Canopy Growth Corp (TSX: WEED)(NYSE: CGC) filed second quarter 2020 financials this morning, reporting net revenues of $76.6 million, a decline of 15% from net revenues seen in the second quarter. Gross revenues amounted to $118.3 million during the quarter, however $32.7 million worth of returns and price reductions and $9.0 million in excise taxes significantly reduced net revenues for the firm.
Classified as being a “restructuring charge”, the $32.7 million hit to gross revenues consisted of what Canopy Growth refers to as “returns, return provisions, and pricing allowances” which was mostly related to oil and softgel products which have not been selling as anticipated. An inventory charge of $15.9 million was also taken during the quarter to reflect the change to the new strategy – essentially a formal way of saying inventory write offs occurred for unsellable product.
In terms of sales mix, business to business cannabis sales were down to $49.4 million during the quarter, a 15% quarter over quarter decline. Sales to consumers were up 24% however to $13.1 million, while medical sales amounted to $14.1 million. International sales also increased on a quarterly basis, to that of $18.1 million. Total gross cannabis sales amounted to $94.7 million during the quarter, up from $92.6 million in the previous quarter.
A total of 10,913 kilograms of cannabis and equivalents were sold during the quarter, an increase of 3% from the prior quarter. Despite this, Canopy harvested 40,570 kilograms of product during the same time period, which was down marginally from last quarters 40,960 kilograms.
Gross margin during the quarter was a negative $9.7 million, thanks in part to inventory return levels during the quarter. Following adjustments for biological assets, a gross margin of $3.5 million was achieved by the issuer.
Total operating expenses amounted to $269.3 million for the three month period, with general and administrative expenses being the largest at $87.8 million. This was closely followed by share based compensation, which amounted to $83.7 million during the quarter. Sales and marketing was the final big expense, at $60.4 million. The net loss for the second quarter of 2020 for Canopy Growth amounted to $374.6 million, or $1.08 per share.
Moving to the balance sheet, Canopy’s cash position decreased from $1.8 billion to $1.1 billion during the quarter, while marketable securities increased slightly from $1.3 billion to $1.6 billion. Receivables climbed slightly during the quarter to $107.4 million, while biological assets climbed to $110.3 million. Inventory climbed significantly during the quarter, from $393.7 million to $461.7 million. Total current assets decreased during the quarter to $3.4 billion from $3.8 billion.
Accounts payable continued to climb during the three month period, from $256.8 million to $286.8 million, while other current liabilities climbed to $124.8 million from $97.6 million. Total current liabilities amounted to $425.8 million.
Canopy Growth last traded at $24.45 on the Toronto Stock Exchange.
Information for this briefing was found via Sedar and Canopy Growth Corp. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.