Tim Seymour On Canopy Growth's Earnings: 'A Huge Exhale'
Net revenue of CA$123.8 million ($93.5 million) was up 49% year-over-year, but the adjusted EBITDA loss of CA$92 million was higher than last year’s CA$74.8.
Over the course of the third quarter, Canopy Growth named David Klein as its new CEO, cemented its leading position in the Canadian retail market by boasting a projected 22% of the adult-use market share, and concluded the first shipments of cannabis edibles and JUJU Power 510 batteries.
Tim Seymour, portfolio manager of the Amplify Seymour Cannabis ETF (NYSE:CNBS) and co-host of CNBC’s “Fast Money,” has been bullish on Canopy for a while. In fact, it represents the biggest holding in his fund.
Chatting with Benzinga, he qualified the earnings report as a “huge exhale on what has been a difficult few weeks for Canadian LPs as the still the most important company in the sector beats on top line and margin.”
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Seymour was most impressed by Canopy’s gross margin improvement. The margin rose from 13% to 34%, beating consensus estimates of 25%. The company attributed this to “significant write-offs over previous quarters and higher selling prices this quarter on 2.0 products,” Seymour explained.
He then moved on to the top-line beat, driven by a combination of gross cannabis revenues (+18%) and “other” revenues, “including major contributions from accessories and skin care lines.”
Also worth noting, Canopy ended this fiscal quarter with $2.3 billion in cash on its balance sheet. This is “a king’s ransom in this market at a time when assets are trading at discounts to NAV,” Seymour told Benzinga.
“With a fiscally-focused, former Constellation Brands CFO at the helm, this company should be well positioned for the next round of asset allocation.”
After a few tough weeks where major Canadian LPs announced executive changes, mass layoffs, and poor financial results, Canopy’s report is encouraging.
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