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3 Ways Canopy Growth Crushed It With Its Q2 Results – Motley Fool

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Canopy Growth (NYSE:CGC) appears to be making the most from its last couple of weeks of trading on the New York Stock Exchange. The Canadian cannabis producer moves its shares to the Nasdaq on Nov. 16, 2020. In the meantime, the pot stock is on a roll with investors enthusiastic about the U.S. election results.

Investors now have something else to be excited about: Canopy announced its fiscal year 2021 second-quarter results before the market opened on Monday. Here are three ways the company crushed it with its Q2 update.

Shadow of dollar sign on top of a pile of cannabis leaves

Image source: Getty Images.

1. Record revenue

Canopy reported net revenue in its fiscal second quarter of 135.3 million in Canadian dollars. There were several things to really like about this result.

First, it set a record high quarterly revenue total for Canopy. Second, the result easily beat the average analysts’ estimate of CA$117.2 million. Third, Canopy’s Q2 revenue reflected a strong 77% year-over-year increase and a 23% jump over its fiscal 2021 Q1 revenue total. 

The company delivered strong revenue growth in its home market of Canada. The only negative was in international medical cannabis markets, where net revenue slipped 3% year over year to CA$17.5 million. This decline was due to a packaging supply issue with one of the distributors for Canopy’s C3 German subsidiary and slower market growth combined with increased competition in Germany’s dried flower market.

2. Gaining ground in the Canadian recreational market

One aspect of Canopy’s tremendous revenue growth deserves a special mention. The company continues to gain ground in the Canadian recreational marijuana market — the most important market of all right now for Canopy.

Canopy reported that its market share in the Canadian rec market increased to 15.5% in its fiscal second quarter. This reflects an increase of 200 basis points compared to the previous quarter. Notably, Canopy’s market share jumped by 190 basis points in Ontario, Canada’s most heavily populated province.

The fly in the ointment was Alberta, where Canopy’s market share fell by 40 basis points quarter over quarter. However, Canopy could be in a position to rebound in the province. It opened nine retail stores in Alberta during Q2 plus another new store in October.

Unsurprisingly, Canopy is dominating the Canadian cannabis-infused beverage market with a 54% dollar share. The company markets five THC cannabis beverages and recently launched CBD beverages.

3. Improving bottom line

Perhaps the best news of all for Canopy Growth was its improving bottom line. The company reported a net loss of CA$96.6 million, a lot better than its CA$128 million net loss in the previous quarter. Canopy posted an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of CA$85.7 million compared to an adjusted EBITDA loss of CA$150.4 million in the prior-year period and CA$92 million in fiscal 2021 Q1.

Canopy Growth CFO Mike Lee said that the company is “accelerating our path to profitability.” That’s exactly what investors want to hear. 

The company’s revenue growth is certainly helping Canopy move closer toward profitability. However, the cost-cutting the company has done since CEO David Klein came aboard is also an important factor. More cost reductions could be on the way: Lee said that Canopy’s “end-to-end review has identified cost savings opportunities in the range of [CA]$150-$200 million across cost of goods sold, general and administrative expenses, and inventory, and efforts are under way to quickly capture value.”

What’s next?

It looks like Canopy is on course to continue delivering solid revenue growth along with making progress toward achieving profitability. The biggest potential catalyst for the marijuana stock is out of its control, though. Any hopes for significant changes to federal marijuana laws in the U.S. hinge on which party wins a majority in the U.S. Senate — and that won’t be decided until January 2021, with two Senate runoff elections in Georgia.

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Bank of Canada deputy downplays risks of consumer default wave – BNN

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The massive policy response from the Bank of Canada and the federal government successfully prevented the country’s financial system from buckling, though vigilance is still needed, according to a top central banker.

Signs of overwhelming financial strain are few, and the risk of a wave of consumer defaults seems low, Deputy Governor Toni Gravelle said in remarks via video conference to the Autorite des marches financiers. Almost all of the households with expired debt deferrals have resumed repayments, and government measures are helping businesses in many sectors manage cash flows, he said.

“We have long warned that a recession could create broad stress across the financial system,” Gravelle said in a semi-annual update on vulnerabilities in the financial system. “Yet, despite the devastating economic impact of the pandemic, this risk has not — as of yet — materialized.”

The speech paints a reassuring picture of Canadian consumers and companies emerging from the unprecedented shock in decent shape, in spite of elevated debt levels. It also casts the central bank’s own response as largely successful in averting the worst effects of the crisis, though Gravelle said the pandemic remains a source of “considerable financial system risk.”

The deputy governor downplayed signs of overheating in the nation’s housing market, hinting the recent surge in prices reflects fundamental factors such as pent-up demand and a shift in preferences to larger homes. Values have risen fastest, meanwhile, in cities with moderate mortgage levels.

“To this point, we do not see signs that home prices are rising due to speculation, like we saw in the greater Toronto and Vancouver areas a few years ago,” he said. At the same time, he cautioned about the need to be vigilant in certain segments of the market such as condos.

Gravelle added, however, that it’s too soon to declare victory, in particular because many mortgage deferrals only ended in October, meaning the full effects may not be known until the end of the year or early 2021.

He was less sanguine on the prospects for business, which he said may need more financing in the near term to get through a bumpy recovery. That’s why the central bank is ready to support the financial system if needed, even though it has recently pulled out of some programs.

“We expect that an increasing number of businesses will need financing in the coming quarters to get by,” he said. “Staff will be conducting simulations using firm-level data to quantify this, and we plan to publish those results in the next couple of months.”

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Former Fed Chair Janet Yellen reportedly Biden pick for Treasury Secretary – Yahoo Canada Finance

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The Canadian Press

AP source: US agency allows formal Biden transition to begin

WASHINGTON — The General Services Administration has ascertained that President-elect Joe Biden is the “apparent winner” of the Nov. 3 election, clearing the way for the start of the transition from President Donald Trump’s administration.An official said Administrator Emily Murphy made the determination after Trump efforts to subvert the vote failed across battleground states, most recently in Michigan, which certified Biden’s victory Monday.The move clears the way for Biden aides to begin co-ordinating with federal agencies on plans for takeover on Jan. 20.THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.Pressure is increasing on President Donald Trump’s administration to authorize a formal transition process for President-elect Joe Biden as an increasing number of Republicans, national security experts and business leaders say it is time for that process to move forward.Retiring Tennessee Sen. Lamar Alexander, who has repeatedly called for the transition to begin, released a new statement Monday saying that Trump should “put the country first” and help Biden’s administration succeed.“When you are in public life, people remember the last thing you do,” Alexander said.Republican Sen. Rob Portman of Ohio on Monday called for the head of the General Services Administration to release money and staffing needed for the transition. Portman, a senior member of the Senate Homeland Security and Governmental Affairs Committee, also said Biden should receive high-level briefings on national security and the coronavirus vaccine distribution plan.Alexander and Portman, who have both aligned themselves with Trump, joined a growing number of Republican officials who in recent days have urged Trump to begin the transition immediately. Sen. Shelley Moore Capito, R-W.Va., also urged a smooth transition, saying in a statement Monday that “at some point, the 2020 election must end.”Meanwhile, more than 160 business leaders asked GSA chief Emily Murphy to immediately acknowledge Biden as president-elect and begin the transition to a new administration. “Withholding resources and vital information from an incoming administration puts the public and economic health and security of America at risk,” the business letters said in an open letter to Murphy.Separately, more than 100 Republican former national security officials — including former Homeland Security Director Tom Ridge, former CIA Director Michael Hayden and former Director of National Intelligence John Negroponte — said in a statement that Trump’s refusal to concede and allow for an orderly transition “constitutes a serious threat” to America’s democratic process. The officials signing the letter worked under four Republican presidents, including Trump.The statement called on “Republican leaders — especially those in Congress — to publicly demand that President Trump cease his anti-democratic assault on the integrity of the presidential election.”The parade of daily statements from Republicans who are gently urging Trump to concede and move on comes as Murphy, whom he appointed, has yet to certify Biden as the winner of the presidential election, stalling the process of officially launching the transition. Trump has publicly refused to accept defeat and has launched a series of losing court battles across the country making baseless claims of widespread voter fraud and seeking to overturn the election results.Murphy missed a deadline on Monday set by House Democrats to brief lawmakers about the delay in beginning the transition, which is usually a routine step between the election and the inauguration. A spokeswoman for the GSA said that a deputy administrator would instead hold two separate briefings for House and Senate committees on Nov. 30.In response, the Democratic chairs of four committees and subcommittees said they could reschedule the meeting for Tuesday, but no later.“We cannot wait yet another week to obtain basic information about your refusal to make the ascertainment determination,” the Democrats said in a letter to Murphy. “Every additional day that is wasted is a day that the safety, health, and well-being of the American people is imperiled as the incoming Biden-Harris administration is blocked from fully preparing for the coronavirus pandemic, our nation’s dire economic crisis, and our national security.”Portman said it was “only prudent” for GSA to begin the transition process immediately.”Donald Trump is our president until Jan. 20, 2021, but in the likely event that Joe Biden becomes our next president, it is in the national interest that the transition is seamless and that America is ready on Day One of a new administration for the challenges we face,” Portman wrote in an op-ed calling for the transition to begin.When Murphy ascertains that Biden won, it will free up money for the transition and clear the way for Biden’s team to begin placing transition personnel at federal agencies. Trump administration officials also say they will not give Biden the classified presidential daily briefing on intelligence matters until the GSA makes the ascertainment official.Among those signing the letter from business leaders were Jon Gray, president of the Blackstone private equity firm; Robert Bakish, president and CEO of ViacomCBS Inc.; Henry Kravis, the co-chief executive of Kohlberg Kravis Roberts & Co., another private equity giant; David Solomon, CEO at Goldman Sachs; and George H. Walker, CEO of the investment firm Neuberger Berman and a second cousin to former President George W. Bush.The renewed calls for an official transition came as Biden is building out his administration with key picks for national security and foreign policy roles. Former Secretary of State John Kerry will lead the incoming administration’s effort to combat climate change, while Alejandro Mayorkas will be nominated as homeland security secretary.Biden also plans to nominate veteran diplomat Antony Blinken as his secretary of state..Matthew Daly And Mary Clare Jalonick, The Associated Press

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Toronto and Peel Region enter lockdown for at least 28 days – CP24 Toronto's Breaking News

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Premier Doug Ford is standing behind his government’s decision to suspend in-person shopping at all non-essential retailers in Toronto and Peel amid criticism from small business owners who say they are being unfairly singled out.

Toronto and Peel officially entered the lockdown stage of Ontario’s framework for COVID-19 restrictions at 12:01 a.m., on Monday. As a result personal care services, like barbers and salons, have been forced to close and restaurants can only do takeout and delivery.

Retail stores are also limited to curbside pickup only with some exceptions for grocers, hardware stores, corner stores and discount and big box retailers selling groceries.

Speaking with reporters during his regular briefing on Monday, Ford said that he knows it is “not fair” that some big box retailers like Walmart can continue to operate while smaller businesses have to shut down but he said it would have been a “logistical nightmare” to require large retailers to cordon off non-essential goods, as is the case under a similar order in Manitoba.

“I know this is not fair and that’s why we put the additional $300 million into supporting small businesses and took care of their property taxes, their energy costs,” he said. “We’re doing everything we can as a province but the quicker we can get through this, the quicker we can get this vaccine out there, then we can get people back and open up,

The Canadian Federation of Independent Business is calling on the Progressive Conservative government to allow three customers at a time into small retail stores.

Ford, however, told reporters that he is not considering any changes to the lockdown rules at this point, much to the dismay of some retailers.

“How does it make sense to shut down the small flower store but allow people to line up at Walmart to buy a bouquet of flowers? To shut down the small independent bookseller but allow them to go to Costco, line up and buy books there? How does that help prevent COVID? Never mind how fair it is,” Dan Kelly, who is the president of the Canadian Federation of Independent Business, told CP24 earlier on Monday. “These rules make no sense at all.”

Kelly said that the CFIB had already forecast that 160,000 small business in Canada would close following the first wave of the pandemic and that the situation has gotten even more critical since then.

He said that something needs to be done to help shuttered retailers in Toronto and Peel and soon or more will be “toast.”

“We think we have seen a hollowing out of the retail sector but we have seen nothing compared to what will happen if they miss out on Christmas,” he warned.

Tory urges people to stay home

The province announced the added restrictions for Toronto and Peel on Friday as new cases of COVID-19 continued to surge in both jurisdictions.

In anticipation of the rules going into effect, several malls extended their hours over the weekend and there were reports of long lineups at stores.

Speaking with CP24, on Monday morning Toronto Mayor John Tory said that the strict new rules are an important, even if there is not a lot of data pointing to widespread transmission in settings like retail stores, for example.

“We don’t really know in every single case exactly where people picked up this virus, we just know it is spreading and was spreading in a fashion last week and the week before and the week before that that was clearly unacceptable in terms of the trend line we were on,” he said. “Look it is a sad day today just to see this kind of thing having to happen but again the choice was to not do these kind of things and have a much longer, much broader, much worse kind of lockdown happen latter when we had completely lost control of this thing as you have seen elsewhere in the world.”

While the lockdown will shutter a number of businesses across Toronto and Peel, schools and childcare centres will remain open as will services deemed essential like dentist offices and physiotherapists.

Several industries that were mostly brought to a halt in the spring, like film and television production and construction, are also exempt.

“I am a little bit concerned that this shutdown doesn’t focus on the largest area of spread. In Brampton our largest source of transmission is industrial settings. Our largest two sectors are transportation logistics and food processing and neither of those sectors are shut down because they are considered essential,” Brampton Mayor Patrick Brown told CP24 on Monday. “So this isn’t truly a lockdown for Brampton. Small businesses have been shut down but with the largest portion of our workforce being essential workers nothing has really changed.”

In addition to the new rules in Toronto and Peel, Durham Region and Waterloo have also been moved into the red category alongside York Region as of today. The rules for that category limit restaurants, gyms and food courts to 10 indoor patrons at a time.

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