Cannara Biotech, Inc. · TSX:LOVE
Cannara Biotech — Q4 2023 Earnings Presentation
46 slides from Cannara Biotech's earnings presentation, Aug 31, 2023
Slide 1: Premium-Grade Cannabis at Scale
TSXV: LOVE | OTCQB: LOVFF | FRA: 8CB0 PREMIUM-GRADE CANNABIS AT SCALE INVESTOR DECK Q4 FISCAL 2023 (AS OF August 31, 2023)
Slide 2: General Disclaimer
GENERAL DISCLAIMER This corporate presentation dated August 31, 2023 (the “Presentation”) has been prepared by management of Cannara Biotech Inc. (the “Company” or “Cannara”) and is based on public information. This Presentation does not constitute an offer to sell to any person, or a general offer
Slide 3: Forward-Looking Statement
FORWARD-LOOKING STATEMENT This presentation contains “forward-looking information” within the meaning of Canadian securities legislation. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this presentation or as of the date of the ef
Slide 4: Executive Summary
EXECUTIVE SUMMARY
Slide 5: Corporate Overview
CORPORATE OVERVIEW We are a vertically-integrated Canadian Licensed Producer of premium-grade cannabis and cannabis-derivative products • Canada’s fourth largest producer based on square footage. Two mega facilities based in Quebec, Canada spanning over 1.6 million square feet. • Currently serving c
Slide 6: Corporate Milestones
CORPORATE MILESTONES MARCH 2018 JANUARY 2019 FEBRUARY 2020 FEBRUARY 2021 APRIL 2021 JUNE 2021 OCTOBER 2021 $ TSXV IDEA CAPITAL CULTIVATION QUEBEC RETAIL LAUNCH TSXV LISTING VALLEYFIELD OCS RETAIL March 2018, idea is Cannara raises over Launches 170,000 sq Retail debut of its 3 Successfully uplisted
Slide 7: Key Investor Considerations
KEY INVESTOR CONSIDERATIONS Well Capitalized, Profitable, Fast-Growing Business Strategic Brand Portfolio • Net revenues generated of $18.3M in Q4 2023 and $57.6M for the • Three flagship in-house brands. full fiscal year of 2023. • Brand partnership with Exotic Genetix. • Generated Net Income of $4
Slide 8: Operations
OPERATIONS
Slide 9: Farnham Facility
FARNHAM FACILITY FARNHAM, QUEBEC LEASED 150,000 sq. ft. 625,000 sq. ft. facility provides 170,000 sq. ft. of LEASED cannabis operation. 294,000 sq. ft. PHASE 1 Fully automated with biomonitoring sensors in every 170,000 sq. ft. 3,500 Kg grow room to ensuring optimal conditions and an increased plant
Slide 10: Valleyfield Facility
VALLEYFIELD FACILITY SALABERRY-DE-VALLEYFIELD, QUEBEC Acquired in June 2021, the facility occupies 1,033,506 sq. ft. on 3,000,000 sq. ft. of land. One of the largest indoor cannabis cultivation facilities in Canada and the largest in Quebec. Provides ability to expand output capacity to 100,000kg of
Slide 11: Valleyfield Facility Phases
VALLEYFIELD FACILITY SALABERRY-DE-VALLEYFIELD, QUEBEC PHASE 1 24 INDEPENDENT GROWING ZONES MEASURING 25,000 SQ.FT EACH 1,033,506 sq. ft. facility The completely automated facility is equipped with cutting edge technology including: : • 578,022 sq. ft. Main cultivation facility LED LIGHTING - FULLY B
Slide 12: The Principals of Our Success
THE PRINCIPALS OF OUR SUCCESS QUALITY ACCESSIBILITY BRAND CULTURE Premium “AAAA” cannabis Disruptive low pricing Grassroot brand culture Hang dried, slow cured Aligned with legacy market Transparency At scale Ideal for your everyday consumers Consumers become ambassadors Q4 FY 2023 | 12
Slide 13: Premium-Grade Cannabis at Scale
PREMIUM-GRADE CANNABIS AT SCALE Delivering a premium-quality product is at the heart of our ethos, resulting in high cannabinoid content and rich flavourful cannabis. Our cannabis employs methods used in the most sophisticated markets in the world such as California; cultivated from: RARE GENETICS H
Slide 14: Exclusive US Brand Partnership in Canada
EXCLUSIVE US BRAND PARTNERSHIP IN CANADA 50 - Time US Award-Winning Seed Breeder EXOTIC GENETIX - Exclusive Canadian Partnership with CANNARA Cannara holds an exclusive license to use, market, sell, and distribute products branded by Exotic Genetix throughout Canada, in addition to its three flagshi
Slide 15: Accessibility
ACCESSIBILITY
Slide 16: Production Assets
PRODUCTION ASSETS CANNARA’S ESTIMATED ANNUAL PRODUCTION CAPACITY IN KG 80,000 kg 75,000 70,000 kg 60,000 kg 57,000 50,000 kg 45,000 40,000 kg 33,500 30,500 30,000 kg 22,000 20,000 kg 10,000 kg 0, kg 2022 2023 2024 2025 2026 2027 Q4 FY 2023 | 16
Slide 17: Why Quebec
WHY QUEBEC AVERAGE ELECTRICITY RATES BY PROVINCE IN CENTS PER KW HOUR 3.7¢/kWh CANNARA PREFERRED RATE Quebec has the lowest electricity rates in Canada (QC: 5.3¢/kWh vs. AB: 13.6¢/kWh). MB BC SK ON NS AB QC 5.3¢/kWh 5.9¢/kWh 7.7¢/kWh 8.9¢/kWh 9.8¢/kWh 11.4¢/kWh 13.6 ¢/kWh Quebec has the highest barr
Slide 18: Competitive Advantage
COMPETITIVE ADVANTAGE Focus on delivering premium “AAAA” quality cannabis at disruptive pricing Quality, Scalability and Transparency: • Deliver true to craft like procedures including hang drying and hand trimming cannabis to ensure quality. • Scalability of its premium-grade cannabis by growing in
Slide 19: Q4 FY 2023
Q4 FY 2023 | 20
Slide 20: Our Unique Value Proposition
OUR UNIQUE VALUE PROPOSITION Cannara is giving consumers what they want—premium quality cannabis at accessible, value-based pricing fit for frequent consumers and new entrants alike. The exceptional quality of our top-tier "AAAA" grade cannabis, along with our revolutionary low pricing, has led to a
Slide 21: Portfolio of Brands
PORTFOLIO OF BRANDS 97 ACTIVE SKUS AVAILABLE IN MARKET Our portfolio consists of three flagship brands – Tribal, Nugz and Orchid, all with distinctive identities and purpose, each filling a white space in Canada’s current cannabis market without compromising quality. All three brands offer premium-g
Slide 22: Tribal
Welcome to Tribal, Cannara’s house of genetics flagship brand. With a Canadian exclusive partnership with renowned US breeder Exotic Genetix, Tribal calls on consumers to enjoy the journey of new genetics across a variety of products, from dried flower and pre-rolls to full spectrum extracts and liv
Slide 23: Nugz
Nugz, your legacy dealer gone legal, has two staple flower offerings in addition to rotational offerings from Cannara’s grow houses and solventless concentrates. Flavour, potency, and premium quality bulk value are key attributes—when Nugz shows up its high-fives and good times all around! AVAILABLE
Slide 24: Orchid CBD
Orchid CBD is changing the perception of cannabis by being the better choice for consumers looking for premium, CBD-dominant and balanced cannabis products. When it comes to flower and pre-rolls, Orchid CBD offers CBD Runtz, a phenomenally well-rounded strain bred by Exotic Genetix. Our flower is ha
Slide 25: Market and Growth Strategy
MARKET and GROWTH STRATEGY
Slide 26: Canadian Recreational Cannabis Market
CANADIAN RECREATIONAL CANNABIS MARKET 2ND LARGEST LEGAL CANNABIS MARKET IN THE WORLD Monthly Retail Sales of Legal Cannabis Stores Legal Recreational Cannabis Market in Canada from October 2018 to December 2022 expected to reach $7.6B by 2026 (in million Canadian dollars) 10,000 Retail sales in mill
Slide 27: 2024 Looking Ahead
2024 LOOKING AHEAD 1. INCREASE CANNABIS SUPPLY & FOCUS ON COST EFFICIENCIES In 2024, Cannara plans to remain vigilant by focusing on labor and cost efficiencies to continue to improve gross margins. This will provide resilience to Cannara’s platform in current market conditions with continued price
Slide 28: 1. Increase Cannabis Supply
1. INCREASE CANNABIS SUPPLY CANNABIS PRODUCTION & REVENUE GROWTH TRAJECTORY AS VALLEYFIELD PRODUCTION SCALES UP CANNABIS NET REVENUE IN $ MILLIONS AND KG SOLD CANNABIS PRODUCTION (TRIMMED BUDS) IN KG $20M 8000 kg 5,902 KG $18M $17.2 4,582 KG 7000 kg $14.9 $16M 6 , 6 0 0 kg 6000 kg 3,580 KG $14M 2,74
Slide 29: 1. Focus on Labour and Cost Efficiencies
1. FOCUS ON LABOUR AND COST EFFICIENCIES COST EFFICIENCIES Cannara will continue to focus on cost efficiencies to improve its overall gross margin. In addition, as Cannara scales Its operations, economies of scale will be achieved, ultimately, improving gross margin in 2024. Gross Margin before FV C
Slide 30: 2. Innovation and Increased Product Offering
2. INNOVATION AND INCREASED PRODUCT OFFERING PRODUCT INNOVATION The company is focused on the innovation of new products for 2024 across all 3 of its flagship brands. Given the success of the Company in 2023 of launching over 70 new SKUS and reaching a total SKU count of 97, Cannara BC will continue
Slide 31: 3. New Genetic Releases
3. NEW GENETIC RELEASES GELATO MINT CUBAN LINX TERPLE POWER SHERB 2 NEW GENETICS FOR Q1 2024 INDICA SATIVA HYBRID INDICA JIGGLERS AND DRIP STATION FY24 FY24 2 NEW GENETICS EXPECTED TO RELEASE IN SUMMER 2024 GALACTIC RUNTZ TRIPLE BURGER DRIP STATION JIGGLERS INDICA INDICA INDICA SATIVA 1 NEW GENETIC
Slide 32: 4. Increase Market Share
4. INCREASE MARKET SHARE Estimated Cannara Market Share MARKET EXPANSION STRATEGY Q3 & Q4 FY 2023 Cannara has created lean and profitable operations, proven to Province Q4 2023 Q3 2023 % Change produce premium cannabis at scale and at competitive prices. QC 8.5% 9.3% -8.6% With the ability to produc
Slide 33: 5. Continued Adjusted EBITDA, Net Income and Operating Cash Flows
5. CONTINUED ADJUSTED EBITDA, NET INCOME AND OPERATING CASH FLOWS The Company’s financial strength shows through across all financial metrics. In 2024, Cannara expects to continue to substantially increase sales while focusing on labor and cost efficiencies resulting in an even stronger financial po
Slide 34: Q4 2023 Financials
cannara’” Q4 2023 FINANCIALS
Slide 35: Q4 2023 Selected Financial Highlights
Q4 2023 SELECTED FINANCIAL HIGHLIGHTS Three-month periods ended Q4 2023 Selected Finacial Highlights August 31, 2023 August 31, 2022 Δ% Gross rev enues 1 $ 18,138,453 $ 11,894,302 52% Other income 140,160 52,810 165% 18,278,613 11,947,112 53% Gross profit, before fair v alue adjustements 6,894,634 4
Slide 36: FY 2023 Selected Financial Highlights
FY 2023 SELECTED FINANCIAL HIGHLIGHTS Year ended FY 2023 Selected Finacial Highlights August 31, 2023 August 31, 2022 Gross rev enues 1 $ 57,067,911 $ 35,482,601 61% Other income 494,891 515,157 -4% 57,562,802 35,997,758 60% Gross profit, before fair v alue adjustements 21,069,539 14,144,868 49% 2 %
Slide 37: Quarterly Detailed Highlights
QUARTERLY DETAILED HIGHLIGHTS August 31, May 31, February 28, Nov ember 30, August 31, 2023 2023 2023 2022 2022 Current assets $ 51,695,836 $ 45,657,986 $ 40,820,665 $ 38,393,438 $ 40,988,684 Non-current assets 89,826,418 89,716,638 88,326,738 87,032,849 84,628,363 Total assets 141,522,254 135,374,6
Slide 38: Total Net Revenues by Quarter
TOTAL NET REVENUES BY QUARTER TOTAL NET REVENUES ANALYSIS BY QUARTER IN $ MILLIONS -- TOTAL NET REVENUE GROSS MARGIN 1 $18.3 $18M $16M $15.9 $14M $13 $12 $12M $10.1 $10.3 $10M $8M $6.9 $6.1 $6M $5M $4.8 $3.7 $4.0 $4.0 $4M $3M $2M $1M 37% 40% 39% 31% 38% 38% $0M Q3 Q4 Q1 Q2 Q3 Q4 2022 2022 2023 2023
Slide 39: Financial Ratios Comparison vs Peers
FINANCIAL RATIOS COMPARISON VS PEERS SIGNIFICANT GROWTH RATE WITH STRONG MARGINS AND PROFITABLE RELATIVE TO PEERS Canopy Village Avant Tillray Aurora Organigram Cannara Decibel Rubicon Growth Farms Brands Market Cap in M 1868 605 295 138 117 80 49 37 27 Revenue (LTM) in M 877 367 264 161 378 58 114
Slide 40: Leadership Team
LEADERSHIP TEAM
Slide 41: Executive Leadership Team
EXECUTIVE LEADERSHIP TEAM ZOHAR KRIVOROT NICHOLAS SOSIAK AVI KRIVOROT CHAIRMAN & CEO CFO CTO Zohar is an entrepreneur who has launched Nicholas is a CPA with an entrepreneurial spirit Avi has been in the information technology several successful businesses. He has founded, and passion for the Cannab
Slide 42: Executive Management Team
EXECUTIVE MANAGEMENT TEAM ISSAM BEN MOUSSA NOEMI FOLLAIN ANTHONY MANOUK VP PRODUCTION & EXPERIMENTATION VP FINANCE GM & VP COMPLIANCE Issam is an engineer in Agronomy & Noemi is a Chartered Professional Anthony is an accomplished business biotechnology and has a PhD in plant Accountant and have 8 ye
Slide 43: Executive Management Team Continued
EXECUTIVE MANAGEMENT TEAM CONTINUED BRIAN SHERMAN VP LEGAL AFFAIRS FRANCE LANDRY VP HUMAN RESOURCES Brian brings industry experience having served as a senior member of the legal France joins the Cannara team with over team at Canopy Growth, one of 17 years of experience in human Canada's most estab
Slide 44: Board of Directors
BOARD OF DIRECTORS ZOHAR KRIVOROT MARY DUROCHER CHAIRMAN & CEO DIRECTOR Mary has been involved in the cannabis industry since the Zohar is an entrepreneur who has launched several infancy of the Marihuana for Medical Purposes successful businesses. He has founded, advised and Regulations introductio
Slide 45: Positioned for National Success
IN SUMMARY Well capitalized, profitable, fast-growing Operating with strong margins and with a business with an established history of execution. focus on positive EBITDA and positive net income, positive cash flow and organic Offering customers the highest value growth through capital reinvestment.
Slide 46: Thank You
TSXV: LOVE | OTCQB: LOVFF | FRA: 8CB THANK YOU www.cannara.ca investors.cannara.ca www.instagram.com/cannarabiotech www.facebook.com/cannarabiotech CANNARA HEADQUARTERS FARNHAM FACILITY VALLEYFIELD FACILITY 333 Decarie blvd, Suite 200 1144 Boulevard Magenta E 1175 Boulevard Gérard-Cadieux Saint-Laur