UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 1, 2022
(Exact name of registrant as specified in its charter)
British Columbia, | N/A | |||||||
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| of incorporation) | File Number) | Identification No.) | ||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code: (416 ) 504-0004
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On March 1, 2022, Cronos Group Inc. (the “Company”) issued a press release announcing its financial results for its fourth quarter and fiscal year ended December 31, 2021. A copy of the press release is attached as Exhibit 99.1 to and is incorporated by reference in this Current Report on Form 8-K.
The information in this Item 2.02, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such a filing or document.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File – The cover page from Cronos Group Inc.’s Current Report on Form 8-K filed on March 1, 2022 is formatted in Inline XBRL. | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CRONOS GROUP INC. | |||||||||||
| Dated: March 1, 2022 | By: | /s/ Kurt Schmidt | |||||||||
| Name: Kurt Schmidt | |||||||||||
| Title: President and Chief Executive Officer | |||||||||||
Exhibit 99.1
Cronos Group Reports 2021 Fourth Quarter and Full-Year Results
Consolidated net revenue increased 59% in Full Year 2021 compared to Full Year 2020
Announces the planned exit of its Peace Naturals Campus in Stayner, Ontario
to streamline supply chain and improve profitability
TORONTO, March 1, 2022 - Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) (“Cronos Group” or the “Company”), today announces its 2021 fourth quarter and full-year business results.
“I am proud of the dedication and resilience our team has shown throughout the past year as we navigated through a dynamic market environment,” said Kurt Schmidt, President and CEO, Cronos Group. “Our fourth quarter 2021 results indicate positive momentum, which we will look to carry forward as we begin to implement our strategic and operational realignment initiatives. As we look to 2022, we will continue to realign Cronos Group’s organizational structure to match our strategy, with a primary focus on adult-use products and elevating our brands through rare cannabinoids. We also remain intensely focused on positioning ourselves for long-term opportunities by continuing to invest in our brands, creating and supporting an efficient manufacturing strategy, investing in rare cannabinoids and innovation, and readying Cronos Group for entry into the U.S. cannabis market once federally permitted. We are optimistic about the future of the Company and the year ahead.”
“In addition to the results we are announcing today and in line with our focus on enhancing agility and fostering long-term growth, we have made the decision to exit our Peace Naturals Campus in Stayner, Ontario. As we continue to execute our asset-light approach and focus on brands and R&D, we will continue to leverage our joint venture with Cronos GrowCo and other contract manufacturing partnerships moving forward. We are grateful to our Stayner associates for their hard work and the contributions they have made to Cronos Group, and appreciate their ongoing support in helping to provide a seamless transition out of the facility throughout 2022.”
Financial Results
| (in thousands of USD) | Three months ended December 31, | Change | Year ended December 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
| Net revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||
| United States | $ | 3,106 | $ | 3,506 | $ | (400) | (11) | % | $ | 9,874 | $ | 9,495 | $ | 379 | 4 | % | ||||||||||||||||||||||||||||||||||
| Rest of World | 22,689 | 13,540 | 9,149 | 68 | % | 64,561 | 37,224 | 27,337 | 73 | % | ||||||||||||||||||||||||||||||||||||||||
| Consolidated net revenue | 25,795 | 17,046 | 8,749 | 51 | % | 74,435 | 46,719 | 27,716 | 59 | % | ||||||||||||||||||||||||||||||||||||||||
| Cost of sales | 23,852 | 16,913 | 6,939 | 41 | % | 80,008 | 46,497 | 33,511 | 72 | % | ||||||||||||||||||||||||||||||||||||||||
| Inventory write-down | — | 15,031 | (15,031) | (100) | % | 11,961 | 26,055 | (14,094) | (54) | % | ||||||||||||||||||||||||||||||||||||||||
| Gross profit | $ | 1,943 | $ | (14,898) | $ | 16,841 | 113 | % | $ | (17,534) | $ | (25,833) | $ | 8,299 | 32 | % | ||||||||||||||||||||||||||||||||||
Gross margin(i) | 8 | % | (87) | % | N/A | 95 | pp | (24) | % | (55) | % | N/A | 31 | pp | ||||||||||||||||||||||||||||||||||||
Net loss(ii) | $ | (133,892) | $ | (111,712) | $ | (22,180) | (20) | % | $ | (397,204) | $ | (75,270) | $ | (321,934) | (428) | % | ||||||||||||||||||||||||||||||||||
Adjusted EBITDA(iii) | $ | (27,357) | $ | (53,133) | $ | 25,776 | 49 | % | $ | (160,463) | $ | (147,253) | $ | (13,210) | (9) | % | ||||||||||||||||||||||||||||||||||
| Other Data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents(iv) | $ | 886,973 | $ | 1,078,023 | $ | (191,050) | (18) | % | ||||||||||||||||||||||||||||||||||||||||||
Short-term investments (iv) | 117,684 | 211,766 | (94,082) | (44) | % | |||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures(v) | 567 | 10,963 | (10,396) | (95) | % | 12,262 | 35,391 | (23,129) | (65) | % | ||||||||||||||||||||||||||||||||||||||||
(i) Gross margin is defined as gross profit divided by net revenue.
(ii) Net loss of $133.9 million in Q4 2021 increased by $22.2 million from Q4 2020. The increase in losses year-over-year was primarily driven by an increase in operating loss that was primarily driven by a combined $123.9 million in non-cash impairment charges. Net loss of $397.2 million in Full-Year 2021 increased by $321.9 million from Full-Year 2020. The increase in losses year-over-year was primarily driven by an increase in operating loss that was primarily driven by a combined $363.7 million in non-cash impairment charges.
(iii) See “Non-GAAP Measures” for more information, including a reconciliation of adjusted earnings (loss) before interest, taxes, depreciation and amortization (“Adjusted EBITDA”).
(iv) Dollar amounts are as of the last day of the period indicated.
(v) Capital expenditures represents component information of investing activities and is defined as the sum of purchase of property, plant and equipment, net of disposals, and purchase of intangible assets, net of disposals.
Fourth Quarter 2021
•Net revenue of $25.8 million in Q4 2021 increased by $8.7 million from Q4 2020. The increase year-over-year was primarily driven by continued growth in the adult-use market in Canada and increased sales in the Israeli medical market.
•Gross profit of $1.9 million in Q4 2021 improved by $16.8 million from Q4 2020. The improvement year-over-year was primarily driven by increased gross profit in the Rest of World (“ROW”) segment as well as a decline in inventory write-downs.
•Adjusted EBITDA of $(27.4) million in Q4 2021 improved by $25.8 million from Q4 2020. The improvement year-over-year was primarily driven by the improvement in gross profit and a decrease in sales and marketing and research and development expenses.
•Capital expenditures of $0.6 million in Q4 2021 decreased by $10.4 million from Q4 2020. The decrease year-over-year was primarily driven by a reduction in construction costs in the ROW segment and a decrease in costs related to the implementation of the Company’s enterprise resource planning ("ERP") system.
Full-Year 2021
•Net revenue of $74.4 million in Full-Year 2021 increased by $27.7 million from Full-Year 2020. The increase year-over-year was primarily driven by continued growth in the adult-use market in Canada and increased sales in the Israeli medical market
•Gross profit of $(17.5) million in Full-Year 2021 improved by $8.3 million from Full-Year 2020. The improvement year-over-year was primarily driven by a reduction in inventory write-downs and favorable sales mix of our cannabis extract products in the ROW segment.
•Adjusted EBITDA of $(160.5) million in Full-Year 2021 decreased by $13.2 million from Full-Year 2020. The decrease year-over-year was primarily driven by an increase in sales and marketing expenses, general and
administrative expenses, which were primarily due to an increase in the allowance for expected credit losses of $12.0 million, and research and development expenses.
•Capital expenditures of $12.3 million in Full-Year 2021 decreased by $23.1 million from Full-Year 2020. The decrease year-over-year was primarily driven by a reduction in construction costs in the ROW segment and a decrease in costs related to the implementation of the Company's ERP system.
Business Updates
Strategic and Organizational Update
Following a careful evaluation of the Company's global supply chain, the Company has announced today the planned exit of its Peace Naturals Campus in Stayner, Ontario, Canada.
Cronos Group will continue to operate the Peace Naturals Campus with a phased reduction and transition of activities with a planned exit by the end of 2022. Various research and development initiatives, inclusive of cannabinoid formulation, product development, tissue culture and micropropagation will continue across multiple facilities available to Cronos Group.
Continuing to optimize and maintain an agile supply chain is a core element of Cronos Group's strategy. Importantly, Cronos Group has focused on building joint ventures and partnerships around the world with best-in-class operators, such as Cronos GrowCo ("GrowCo") the Company's joint venture with leading Canadian large-scale greenhouse operators. As GrowCo has developed its capabilities, it has become an important component of the Company's biomass supply. Cronos Group looks forward to leveraging GrowCo's capabilities in premium flower cultivation and efficient downstream processing, with the intention to improve profitability of the Company's Canadian operations. Cronos Group intends to obtain a sales license from Health Canada at GrowCo's facility to maintain the Company's customer relationships and ability to continue supplying the Canadian market. In addition to further leveraging its joint venture with GrowCo, Cronos Group will continue to maintain a network of third-party licensed producers to supplement its cultivation and manufacturing needs.
As a result of the Company's planned exit from the Peace Naturals Campus, the Company has incurred a $119.9 million non-cash impairment charge on long-lived assets in the fourth quarter of 2021. In addition, the Company expects to incur charges of approximately $4.5 million in connection with the planned exit, all of which impact the ROW segment. These charges include employee-related costs, such as severance, relocation and other termination benefits, as well as contract termination and other related costs, which are expected to be incurred primarily in the second half of 2022. In addition, the Company anticipates capital expenditures of approximately $2.5 million to modernize information technology systems and build distribution capabilities.
Rest of World Results
Cronos Group’s ROW reporting segment includes results of the Company’s operations for all markets outside of the U.S.
| (in thousands of USD) | Three months ended December 31, | Change | Year ended December 31, | Change | |||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | $ | % | 2021 | 2020 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Cannabis flower | $ | 18,857 | $ | 11,559 | $ | 7,298 | 63 | % | $ | 55,194 | $ | 27,932 | $ | 27,262 | 98 | % | |||||||||||||||||||||||||||||||
| Cannabis extracts | 3,787 | 1,938 | 1,849 | 95 | % | 8,807 | 8,759 | 48 | 1 | % | |||||||||||||||||||||||||||||||||||||
| Other | 45 | 43 | 2 | (5) | % | 560 | 533 | 27 | 5 | % | |||||||||||||||||||||||||||||||||||||
| Net revenue | 22,689 | 13,540 | 9,149 | 68 | % | 64,561 | 37,224 | 27,337 | 73 | % | |||||||||||||||||||||||||||||||||||||
| Cost of sales | 20,287 | 15,232 | 5,055 | 33 | % | 70,193 | 41,162 | 29,031 | 71 | % | |||||||||||||||||||||||||||||||||||||
| Inventory write-down | — | 15,031 | (15,031) | (100) | % | 11,961 | 26,055 | (14,094) | (54) | % | |||||||||||||||||||||||||||||||||||||
| Gross profit | $ | 2,402 | $ | (16,723) | $ | 19,125 | 114 | % | $ | (17,593) | $ | (29,993) | $ | 12,400 | 41 | % | |||||||||||||||||||||||||||||||
| Gross margin | 11 | % | (124) | % | N/A | 135 | pp | (27) | % | (81) | % | N/A | 54 | pp | |||||||||||||||||||||||||||||||||
Fourth Quarter 2021
•Net revenue of $22.7 million in Q4 2021 increased by $9.1 million from Q4 2020. The increase year-over-year was primarily driven by growth in the adult-use extracts and flower categories in Canada and sales in the Israeli medical market.
•Gross profit of $2.4 million in Q4 2021 improved by $19.1 million from Q4 2020. The improvement year-over-year was primarily driven by a reduction in inventory write-downs and increased sales of cannabis extracts, which carry higher gross profit and gross margin than other product categories.
Full-Year 2021
•Net revenue of $64.6 million in Full-Year 2021 increased by $27.3 million from Full-Year 2020. The increase year-over-year was primarily driven by growth in the adult-use flower category in Canada and increased sales in the Israeli medical market.
•Gross profit of $(17.6) million in Full-Year 2021 improved by $12.4 million from Full-Year 2020. The improvement year-over-year was primarily driven by a reduction in inventory write-downs and favorable sales mix of cannabis extract products.
United States Results
Cronos Group’s U.S. reporting segment includes results of the Company’s operations for all brands and products in the U.S.
| (in thousands of USD) | Three months ended December 31, | Change | Year ended December 31, | Change | |||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | $ | % | 2021 | 2020 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Net revenue | $ | 3,106 | 3,506 | $ | (400) | (11) | % | $ | 9,874 | $ | 9,495 | $ | 379 | 4 | % | ||||||||||||||||||||||||||||||||
| Cost of sales | 3,565 | 1,681 | 1,884 | 112 | % | 9,815 | 5,335 | 4,480 | 84 | % | |||||||||||||||||||||||||||||||||||||
| Gross profit | $ | (459) | $ | 1,825 | $ | (2,284) | (125) | % | $ | 59 | $ | 4,160 | $ | (4,101) | (99) | % | |||||||||||||||||||||||||||||||
| Gross margin | (15) | % | 52 | % | N/A | (67) | pp | 1 | % | 44 | % | N/A | (43) | pp | |||||||||||||||||||||||||||||||||
Fourth Quarter 2021
•Net revenue of $3.1 million in Q4 2021 decreased by $0.4 million from Q4 2020. The decrease year-over-year was primarily driven by a reduction in volume due to competitive pressures.
•Gross profit of $(0.5) million in Q4 2021 decreased by $2.3 million from Q4 2020. The decrease year-over-year was primarily due to increased production costs and inventory valuation adjustments to reflect net realizable value.
Full-Year 2021
•Net revenue of $9.9 million in Full-Year 2021 increased by $0.4 million from Full-Year 2020. The increase year-over-year was primarily driven by the introduction of new U.S. hemp-derived CBD products.
•Gross profit of $0.1 million in Full-Year 2021 decreased by $4.1 million from Full-Year 2020. The decrease year-over-year was primarily due to the costs associated with the introduction of new products, inventory valuation adjustments to reflect net realizable value, and increased headcount.
Conference Call
The Company will host a conference call and live audio webcast on Tuesday, March 1, 2022 at 8:30 a.m. EST to discuss 2021 Fourth Quarter and Full-Year business results. An audio replay of the call will be archived on the Company’s website for replay. Instructions for the conference call are provided below:
•Live audio webcast: https://ir.thecronosgroup.com/events-presentations
•Toll Free from the U.S. and Canada dial-in: (866) 795-2258
•International dial-in: (409) 937-8902
•Conference ID: 6599242
About Cronos Group
Cronos Group is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development. With a passion to responsibly elevate the consumer experience, Cronos Group is building an iconic brand portfolio. Cronos Group’s diverse international brand portfolio includes Spinach®, PEACE NATURALS®, Lord Jones®, Happy Dance® and PEACE+™. For more information about Cronos Group and its brands, please visit: thecronosgroup.com.
Forward-looking statements
This press release may contain information that may constitute forward-looking information and forward-looking statements within the meaning of applicable securities laws (collectively, “Forward-Looking Statements”), which are based upon our current internal expectations, estimates, projections, assumptions and beliefs. All information that is not clearly historical in nature may constitute Forward-Looking Statements. In some cases, Forward-Looking Statements can be identified by the use of forward-looking terminology such as “expect”, “likely”, “may”, “will”, “should”, “intend”, “anticipate”, “potential”, “proposed”, “estimate” and other similar words, expressions and phrases, including negative and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussion of strategy. Forward-Looking Statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of historical fact.
Forward-Looking Statements include, but are not limited to, statements with respect to:
•the uncertainties associated with the COVID-19 pandemic, including our ability, and the abilities of our joint ventures and our suppliers and distributors, to effectively deal with the restrictions, limitations and health issues presented by the COVID-19 pandemic, the ability to continue our production, distribution and sale of our products, and demand for and the use of our products by consumers;
•laws and regulations and any amendments thereto applicable to our business and the impact thereof, including uncertainty regarding the application of United States ("U.S.") state and federal law to U.S. hemp (including CBD and other U.S. hemp derived cannabinoids) products and the scope of any regulations by the U.S. Food and Drug Administration, the U.S. Drug Enforcement Administration, the U.S. Federal Trade Commission, the U.S. Patent and Trademark Office and any state equivalent regulatory agencies over U.S. hemp (including CBD and other U.S. hemp derived cannabinoids) products;
•the laws and regulations and any amendments thereto relating to the U.S. hemp industry in the U.S., including the promulgation of regulations for the U.S. hemp industry by the U.S. Department of Agriculture and relevant state regulatory authorities;
•expectations related to our announced realignment (the “Realignment”) and any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, reporting structure, costs, operating expenses, employee turnover and other changes with respect thereto;
•the timing of our exit from our facility in Stayner, Ontario and the expected costs and benefits from the wind-down of the Stayner facility;
•our ability to effectively wind-down the Stayner facility in an organized fashion and acquire raw materials from other suppliers, including GrowCo;
•the grant, renewal and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof;
•our international activities and joint venture interests, including required regulatory approvals and licensing, anticipated costs and timing, and expected impact;
•our ability to successfully create and launch brands and further create, launch and scale U.S. hemp-derived consumer products and cannabis products;
•the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis including CBD and other cannabinoids;
•expectations regarding the implementation and effectiveness of key personnel changes;
•the anticipated benefits and impact of the Altria Group' Inc.'s ("Altria") investment in us (the “Altria Investment”), pursuant to a subscription agreement dated December 7, 2018;
•the potential exercise of one warrant of the Company included as part of the Altria Investment held by Altria, pre-emptive rights and/or top-up rights in connection with the Altria Investment, including proceeds to us that may result therefrom;
•expectations regarding the use of proceeds of equity financings, including the proceeds from the Altria Investment;
•the legalization of the use of cannabis for medical or adult-use in jurisdictions outside of Canada, the related timing and impact thereof and our intentions to participate in such markets, if and when such use is legalized;
•expectations regarding the potential success of, and the costs and benefits associated with, our joint ventures, strategic alliances and equity investments, including the strategic partnership with Ginkgo Bioworks Holdings, Inc.;
•our ability to execute on our strategy and the anticipated benefits of such strategy;
•expectations of the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill;
•the ongoing impact of the legalization of additional cannabis product types and forms for adult-use in Canada, including federal, provincial, territorial and municipal regulations pertaining thereto, the related timing and impact thereof and our intentions to participate in such markets;
•the future performance of our business and operations;
•our competitive advantages and business strategies;
•the competitive conditions of the industry;
•the expected growth in the number of customers using our products;
•our ability or plans to identify, develop, commercialize or expand our technology and research and development ("R&D") initiatives in cannabinoids, or the success thereof;
•expectations regarding acquisitions and dispositions and the anticipated benefits therefrom;
•uncertainties as to our ability to exercise an option to buy Class A shares of common stock of PharmaCann Inc. (the "PharmaCann Option") in the near term or the future, in full or in part, including the uncertainties as to the status and future development of federal legalization of cannabis in the U.S. and our ability to realize the anticipated benefits of the transaction with PharmaCann, Inc. (“PharmaCann”);
•expectations regarding revenues, expenses and anticipated cash needs;
•expectations regarding cash flow, liquidity and sources of funding;
•expectations regarding capital expenditures;
•the expansion of our production and manufacturing, the costs and timing associated therewith and the receipt of applicable production and sale licenses;
•expectations regarding our growing, production and supply chain capacities;
•expectations regarding the resolution of litigation and other legal and regulatory proceedings, reviews and investigations;
•expectations with respect to future production costs;
•expectations with respect to future sales and distribution channels and networks;
•the expected methods to be used to distribute and sell our products;
•the anticipated future gross margins of our operations;
•accounting standards and estimates;
•our ability to timely and effectively remediate any material weaknesses in our internal control over financial reporting; and
•expectations regarding the costs and benefits associated with our contracts and agreements with third parties, including under our third-party supply and manufacturing agreements.
Certain of the Forward-Looking Statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.
The Forward-Looking Statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) our ability to efficiently and effectively exit the Stayner facility, receive the benefits of the Stayner exit and acquire raw materials on a timely and cost-effective basis from third-parties, including GrowCo; (ii) our ability, and the abilities of our joint ventures and our suppliers and distributors, to effectively deal with the restrictions, limitations and health issues presented by the COVID-19 pandemic and the ability to continue our production, distribution and sale of our products and customer demand for and use of our products; (iii) management’s perceptions of historical trends, current conditions and expected future developments; (iv) our ability to generate cash flow from operations; (v) general economic, financial market, regulatory and political conditions in which we operate; (vi) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (vii) consumer interest in our products; (viii) competition; (ix) anticipated and unanticipated costs; (x) government regulation of our activities and products including, but not limited, to the areas of taxation and environmental protection; (xi) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; (xii) our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xiii) our ability to conduct operations in a safe, efficient and effective manner; (xiv) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; (xv) our ability to realize the expected cost savings, efficiencies and other benefits of our Realignment and employee turnover related thereto; (xvi) our ability to complete planned dispositions, and, if completed, obtain our anticipated sales price; (xvii) our ability to exercise the PharmaCann Option and realize the anticipated benefits of the transaction with PharmaCann; and (xviii) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.
By their nature, Forward-Looking Statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the Forward-Looking Statements in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, the risk that we may not be able to exit our Stayner facility in a disciplined manner or achieve the anticipated benefits of the exit or be able to access raw materials on a timely and cost-effective basis from third-parties, including GrowCo; the COVID-19 pandemic may disrupt our operations and those of our suppliers and distribution channels and negatively impact the demand for and use of our products; the risk that cost savings and any other synergies from the Altria Investment may not be fully realized or may take longer to realize than expected; the risk that we will not complete planned dispositions, or, if completed, obtain our anticipated sales price; the implementation and effectiveness of key personnel changes; the risks that our Realignment, the closure of the Stayner facility and our further leveraging of our strategic partnerships will not result in the expected cost savings, efficiencies and other benefits or will result in greater than anticipated turnover in personnel; future levels of revenues; consumer demand for cannabis and U.S. hemp products; our ability to manage disruptions in credit markets or changes to our credit ratings; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; business strategies, growth opportunities and expected investment; the adequacy of our capital resources and liquidity, including but not
limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); the potential effects of judicial, regulatory or other proceedings, or threatened litigation or proceedings, on our business, financial condition, results of operations and cash flows; volatility in and/or degradation of general economic, market, industry or business conditions; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and U.S. hemp products in vaping devices; the anticipated effects of actions of third parties such as competitors, activist investors or federal (including U.S. federal), state, provincial, territorial or local regulatory authorities or self-regulatory organizations; changes in regulatory requirements in relation to our business and products; legal or regulatory obstacles that could prevent us from being able to exercise the PharmaCann Option and thereby realizing the anticipated benefits of the transaction with PharmaCann; dilution of our fully diluted ownership of PharmaCann and the loss of our rights as a result of that dilution; our remediation of material weaknesses in our internal control over financial reporting and the improvement of our control environment and our systems, processes and procedures; and the factors discussed under the heading “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on Forward-Looking Statements.
Forward-Looking Statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management’s current expectations and plans relating to the future, and the reader is cautioned not to place undue reliance on these Forward-Looking Statements because of their inherent uncertainty and to appreciate the limited purposes for which they are being used by management. While we believe that the assumptions and expectations reflected in the Forward-Looking Statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-Looking Statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any Forward-Looking Statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such Forward-Looking Statements. The Forward-Looking Statements contained in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.
As used in this press release, “CBD” means cannabidiol and “U.S. hemp” has the meaning given to the term “hemp” in the U.S. Agricultural Improvement Act of 2018, including hemp-derived CBD.
Cronos Group Inc.
Consolidated Balance Sheets
As of December 31, 2021 and 2020
(In thousands of USD)
| As of December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 886,973 | $ | 1,078,023 | |||||||
| Short-term investments | 117,684 | 211,766 | |||||||||
| Accounts receivable, net | 22,067 | 8,928 | |||||||||
| Other receivables | 5,765 | 10,033 | |||||||||
| Current portion of loans receivable, net | 5,460 | 7,083 | |||||||||
| Prepaids and other current assets | 8,967 | 11,161 | |||||||||
| Inventory, net | 32,802 | 44,002 | |||||||||
| Held-for-sale assets | — | 1,176 | |||||||||
| Total current assets | 1,079,718 | 1,372,172 | |||||||||
| Investments in equity accounted investees, net | 16,764 | 19,235 | |||||||||
| Other investments | 118,392 | — | |||||||||
| Non-current portion of loans receivable, net | 80,635 | 87,191 | |||||||||
| Property, plant and equipment, net | 74,070 | 187,599 | |||||||||
| Right-of-use assets | 8,882 | 9,776 | |||||||||
| Goodwill | 1,098 | 179,522 | |||||||||
| Intangible assets, net | 18,079 | 69,720 | |||||||||
| Other assets | 100 | 467 | |||||||||
| Total assets | $ | 1,397,738 | $ | 1,925,682 | |||||||
| Liabilities | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 11,218 | $ | 19,346 | |||||||
| Accrued liabilities | 26,069 | 22,756 | |||||||||
| Current portion of lease obligation | 2,711 | 1,322 | |||||||||
| Derivative liabilities | 14,375 | 163,410 | |||||||||
| Total current liabilities | 54,373 | 206,834 | |||||||||
| Due to non-controlling interests | 1,913 | 2,188 | |||||||||
| Non-current portion of lease obligation | 7,095 | 8,492 | |||||||||
| Deferred income tax liability | 81 | — | |||||||||
| Total liabilities | 63,462 | 217,514 | |||||||||
| Shareholders’ equity | |||||||||||
| Share capital | 595,497 | 569,260 | |||||||||
| Additional paid-in capital | 32,465 | 34,596 | |||||||||
| Retained earnings | 659,416 | 1,064,509 | |||||||||
| Accumulated other comprehensive income | 49,865 | 42,999 | |||||||||
| Total equity attributable to shareholders of Cronos Group | 1,337,243 | 1,711,364 | |||||||||
| Non-controlling interests | (2,967) | (3,196) | |||||||||
| Total shareholders' equity | 1,334,276 | 1,708,168 | |||||||||
| Total liabilities and shareholders' equity | $ | 1,397,738 | $ | 1,925,682 | |||||||
Cronos Group Inc.
Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)
For the years ended December 31, 2021, 2020 and 2019
(In thousands of USD, except share and per share amounts)
| Year ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| Net revenue, before excise taxes | $ | 89,486 | $ | 54,353 | $ | 25,639 | |||||||||||
| Excise taxes | (15,051) | (7,634) | (1,889) | ||||||||||||||
| Net revenue | 74,435 | 46,719 | 23,750 | ||||||||||||||
| Cost of sales | 80,008 | 46,497 | 12,174 | ||||||||||||||
| Inventory write-down | 11,961 | 26,055 | 29,173 | ||||||||||||||
| Gross profit | (17,534) | (25,833) | (17,597) | ||||||||||||||
| Operating expenses | |||||||||||||||||
Sales and marketing | 44,937 | 34,386 | 23,048 | ||||||||||||||
Research and development | 23,331 | 20,366 | 12,155 | ||||||||||||||
General and administrative | 96,482 | 80,569 | 81,479 | ||||||||||||||
Share-based payments | 10,151 | 15,361 | 11,619 | ||||||||||||||
Depreciation and amortization | 4,484 | 2,872 | 2,090 | ||||||||||||||
| Impairment loss on goodwill and indefinite-lived intangible assets | 236,056 | 40,000 | — | ||||||||||||||
| Impairment loss on long-lived assets | 127,619 | — | — | ||||||||||||||
Repurposing charges | — | — | 5,328 | ||||||||||||||
Total operating expenses | 543,060 | 193,554 | 135,719 | ||||||||||||||
| Operating loss | (560,594) | (219,387) | (153,316) | ||||||||||||||
| Other income (expense) | |||||||||||||||||
| Interest income, net | 9,071 | 18,415 | 27,969 | ||||||||||||||
| Gain on revaluation of derivative liabilities | 151,360 | 129,254 | 1,276,819 | ||||||||||||||
| Gain on disposal of investments | — | 4,789 | 16,277 | ||||||||||||||
| Share of loss from equity accounted investments | (6,313) | (4,510) | (2,009) | ||||||||||||||
| Gain (loss) on revaluation of financial instruments | 8,611 | (9) | 197 | ||||||||||||||
| Other, net | 730 | (1,825) | — | ||||||||||||||
| Total other income | 163,459 | 146,114 | 1,319,253 | ||||||||||||||
| Income (loss) before income taxes | (397,135) | (73,273) | 1,165,937 | ||||||||||||||
| Income tax expense (benefit) | (431) | 1,347 | — | ||||||||||||||
| Income (loss) from continuing operations | (396,704) | (74,620) | 1,165,937 | ||||||||||||||
| Loss from discontinued operations | (500) | (650) | (363) | ||||||||||||||
| Net income (loss) | (397,204) | (75,270) | 1,165,574 | ||||||||||||||
| Net loss attributable to non-controlling interest | (1,097) | (2,133) | (932) | ||||||||||||||
| Net income (loss) attributable to Cronos Group | $ | (396,107) | $ | (73,137) | $ | 1,166,506 | |||||||||||
| Comprehensive income (loss) | |||||||||||||||||
| Net income (loss) | $ | (397,204) | $ | (75,270) | $ | 1,165,574 | |||||||||||
| Foreign exchange gain on translation | 8,192 | 14,951 | 37,687 | ||||||||||||||
| Comprehensive income (loss) | (389,012) | (60,319) | 1,203,261 | ||||||||||||||
| Comprehensive income (loss) attributable to non-controlling interest | 229 | (2,343) | (953) | ||||||||||||||
| Comprehensive income (loss) attributable to Cronos Group | $ | (389,241) | $ | (57,976) | $ | 1,204,214 | |||||||||||
| Net income (loss) from continuing operations per share | |||||||||||||||||
Basic | $ | (1.07) | $ | (0.21) | $ | 3.76 | |||||||||||
Diluted | $ | (1.07) | $ | (0.21) | $ | 3.33 | |||||||||||
| Weighted average number of outstanding shares | |||||||||||||||||
| Basic | 370,390,965 | 351,576,848 | 310,067,179 | ||||||||||||||
| Diluted | 370,390,965 | 351,576,848 | 342,811,992 | ||||||||||||||
Cronos Group Inc.
Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)
For the three months ended December 31, 2021 and 2020
(In thousands of USD, except share and per share amounts, unaudited)
| Three months ended December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Net revenue, before excise taxes | $ | 31,394 | $ | 19,956 | |||||||
| Excise taxes | (5,599) | (2,910) | |||||||||
| Net revenue | 25,795 | 17,046 | |||||||||
| Cost of sales | 23,852 | 16,913 | |||||||||
| Inventory write-down | — | 15,031 | |||||||||
| Gross profit | 1,943 | (14,898) | |||||||||
| Operating expenses | |||||||||||
| Sales and marketing | 10,653 | 13,537 | |||||||||
| Research and development | 6,557 | 7,411 | |||||||||
| General and administrative | 19,613 | 19,481 | |||||||||
| Share-based payments | 2,420 | 2,463 | |||||||||
| Depreciation and amortization | 1,455 | 620 | |||||||||
| Impairment loss on goodwill and indefinite-lived intangible assets | 1,000 | — | |||||||||
| Impairment loss on long-lived assets | 122,880 | — | |||||||||
| Repurposing charges | — | — | |||||||||
| Total operating expenses | 164,578 | 43,512 | |||||||||
| Operating loss | (162,635) | (58,410) | |||||||||
| Other income (expense) | |||||||||||
| Interest income, net | 2,385 | 3,149 | |||||||||
| Gain (loss) on revaluation of derivative liabilities | 20,070 | (53,541) | |||||||||
| Gain on disposal of investments | — | 46 | |||||||||
| Share of loss from equity accounted investments | (2,141) | (1,217) | |||||||||
| Gain (loss) on revaluation of financial instruments | 8,463 | (302) | |||||||||
| Other, net | (306) | (947) | |||||||||
| Total other income (expense) | 28,471 | (52,812) | |||||||||
| Income (loss) before income taxes | (134,164) | (111,222) | |||||||||
| Income tax expense (benefit) | (272) | 359 | |||||||||
| Income (loss) from continuing operations | (133,892) | (111,581) | |||||||||
| Loss from discontinued operations | — | (131) | |||||||||
| Net income (loss) | (133,892) | (111,712) | |||||||||
| Net income (loss) attributable to non-controlling interests | (255) | (479) | |||||||||
| Net income (loss) attributable to Cronos Group | $ | (133,637) | $ | (111,233) | |||||||
| Comprehensive income (loss) | |||||||||||
| Net income (loss) | $ | (133,892) | $ | (111,712) | |||||||
| Foreign exchange gain (loss) on translation | 1,256 | 50,605 | |||||||||
| Comprehensive income (loss) | (132,636) | (61,107) | |||||||||
| Comprehensive income (loss) attributable to non-controlling interests | 62 | (693) | |||||||||
| Comprehensive income (loss) attributable to Cronos Group | $ | (132,698) | $ | (60,414) | |||||||
| Net income (loss) from continuing operations per share | |||||||||||
Basic | $ | (0.36) | $ | (0.31) | |||||||
Diluted | $ | (0.36) | $ | (0.31) | |||||||
| Weighted average number of outstanding shares | |||||||||||
| Basic | 374,227,930 | 358,068,549 | |||||||||
| Diluted | 374,227,930 | 358,068,549 | |||||||||
Cronos Group Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2021, 2020, and 2019
(In thousands of USD)
| Year ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| Operating activities | |||||||||||||||||
| Net income (loss) | $ | (397,204) | $ | (75,270) | $ | 1,165,574 | |||||||||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||||||||||||
| Gain on revaluation of derivative liabilities | (151,360) | (129,254) | (1,276,819) | ||||||||||||||
| Impairment loss on goodwill and indefinite-lived intangible assets | 236,056 | 40,000 | — | ||||||||||||||
| Impairment loss on long-lived assets | 127,619 | — | — | ||||||||||||||
| Expected credit losses on long-term financial assets | 12,202 | 2,437 | — | ||||||||||||||
| Share-based payments | 10,151 | 15,361 | 11,619 | ||||||||||||||
| Depreciation and amortization | 15,402 | 11,176 | 4,271 | ||||||||||||||
| Share of loss from investments in equity accounted investees | 6,313 | 4,510 | 2,009 | ||||||||||||||
| Gain on disposal of investments | — | (4,789) | (16,277) | ||||||||||||||
| Loss (gain) on revaluation of financial instruments | (8,611) | 9 | (197) | ||||||||||||||
| Non-cash sales and marketing | 1,383 | 2,863 | 410 | ||||||||||||||
| Non-cash repurposing costs | — | — | 4,439 | ||||||||||||||
| Other non-cash operating activity expense (income) | (3,562) | 1,215 | (46) | ||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||
| Accounts receivable, net | (13,163) | (4,724) | (566) | ||||||||||||||
| Other receivables | 3,838 | (5,300) | (10,509) | ||||||||||||||
| Prepaids and other current assets | 3,102 | — | (4,585) | ||||||||||||||
| Inventory, net | 11,565 | (4,866) | (23,073) | ||||||||||||||
| Accounts payable | (2,373) | (3,292) | (46) | ||||||||||||||
| Accrued liabilities | (4,974) | 5,053 | 12,603 | ||||||||||||||
| Net cash used in operating activities | (153,616) | (144,871) | (131,193) | ||||||||||||||
| Investing activities | |||||||||||||||||
| Proceeds from short-term investments | 215,303 | 296,730 | — | ||||||||||||||
| Purchase of short-term investments | (119,610) | (201,326) | (299,923) | ||||||||||||||
| Purchase of investments | (110,392) | — | (1,658) | ||||||||||||||
| Proceeds from sale of investments | — | 4,789 | 19,614 | ||||||||||||||
| Proceeds from held-for-sale assets | 2,770 | — | — | ||||||||||||||
| Advances to joint ventures, net of repayments | (4,707) | (44,652) | (58,472) | ||||||||||||||
| Purchase of property, plant and equipment, net of disposals | (11,144) | (31,412) | (38,664) | ||||||||||||||
| Purchase of intangible assets, net of disposals | (1,118) | (3,979) | (289) | ||||||||||||||
| Acquisition of Redwood | — | — | (224,295) | ||||||||||||||
| Other non-cash investing activity expense | — | — | 415 | ||||||||||||||
| Net cash provided by (used in) investing activities | (28,898) | 20,150 | (603,272) | ||||||||||||||
Cronos Group Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2021, 2020, and 2019
(In thousands of USD)
| Year ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| Financing activities | |||||||||||||||||
| Advance to non-controlling interests | — | (1,019) | — | ||||||||||||||
| Withholding taxes paid on equity awards | (13,458) | (2,148) | (915) | ||||||||||||||
| Proceeds from Altria Investment | — | — | 1,809,556 | ||||||||||||||
| Proceeds from exercise of Top-up Rights | — | — | 67,051 | ||||||||||||||
| Proceeds from exercise of warrants and options | 16 | 116 | 1,455 | ||||||||||||||
| Share issuance costs | — | — | (3,722) | ||||||||||||||
| Repayment of construction loan payable | — | — | (15,971) | ||||||||||||||
| Advance under Credit Facility | — | — | 48,715 | ||||||||||||||
| Repayment of Credit Facility | — | — | (48,309) | ||||||||||||||
| Net cash provided by (used in) financing activities | (13,442) | (3,051) | 1,857,860 | ||||||||||||||
| Effect of foreign currency translation on cash and cash equivalents | 4,906 | 6,102 | 52,371 | ||||||||||||||
| Net change in cash and cash equivalents | (191,050) | (121,670) | 1,175,766 | ||||||||||||||
| Cash and cash equivalents, beginning of period | 1,078,023 | 1,199,693 | 23,927 | ||||||||||||||
| Cash and cash equivalents, end of period | $ | 886,973 | $ | 1,078,023 | $ | 1,199,693 | |||||||||||
| Supplementary cash flow information: | |||||||||||||||||
| Interest paid | $ | — | $ | — | $ | 759 | |||||||||||
| Interest received | 8,988 | 18,105 | 25,520 | ||||||||||||||
| Taxes paid | 892 | — | — | ||||||||||||||
Non-GAAP Measures
Cronos Group reports its financial results in accordance with Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”). This press release refers to measures not recognized under U.S. GAAP (“non-GAAP measures”). These non-GAAP measures do not have a standardized meaning prescribed by U.S. GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these non-GAAP measures are provided as a supplement to corresponding U.S. GAAP measures to provide additional information regarding our results of operations from management’s perspective. Accordingly, non-GAAP measures should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. All non-GAAP measures presented in this press release are reconciled to their closest reported U.S. GAAP measure.
Adjusted EBITDA
Management reviews Adjusted EBITDA, a non-GAAP measure which excludes non-cash items or items that do not reflect management’s assessment of on-going business performance of our operating segments. Management defines Adjusted EBITDA as net income (loss) before interest, tax expense, depreciation and amortization adjusted for: share of loss from equity accounted investments; impairment loss on goodwill and intangible assets; impairment loss on long-lived assets; gain on revaluation of derivative liabilities; gain on revaluation of financial instruments; transaction costs related to strategic projects; other, net; loss from discontinued operations; share-based payments; and review and investigation costs related to the restatements of the Company’s 2019 and 2021 interim financial statements, including costs related to the Company’s responses to the reviews of such financial statements by various regulatory authorities and legal costs defending shareholder class action complaints brought against the Company as a result of the 2019 restatement.
Management believes that Adjusted EBITDA provides the most useful insight into underlying business trends and results and provides a more meaningful comparison of year-over-year results. Management uses Adjusted EBITDA for planning, forecasting and evaluating business and financial performance, including allocating resources and evaluating results relative to employee compensation targets.
Adjusted EBITDA is reconciled to net income (loss) as follows for the years ended December 31, 2021 and 2020:
| (in thousands of USD) | Year ended December 31, 2021 | |||||||||||||||||||||||||
| US | ROW | Corporate | Total | |||||||||||||||||||||||
| Net income (loss) | $ | (283,883) | $ | (81,811) | $ | (31,510) | $ | (397,204) | ||||||||||||||||||
| Interest income, net | (40) | (9,031) | — | (9,071) | ||||||||||||||||||||||
| Income tax benefit | (89) | (342) | — | (431) | ||||||||||||||||||||||
| Share of loss from equity accounted investees | — | 6,313 | — | 6,313 | ||||||||||||||||||||||
| Impairment loss on goodwill and indefinite-lived intangible assets | 236,019 | 37 | — | 236,056 | ||||||||||||||||||||||
| Impairment loss on long-lived assets | 2,955 | 124,664 | — | 127,619 | ||||||||||||||||||||||
| Gain on revaluation of derivative liabilities | — | (151,360) | — | (151,360) | ||||||||||||||||||||||
| Gain on revaluation of financial instruments | — | (8,611) | — | (8,611) | ||||||||||||||||||||||
| Transaction costs | — | — | 3,801 | 3,801 | ||||||||||||||||||||||
| Other, net | 3 | (733) | — | (730) | ||||||||||||||||||||||
| Loss from discontinued operations | — | 500 | — | 500 | ||||||||||||||||||||||
| Share-based payments | 3,401 | 6,750 | — | 10,151 | ||||||||||||||||||||||
| Financial statement review costs | — | — | 7,102 | 7,102 | ||||||||||||||||||||||
| Depreciation and amortization | 917 | 14,485 | — | 15,402 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | (40,717) | $ | (99,139) | $ | (20,607) | $ | (160,463) | ||||||||||||||||||
| (in thousands of USD) | Year ended December 31, 2020 | |||||||||||||||||||||||||
| US | ROW | Corporate | Total | |||||||||||||||||||||||
| Net income (loss) | $ | (77,368) | $ | 32,671 | $ | (30,573) | $ | (75,270) | ||||||||||||||||||
| Interest expense (income), net | 18 | (18,433) | — | (18,415) | ||||||||||||||||||||||
| Income tax expense | 323 | 1,024 | — | 1,347 | ||||||||||||||||||||||
| Share of loss from equity accounted investees | — | 4,510 | — | 4,510 | ||||||||||||||||||||||
| Impairment loss on goodwill and indefinite-lived intangible assets | 40,000 | — | — | 40,000 | ||||||||||||||||||||||
| Gain on revaluation of derivative liabilities | — | (129,254) | — | (129,254) | ||||||||||||||||||||||
| Loss on revaluation of financial instruments | — | 9 | — | 9 | ||||||||||||||||||||||
| Transaction costs | 40 | — | — | 40 | ||||||||||||||||||||||
| Gain on disposal of investments | — | (4,789) | — | (4,789) | ||||||||||||||||||||||
| Other, net | 20 | 1,805 | — | 1,825 | ||||||||||||||||||||||
| Loss from discontinued operations | — | 650 | — | 650 | ||||||||||||||||||||||
| Share-based payments | 8,714 | 6,647 | — | 15,361 | ||||||||||||||||||||||
| Financial statement review costs | — | — | 9,688 | 9,688 | ||||||||||||||||||||||
| Depreciation and amortization | 234 | 6,811 | — | 7,045 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | (28,019) | $ | (98,349) | $ | (20,885) | $ | (147,253) | ||||||||||||||||||
Adjusted EBITDA is reconciled to net income (loss) as follows for the three months ended December 31, 2021 and 2020:
| (in thousands of USD) | Three months ended December 31, 2021 | |||||||||||||||||||||||||
| US | ROW | Corporate | Total | |||||||||||||||||||||||
| Net income (loss) | $ | (10,445) | $ | (116,489) | $ | (6,958) | $ | (133,892) | ||||||||||||||||||
| Interest income, net | (13) | (2,372) | — | (2,385) | ||||||||||||||||||||||
| Income tax benefit | (89) | (183) | — | (272) | ||||||||||||||||||||||
| Share of loss from equity accounted investees | — | 2,141 | — | 2,141 | ||||||||||||||||||||||
| Impairment loss on goodwill and indefinite-lived intangible assets | 1,000 | — | — | 1,000 | ||||||||||||||||||||||
| Impairment loss on long-lived assets | — | 122,880 | — | 122,880 | ||||||||||||||||||||||
| Gain on revaluation of derivative liabilities | — | (20,070) | — | (20,070) | ||||||||||||||||||||||
| Gain on revaluation of financial instruments | — | (8,463) | — | (8,463) | ||||||||||||||||||||||
| Other, net | 3 | 303 | — | 306 | ||||||||||||||||||||||
| Share-based payments | 867 | 1,553 | — | 2,420 | ||||||||||||||||||||||
| Financial statement review costs | — | — | 2,487 | 2,487 | ||||||||||||||||||||||
| Depreciation and amortization | 381 | 6,110 | — | 6,491 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | (8,296) | $ | (14,590) | $ | (4,471) | $ | (27,357) | ||||||||||||||||||
| (in thousands of USD) | Three months ended December 31, 2020 | |||||||||||||||||||||||||
| US | ROW | Corporate | Total | |||||||||||||||||||||||
| Net income (loss) | $ | (12,861) | $ | (92,969) | $ | (5,882) | $ | (111,712) | ||||||||||||||||||
| Interest expense (income), net | 4 | (3,153) | — | (3,149) | ||||||||||||||||||||||
| Income tax expense | 180 | 179 | — | 359 | ||||||||||||||||||||||
| Share of loss from equity accounted investees | — | 1,217 | — | 1,217 | ||||||||||||||||||||||
| Loss on revaluation of derivative liabilities | — | 53,541 | — | 53,541 | ||||||||||||||||||||||
| Loss on revaluation of financial instruments | — | 302 | — | 302 | ||||||||||||||||||||||
| Gain on disposal of investments | — | (46) | — | (46) | ||||||||||||||||||||||
| Other, net | (1) | 948 | — | 947 | ||||||||||||||||||||||
| Loss from discontinued operations | — | 131 | — | 131 | ||||||||||||||||||||||
| Share-based payments | 783 | 1,680 | — | 2,463 | ||||||||||||||||||||||
| Financial statement review costs | — | — | 864 | 864 | ||||||||||||||||||||||
| Depreciation and amortization | 130 | 1,820 | — | 1,950 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | (11,765) | $ | (36,350) | $ | (5,018) | $ | (53,133) | ||||||||||||||||||
Foreign currency exchange rates
All currency amounts in this press release are stated in U.S. dollars ("USD"), which is our reporting currency, unless otherwise noted. All references to “dollars” or “$” are to USD. The assets and liabilities of the Company’s foreign operations are translated into USD at the exchange rate in effect as of December 31, 2021, December 31, 2020 and December 31, 2019 as reported using Bloomberg. Transactions affecting shareholders' equity are translated at historical foreign exchange rates. The consolidated statements of net income (loss) and comprehensive income (loss) and the consolidated statements of cash flows of the Company's foreign operations are translated into USD by applying the average foreign exchange rate in effect for the reporting period as reported using Bloomberg.
The exchange rates used to translate from USD to Canadian dollars (“C$”) is shown below:
| (Exchange rates are shown as C$ per $) | Year ended December 31, | ||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| Average rate | 1.2541 | 1.3411 | 1.3268 | ||||||||||||||
| Spot rate | 1.2746 | 1.2751 | 1.2990 | ||||||||||||||
For further information, please contact:
Shayne Laidlaw
Investor Relations
Tel: (416) 504-0004
investor.relations@thecronosgroup.com