Canadian Cannabis Earnings Are A Bloodbath - HuffPost Canada

Chris Wattie / Reuters

A worker collects cuttings from a marijuana plant at the Canopy Growth facility in Smiths Falls, Ont., Jan. 4, 2018.

MONTREAL — Weed may not be the product that sells itself after all. It’s turning out to be a bit tricky to make a profit on the green stuff — legally — in Canada these days.

Some of Canada’s largest cannabis manufacturers have reported dismal sales and weakening revenue this week, with Smiths Falls, Ont.-based Canopy Growth, the largest public cannabis company in the world, reporting a nearly $375-million loss for the second quarter of the fiscal year.

Check out this cannabis bonsai tree. Story continues below.

Revenue for the period was just under $77 million, well short of analysts’ expectations of $107 million, and the company is no longer offering projections on future revenue.

Shares in the company fell 18 per cent after it released its earnings.

Though the numbers were a surprise, the downward trend was not. Investors have been experiencing disillusionment with Canada’s cannabis industry for at least the past half year, as revenues and profits rolled in much more slowly than hoped.

The North American Marijuana Index — a basket of cannabis stocks dominated by Canadian producers — has lost nearly two-thirds of its value since peaking this past spring.

North American Marijuana Index

The North American Marijuana Index has lost two-thirds of its value since peaking in the spring of 2019.

One part of the problem is declining retail prices. Legalization has been pushing down prices in the illicit market for at least the past year, forcing legal producers to follow suit, reducing their bottom lines.

But industry insiders say the rollout of legal cannabis retail infrastructure has been too slow, especially in Ontario and Quebec.

The country’s cannabis market “is simply not living up to expectations,” said Mark Zekulin, Canopy’s interim CEO, in a conference call with analysts this week.

Zekulin took aim at Ontario’s slow rollout of privately-run cannabis stores, of which only 24 have been authorized to open. By comparison, there are roughly 300 stores open in Alberta, which has less than a third of Ontario’s population. 

“The inability of the Ontario government to license retail stores, right off the bat, has resulted in half of the expected market in Canada simply not existing,″ Zekulin said.

Some estimates suggest that the legal cannabis industry hasn’t even managed to take half of the illicit industry’s business. Statistics Canada says the black market shrank by just 21 per cent in the first year of legal pot.

Ontario’s previous Liberal government set up a provincially-run cannabis retail monopoly, but the Progressive Conservative government of Doug Ford scaled back those plans last year and began offering licences to private retailers.

Zekulin said he is happy to see that Ontario is expanding the province’s lottery system for awarding pot retail licences so that there is an unlimited number available, limited only by market demand.

“This is a big deal but it cannot come soon enough,” he said.

Aurora Cannabis sees big sales drop

Canopy isn’t the only company disappointing investors these days. Shares in Aurora Cannabis, the second-largest weed grower in the world, tanked 10 per cent as of mid-day Friday after the company revealed recreational sales dropped by 33 per cent in the most recent quarter.

Aurora made $75.3 million in revenue in the most recent quarter, down sharply from $94.6 million one quarter earlier, and well below analysts’ expectations of $105 million.

Like some other producers, Aurora is cutting back on launching new production facilities, to get a better handle on its spending.

Analysts at Desjardins dropped their price target for the company’s shares to $6.50, from $14.00, but maintained its “buy” rating on the stock.

Retailers may not be spared financial problems, either. Cannabis NB, the provincially-run pot retailer in New Brunswick, announced this week it had stacked up a $12-million loss in its first six months. The province is now looking for a private contractor to take over the operation.

Meanwhile, the provincially-run Ontario Cannabis Store — which under the Conservative government has been scaled back from being the monopoly retailer to being a wholesale and online operation — is on track to lose $25 million this year, according to government projections, which see the OCS becoming profitable next year.

In the long run, most market observers expect the industry to get its act together.

“We still believe there remains tremendous growth in the sector,” Desjardins analysts John Chu and Amrit Sidhu wrote in a client note.

With a file from The Canadian Press

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November 16, 2019 at 03:33AM

Sidewalk labs releases further plans for Toronto waterfront development - CityNews Toronto

Sidewalk Labs has released a 482-page document detailing its plans for a development on Toronto’s waterfront.

The so-called Digital Innovation Appendix works in part to alleviate some of the privacy concerns that have swirled around the project since it was first proposed in October 2017.

The document from the Google sister company outlines several “innovations” — ranging from weather-responsive heated pavement to pedestrian detectors at crosswalks — and what data they will collect.

It also reiterates the company’s commitment that Waterfront Toronto, an agency composed of representatives from three levels of government, will take the lead on data governance.

The decision to relinquish control of the data was an about-face for Sidewalk, which had previously proposed the establishment of a new agency to manage data from the project.

Waterfront Toronto approved that change last month, along with a reduced scope for the project.

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November 16, 2019 at 02:52AM

Fans Getting Charged Up To See Ford's New Electric Mustang SUV - NPR

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Ford's Mustang Mach-E will be unveiled Sunday. It's part of the Detroit-based company's $11 billion investment in electric cars. Ford hide caption

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Ford

The Mustang — one of the most quintessentially American cars — is about to kick off a new chapter. After years of secrecy, Ford is unveiling the Mustang Mach-E, an electric SUV "inspired" by the classic car's key design elements.

The big reveal is happening Sunday in Los Angeles, days ahead of the annual auto show there.

The Detroit-based company's classic hush-hush marketing strategy has had fans of the iconic car scouring the Internet for clues about how it will look and drive. And, on Thursday night, they hit the mother lode. Or at least, it's possible they hit it.

For a brief window, someone at Ford published the SUV's reservations website, complete with photos, specs and pricing. But the site was quickly taken down and Ford has not confirmed any of the details that it contained, which seems top have fanned the flames for eager fans.

Among them, is Gary Hankins, who said he's been trying to piece together bits of information about the car for the last two years — an admirable feat considering he didn't even know the name of the car until this week.

All Ford is officially saying for now is that the SUV will be on the market in late 2020 — part of the company's $11 billion investment in electric cars. The automaker also says the estimated range of the SUV will be a whopping 300 miles on a single charge.

That was enough to make Hankins, a retired D.C. cop, "go absolutely gaga," according to his friends. For Hankins, the fact that it'll look a little like a Mustang is "really icing on the cake."

Finally owning a car with the Mustang named attached would be the fulfillment of a teenage dream.

"I was in high school in the '60s when the Mustang came out," he recalled wistfully. "I would love to have had a Mustang. [I] couldn't afford one."

More than five decades later, Hankins is thrilled he's got a lot more money in the bank. "Here I am, now 71 years old, I'm finally getting my Mustang," he said.

Hankins is angling to get on a pre-order list for the teched-out pony car, which Ford says he'll be able to do as early as Sunday night.

The only official peek of what the SUV will look like, is a vague swooping blue drawing on Ford's website. But, Thursday's leaked photos along with others captured by eagle-eyed enthusiasts last week, show it's a fairly compact and sporty version of an SUV.

Car designer Camilo Pardo is a skeptical of attaching the Mustang name to an SUV. "If an SUV could speak, the first thing it would say is, I want to be a Mustang," he said and laughed.

Pardo, the former head of Ford's Living Legends studio and the chief designer of Ford's GT, says hardcore Mustang fans should manage expectations when it comes to any family friendly crossover. But he suspects the reimagined version will possess three essential iconic elements.

First, it's got to have the big grill, which "is supposed to look intimidating."

"Like it's out to get you," he said.

Second, he said, the headlamps have to have the trademark "frowny" shape that give it "the personality of an angry animal."

Finally, it has to have the unmistakable taillights. Pardo said experimenting with those has always been a fun thing for designers. The challenge is figuring out how to modernize the three little bars the Mustang is known for.

Gail Wise is widely recognized as the first person to buy a Mustang in the U.S. She got hers on April 15, 1964, two days before it debuted at New York's World Fair. Courtesy of Gail Wise hide caption

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Courtesy of Gail Wise

Based on the sales track record of most electric cars, it's unlikely this Ford model will prove as popular as the 1964 original. That had one of the most successful product launches in American history.

Gail Wise remembers the frenzy around the campaign, which much like today's was shrouded in mystery. "Ford had not shown the car on TV. They only advertised the logo," she recalled.

Wise is widely recognized as the first person in the U.S. to buy the car. She was 22 and wanted a convertible. The salesman said he had just the car.

He walked Wise, and her parents, past all of the cars on the showroom floor saying he had something special to show her.

"And in the back room, under a tarp, was a skylight blue Mustang and I was like, wow, that's for me," she said.

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Gail Wise sits in her 1964 Mustang as Ford celebrates the production of the 10 millionth Mustang at in August 2018. Jeff Kowalsky/AFP via Getty Images hide caption

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Jeff Kowalsky/AFP via Getty Images

It was April 15, 1964, two days before the car debuted at the New York World's Fair. The salesman wasn't supposed to sell it. But he did. It cost $3,447.50.

Fifty-five years later, Wise still has the skylight blue beauty. (Her husband Tom fully restored the car as a retirement project.)

Wise says she knows she's biased, but she wonders if being Mustang "inspired" will be enough to make Ford's new venture an icon, too.

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https://www.npr.org/2019/11/16/779773223/fans-getting-charged-up-to-see-fords-new-electric-mustang-suv

2019-11-16 13:01:00Z
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CN Rail cuts jobs as weakening economy hurts freight volumes - CTV News

Canadian National Railway Co. has confirmed that it is cutting jobs as freight volumes and revenue continue to fall amid a weakening North American economy.

The company said in a statement that it will be “adjusting its resources to demand,” which means it will be placing some workers on leave and “reducing both management and union job numbers.”

About 1,600 workers will be laid off, the Globe and Mail reported Friday, and layoffs have already started.

“CN would like to express gratitude to the employees who will be leaving the company and thank them for their service,” the statement issued Friday afternoon reads.

This comes after the Teamsters Canada Rail Conference said last month that its 3,000 members voted almost unanimously to go to a strike, which could start on Nov. 19.

The workers have been without a contract since July 23.

CN employs around 24,000 people across a rail network that spans Canada and parts of the United States.

In an interview with BNN Bloomberg last month, CN’s president and CEO alluded to looming layoffs.

“In a time like this where the North American economy, at least everything but the consumer, is slowing down, that means that we have to ramp down capital program. We’ll do that in 2020. And also we have to have less rolling stock and probably less employees,” JJ Ruest said.

The layoffs come as the company cut its profit outlook last quarter, citing a weaker economy and lower freight volumes.

Pedro Antunes, an economist with the Conference Board of Canada, said the issue is directly connected to broader economic decline.

“The problem is if we don’t have the goods to ship, we don’t have the capacity to produce the goods to ship, this is where essentially the transportation sector, CN, is seeing a decline in demand for its services,” Antunes said.

In September, Canadian National Railway Co.’s chief financial officer said that the company’s freight volumes and revenue had been hurt by the global economy slipping, as well as the U.S.-China trade war.

The layoffs are proof of just how much Canadian jobs rely on the strength of international markets, according to James Moore, the former minister of industry under Stephen Harper’s Conservative government.

“One in five Canadian jobs is dependent directly on trade. And we have a problem of a collapse of market access with the rest of the world, with the United States,” Moore said.

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November 16, 2019 at 10:09AM

National home sales up almost 13% in October compared with last year - CBC.ca

The Canadian Real Estate Association says the number of home sales was up 12.9 per cent nationally in October compared with the same month last year.

It says sales activity last month was almost the same as for September, but up almost 20 per cent from a six-year low reached in February. Home sales are still about seven per cent below the heights reached in 2016 and 2017.

CREA says sales activity was mixed across the country as growing sales in Greater Vancouver, the B.C. Fraser Valley, and Ottawa, was offset by a monthly decline in the Greater Toronto Area and Hamilton-Burlington.

Greater Vancouver's composite index price was down 6.4 per cent from a year ago to $994,900, while in the GTA, the index price was up 5.6 per cent to $814,400. Ottawa recorded the highest price gains of major cities with a 10.25 per cent climb to $436,300.

Nationally, the composite index price was up 1.77 per cent to $633,600 despite declines in parts of B.C. as well as in major cities in Alberta and Saskatchewan.

The number of new residential home listings was down by 5.8 per cent in October compared with last year, and down 1.8 per cent from September.

The national average price for homes sold in October was around $525,000 which is up 5.8 per cent from the same month last year. 

When excluding the GTA and GVA, the national average price is reduced by almost $125,000 to $400,000.

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November 15, 2019 at 10:13PM

Alberta Rejects Oil-Sands Stigma After Sweden Dumps Bonds - Yahoo Canada Finance

(Bloomberg) -- Alberta finance officials are reaching out to institutional investors to counter a brewing backlash against the Canadian province’s oil-sands industry.

The offensive comes as Sweden’s central bank said this week it was dumping Alberta’s bonds as it moves to divest from issuers with high carbon-dioxide emissions.

“We are working to ensure that the facts are known and clear about the Canadian energy industry,” Finance Minister Travis Toews said in a telephone interview from Edmonton Thursday. Officials are making the case that environmental, social and governance factors should be “applied fairly and factually” to Alberta and Canadian energy assets, especially when compared to other energy sources such as Russia and the Middle East, Toews said.

Central banks, pension funds and other global investors are increasingly factoring climate change into their portfolio calculations. Alberta’s oil sands, the world’s third-largest crude reserves, have been criticized by some as among the most carbon-intensive.

Sweden’s Riksbank said on Wednesday it sold debt issued by Alberta and Australian states as it gives more consideration to sustainability. The central bank has about 8% of its foreign exchange reserves in Australian and Canadian debt. Last month, KLP -- Norway’s largest pension fund -- announced it would divest its debt and equity holdings of four Canadian oil-sands companies including Suncor Energy Inc. over environmental concerns.

Alberta has seen foreign companies sell more than $30 billion in assets in the past three years amid a crude-price slump, pipeline bottlenecks and growing distaste of its oil sands.

Toews said the province has not faced any challenges issuing bonds competitively. “However we recognize the narrative and -- I would suggest the unfair narrative -- that is out there around Canadian energy.”

Alberta’s 10-year yield curve is almost 11 basis points higher than Quebec’s as low oil prices keep the former province in deficit while the latter records budget surpluses.

Alberta Premier Jason Kenney, who was elected in April, is also on a mission to tout the benefits of Canadian oil, arguing it is a safe, secure and socially responsible source of energy from the only stable liberal democracy among the world’s largest oil producers.

“We have an effort on the ground, where we are reaching out to wealth-management firms to ensure Canada’s energy story is told,” Toews said.

--With assistance from Kevin Orland and Caleb Mutua.

To contact the reporter on this story: Esteban Duarte in Toronto at eduarterubia@bloomberg.net

To contact the editors responsible for this story: Jacqueline Thorpe at jthorpe23@bloomberg.net, ;Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, James Crombie

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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November 15, 2019 at 10:58PM

Aurora Cannabis' Q1 Was a Dumpster Fire -- but Here's the Even Bigger Story - Motley Fool

Two words sum up Aurora Cannabis' (NYSE:ACB) fiscal 2020 first-quarter results: dumpster fire. Aurora's share price sank during the day on Thursday even before the company reported its Q1 results after the market closed due to Canopy Growth's horrible quarterly update announced before the market opened. But as it turned out, that sell-off during normal trading hours wasn't pessimistic enough.

However, in addition to the horribly rotten results, Aurora announced something else Thursday evening that you shouldn't overlook. And it's arguably a bigger story than the Q1 dumpster fire.

Image source: Getty Images.

The big story

Aurora's press release announcing its Q1 results on Thursday was preceded by another press release about a "temporarily amended early conversion privilege for its 2020 convertible debentures." I know that's a mouthful, so let's unpack exactly what's happening.

The company has fueled a significant portion of its acquisitions spree and massive production capacity expansion through issuing convertible debentures. These debentures are notes that pay interest like a bond but can be converted at a specified time and price to shares.

I've written in the past about Aurora's "ticking time bomb" -- 230 million Canadian dollars' worth of convertible debentures that reach maturity in March 2020. The conversion price for these debentures is CA$13.05. That's way higher than Aurora's share price even before the big sell-off this week. It seemed a virtual certainty that the company would have to dilute its stock more to pay off the holders of these debentures.

However, Aurora appears to have essentially pulled a rabbit out of the hat. The company is offering a special deal that allows investors to convert their debentures to stock at a share price that's a 6% discount to the five-day volume-weighted average trading price of the stock. In addition, the holders of the debentures still get to receive all accrued and unpaid interest from the last interest payment on June 30, 2019, plus all future unpaid interest between Nov. 25, 2019, and the March 9, 2020, maturity date of the debentures.

Aurora has been busy selling this deal as well. The company stated that it has lined up commitments from investors who together own around CA$155 million of the debentures to convert those debentures under the special terms.

So what does all of this mean? Aurora isn't going to have to come up with CA$230 million in cash to pay off holders of the debentures. That's very good news. Sure, the company might have to pony up some cash to cover any debentures that aren't converted. But it won't be nearly as bad as it could have been.

About the dumpster fire

This avoidance of one big problem, however, doesn't make Aurora's Q1 results look any better. It's hard to know where to even begin in describing just how bad the quarter was.

Aurora reported Q1 total net revenue of CA$75.2 million. This reflected a 24% decline from the previous quarter. Sales to consumers in Canada's adult-use recreational marijuana market fell 33% quarter over quarter to CA$30 million. Wholesale bulk cannabis net revenue in this market plunged 49% from the fiscal 2019 fourth quarter to CA$10.3 million.

The only good news on the revenue front was that Aurora reported higher net sales for medical cannabis of $30.5 million. But those sales increased only 3% from the previous quarter.

Aurora posted positive net income of CA$10.7 million -- but don't get too excited. This figure included an unrealized gain on derivative liability of CA$143.8 million. This unrealized gain resulted from Aurora's share price dropping during the quarter, thereby reducing its liability related to 2024 convertible senior notes. Any paper profit that stemmed from a declining share price isn't something to crow about.

The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is more instructive. Aurora reported an adjusted EBITDA loss in the first quarter of CA$39.7 million, compared to an adjusted EBITDA loss of CA$26.6 million in the previous quarter. It wasn't all that long ago that Aurora executives were predicting positive adjusted EBITDA in the near future, but now its results are headed in the wrong direction.

What went wrong for Aurora in its fiscal first quarter? Like Canopy Growth and others, the company pointed to the inadequate number of retail cannabis stores in Canada. As for the big decline in wholesale cannabis revenue, Aurora said that the "Canadian wholesale market is rapidly evolving." The company's deteriorating EBITDA stemmed from the revenue shortfall combined with significant increases in spending.

What's ahead

First, the bad news: It's not looking like Aurora's path to profitability will be a smooth one. The company noted that its continued global investments "may result in near-term challenges to achieving positive adjusted EBITDA."

However, Aurora plans to cut its capital expenditures. It's halting construction on its Aurora Nordic 2 facility in Denmark. It's pushing back most of the remaining construction work on the Aurora Sun facility. These two decisions together will save around CA$190 million.

Expect more dilution, however. Aurora is raising more cash through its at-the-market (ATM) facility.

There is some good news, though. The retail environment in Canada is improving. Aurora expects to be a winner in the Cannabis 2.0 cannabis derivatives market. The company also said that it's "evaluating a number of potential accretive alternatives with a focus on adding operating cash flows" for "expanding its operating footprint in the United States."

Canadian marijuana stocks are going through an especially rough period right now. Aurora Cannabis is clearly no exception. Its Q1 results were without exaggeration a dumpster fire. But don't assume that the future will be as bad as the recent past.

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November 15, 2019 at 06:00PM