Canaccord Conference May 2019 - A leading international Cannabis Investment Company - Captor Capital Corp.
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
A leading international Cannabis Investment Company
Canaccord Conference
May 2019
Unless otherwise stated all amounts are in USD
1
Disclaimer
This presentation (together with any supplements and any other information that may be furnished to prospective investors by Captor Capital
Corp contains “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws (collectively,
“forward-looking information”). Forward-looking information is generally identifiable by the use of the words “believes”, “may”, “plans”, “will”,
“anticipates”, “intends”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “projects” and similar expressions, and the negative of such
expressions. Forward-looking information in this presentation includes, but is not limited to, statements concerning economic trends, the size of
the market, the timing and scope of Captor Capital Corp capital expenditures, the anticipated use of proceeds, financial forecasts, and the
proposed ownership allocation.
Captor Capital Corp has based this forward-looking information on factors and assumptions about future events and financial trends that it
believes may affect it’s financial condition, results of operations, business strategy and financial needs, including the ability of Captor Capital
Corp to generate cash flow from operations and obtain necessary financing on acceptable terms, general economic, financial market, regulatory
and political conditions in which Captor Capital Corp operates, consumer interest in Captor Capital Corp products, competition, anticipated costs,
government regulation of Captor Capital Corp activities and products and in areas of taxation and environmental protection, the timely receipt of
any required regulatory approvals, and Captor Capital Corp ability to obtain qualified staff, equipment and services in a timely and cost efficient
manner. While Captor Capital Corp considers these assumptions to be reasonable, these assumptions are inherently subject to significant
uncertainties and contingencies. Additionally, there are known and unknown risk factors which could cause Captor Capital Corp actual results,
performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the
forward-looking information contained herein. Known risk factors include, among others, regulatory risks, the lack of a public market for the
securities of Captor Capital Corp, the limited operating history and financial track record of Captor Capital Corp and the uncertainty as to
revenues, reliance on key personnel, product liability, unfavourable publicity, management of growth and the difficulty in forecasting.
Unless otherwise stated all amounts are in USD
2
About Captor Capital
▪ Captor Capital Corp. (“Captor”) is a vertically integrated
cannabis investment company listed on the Canadian
Securities Exchange, OTC USA, and the Frankfurt Stock
Exchange.
▪ Our primary investment strategy is to
- Acquire leading cannabis companies across all
industry verticals
- Develop brands which can be leveraged into new
markets- e.g. Michigan
- Expand our investment portfolio across the USA
and eventually internationally
- Identify and invest into synergistic industries such
as hemp based CBD
▪ Our goal is to build a valuable and sustainable portfolio of
leading cannabis companies and provide a robust return to
our shareholders.
Unless otherwise stated all amounts are in USD
3
Our Portfolio of Brands and Operating Companies
Cultivation Manufacturing/Distribution Retail
Washington
California
California
Bricks & Mortar Delivery
Washington
Michigan
Investments across all industry verticals
Unless otherwise stated all amounts are in USD
4
Overview of Achievements
▪ Cash & cash equivalents of c.+$50mm
▪ Unlevered balance sheet
▪ Investments across all verticals
Today
▪ Solid operating base in California
▪ Achieved MSO status in high value market of Michigan
Apr 2019 –
Signed LOI to
Mar 2019 – acquire
Signed LOI to Michigan retail,
Feb 2019 –
acquire Type 7 cultivation and
Branded all
Feb 2019 – manufacturing manufacturing
retail stores
Sold plant assets
Dec 2018 – as Chai
Medmen Cannabis
Acquired branded
Nov 2018 – Higher Level
Signed LOI dispensaries
Sept 2018 – of Care for $31mm
to acquire dispensary
Completed
2018 Sep 2018 – acquisition
Santa
Completed Barbara
Aug 2018 – of Chai dispensary
the Mellow Cannabis Co
Signed LOI Extracts
Mar 2018 – to acquire dispensary
Completed Acquisition
Jan 2018 – Chai
closing of Cannabis Co
Agreed to MedMen
acquire I-5 dispensary
equity
and its two investment
MedMen
branded
stores
Unless otherwise stated all amounts are in USD
5
Summary of Our Portfolio – Status of M&A
Company Licence(s) LOI Definitive Regulatory Closed
Agreement Approval
Mellow Extracts ▪ Manufacturing ✓ ✓ ✓ ✓
▪ Distribution
Chai Santa Cruz ▪ Retail ✓ ✓ ✓ ✓
▪ Delivery
▪ Distribution (Pending)
▪ Retail ✓ ✓ ✓ ✓
California
Chai Castroville
▪ Delivery
Type 7 Extraction ▪ Manufacturing ✓ In Process
Facility
Monterey County ▪ Retail ✓ In Process
▪ Delivery
Goleta Santa Barbara ▪ Retail (Pending) ✓ In Process
▪ Delivery (Pending)
Green Buddha and ▪ Retail ✓ In Process
Michigan
Other Michigan Assets ▪ Manufacturing
▪ Cultivation
Fine Detail Greenway ▪ Cultivation ✓ ✓ ✓ ✓
Washington
Cascadia Gardens ▪ Cultivation ✓ ✓ ✓ ✓
Mainstem N/A ✓ ✓ N/A ✓
All annual licence applications have been submitted and are on schedule
Unless otherwise stated all amounts are in USD
6
Michigan Asset Hub
Green Buddha – Under LOI
▪ Joint venture
- Captor to own 50.1%
- Green Buddha Group to own 49.9%
- Captor has option to purchase Green Buddha shareholding
▪ 20 cannabis retail licenses
▪ 8 cultivation licenses
- 325,000 sq. ft. cultivation facility
- Projected payback ~1.3 years
▪ 2 processing licenses
▪ Bringing together Captor Capital’s strengths in the cannabis and capital markets
with Green Buddha’s team’s expertise in the cannabis and retail tobacco store
industries
Unless otherwise stated all amounts are in USD
7
Market – State of the Cannabis Industry
▪ Industry Growth for Foreseeable Future
- Legalisation expanding to new States
- Increase of recreational licencing
- Creation of new products (e.g. beverages)
- Regulators starting to address black market
- Maturing of brands
Source: Marijuana Business Daily 2018
▪ California Led
- Biggest consumer market
- Lots of growth to go – once black market declines
- Forefront of brand development
- Top genetics and SOPs
▪ Multi-State Operator’s (“MSO”) Rewarded
- Market rewarding:
- Market diversification
- Brand extension
- Barriers to entry
- Likely will lead to acceleration of consolidation
- Brand licencing will become competitive
- Ability to monetise existing SOPs in new markets
Unless otherwise stated all amounts are in USD
8
Market – A Variety of Challenges to Navigate
Competition
▪ Black Market
▪ Uncontrolled licencing can lead to substantial competition and impact profitability (size to survive)
▪ CBD market
Regulation
▪ Highly fluid, incomplete, contradictory, time consuming……….and expensive!
▪ 280E tax
▪ Limited “Green Zones” creates hidden costs (e.g. higher than market property leases)
▪ Lack of viable banking and finance
▪ Construction and other regulatory permitting slow and cumbersome
Interconnected Infrastructure
▪ Despite industry growth many operations taking longer to get up and running – holds back the macro industry
▪ Supply Chain Pricing Pressure
- Flower pricing dropping
- High end and bio-mass cultivators are surviving the others are at risk of dying
- At current prices chances are many smaller operators will struggle to survive
- Lots of oil production coming online
Delivery Service
▪ Historically marijuana is a delivery culture
▪ Current delivery services expensive for retailers
▪ Puts stress on brick and mortar retail owners who don’t develop delivery strategy
▪ Impact on brick and mortar valuations unknown
Unless otherwise stated all amounts are in USD
9
2019 Operational Strategy
California Market
▪ Complete northern “California Retail Cluster”
- Leverage the Chaicannabis.com delivery service
▪ Create our own branded products via our Type 7 and Type 6 facilities
▪ Licence our brands to new markets
▪ Expand our retail footprint in the south via acquisition of revenue producing stores
▪ Potentially invest into cultivation for bio-mass to secure supply chain
Michigan Market
▪ Complete the acquisition and integrate into Group
▪ Seek additional acquisitions to expand retail portfolio
▪ Standardise the Green Buddha Retail stores
▪ Initiate Green Buddha delivery service
▪ Licence California Brands for the local market
▪ Implement the cultivation facility with leading genetics and team
▪ Develop manufacturing and vertically integrate the operations
Global Market
▪ Identify new States in the USA to enter with large population
- E.g. Florida
▪ Seek to acquire CBD companies that are synergistic
▪ Consider consolidation options that enhance market size
▪ Examine international options
Unless otherwise stated all amounts are in USD
10Expected Results of Our Strategy
Captor Expects Significant Revenue Growth Equating to $89.6mm and $206mm in 2019 and 2020, Respectively1
Total Revenue in US$ Total EBITDA in US$
250,000,000 60,000,000
50,000,000
200,000,000
40,000,000 59%
150,000,000
66% 30,000,000
100,000,000
53% 20,000,000 44%
50,000,000 34% 10,000,000 56% 41%
47%
- -
2019 2020 2019 2020
California Michigan California Michigan
Attractive EBITDA Results on an Unlevered Balance Sheet
1-Assumes completion of all transactions under LOI by August 2019; and assumes completion of currently owned manufacturing operations by 30 June 2019
Unless otherwise stated all amounts are in USD
11How We Compare to Our Peers
A Peer Group Comparison Indicates Substantial Undervaluation of Captor
Cannabis Comps
Apr 2019
Consensus '19E Consensus '20E Consensus '19E Consensus '20E
52-Week 52-Week FD Mkt. FD EV / EV / EV / EV / Rev EBITDA
Company Last Price High Low Cap. ($M) EV ($M) Rev EBITDA Rev EBITDA Rev EBITDA Rev EBITDA Growth Margin
Canopy $14,440 $14,650 21.9x 141.9x 12.9x 44.8x $669 $103 $1,133 $327 69% 49%
Aurora $8,950 $9,030 14.4x 121.8x 6.6x 22.7x $626 $74 $1,359 $397 117% 63%
Cronos $5,994 $5,959 51.7x 173.3x 24.2x 67.2x $115 $34 $246 $89 114% 77%
Tilray $5,460 $5,400 37.7x 379.1x 16.9x 138.6x $143 $14 $319 $39 123% 27%
Curaleaf $4,070 $420 1.4x 3.6x 0.7x 1.7x $311 $116 $586 $245 89% 79%
Green Thumb $2,990 $2,230 10.6x 24.8x 2.7x 7.7x $211 $90 $833 $290 296% 138%
Aphria $2,410 $2,500 6.7x 31.1x 3.5x 11.9x $371 $80 $716 $210 93% 57%
Trulieve $1,666 $1,590 7.4x 16.6x 5.5x 12.2x $216 $96 $292 $131 35% 60%
MedMen $1,380 $483 1.4x -7.3x 0.7x 26.2x $337 ($66) $707 $18 110% 5%
Hexo $1,333 $1,339 8.8x 48.3x 4.7x 16.9x $152 $28 $286 $79 88% 52%
OrganiGram $1,003 $936 5.8x 14.6x 3.5x 9.4x $161 $64 $271 $99 68% 62%
Green Organic $841 $882 2.9x 12.4x 1.5x 3.4x $300 $71 $600 $259 100% 86%
CannTrust $783 $804 4.4x 24.9x 2.7x 14.8x $185 $32 $301 $54 63% 29%
iAnthus $769 $415 2.3x 14.6x 1.2x 4.6x $182 $28 $338 $90 85% 50%
Village Farms $664 $771 4.0x 26.1x 3.8x 18.3x $193 $30 $204 $42 6% 22%
CannaRoyalty $563 $520 3.4x 25.6x 1.9x 10.2x $155 $20 $269 $51 74% 33%
Supreme $425 $449 4.2x 15.5x 2.6x 7.4x $107 $29 $176 $61 65% 57%
Flowr $383 $383 19.8x 56.3x 2.8x 8.3x $19 $7 $138 $46 615% 238%
Liberty Health $233 $243 3.3x 18.6x 1.7x 5.4x $75 $13 $146 $45 96% 60%
Cannex $233 $323 20.0x - 31.7x - $16 nm $10 nm -37% nm
WeedMD $217 $184 2.9x 10.4x 1.4x 4.4x $64 $18 $132 $42 107% 66%
Captor $41 $81 0.9x 3.5x 0.4x 1.4x $90 $23 $206 $59 129% 66%
Emblem $185 $185 2.5x 16.7x 1.3x 5.1x $75 $11 $142 $36 88% 48%
Average 10.4x 53.3x 5.9x 20.1x $208 $42 $409 $123 113% 65%
High 51.7x 379.1x 31.7x 138.6x $669 $116 $1,359 $397 615% 238%
Low 0.9x (7.3x) 0.4x 1.4x $16 ($66) $10 $18 -37% 5%
Median 4.4x 21.7x 2.7x 9.8x $161 $29 $286 $70 89% 59%
$1B+ EV 19.9x 117.1x 9.6x 40.2x $315 $57 $648 $183 113% 61%
Sub-$1B Mkt Cap 5.9x 19.9x 4.3x 10.2x $125 $29 $226 $74 112% 68%
'20E Rev Growth >75% 11.2x 60.5x 4.7x 21.7x $205 $36 $450 $130 1.5x 0.7x
'20E Rev GrowthAppendix
Unless otherwise stated all amounts are in USD
13Management Team
A balanced and diverse team with extensive experience in cannabis and M&A
John Zorbas Shawn Groshans Wayne Lipschitz Jeffrey Berkowitz
President and Director Head of Business Development COO of wholly owned subsidiary US Legal Counsel
Mr. John Zorbas is an entrepreneur with a Mr Shawn Groshans has approximately 20 Mr. Lipschitz founded a professional firm that Mr. Berkowitz has practiced corporate, business
proven track record in the metals exploration years in merchant banking and corporate provides outsourced back office accounting and and tax law for more than 35 years. He has
and development industry and the investment finance with experience in private equity CFO services to the restaurant and retail extensive experience in a wide variety of
banking. He has held senior advisory positions investing, advising companies on mergers and industries since January 2012. Mr. Lipschitz transactions in many industries, with particular
in various facets of business including acquisitions, capital raising, business also served as the outsourced President and/or emphasis on structuring complex transactions,
operations, marketing, sales, strategic planning development, and restructuring. Subsequent to CFO for several restaurant concepts. Prior to including entity organization, financing, mergers
and structured finance. Mr. Zorbas has been his experience in banking he took a role as this Mr. Lipschitz held various CFO and and acquisitions, real estate and US-Canada
with the Company since June 2008. He also Head of Business Development for a global controller positions with private, public and cross-border transactions.
serves as URU Metals Ltd (Captor Capital intelligence and cyber-security firm, in addition private equity backed companies such as
investment) Chief Executive Officer since 2 to his involvement in entrepreneurial ventures Spectrum Clubs, Inc. (Spectrum Athletic Clubs), Since 2013, Mr Berkowitz has been actively
June 2014. He was appointed Chairman of which includes the cannabis industry. Grill Concepts. Inc. (Grill on the Alley and Daily involved with the rapidly-growing cannabis
Management Resource Solutions PLC in April Grill), San Manual Band of Mission Indians (San industry, assisting clients in obtaining financing,
2017. He also served as the President of MGM Mr. Groshans serves as a Non-Executive Manual Casino and other economic securing licenses and acquiring cultivation
Productions Group Inc a company focused in Director for Tower Financial and he has developments), International Coffee & Tea, LLC facilities and established dispensaries. Earlier in
media and retail investments., as well as previously worked for Salamanca Group, (Coffee Bean & Tea Leaf), The Cheesecake his career, Mr. Berkowitz practiced as a
Director of both ZorCorp Capital Holdings and Richmond Park Partners, S-RM and PwC. Factory Incorporated (The Cheesecake Certified Public Accountant.
Starline Capital Holdings Infrastructure Fund. Factory), and Wolfgang Puck Food Company,
He served as the Chief Executive Officer and a L.P. (Wolfgang Puck Cafes and frozen foods).
Director of Monchhichi PLC (former: Mercom
Capital PLC) until 23 December 2016. Mr. In addition, Mr. Lipschitz is a CPA and has
Zorbas also served as a Director of Stratton worked for a national CPA firm, Laventhol &
Capital Corp. until 20 October 2016. He is a Horwath. Mr. Lipschitz holds a BS degree in
founding shareholder of Asian Coast Accounting from California State University,
Development Ltd. Mr. Zorbas holds an Honors Northridge.
Bachelors in Economics from the University of
Toronto.
Unless otherwise stated all amounts are in USD
14Operations Team
A balanced and diverse team with extensive experience in cannabis and M&A
Oliver Summers Matt Longo Joshua Lechner Gavin Davidson
Director of Retail Dispensaries Director of Manufacturing & Purchasing & Inventory Manager Head of Communications
Cultivation
Mr. Oliver Summers has been a Los Mr. Lechner has always been a Mr Davidson has more than 20 years
Angeles Medical Cannabis advocate Mr. Matt Longo has over 15 years passionate activist within the of progressive PR experience and a
since 2005, speaking and promoting operating experience in the cannabis cannabis industry for over a decade. Masters in Strategic Communication
cannabis numerous times on the industry and has extensive from the University of Central
behalf of patients. He has owned and agricultural and supply chain As the purchasing Supervisor for Lancashire in the UK. Currently Mr.
operated three dispensaries in LA knowledge. Additionally he has years Captor, he has been with Chai since Davidson leverages his extensive
since 2006 and is an experienced of experience in general agriculture, 2012, and has an extensive network and diverse communications
grower of boutique cannabis strains. and held various operational roles at in the California cannabis industry. experience in driving Captor Capital‘s
Anheuser-Busch Distribution. Furthermore, he has a diverse media and investor relations
Mr. Summers is an original member operating background ranging from services.
and moderator of the Greater Los Mr. Longo has guided the set-up of planting, cloning, and growing, to
Angeles Collective Alliance (GLACA), Prop 215 compliant businesses in harvesting, processing & With proven success in senior
a member of Americans For Safe California and navigated the complex manufacturing, and retail dispensary agency and client side roles, he was
Access (ASA), Marijuana Policy and multi-layered regulatory management. previously Vice President of
Project (MPP), Patients Advocacy environments. Mr. Longo has owned Communications for Asian Coast
Network (PAN). He is also a former and operated two cultivation facilities Prior to his Purchasing Manager role Development, a Canadian company
member of the South Robertson with a total of 20,000 square feet and Mr. Lechner managed the Chai Santa building a $4 billion integrated resort
Neighborhood Council, Pico employed roughly 100 employees. Cruz dispensary guiding it to a multi- complex on the white sand beaches
Neighborhood Council, Melrose West Prior to his role with Captor he owned million dollar operating brand. of Vietnam.
Neighborhood Council and UFCW and operated a dispensary and was
Local 770. involved in three other cannabis-
related business ventures across the
United States, including a 70-acre
hemp production farm in Franklin, TN
and a 22,000 acre licensed hemp
farm in Madisonville, Kentucky. Both
farms are licensed by the Department
of Agriculture and subject to stringent
protocols as a hemp producer.
Unless otherwise stated all amounts are in USD
15Captor Capital Corporation
4 King Street West, Suite 401,
THANK YOU Toronto, ON M5H 1B6, Canada
John Zorbas
johnz@captorcapital.com
Unless otherwise stated all amounts are in USD
16You can also read
