INVESTOR PRESENTATION JANUARY 2019 - HEXO Corp
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INVESTOR PRESENTATION
JANUARY 2019
1
2 FORWARD-LOOKING STATEMENT The material in this presentation has been prepared by Newstrike and is general background information about Newstrike’s activities current as at the date of this presentation. This information is given in summary form and does not purport to be complete. Information in this presentation, including forecast production information, should not be considered as advice or a recommendation to investors or potential investors in relation to holding, purchasing product development or selling securities or other financial products or instruments and does not take into account your particular investment objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to these matters, any relevant offer document and in particular, you should seek independent financial advice. All securities and financial product or instrument transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk. This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to Newstrike’s businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Readers are cautioned not to place undue reliance on these forward looking statements. Newstrike does not undertake any obligation to publicly release the result of any revisions to these forward looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside Newstrike’s control. Past performance is not a reliable indication of future performance. Unless otherwise specified all information is as of January 16, 2019.
3
OUR VISION:
CANADA’S RECREATIO NA L BRAND
• Up Cannabis will one day be as synonymous with Canadiana as Tim Hortons or Roots
• From day one our focus has been centered around executing a business plan that positioned
Up Cannabis for the adult-use market
4 OUR PERSPECTIVE: KEEP IT REAL IN A NOISY MARKET
5
OUR FOCUSED STRATEGY:
4 PILLARS OF GROWTH
I D B P
N I R R
N S A O
O T N D
V R D U
A I I C
T B N T
I U G I
O T O
N I N
O
N
Dedicated execution across these four pillars will drive accretive shareholder value
6
REVERSE ENGINEERING PRODUCTION
DELIVERING AGAINST CAPACITY
PRODUCTION DISTRIBUTION BRANDING
Brantford Facility Retail partnerships DISTRIBUTION
(2,000 kg) CURRENT Provincial agreements
Niagara Phase 1* INNOVATION
(20,000 kg)
Niagara Phase 2*
(Additional 20,000 kg)
BRANDING I N N O VAT I O N
UP Cannabis New product
$108M CA SH development
Ambassadors
(Q3 2018) Joint Ventures
Licensing agreements
Our strong, debt-free balance sheet allows
us to execute on additional capacity
quicker than other competitors
*assuming full production ramp-up
7
ADVANCED PRODUCTION
Tier 1
PRODUCTION ASSETS automotive
Dutch Tray expertise
System
455,000
square feet
(2019)
Lean Six
Projected Automated Sigma and
state of the art facility 2,400 machinery Kaizen
40,000+
at full capacity
kg plants/day principles
Projected
1,000,000
plants
Talking ISO
floor 9001:2015
Certified
facility
8
PRODUCTION
NOT YOUR GRANDPA’S
CUCUMBER GREENHOUSE
444
QUALITY
CHECKS PER
HARVEST
STRATEGIC PRODUCT AND STRAIN PORTFOLIO
STRENGTH IN SIMPLICITY + COMMON SENSE
Indica Hybrid Hybrid Hybrid Hybrid
1:2 CBD Indica Dominant Sativa Dominant Sativa Dominant
5 STRAINS FOR 5 CONSUMER NEEDS
10
STRATEGIC PRODUCT AND STRAIN PORTFOLIO
STRENGTH IN SIMPLICITY + COMMON SENSE
2018 2019 2020
Edibles
Single-serve
Flower
Multi-serve Oils Vaping Oils Beverages
Flower
FOCUSED ON THE
H I G H E S T P O T E N T I A L F O R M AT S11
BRANDING
1112
BRANDING
DOMINANT COMMANDING 400+
SHARE SHARE OF
OF VOICE SEARCH AND MILLION
SUMMER VOICE RELATIVE IMPRESSIONS
2018 TO ALL LPS TO DATE13
A POWERFUL PARTNERSHIP BRANDING
WITH CANADA’S MOST CELEBRATED BAND
With their unique and deep understanding of Canada and Canadians, an un
unrivalled national platform, members of The Tragically Hip are core strategic
partners in the emergence of Up Cannabis as this country’s leading adult -use
cannabis brand.14
DISTRIBUTION AGREEMENTS DISTRIBUTION
IN PLACE WITH 7 PROVINCES
Retailer Partnerships15
PUNCHING DISTRIBUTION
ABOVE OUR WEIGHT
Health
Canada 113
At least 1
licenced provincial
entities agreements At least 2 39
provincial
agreements
At least 7 29
provincial
agreements 7
Current
Market Cap1 Ent Value1 Capacity2
($M) ($M) (kg)
TILRAY
Canopy Growth $19,083 $19,773 undisclosed
Tilray $7,976 $7,875 21,000
UP CANNABIS
Aurora Cannabis $9,701 $9,501 100,000
Aphria $2,198 $2,091 35,000
CannTrust $874 $799 50,000
Organigram $815 $784 36,000
Average $6,775 $6,804 37,056
UP Cannabis $284 $177 20,000
1As at Jan 16, 2019, Thomson Reuters
2Company reports and analyst estimates16
WELL-FUNDED
TO EXECUTE
I N N OVAT I O N D I ST R I B U T I O N
$108M
CASH-ON-HAND
(Q3 2018)
BRANDING PRODUCTION17
CASH IS KING
CASH AS A PERCENTAGE OF MARKET CAPITALIZATION
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Cronos Newstrike Canopy Supreme Hexo Organigram Aphria Canntrust Tilray Aurora
Brands
Source: Mackie Research Capital, Sedar, Thomson Reuters as at Jan 16, 2019
*Assumes completion of investment from Altria18
INNOVATION
INNOVATION
MOMENTS
OF TRUTH
40+K KG
TRANSACTIONS CAPACITY
Vape:
Beverage Green Tank
VAPES, FLOWER, OILS, CAPSULES, EDIBLES, BEVERAGES Technologies
Food: HOW
Neal
Brothers JV Wellness
JV ACQUIRE PARTNER DEVELOP CPG
CAPACITY IS TABLE STAKES. WHAT WILL SEPARATE THE WHEAT FROM THE CHAFF IS:
ACCESS, PRODUCTS AND RELATIONSHIPS19
INTERNATIONAL EXPANSION
LOOKING ABROAD TO LATIN AMERICA AND EUROPE
The development of a repeatable stamp in Canada will allow for a focused and
calculated approach for expansion into international markets
Market Population
Canada 36,950,000
Latin America 652,000,000
Brazil 211,000,000
Colombia 49,500,000
Europe 738,000,000
Germany 82,300,000
United Kingdom 66,570,000
+
1,427M E
+ U
C
689M L R
A
A O
N
T P
A
37M A
E
D
M
A 1920
PRODUCTION
2018
A YEAR OF SIGNIFICANT PROGRESS BRANDING
Inner
Spirit
CCO alliance DISTRIBUTION
Bought
Deal B
HISTORIC
Construction FIRST INNOVATION
Bought GCP Niagara SHIPMENT
Founding commences Marketing
deal A Sep 18
Member Launch 3
Marketing Dundas Sq.
Launch 1 Marketing
Sales Licence Cultivation Sales Licence Sales Licence
Bathouse Launch 2
Brantford licence Niagara for Brantford Oil Niagara
Niagara UpNorth Initial PO
Extraction
MediPharm PEI
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Supply Agreement
Vaping
VP Marketing Cultivation Alberta Edibles JV
Unison Technology Neal Brothers
Licence Niagara Partnership Green Tank
Supply Agreement Supply
BC Agreement
NS OCT 17!
Niagara College Supply Agreement Approved Supplier
Business ON SK
Niagara College
Program
Cannabis Cultivation
Program21
MANAGEMENT TEAM
Jay Wilgar Sean Byrne Peter Hwang Mark Burton Kevin Epp Sylvie Levesque
Chief Executive Officer Chief Financial President, Operations Chief Strategy Chief Operating Chief Marketing
& Director Officer & Director Officer Officer Officer
Seasoned Over 25 years in Experienced A career spanning Over two decades Over 25 years in the
entrepreneur with a senior financial entrepreneur with a more than three of experience in CPG and alcohol
proven track record management roles, history of decades in strategic operations’ beverage industries.
in emerging, most recently as commercializing start- leadership roles management and Previously GM,
regulated CFO at Brick ups from inception to including CEO at five management Canada at Treasury
industries. Founded Brewing. Also held succession. Peter separate technology consulting with Wine Estates,
and sold one of senior finance recently founded and companies, two of McKinsey & Co., overseeing a portfolio
Ontario’s largest positions at RR sold Globalfaces which were TSX- Union Gas, Reckitt of 50+ wineries. Prior
renewable energy Donelly Canada, Direct, one of North listed. Prior to joining Benckiser, Weston to TWE, Sylvie held
development firms Thermo Fisher Americas largest direct Newstrike, Mark was and CPI Plastics senior sales and
– AIM PowerGen. Scientific, The Scotts marketing and data partner at KPMG and Group Ltd. marketing roles at
Company and analytics agencies is a former partner at Johnson & Johnson,
Monsanto Corp. serving the Not-For- Stikeman Elliott. Pfizer, Molson, and
Profit sector. Unilever.22
OUR PERSPECTIVE: BY KEEPING IT REAL
THIS IS DOABLE
PRODUCTION
BRANDING
DISTRIBUTION
PLATFORM
PRIORITIES23
CORPORATE INFO
EQUITY OVERVIEW
Basic Shares Outstanding 556.4 million
As of September 30, 2018
Options and Warrants 150.6 million1
As of September 30, 2018
Fully Diluted Shares ~707.0 million1
As of September 30, 2018
52 Week Range $3.30 – $0.29
Cash $107.6 million
As of September 30, 2018
Market Capitalization $284 million
As of January 16, 2019
Listed Warrants 94.5 million
Traded under HIP.WT
1 Assumes all outstanding options fully exercised
and all outstanding warrants fully exercised.24 THANK YOU
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