CORPORATE PRESENTATION November 9, 2018
FORWARD-LOOKING STATEMENTS Certain statements contained in this presentation, as well as any beyond the control of the Corporation and may cause their or the amendments or supplements and any other information that may be industry’s actual results, performance, achievements, prospects and furnished by the Corporation, may include forward-looking information. opportunities in future periods to differ materially from those expressed To the extent any forward-looking information in this presentation or implied by such forward-looking statements. constitutes “future-oriented financial information” or “financial outlooks” The Corporation cannot assure you that such statements will prove to within the meaning of applicable Canadian securities laws, such be accurate, as actual results and future events could differ materially information has been prepared by the Corporation to provide a from those anticipated in such statements. Readers are cautioned that reasonable estimate of potential revenue and profit margins and the forward-looking statements are not guarantees of future performance reader is cautioned that this information may not be appropriate for any and accordingly readers are cautioned not to put undue reliance on other purpose and the reader should not place undue reliance on such forward-looking statements due to the inherent uncertainty therein. future-oriented financial information and financial outlooks. Within the meaning of applicable securities laws, forward-looking information may All forward-looking statements included in this presentation are qualified relate to the future outlook and anticipated events or results of the by these cautionary statements. Unless otherwise indicated, these Corporation and may include statements regarding the regulatory forward-looking statements are made as at October 24, 2018, and the environment (including anticipated changes) that the Corporation Corporation does not intend, and does not assume any obligation, to operates in, and the financial position, business strategy, budgets, update these forward-looking statements, except as expressly required projected costs, capital expenditures, financial results, plans and by law. objectives of or involving the Corporation. In particular, statements regarding future results, performance, achievements, prospects or Disclaimer opportunities for the Corporation or the cannabis industry are forward- looking statements. The Corporation has based these forward-looking November 2, 2018 – The information contained in this presentation is provided for informational purposes only and does not constitute an offer to issue or arrange to issue, statements on factors and assumptions about future events and financial or the solicitation of an offer to issue, securities of the Corporation or other financial products. trends that it believes may affect the financial condition, results of The information contained herein is not investment or financial product advice and is not operations, business strategy and financial needs of the Corporation. intended to be used as the basis for making an investment decision. In this presentation, all amounts are in Canadian dollars, unless otherwise indicated. Although the forward-looking statements contained in this presentation Any graphs, tables or other information in this presentation demonstrating the historical are based upon assumptions that management of the Corporation performance of the Corporation or any other entity contained in this presentation are intended only to illustrate past performance of such entities and are not necessarily believes are reasonable based on information currently available to it, indicative of future results. there can be no assurance that actual results will be consistent with An investment in the Corporation’s securities is subject to a number of risks that should be these forward-looking statements. considered by a prospective investor. Prospective investors should carefully consider the risk factors described under “Risk Factors” in the preliminary prospectus, final prospectus and By their nature, forward-looking statements are inherently uncertain, any amendment before purchasing securities of the Corporation. are subject to risk and are based on assumptions, many of which are 2
OUR SPRINGBOARD TO BIGGER THINGS Retail breakdown 2013 June MMPR is enacted 2014 August ACMPR is enacted 2015 June 12 Bill 157 becomes June 21 2016 law in Quebec Bill C-45 becomes law 2017 Government-owned stores October 17 2018 Expected legalization of edibles October 17 Privately owned stores Legalization of adult-use recreational cannabis Both 2019 3
ABOUT HEXO CORP June 2018 First plants in new August 2013 May 2015 250,000 sq. ft. August 2018 The Hydropothecary Corp. First sales to September 2017 greenhouse Fortune 500 joint incorporated medical patients Kosher certification April 2018 March 2017 • venture with from Time of Day obtained – a 5-year supply deal Listed on the Listed on the TSX Molson Coors Canada product line Canadian LP first with Quebec signed TSX-V announced 2014 2016 2018 2013 2015 2017 July 2018 Fleur de Lune – a unique March 2018 July 2017 Segra partnership for intimate oil – launched December 2016 August 2014 • Elixir – Canada’s first plant tissue cultures 35,000 sq. ft. First crop harvested announced Advanced 10,000 sq. ft. automated and only cannabis oil May 2018 greenhouse completed manufacturing facility completed sublingual spray – HEXO – an adult-use • • launched consumer brand – H2 and Decarb $10M invested in Fire & Flower, launched products launched western Canada’s premier retail cannabis operation 4
INVESTMENT HIGHLIGHTS Innovative, diversified and expanding Market share leader Revenue per gram in Quebec – 35% of sales adult-use portfolio with = $9.26 due to for Year 1 of legalization 13 dried flower and value-added products 9 smokeless products Experienced Weighted average management team Well-capitalized cash cost per gram to pursue growth focused on execution, of dried inventory ambitions, no debt growth and sustainable sold = $0.90 shareholder value 5
STRATEGIC PRIORITIES Top 2 in Canada Execute on the SQDC contract with excellence, and serve and expand across Canada from a strong regional base. Become one of the Top 2 licensed producers in Canada on our way to a 2% global market share. Operational Brand Leadership Scalability Further develop our house of brands using data- Invest in people, processes driven, in-depth knowledge of customers and their and systems to deliver the preferences. Ensure that we create products and highest-quality product at brands that provide the full range of options that sustainable operating costs. cater to consumer needs. Put our brand top of mind in the markets we serve. New Product Innovation Excel at identifying, developing and launching new products. 6
HUB AND SPOKE MODEL Build value for shareholders Global distribution program • Build a house of brands to include cosmetics, edibles, non-alcoholic Food beverages, vapes and more. Confectionary, Cosmetics baked goods, dairy • Partner with Fortune 500 companies to establish consumer-centric joint ventures; leverage capacity to scale up distribution Non-alcoholic Vapes beverages and occupy shelf space quickly. • Create opportunities for future JVs or M&As leading to strategic exits and capital appreciation of shareholder return. Groundbreaking joint venture with Molson Coors Canada paves the way Brand for the leading non-alcoholic, cannabis- Products, technology, distribution, infrastructure infused beverages for the Canadian adult-use market. 7
CANADIAN MARKET OVERVIEW Fire & Flower Retail store locations expected 2018 15 store locations and web sales Fire & Flower 2019 2 retail store 50 stores expected licences obtained Fire & Flower Supply channels obtained 35+ retail store 2018 licences expected Web sales obtained Supply channels expected 2019 Retail stores expected 8
QUEBEC: A CLEAR PATH TO PROFITABILITY Landmark agreement Volume and market share % • SQDC* supply contract announced on April 11, 2018 • $1B in potential revenue for HEXO Corp over 5 years Year 4 and Year 5 supply volumes to be determined • Option to extend agreement for an additional year 35% market • Largest forward supply contract in the history of the share cannabis industry * Société québécoise du cannabis (“SQDC”) is the provincial Crown corporation responsible for the 45,000 kg distribution and sale of adult-use cannabis in Quebec. 35,000 kg 20,000 kg Year 1 Year 2 Year 3 Year 4 Year 5 9
RECOGNIZED PRODUCT INNOVATOR Canada’s first and only line of cannabis The first licensed producer to offer an activated peppermint oil sublingual sprays cannabis powder designed for oral consumption 10
24 MEDICAL PRODUCTS DIVERSIFIED AND EXPANDING BRANDED LINES Sublingual Intimate Edible Dried Premium Sprays Oil Powders Flowers Dried Flowers 2 Products 1 Product 6 Products 11 Products 4 Products $69 to $89/bottle $59/bottle $3 to $15/g $6 to $10/g $15/g 11
INNOVATING NOW TO BE READY FOR THE FUTURE An unwavering commitment to product innovation to help shape (and thrive in) the adult-use market – in Canada and around the world. Today What’s to come Flower Sublingual Soft gel Vapes sprays capsules Beverages Intimate Decarboxylated Topicals Edibles oil powders 12
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