TRANSFORMING THE HEALTH & WELLNESS INDUSTRY October 2019 1 NASDAQ/TSX: NEPT ▫ Headquartered in Laval, Quebec, Canada
CAUTION REGARDING NON-IFRS FINANCIAL MEASURES The Corporation uses two adjusted financial measures, Adjusted Segment Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted Segment EBITDA) and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) to assess its operating performance. These non-IFRS financial measures are directly derived from the Corporation’s financial statements and are presented in a consistent manner. The Corporation uses these measures for the purposes of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the Corporation to plan and forecast for future periods as well as to make operational and strategic decisions. The Corporation believes that providing this information to investors, in addition to IFRS measures, allows them to see the Corporation’s results through the eyes of management, and to better understand its historical and future financial performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Corporation uses Adjusted Segment EBITDA and Adjusted EBITDA to measure its performance from one period to the next without the variation caused by certain adjustments that could potentially distort the analysis of trends in our operating performance, and because the Corporation believes it provides meaningful information on the Corporation’s financial condition and operating results. Neptune’s method for calculating Adjusted Segment EBITDA and Adjusted EBITDA may differ from that used by other corporations. Neptune obtains its Adjusted Segment EBITDA measurement by adding depreciation and amortization and stock-based compensation to segment income (loss) from operating activities before corporate expenses. Neptune obtains its Adjusted EBITDA measurement by adding to net income (loss), net finance costs and depreciation and amortization and by subtracting income tax recovery. Other items such as stock-based compensation, litigation provisions, acquisition costs and severance and related costs that do not impact core operating performance of the Corporation are also added back as they may vary significantly from one period to another. Adjusting for these items does not imply they are non- recurring. 2
CAUTIONARY NOTE AND FORWARD-LOOKING STATEMENT Statements in this presentation that are not statements of historical or current fact constitute ‟forward -looking statements” within the meaning of the U.S. securities laws and Canadian securities laws. Such forward-looking statements involve known and unknown risks, uncertainties, and other unknown factors that could cause the actual results of Neptune to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates," "will," "should," or "plans" to be uncertain and forward-looking. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Forward-looking information in this presentation includes, but is not limited to, information or statements about our ability to successfully develop, produce, supply, promote or generate revenues from the sale of cannabis-based and hemp-based products in the legal market. The forward-looking statements contained in this presentation are expressly qualified in their entirety by this cautionary statement and the ‟Cautionary Note Regarding Forward-Looking Information” section contained in Neptune’s latest Annual Information Form (the ‟AIF”), which also forms part of Neptune’s latest annual report on Form 40-F, and which is available on SEDAR at www.sedar.com, on EDGAR at www.sec.gov/edgar.shtml and on the Investors section of Neptune’s website at www.neptunecorp.com. All forward-looking statements in this presentation are made as of the date of this presentation. Neptune does not undertake to update any such forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in Neptune public securities filings with the Securities and Exchange Commission and the Canadian securities commissions. Additional information about these assumptions and risks and uncertainties is contained in the AIF under ‟Risk Factors” . 3
NEPTUNE TODAY Cannabis One-stop-shop for Plant-based solutions for the extraction, purification, and Health & Wellness industry formulation of cannabinoids in North America Health & Wellness 4
CORE COMPETENCIES GROUNDED IN EXTRACTION AND FORMULATION… Food grade GMP Forms and delivery Clinical certified facility Condition specific system research formulations Highly automated Global Strict processes Proven cold ethanol Facility distribution and standards ensure extraction process quality control Relationships with leaders Oil extraction in Retail, Vitamin, and expertise Supplement industries 5
…HAS ENABLED CANNABIS MARKET PENETRATION AND PROVIDED THE FOUNDATION FOR SIGNIFICANT HEALTH & WELLNESS EXPANSION Jul 2019 Sep 2019 Michael Expanding U.S. Cammarata is customer base named President & Jun 2019 CEO TGOD multi- year Mar 2019 extraction deal Initiated commercial Oct 2019 production Collaboration and shipping Jun 2018 Aug 2019 with IFF of cannabis Canopy Launch of Growth multi- Neptune year Ventures Jul 2019 Apr 2017 extraction deal Health Canada Closed acquisition of application SugarLeaf Labs Jun 2019 Tilray multi- year Jan 2019 extraction deal Health Canada processing licence received Aug 2017 Exits krill oil manufacturing 6
SIGNIFICANT NORTH AMERICAN CAPACITY TO ADDRESS DEMAND FOR PLANT-BASED PRODUCTS Fully-automated , modern, large scale Newly acquired, modern, hemp processing facility extraction facility licensed to process Cannabis located in North Carolina 1,500,000 kg capacity to process biomass using 1,500,000 kg capacity to process biomass using cold ethanol technology 1 cold ethanol technology 2 3,000,000 kg Good Manufacturing Practices (c-GMP) Sources hemp cultivated by licensed American capacity 3 certified for nutrition products growers conforming with federal and state regulations 1,500,000 1,500,000 EU GMP certification underway (by 1H CY 2020) Hemp-based products have surpassed the Vitamin E category and are on track to overtake the In-house quality control lab and R&D lab with 1,300,000 Omega-3 category full testing capabilities 200,000 30,000 Hemp-based platform focused on Health and 170,000 Wellness is a natural extension of what Neptune Phase I Phase II Phase IIIA US has specialized in for over 2 decades (Q1 CY 2020E) 1 Post expansion, construction expected to complete by end of CY2019; Health Canada approval needed thereafter 7 2 Post expansion, construction expected to be complete by end of CY2019 3 Post expansion & once approvals are received
COLD ETHANOL EXTRACTION DIFFERENTIATES NEPTUNE’S PROCESS COLD ETHANOL EXTRACTION PRODUCES NUTRIENT RICH, COMPLETE, FULL SPECTRUM EXTRACTS WHILE MAINTAINING A LOW CARBON FOOTPRINT Ethanol extracts more plant substances than CO 2 , which misses valuable compounds such as some phytocannabinoids and terpenes Competitors turn to CO 2 extraction because of the large start-up capital expenditures required for cold ethanol equipment. However, Neptune has been executing this process for over a decade >5x faster Cold Ethanol vs. CO 2 Extraction winterized oil process >2x less energy consumption Greater recovery of cannabinoids and terpenes 8
EMERGING AS THE PREFERRED ONE-STOP-SHOP SUPPLIER OF CANNABIS PRODUCTS Multi-year deal signed June 2018 3-year deal signed June 2019 3-year deal signed June 2019 Supplement Canopy Growth’s Minimum volumes of 125,000 kg Minimum volumes of 230,000 kg extraction, refinement, and Extraction services to produce Extraction and purification of formulation capacity crude resin, winterized oil, and cannabinoids from cannabis and Represents an important distillate extracts hemp biomass milestone in Neptune’s transition Formulation, manufacturing and Highlights Neptune’s capabilities packaging of several product to capture the growing cannabis forms: capsules, tinctures, sprays, market opportunity topicals, vape pens, shots, teas Neptune to seek organic certification with TGOD assistance 9
GROWTH STRATEGY TO ACHIEVE VISION VISION: Become a leading supplier of cannabinoid extracts, ingredients, and finished products to the Health & Wellness and CPG industries Increase Processing Capacity in North America and Internationally Expand Customer Base into Global CPG and Health & Wellness Innovate to Create New Product Forms Acquire Unique Delivery Forms & Technology Develop Strategic Partnerships through Neptune Ventures 10
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