Full Press Release Details
Aurora Cannabis Announces Fiscal 2021 Third Quarter
EDMONTON, AB, May 13, 2021 /CNW/ - Aurora Cannabis
Inc. (the "Company" or "Aurora") (NYSE: ACB) (TSX: ACB), the Canadian company defining the future of
cannabinoids worldwide, today announced its financial and operational results for the third quarter of fiscal 2021 ended March 31, 2021.
"Consistent with many of our peers, the quarter
presented challenges in the Canadian adult-use segment. This reinforces the importance of Aurora's broadly diversified business model
that balances domestic medical, international medical, and adult-use platforms," stated Miguel Martin, Chief Executive Officer of
Aurora Cannabis. "To that point, we delivered the strongest performance in domestic medical and the best results in international
medical cannabis of any Canadian LP during the period. This is critical, because we expect being #1 by revenue in Canada's medical market,
the largest federally regulated medical market globally, should translate into global adult-use success in the future as medical regimes
evolve to adult-use markets. In addition, being the #2 largest Canadian LP by global cannabis sales this quarter, and a leader across
multiple markets and segments, gives Aurora the brand recognition and clout to pursue numerous incremental opportunities around the world."
"Aurora also announced today that our cost structure
transformation continues and we have identified further cost savings of $60 million to $80 million annually that are expected to be achieved
within eighteen months and are incremental to the ~$300 million in annual savings already achieved. We anticipate that this initiative
will not only allow us to meet our financial objectives while the Canadian adult-use market normalizes over the next several quarters,
but will not have any effect on future revenue growth. We have recently added Alex Miller and Lori Schick to the team; two highly respected
leaders in the areas of operations and human resources, respectively, to accelerate the execution of our corporate objectives. They each
bring 20 plus years of transformative regulated industry experience and are already fully engaged. Lastly, our balance sheet remains strong
with approximately $525 million in cash. This will allow us to support organic growth as well as opportunistic M&A, particularly in
Third Quarter 2021 Highlights
(Unless otherwise stated, comparisons are made between fiscal Q3 2021 and Q3 2020 results and are in Canadian dollars)
Q3 2021 total cannabis net revenue1 before
provisions was $58.4 million, a 19.5% decrease over Q3 2020 and a 17.0% sequential decline. After accounting for return and price provisions,
Q3 2021 total cannabis net revenue was $55.2 million, a 20.8% decrease in cannabis net revenue1 over fiscal Q3 of the
Reflecting the shift in mix toward our medical businesses,
the Q3 2021 average net selling price per gram of dried cannabis1 increased to $5.00 per gram from $4.64 in Q3 2020 and
$4.45 in Q2 2021. This excludes the impact of the Q3 2021 bulk wholesale of excess lower-potency cannabis flower at clear-out pricing.
Adjusted gross margin before fair value adjustments
on cannabis net revenue1 was 44% in Q3 2021, versus 43% in Q3 2020. The increase in adjusted gross margin is due to a
significant shift in revenue mix towards our medical markets which command much higher average net selling prices, partially offset by
the purposeful reduction in production levels at Sky resulting in charges related to under-utilization of capacity.
Adjusted EBITDA1 loss was $24.0 million
in Q3 2021 ($16.7 million loss excluding restructuring charges and product swap provisions) compared to the prior year Adjusted EBITDA
loss1 of $49.6 million primarily driven by the substantial decrease in SG&A and R&D expenses and continued healthy
| ______________________ |
| 1 These terms are non-GAAP measures, see "Non-GAAP Measures" below. |
Selling, General and Administrative ("SG&A"):
Additional Financial Information:
Fiscal Q3 2021 Cash Use:
In Q3 2021, despite a decline in Canadian consumer
revenue, the Company managed cash flow tightly using $35.9 million in cash to fund operations, excluding working capital investments and
restructuring costs and other costs of $5.4 million. Cash used to pay for capital expenditures, net of disposals, in Q3 2021 was $12.2
million versus $83.9 million in Q3 2020 and $8.8 million in Q2 2021. Cash used in operations and for capital expenditures are crucial
metrics in Aurora's drive toward generating sustainable positive free cash flow, and both have improved significantly over the past year.
The Company's ongoing business transformation, with the additional cost efficiency savings described earlier, is expected to move the
operating cash flow metric in a positive direction over the coming quarters.
Net working capital used $25.0 million in the quarter,
driven by a decrease in accounts payable and an increase in biological assets. Q3 2021 saw Aurora bring production levels into alignment
with demand as 14,484 kilograms of cannabis were produced and 13,520 kilograms equivalents were sold, a marked improvement over prior
quarters. The remaining government wage subsidy accrual of $19.7 million initially recorded in December 2020 was collected in April
2021. With the balancing of production with sales, had this wage subsidy accrual been collected in March 2021, the Company's net investment
in working capital would have been approximately $5.3 million in the quarter.
The main components of cash source and use in Q3 2021
| ($ thousands) | Q3 2021 | Q3 2020 (4) | Q2 2021 |
| Cash Flow | |||
| Cash, Opening | $434,386 | $201,336 (2) | $133,678 |
| Cash used in operations | ($41,266) | ($57,853) | ($36,753) |
| Working capital change | ($25,029) | $2,836 | ($30,433) |
| Capital expenditures | ($12,240) | ($83,803) | ($8,837) |
| Debt and interest payments | ($7,766) | ($60,770) | ($8,559) |
| Cash use | ($86,301) | ($199,590) | ($84,582) |
| Proceeds raised from sale of marketable securities and investments in associates | - | - | $6,135 |
| Proceeds raised through debt | - | $22,000 | - |
| Proceeds raised through equity financing (1) | $172,153 | $206,462 | $379,155 |
| Cash raised | $172,153 | $228,462 | $385,290 |
| Cash, Ending (3) | $520,238 | $230,208 | $434,386 |
| (1) | Includes impact of foreign exchange rates on USD cash raised from financing |
| (2) | Includes restricted cash of $45.0M for Q3 2020 held as cash collateral under the BMO Credit Facility. |
| (3) | Ending cash balance above includes restricted cash of $50.0M for Q3 and Q2 2021, as required under the amended BMO Credit Facility. The restricted cash can be used to repay, at any time at the Company's discretion the outstanding principal on its term loan on a 1:1 basis with a corresponding reduction in the restricted cash balance requirement. |
| (4) | Previous reported amounts have been restated to adjust for the change in accounting policy for inventory costing relating to by-products and the allocation of production management staff salaries. Refer to Note 2(e) of the unaudited Condensed Consolidated Interim Financial Statements for a reconciliation on the change in accounting policy. |
Refer to "Condensed Consolidated Interim Statement
of Cash Flows" in the "Condensed Consolidated Interim Financial Statements (unaudited)" for our cash flow statements prepared
in accordance with IAS 7 - Statement of Cash Flows.
| ($ thousands, except Operational Results) | Q3 2021 | Q3 2020 (6) | $ Change | % Change | Q2 2021 | $ Change | % Change | |||||
| Financial Results | ||||||||||||
| Total net revenue (1) | $55,161 | $73,541 | ($18,380) | (25) | % | $67,673 | ($12,512) | (18) | % | |||
| Cannabis net revenue (1)(2)(3a) | $55,161 | $69,637 | ($14,476) | (21) | % | $67,673 | ($12,512) | (18) | % | |||
| Medical cannabis net revenue (2)(3a) | $36,378 | $31,086 | $5,292 | 17 | % | $38,856 | ($2,478) | (6) | % | |||
| Consumer cannabis net revenue (1)(2)(3a) | $18,023 | $38,551 | ($20,528) | (53) | % | $28,573 | ($10,550) | (37) | % | |||
| Wholesale bulk cannabis net revenue (2)(3a) | $760 | $ - | $760 | N/A | $244 | $516 | 211 | % | ||||
| Adjusted gross margin before FV adjustments on cannabis net revenue (2)(3b)(7) | 44 | % | 43 | % | N/A | 1 | % | 42 | % | N/A | 2 | % |
| Adjusted gross margin before FV adjustments on medical cannabis net revenue (2)(3b)(7) | 59 | % | 60 | % | N/A | (1) | % | 56 | % | N/A | 3 | % |
| Adjusted gross margin before FV adjustments on consumer cannabis net revenue (2)(3b)(7) | 21 | % | 28 | % | N/A | (7) | % | 27 | % | N/A | (6) | % |
| Adjusted gross margin before FV adjustments on wholesale bulk cannabis net revenue (2)(3b)(7) | (140) | % | N/A | N/A | (140) | % | (305) | % | N/A | 165 | % | |
| SG&A expense (7) | $41,684 | $72,318 | ($30,634) | (42) | % | $41,972 | ($288) | (1) | % | |||
| R&D expense | $3,398 | $5,601 | ($2,203) | (39) | % | $2,432 | $966 | 40 | % | |||
| Adjusted EBITDA (2)(3c)(7) | ($24,020) | ($49,579) | $25,559 | (52) | % | ($16,802) | ($7,218) | 43 | % | |||
| Balance Sheet | ||||||||||||
| Working capital (7) | $642,512 | $429,293 | $213,219 | 50 | % | $592,746 | $49,766 | 8 | % | |||
| Cannabis inventory and biological assets (2)(4)(7) | $98,839 | $225,966 | ($127,127) | (56) | % | $179,502 | ($80,663) | (45) | % | |||
| Total assets (7) | $2,835,357 | $4,699,137 | ($1,863,780) | (40) | % | $2,830,190 | $5,167 | 0 | % | |||
| Operational Results - Cannabis | ||||||||||||
| Average net selling price of dried cannabis (2) | $3.59 | $4.64 | ($1.05) | (23) | % | $4.12 | ($0.53) | (13) | % | |||
| Kilograms sold (5) | 13,520 | 12,729 | 791 | 6 | % | 15,253 | (1,733) | (11) | % |
| (1) | Includes the impact of actual and expected product returns and price adjustments (Q3 2021 - $3.2 million; Q2 2021 - $2.7 million; Q3 2020 - $2.9 million). | |
| (2) | These terms are defined in the " Cautionary Statement Regarding Certain Non-GAAP Performance Measures " of the MD&A. | |
| (3) | Refer to the following sections for reconciliation of non-GAAP measures to the IFRS equivalent measure: | |
| a. | Refer to the " Revenue " section for a reconciliation of cannabis net revenue to the IFRS equivalent. | |
| b. | Refer to the " Cost of Sales and Gross Margin " section for reconciliation to the IFRS equivalent. | |
| c. | Refer to the " Adjusted EBITDA" section for reconciliation to the IFRS equivalent. | |
| (4) | Represents total biological assets and cannabis inventory, exclusive of merchandise, accessories, supplies and consumables. | |
| (5) | The kilograms sold is offset by the grams returned during the period. | |
| (6) | As a result of the Company's divestment of its wholly owned subsidiaries, Aurora Larssen Projects ("ALPS") and Aurora Hemp Europe ("AHE"), the operations of ALPS and AHE have been presented as discontinued operations and the Company's operational results have been retroactively restated, as required. Refer to Note 11(b) of the Financial Statements for more information about the divestitures. | |
| (7) | Amounts have been retroactively restated for the change in accounting policy for inventory costing relating to by-products and the allocation of production management staff salaries. Refer to the " Change in Accounting Policies " section in Note 2(e) of the Financial Statements. |
Operational Efficiency Plan
Today Aurora announced a plan to accelerate $60 million
to $80 million in annualized cost efficiencies which are expected to be realized over the next 12-18 months. The efficiencies are expected
to be $40 million - $60 million in costs of goods sold ("COGS") and approximately $20 million in SG&A, and relate primarily
to production costs, facility and logistic expenses, organizational efficiencies, insurance and capital markets related expenses. These
efficiencies are incremental to the approximately $300 million of total annualized expense reductions achieved since the announcement
of the Company's Business Transformation Plan in February 2020.
Executive Board Transitions and Recent Executive
Leadership Appointments
Aurora is pleased to announce that Mr. Ronald Funk,
lead independent Director, has assumed the role of Chairman, effective immediately. Mr. Michael Singer has reverted from Executive Chairman
to the Board seat he has occupied since May 2016. This transition reflects the strength of current management and the Board's planned
governance enhancements to include an independent Chairman.
Mr. Funk has 30+ years in senior executive roles managing
profitable regulated CPG brands. He brings unique skills and experiences that will assist the Company in the pursuit of global growth.
He has served on the Board for three years and has proven himself to be an effective leader as the Company has grown and evolved. Mr.
Singer has served as Interim CEO from February to September 2020, during which time he managed the Company's business transformation towards
profitability and transitioning management, including the hiring of CEO Miguel Martin.
Aurora has also announced the appointment of Mr. Alex
Miller to the role of Executive Vice President, Supply Chain and Ms. Lori Schick to the role of Executive Vice President, Human Resources.
Alex Miller brings 25+ years of experience in food, CPG and pharmaceutical industry experience in operations and supply chain leadership
positions, most recently as Vice President, Operations at MAV Beauty Brands Inc. Lori Schick brings 20+ years of global human resources
leadership experience leading organizational transformation and building high performance teams. Most recently Lori was Senior Vice President
and Head of People at Holt, Renfrew & Co.
Stock Exchange Listing Transfer to NASDAQ from
Aurora also announced that it will transfer its U.S.
stock exchange listing from the New York Stock Exchange ("NYSE") to The Nasdaq Global Select Market ("Nasdaq"), effective
May 24, 2021, after the market close. The last day of trading of the Company's common stock on NYSE is expected to be May 24, 2021. The
Company expects its common stock will begin trading as a Nasdaq-listed security at market open on May 25, 2021 and will continue to be
listed under the ticker symbol "ACB". The transfer is automatic, and shareholders are not required to take any action. This
transition will not impact the Company's primary listing on the Toronto Stock Exchange (TSX: ACB).
"Nasdaq represents a good fit for Aurora and
this listing transfer will enable us to realize cost efficiencies as part of our efforts to deliver long-term value to shareholders,"
Filing of Prospectus Supplement
Aurora intends to file a new prospectus supplement
for a U.S. $300 million At-the-Market offering program ("ATM"). This is a routine filing which Aurora believes will provide
maximum flexibility to pursue select acquisitions going forward, including within the U.S. Given the strength of Aurora's current cash
position, it is not expected to need to access the ATM facility without an accretive use of proceeds.
Aurora will host a conference call today, May
13, 2021, to discuss these results. Miguel Martin, Chief Executive Officer, and Glen Ibbott, Chief Financial Officer, will host