Full Press Release Details
Aurora Cannabis Announces Fiscal 2023 Second
Cannabis Revenues Up ~20% from Fiscal Q1 2023, Net Revenue1
Achieves Positive Adjusted EBITDA1 in
Line with Prior Guidance
Delivers ~$340 Million in Annualized Cost Savings Since
Balance Sheet Remains in Net Cash Position, Among Strongest
in Industry; Debt Reduction of ~$302 Million in CY 2022
EDMONTON, AB, Feb. 9, 2023 /CNW/ - Aurora Cannabis
Inc. (the "Company" or "Aurora") (NASDAQ: ACB) (TSX: ACB), the Canadian company opening the world to
cannabis, today announced its financial and operational results for the fiscal second quarter ended December 31, 2022. As a reminder,
Fiscal 2023 is comprised of three quarters ending March 31, 2023.
"We are pleased to have delivered on our commitment
to achieve positive Adjusted EBITDA1 in Q2 2023, following a tremendous effort to realize approximately $340 million of total
annualized savings since February 2020. We have right-sized our business while remaining the #1 Canadian LP in global medical cannabis
revenues, and having demonstrated organic quarter over quarter revenue growth across all of our cannabis segments during Q2 2023. Additionally,
our robust balance sheet remains in a net cash position which puts it among the strongest in the industry, and we continued to make significant
strides in reducing our debt in the recent quarter," stated Miguel Martin, Chief Executive Officer of Aurora.
"Revenue growth in Q2 2023 was primarily driven
by our unique, portable, and profitable international medical program. Our Canadian rec business also demonstrated sequential growth driven
by significant product innovation, and our Canadian medical cannabis business continued to benefit from strong patient relationships and
high barriers to entry. Q2 2023 also included the first full-quarter of results from our recent Bevo Agtech Inc. ("Bevo")
acquisition, for which we anticipate an even higher top-line and Adjusted EBITDA1 contribution in Q3 2023 versus Q2 2023 due
to the inherent seasonality of this business," he added.
"Looking ahead, we are focused on profitable
growth opportunities across all segments, ongoing discipline in capital deployment, and our ability to generate positive operating cash
flow as we continue to build value for shareholders," he concluded.
| __________________________________ |
| 1 This press release includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. See "Non-GAAP Measures" below for reconciliations of non-GAAP financial measures to GAAP financial measures. |
Second Quarter 2023 Highlights
(Unless otherwise stated, comparisons are made between fiscal Q2 2023, Q1 2023, and Q2 2022 results and are in Canadian dollars)
Total net revenue1 was $61.7 million, as compared to
the prior quarter net revenue1 of $49.3 million and $60.6 million in the prior year period. The increase from the prior quarter
was due to growth across all cannabis business segments and a full quarter contribution of $6.6 million from Bevo, acquired in August
Excluding the impact of the non-core bulk wholesales, adjusted
gross margin before fair value adjustments on cannabis net revenue1 for Q2 2023 remained strong and steady, and well above the industry
average, at 49% compared to 54% in Q1 2023 and 54% in Q2 2022. Sequentially, adjusted gross margin was impacted by growth in the consumer
channel and incremental export revenue into developing countries, both of which deliver healthy gross margins but at levels below our
Canadian and European medical businesses.
Medical cannabis net revenue1 was $39.5 million, a
25% increase from the prior quarter and a 14% decrease from the prior year period, delivering 64% of Aurora's Q2 2023 consolidated net
revenue1 and 87% of Adjusted gross profit before fair value adjustments1.
The increase in net revenue1 from Q1 2023 was primarily attributable
to growth into international export markets such as Australia, Poland, the UK, and Cayman Islands, demonstrating the Company's ability
to navigate complex import/export licensing requirements to participate in these high-growth markets. The decrease from the prior year
quarter was primarily attributable to timing of sales to certain international export markets.
Adjusted gross margin before fair value adjustments1
on medical cannabis net revenue was 61% compared to 63% in the prior year period and 67% sequentially. The continued strength of the Company's
medical adjusted gross margins1 reflect the direct-to-patient model in Canada and strong and sustained presence in the
high margin international medical business. The decrease is primarily driven by higher sales into certain developing international export
markets, which yield a slightly lower adjusted gross margin1, but still contribute strong positive adjusted gross profits1.
Consumer cannabis net revenue1 was $14.6 million, a
7% increase from the prior quarter. Excluding the one-time Q1 2023 refund of excise taxes, Q2 2023 net revenue1 was a 13% sequential
The increase in net revenue1 from Q1 2023 was driven by growth
in both Aurora's premium brand San Rafael '71, and by the Company's value brand Daily Special, which offers a strong consumer potency/quality/price
Adjusted gross margin before fair value adjustments1 on
consumer cannabis net revenue was 20%, compared to 25% in the prior quarter and 23% in the comparable prior year period.
Selling, General and Administrative ("SG&A"):
SG&A, including Research and Development ("R&D"),
was $41.6 million in Q2 2023 which includes $14.0 million of restructuring, non-recurring, and out-of-period costs, and $0.9 million in
market development costs.
Excluding the non-routine items noted above, SG&A and R&D
continued to be well controlled and declining at $26.6 million during Q2 2023 versus $32.1 million in the prior quarter and $39.3 million
in the prior year period, presented on a comparable basis.
Plant propagation revenue1 was comprised wholly from the Bevo
business, contributing $6.6 million of net revenue1 and represents an increase of $3.3 million from the prior quarter, which represented
the truncated period from the date of closing of Aurora's investment in Bevo on August 25, 2022. Bevo's business, is reasonably predictable
with customer orders known well in advance of planting dates, and in many instances requiring customer deposits prior to planting coupled
with many long tenured customer relationships. However, Bevo's business does exhibit operational seasonality, with the months of January
to June representing the busiest operational and financial period for Bevo with July to December being less operationally intensive.
Net loss for the three months ended December 31, 2022
was $67.2 million compared to $51.9 million in the prior quarter and $75.1 million for the same period in the prior year. The increase
in net loss of $15.3 million from the prior quarter was primarily due to: (i) an increase in gross loss of $14.5 million and (ii) an increase
of $2.3 million in impairment of property, plant and equipment. This was mainly offset by (i) an increase of $9.5 million in other gains,
and (ii) a $7.1million increase in foreign exchange gains. The decrease in net loss of $8.0 million from the same period in the prior
year was primarily due to an increase in other income of $24.0 million primarily consisting of: (i) an increase of $8.3 million in foreign
exchange gains (ii) an increase of $6.8 million in other gains (iii) a decrease of $5.6 million in finance costs and (iv) a decrease of
$2.0 million in impairment of property, plant and equipment and lower operating expenses of $5.9 million, partially offset by a lower
gross profit of $21.8 million.
Adjusted EBITDA1 increased to positive
$1.4 million in Q2 2023 versus a loss of $7.4 million in Q1 2023 and loss of $7.1 million in the prior year period. The increase in Adjusted
EBITDA1, as compared to the previous quarter and the same period in the prior year is primarily attributable to reductions
in SG&A and, for the sequential comparative, due also to revenue growth across all markets.
Operational Efficiency Plan, Balance Sheet Strength,
Aurora has completed its previously announced strategic
transformation plan. The achievement of significant and sustainable operating cost and SG&A reductions resulted in positive Adjusted
EBITDA during Q2 2023.
Aurora has one of the strongest balance sheets in
the Canadian Cannabis industry with approximately $310 million of cash, including $65 million of restricted cash as of February 8, 2023
and access to the base shelf prospectus filed on March 30, 2021 (the "2021 Shelf Prospectus"), including US $134.4 million
remaining securities for sale under the 2021 at-the-market (ATM) program (the "ATM Program"). During the three months
ended December 31, 2022, the Company issued 39,500,341 common shares under the ATM Program for net proceeds of $68.8 million (US $49.7
During the three months ended December 31, 2022, the
Company repurchased a total of $135.0 million (US $99.0 million) in principal amount of convertible senior notes due 2024 ("Senior
Notes") for $128.7 million (US $94.4 million), plus accrued interest. Aurora may, from time to time and subject to market conditions,
repurchase its convertible notes, including in open market purchases and privately negotiated transactions.
Cash use is outlined in the following table:
| ($ thousands) | Q2 2023 | Q2 2022 (2) | Q1 2023 (2) |
| Cash, Opening (1) | $428,228 | $424,301 | $488,779 |
| Cash used in operations, including working capital (3) | ($60,648) | ($21,586) | ($31,138) |
| Capital expenditures and investments, net of disposals and government grant income | $11,670 | ($11,497) | $18 |
| Acquisition of business, net of cash acquired | - | $1,299 | ($38,790) |
| Deposits | ($980) | $620 | ($2,602) |
| Debt and interest payments | ($130,198) | ($8,753) | ($2,379) |
| Cash use | ($180,156) | ($39,917) | ($74,891) |
| Investment in derivatives and proceeds from loans receivable | $3,813 | ($135) | ($557) |
| Proceeds raised through debt | $5,097 | - | $842 |
| Proceeds (costs) raised through equity financing | $68,761 | $1,169 | ($119) |
| Cash raised | $77,671 | $1,034 | $166 |
| Effect of foreign exchange on cash and cash equivalents | ($2,043) | ($1,665) | $14,174 |
| Cash, Ending (1) | $323,700 | $383,753 | $428,228 |
| Total Debt | ($193,411) | ($432,693) | ($326,320) |
| Net Cash (1) | $130,289 | $48,940 | $101,908 |
| (1) Includes restricted cash of $65.0M at Q2 2023, $59.0M at Q1 2023, and $51.3M at Q2 2022. |
| (2) Prior period comparatives have been recast to conform to the current period's presentation. |
| (3) Cash used in operations for Q2 2023 includes $15.5 million related to business transformation and $12.4 million related to annual payments of bonuses, business insurance premiums, and Health Canada permits. |
Key Quarterly Financial and Operating Results
| ($ thousands, except Operational Results) | Q2 2023 | Q2 2022 | $ Change | % Change | Q1 2023 | $ Change | % Change |
| Financial Results | |||||||
| Total net revenue (1)(2) | $61,679 | $60,586 | $1,093 | 2 % | $49,263 | $12,416 | 25 % |
| Medical cannabis net revenue (1)(2) | $39,514 | $45,748 | ($6,234) | (14 %) | $31,565 | $7,949 | 25 % |
| Consumer cannabis net revenue (1)(2) | $14,647 | $14,374 | $273 | 2 % | $13,713 | $934 | 7 % |
| Adjusted gross margin before FV adjustments on total net revenue (2) | 45 % | 53 % | N/A | (8 %) | 50 % | N/A | (5 %) |
| Adjusted gross margin before FV adjustments on core cannabis net revenue (2) | 49 % | 54 % | N/A | (5 %) | 54 % | N/A | (5 %) |
| Adjusted gross margin before FV adjustments on medical cannabis net revenue (2) | 61 % | 63 % | N/A | (2 %) | 67 % | N/A | (6 %) |
| Adjusted gross margin before FV adjustments on consumer cannabis net revenue (2) | 20 % | 23 % | N/A | (3 %) | 25 % | N/A | (5 %) |
| Adjusted SG&A expense (2) | $25,428 | $37,715 | ($12,287) | (33 %) | $30,642 | ($5,214) | (17 %) |
| Adjusted R&D expense (2) | $1,217 | $1,625 | ($408) | (25 %) | $1,417 | ($200) | (14 %) |
| Adjusted EBITDA (2) | $1,428 | ($7,110) | $8,538 | 120 % | ($7,363) | $8,791 | 119 % |
| Balance Sheet | |||||||
| Working capital (2) | $409,729 | $481,574 | ($71,845) | (15 %) | $514,193 | ($104,464) | (20) % |
| Cannabis inventory and biological assets (3) | $93,675 | $139,625 | ($45,950) | (33 %) | $121,776 | ($28,101) | (23) % |
| Total assets | $1,023,835 | $2,485,384 | ($1,461,549) | (59 %) | $1,169,927 | ($146,092) | (12) % |
| Operational Results - Cannabis | |||||||
| Average net selling price of dried cannabis excluding bulk sales (2) | $4.79 | $4.52 | $0.27 | 6 % | $5.32 | ($0.53) | (10) % |
| Kilograms sold (4) | 15,269 | 13,043 | 2,226 | 17 % | 12,165 | 3,104 | 26 % |
| (1) Includes the impact of actual and expected product returns and price adjustments (Q2 2023 - $2.0 million; Q1 2023 - $0.7 million; Q2 2022 - $3.7 million). |
| (2) This press release includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. See " Non-GAAP Measures " below for reconciliations of non-GAAP financial measures to GAAP financial measures. |
| (3) Represents total biological assets and inventory, exclusive of merchandise, accessories, supplies, consumables and plant propagation biological assets. |
| (4) The kilograms sold is offset by the grams returned during the period. |