Full Press Release Details
Aurora Cannabis Provides Key Updates on
Business Transformation Plan
Continues to Execute on Corporate Restructuring &
Facility Rationalization Plan Aimed at Margin Improvement and Profitability
Exiting Fiscal Q4 2020 at an SG&A Run Rate of
Approximately $42 Million
Remains on Track for Positive Adjusted EBITDA in
EDMONTON, AB, June 23, 2020 /CNW/ - Aurora
Cannabis Inc. (the "Company" or "Aurora") (NYSE | TSX: ACB), the Canadian company defining the
future of cannabinoids worldwide, today provided a progress update on its Business Transformation Plan that was previously communicated
"Across our organization we continue to
take decisive action and execute on our previously announced Business Transformation Plan," stated Michael Singer, Executive
Chairman and Interim CEO of Aurora. "With today's announcement we have achieved our stated SG&A run-rate target and expect
to operate at approximately $42 million for the first quarter of fiscal 2021. The further cost savings and margin improvement to
be realized from our facility rationalization plan is another example of our commitment to deliver greater efficiency throughout
Mr. Singer further elaborated, "This has
not simply been a cost cutting exercise. We have undertaken a strategic realignment of our operations to protect Aurora's position
as a leader in key global cannabinoid markets, most notably Canada. Both the Canadian facility rationalization and inventory revaluation
are expected to improve gross margins and accelerate our ability to generate positive cash flow. We believe that we now have the
right balance for the long-term success of Aurora - market leadership, financial discipline, operational excellence, and
strong execution. We remain focused on making Aurora a profitable and robust global cannabinoid company."
Since announcing the Business Transformation
Plan, Aurora has taken a number of concrete steps that position the Company to meet or exceed the previously announced Selling,
General and Administrative (SG&A) cost target of $40 to $45 million, including R&D, as the Company exits Q4 2020.
Today, the Company announced the following
Restructuring of Personnel and Third-Party
The Company has executed a material reduction
in both corporate and production level employees and third-party consulting and professional spending across the organization.
These changes include an approximate 25% reduction in Aurora's SG&A staff, most with immediate effect, and an approximate 30%
reduction in production staff over the next two quarters. The corporate headcount rationalization was undertaken at all levels
of the Company, including a restructuring of the executive leadership team and the recently announced retirement of President Steve
The Q1 2021 SG&A run-rate of approximately
$42 million represents a cost structure that the Company anticipates will be capable of supporting significantly higher levels
of revenue in the future without a corresponding level of growth in SG&A.
Consolidation of Production Activities to
Aurora's Most Efficient Facilities:
Aurora has initiated a plan to close operations
at five facilities over the next two quarters in order to focus production and manufacturing at the Company's larger scale and
highly efficient sites. The affected facilities are the smaller scale facilities, Aurora Prairie, Aurora Mountain, Aurora Ridge,
Aurora Vie and Aurora Eau. Aurora expects that part of the Aurora Vie facility in Quebec will remain operational to allow for the
manufacturing of certain higher margin products. By the end of fiscal Q2 2021, the Company intends to consolidate Canadian production
and manufacturing at Aurora Sky, Aurora River (EU-GMP certified), Whistler Pemberton, and Polaris. As previously stated, the Aurora
Sun production facility has been scaled back to six grow bays, and will allow for efficient scale production on an as-needed basis
as market demand grows. As part of the transition, the Company also intends to immediately ramp up cannabis production at its Nordic
facility in Europe from which it believes can adequately service the European market with EU-GMP certified product. This production
and manufacturing consolidation plan represents a new, incremental cost reduction opportunity not previously considered in the
original SG&A target.
In connection with the stated facility rationalization,
Aurora expects to record production asset impairment charges of up to $60 million during Q4 2020. The Company also expects to record
a charge of up to $140 million in the carrying value of certain inventory, predominantly trim, in order to align inventory
on hand with near term expectations for demand. Approximately 40% of the expected inventory provision relates to the non-cash
IFRS fair value adjustment within inventory.
In addition to the Company's continued focus
on production efficiencies and yield improvements, Aurora expects that the production facility closures will be accretive to gross
margin as the move to large scale operations is expected to result in a material reduction in per unit cost of goods by Q3 2021.
The reduction in inventory carrying value is also expected to be modestly accretive to future gross margins as older, higher cost
inventory is replaced with newer, lower cost inventory and consequently reflected in gross margins.
Aurora expects to report its Q4 2020 full financial
results in early September.
Aurora is a global leader in the cannabis industry
serving both the medical and consumer markets. Headquartered in Edmonton, Alberta, Aurora is a pioneer in global cannabis dedicated
to helping people improve their lives. The Company's brand portfolio includes Aurora, Aurora Drift, San Rafael '71, Daily Special,
AltaVie, MedReleaf, CanniMed, Whistler, and ROAR Sports. Providing customers with innovative, high-quality cannabis products, Aurora's
brands continue to break through as industry leaders in the medical, performance, wellness and recreational markets wherever they
are launched. For more information, please visit our website at www.auroramj.com.
Aurora's Common Shares trade on the TSX and
NYSE under the symbol "ACB", and is a constituent of the S&P/TSX Composite Index.
This news release includes statements containing
certain "forward-looking information" within the meaning of applicable securities law ("forward-looking statements").
Forward-looking statements are frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain events or conditions "may"
or "will" occur. These forward-looking statements are only predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking
statements are based on the opinions, estimates and assumptions of management in light of management's experience and perception
of historical trends, current conditions and expected developments at the date the statements are made, such as current and future
market conditions, the current and future regulatory environment and future approvals and permits. Forward-looking statements are
subject to a variety of risks, uncertainties and other factors that management believes to be relevant and reasonable in the circumstances
could cause actual events, results, level of activity, performance, prospects, opportunities or achievements to differ materially
from those projected in the forward-looking statements, including the risks associated with: entering the U.S. market, the ability
to realize the anticipated benefits associated with the acquisition of Reliva, achievement of Aurora's business transformation
plan, general business and economic conditions, changes in laws and regulations, product demand, changes in prices of required
commodities, competition, the effects of and responses to the COVID-19 pandemic and other risks, uncertainties and factors set
out under the heading "Risk Factors" in the Company's annual information form dated September 10, 2019 (the "AIF")
and filed with Canadian securities regulators available on the Company's issuer profile on SEDAR at www.sedar.com and filed with
and available on the SEC's website at www.edgar.gov. The Company cautions that the list of risks, uncertainties and other factors
described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider
the risks, uncertainties and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place
undue reliance on such information. The Company is under no obligation, and expressly disclaims any intention or obligation, to
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as
expressly required by applicable securities law.
The Company uses financial measures regarding
itself, such as Adjusted EBITDA, that do not have standardized meaning under the International Financial Reporting Standards ("IFRS")
and may not be comparable to similar measures presented by other entities ("non-IFRS measures"). Further information
relating to non-IFRS measures, is set out in the Company's management discussion and analysis for the three and nine months ended
March 31, 2020 and 2019 under the heading "Cautionary Statement Regarding Non-GAAP Performance Measures" and the "Revenue"
section for reconciliation to the IFRS equivalent.
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