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Home / Business / Aurora Cannabis Announces Results for First Quarter 2020 and Action Plan

Aurora Cannabis Announces Results for First Quarter 2020 and Action Plan



NYSE | TSX: ACB

  • Report Industry Leading Gross Profit of $ 53.7 Million and 58% Cannabis Gross Margin
  • Provides Best-In-Class Costs to Produce $ 0.85 Per Gram [19659004] Announces Settlement Plan March 2020 5.0% Convertible Bond
  • Revises Capital Expenditure Plan to Match Long-Term Market Growth
  • Generates Total Income of $ 75.6 Million Included Medical and Consumer Cannabis Net Revenue of $ 60.5 Million and Wholesale Cannabis Net Revenue of $ 1
    0.3 Million

EDMONTON Nov. 14, 2019 / PRNewswire / – Aurora Cannabis Inc. (" Company " or " Aurora ") (NYSE | TSX: ACB), the Canadian company defining the future of cannabis worldwide, today announced its financial and operational results for the first quarter of fiscal 2020 ended September 30, 2019 .

"In recent years, Aurora has gained its place as a global leader in spite of short-term distribution and regulatory headwinds in Canada that have temporarily affected the industry, the long-term opportunity for Aurora in the global the market for cannabis and cannabinoids huge, "said Terry Booth CEO, Aurora Cannabis . "Aurora has and will continue to focus on everything that is within our control. Our success in doing so was demonstrated again this quarter by continuing to significantly improve our core KPIs. We delivered solid operating results this quarter, exemplified by our industry-leading cash costs to produce which fell an additional 25% to $ 0.85 per gram this quarter, as well as our industry-leading gross margins and market share. "

Mr. Booth added, "To capitalize on this global market, we recognize the need to be quick and proactive. To strengthen our financial flexibility and position ourselves to maximize future growth opportunities, we have also taken crucial steps to immediately strengthen our Specific includes these steps: (1) the announcement of a formal plan to settle our 5.0% convertible bonds due to March 2020 (2) a reduction in our capital investment over the next several quarters within the $ 190 million to better match near-term capacity expansion with expected demand, while maintaining long-term demand prospects, and (3) raising over $ $ 124 million in gross equity income since the start of fiscal 2020 through our Financing Program (ATM). "

Highlights of the first quarter of 2020

(Unless otherwise stated, comparisons are made between Fiscal Q1 2020 and Q4 2019 result and are in Canadian dollars)

  • Cash costs to produce per gram sold dropped 25% sequentially to $ 0 , 85 per gram, and delivered on the company's promised sub one dollar per gram. gram target CPI
  • Net Cannabis Income of $ 70.8 Million Compared to $ 94.6 Million in Q4 2019;
    • Wholesale cannabis revenue decreased 19% in succession, consisting of:
      • Medical cannabis revenue of $ 30.5 million up 3% sequentially
      • Canadian consumer cannabis revenue of $ 30.0 million down 33% in succession as provincial ordering declined significantly over the summer as distributors worked through inventory and as the industry was affected by the slow pace of store licensing
    • Wholesale revenue of $ 10.3 million with 58% gross margin
  • Production volume increased 43% sequentially to 41 436 kg
  • Total gross profit of $ 53.7 million and gross margin on cannabis net income of 58%, driven by a significant reduction in cash production costs
  • Aurora's medical patient base expanded 8% to 91,116 in succession. At the date of release, Aurora has approximately 91,408 active enrolled patients
  • Closed an Amended and Enlarged $ 360 Million secured credit facility which includes an accordion feature that allows Aurora to increase the size of the facility by approximately 40 million dollars . At the date of this release, approximately $ 160 million of this facility has not been withdrawn and remains available for Aurora
  • Sold remaining 28.8 million shares in The Green Organic Dutchman Holdings Ltd. for gross revenues of $ 86.5 million

Subsequent events and business actions

After the end of the quarter, the company made several decisions designed to streamline operations, provide financial flexibility and reduce financial leverage in response to a shift market and regulatory environment, while supporting our long-term growth:

  • Aurora has secured the commitment of investors holding approximately $ 155 million of the principal value of the 5% March 2020 Convertible Debentures ("March Convertible Debenture") to voluntarily convert their bonds under a temporarily altered early conversion privilege ("Altered Early Conversion Privilege"). During this scheduled transaction, all remaining holders of March convertible bonds will have the option of a period at a price equal to 6% discount to a 5-day volume-weighted average price ("VWAP") to convert their bonds. Any owners who do not exercise their early conversion privilege will remain holders of their original bonds which have a 5% coupon, $ 13.05 conversion price and mature on March 9, 2020 .
  • In a To expand responsibly in line with global demand, the company has made the decision to immediately halt construction activity at the Aurora Nordic 2 facility in Denmark which is expected to save approximately $ 80 million over the next 12 months. Aurora Nordic 1, a 100,000-square-foot facility located in Odense, Denmark has been granted a production license, and the company expects to obtain a license to sell shortly. Furthermore, the company has decided to postpone most of the final construction and commissioning operations of the Aurora Sun plant for the foreseeable future, which is expected to save approximately $ $ 110 million cash. When the work is completed to date, both Aurora Nordic 2 and Aurora Sun systems are now completely closed. The company expects to have at least six flower rooms completed and operational in Aurora Sun by 2020, totaling 238,000 square meters. As global demand develops, or as Aurora's market share in the global cannabis market increases, we will reactivate these projects.
  • Aurora has been active under the USD 400 million ATM Distribution Program as it represents a strategically valuable source of equity. The fiscal year to date, the company has raised gross revenues of $ 124.4 million through the issuance of 29,0557,944 shares.

Q1 2020 key economic and operational metrics

(thousands of dollars, excluding operating results)

Q1 2020

Q4 2019 (4)

$ Change

% Change

Financial Performance





Total Net Revenue

$ 75,245

$ 98,942

($ 23,697)

(24)%

Cannabis Net Income (1) (2a)

$ 70,776

$ 94,640

($ 23,864)

(25)%

Medical Cannabis Net Revenue (1) (2a)

$ 30,450

$ 29,651

$ 799 [19659049] 3%

Cannabis Net Income Consumption (1) (2a)

$ 30,022

$ 44,882

($ 14,860)

(33)%

Wholesale Bulk Cannabis Net Income (1) (2a)

$ 10 304

$ 20 107

($ 9803)

(49)%

Gross Margin before FV adjustments on cannabis net income (1) (2b)

58%

58%

N / A

0%

Gross margin b efore FV adjustments of medical cannabis net income (1) (2b) [19659061] 63%

60%

N / A

3%

Gross margin before FV adjustments on cannabis consumption net income (1) (2b)

53%

55%

N / A

(2)%

Gross Margin Before FV Adjustments on Wholesale Bulk Net Revenue for Cannabis (1) (2b)

58%

61%

N / A

(3)%

Sales, general and administrative expenses

$ 81,132

$ 72,869

$ 8663

11%






Balance





Working capital

$ 123,750

$ 227,802

($ 104,052)

(46)%

Cannabis inventory and biological assets (3)

$ 178,748

$ 144,275

$ 34,473 [19659095] 24%

Total Assets

$ 5,606,799

$ 5,502,830 [1 9659037] $ 103,969

2%

] Operating results – Cannabis





Cash cost to produce per gram sold (1) (2c)

$ 0.85

$ 1.14 [19659039] ($ 0.29)

(25)%

Active Registered Patients

91,116

84,729

6387

8%

Average Net Sales Price for Medical Cannabis (1)

$ 8.00

$ 8.51

($ 0.51)

(6)%

Average net selling price for cannabis consumer (1) [19659047] $ 5.28

$ 5.14

$ 0.14

3%

Average Net Wholesale Price of Wholesale Bulk Cannabis (1)

$ 3.46

$ 3.61

($ 0.15)

(4)%

Kilogram produced

41,436

29,034

12 402

43%

Kilogram sold [19659133] 12,463

17,793

(5,330)

(30)%

(1)

These terms are the vested in " Warning Statement on Certain Non-GAAP Performance Objectives " section of MD&A.

(2)

See the following sections in the MD&A for reconciliation of non-GAAP measures to IFRS-equivalent measures:


a.

See the " Revenue " section of MD&A for a reconciliation of net income from cannabis to IFRS equivalent.


b.

See section " Gross Margin " in MD&A for reconciliation with IFRS equivalent.


c.

See " Cash Costs of Dried Cannabis Sales and Cash Costs to Produce Dried Cannabis Sold – Aurora Manufactured Cannabis " section of MD&A for reconciliation with IFRS equivalent.

(3)

Represents total biological assets and cannabis inventory, excluding goods, accessories, supplies and consumables.

(4)

During the three months ended June 30, 2019, the Company recorded non-material year-end adjustments for: (i) activating certain payroll rules, stock-based compensation and borrowing costs related to the construction of production facilities that were incorrectly charged oaths in previous periods; and (ii) reverse items that had been worked up in previous periods. The net effect of these adjustments in Q4 2019 Adjusted EBITDA was a $ 14.9 million reduction in reported operating expenses.

(thousands of dollars)

Three months ended

30. September 2019

June 30, 2019

September 30, 2018

Net Income

75.245

98.942

29.674

Design, Design and Construction Services

(1 489)

Patient Counseling Services

(1 055)

(606)

(1 242)

Analytical Testing Services [19659062] (816)

(1965) 317)

(447)

Other cannabis segment revenue (accessories, hemp, other)

(2 168)

(2,760)

( 1 385)

Horizontally Integrated Business Revenue

(430)

(619)

(515)

Cannabis Net Revenue

70,776

94,640

24,596

Table the overview of the cannabis network between our medical, consumer and wholesale markets, as well as our dried cannabis and cannabis extracts for the three months that were ended September 30, 2019 and the comparative periods.

(thousand dollars)

Three months ended

30. September 2019

30. June 2019

30. September 2018

Medical Cannabis Net Revenue




Canada Dried Cannabis

14,882

14,438

13,752 [19659040] Canada Cannabis Extracts (1)

10606

10,732

7488

International Dried Cannabis

4,553

4 481

2803

International Cannabis Extracts (1)

409

Total medical net income

30,450

29,651

24,043





Consumers cannabis net income [19659191is26889

41,813 [19659049] 533

Cannabis extracts (1)

3,133

3,069

20

Total consumption net income

30,022 [19659177] 44,882

553





Net revenue in bulk from cannabis




Dried cannabis

7,432

20,107

Cannabis extracts (1)

2,872

Wholesale cannabis revenue [19659031] 10304

20,107





Total net income for cannabis

70,776

94,640

24,596

(1)

Revenue from cannabis extracts includes cannabis oils, capsules, softgels, sprays and current income.

Consolidated net income was $ 75.2 million in Q1 2020 compared to $ 98.9 million in the previous quarter. Medical net cannabis revenues increased to $ 30.5 million in Q1 2020, a 3% increase over the previous quarter. Consumer cannabis revenues were $ 1945.000 $ 30.0 million in Q1 2020, down 33% from the previous quarter and contributing 40% to total consolidated net income. The decline in net revenue for cannabis is mainly due to previously identified restrictions in Canadian consumer trade and distribution infrastructure combined with a decline in wholesale revenue. The Canadian wholesale market is developing rapidly and remains an important long-term opportunity for Aurora.

As a leader in high-automation, low-cost manufacturing, Aurora is well positioned to coordinate assets to quickly respond to evolving consumer preferences while pursuing potential white label wholesale opportunities and building a strong inventory of high-quality derivative products for launch later this year.

Average net sales price for cannabis increased by $ 0.36 per gram over the previous quarter from $ 5.32 in Q4 2019 to $ 5, 68 in Q1 2020. This increase is primarily due to an increase in the average net selling price of cannabis combined with a decrease in sales volume to the bulk wholesale markets, which results in lower average net sales prices compared to consumer and medical markets.

Gross margin on cannabis net income remained stable at 58% in Q1 2020, compared to 58% in the previous quarter.

During Q1 2020, Aurora produced 41,436 kilos of cannabis, compared with 29,034 kilos in the previous quarter. The 42.7% increase in production production was primarily due to a continued production scale up at the company's Aurora Sky plant. While Aurora Sky has delivered well above expectations from a capacity perspective, in responding to changing consumer preferences, the company is likely to plant greater strength, lower return strains demanded in the leisure market. As such, we do not expect production in the short term to reach levels reached in Q1 2020, and the company continues to operate with an annual production capacity of 150,000 kg.

Excluding the effect of $ 10.6 million excluding period adjustments recognized in Q4 2019, Q1 2020 SG&A fell by 3% to $ 81.1 million . The decline was driven by a reduction in fulfillment and shipping costs, and a decrease in one-off costs related to derivative product launches and regulatory fees during the first quarter of 2020.

Adjusted EBITDA loss was $ 39.7 million Q1 2020 compared to $ 26.6 million in Q4 2019, excluding the effect of $ 14.9 million outside the period recognized in the previous quarter. Developing a profitable and robust global cannabis company is extremely important to Aurora. Although the company strongly believes the global market opportunity for cannabis is robust, there is uncertainty at the time of revenue growth in the core markets, and we continue to invest in our global business that could lead to near-term challenges in achieving positive adjusted EBITDA. However, the company expects adjusted EBITDA to continue to improve in the future as we increase revenues through sales of higher-margin extract products and increase gross margin through economies of scale, while investing in the company's capabilities with controlled SG&A growth.

Outlook

The global medical cannabis and hemp-derived cannabinoid markets represent a significant opportunity for Aurora. To support the company's future prospects in these markets, Aurora continues to make the necessary investments that will build long-term value for its shareholders, while balancing growth with sound financial management and capital allocation. This focus includes aligning Aurora's planned cultivation properties and capital expenditures with the global demand for cannabis. With the company's cultivation properties surpassing the capacity of the nameplate, Aurora is positioned to meet the long-term global market demand and to pursue long-term white label agreements and contract with distribution partners in the Canadian and international markets.

Current October 17, 2019 new Cannabis Act regulations will come into force that will allow the sale of higher value, sought after products such as crayons, edible items and other derivatives in the consumer market ("Cannabis 2.0") . The implementation of Cannabis 2.0 is still the most important market opportunity for the company in Canada . Aurora is extremely well positioned and has prioritized its resources to prepare for a successful initial launch and supported an ongoing refill strategy to ensure that consumers across Canada will have access to a diverse portfolio of high quality derivative products They want to buy. Aurora expects to begin submitting these new product formats to provincial regulators starting late December 2019 .

The second near-term focus and market opportunity for the company expands its operational footprint in United States . To ensure a successful entrance, Aurora is considering a number of potential accredited options with a focus on adding cash flows to operations. The company is obligated to participate only in activities permitted under both state and federal laws.

Telephone Conference

Aurora will host a conference call today, November 14, 2019, to discuss these results. Terry Booth, Chief Executive Officer, Glen Ibbott, Chief Financial Officer, Cam Battley Chief Executive Officer, and Michael Singer Chief Executive Officer, will host the call beginning at 6 p.m. Eastern time. A question and answer session will follow the management's presentation.

Date:

Thursday, November 14 th 2019

Time:

06:00 p.m. Eastern Time | 4:00 p.m. Mountain Time

Webcast:

https://bit.ly/2JBOI2s

Replay:

(416) 849-0833 or (855) 859-2056


until 12:00 midnight Eastern Time Thursday, November 21, 2019

Reference Number:

3751059

About Aurora

Headquarters in Edmonton, Alberta, Canada with a funded capacity of over 625,000 kg per year and sales and operations in 25 countries across five continents, Aurora is one of the world's largest and leading cannabis companies. Aurora is vertically integrated and horizontally diversified in all key segments of the value chain, from plant engineering and design to cannabis breeding and genetics research, cannabis and hemp production, derivatives, high value product development, home cultivation, wholesale and retail distribution.

Aurora has established a uniquely advanced, consistent and efficient manufacturing strategy, very different from its peers, based on purpose-built facilities that integrate leading-edge technologies across all processes, defined by extensive automation and customization, resulting in massive scale production of high quality consistent product. Designed to be reproduced and scaled globally, our manufacturing facilities are manufactured to produce cannabis on a substantial scale, with high quality, industry-leading yields and low per gram production costs. Each of Aurora's facilities is built to meet EU Good Manufacturing Standards (EU GMP). Certification has been granted to Aurora's first Mountain View County manufacturing facility, the MedReleaf Markham plant, and the wholly-owned European medical cannabis distributor Aurora Deutschland. All Aurora plants are designed and built to the EU GMP standard.

In addition to the company's rapid organic growth and strong execution of strategic M&A, which to date includes 17 wholly owned subsidiaries – MedReleaf, CanvasRX, Peloton Pharmaceutical, Aurora Deutschland, H2 Biopharma, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia , HotHouse Consulting, MED Colombia, Agropro, Borela, ICC Labs, Whistler, Chemi Pharmaceutical, and Hempco – Aurora stands out with its reputation as a chosen partner and employer in the global cannabis sector, after investing in and establishing strategic partnerships with a number of leading innovators, including: Radient Technologies Inc. (TSXV: RTI), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), CTT Pharmaceuticals (OTCC: CTTH), Alcanna Inc. (TSX: CLIQ), High Tide Inc. (CSE) : HITI), EnWave Corporation (TSXV: ENW), Capcium Inc. (private), Evio Be auty Group (private) and Wagner Dimas (private).

Aurora Common Shares trades on the TSX and NYSE under the symbol "ACB" and is a constituent of the S & P / TSX Composite Index.

For more information on Aurora, please visit our investor site, investor.auroramj.com

Terry Booth CEO

Aurora Cannabis Inc.

Forward-looking Statements and Non-IFRS industry measures [19659276] This news release refers to certain non-IFRS measures, including certain industry metrics. These calculations and measurements are not recognized targets under IFRS have no meanings prescribed under IFRS and as a result are unlikely to be comparable to similar measures presented by other companies. These measures are provided as information that is complementary to the IFRS measures by providing a further understanding of our operating results from the management's perspective. As such, these measures should not be considered in isolation or in lieu of review of our financial information reported under IFRS. This press release uses non-IFRS measures including "net cannabis revenues", "adjusted EBITDA", "cannabis inventory and biological assets", "cash costs to produce per gram sold", "average net selling price", "production capacity", and "SG & A". The above are frequently used operating measures in the industry, but can be calculated differently compared to other companies in the industry. These non-IFRS measures, including the industry measures, are used to provide investors with additional measures for our operating results that are otherwise not visible when relying only on IFRS calculations. Definitions of the non-IFRS measures can be found in our accounts, MD&A and this news paper.

This news release also contains statements containing certain "forward-looking information" within the meaning of applicable securities law ("forward-looking) statements"). Forward-looking statements are often marked by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "can", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur and include, but are not limited to, the settlement of the convertible bonds in March, the reduction in capital investment and the successful the launch and replenishment strategy for Cannabis 2.0. These statements are just predictions. Various assumptions were used to draw conclusions or make projections in the forward-looking statements through this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a number of risks and uncertainties and other factors that may cause actual events or results to differ materially from those projected in the future. -so statements. These risks include, but are not limited to, the ability to retain key personnel, the ability to continue to invest in infrastructure to support growth, the ability to obtain financing under acceptable conditions, continued quality of our products, customer experience and retention, development of third-party government and non-governmental sales channels for adult use, consumer demand estimation management in Canada and in jurisdictions where the company exports, expectations of future results and expenditures, availability of additional capital to complete construction projects and construction improvements, risk for successful integration of acquired business and operations, the ability to expand and maintain distribution capabilities, the effect of competition, and the opportunity for changes in laws, regulations and regulations in the industry. 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, unless expressly required by applicable law.

N either TSX, NYSE or their relevant regulatory service providers (as defined in the Toronto Stock Exchange and New York Stock Exchange Policies) accept responsibility for the adequacy or accuracy of this release.

SOURCE Aurora Cannabis Inc.

Related links

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