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Sept. 27, 2021, 4:15 p.m. EDT

Aurora Cannabis Announces Fiscal 2021 Fourth Quarter Results

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EDMONTON, AB, Sep. 27, 2021 (Canada NewsWire via COMTEX) -- NASDAQ | TSX: ACB







        
            --  #1 Canadian LP in Global Medical Cannabis; Total Medical
                Cannabis Net Revenue Rose 9% Compared to Prior Year; Strong
                Adjusted Gross Margin before FVA of 68%
            --  Business Transformation Plan on Track; Reiterates Annual Cost
                Savings of $60 Million to $80 Million, Providing Clear Pathway
                to Adjusted EBITDA Profitability
            --  Balance Sheet Remains Strong with $440.9 Million of Cash at
                June 30, 2021; Working Capital Improves by $404.3 Million
                Compared to Prior Year
            --  Adjusted EBITDA Loss, Excluding Restructuring Costs, Narrows to
                $13.9 Million, a $17.6 Million Improvement Compared to Prior
                Year
            --  Total Cannabis Net Revenue, Net of Provisions, of $54.8 Million
                Compared to $55.2 Million in the Prior Quarter, and $67.5
                Million in the Year-Ago Period
        
        
        


Aurora Cannabis Inc. (the "Company" or "Aurora") /zigman2/quotes/210559470/composite ACB +0.15% /zigman2/quotes/203734337/delayed CA:ACB -1.29% , the Canadian company defining the future of cannabinoids worldwide, today announced its financial and operational results for the fourth quarter and full year fiscal 2021 ended June 30, 2021.

"We are very pleased with our strategic and financial progress in growing our high-margin medical revenue, rationalizing expenses, strengthening our balance sheet, and reducing our cash burn during fiscal year 2021. Given ongoing challenges in the Canadian adult recreational market, our broad diversification across domestic medical, international medical, and adult recreational segments provides us with underlying strength, stability, and growth opportunities in an evolving industry for global cannabinoids. Additionally, our enviable leadership position as the #1 Canadian LP in global medical cannabis by revenue on a trailing twelve-month basis, supported by regulatory and compliance expertise, is a tailwind that we expect to enable us to ultimately expand into global adult recreational as medical regimes evolve" stated Miguel Martin, Chief Executive Officer of Aurora Cannabis.

"During the quarter, we delivered another strong yet steady performance in domestic medical, the largest federally regulated medical market globally, exceptional year-over-year growth in our high-margin international medical segment, where we remain the #2 Canadian LP by revenue on a trailing twelve-month basis, and quarterly sequential growth in adult recreational which included higher sales of premium cultivars. We are now delighted to announce a long-term supply agreement with Cantek in Israel that we expect to provide us with a steady stream of high-margin revenue that could also evolve into a larger partnership over time. We further believe our Canadian adult recreational segment is poised for recovery due to our product portfolio enhancements coupled with an acceleration of new store openings and rising consumer demand," he continued.

"We have positioned ourselves for long-term success by delivering further improvement in our industry-leading Adjusted gross margin and substantially narrowing our Adjusted EBITDA loss compared to the year-ago period. With annual cost savings of approximately $60 to $80 million across selling, general and administrative ("SG&A"), production cost, facility and logistic expenses, we have a clear pathway to achieve Adjusted EBITDA profitability. Importantly, our considerable cash balance of $440.9 million, substantial improvement in working capital, and strong balance sheet support our organic growth and can be utilized for opportunistic M&A, particularly in the U.S," he concluded.

Fourth Quarter 2021 Highlights (Unless otherwise stated, comparisons are made between fiscal Q4 2021 and Q4 2020 results and are in Canadian dollars)

Medical cannabis:







        
            --  Medical cannabis net revenue(1) was $35.0 million, a 9%
                increase from the prior year period. The increase was primarily
                attributable to continued growth in the international medical
                business, 88% over the prior year comparative period, as the
                Company continued to grow new, high margin medical markets.
            --  Adjusted gross margin before fair value adjustments on medical
                cannabis net revenue(1) was 68% versus 64% in the prior year,
                as a result of overall reduction in production costs due to the
                closure of non-core facilities as part of our business
                transformation plan and higher sales coming from our
                international sales, which yield higher margins.
        
        
        


Consumer cannabis:







        
            --  Consumer cannabis net revenue(1 )was $19.5 million ($20.2
                million excluding provisions), a 45% decrease from $35.3
                million ($37.1 million excluding provisions) in the prior year.
                This was due primarily to a reduction in orders from Provinces
                in response to slower consumer demand, reflecting the impact of
                lockdown restrictions related to COVID-19. Sequentially,
                consumer cannabis net revenue increased 8% over the prior
                quarter mainly due to completion of the transition of our fixed
                sales force to Great North and a $2.5 million reduction in
                actual net returns, price adjustments and provisions as the
                company completed its product swap initiative to replace low
                quality product with higher potency product at the provinces.
            --  Adjusted gross margin before fair value adjustments on consumer
                cannabis net revenue[1] was 31% vs 36% in the prior year
                period. This was primarily driven by an increase in cost of
                sales due to under-utilized capacity at Aurora Sky as a result
                of the scaling back production (expected to partially reverse
                in future quarters), offset by an increase in the consumer
                cannabis sales mix attributed to our core and premium brands,
                contributing to an increase in our average net selling price
                per gram of dried cannabis.
        
        
        


Consolidated:







        
            --  Adjusted gross margin before fair value adjustments on cannabis
                net revenue1 was 54% in Q4 2021 versus 49% in the prior year
                period and 44% in Q3 2021. The increase in Adjusted gross
                margin compared to Q4 2020 is due primarily to a shift in sales
                mix towards the medical market which commands higher average
                net selling prices and margins.
            --  Adjusted EBITDA(1) loss improved to $19.3 million in Q4 2021
                ($13.9 million loss excluding restructuring charges) compared
                to the prior year Adjusted EBITDA loss(1) of $33.3 million
                ($31.5 million loss excluding restructuring charges) primarily
                driven by the substantial decrease in SG&A and R&D expenses and
                an increase in gross margins.
            --  Q4 2021 total cannabis net revenue(1) was $54.8 million,
                essentially flat sequentially, and a 19% decrease in over
                fiscal Q4 of the prior year.
            --  Reflecting the shift in mix toward our medical businesses, the
                Q4 2021 average net selling price per gram of dried cannabis(1)
                increased to $5.11 per gram from $3.60 in Q4 2020 and $5.00 in
                Q3 2021. This excludes the impact of bulk wholesale of excess
                mid-potency cannabis flower at clear-out pricing.
        
        
        


Selling, General and Administrative ("SG&A"):







        
            --  SG&A, including Research and Development ("R&D"), was $44.8
                million, excluding $5.2 million in severance and restructuring
                costs ($49.9 million reported), down $19.1 million or 30% from
                the prior year as a result of our business transformation plan.
        
        
        


Operational Efficiency Plan, Balance Sheet Strength, & Working Capital Improvement

Aurora has identified cash savings of $60 million to $80 million. We expect to deliver $30 million to $40 million of annualized cash savings within the next year, and the remainder by the end of Q2 fiscal 2023.







        
        
             ___________________________________
        
        
        
        
                      (1)
                    These terms are non-GAAP measures, see "Non-GAAP Measures" below.
        
        
        


Approximately 60% of the savings are expected to be driven out of our network through asset consolidation, and operational and supply chain efficiencies. In fact, last week we announced the centralization of much of our Canadian manufacturing processes to our River facility in Bradford, Ontario and the resultant closure of our western Canada manufacturing facility. The remaining 40% of savings are intended to be sourced through SG&A; a portion of those savings will be via insurance structures that are already partially executed.

These cash savings will be reflected in our P&L either as they occur for SG&A savings, or as inventory is drawn down for production-related savings. These efficiencies are incremental to the approximately $300 million of total cost reductions achieved since the announcement of the Company's business transformation plan in February 2020.

Aurora materially improved its balance sheet during fiscal year 2021 through a number of purposeful actions including repaying the credit facility in full in June 2021, which resulted in interest and principal repayment reductions of approximately $25 million annually. The Company views a strong balance sheet as critical to operating the business, executing its strategic plans, and pursuing growth opportunities in an unconstrained manner, including within the U.S.

At June 30, 2021 Aurora has a cash balance of approximately $440.9 million, comprised of $421.5 million of cash and cash equivalents and $19.4 million in restricted cash, no secured term debt, and access to US$1 billion of capital under its shelf prospectus.

The Company's focus on realizing operational efficiencies and ability to manage cash has greatly improved operating cash flow; reducing the need for incremental capital. In Q4 2021, Aurora managed cash flow tightly using $7.8 million in cash to fund operations, including working capital investments and restructuring and severance payments of $5.1 million. Cash inflow from capital expenditures, net of $17.5 million disposals and government grant income, in Q4 2021 was $6.2 million versus $32.8 million of cash used in Q4 2020 and $12.2 million of cash used in Q3 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.

Fiscal Q4 2021 Cash Use

The main components of cash source and use in Q4 2021 were as follows:







        
                                    ($ thousands)      Q4 2021 Q4 2020(4)        Q3 2021(4)
        
            ---
        
                                    Cash Flow
        
            ---
        
                                    Cash, Opening     $520,238    $230,208            $434,386
        
        
        
        
                       Cash used in
                        operations
                        including
                        working                       ($7,840)  ($64,199)          ($66,215)
            capital
        
        
                       Capital
                        expenditures,
                        net of
                        disposals and                   $6,230   ($32,789)          ($12,320)
            government
             grant income
        
        
                       Debt and
                        interest
                        payments                  ($90,141)(3)   ($52,979)           ($7,766)
        
            ---
        
                       Cash use                      ($91,751) ($149,967)          ($86,301)
        
        
        
        
                       Proceeds
                        raised from
                        sale of
                        marketable                      11,929      33,673
                      $-
            securities and
             investments
             in associates
        
        
                       Proceeds
                        raised
                        through debt
        
        
                       Proceeds
                        raised
                        through
                        equity
                        financing                         $435     $48,265
               $172,153(1)
        
            ---
        
                       Cash raised                     $12,364     $81,938            $172,153
        
        
        
        
                                    Cash, Ending      $440,851    $162,179
        
                 $520,238(2)
        
            ---
        
        








        
        
        
             (1) Includes impact of foreign exchange rates on
                      USD cash raised from financing
        
        
        
        
             (2) Includes restricted cash of $50.0M for Q3
                      2021 held as cash collateral under the BMO
                      Credit Facility.
        
        
        
        
             (3) Includes $88.7 million full principal
                      repayment on the BMO Credit Facility. As of
                      June 30, 2021, the BMO Credit Facility has
                      been fully settled and discharged.
        
        
                    Previously reported amounts have been
                      retroactively recast for the biological
                      assets and inventory non-material prior
                      period error. Refer to the "Significant
                      Accounting Policies and Judgments" section
        
        
             (4)  in Note 2(h) of the Financial Statements.
        
        
        


Refer to the "Consolidated Statement of Cash Flows" in the "Consolidated Financial Statements" for our cash flow statements prepared in accordance with IAS 7 - Statement of Cash Flows.







        
        
        
                        ($ thousands, except Operational Results)      Q4 2021 Q4 2020(5)(6)
        
              $ Change        % Change               Q3 2021 (5)(6)
        
             $ Change                   % Change
        
            ---
        
        
        
                        Financial Results
        
            ---
        
        
                      Total net revenue (1)                                       $54,825                     $68,426           ($13,601)          (20)                    $55,161                       ($336)             (1)
        
                                                                                                                                                     %                                                                      %
        
        
        
                      Cannabis net revenue (1)(2a)                                $54,825                     $67,492           ($12,667)          (19)                    $55,161                       ($336)             (1)
        
                                                                                                                                                     %                                                                      %
        
        
        
                      Medical cannabis net revenue (2a)                           $35,022                     $32,226              $2,796              9                     $36,378                     ($1,356)             (4)
                                                                                                                                                     %
                                                                                                                                                                                                                            %
        
        
        
                      Consumer cannabis net revenue (1)(2a)                       $19,514                     $35,266           ($15,752)          (45)
                                                                                                                                                                                                                            %
                                                                                                                                                     %                    $18,023                       $1,491                8
        
        
        
                      Adjusted gross margin before FV adjustments            54
                    %               49
                    %                N/A          5       44
                 %                               N/A       10
                                                                                                                                                  %                                                         %
            on cannabis net revenue (2b)
        
        
        
                      Adjusted gross margin before FV adjustments            68
                    %               64
                    %                N/A          4       53
                 %                               N/A       15
                                                                                                                                                  %                                                         %
            on medical cannabis net revenue (2b)
        
        
        
                      Adjusted gross margin before FV adjustments            31
                    %               36
                    %                N/A        (5)      33
                 %                               N/A      (2)
                                                                                                                                                  %                                                         %
            on consumer cannabis net revenue (2b)
        
        
        
                      SG&A expense                                                $46,902                     $57,969           ($11,067)          (19)
                                                                                                                                                                                                                            %
                                                                                                                                                     %                    $41,684                       $5,218               13
        
        
        
                      R&D expense                                                  $3,034                      $7,645            ($4,611)          (60)                     $3,398                       ($364)            (11)
        
                                                                                                                                                     %                                                                      %
        
        
        
                      Adjusted EBITDA (2c)                                      ($19,256)                  ($33,349)            $14,093             42                   ($23,853)                      $4,597               19
                                                                                                                                                     %                                                                      %
        
        
        
        
        
        
                        Balance Sheet
        
            ---
        
        
                      Working capital                                            $549,517                    $145,258            $404,259            278                    $646,310                    ($96,793)            (15)
        
                                                                                                                                                     %                                                                      %
        
        
        
                      Cannabis inventory and biological assets(3) (2)(3)(7)      $120,297                    $135,973           ($15,676)          (12)
                                                                                                                                                                                                                            %
                                                                                                                                                     %                   $102,637                      $17,660               17
        
        
        
                      Total assets                                             $2,604,731                  $2,779,921          ($175,190)           (6)                 $2,839,155                   ($234,424)             (8)
        
                                                                                                                                                     %                                                                      %
        
        
        
        
        
        
                        Operational Results - Cannabis
        
            ---
        
        
                      Average net selling price of dried cannabis                   $5.11                       $3.60               $1.51             42                       $5.00                        $0.11                2
                                                                                                                                                     %                                                                      %
            excluding bulk sales (2)
        
        
        
                      Kilograms sold (4)                                           11,346                      16,748             (5,402)          (32)                     13,520                      (2,174)            (16)
        
                                                                                                                                                     %                                                                      %
        
            ---
        
        








        
        
        
                        (1)              Includes the
                                                       impact of
                                                       actual and
                                                       expected
                                                       product
                                                       returns and
                                                       price
                                                       adjustments
                                                       (Q4 2021 -
                                                       $0.7
                                                       million; Q3
                                                       2021 -$3.2
                                                       million; Q4
                                                       2020 -$1.9
                                                       million).
        
        
        
        
                        (2)              These terms
                                                       are defined
                                                       in the
                                                       "Cautionary
                                                       Statement
                                                       Regarding
                                                       Certain Non-
                                                       GAAP
                                                       Performance
                                                       Measures" of
                                                       the MD&A.
                                                       Refer to the
                                                       following
                                                       MD&A
                                                       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.
        
        
        
        
                        (3)              Represents
                                                       total
                                                       biological
                                                       assets and
                                                       cannabis
                                                       inventory,
                                                       exclusive of
                                                       merchandise,
                                                       accessories,
                                                       supplies and
                                                       consumables.
        
        
        
        
                        (4)              The kilograms
                                                       sold is
                                                       offset by
                                                       the grams
                                                       returned
                                                       during the
                                                       period.
        
        
        
        
                        (5)              As a result
                                                       of the
                                                       Company's
                                                       dissolution
                                                       and
                                                       divestment
                                                       of its
                                                       wholly owned
                                                       subsidiaries,
                                                       Hempco Food
                                                       and Fiber
                                                       Inc.
                                                       ("Hempco"),
                                                       Aurora
                                                       Larssen
                                                       Projects
                                                       ("ALPS"),
                                                       Aurora Hemp
                                                       Europe
                                                       ("AHE"), the
                                                       operations
                                                       of Hempco,
                                                       ALPS and AHE
                                                       have been
                                                       presented as
                                                       discontinued
                                                       operations
                                                       and the
                                                       Company's
                                                       operational
                                                       results have
                                                       been
                                                       retroactively
                                                       restated, as
                                                       required.
                                                       Refer to
                                                       Note 12(b)
                                                       of the
                                                       Financial
                                                       Statements
                                                       for more
                                                       information
                                                       about the
                                                       divestitures.
        
        
        
        
                        (6)              Amounts have
                                                       been
                                                       retroactively
                                                       recast for
                                                       the
                                                       biological
                                                       assets and
                                                       inventory
                                                       non-
                                                       material
                                                       prior period
                                                       error. Refer
                                                       to the
                                                       "Significant
                                                       Accounting
                                                       Policies and
                                                       Judgments"
                                                       section in
                                                       Note 2(h) of
                                                       the
                                                       Financial
                                                       Statements.
        
        
        


Conference Call

Aurora will host a conference call today, September 27, 2021, to discuss these results. Miguel Martin, Chief Executive Officer, and Glen Ibbott, Chief Financial Officer, will host the call starting at 5:00 p.m. Eastern time / 3:00 p.m. Mountain Time. A question and answer session will follow management's presentation.

Conference Call Details







        
             DATE:
             Tuesday, September 27, 2021
        
        
             TIME:
             5:00 p.m. Eastern Time | 3:00 p.m. Mountain Time
        
        
             WEBCAST:                               http://public.viavid.com/index.php?id=146159
        
        
        
        


Investors may submit questions in advance or during the conference call itself through same weblink listed above. This weblink has also been posted to the Company's "Investor Info" link at https://investor.auroramj.com/ under "News & Events".

/zigman2/quotes/210559470/composite
US : U.S.: Nasdaq
$ 6.79
+0.01 +0.15%
Volume: 3.39M
Nov. 26, 2021 1:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.34 billion
Rev. per Employee
$108,554
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/zigman2/quotes/203734337/delayed
CA : Canada: Toronto
$ 8.45
-0.11 -1.29%
Volume: 1.15M
Nov. 26, 2021 5:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.70 billion
Rev. per Employee
$139,269
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