Aurora Cannabis Announces Fiscal 2024 First Quarter Results, and Delivers Record Positive Adjusted EBITDA
- Strong net revenue and record adjusted EBITDA position Aurora Cannabis well for a successful fiscal year 2024.
- Significant growth in global medical cannabis, consumer cannabis, and plant propagation businesses.
- Reduction in operating cash used and re-affirmation of positive free cash flow target indicate a positive financial outlook.
- None.
- Achieves Quarterly Net Revenue1 of
$75.1 Million 14% , Consumer Cannabis +5% , Plant Propagation +12% - Delivers Third Sequential Quarter of Positive Adjusted EBITDA1, Supported by Bevo's Record Quarterly Revenue
- Cash Used in Operating Activities Reduced by
$15.5 Million
NASDAQ | TSX: ACB
"We are pleased to have generated strong net revenue1 and record adjusted EBITDA1 during Q1 which positions us well for what we believe will be a successful fiscal year 2024," stated Mr. Martin, CEO of Aurora Cannabis. "We have built a differentiated and growing business that is diversified across key global cannabis and non-cannabis platforms, and I am truly delighted with the strong performance across all our business units. Following the previously announced
First Quarter 2024 Highlights
(Unless otherwise stated, comparisons are made between fiscal Q1 2024, Q3 2023, and Q4 2022 results and are in Canadian dollars)
Consolidated Revenue and Adjusted Gross Profit:
Total net revenue1 was
Excluding the impact of the non-core bulk wholesales, adjusted gross margin before fair value adjustments1 on cannabis net revenue1 for Q1 2024 remained strong and steady, and well above the industry average at
Consolidated adjusted gross margin before fair value adjustments1 was
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. |
Medical Cannabis:
Medical cannabis net revenue1 was
The increase in net revenue1 of
Adjusted gross margin before fair value adjustments1 on medical cannabis net revenue remained strong at
Consumer Cannabis:
Aurora's consumer cannabis net revenue1 was
Adjusted gross margin before fair value adjustments[1] on consumer cannabis net revenue[1] was
Plant Propagation:
Plant propagation net revenue1 was wholly comprised from the Bevo business, contributing
Adjusted gross margin before fair value adjustments1 on plant propagation revenue was
Selling, General and Administrative ("SG&A"):
Adjusted SG&A1, was
Adjusted R&D1, was
Net Loss:
Net loss for the three months ended June 30, 2023 was
Adjusted EBITDA:
Adjusted EBITDA1 was
Fiscal 2024 Expectations:
In Q2 fiscal 2024
- The Company expects cannabis net revenue1 to be largely similar to fiscal Q1 2024, with the geographical mix slightly weighted further towards the international medical segment.
- For plant propagation, we expect to see seasonally reduced revenues and gross profit in Q2 2024 that will be in line with historical performance as
25% –35% of revenues are normally earned in the second half of a calendar year.
Through the remainder of fiscal 2024
- Aurora is now realizing the benefit of its long-term commitment to science and quality cultivation in that demand for the Company's products globally is beginning to outpace supply. Aurora is focused on growing profitable revenue across all business units, but in particular to fully supply the growing demand now evident in Aurora's international medical business as the Company's leading new cultivars have been introduced to our international channels.
- In plant propagation, in addition to the normal seasonal cadence of the base business, the Company expects first sales of orchids from the 800,000 sq ft Sky facility to occur in Q3 of this fiscal year and for the 1.6 million sq ft Aurora Sun facility to be contributing to the top line at the start of the next fiscal year.
Aurora's achievement of significant and sustainable operating cost and SG&A reductions has now resulted in three consecutive quarters with positive Adjusted EBITDA. This has paved the path towards positive free cashflow in calendar year 2024.
Convertible Senior Notes
During the three months ended June 30, 2023, the Company repurchased approximately U.
Subsequent to June 30, 2023, the Company repurchased approximately U.
Aurora may, from time to time and subject to market conditions, repurchase its convertible notes, including in open market purchases and privately negotiated transactions.
Key Quarterly Financial and Operating Results
Three months ended | |||||||
($ thousands, except Operational Results) | June 30, 2023 | June 30, 2022(6) | $ Change | % Change | March 31 , 2023(6) | $ % Change Change | |
Financial Results | |||||||
Total net revenue (1)(2a) | 50 % | 17 % | |||||
Medical cannabis net revenue (1)(2a) | 14 % | 10 % | |||||
Consumer cannabis net revenue (1)(2a) | 5 % | ( | (9 %) | ||||
Plant propagation net revenue (1)(2a) | $— | 100 % | 85 % | ||||
Adjusted gross margin before FV adjustments on total net | |||||||
revenue (2b) | 44 % | 50 % | N/A | (6 %) | 48 % | N/A | (4 %) |
Adjusted gross margin before FV adjustments on core cannabis | |||||||
net revenue (2b) | 53 % | 56 % | N/A | (3 %) | 51 % | N/A | 2 % |
Adjusted gross margin before FV adjustments on medical | |||||||
cannabis net revenue (2b) | 61 % | 67 % | N/A | (6 %) | 61 % | N/A | 0 % |
Adjusted gross margin before FV adjustments on consumer | |||||||
cannabis net revenue (2b) | 27 % | 26 % | N/A | 1 % | 25 % | N/A | 2 % |
Adjusted gross margin before FV adjustments on plant | |||||||
propagation net revenue (2b) | 22 % | — % | N/A | 22 % | 36 % | N/A | (14 %) |
Adjusted SG&A expense(2d)(5) | ( | (15 %) | 6 % | ||||
Adjusted R&D expense(2d) | ( | (45 %) | ( | (29 %) | |||
Adjusted EBITDA (2c)(5) | ( | 125 % | 72 % | ||||
Balance Sheet | |||||||
Working capital (2e,f) | ( | (63 %) | ( | (4) % | |||
Cannabis inventory and biological assets (3) | ( | (21 %) | 8 % | ||||
Total assets | ( | (23 %) | ( | (10) % | |||
Operational Results – Cannabis | |||||||
Average net selling price of dried cannabis excluding bulk sales | |||||||
(2g) | ( | (6 %) | 1 % | ||||
Kilograms sold (4) | 15,682 | 13,130 | 2,552 | 19 % | 16,578 | (896) | (5) % |
(1) | Includes the impact of actual and expected product returns and price adjustments (Q1 2024 - | |
(2) | These terms are defined in the "Cautionary Statement Regarding Certain Non-GAAP Performance Measures" section of this MD&A. Refer to the following sections for reconciliation of Non-GAAP Measures to the IFRS equivalent measure: | |
a. | Refer to the "Revenue" and "Cost of Sales and Gross Margin" section for a reconciliation of cannabis net revenue to the IFRS equivalent. | |
b. | Refer to the "Adjusted Gross Margin" section for reconciliation to the IFRS equivalent. | |
c. | Refer to the "Adjusted EBITDA" section for reconciliation to the IFRS equivalent. | |
d. | Refer to the "Operating Expenses" section for reconciliation to the IFRS equivalent. | |
e. | "Working capital" is defined as Current Assets less Current Liabilities as reported on the Company's Consolidated Statements of Financial Position. | |
f. | Current liabilities includes the current portion of convertible debentures. As at March 31, 2023, the remaining balance of convertible debentures outstanding is included in current liabilities. | |
g. | Net selling price of dried cannabis excluding bulk sales is comprised of revenue from dried cannabis excluding bulk sales (Q1 2024 - | |
- | ||
(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. | |
(5) | Prior period comparatives were recast to include the adjustments for markets under development, business transformation costs, and non-recurring charges related to non-core bulk cannabis wholesales to be comparable to the current period presentation. | |
(6) | Comparative information has been re-presented due to discontinued operations. | |
Conference Call
Aurora will host a conference call today, Thursday, August 10, 2023, 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: | Thursday, August 10, 2023 |
TIME: | 5:00 p.m. Eastern Time | 3:00 p.m. Mountain Time |
WEBCAST: |
This weblink has also been posted to the Company's "Investor Info" link at https://auroramj.com/investors under "Events".
About Aurora
Aurora is opening the world to cannabis, serving both the medical and consumer markets. Headquartered in
Forward Looking Statements
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. Forward-looking statements made in this news release include statements regarding pro forma measures including revenue, cash flow, Adjusted gross margin before fair value adjustments, and expected SG&A run-rates; ongoing cost efficiencies and the Company's path and timing to achieve positive free cash flow; the Company's ability to deliver profitable results; statements under the heading "Fiscal 2024 Expectations" including, but not limited to, those with respect to cannabis and plant propagation revenues, supply for demand in the growing international medical cannabis segment and expectations in the plant propagation segment, including timing for the first sales of orchids from the Sky facility and contributions from the Sun facility; plans to repurchase convertible notes prior to maturity; product innovation; and timing for a conference call to discuss the Q1 fiscal 2024 results.
These forward-looking statements are only predictions. Forward looking information or statements contained in this news release have been developed based on assumptions management considers to be reasonable. Material factors or assumptions involved in developing forward-looking statements include, without limitation, publicly available information from governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which the Company believes to be reasonable. 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. These risks include, but are not limited to, the ability to retain key personnel, the ability to continue investing in infrastructure to support growth, the ability to obtain financing on acceptable terms, the continued quality of our products, customer experience and retention, the development of third party government and non-government consumer sales channels, management's estimates of consumer demand in
Non-GAAP Measures
This news release contains reference to certain financial performance measures that are not recognized or defined under IFRS (termed "Non-GAAP Measures"). As a result, this data may not be comparable to data presented by other licensed producers of cannabis and cannabis companies. Non-GAAP Measures should be considered together with other data prepared in accordance with IFRS to enable investors to evaluate the Company's operating results, underlying performance and prospects in a manner similar to Aurora's management. Accordingly, these non-GAAP Measures are intended to provide additional information and to assist management and investors in assessing financial performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
The information included under the heading "Cautionary Statement Regarding Certain Non-GAAP Performance Measures" in the Company's management's discussion and analysis for the three months ended June 30, 2023 and 2022 (the "MD&A") is incorporated by reference into this news release. The MD&A is available on the Company's issuer profile on SEDAR at www.sedarplus.com.
Net Revenue, Adjusted Gross Profit and Margin
Net revenue, adjusted gross profit before FV adjustments, and adjusted gross margin before FV adjustments are Non-GAAP Measures and can be reconciled with revenue, gross profit and gross margin, the most directly comparable GAAP financial measures, respectively, as follows:
($ thousands) |
Medical |
Consumer | Core Bulk |
Total Core | Non-Core Bulk |
Plant |
Total |
Three months ended June 30, 2023 | |||||||
Gross revenue | 43,872 | 17,429 | 47 | 61,348 | 324 | 19,904 | 81,576 |
Excise taxes | (2,257) | (4,209) | — | (6,466) | — | — | (6,466) |
Net revenue (1) | 41,615 | 13,220 | 47 | 54,882 | 324 | 19,904 | 75,110 |
Non-recurring net revenue adjustments (4) | (598) | (249) | — | (847) | — | — | (847) |
Adjusted net revenue | 41,017 | 12,971 | 47 | 54,035 | 324 | 19,904 | 74,263 |
Cost of sales | (24,547) | (17,053) | (70) | (41,670) | (752) | (18,951) | (61,373) |
Depreciation | 2,776 | 1,643 | 7 | 4,426 | 78 | 870 | 5,374 |
Inventory impairment and non-recurring | |||||||
costs included in cost of sales (2)(5) | 5,692 | 5,889 | 21 | 11,602 | 221 | 2,501 | 14,324 |
Adjusted gross profit (loss) before FV | |||||||
adjustments (1) | 24,938 | 3,450 | 5 | 28,393 | (129) | 4,324 | 32,588 |
Adjusted gross margin before FV | |||||||
adjustments (1) | 61 % | 27 % | 11 % | 53 % | (40 %) | 22 % | 44 % |
Three months ended March 31, 2023(7) | |||||||
Gross revenue | 40,684 | 18,956 | 307 | 59,947 | 488 | 10,754 | 71,189 |
Excise taxes | (2,681) | (4,465) | — | (7,146) | — | — | (7,146) |
Net revenue(1) | 38,003 | 14,491 | 307 | 52,801 | 488 | 10,754 | 64,043 |
Cost of sales | (19,938) | (14,556) | (173) | (34,667) | (646) | (8,032) | (43,345) |
Depreciation | 2,453 | 1,773 | 21 | 4,247 | 77 | 877 | 5,201 |
Inventory impairment, non-recurring, out-of- | |||||||
period, and market development costs | |||||||
included in cost of sales (2)(3)(4)(6) | 2,555 | 1,912 | 25 | 4,492 | 96 | 233 | 4,821 |
Adjusted gross profit (loss) before FV | |||||||
adjustments (1) | 23,073 | 3,620 | 180 | 26,873 | 15 | 3,832 | 30,720 |
Adjusted gross margin before FV | |||||||
adjustments (1) | 61 % | 25 % | 59 % | 51 % | 3 % | 36 % | 48 % |
Three months ended June 30, 2022(7) | |||||||
Gross revenue | 39,454 | 16,994 | — | 56,448 | 1,007 | — | 57,455 |
Excise taxes | (2,983) | (4,356) | — | (7,339) | — | — | (7,339) |
Net revenue(1) | 36,471 | 12,638 | — | 49,109 | 1,007 | — | 50,116 |
Non-recurring net revenue adjustments (4) | — | 1,023 | 1,023 | — | — | 1,023 | |
Adjusted net revenue | 36,471 | 13,661 | 50,132 | 1,007 | — | 51,139 | |
Cost of sales | (21,271) | (17,700) | — | (38,971) | (6,323) | — | (45,294) |
Depreciation | 3,489 | 2,506 | — | 5,995 | 816 | — | 6,811 |
Inventory impairment, out-of-period, and | |||||||
non-recurring adjustments included in cost | |||||||
of sales (2)(4)(6) | 5,747 | 5,118 | — | 10,865 | 2,230 | — | 13,095 |
Adjusted gross profit (loss) before FV | |||||||
adjustments (1) | 24,436 | 3,585 | — | 28,021 | (2,270) | — | 25,751 |
Adjusted gross margin before FV | |||||||
adjustments (1) | 67 % | 26 % | — % | 56 % | (225 %) | — % | 50 % |
(1) | These terms are Non-GAAP Measures and are defined in the "Cautionary Statement Regarding Certain Non-GAAP Performance Measures" section of this MD&A. |
(2) | Inventory impairment includes inventory write-downs due to lower of cost or net realizable value adjustments, obsolescence provision adjustments, and inventory destruction. |
(3) | Markets under development represents the adjustment for business operations focused on developing international markets prior to commercialization. |
(4) | Non-recurring items includes one-time excise tax refunds, one-time Reliva returns, inventory count adjustments resulting from facility shutdowns and inter- site transfers, and abnormal spikes to utilities costs on its plant propagation business. |
(5) | Non recurring items includes business transformation costs in connection with the re-purposing and ramp-up of the Company's Sky facility. Inventory provision in Q1 2024 includes a provision of |
(6) | Out-of-period adjustments include adjustments to year-end bonus accruals included in the current quarter but relating to prior quarters and adjustments to input assumptions related to fair value of biological assets. |
(7) | Comparative information has been re-presented due to discontinued operations. |
Adjusted EBITDA
Adjusted EBITDA is a Non-GAAP Measure and can be reconciled with net income (loss), the most directly comparable GAAP financial measure, as follows:
Three months ended | ||||
($ thousands) | June 30, 2023 | March 31, 2023 | June 30, 2022 | |
Net loss from continuing operations | (22,204) | (76,884) | (617,022) | |
Income tax expense (recovery) | 96 | (3,109) | (1,363) | |
Other income (expense) | 5,994 | 48,154 | 558,301 | |
Share-based compensation | 2,281 | 3,620 | 3,472 | |
Depreciation and amortization | 8,288 | 9,875 | 18,459 | |
Acquisition costs | 226 | 696 | 3,720 | |
Inventory and biological assets fair value and impairment adjustments(6) | (2,436) | 6,719 | 9,007 | |
Business transformation related charges (1) | 6,564 | 7,253 | 6,812 | |
Out-of-period adjustments (2) | 544 | 1,333 | 1,833 | |
Non-recurring items (3) | 2,802 | 2,425 | 6,736 | |
Markets under development (4) | — | 1,172 | 1,288 | |
Adjusted EBITDA (5) | 2,155 | 1,254 | (8,757) | |
(1) | Business transformation related charges includes costs related to closed facilities, certain IT project costs, costs associated with the repurposing of Sky, severance and retention costs in connection with the business transformation plan, costs associated with the retention of certain medical aggregators, and payroll costs exited prior to the end of Q2 2023 associated with the medical cannabis business. |
(2) | Out-of-period adjustments reflect adjustments to net loss for the financial impact of transactions recorded in the current period that relate to prior periods. |
(3) | Non-recurring items includes one-time excise tax refunds, non-core adjusted wholesale bulk margins, inventory count adjustments resulting from facility shutdowns and inter-site transfers, litigation and non-recurring project costs, an abnormal mildew issue on certain cultivation lots, additional expenses associated with the change in fiscal year end to March 31, 2023, one-time break fees with certain vendors, and temporary abnormal utilities costs within the plant propagation business. |
(4) | Markets under development represents the adjustment for business operations focused on developing international markets prior to commercialization. |
(5) | Adjusted EBITDA is a Non-GAAP Measure and is not a recognized, defined, or standardized measure under IFRS. Refer to "Cautionary Statement Regarding Certain Non-GAAP Performance Measures" section of the MD&A. Prior period comparatives were recast to include the adjustments for markets under development, business transformation costs, and non-recurring charges related to non-core bulk cannabis wholesales to be comparable to the current period presentation. |
(6) | Year ended June 30, 2022 comparative was recasted to include inventory impairment adjustments to be comparable to the current period presentation. |
Adjusted SG&A
Adjusted SG&A is a Non-GAAP Measure and can be reconciled with sales and marketing and general and administrative expenses, the most directly comparable GAAP financial measure, as follows:
($ thousands) | Three months ended June 30, 2023 March 31, 2023 |
June 30, 2022 | |
Sales and marketing | 12,806 | 13,408 16,276 | |
General and administration | 21,874 | 26,316 30,139 | |
Business transformation costs | (4,063) | (7,209) (6,812) | |
Out-of-period adjustments | (544) | (818) (2,349) | |
Non-recurring costs | (593) | (2,837) (1,127) | |
Market development costs | — | (958) (1,288) | |
Adjusted SG&A (1) | 29,480 | 27,902 | 34,839 |
(1) | These terms are defined in the "Cautionary Statement Regarding Certain Non-GAAP Performance Measures" section of this MD&A. |
Adjusted R&D
Adjusted R&D is a Non-GAAP Measure and can be reconciled with research and development expenses, the most directly comparable GAAP financial measure, as follows:
($ thousands) |
June 30, 2023 | Three months ended March 31, 2023 |
June 30, 2022 |
Research and development | 1,101 | 1,656 | 1,991 |
Out-of-period adjustments | — | (63) | — |
Share-based compensation | — | (44) | — |
Adjusted R&D (1) | 1,101 | 1,549 | 1,991 |
(1) | Adjusted SG&A is a Non-GAAP Measure and is not a recognized, defined, or standardized measure under IFRS. Refer to the "Cautionary Statement Regarding Certain Non-GAAP Performance Measures" section of this MD&A. |
Working Capital
Working capital is a Non-GAAP Measure and can be reconciled with total current assets and total current liabilities, the most directly comparable GAAP financial measure, as follows:
($ thousands) |
June 30, 2023 | Three months ended March 31, 2023 |
June 30, 2022 | |
Total current assets | 399,311 | 479,927 | 745,121 | |
Total current liabilities | (171,999) | (242,305) | (130,857) | |
Working capital | 227,312 | 237,622 | 614,264 | |
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SOURCE Aurora Cannabis Inc.
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