Generates Net Revenue of $98.9 Million, Up 52% From Prior
Quarter
Cannabis Net Revenue Increases 61% to
$94.6 Million From Prior
Quarter
Reports Gross Margin on Cannabis Net
Revenue of 58%
TSX: ACB | NYSE: ACB
EDMONTON, Sept. 11, 2019 /CNW/ - Aurora Cannabis Inc.
(the "Company" or "Aurora") (NYSE | TSX: ACB), the
Canadian company defining the future of cannabis worldwide,
announced today its financial and operational results for the
fourth quarter and fiscal year ended June
30, 2019.
"In 2019 Aurora took its place as the global leader in cannabis
production, research, innovation, and international market
development. We are executing on all our strategic priorities,"
said Terry Booth, CEO. "Our best in
class cultivation methods allow us to grow consistent, high-quality
cannabis at scale. Because of this, we've delivered solid revenue
growth in the fourth quarter. We are working to extend our reach in
the U.S. markets. Our partnership with the UFC is a basis to
explore CBD-from-hemp and hemp food products. We are also exploring
additional opportunities and leveraging our Strategic Advisor. We
are focused on building a sustainable, high-margin business while
providing patients and consumers with access to safe and reliable
medicine."
Glen Ibbott, CFO, added, "We
continue to see strong growth in cannabis revenues in both medical
and consumer categories. Our cultivation execution continues to
drive production costs lower and improve gross margins. Aurora's
diversified product portfolio remains in demand with patients and
consumers alike. With the Canadian launch of derivative products in
the coming months, we have made the necessary investments to ensure
readiness and focus on a variety of value added products. We are
very excited to supply an expanded consumer market with premium
cannabis and new product forms."
Fourth Quarter 2019 Highlights
(Unless otherwise stated, comparisons are made between Fiscal
Q4 2019 and Q3 2019 results and are in Canadian dollars)
- Net cannabis revenue up 61% sequentially to $94.6 million
-
- Canadian consumer cannabis revenue up 52% to $44.9 million
- Medical cannabis revenue up 10% to $29.7
million
- Wholesale revenues of $20.1
million
- Cash cost to produce per gram sold declined 20% sequentially to
$1.14 per gram in Q4 2019.
- Production volume increased 86% sequentially to 29,034 kgs.
- Gross margin on cannabis net revenue increased by 3% to 58%
sequentially.
- Aurora's medical patient base expanded 10% to 84,729
sequentially. As at the date of this release, Aurora has
approximately 89,700 active registered patients, a further increase
of 6%.
- Adjusted EBITDA loss of $11.7
million represents an improvement of 68% compared to
$36.6 million in Q3 2019.
Subsequent Events
- Closed an amended and upsized $360
million secured credit facility which includes an accordion
feature that enables Aurora to upsize the facility by approximately
$40 million,
- Sold its remaining 28,833,334 shares of The Green Organic
Dutchman Holdings Ltd ("TGOD"), at a price of $3.00 per share for aggregate gross proceeds of
$86.5 million, representing an
approximate 50% internal rate of return for the Company.
Full Year Fiscal 2019 Highlights
- Net revenue of $247.9 million, up
349% compared to the prior year.
- Gross margin on cannabis net revenue of 55% in fiscal 2019
versus 65% in fiscal 2018.
- Kilograms produced and kilograms sold of 57,442 kgs and 36,628
kgs, up 920% and 629% respectively compared to fiscal 2018.
Q4 2019 Key Financial and Operational Metrics
($ thousands,
except Operational Results)
|
Q4 2019
(6)
|
Q3
2019
|
$
Change
|
%
Change
|
Financial
Results
|
|
|
|
|
Net Revenue
(1)
|
$98,942
|
$65,145
|
$33,797
|
52%
|
Cannabis net revenue
(2)(3a)
|
$94,640
|
$58,652
|
$35,988
|
61%
|
Medical cannabis net
revenue (2)(3a)
|
$29,651
|
$27,001
|
$2,650
|
10%
|
Consumer cannabis net
revenue (2)(3a)
|
$44,882
|
$29,577
|
$15,305
|
52%
|
Wholesale bulk
cannabis net revenue (2)(3a)
|
$20,107
|
$2,074
|
$18,033
|
869%
|
Gross margin before
FV adjustments on cannabis net revenue
(2)(3b)
|
58%
|
55%
|
N/A
|
3%
|
Gross margin before
FV adjustments on medical cannabis net revenue
(2)(3b)
|
60%
|
60%
|
N/A
|
0%
|
Gross margin before
FV adjustments on consumer cannabis net revenue
(2)(3b)
|
55%
|
50%
|
N/A
|
5%
|
Gross margin before
FV adjustments on wholesale bulk cannabis net revenue
(2)(3b)
|
61%
|
60%
|
N/A
|
1%
|
Selling, general and
administration expense
|
$72,869
|
$67,104
|
$5,765
|
9%
|
Adjusted EBITDA
(4)
|
($11,737)
|
($36,572)
|
$24,835
|
68%
|
|
|
|
|
|
Balance
Sheet
|
|
|
|
|
Working
capital
|
$227,802
|
$469,729
|
($241,927)
|
(52)%
|
Cannabis inventory
and biological assets (5)
|
$144,275
|
$118,023
|
$26,252
|
22%
|
Total
assets
|
$5,502,830
|
$5,549,780
|
($46,950)
|
(1)%
|
|
|
|
|
|
Operational
Results – Cannabis
|
|
|
|
|
Cash cost to produce
per gram sold (2)(3c)
|
$1.14
|
$1.42
|
($0.28)
|
(20)%
|
Active registered
patients
|
84,729
|
77,136
|
7,593
|
10%
|
Average net selling
price of medical cannabis (2)
|
$8.51
|
$8.51
|
$0.00
|
0%
|
Average net selling
price of consumer cannabis (2)
|
$5.14
|
$5.48
|
($0.34)
|
(6)%
|
Average net selling
price of wholesale bulk cannabis (2)
|
$3.61
|
$3.52
|
$0.09
|
3%
|
Kilograms
produced
|
29,034
|
15,590
|
13,444
|
86%
|
Kilograms
sold
|
17,793
|
9,160
|
8,633
|
94%
|
(1)
|
Net revenue
represents our total gross revenue cannabis products effective
October 17, 2018.
|
(2)
|
These terms are
defined in the "Cautionary Statement Regarding Certain
Performance Measures" section of this MD&A
|
(3)
|
Refer to the
following 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
"Gross Margin" section for reconciliation to the IFRS
equivalent.
|
|
c.
|
Refer to the "Cash
Cost of Sales of Dried Cannabis and Cash Cost to Produce Dried
Cannabis Sold – Aurora Produced Cannabis"
section for reconciliation to the IFRS equivalent.
|
(4)
|
Adjusted EBITDA is
calculated as net income (loss) excluding interest income
(expense), accretion, income taxes, depreciation, amortization,
changes in fair value of inventory sold, changes in fair value of
biological assets, share-based compensation, foreign exchange,
changes in
fair value of financial instruments, gains and losses on deemed
disposal, and non-cash impairment of equity investments, goodwill,
and other
assets.
|
(5)
|
Represents total
biological assets and cannabis inventory, exclusive of merchandise,
accessories, supplies, and consumables.
|
(6)
|
During the three
months ended June 30, 2019, the Company recorded non-material
year-end corrections to: (i) capitalize certain payroll,
share-based compensation and borrowing costs, related to the
construction of our production facilities that were incorrectly
expensed in
prior periods; and (ii) reverse items that had been over-accrued in
prior periods. The net impact of these adjustments to Q4 2019
Adjusted
EBITDA was a $14.9 million reduction in reported operating
expenses
|
|
|
|
|
($
thousands)
|
Three months
ended
|
|
Year
ended
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2019
|
|
June 30,
2018
|
|
June 30,
2017
|
Medical cannabis
net revenue
|
|
|
|
|
|
|
|
|
|
Canada dried
cannabis
|
14,438
|
|
14,501
|
|
58,101
|
|
24,231
|
|
14,679
|
EU dried
cannabis
|
4,481
|
|
4,004
|
|
14,141
|
|
9,835
|
|
439
|
Canada cannabis
extracts (1)
|
10,732
|
|
8,496
|
|
34,447
|
|
8,690
|
|
804
|
Total medical
cannabis net revenue
|
29,651
|
|
27,001
|
|
106,689
|
|
42,756
|
|
15,922
|
|
|
|
|
|
|
|
|
|
|
Consumer cannabis
net revenue
|
|
|
|
|
|
|
|
|
|
Dried
cannabis
|
41,813
|
|
27,461
|
|
88,603
|
|
—
|
|
—
|
Cannabis extracts
(1)
|
3,069
|
|
2,116
|
|
7,992
|
|
—
|
|
—
|
Total consumer
cannabis net revenue
|
44,882
|
|
29,577
|
|
96,595
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Wholesale bulk
dried cannabis net revenue
|
20,107
|
|
2,074
|
|
22,181
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total cannabis net
revenue
|
94,640
|
|
58,652
|
|
225,465
|
|
42,756
|
|
15,922
|
(1) Cannabis
extracts revenue includes cannabis oils, capsules, softgels,
sprays, and topical revenue.
|
|
|
|
|
($
thousands)
|
Three months
ended
|
|
Year
ended
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2019
|
|
June 30,
2018
|
|
June 30,
2017
|
Net
revenue
|
98,942
|
|
65,145
|
|
247,939
|
|
55,196
|
|
18,067
|
Design, engineering
and construction services
|
—
|
|
(914)
|
|
(2,403)
|
|
(4,218)
|
|
—
|
Patient counseling
services
|
(606)
|
|
(809)
|
|
(4,214)
|
|
(3,933)
|
|
(2,145)
|
Analytical testing
services
|
(317)
|
|
(1,238)
|
|
(2,976)
|
|
—
|
|
—
|
Other cannabis
segment revenues
|
|
|
|
|
|
|
|
|
|
(accessories, hemp,
other)
|
(2,760)
|
|
(962)
|
|
(10,370)
|
|
(1,865)
|
|
—
|
Horizontally
integrated business revenues
|
(619)
|
|
(2,570)
|
|
(2,511)
|
|
(2,424)
|
|
—
|
Cannabis net
revenue
|
94,640
|
|
58,652
|
|
225,465
|
|
42,756
|
|
15,922
|
Consolidated net revenue increased 52% to $98.9 million in Q4 2019 as compared to
$65.1 million in the prior quarter.
Consumer cannabis revenues were $44.9
million in Q4 2019, an increase of 52% from the prior
quarter and contributed 45% to total consolidated net revenue.
Canadian medical cannabis net revenues increased to $25.2 million in Q4 2019, up 9% over the prior
quarter. Revenue growth was primarily driven by additional
production capacity and supply available for sale from Aurora Sky
and Aurora River (Bradford).
Average net selling price of cannabis decreased by $1.08 per gram over the prior quarter from
$6.40 in Q3 2019 to $5.32 in Q4 2019. This decrease is primarily
attributable to the increase in sale volumes to consumer and bulk
wholesale markets which yield lower average net selling prices as
compared to medical markets.
Gross margin on cannabis net revenue increased to 58% in Q4
2019, compared to 55% in the prior quarter. Gross margin
improvement was driven by the continued decline in cash cost to
produce per gram and higher gross margins achieved on bulk
sales.
During Q4 2019, Aurora produced 29,034 kilograms of cannabis as
compared to 15,590 kilograms in the prior quarter. The 86.2%
increase in production output was primarily due to the additional
production capacity added by Aurora Sky, River (Bradford), and Ridge (Markham) facilities. Extraction capacity
increased from 20,400 kilograms to 26,400 kilograms in Q4
2019. Subsequent to the quarter end, Aurora's annual
extraction capacity further increased to 45,600 kilograms.
Q4 2019 SG&A increased by 9% to $72.9
million, compared to the prior quarter. The change was
primarily driven by an increase in fulfillment and shipping costs
related to the growth in consumer cannabis sales and continued
investment in sales initiatives, distribution network, and
partnerships to conduct research, develop products, and drive brand
awareness. Aurora will continue to invest in infrastructure and
talent required for market share growth in the global medical and
consumer cannabis markets but will remain intensely focused doing
this as efficiently as possible.
In Q4 2019, adjusted EBITDA loss improved 68% to $11.7 million from $36.6
million in the prior quarter. Developing a profitable and
robust global cannabis company is extremely important to Aurora. In
fiscal 2019 Aurora was focused on excellence in execution, and the
Company's KPIs show its success in this regard. Furthermore, Aurora
has addressed previously identified production bottlenecks and
continues to see strong sell-through of the Company's products at
the retail level. However, the Canadian consumer channel continues
to experience challenges at the retail level in key markets and
resolution of this issue is beyond the Company's control. Aurora is
working closely with all our regulatory and channel partners to
streamline distribution as the Company continues to track toward
positive adjusted EBITDA on a consolidated basis.
The Company's operating facilities current annualized run-rate
production capacity is in excess of 150,000 kg per annum, based on
planted rooms. As the industry leader in purpose-built
cultivation, Aurora is focused on producing a consistent supply of
high-quality, low-cost product to meet evolving market demand.
Aurora is well-positioned to respond to market conditions quickly
with shorter lead times, increased harvest cycles and high plant
yields.
Outlook
The global cannabis and hemp markets represent a significant
opportunity for Aurora and the Company will continue to make the
necessary investments today to build long-term value for
shareholders. However, Aurora will take a balanced approach to
these investments with a focus on operating a sustainable and
profitable business.
The introduction of new product formats to the Canadian consumer
market this fall represents a significant opportunity for the
Company. Aurora expects to have a robust product line-up ready to
launch in December. Given the very early stage of development of
the consumer market in Canada and
international medical markets, management anticipates that quarter
to quarter sales volumes and revenues may be volatile. The Company
expects adjusted EBITDA to continue to improve in the future due to
expected revenue growth, improvements in gross margin and prudent
SG&A growth.
The passing of the U.S. Farm Act presents new opportunities in
the largest cannabis and hemp-derived CBD market globally, and as
such Aurora is committed to establishing a substantial operating
footprint in the U.S. As part of the U.S. market strategy, the
Company is considering its stakeholders and how various state and
federal regulations will affect its business prospects. A number of
alternatives to grow Aurora's presence in the U.S. market are under
evaluation and the Company is committed to only engage in
activities which are permissible under both state and federal laws.
Management believes there are currently market opportunities that
are legal at both state and federal levels that can add operating
cash flows and be critical pillars of Aurora's strategy and
long-term success.
Conference Call
Aurora will host a conference call tomorrow, September 12,
2019, to discuss these results. Terry Booth, Chief Executive
Officer, Glen Ibbott, Chief Financial Officer, Cam Battley, Chief Corporate Officer, and
Michael Singer, Executive
Chairman, will host the call starting at 9:00 a.m.
Eastern time. A question and answer session will follow
management's presentation.
Date:
|
Thursday, September
12th, 2019
|
Time:
|
9:00 a.m. Eastern
Time | 7:00 a.m. Mountain Time
|
Webcast:
|
https://bit.ly/34gYCj5
|
Replay:
|
(416) 849-0833 or
(855) 859-2056
|
|
until 12:00 midnight
Eastern Time Thursday, September 19, 2019
|
Reference
Number:
|
6084057
|
About Aurora
Headquartered in Edmonton, Alberta,
Canada with funded capacity in excess of 625,000 kg per
annum 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 across every key segment of the value
chain, from facility engineering and design to cannabis breeding
and genetics research, cannabis and hemp production, derivatives,
high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy,
based on purpose-built facilities that integrate leading-edge
technologies across all processes, defined by extensive automation
and customization, resulting in the massive scale production of
high-quality consistent product. Designed to be replicable and
scalable globally, our production facilities are designed to
produce cannabis at significant scale, with high quality,
industry-leading yields, and low-per gram production costs. Each of
Aurora's facilities is built to meet European Union Good
Manufacturing Practices ("EU GMP") standards. Certification has
been granted to Aurora's first production facility in Mountain View
County, the MedReleaf Markham facility, and its wholly owned
European medical cannabis distributor Aurora Deutschland. All
Aurora facilities are designed and built to the EU GMP
standard.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 17 wholly
owned subsidiary companies – 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 is
distinguished by its reputation as a partner and employer of choice
in the global cannabis sector, having invested in and established
strategic partnerships with a range 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 Beauty Group
(private), and Wagner Dimas (private).
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.
For more information about Aurora, please visit our investor
website, investor.auroramj.com
Terry Booth,
CEO
Aurora Cannabis Inc.
Forward Looking Statements and Non-IFRS Industry
Measures
This news release makes reference to certain non-IFRS measures,
including certain industry metrics. These metrics and measures are
not recognized measures under IFRS do not have meanings prescribed
under IFRS and are as a result unlikely to be comparable to similar
measures presented by other companies. These measures are provided
as information complimentary to those IFRS measures by providing a
further understanding of our operating results from the perspective
of management. As such, these measures should not be considered in
isolation or in lieu of review of our financial information
reported under IFRS. This news release uses non-IFRS measures
including "cannabis net revenue", "Adjusted EBITDA", "cannabis
inveventory and biological assets", "cash cost to produce per gram
sold", "average net selling price per gram", "production
capacity", and "SG&A". The foregoing are commonly
used operating measures in the industry but may be calculated
differently compared to other companies in the industry. These
non-IFRS measures, including the industry measures, are used to
provide investors with supplementary measures of our operating
performance that may not otherwise be apparent when relying solely
on IFRS metrics. Definitions of the non-IFRS measures can be found
in our financial statements, MD&A and this news release.
This news also 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 and include, but are not limited to the
execution of definitive agreements and the closing of the
transaction. These 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 and estimates of management at the date the statements are
made, and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results 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 adult-use sales channels, managements
estimation of consumer demand in Canada and in jurisdictions where the Company
exports, expectations of future results and expenses, the
availability of additional capital to complete construction
projects and facilities improvements, the risk of successful
integration of acquired business and operations, the ability to
expand and maintain distribution capabilities, the impact of
competition, and the possibility for changes in laws, rules, 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, except as expressly
required by applicable law.
Neither TSX, NYSE nor their applicable Regulation
Services Providers (as that term is defined in the policies of the
Toronto Stock Exchange and New York Stock Exchange) accept
responsibility for the adequacy or accuracy of this
release.
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SOURCE Aurora Cannabis Inc.