Aurora Cannabis CCO on missing companys own revenue estimates: Were a little red-faced – Yahoo Style

Aurora Cannabis CCO on missing company\s own revenue estimates: We\re \a little red-faced\ - Yahoo Style
Aurora Cannabis Announces Financial Results for the Fourth Quarter and 2019 Fiscal Year
The Canadian cannabis giant reported C$98.9 million ($74.83 million USD) in net revenue for the quarter, which missed the C$100-C$107 million range the company had been projecting ahead of reporting results. The company also reported a wider-than-expected C$0.29 loss per share compared to the C$0.06 loss analysts polled by Bloomberg had been bracing for.

If youre asking if were a little red-faced, yes we are, Auroras Chief Corporate Officer Cam Battley told Yahoo Finance, blaming the miss on the companys ancillary businesses. If you take a look at our core business, our cannabis businesses, we came in exactly where we guided for which was between C$90 [million] and C$95 [million] and we came in at C$95 million.

Its been nearly one year since Canada legalized cannabis for recreational use, starting with flower, seeds, plants and oils, in October. However, the footprint of legal pot stores has been slower to develop in some provinces than others. For example, while Alberta already hundreds of licensed retailers, Ontario will have 75 retail outlets by October of this year, after the latest lottery process for the opportunity to apply for the 50 new licences.

Battley listed the companys construction division and analytics testing labs for the weakness in ancillary segments.

In the beginning of the year, we were targeting positive EBITDA in our fourth quarter, the June quarter of this year, he said. At that point we were anticipating — as I think everybody else was — that there would be more retail stores open in Canada.

As the largest seller of recreational cannabis in Canada, Battley said the fact that stores have been slower to open has disproportionately impacted Auroras sales. Other Canadian cannabis companies that have been hammered for slowing growth have pointed to the same theme on earnings calls.

Tamy Chen, an analyst with BMO Capital Markets, said Auroras latest results were "mixed." While the pot producer expanded its share of the recreational market during the quarter, Aurora indicated that their sales volumes may be "volatile" from quarter to quarter, she said in a note to clients.

Aurora Cannabis shares down after company misses own Q4 revenue guidance

Looking for a silver lining from the quarter, Battley highlighted that gross margins continue to improve — something that competitor Canopy Growth was not able to say in their latest quarter. Auroras margins inched higher to 58% from 55% last quarter.

The cannabis company also reported an adjusted loss before interest, taxes and depreciation of $11.7 million, an improvement from a loss of $36.6 million in the third quarter but not positive EBITDA, as the company previously said it would like to reach at this stage.

That would make any other cannabis company green with envy, he said. The reason why were able to generate increased margin is because even though [our] average selling price came down, because we were selling more in the consumer market and a little bit less proportionately in medical, [is] we actually brought our cost of production — our cash cost to produce — came way down to about C$1.14 [per gram.]

Aurora Cannabis misses own guidance with weaker revenues in fourth quarter

For now, that silver lining wasnt enough to reverse what has been continued pressure for Aurora and the sector overall. Aurora shares are now down about 25% over the past three months.

Zack Guzman is the host of YFi PM as well as a senior writer and on-air reporter covering entrepreneurship, startups, and breaking news at Yahoo Finance. Follow him on Twitter @zGuz.

Aurora reported $98.9 million in net revenue for the quarter ended June 30, up from $19.1 million a year ago but lower than the range of between $100 million and $107 million predicted in company estimates released last month.

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The executive chairman of Aurora Cannabis Inc. says his company could become profitable in the second half of this fiscal year under the right circumstances, after missing its own sales forecast in the latest quarter.

Generates Net Revenue of $98.9 Million, Up 52% From Prior QuarterCannabis Net Revenue Increases 61% to $94.6 Million From Prior QuarterReports Gross Margin on Cannabis Net Revenue of 58%

Shares of Aurora Cannabis fell about nine per cent in early afternoon trading after the pot producer reported fiscal fourth-quarter revenue that fell short of its own outlook and a $2.2-million loss.

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, weve 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."

Although Aurora reported an adjusted EBITDA loss of $11.7 million, the company improved its earnings by 68% compared to the previous-quarter loss of $36.6 million in Q3 2019. At this point in Aurora’s growth, negative EBITDA is not necessarily a cause for alarm as long as it is within reasonable limits.

Aurora Cannabis Posts Annual Gross Revenues of $271 Million

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. Auroras 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."

The Dutchman announced a meagre 20% increase in revenue to $2.9 million. While its revenue growth may be low, this new player in the cannabis market is still preparing for full commercialization. Its performance over the next two quarters will be critical to determine the brand’s competitiveness.

(Unless otherwise stated, comparisons are made between Fiscal Q4 2019 and Q3 2019 results and are in Canadian dollars)

Aurora CEO Terry Booth commented on the company’s international strategy in the United States: “We are working to extend our reach in the U.S. markets. Our partnership with the UFC (Ultimate Fighting Championship) is a basis for exploring CBD-from-hemp and hemp food products.”

Aurora Cannabis pushes back profitability target to fiscal 2020

These terms are defined in the "Cautionary Statement Regarding Certain Performance Measures" section of this MD&A

Heavy losses from costly expansions are frequent in competitive industries. Enterprises like Canopy Growth and Uber are losing money at alarming rates. Canadian investors should ensure that the stocks in their portfolio are not hemorrhaging too much cash during expansions.

Refer to the following sections for reconciliation of non-GAAP measures to the IFRS equivalent measure:

It’s been nearly one year since Canada legalized cannabis for recreational use, starting with flower, seeds, plants and oils, in October. However, the footprint of legal pot stores has been slower to develop in some provinces than others. For example, while Alberta already hundreds of licensed retailers, Ontario will have 75 retail outlets by October of this year, after the latest lottery process for the opportunity to apply for the 50 new licences.

Refer to the "Revenue" section for a reconciliation of cannabis net revenue to the IFRS equivalent.

Aurora reported $98.9 million in net revenues for the quarter ended June 30, up from $19.1 million a year ago but lower than the range of between $100 million and $107 million predicted in company estimates released last month. Analysts had expected revenues of $108.25 million, according to financial markets data firm Refinitiv.

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.

Tamy Chen, an analyst with BMO Capital Markets, said Aurora’s latest results were “mixed.” While the pot producer expanded its share of the recreational market during the quarter, Aurora indicated that their sales volumes may be “volatile” from quarter to quarter, she said in a note to clients.

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 infair value of financial instruments, gains and losses on deemed disposal, and non-cash impairment of equity investments, goodwill, and otherassets.

The cannabis company also reported an adjusted loss before interest, taxes and depreciation of $11.7 million, an improvement from a loss of $36.6 million in the third quarter but not positive EBITDA, as the company previously said it would like to reach at this stage.

Aurora Cannabis Announces Financial Results for the Fourth Quarter and 2019 Fiscal Year – Technical420

Represents total biological assets and cannabis inventory, exclusive of merchandise, accessories, supplies, and consumables.

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 inprior periods; and (ii) reverse items that had been over-accrued in prior periods.  The net impact of these adjustments to Q4 2019 AdjustedEBITDA was a $14.9 million reduction in reported operating expenses

Its been nearly one year since Canada legalized cannabis for recreational use, starting with flower, seeds, plants and oils, in October. However, the footprint of legal pot stores has been slower to develop in some provinces than others. For example, while Alberta already hundreds of licensed retailers, Ontario will have 75 retail outlets by October of this year, after the latest lottery process for the opportunity to apply for the 50 new licences.

Aurora Cannabis misses revenue guidance

(1)  Cannabis extracts revenue includes cannabis oils, capsules, softgels, sprays, and topical revenue.

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.

Tamy Chen, an analyst with BMO Capital Markets, said Auroras latest results were mixed. While the pot producer expanded its share of the recreational market during the quarter, Aurora indicated that their sales volumes may be volatile from quarter to quarter, she said in a note to clients.

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.

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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, Auroras annual extraction capacity further increased to 45,600 kilograms.

The company says it sold nearly 18,000 of the 29,000 kilograms of marijuana it produced in the quarter. Production was on the higher end of its estimated production available for sale of between 25,000 and 30,000 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.

Although initial supply shortages across the country have eased, the rollout of brick-and-mortar retail stores in Ontario — the biggest market for legal pot — have lagged other parts of the country. 

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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 Companys KPIs show its success in this regard. Furthermore, Aurora has addressed previously identified production bottlenecks and continues to see strong sell-through of the Companys 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 Companys 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.

Aurora failed to achieve a positive adjusted EBITDA, with a loss before interest, taxes and depreciation of $11.7 million, an improvement from a loss of $36.6 million in the third quarter.

The Companys 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.

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.

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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 Auroras 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 Auroras strategy and long-term success.

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 managements presentation.

“We have been talking to Canopy [Growth Corporation] for some time now about the issues with their oils and gel capsules. They have known for months that most of the retailers are having problems selling them.”

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 worlds 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.

“They are just not selling,” said Mark Goliger, the chief executive of National Access Cannabis Corporation, a recreational cannabis retailer with 35 stores in Alberta, Saskatchewan and Manitoba.

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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 Auroras facilities is built to meet European Union Good Manufacturing Practices ("EU GMP") standards. Certification has been granted to Auroras 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.

As Ottawa prepares to legalize edibles and concentrates later this year, Canadians interested in cannabis oils won’t have to line up for long.

In addition to the Companys 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).

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

This news release 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.

For further information: For Media: Heather MacGregor, +1.416.509.5416, [email protected]; For Investors: Rob Kelly, +1.647.331.7228, [email protected]