- Continued Adjusted EBITDA Improvement Due to Strong Gross
Margins and Reduced SG&A
- Debt Levels and CapEx Spend Down Substantially in Q4
2020
- Provides Guidance for Q1 2021
NYSE | TSX: ACB
EDMONTON, AB, Sept. 22, 2020 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (NYSE | TSX: ACB), the
Canadian company defining the future of cannabinoids worldwide,
today announced its financial and operational results for the
fourth quarter of fiscal 2020 ended June 30,
2020.
"As reported in our September 8,
2020 business update, our Q4 demonstrated progress in
rationalization of SG&A and cash burn along with continued
leadership in both Canadian and international medical. However,
Aurora has slipped from its top position in Canadian consumer, a
market that continues to support material growth and opportunity,"
stated Miguel Martin, recently
appointed Chief Executive Officer of Aurora. "My focus is therefore
to re-position the Canadian consumer business immediately. We look
to expand beyond the value flower segment, leverage our
capabilities in science and product innovation and put our effort
on a finite number of emerging growth formats. This entails
prioritizing our San Rafael, Aurora and Whistler premium brands in
flower, pre-rolls and vapor, which will be shortly followed by
strategic marketing and innovation efforts in concentrates and
edibles."
"I accepted the CEO role because I see an opportunity to utilize
my skill set in regulated CPG brand development. I am fortunate to
have stepped into a Company built with a dedication to science and
a compliance first approach. Through successful execution, I
believe what we build in Canada
will be very portable to other larger global cannabinoid markets.
Having now spent four months at Aurora, I have seen the talent and
industry knowledge that makes this Company innovative and agile. I
want Aurora to be a leader in cannabinoids when the largest markets
open up globally and my job is to make sure we can deliver on that
plan."
Fourth Quarter 2020 Highlights
(Unless otherwise stated, comparisons are made between fiscal
Q4 2020 and Q3 2020 results and are in Canadian dollars. Certain
key metrics in prior quarters have been restated to reflect
accounting policy changes for inventory costing and the allocation
of production staff salaries. See Change in Accounting Policy
section below)
Q4 2020 total net revenue was $72.1
million, a 5% decrease from the prior quarter. Cannabis net
revenue1 was $67.5 million
in Q4 2020, a 3% decrease from the prior quarter. Adjusted gross
margin, before FV adjustments, on cannabis net
revenue1 was 50%, up from 43% in Q3.
Consumer cannabis:
- Consumer cannabis net revenue1 was $35.3 million, a decrease of 9% over the previous
quarter. Total volume of dried consumer cannabis sold increased by
36%, but was offset by a 30% decrease in the average net selling
price per gram of consumer cannabis1 as the Company's
value segment brand, Daily Special, accounted for a greater
percentage of consumer cannabis net revenue, at 62% of flower
revenue compared to 35% in the prior quarter. Consumer cannabis
extract net revenue decreased by $1.5
million as compared to the prior quarter driven primarily by
a loss of market share for vaporizer products.
- Adjusted gross margin, before fair value adjustments on
consumer cannabis net revenue1 was 35% in Q4 2020,
versus the 29% in the prior quarter. Despite the pressure on
average selling price ("ASP") in this segment, continued per-unit
reductions in production costs supported a healthy average
margin.
Medical cannabis:
- Medical cannabis net revenue1 was $32.2 million, a 4% increase from the prior
quarter. The increase was primarily attributable to a sustainable
and profitable Canadian medical business growing by 2% and strong
traction in Europe growing by 14%
quarter over quarter.
- Adjusted gross margin, before fair value adjustments of medical
cannabis net revenue1 was 67% in Q4 2020, versus the 60%
in the prior quarter. The medical cannabis segment continues to
benefit from the Company's leading share of the Canadian and
European medical markets, with strong average net selling price of
medical cannabis1 and continued per unit production cost
reductions.
Selling, General and Administrative ("SG&A") and
Adjusted EBITDA:
- SG&A, including Research and Development ("R&D"), was
$67.7 million in Q4 2020, down
$11.2 million from the prior quarter
as a result of the Company's Business Transformation Plan. Included
in SG&A is $3.9 million of costs
related to divested businesses, R&D termination costs and
severance and benefit costs associated with the Business
Transformation Plan. Excluding these impacts, Q4 SG&A was
$63.8 million.
- Adjusted EBITDA1 in Q4 2020 was a loss of
$34.6 million, an improvement of
$15.8 million from the prior quarter
Adjusted EBITDA loss of $50.4
million. Excluding severance costs, R&D termination
costs and divested business results, Q4 Adjusted EBITDA was a loss
of $30.7 million.
Additional Highlights:
- Production volume in Q4 2020 was 44,406 kilograms, a 23%
increase from the prior quarter, contributing to a 27% decrease in
cash cost to produce per gram of dried cannabis sold1
quarter over quarter.
- Capital Expenditures ("CapEx") were approximately $16.4 million in Q4 2020, a significant decline
from the $73.7 million reported in Q3
2020, as the Company's business transformation continued to deliver
concrete results. This includes additions to intangible assets and
excludes the impact of capitalized borrowing costs and share based
compensation.
- Aurora recorded a number of balance sheet adjustments in Q4
2020 to recognize market realities and position the Company for
future performance. These adjustments include fixed asset
impairment charges of $86.5 million
due to production facility rationalization, and a charge of
$135.1 million in the carrying value
of certain inventory, predominantly trim, in order to align
inventory on hand with near term expectations for demand. Of the
$135.1 million inventory impairment,
$105.5 million is recognized through
cost of sales and $29.6 million is
recognized through changes in fair value of inventory sold on the
statements of comprehensive loss. Finally, the Company recognized a
non-cash write-down of goodwill and intangible assets of
$1.6 billion.
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1
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These terms are
non-GAAP measures, see "Non-GAAP Measures" below.
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Fiscal Q4 2020 Cash Use:
Significant Reduction in CapEx levels and Adjusted EBITDA
Loss. Term Debt Paid Down Substantially.
Cash use in Q4 2020 was similar to the prior quarter, however
the mix within the use showed significant positive progress. In Q4
2020, Aurora used $53.3 million cash
to pay down term debt and lease obligations, and following further
paydowns subsequent to the quarter end, term debt stands at
$110.5 million as of September 21, 2020. Cash used for capital
expenditures was $32.8 million, which
includes invoices paid related for work done in Q3, and was
$51.2 million lower than in Q3. Cash
used in operations was $63.9 million,
excluding the $105.5 million of
non-cash inventory impairment in cost of sales (see "Additional
Highlights" above).
Given the Company's continued strength in adjusted gross margins
before fair value adjustments on cannabis net revenue and
further reductions in SG&A expense and capital expenditures as
described above, management expects cash use in fiscal Q1 2021 to
further decrease.
The main components of cash source and use in Q4 2020 were as
follows:
($
thousands)
|
Q4
2020
|
|
Q3 2020
(2)
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First
Half 2021 Expectations
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Cash
Flow
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Cash,
Opening
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$230,208
|
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$156,334
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|
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|
|
|
|
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Cash used in
operations
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($63,912)
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|
($54,763)
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Positive Adjusted
EBITDA targeted for Q2 2021, and inventory build
expected to reduce over next 2 – 3 quarters
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Capital
expenditures
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($32,768)
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($83,938)
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|
Less than $10 million
quarterly average for currently planned 2021 projects
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Debt and interest
payments
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($53,287)
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($15,887)
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Term debt declining /
Convertible debt payments only at six month points
(Q1, 2021, Q3 2021, etc)
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Cash use
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($149,967)
|
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($154,588)
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|
|
|
|
|
|
|
|
Proceeds raised
through debt
|
$-
|
|
$22,000
|
|
|
Proceeds raised from
sale of marketable
securities and investments in associates
|
$33,673
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$-
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Proceeds raised
through equity issuance
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$48,265
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$206,462
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Access to capital in
an uncertain environment is paramount but cost control
and healthy net revenue growth are primary levers. Equity capital
to be
available as backstop or for near-term positive NPV
investments.
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Cash
raised
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$81,938
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$228,462
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Cash,
Ending
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$162,179
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$230,208
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(1)
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Refer to
"Consolidated Statement of Cash Flows" prepared in accordance with
IAS 7 – Statement of Cash Flows below.
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(2)
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April 1, 2020, the
Company changed its accounting policy for inventory costing
relating to by-products, and the allocation of production
management staff salaries, previously charged to G&A, and now
charged to inventory and cost of sales. Management applied the
change in accounting policy retrospectively. Previously reported
metrics have been restated to reflect adjustments made as a result
of these changes in accounting policy.
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Q4 2020 Key Financial and Operational Metrics
($ thousands,
except Operational Results)
|
Q4
2020
|
Q3 2020
(1)
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$
Change
|
%
Change
|
Financial
Results
|
|
|
|
|
Total net revenue
(2)
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$72,114
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$75,520
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($3,406)
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(5)%
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Cannabis net revenue
(2)(3a)
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$67,492
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$69,637
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($2,145)
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(3)%
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Medical cannabis net
revenue (3a)
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$32,226
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$31,086
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$1,140
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4%
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Consumer cannabis net
revenue (3a)
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$35,266
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$38,551
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($3,285)
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(9)%
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Adjusted gross margin
before FV adjustments on cannabis net revenue
(3b)
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50%
|
43%
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N/A
|
7%
|
Adjusted gross margin
before FV adjustments on medical cannabis net revenue
(3b)
|
67%
|
60%
|
N/A
|
7%
|
Adjusted gross margin
before FV adjustments on consumer cannabis net revenue
(3b)
|
35%
|
29%
|
N/A
|
6%
|
SG&A expense
(4)
|
$60,088
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$73,289
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($13,201)
|
(18)%
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R&D
expense
|
$7,646
|
$5,601
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$2,045
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37%
|
Adjusted EBITDA
(3c)(7)
|
($34,606)
|
($50,427)
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$15,821
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31%
|
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|
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|
Balance
Sheet
|
|
|
|
|
Working
capital
|
$147,933
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$429,293
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($281,360)
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(66)%
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Cannabis inventory
and biological assets (5)
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$139,198
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$225,966
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($86,768)
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(38)%
|
Total
assets
|
$2,783,695
|
$4,699,137
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($1,915,442)
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(41)%
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Operational
Results – Cannabis
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Cash cost to produce
per gram of dried cannabis sold (3d)
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$0.89
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$1.22
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($0.33)
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(27)%
|
Average net selling
price of dried cannabis (3)
|
$3.60
|
$4.64
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($1.04)
|
(22)%
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Kilograms
produced
|
44,406
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36,207
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8,199
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23%
|
Kilograms sold
(6)
|
16,748
|
12,729
|
4,019
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32%
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(1)
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Certain previously
reported amounts have been restated to exclude the results related
to discontinued operations and change in accounting policy for
inventory costing relating to by-products and the allocation of
production management staff salaries. For further detail, refer to
"Change in Accounting Policies" section below.
|
(2)
|
Includes the impact
of actual and expected product returns and price adjustments (three
and twelve months ended June 30, 2020 - $1.9 million and $15.3
million; three and twelve months ended June 30, 2019 - nil and
nil).
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(3)
|
These terms are
defined in the "Non-GAAP Measures" below. Refer to the
following sections for reconciliation of the non-GAAP measures to
the IFRS equivalent measure
|
|
|
a.
Refer to the "Net Revenue" section for a
reconciliation to the IFRS equivalent.
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b.
Refer to the "AdjustedGross Margin" section for
reconciliation to the IFRS equivalent.
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c.
Refer to the "Adjusted EBITDA" section for reconciliation to the
IFRS equivalent.
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d.
Refer to the "Cash Cost to Produce Dried Cannabis Sold"
section for reconciliation to the IFRS equivalent.
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(4)
|
Includes costs from
divested businesses and severance and benefit costs associated with
our business transformation plan of $2.1 million and $1.0 million,
respectively (Q3 2020 - $1.0 million and $5.0 million,
respectively).
|
(5)
|
Represents total
biological assets and cannabis inventory, exclusive of merchandise,
accessories, supplies and consumables.
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(6)
|
The kilograms sold is
offset by the grams returned.
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(7)
|
Included in Q4 2020,
are $3.1 million SG&A costs relating to divested businesses and
severance and benefit costs associated with our business
transformation plan, and $0.8 million R&D termination costs.
Excluding these expenses, Adjusted EBITDA loss would have been
$30.7 million.
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Events Subsequent to Quarter End
- Miguel Martin was appointed
Chief Executive Officer, effective September
8, 2020. With deep, diverse experience in consumer packaged
goods, highly regulated industries and the U.S. cannabinoid
industry, Miguel is well-positioned to execute the next phase of
Aurora's business transformation, with a focus on commercial
strategy. Michael Singer, who served
as Interim CEO beginning February
2020, stepped down from his temporary role and remains
Executive Chairman.
- In a press release on September 8,
2020, Aurora provided a business update, including the
following announcements:
-
- The Company is now operating at its quarterly SG&A run-rate
in the low $40 million range, and
expects operational cost reductions from facility closures up to
$10 million per quarter starting in
the second half of fiscal 2021. With a tailwind of growth in the
Canadian recreational market, the Company is better positioned for
its next phase focused on profitability.
- Aurora and the UFC have agreed to mutually terminate their
partnership. For the Company, this decision reflects the evolution
of the realities of the cannabis market and a focus on near term
profit pools. In connection with this decision, the Company expects
to make a one-time payment of US$30
million to terminate the contract in Q1 2021, which is
expected to avoid more than $150
million in fees, research costs, and marketing activation
expenses over the next five years.
- Aurora reached an agreement with its syndicate of banks
regarding amendments to its secured credit agreement. These
amendments have provided additional flexibility during the
Company's Business Transformation Plan.
- Effective immediately, Dr. Jason
Dyck has elected to step down from the Board of Directors in
order to pursue other opportunities.
Subsequent to June 30, 2020, the
Company raised US$36.6 million gross
proceeds under its ATM program, with approximately US$183 million of remaining available room under
the ATM and approximately US$60.0
million of remaining available room under the Shelf
Prospectus for future financings or issuances of securities.
Guidance
Following the divestiture of non-core subsidiaries during fiscal
2020, net revenue in Q1 2021 is expected to be comprised
exclusively of cannabis net revenue. Cannabis net revenue is
expected to be between $60 million
and $64 million, compared to
$67.5 million in Q4 2020. The Company
expects adjusted gross margin before fair value adjustments on
cannabis net revenue to be within a range of 46%-50% and SG&A
costs (including R&D) in the low $40
million range.
As a reminder, the Company expects to achieve positive Adjusted
EBITDA in Q2 2021.
Conference Call
Aurora will host a conference call today, September 22,
2020, 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. A question and answer session will follow
management's presentation.
DATE:
|
Tuesday, September
22, 2020
|
TIME:
|
5:00 p.m. Eastern
Time | 3:00 p.m. Mountain Time
|
WEBCAST:
|
http://public.viavid.com/index.php?id=141462
|
REPLAY:
|
(844) 512-2921 or
(412) 317-6671
Available until 11:59
p.m. Eastern Time Tuesday, October 6, 2020
|
PIN
NUMBER:
|
13710020
|
About Aurora
Aurora is a global leader in the cannabis industry serving both
the medical and consumer markets. Headquartered in Edmonton, Alberta, Aurora is a pioneer in
global cannabis dedicated to helping people improve their lives.
The Company's brand portfolio includes Aurora, Aurora Drift, San
Rafael '71, Daily Special, AltaVie, MedReleaf, CanniMed, Whistler,
and Reliva. Providing customers with innovative, high-quality
cannabis and hemp products, Aurora's brands continue to break
through as industry leaders in the medical, performance, wellness
and recreational markets wherever they are launched. For more
information, please visit our website at www.auroramj.com.
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.
Forward Looking Statements
This news release includes certain statements which may
constitute "forward-looking information" and "forward-looking
statements" within the meaning of Canadian securities law
requirements (collectively, "forward-looking statements" or "FLS").
These forward-looking statements are made as of the date of this
press release and the Company does not intend, and does not assume
any obligation, to update these FLS, except as required under
applicable securities legislation. FLS relate to future events or
future performance and reflect Company management's expectations or
beliefs regarding future events. In certain cases, FLS can be
identified by the use of words such as "plans", "expects" or "does
not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or statements
that certain actions, events or results "may", "could", "would",
"might" or "will be taken", "occur" or "be achieved" or the
negative of these terms or comparable terminology. In this
document, certain forward-looking statements are identified by
words including "may", "future", "expected", "intends" and
"estimates". By their very nature FLS involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the FLS. The Company provides
no assurance that FLS will prove to be accurate, as actual results
and future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on FLS. Certain FLS in this press release include, but are
not limited to the following:
- pro forma measures including revenue, adjusted gross margin
before fair value adjustments, and expected SG&A run-rates, and
grams produced;
- the completion of construction of production facilities,
associated costs, and receipt of licenses from Health Canada to
produce and sell cannabis and cannabis related products from these
facilities;
- strategic investments and capital expenditures, and related
benefits;
- future strategic plans;
- growth in the global consumer use cannabis market;
- expectations regarding production capacity, costs and
yields;
- product sales expectations and corresponding forecasted
increases in net revenue; and
- the impact of the COVID-19 pandemic on the Company's business,
operations, capital resources and/or financial results.
The above and other aspects of the Company's anticipated future
operations are forward-looking in nature and, as a result, are
subject to certain risks and uncertainties. Although the Company
believes that the expectations reflected in these FLS are
reasonable, undue reliance should not be placed on them as actual
results may differ materially from the forward-looking statements.
Such FLS are estimates reflecting the Company's best judgment based
upon current information and involve a number of risks and
uncertainties, and there can be no assurance that other factors
will not affect the accuracy of such 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 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, management's
estimation that SG&A will grow only in proportion of revenue
growth, the ability to expand and maintain distribution
capabilities, the impact of competition, the general impact of
financial market conditions, the yield from cannabis growing
operations, product demand, changes in prices of required
commodities, competition, and the possibility for changes in laws,
rules, and regulations in the industry, epidemics, pandemics or
other public health crises, including the current outbreak of
COVID-19. Readers are urged to consider the risks, uncertainties
and assumptions carefully in evaluating the forward-looking
statements and are cautioned not to place undue reliance on such
information.
Should one or more of these risks or uncertainties materialize,
or should underlying factors or assumptions prove incorrect, actual
results may vary materially from those described in forward looking
statements. 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.
Although the Company believes that the expectations conveyed by
the forward-looking statements are reasonable based on the
information available to the Company on the date hereof, no
assurance can be given as to future results, approvals or
achievements. Forward-looking statements contained in this
press release are expressly qualified by this cautionary
statement. The Company disclaims any duty to update any of
the forward-looking statements after the date of this Annual
Information form except as otherwise required by applicable
law.
Non-GAAP Measures
The Company uses 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. For an
explanation of these measures to related comparable financial
information presented in the consolidated financial statements
prepared in accordance with IFRS, refer to the discussion below.
The Company believes that these Non-GAAP Measures are useful
indicators of operating performance and are specifically used by
management to assess the financial and operational performance of
the Company. These Non-GAAP Measures include, but are not limited,
to the following:
- Cash cost to produce dried cannabis sold is calculated by
taking the cost of sales, excluding the effect of changes in the FV
of biological assets and inventory, and deducting non-cash
production costs, cannabis extract conversion costs, cost of
accessories, cost of products purchased from other Licensed
Producers that were sold, cost of sales from non-cannabis producing
subsidiaries, inventory impairments, and packaging costs (i.e.
post-production costs). Cash cost to produce per gram of dried
cannabis sold is calculated by taking cash cost to produce dried
cannabis sold divided by total grams of dried cannabis sold in the
period that was produced by Aurora. Management believes these
measures provide useful information about the efficiency of our
production of cannabis.
- Cannabis net revenue represents revenue from the sale of
cannabis products, excluding excise taxes and net revenue from
patient counseling services, design, engineering and construction
services, sale of hemp products, and analytical testing services.
Cannabis net revenue is further broken down as follows:
-
- Medical cannabis net revenue represents Canadian and
international cannabis net revenue for medical cannabis sales only,
excluding wholesale bulk cannabis net revenue.
- Consumer cannabis net revenue represents cannabis net revenue
for consumer cannabis sales only.
Management believes the cannabis net revenue measures provide
more specific information about the net revenue purely generated
from our core cannabis business and by market type.
- Average net selling price per gram and gram equivalent is
calculated by taking cannabis net revenue divided by total grams
and grams equivalent of cannabis sold in the period. Average net
selling price per gram and gram equivalent is further broken down
as follows:
-
- Average net selling price per gram of dried cannabis represents
the average net selling price per gram for dried cannabis sales
only, excluding wholesale bulk cannabis sold in the period.
- Average net selling price per gram and gram equivalent of
consumer cannabis represents the average net selling price per gram
and gram equivalent for dried cannabis and cannabis extracts sold
in the consumer market.
Management believes the average net selling price per gram or
gram equivalent measures provide more specific information about
the pricing trends over time by product and market type.
- Adjusted gross profit before FV adjustments on cannabis net
revenue represents cash gross profit and gross margin on cannabis
net revenue and is calculated by subtracting from total cannabis
net revenue (i) cost of sales, before the effects of changes in FV
of biological assets and inventory; (ii) cost of sales from
non-cannabis auxiliary support functions; and removing (iii)
depreciation in cost of sales; and (iv) cannabis inventory
impairment. Adjusted gross margin before FV adjustments on cannabis
net revenue is calculated by dividing adjusted gross profit before
FV adjustments on cannabis net revenue divided by cannabis net
revenue. Adjusted gross profit and gross margin before FV
adjustments on cannabis net revenue is further broken down as
follows:
-
- Adjusted gross profit and gross margin before FV adjustments on
medical cannabis net revenue represents adjusted gross profit and
gross margin before FV adjustments on sales generated in the
medical market only.
- Adjusted gross profit and gross margin before FV adjustments on
consumer cannabis net revenue represents adjusted gross profit and
gross margin before FV adjustments on sales generated in the
consumer market only.
Management believes that these measures provide useful
information to assess the profitability of our cannabis operations
as it represents the cash gross profit and margin generated from
cannabis operations and excludes the effects of non-cash FV
adjustments on inventory and biological assets, which are required
by IFRS.
- Adjusted EBITDA is calculated as net (loss) income 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,
acquisition costs, foreign exchange, changes in fair value of
financial instruments, gains and losses on deemed disposal, and
non-cash impairment of intangibles, goodwill, inventory, property,
plant and equipment and other assets. Adjusted EBITDA is intended
to provide a proxy for the Company's operating cash flow and is
widely used by industry analysts to compare Aurora to its
competitors, and derive expectations of future financial
performance for Aurora. Adjusted EBITDA increases comparability
between comparative companies by eliminating variability resulting
from differences in capital structures, management decisions
related to resource allocation, and the impact of FV adjustments on
biological assets and inventory and financial instruments, which
may be volatile and fluctuate significantly from period to
period.
Non-GAAP measures should be considered together with other data
prepared 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 should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS.
Consolidated Statements of Financial Position
(Amounts reflected in thousands of Canadian dollars, unaudited)
|
|
|
Restated
(1)
|
|
June 30,
2020
|
|
June 30,
2019
|
|
$
|
|
$
|
Assets
|
|
|
|
Current
|
|
|
|
Cash and cash
equivalents
|
162,179
|
|
172,727
|
Restricted
cash
|
—
|
|
46,066
|
Accounts
receivable
|
54,110
|
|
103,493
|
Income taxes
receivable
|
—
|
|
8,833
|
Marketable
securities
|
7,066
|
|
143,248
|
Derivatives
|
11,791
|
|
—
|
Biological
assets
|
35,435
|
|
50,567
|
Inventory
|
121,827
|
|
111,321
|
Prepaids and other
current assets
|
22,137
|
|
24,323
|
Assets held for
sale
|
6,194
|
|
—
|
|
420,739
|
|
660,578
|
|
|
|
|
Property, plant and
equipment
|
946,380
|
|
765,567
|
Derivatives
|
41,791
|
|
86,409
|
Deposits
|
12,329
|
|
6,926
|
Loan
receivable
|
3,643
|
|
—
|
Investments in
associates and joint ventures
|
18,114
|
|
118,845
|
Intangible
assets
|
412,267
|
|
688,366
|
Goodwill
|
928,432
|
|
3,172,550
|
Total
assets
|
2,783,695
|
|
5,499,241
|
|
|
|
|
Liabilities
|
|
|
|
Current
|
|
|
|
Accounts payable and
accrued liabilities
|
95,574
|
|
152,884
|
Deferred
revenue
|
3,505
|
|
749
|
Convertible
debentures
|
32,110
|
|
235,909
|
Loans and
borrowings
|
120,508
|
|
13,758
|
Contingent
consideration payable
|
19,604
|
|
28,137
|
Deferred gain on
derivatives
|
20
|
|
728
|
Provisions
|
1,485
|
|
4,200
|
|
272,806
|
|
436,365
|
|
|
|
|
Convertible
debentures
|
294,928
|
|
267,672
|
Loans and
borrowings
|
83,701
|
|
127,486
|
Derivative
liability
|
1,827
|
|
177,395
|
Other long-term
liability
|
37
|
|
11,979
|
Deferred tax
liability
|
3,946
|
|
90,970
|
Total
liabilities
|
657,245
|
|
1,111,867
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Share
capital
|
5,785,395
|
|
4,673,118
|
Reserves
|
145,395
|
|
139,327
|
Accumulated other
comprehensive loss
|
(187,197)
|
|
(143,170)
|
Deficit
|
(3,592,787)
|
|
(286,311)
|
Total equity
attributable to Aurora shareholders
|
2,150,806
|
|
4,382,964
|
Non-controlling
interests
|
(24,356)
|
|
4,410
|
Total
equity
|
2,126,450
|
|
4,387,374
|
Total liabilities and
equity
|
2,783,695
|
|
5,499,241
|
(1)
|
Effective April 1,
2020, the Company changed its accounting policy for inventory
costing relating to by-products, and the allocation of production
management staff salaries, previously charged to G&A, and
now charged to inventory and cost of sales. Management applied
the change in accounting policy retrospectively. Previously
reported metrics have been restated to reflect adjustments made as
a result of these changes in accounting policy.
|
Consolidated Statements of Profit and Loss
(Amounts
reflected in thousands of Canadian dollars, except share and per
share amounts, unaudited)
|
Years ended June
30,
|
|
|
|
Restated
(1)
|
|
2020
|
2019
|
|
$
|
$
|
Revenue from sale of
goods
|
323,201
|
271,105
|
Revenue from
provision of services
|
5,002
|
7,589
|
Excise
taxes
|
(49,297)
|
(33,158)
|
Net
revenue
|
278,906
|
245,536
|
Cost of
sales
|
277,234
|
123,778
|
Gross profit before
fair value adjustments
|
1,672
|
121,758
|
|
|
|
Changes in fair value
of inventory sold
|
91,825
|
71,821
|
Unrealized gain on
changes in fair value of biological assets
|
(56,614)
|
(92,503)
|
|
|
|
Gross (loss)
profit
|
(33,539)
|
142,440
|
|
|
|
Expense
|
|
|
General and
administration
|
205,276
|
159,069
|
Sales and
marketing
|
91,271
|
99,272
|
Acquisition
costs
|
6,493
|
17,217
|
Research and
development
|
26,070
|
14,778
|
Depreciation and
amortization
|
68,414
|
63,343
|
Share-based
compensation
|
59,899
|
107,039
|
|
457,423
|
460,718
|
|
|
|
Loss from
operations
|
(490,962)
|
(318,278)
|
|
|
|
Other (expense)
income
|
|
|
Interest and other
income
|
4,990
|
3,679
|
Finance and other
costs
|
(77,538)
|
(39,409)
|
Foreign exchange
("FX") loss
|
(12,779)
|
(5,147)
|
Other (losses)
gains
|
(28,643)
|
110,797
|
Restructuring
charges
|
(1,947)
|
—
|
Impairment of
property, plant and equipment
|
(157,838)
|
—
|
Impairment of
investment in associates
|
(75,035)
|
(73,289)
|
Impairment of
intangible assets and goodwill
|
(2,544,144)
|
(9,002)
|
|
(2,892,934)
|
(12,371)
|
|
|
|
Loss from operations
before taxes and discontinued operations
|
(3,383,896)
|
(330,649)
|
|
|
|
Income tax
recovery
|
|
|
Current
|
5,100
|
6,000
|
Deferred,
net
|
78,303
|
23,909
|
|
83,403
|
29,909
|
|
|
|
Net loss from
continuing operations
|
(3,300,493)
|
(300,740)
|
Net (loss) income
from discontinued operations, net of tax
|
(9,844)
|
144
|
Net loss
|
(3,310,337)
|
(300,596)
|
|
|
|
Net loss per share -
basic and diluted
|
|
|
Continuing
operations
|
($33.84)
|
($3.66)
|
Discontinued
operations
|
($0.10)
|
$0.00
|
Total
operations
|
($33.94)
|
($3.66)
|
(1)
|
Effective April 1,
2020, the Company changed its accounting policy for inventory
costing relating to by-products, and the allocation of production
management staff salaries, previously charged to G&A, and now
charged to inventory and cost of sales. Management applied the
change in accounting policy retrospectively. Previously reported
metrics have been restated to reflect adjustments made as a result
of these changes in accounting policy.
|
Consolidated Statements of Cash Flows
(Amounts
reflected in thousands of Canadian dollars, unaudited)
|
Year ended June
30,
|
|
|
Restated
(1)
|
|
2020
|
2019
|
|
$
|
$
|
Operating
activities
|
|
|
Net loss from
continuing operations
|
(3,300,493)
|
(300,740)
|
Adjustments for
non-cash items:
|
|
|
Unrealized gain on
changes in fair value of biological assets
|
(56,614)
|
(92,503)
|
Changes in fair value
included in inventory sold
|
91,825
|
71,821
|
Depreciation of
property, plant and equipment
|
74,314
|
45,362
|
Amortization of
intangible assets
|
40,577
|
42,893
|
Share-based
compensation
|
59,899
|
107,039
|
Non-cash acquisition
costs
|
—
|
4,243
|
Impairment of
property, plant and equipment
|
157,838
|
—
|
Impairment of
investment in associate
|
75,035
|
73,289
|
Impairment of
intangible assets and goodwill
|
2,544,144
|
9,002
|
Accrued interest and
accretion expense
|
18,591
|
22,798
|
Interest and other
income
|
(4,835)
|
(265)
|
Deferred tax expense
(recovery)
|
(78,303)
|
(23,909)
|
Other (losses) gains,
net
|
28,643
|
(109,464)
|
Foreign exchange
loss
|
12,779
|
(3,814)
|
Changes in non-cash
working capital
|
7,643
|
(37,285)
|
Net cash used in
operating activities from discontinued operations
|
(8,995)
|
(712)
|
Net cash used in
operating activities
|
(337,952)
|
(192,245)
|
|
|
|
Investing
activities
|
|
|
Marketable securities
and derivative investments
|
(2,000)
|
(50,584)
|
Proceeds from
disposal of marketable securities and derivatives
|
90,843
|
46,975
|
Purchase of property,
plant and equipment, and intangible assets
|
(355,006)
|
(414,190)
|
Disposal of property,
plant and equipment
|
3,739
|
—
|
Acquisition of
businesses, net of cash acquired
|
280
|
114,213
|
Payment of contingent
consideration
|
(1,993)
|
(4,112)
|
Loan
receivable
|
(3,643)
|
—
|
Dividends
received
|
—
|
828
|
Deposits
|
(17,744)
|
(5,452)
|
Proceeds from
disposal of investment in associates
|
27,600
|
134
|
Net cash used in
investing activities from discontinued operations
|
8,441
|
(109)
|
Net cash used in
investing activities
|
(249,483)
|
(312,297)
|
|
|
|
Financing
activities
|
|
|
Proceeds from
long-term loans
|
86,394
|
605,104
|
Repayment of
long-term loans
|
(115,130)
|
(21,126)
|
Repayment of
short-term loans
|
—
|
(238)
|
Repayment of
convertible debenture
|
(2,306)
|
—
|
Payments of principal
portion of lease liabilities
|
(7,788)
|
—
|
Proceeds from lease
inducements
|
1,746
|
—
|
Restricted
cash
|
46,066
|
(32,668)
|
Financing
fees
|
(1,789)
|
(18,709)
|
Shares issued for
cash, net of share issue costs
|
575,506
|
59,331
|
Capital contribution
from non-controlling interest
|
—
|
5,854
|
Net cash used in
financing activities from discontinued operations
|
(137)
|
—
|
Net cash provided by
financing activities
|
582,562
|
597,548
|
Effect of foreign
exchange on cash and cash equivalents
|
(5,675)
|
2,936
|
Increase (decrease)
in cash and cash equivalents
|
(10,548)
|
95,942
|
Cash and cash
equivalents, beginning of year
|
172,727
|
76,785
|
Cash and cash
equivalents, end of year
|
162,179
|
172,727
|
(1)
|
Effective April 1,
2020, the Company changed its accounting policy for inventory
costing relating to by-products, and the allocation of production
management staff salaries, previously charged to G&A, and now
charged to inventory and cost of sales. Management applied the
change in accounting policy retrospectively. Previously reported
metrics have been restated to reflect adjustments made as a result
of these changes in accounting policy.
|
Change in Accounting Policy
Effective April 1, 2020, the
Company elected to change its accounting policy for inventory
costing of by-products. The process of growing and harvesting dried
cannabis produces trim, which is now considered to be a by-product.
Inventories of harvested cannabis, which now excludes trim, are
transferred from biological assets to inventory at fair value less
costs to sell at the point of harvest, which becomes the deemed
cost. Historically, the Company pro-rated this deemed cost of
inventory based on the total grams harvested. The Company now
measures by-products at their net realizable value at point of
harvest and deducts this value from the total deemed cost to derive
a net cost for the main product. Additionally, the Company has
elected to change its accounting policy with respect to the
allocation of production management staff salaries, previously
charged to general administrative expense, and now charged to
inventory and cost of sales. The Company now allocates and
capitalizes a portion of these salaries to inventory as opposed to
expensing them directly in sales and marketing, and general and
administrative expenses. The Company believes that the revised
policies and presentation provides more accurate and relevant
financial information to users of the consolidated financial
statements. See Note 9 for the Company's revised accounting policy
on inventory costing.
Management has applied the change in accounting policy
retrospectively. The consolidated financial statements for the year
ended June 30, 2019 have been
restated to reflect adjustments made as a result of this change in
accounting policy. The following is a summary of the impacts to the
statement of financial position, the statement of comprehensive
loss, and the statement of cash flows for the year ended
June 30, 2019:
Unaudited
|
June 30,
2019
As previously
reported
|
Inventory
Adjustments
|
Discontinued
Operations
|
June 30,
2019
Restated
|
Consolidated
Statement of Financial Position
|
|
|
|
|
Biological
assets
|
51,836
|
(1,269)
|
—
|
50,567
|
Inventory
|
113,641
|
(2,320)
|
—
|
111,321
|
Deferred tax
liability
|
91,886
|
(916)
|
—
|
90,970
|
Deficit
|
(283,639)
|
(2,672)
|
—
|
(286,311)
|
Unaudited
|
Year ended
June 30,
2019
As previously
reported
|
Inventory
Adjustments
|
Discontinued
Operations
|
Year ended
June 30,
2019
Restated
|
Consolidated
Statement of Comprehensive Loss
|
|
|
|
|
Cost of
sales
|
112,526
|
11,252
|
—
|
123,778
|
Gross profit before
fair value adjustments
|
135,413
|
(11,252)
|
(2,403)
|
121,758
|
|
|
|
|
|
Changes in fair value
of inventory sold
|
72,129
|
(308)
|
—
|
71,821
|
Unrealized gain on
changes in fair value of biological assets
|
(96,531)
|
4,028
|
—
|
(92,503)
|
Gross
profit
|
159,815
|
(14,972)
|
(2,403)
|
142,440
|
|
|
|
|
|
General and
administration
|
172,365
|
(11,384)
|
(1,912)
|
159,069
|
|
|
|
|
|
Deferred tax
(recovery) expense
|
(23,257)
|
(916)
|
264
|
(23,909)
|
|
|
|
|
|
Net loss from
continuing operations
|
(297,924)
|
(2,672)
|
(144)
|
(300,740)
|
Net loss attributable
to Aurora shareholders
|
(290,837)
|
(2,672)
|
—
|
(293,509)
|
Loss per share (basic
and diluted)
|
(3.63)
|
(0.03)
|
n/a
|
(3.66)
|
Unaudited
|
Year ended
June 30,
2019
As previously
reported
|
Inventory
Adjustments
|
Discontinued
Operations
|
Year ended
June 30,
2019
Restated
|
Consolidated
Statement of Cash Flows
|
|
|
|
|
Unrealized gain on
changes in fair value of biological assets
|
(96,531)
|
4,028
|
—
|
(92,503)
|
Changes in fair value
of inventory sold
|
72,129
|
(308)
|
—
|
71,821
|
Deferred tax expense
(recovery)
|
(23,257)
|
(916)
|
264
|
(23,909)
|
Changes in non-cash
working capital
|
(37,952)
|
(211)
|
878
|
(37,285)
|
Net cash used in
operating activities
|
(192,245)
|
—
|
—
|
(192,245)
|
Reconciliation of Non-GAAP Measures
Net Revenue
|
Three months
ended
|
|
June 30,
2020
|
March 31,
2020
|
Medical cannabis net
revenue
|
32,226
|
31,086
|
Consumer cannabis net
revenue
|
35,266
|
38,551
|
Total cannabis net
revenue
|
67,492
|
69,637
|
Ancillary net
revenue
|
4,622
|
5,883
|
Total net
revenue
|
72,114
|
75,520
|
Adjusted Gross Margin
|
Medical
Cannabis
|
Consumer
Cannabis
|
Ancillary
|
Total
|
Three months
ended June 30, 2020
|
|
|
|
|
Net
revenue
|
32,226
|
35,266
|
4,622
|
72,114
|
Cost of
sales
|
(32,118)
|
(100,266)
|
(19,585)
|
(151,969)
|
Gross margin before
FV adjustments
|
108
|
(65,000)
|
(14,963)
|
(79,855)
|
Depreciation in cost
of sales
|
3,073
|
4,703
|
-
|
7,776
|
Inventory impairment
in cost of sales
|
18,260
|
72,749
|
14,479
|
105,488
|
Adjusted gross
profit
|
21,441
|
12,452
|
(484)
|
33,409
|
Adjusted gross
margin
|
67%
|
35%
|
(10)%
|
46%
|
|
|
|
|
|
Three months
ended March 31, 2020
|
|
|
|
|
Net
revenue
|
31,086
|
38,551
|
5,883
|
75,520
|
Cost of
sales
|
(15,422)
|
(32,115)
|
(4,975)
|
(52,512)
|
Gross margin before
FV adjustments
|
15,664
|
6,436
|
908
|
23,008
|
Depreciation in cost
of sales
|
2,887
|
4,703
|
-
|
7,590
|
Adjusted gross
profit
|
18,551
|
11,139
|
908
|
30,598
|
Adjusted gross
margin
|
60%
|
29%
|
15%
|
41%
|
(1)
|
Effective April 1,
2020, the Company changed its accounting policy for inventory
costing relating to by-products, and the allocation of production
management staff salaries, previously charged to G&A, and now
charged to inventory and cost of sales. Management applied the
change in accounting policy retrospectively. Previously reported
metrics have been restated to reflect adjustments made as a result
of these changes in accounting policy.
|
(2)
|
Previously reported
amounts have been restated to exclude results related to
discontinued operations.
|
Adjusted EBITDA
|
Three months
ended
|
|
June 30,
2020
|
March 31,
2020
|
Net loss from
continuing operations
|
(1,860,027)
|
(136,132)
|
Finance
costs
|
29,120
|
6,662
|
Interest
income
|
376
|
(2,195)
|
Income tax (expense)
recovery
|
(67,581)
|
(11,769)
|
Depreciation and
amortization
|
22,565
|
22,263
|
EBITDA
|
(1,875,547)
|
(121,171)
|
Changes in fair value
of inventory sold
|
43,153
|
14,144
|
Unrealized gain on
changes in fair value of biological assets
|
(11,879)
|
(10,904)
|
Share-based
compensation
|
5,975
|
9,204
|
Acquisition
costs
|
2,170
|
1,300
|
Foreign exchange
(gain) loss
|
(3,613)
|
11,684
|
Share of loss from
investment in associates
|
2,601
|
4,611
|
Gain on loss of
control of subsidiary
|
—
|
(500)
|
(Gain) loss on
financial instruments
|
(3,265)
|
(6,416)
|
Gain on deemed
disposal of significant influence investment
|
(11,955)
|
—
|
Restructuring
charges
|
1,947
|
—
|
Impairment of
inventory, investment in associates, property, plant
|
|
|
and equipment,
intangibles, and goodwill
|
1,815,807
|
47,621
|
Adjusted
EBITDA
|
(34,606)
|
(50,427)
|
(1)
|
Effective April 1,
2020, the Company changed its accounting policy for inventory
costing relating to by-products, and the allocation of production
management staff salaries, previously charged to G&A, and now
charged to inventory and cost of sales. Management applied the
change in accounting policy retrospectively. Previously reported
metrics have been restated to reflect adjustments made as a result
of these changes in accounting policy.
|
(2)
|
Previously reported
amounts have been restated to exclude results related to
discontinued operations.
|
Cash Cost to Produce Dried Cannabis Sold
|
|
($
thousands)
|
Three months
ended
|
June 30,
2020
|
March 31,
2020
|
Total consolidated
cost of sales
|
151,969
|
52,512
|
Adjustments:
|
|
|
Non-cannabis segment
and non-cannabis cost of sales
|
(19,585)
|
(5,759)
|
Cannabis inventory
impairment
|
(91,009)
|
—
|
Cash cost of sales
for cannabis extracts
|
(10,647)
|
(13,471)
|
Cost of cannabis
purchased from other licensed producers
|
(97)
|
(434)
|
Depreciation
|
(7,776)
|
(7,590)
|
Packaging
costs
|
(7,717)
|
(9,064)
|
Cash cost to produce
dried cannabis sold
|
15,138
|
16,194
|
Kilogram equivalents
of cannabis sold produced by Aurora
|
16,960
|
13,239
|
Cash cost to
produce per gram of dried cannabis sold
|
$0.89
|
$1.22
|
(1)
|
Effective April 1,
2020, the Company changed its accounting policy for inventory
costing relating to by-products, and the allocation of production
management staff salaries, previously charged to G&A, and now
charged to inventory and cost of sales. Management applied the
change in accounting policy retrospectively. Previously reported
metrics have been restated to reflect adjustments made as a result
of these changes in accounting policy.
|
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SOURCE Aurora Cannabis Inc.