- Appoints Miguel Martin as
Chief Executive Officer
- Expects Fiscal Q4 2020 Net Revenue Between $70 and $72
Million, Including $66 to
$68 Million Cannabis Net
Revenue
- To Record Up to $1.8
Billion in Goodwill Impairment Charges in Q4
2020
- Secures Greater Financial Flexibility with Credit
Facility Amendments
- Now Anticipates Positive Adjusted EBITDA in Fiscal Q2
2021
- To Host Q4 and Fiscal Year 2020 Conference Call on
September 22, 2020
NYSE | TSX: ACB
EDMONTON, AB, Sept. 8, 2020 /PRNewswire/ - Aurora Cannabis Inc.
(the "Company" or "Aurora") (NYSE: ACB) (TSX: ACB),
the Canadian company defining the future of cannabinoids worldwide,
today announced an update on its business operations along with
certain unaudited preliminary fiscal fourth quarter 2020 results.
The Company also announced the appointment of Miguel Martin as its new CEO which is detailed
in a separate announcement released this morning.
"Over the last six months, Aurora has focused on building the
infrastructure and capabilities necessary for a successful and
diversified business," stated Michael
Singer, Executive Chairman and former Interim CEO of Aurora.
"The first phase of our business transformation, which is now
substantially complete, included the rationalization of our cost
structure, reduced capital spending, and a more prudent and
targeted approach to capital deployment. As a result, we now have a
far more efficient asset base and infrastructure to supply our key
global markets. I am delighted to now be transitioning the CEO
responsibilities to Miguel and I am confident that Aurora is in a
strong position to succeed under Miguel's leadership."
"Material progress has been made to optimize our Canadian
operations and put Aurora on a much stronger footing," stated
Miguel Martin, newly appointed CEO
of Aurora. "With market leading brands and a culture rooted in
innovation and science, I now feel even more confident in the
opportunity to create a global leader in a rapidly growing
industry."
Today, the Company is providing the following updates:
Preliminary Unaudited Net Revenue, Adjusted Gross Margin and
SG&A Results for Q4 2020
Net revenue in Q4 2020 is expected to be between $70 million and $72
million, compared to $75.5
million in Q3 2020. Cannabis net revenue is expected to be
between $66 million and $68 million, compared to $69.6 million in Q3 2020. We expect adjusted
gross margin before fair value adjustments on cannabis net revenue
to be within a range of 46%-50%, with lower gross margins expected
from non-cannabis business segments.
As previously stated, Aurora has focused on prudently managing
its sales, marketing and administrative ("SG&A") costs in the
second half of fiscal 2020. Aurora successfully reduced SG&A
costs (which include R&D spending) from over $100 million in fiscal Q2 2020 down to an
expected range of $60 to $65 million in fiscal Q4 2020, excluding
approximately $3 million of
non-recurring costs related to the business reset and $2 million of costs associated with divested
businesses.
Cost Rationalization and Near-Term Revenue Plan
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.
Under Aurora's new CEO, the team expects to be focused on
executing a tactical plan intended to (1) grow Aurora's leading
market share in key profitable Canadian consumer categories (2)
protect and enhance Aurora's leading market share in Canadian
medical, (3) grow our international medical business and (4) build
leading brands under Reliva in the US CBD market. Ultimately,
Aurora believes that it is capable of supporting significantly
higher levels of net revenue in the future without a corresponding
level of growth in SG&A.
Impairment Charges
As previously announced, and as part of the business
transformation and cost reset, Aurora expects to record a number of
balance sheet adjustments in Q4 2020 to recognize market realities
and to position the Company for future performance. These
adjustments include previously announced fixed asset impairment
charges, now expected to be up to $90
million, due to production facility rationalization, and a
charge of approximately $140 million
in the carrying value of certain inventory, predominantly trim, in
order to align inventory on hand with near term expectations for
demand. Approximately 40% of the expected inventory provision
relates to the non-cash IFRS fair value adjustment within
inventory. Although the business prospects for Aurora remain
strong, under IFRS, management is required to recognize the impact
of overall industry risk, and to consider the book value of the
Company relative to current market capitalization. Accordingly, the
Company expects to recognize a non-cash write-down of goodwill and
intangible assets in the range of $1.6 to $1.8
billion.
In addition, and consistent with a focus on financial
discipline and the drive to positive Adjusted EBITDA,
Aurora announced today that the Company and the UFC have agreed to
mutually terminate their partnership. For Aurora, 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.
Amendments to Credit Facility Provide Increased Financial
Flexibility
Aurora has reached an agreement with its syndicate of banks
regarding amendments to its secured credit agreement. These
amendments are expected to provide additional flexibility during
the Company's Business Transformation Plan and include:
- Adjustment of the total funded debt-to-equity covenant to
0.28:1 for Q4 2020 and Q1 2021, and 0.25:1 thereafter, allowing for
room to take the balance sheet adjustments noted above
- Reduction in the Adjusted EBITDA milestones required for the
trailing twelve-month period ending June 30,
2021 from $51 million to
$20 million, including delaying the
requirement to generate positive Adjusted EBITDA to Q2, in line
with management's revised tactical commercial plan
- Reduction in the size of the revolving facility from
$43 million to $15 million to better align with the Company's
average receivables balance and to reduce unnecessary standby
fees
"With the difficult actions we have taken since February to
right-size our team and our production footprint now behind us,
these amendments to our credit facility provide us with greater
flexibility over the next few quarters as we focus intensively on
top line opportunities," stated Glen
Ibbott, Aurora's Chief Financial Officer. "We thank our
lending partners for their continued support to reach this
agreement. At June 30, 2020, Aurora
had approximately $160 million cash
on hand. Today, we also have approximately $275 million (US$220
million) available under our existing at-the-market ("ATM")
program which provides us with additional balance sheet support if
required as we drive toward achieving Adjusted EBITDA profitability
in the near term. With Miguel having been part of Aurora's
executive team since May 2020 the
next phase of our business transformation is already well underway.
We have established what we believe to be a secure foundation from
which to drive shareholder value in fiscal 2021, and to firmly
establish Aurora as a profitable, growth-oriented leader in the
global cannabinoid market."
Q4 and FY 2020 Investor Conference Call
Aurora has scheduled a conference call to discuss the results
for its fourth quarter and fiscal year ended June 30, 2020 on Tuesday,
September 22, 2020 at 5:00 p.m.
Eastern Time. Miguel Martin,
Chief Executive Officer, and Glen
Ibbott, Chief Financial Officer, will host the call and a
question and answer period. The Company will report its financial
results after the close of markets on Tuesday, September 22, 2020.
Conference Call
Details
|
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 CBD. Providing customers with innovative, high-quality
cannabis 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 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. These forward-looking
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, estimates and
assumptions of management in light of management's experience and
perception of historical trends, current conditions and expected
developments at the date the statements are made, such as current
and future market conditions, the current and future regulatory
environment and future approvals and permits. Forward-looking
statements are subject to a variety of risks, uncertainties and
other factors that management believes to be relevant and
reasonable in the circumstances could cause actual events, results,
level of activity, performance, prospects, opportunities or
achievements to differ materially from those projected in the
forward-looking statements, including the risks associated with:
entering the U.S. market, the ability to realize the anticipated
benefits associated with the acquisition of Reliva, achievement of
Aurora's business transformation plan, general business and
economic conditions, changes in laws and regulations, product
demand, changes in prices of required commodities, competition, the
effects of and responses to the COVID-19 pandemic and other risks,
uncertainties and factors set out under the heading "Risk Factors"
in the Company's annual information form dated September 10, 2019 (the "AIF") and filed
with Canadian securities regulators available on the Company's
issuer profile on SEDAR at www.sedar.com and filed with and
available on the SEC's website at www.edgar.gov. The Company
cautions that the list of risks, uncertainties and other factors
described in the AIF is not exhaustive and other factors could also
adversely affect its results. 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. 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 securities law.
The Company uses financial measures regarding itself, such as
Adjusted EBITDA, adjusted gross margin before fair value
adjustments on cannabis net revenue and cannabis net revenue,
that do not have standardized meaning under the International
Financial Reporting Standards ("IFRS") and may not be
comparable to similar measures presented by other entities
("non-IFRS measures"). Further information relating to
non-IFRS measures, is set out in the Company's management
discussion and analysis for the three and twelve months ended
June 30, 2020 and 2019 under the
heading "Cautionary Statement Regarding Non-GAAP Performance
Measures" and the "Revenue" section for reconciliation to the IFRS
equivalent.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/aurora-cannabis-provides-business-updates-and-announces-new-ceo-301125323.html
SOURCE Aurora Cannabis Inc.