NYSE | TSX: ACB
- Continues to Execute on Corporate Restructuring &
Facility Rationalization Plan Aimed at Margin Improvement and
Profitability
- Exiting Fiscal Q4 2020 at an SG&A Run Rate of
Approximately $42 Million
- Remains on Track for Positive Adjusted EBITDA in Fiscal
Q1 2021
EDMONTON, AB, June 23, 2020 /PRNewswire/ - Aurora Cannabis Inc.
(the "Company" or "Aurora") (NYSE | TSX: ACB), the
Canadian company defining the future of cannabinoids worldwide,
today provided a progress update on its Business Transformation
Plan that was previously communicated February 6, 2020.
"Across our organization we continue to take decisive action and
execute on our previously announced Business Transformation Plan,"
stated Michael Singer, Executive
Chairman and Interim CEO of Aurora. "With today's announcement we
have achieved our stated SG&A run-rate target and expect to
operate at approximately $42 million
for the first quarter of fiscal 2021. The further cost savings and
margin improvement to be realized from our facility rationalization
plan is another example of our commitment to deliver greater
efficiency throughout the business."
Mr. Singer further elaborated, "This has not simply been a cost
cutting exercise. We have undertaken a strategic realignment of our
operations to protect Aurora's position as a leader in key global
cannabinoid markets, most notably Canada. Both the Canadian facility
rationalization and inventory revaluation are expected to improve
gross margins and accelerate our ability to generate positive cash
flow. We believe that we now have the right balance for the
long-term success of Aurora – market leadership, financial
discipline, operational excellence, and strong execution. We remain
focused on making Aurora a profitable and robust global cannabinoid
company."
Since announcing the Business Transformation Plan, Aurora has
taken a number of concrete steps that position the Company to meet
or exceed the previously announced Selling, General and
Administrative (SG&A) cost target of $40 to $45 million,
including R&D, as the Company exits Q4 2020.
Today, the Company announced the following initiatives:
Restructuring of Personnel and Third-Party Costs:
The Company has executed a material reduction in both corporate
and production level employees and third-party consulting and
professional spending across the organization. These changes
include an approximate 25% reduction in Aurora's SG&A staff,
most with immediate effect, and an approximate 30% reduction in
production staff over the next two quarters. The corporate
headcount rationalization was undertaken at all levels of the
Company, including a restructuring of the executive leadership team
and the recently announced retirement of President Steve Dobler.
The Q1 2021 SG&A run-rate of approximately $42 million represents a cost structure that the
Company anticipates will be capable of supporting significantly
higher levels of revenue in the future without a corresponding
level of growth in SG&A.
Consolidation of Production Activities to Aurora's Most
Efficient Facilities:
Aurora has initiated a plan to close operations at five
facilities over the next two quarters in order to focus production
and manufacturing at the Company's larger scale and highly
efficient sites. The affected facilities are the smaller scale
facilities, Aurora Prairie,
Aurora Mountain, Aurora Ridge, Aurora Vie and Aurora Eau. Aurora
expects that part of the Aurora Vie facility in Quebec will remain operational to allow for
the manufacturing of certain higher margin products. By the end of
fiscal Q2 2021, the Company intends to consolidate Canadian
production and manufacturing at Aurora Sky, Aurora River (EU-GMP certified), Whistler
Pemberton, and Polaris. As previously stated, the Aurora Sun
production facility has been scaled back to six grow bays, and will
allow for efficient scale production on an as-needed basis as
market demand grows. As part of the transition, the Company also
intends to immediately ramp up cannabis production at its Nordic
facility in Europe from which it
believes can adequately service the European market with EU-GMP
certified product. This production and manufacturing
consolidation plan represents a new, incremental cost reduction
opportunity not previously considered in the original SG&A
target.
In connection with the stated facility rationalization, Aurora
expects to record production asset impairment charges of up to
$60 million during Q4 2020. The
Company also expects to record a charge of up to $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.
In addition to the Company's continued focus on production
efficiencies and yield improvements, Aurora expects that the
production facility closures will be accretive to gross margin as
the move to large scale operations is expected to result in a
material reduction in per unit cost of goods by Q3 2021. The
reduction in inventory carrying value is also expected to be
modestly accretive to future gross margins as older, higher cost
inventory is replaced with newer, lower cost inventory and
consequently reflected in gross margins.
Aurora expects to report its Q4 2020 full financial results in
early September.
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 ROAR Sports. 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.
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, 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 nine months ended
March 31, 2020 and 2019 under the
heading "Cautionary Statement Regarding Non-GAAP Performance
Measures" and the "Revenue" section for reconciliation to the IFRS
equivalent.
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SOURCE Aurora Cannabis Inc.