- Domestic Medical Net Revenue Steady at $26.9 Million
- Strong International Medical Net Revenue of $9.4 Million
- Total Cannabis Net Revenue, Excluding Provisions, of
$58.4 Million
- Business Transformation Plan Continues, Management
Expects to Deliver Incremental Cost-Saving Measures of $60 Million to $80
Million Annually
- Balance Sheet Remains Strong with ~$525 Million of Cash on Hand at May 12, 2021
- Lead Independent Director Ronald Funk Appointed as
Chairman, Michael Singer to Remain
Board Member
NYSE | TSX: ACB
EDMONTON, AB, May 13, 2021 /PRNewswire/ - Aurora Cannabis
Inc. (the "Company" or "Aurora") (NYSE: ACB) (TSX:
ACB), the Canadian company defining the future of cannabinoids
worldwide, today announced its financial and operational results
for the third quarter of fiscal 2021 ended March 31, 2021.
"Consistent with many of our peers, the quarter presented
challenges in the Canadian adult-use segment. This reinforces the
importance of Aurora's broadly diversified business model that
balances domestic medical, international medical, and adult-use
platforms," stated Miguel Martin,
Chief Executive Officer of Aurora Cannabis. "To that point, we
delivered the strongest performance in domestic medical and the
best results in international medical cannabis of any Canadian LP
during the period. This is critical, because we expect being #1 by
revenue in Canada's medical
market, the largest federally regulated medical market globally,
should translate into global adult-use success in the future as
medical regimes evolve to adult-use markets. In addition, being the
#2 largest Canadian LP by global cannabis sales this quarter, and a
leader across multiple markets and segments, gives Aurora the brand
recognition and clout to pursue numerous incremental opportunities
around the world."
"Aurora also announced today that our cost structure
transformation continues and we have identified further cost
savings of $60 million to
$80 million annually that are
expected to be achieved within eighteen months and are incremental
to the ~$300 million in annual
savings already achieved. We anticipate that this initiative will
not only allow us to meet our financial objectives while the
Canadian adult-use market normalizes over the next several
quarters, but will not have any effect on future revenue growth. We
have recently added Alex Miller and
Lori Schick to the team; two highly
respected leaders in the areas of operations and human resources,
respectively, to accelerate the execution of our corporate
objectives. They each bring 20 plus years of transformative
regulated industry experience and are already fully engaged.
Lastly, our balance sheet remains strong with approximately
$525 million in cash. This will allow
us to support organic growth as well as opportunistic M&A,
particularly in the U.S."
Third Quarter 2021 Highlights
(Unless otherwise
stated, comparisons are made between fiscal Q3 2021 and Q3 2020
results and are in Canadian dollars)
Q3 2021 total cannabis net revenue1 before provisions
was $58.4 million, a 19.5% decrease
over Q3 2020 and a 17.0% sequential decline. After accounting for
return and price provisions, Q3 2021 total cannabis net revenue was
$55.2 million, a 20.8% decrease in
cannabis net revenue1 over fiscal Q3 of the prior
year.
Reflecting the shift in mix toward our medical businesses, the
Q3 2021 average net selling price per gram of dried
cannabis1 increased to $5.00 per gram from $4.64 in Q3 2020 and $4.45 in Q2 2021. This excludes the impact
of the Q3 2021 bulk wholesale of excess lower-potency cannabis
flower at clear-out pricing.
Adjusted gross margin before fair value adjustments on cannabis
net revenue1 was 44% in Q3 2021, versus 43% in Q3
2020. The increase in adjusted gross margin is due to a significant
shift in revenue mix towards our medical markets which command much
higher average net selling prices, partially offset by the
purposeful reduction in production levels at Sky resulting in
charges related to under-utilization of capacity.
Adjusted EBITDA1 loss was $24.0 million in Q3 2021 ($16.7 million loss excluding restructuring
charges and product swap provisions) compared to the prior year
Adjusted EBITDA loss1 of $49.6
million primarily driven by the substantial decrease in
SG&A and R&D expenses and continued healthy gross
margins.
______________________
|
1 These terms are non-GAAP measures,
see "Non-GAAP Measures" below.
|
Medical cannabis:
- Medical cannabis net revenue1 was $36.4 million, a 17% increase from the prior year
period. The increase was primarily attributable to a continued
strong performance in both the international and Canadian medical
businesses. International medical sales grew by 134% over the prior
year comparative period.
- Adjusted gross margin before fair value adjustments on medical
cannabis net revenue1 was 59% versus 60% in the prior
year, remaining strong despite the increase in cost of sales from
the under-utilized capacity at Aurora Sky and the continued ramp up
of the Aurora Nordic facility in Europe.
Consumer cannabis:
- Consumer cannabis net revenue1 was $18.0 million ($21.3
million excluding provisions), a 53% decrease from the prior
year. This was due primarily to Covid-19 related challenges across
Canada in both provincial
distributors and consumer access to in-store retail shopping. Also
impacting the change in Consumer cannabis net revenue in fiscal Q3
were Aurora's one-time transition to our new contract sales force,
and the load-in of 2.0 products and the Daily Special launch in the
prior year comparative period.
- Adjusted gross margin before fair value adjustments on consumer
cannabis net revenue1 was 21% versus 28% in the prior
year period, primarily driven by a $1.8
million increase in cost of sales due to under-utilized
capacity as a result of the scaling back production at Aurora Sky
(expected to partially reverse in future quarters), and a decrease
in the average net selling price per gram of consumer cannabis as a
result of price compression.
Selling, General and Administrative
("SG&A"):
- SG&A, including Research and Development ("R&D"), was
$45.1 million ($41.9 million excluding restructuring costs),
down $32.8 million or 42% from the
prior year period as a result of the Company's Business
Transformation Plan.
Additional Financial Information:
- Cash balance at May 12, 2021 was
approximately $525 million.
- As previously announced on December 15,
2020, Aurora has aligned production to current demand and
reduced network complexity in order to improve its operational
flexibility and cashflow. The Company is currently operating Aurora
Sky at 25% capacity, and in fiscal Q3 2021 produced 14,484
kilograms of cannabis and achieved net sales of 13,520
kilograms.
Fiscal Q3 2021 Cash Use:
In Q3 2021, despite a decline in Canadian consumer revenue, the
Company managed cash flow tightly using $35.9 million in cash to fund operations,
excluding working capital investments and restructuring costs and
other costs of $5.4 million. Cash
used to pay for capital expenditures, net of disposals, in Q3 2021
was $12.2 million versus $83.9 million in Q3 2020 and $8.8 million in Q2 2021. Cash used in operations
and for capital expenditures are crucial metrics in Aurora's drive
toward generating sustainable positive free cash flow, and both
have improved significantly over the past year. The Company's
ongoing business transformation, with the additional cost
efficiency savings described earlier, is expected to move the
operating cash flow metric in a positive direction over the coming
quarters.
Net working capital used $25.0
million in the quarter, driven by a decrease in accounts
payable and an increase in biological assets. Q3 2021 saw Aurora
bring production levels into alignment with demand as 14,484
kilograms of cannabis were produced and 13,520
kilograms equivalents were sold, a marked improvement over
prior quarters. The remaining government wage subsidy accrual
of $19.7 million initially recorded
in December 2020 was collected in
April 2021. With the balancing of
production with sales, had this wage subsidy accrual been collected
in March 2021, the Company's net
investment in working capital would have been approximately
$5.3 million in the quarter.
The main components of cash source and use in Q3 2021 were as
follows:
($
thousands)
|
Q3
2021
|
Q3
2020(4)
|
Q2
2021
|
Cash
Flow
|
|
|
|
Cash,
Opening
|
$434,386
|
$201,336(2)
|
$133,678
|
|
|
|
|
Cash used in
operations
|
($41,266)
|
($57,853)
|
($36,753)
|
Working capital
change
|
($25,029)
|
$2,836
|
($30,433)
|
Capital
expenditures
|
($12,240)
|
($83,803)
|
($8,837)
|
Debt and interest
payments
|
($7,766)
|
($60,770)
|
($8,559)
|
Cash use
|
($86,301)
|
($199,590)
|
($84,582)
|
|
|
|
|
Proceeds raised from
sale of marketable securities and investments in
associates
|
-
|
-
|
$6,135
|
Proceeds raised
through debt
|
-
|
$22,000
|
-
|
Proceeds raised
through equity financing (1)
|
$172,153
|
$206,462
|
$379,155
|
Cash
raised
|
$172,153
|
$228,462
|
$385,290
|
|
|
|
|
Cash, Ending
(3)
|
$520,238
|
$230,208
|
$434,386
|
|
|
(1)
|
Includes impact of
foreign exchange rates on USD cash raised from financing
|
(2)
|
Includes restricted
cash of $45.0M for Q3 2020 held as cash collateral under the BMO
Credit Facility.
|
(3)
|
Ending cash balance
above includes restricted cash of $50.0M for Q3 and Q2 2021, as
required under the amended BMO Credit Facility. The restricted cash
can be used to repay, at any time at the Company's discretion the
outstanding principal on its term loan on a 1:1 basis with a
corresponding reduction in the restricted cash balance
requirement.
|
(4)
|
Previous reported amounts have been restated to
adjust for the change in accounting policy for inventory costing
relating to by-products and the allocation of production management
staff salaries. Refer to Note 2(e) of the unaudited Condensed
Consolidated Interim Financial Statements for a reconciliation on
the change in accounting policy.
|
Refer to "Condensed Consolidated Interim Statement of Cash
Flows" in the "Condensed Consolidated Interim Financial Statements
(unaudited)" for our cash flow statements prepared in accordance
with IAS 7 – Statement of Cash Flows.
($ thousands,
except Operational Results)
|
Q3
2021
|
Q3 2020
(6)
|
$
Change
|
%
Change
|
Q2
2021
|
$
Change
|
%
Change
|
Financial
Results
|
|
|
|
|
|
|
|
Total net revenue
(1)
|
$55,161
|
|
$73,541
|
|
($18,380)
|
(25)
|
%
|
$67,673
|
|
($12,512)
|
(18)
|
%
|
Cannabis net revenue
(1)(2)(3a)
|
$55,161
|
|
$69,637
|
|
($14,476)
|
(21)
|
%
|
$67,673
|
|
($12,512)
|
(18)
|
%
|
Medical cannabis net
revenue (2)(3a)
|
$36,378
|
|
$31,086
|
|
$5,292
|
17
|
%
|
$38,856
|
|
($2,478)
|
(6)
|
%
|
Consumer cannabis net
revenue (1)(2)(3a)
|
$18,023
|
|
$38,551
|
|
($20,528)
|
(53)
|
%
|
$28,573
|
|
($10,550)
|
(37)
|
%
|
Wholesale bulk
cannabis net revenue (2)(3a)
|
$760
|
|
$—
|
|
$760
|
N/A
|
$244
|
|
$516
|
211
|
%
|
Adjusted gross margin
before FV adjustments on cannabis net revenue
(2)(3b)(7)
|
44
|
%
|
43
|
%
|
N/A
|
1
|
%
|
42
|
%
|
N/A
|
2
|
%
|
Adjusted gross margin
before FV adjustments on medical cannabis net revenue
(2)(3b)(7)
|
59
|
%
|
60
|
%
|
N/A
|
(1)
|
%
|
56
|
%
|
N/A
|
3
|
%
|
Adjusted gross margin
before FV adjustments on consumer cannabis net revenue
(2)(3b)(7)
|
21
|
%
|
28
|
%
|
N/A
|
(7)
|
%
|
27
|
%
|
N/A
|
(6)
|
%
|
Adjusted gross margin
before FV adjustments on wholesale bulk cannabis net revenue
(2)(3b)(7)
|
(140)
|
%
|
N/A
|
|
N/A
|
(140)
|
%
|
(305)
|
%
|
N/A
|
165
|
%
|
SG&A expense
(7)
|
$41,684
|
|
$72,318
|
|
($30,634)
|
(42)
|
%
|
$41,972
|
|
($288)
|
(1)
|
%
|
R&D
expense
|
$3,398
|
|
$5,601
|
|
($2,203)
|
(39)
|
%
|
$2,432
|
|
$966
|
40
|
%
|
Adjusted EBITDA
(2)(3c)(7)
|
($24,020)
|
|
($49,579)
|
|
$25,559
|
(52)
|
%
|
($16,802)
|
|
($7,218)
|
43
|
%
|
|
|
|
|
|
|
|
|
Balance
Sheet
|
|
|
|
|
|
|
|
Working capital
(7)
|
$642,512
|
|
$429,293
|
|
$213,219
|
50
|
%
|
$592,746
|
|
$49,766
|
8
|
%
|
Cannabis inventory
and biological assets (2)(4)(7)
|
$98,839
|
|
$225,966
|
|
($127,127)
|
(56)
|
%
|
$179,502
|
|
($80,663)
|
(45)
|
%
|
Total assets
(7)
|
$2,835,357
|
|
$4,699,137
|
|
($1,863,780)
|
(40)
|
%
|
$2,830,190
|
|
$5,167
|
0
|
%
|
|
|
|
|
|
|
|
|
Operational
Results – Cannabis
|
|
|
|
|
|
|
|
Average net selling
price of dried cannabis (2)
|
$3.59
|
|
$4.64
|
|
($1.05)
|
(23)
|
%
|
$4.12
|
|
($0.53)
|
(13)
|
%
|
Kilograms sold
(5)
|
13,520
|
|
12,729
|
|
791
|
6
|
%
|
15,253
|
|
(1,733)
|
(11)
|
%
|
|
|
|
(1)
|
Includes the impact
of actual and expected product returns and price adjustments (Q3
2021 - $3.2 million; Q2 2021 - $2.7 million; Q3 2020 - $2.9
million).
|
(2)
|
These terms are
defined in the "Cautionary Statement Regarding Certain Non-GAAP
Performance Measures" of the MD&A.
|
(3)
|
Refer to the
following sections for reconciliation of non-GAAP measures to the
IFRS equivalent measure:
|
|
a.
|
Refer to the
"Revenue" section for a reconciliation of cannabis net
revenue to the IFRS equivalent.
|
|
b.
|
Refer to the "Cost
of Sales and Gross Margin" section for reconciliation to the
IFRS equivalent.
|
|
c.
|
Refer to the
"Adjusted EBITDA" section for reconciliation to the IFRS
equivalent.
|
(4)
|
Represents total
biological assets and cannabis inventory, exclusive of merchandise,
accessories, supplies and consumables.
|
(5)
|
The kilograms sold is
offset by the grams returned during the period.
|
(6)
|
As a result of the
Company's divestment of its wholly owned subsidiaries, Aurora
Larssen Projects ("ALPS") and Aurora Hemp Europe ("AHE"), the
operations of ALPS and AHE have been presented as discontinued
operations and the Company's operational results have been
retroactively restated, as required. Refer to Note 11(b) of the
Financial Statements for more information about the
divestitures.
|
(7)
|
Amounts have been
retroactively restated for the change in accounting policy for
inventory costing relating to by-products and the allocation of
production management staff salaries. Refer to the "Change in
Accounting Policies" section in Note 2(e) of the Financial
Statements.
|
Operational Efficiency Plan
Today Aurora announced a plan to accelerate $60 million to $80
million in annualized cost efficiencies which are expected
to be realized over the next 12-18 months. The efficiencies are
expected to be $40 million -
$60 million in costs of goods sold
("COGS") and approximately $20
million in SG&A, and relate primarily to production
costs, facility and logistic expenses, organizational efficiencies,
insurance and capital markets related expenses. These efficiencies
are incremental to the approximately $300
million of total annualized expense reductions achieved
since the announcement of the Company's Business Transformation
Plan in February 2020.
Executive Board Transitions and Recent Executive Leadership
Appointments
Aurora is pleased to announce that Mr. Ronald Funk, lead independent Director, has
assumed the role of Chairman, effective immediately. Mr.
Michael Singer has reverted from
Executive Chairman to the Board seat he has occupied since
May 2016. This transition reflects
the strength of current management and the Board's planned
governance enhancements to include an independent Chairman.
Mr. Funk has 30+ years in senior executive roles managing
profitable regulated CPG brands. He brings unique skills and
experiences that will assist the Company in the pursuit of global
growth. He has served on the Board for three years and has proven
himself to be an effective leader as the Company has grown and
evolved. Mr. Singer has served as Interim CEO from February to
September 2020, during which time he
managed the Company's business transformation towards profitability
and transitioning management, including the hiring of CEO
Miguel Martin.
Aurora has also announced the appointment of Mr. Alex Miller to the role of Executive Vice
President, Supply Chain and Ms. Lori
Schick to the role of Executive Vice President, Human
Resources. Alex Miller brings 25+
years of experience in food, CPG and pharmaceutical industry
experience in operations and supply chain leadership positions,
most recently as Vice President, Operations at MAV Beauty Brands
Inc. Lori Schick brings 20+ years of
global human resources leadership experience leading organizational
transformation and building high performance teams. Most recently
Lori was Senior Vice President and Head of People at Holt, Renfrew
& Co.
Stock Exchange Listing Transfer to NASDAQ from NYSE
Aurora also announced that it will transfer its U.S. stock
exchange listing from the New York Stock Exchange ("NYSE") to The
Nasdaq Global Select Market ("Nasdaq"), effective May 24, 2021, after the market close. The last
day of trading of the Company's common stock on NYSE is expected to
be May 24, 2021. The Company expects
its common stock will begin trading as a Nasdaq-listed security at
market open on May 25, 2021 and will
continue to be listed under the ticker symbol "ACB". The transfer
is automatic, and shareholders are not required to take any action.
This transition will not impact the Company's primary listing on
the Toronto Stock Exchange (TSX: ACB).
"Nasdaq represents a good fit for Aurora and this listing
transfer will enable us to realize cost efficiencies as part of our
efforts to deliver long-term value to shareholders," concluded
Martin.
Filing of Prospectus Supplement
Aurora intends to file a new prospectus supplement for a U.S.
$300 million At-the-Market offering
program ("ATM"). This is a routine filing which Aurora believes
will provide maximum flexibility to pursue select acquisitions
going forward, including within the U.S. Given the strength of
Aurora's current cash position, it is not expected to need to
access the ATM facility without an accretive use of proceeds.
Conference Call
Aurora will host a conference call today, May 13, 2021, 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 / 3:00 p.m. Mountain
Time. A question and answer session will follow management's
presentation.
Conference Call Details
DATE:
|
|
Thursday, May 13,
2021
|
TIME:
|
|
5:00 p.m. Eastern
Time | 3:00 p.m. Mountain Time
|
WEBCAST:
|
|
http://public.viavid.com/index.php?id=144524
|
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. Forward looking statements made in this news
release include the Company's expectations of the impact of its
current market position on its future prospects, future cost
savings and their expected impact on revenue, the anticipated
transfer of the Company's listing to NASDAQ and its expected
–the-market offering impact on cost savings, and the anticipated
filing of a prospectus supplement for an at the-market offering.
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 ability to maintain SG&A costs in line with current
expectations, the ability to achieve high margin revenues in the
Canadian consumer market, 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 and other
acquisitions (if any), 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 24,
2020 (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.
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:
- Cannabis net revenue represents revenue from the sale of
cannabis products, excluding excise taxes. 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.
- Wholesale bulk cannabis net revenue represents cannabis net
revenue for wholesale bulk 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 and removing the impact
of cost of sales net against revenue in agency relationships, which
is then 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 derivatives
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. Under an agency relationship, revenue is
recognized net of cost of sales in accordance with IFRS. Management
believes the removal of agency cost of sales in determining the
average net selling price per gram and gram equivalent is more
reflective of our average net selling price generated in the
marketplace.
- 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.
- Adjusted gross profit and gross margin before FV adjustments on
wholesale bulk cannabis net revenue represents adjusted gross
profit and gross margin before FV adjustments on sales generated
from wholesale bulk cannabis 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 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,
acquisition costs, foreign exchange, share of income (losses) from
investment in associates, government grant income, fair value gains
and losses on financial instruments, gains and losses on deemed
disposal, losses on disposal of assets, restructuring charges,
onerous contract provisions, and non-cash impairments of deposits,
property, plant and equipment, equity investments, intangibles,
goodwill, 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.
Reconciliation of Non-GAAP Measures
Net Revenue
|
Three months
ended
|
|
March 31,
2021
|
March 31, 2020
(1)
|
December 31,
2020
|
Medical cannabis net
revenue
|
36,378
|
31,086
|
38,856
|
Consumer cannabis net
revenue
|
18,023
|
38,551
|
28,573
|
Wholesale bulk
cannabis net revenue
|
760
|
-
|
244
|
Total cannabis net
revenue
|
55,161
|
69,637
|
67,673
|
Total net
revenue
|
55,161
|
73,541
|
67,673
|
|
|
|
|
|
(1)
|
As a result of the
Company's divestment of its wholly owned subsidiaries ALPS and AHE,
the operations of ALPS and AHE have been presented as discontinued
operations and the Company's results have been retroactively
restated, as required. Refer to Note 11(b) of the Financial
Statements for information about the divestitures.
|
Adjusted Gross Margin
($
thousands)
|
Medical
Cannabis
|
Consumer
Cannabis
|
Wholesale
Bulk
Cannabis
|
Ancillary
Support
Functions
|
Total
|
Three months
ended March 31, 2021
|
|
|
|
|
|
Gross
revenue
|
39,457
|
|
23,828
|
|
760
|
|
—
|
|
64,045
|
|
Excise
taxes
|
(3,079)
|
|
(5,805)
|
|
—
|
|
—
|
|
(8,884)
|
|
Net
revenue
|
36,378
|
|
18,023
|
|
760
|
|
—
|
|
55,161
|
|
Cost of
sales
|
(74,473)
|
|
(50,105)
|
|
(2,967)
|
|
—
|
|
(127,545)
|
|
Gross profit
(loss) before FV adjustments (1)
|
(38,095)
|
|
(32,082)
|
|
(2,207)
|
|
—
|
|
(72,384)
|
|
Depreciation
|
5,169
|
|
3,121
|
|
100
|
|
—
|
|
8,390
|
|
Inventory impairment
in cost of sales
|
54,226
|
|
32,749
|
|
1,045
|
|
—
|
|
88,020
|
|
Adjusted gross
profit (loss) before FV adjustments (1)
|
21,300
|
|
3,788
|
|
(1,062)
|
|
—
|
|
24,026
|
|
Adjusted gross
margin before FV adjustments (1)
|
59
|
%
|
21
|
%
|
(140)
|
%
|
—
|
%
|
44
|
%
|
|
|
|
|
|
|
Three months
ended March 31, 2020 (2)(3)
|
|
|
|
|
|
Gross
revenue
|
34,339
|
|
49,387
|
|
—
|
|
3,904
|
|
87,630
|
|
Excise
taxes
|
(3,253)
|
|
(10,836)
|
|
—
|
|
—
|
|
(14,089)
|
|
Net
revenue
|
31,086
|
|
38,551
|
|
—
|
|
3,904
|
|
73,541
|
|
Cost of
sales
|
(15,422)
|
|
(32,115)
|
|
—
|
|
(3,119)
|
|
(50,656)
|
|
Gross profit
(loss) before FV adjustments (1)
|
15,664
|
|
6,436
|
|
—
|
|
785
|
|
22,885
|
|
Depreciation
|
3,113
|
|
4,477
|
|
—
|
|
—
|
|
7,590
|
|
Adjusted gross
profit (loss) before FV adjustments (1)
|
18,777
|
|
10,913
|
|
—
|
|
785
|
|
30,475
|
|
Adjusted gross
margin before FV adjustments (1)
|
60
|
%
|
28
|
%
|
—
|
%
|
20
|
%
|
41
|
%
|
|
|
|
|
|
|
Three months
ended December 31, 2020
|
Gross
revenue
|
41,872
|
|
37,459
|
|
244
|
|
—
|
|
79,575
|
|
Excise
taxes
|
(3,016)
|
|
(8,886)
|
|
—
|
|
—
|
|
(11,902)
|
|
Net
revenue
|
38,856
|
|
28,573
|
|
244
|
|
—
|
|
67,673
|
|
Cost of
sales
|
(23,946)
|
|
(25,681)
|
|
(1,017)
|
|
—
|
|
(50,644)
|
|
Gross profit
before FV adjustments (1)
|
14,910
|
|
2,892
|
|
(773)
|
|
—
|
|
17,029
|
|
Depreciation
|
6,376
|
|
4,472
|
|
29
|
|
—
|
|
10,877
|
|
Inventory impairment
in cost of sales
|
333
|
|
406
|
|
—
|
|
—
|
|
739
|
|
Adjusted gross
profit before FV adjustments (1)
|
21,619
|
|
7,770
|
|
(744)
|
|
—
|
|
28,645
|
|
Adjusted gross
margin before FV adjustments (1)
|
56
|
%
|
27
|
%
|
(305)
|
%
|
—
|
%
|
42
|
%
|
|
|
(1)
|
These terms are
defined in the "Cautionary Statement Regarding Certain Non-GAAP
Performance Measures" of the MD&A.
|
(2)
|
Amounts have been
retroactively restated for the change in accounting policy for
inventory costing relating to by-products and the allocation of
production management staff salaries. Refer to the "Change in
Accounting Policies" section below for further
detail.
|
(3)
|
As a result of the
Company's divestment of its wholly owned subsidiaries, ALPS and
AHE, the operations of ALPS and AHE have been presented as
discontinued operations and the Company's operational results have
been retroactively restated, as required. Refer to Note 11(b) of
the Financial Statements for more information about the
divestiture. Discontinued operations, from ALPS and AHE, had
incurred an adjusted gross profit before FV adjustments of $0.1
million for the three months ended March 31, 2020. ALPS generated
no adjusted gross profit before FV adjustments in the three months
ended March 31, 2020.
|
Adjusted EBITDA
($
thousands)
|
Three months
ended
|
Nine months
ended
|
March 31,
2021
|
March 31, 2020
(1)(2)
|
December 31,
2020
|
March 31, 2021
(2)
|
March 31, 2020
(1)(2)
|
Net (loss) income
from continuing operations
|
(164,650)
|
(133,528)
|
(292,788)
|
(564,598)
|
(1,424,466)
|
Finance
costs
|
16,990
|
6,655
|
18,872
|
50,553
|
48,364
|
Interest (income)
expense
|
(1,467)
|
(1,998)
|
(1,865)
|
(4,599)
|
(4,884)
|
Income tax expense
(recovery)
|
(129)
|
(12,441)
|
3,167
|
3,649
|
(18,873)
|
Depreciation and
amortization
|
15,570
|
22,538
|
24,883
|
62,897
|
73,090
|
EBITDA
|
(133,686)
|
(118,774)
|
(247,731)
|
(452,098)
|
(1,326,769)
|
Changes in fair value
of inventory sold
|
29,583
|
14,144
|
5,942
|
38,829
|
48,672
|
Unrealized gain on
changes in fair value of biological assets
|
(16,506)
|
(10,904)
|
(6,262)
|
(28,175)
|
(44,735)
|
Share-based
compensation
|
5,233
|
8,904
|
5,987
|
18,081
|
53,155
|
Acquisition
costs
|
—
|
1,300
|
—
|
1,104
|
4,323
|
Foreign exchange loss
(gain)
|
7,035
|
12,280
|
527
|
135
|
16,181
|
Share of loss from
investment in associates
|
9
|
4,611
|
117
|
499
|
8,933
|
Government grant
income
|
(4,692)
|
—
|
(23,678)
|
(28,370)
|
—
|
Losses (gains) on
financial instruments (3)
|
(2,566)
|
(6,416)
|
17,309
|
22,109
|
30,413
|
Loss on loss of
control of subsidiary
|
—
|
(500)
|
—
|
—
|
(500)
|
Losses (gains) on
deemed disposal of significant influence investment
|
(204)
|
—
|
—
|
1,239
|
—
|
Gains (losses) on
disposal of assets held for sale and property, plant, and
equipment
|
(1,595)
|
—
|
(3,317)
|
(3,990)
|
—
|
Restructuring
charges
|
801
|
—
|
—
|
1,011
|
—
|
Onerous contract
provision
|
—
|
—
|
2,000
|
2,000
|
—
|
Impairment of
deposit, inventory, investment in associate, property, plant and
equipment, intangibles, and goodwill
|
92,568
|
45,776
|
232,304
|
328,913
|
1,057,825
|
Adjusted EBITDA
(4)
|
(24,020)
|
(49,579)
|
(16,802)
|
(98,713)
|
(152,002)
|
|
|
(1)
|
Amounts have been
retroactively restated for the change in accounting policy for
inventory costing relating to by-products and the allocation of
production management staff salaries. Refer to the "Change in
Accounting Policies" in Note 2(e) of the Financial
Statements.
|
(2)
|
As a result of the
Company's divestment of its wholly owned subsidiaries ALPS and AHE,
the operations of ALPS and AHE have been presented as discontinued
operations and the Company's operational results have been
retroactively restated, as required. Refer to Note 11(b) of the
Financial Statements for more information about the divestiture.
Including the results of ALPS and AHE, adjusted EBITDA loss would
have been $52.3 million for the three months ended March 31, 2020,
and $99.2 million and $162.3 million for the nine months ended
March 31, 2021 and 2020, respectively.
|
(3)
|
Includes fair value
changes on derivative investments, derivative liabilities,
contingent consideration, loss on induced conversion of debentures,
and (gain) loss on the modification of debt. Refer to Note 21 of
the Financial Statements.
|
(4)
|
Adjusted EBITDA is a
non-GAAP financial measure and is not a recognized, defined, or
standardized measure under IFRS. Refer to "Cautionary Statement
Regarding Certain Non-GAAP Performance Measures" section of the
MD&A.
|
Included in the three months ended March
31, 2021 Adjusted EBITDA loss is $2.2
million (three months ended December
31, 2020 - $0.8 million) legal
settlement and contract termination fees and $3.2 million (three months ended December 31, 2020 - $2.1
million) related to restructuring charges, severance and
benefits associated with the business transformation plan, and
$1.9 million (three months ended
December 31, 2020 - $1.8 million) in revenue provisions as a result
of our Company initiated product swap to replace low quality
product with higher potency product at the provinces. Excluding
these impacts, Adjusted EBITDA loss is $16.7
million (three months ended December
31, 2020 - $12.1 million).
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SOURCE Aurora Cannabis Inc.