One more quarter to go and Aurora will be too legit to quit. BUY
Outstanding Shares 197,413,275 02/09/2021
Aurora Cannabis Announces Fiscal 2021 Second Quarter Results
February 11, 2021
Total Cannabis Net Revenue of $70.3 Million not bad, $280M annualized, Excluding Provisions of $2.7 Million, Up 11% over Q2 2020
Medical Cannabis Net Revenue of $38.9 Million, Up 42% Versus Q2 2020, Driven by a 562% Increase in High Margin International Medical Sales
Adjusted EBITDA Loss, excluding Provisions and Termination Costs, of $12.1 Million Represents an Improvement of $53.1 Million Over Q2 2020; Current Loss Triggered by Several Decisions Expected to Boost Long-Term Profitability Might want to buy in 2 1/2 months
Improved Cash Use by More Than 74% Versus Q2 2020; Cash on Hand at February 10, 2021 of $565 Million
EDMONTON, AB, Feb. 11, 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 second quarter of fiscal 2021 ended December 31, 2020.
"Aurora had an excellent second quarter, and I'm pleased that we're advancing nicely against the plan we laid out in September of 2020," stated Miguel Martin, Chief Executive Officer of Aurora Cannabis (ACB). "For the period, our core revenue strength in medical and consumer was complemented by initial rollouts in vape products and concentrates. Combined, these elements are part of the proven, regulated CPG strategy we've adopted. Adjusted EBITDA for the quarter, while vastly improved year over year, was impacted by several decisions that we believe will clear a path for our premium product focus and more variable cost model. We are confident that this will give Aurora maximum flexibility and position the organization to drive significant cashflow in the coming quarters."
"To further support this strategy, we have also focused on improving our cash burn, margins and overall financial flexibility. To that point, our year over year cash use has decreased by 74% to $70.5 million, our normalized margins remain solid particularly in medical, and our recently amended credit facility gives Aurora much improved optionality as opportunities arise. Combined with $565 million in cash on our balance sheet today, Aurora will continue to be a long-term player in the global cannabinoid market and increasingly positioned to deliver for shareholders over the long run."
Second Quarter 2021 Highlights (Unless otherwise stated, comparisons are made between fiscal Q2 2021 and Q2 2020 results and are in Canadian dollars)
Q2 2021 total and cannabis net revenue1 before provisions was $70.3 million, an 11% increase over Q2 2020 and 2.5% sequentially. After accounting for return and price provisions, Q2 2021 total cannabis net revenue was $67.7 million, a 28% increase in cannabis net revenue over fiscal Q2 of the prior year.
Adjusted gross margin before fair value adjustments on cannabis net revenue1 was 42% good in Q2 2021, versus 48% in Q2 2020. The decrease is due to the purposeful reduction in production levels at Aurora Sky resulting in an increase in cash cost of sales due to the under-utilization of capacity. Also impacting adjusted gross margin was a $1.8 million increase in actual net returns, price adjustments and provisions primarily relating to company-initiated product returns meant to open channels to newer, higher-potency flower that Aurora is now producing. Normalizing for these impacts, adjusted gross margin was 52%.
Adjusted EBITDA loss was $16.8 million in Q2 2021 not bad, which includes termination and restructuring costs of $2.9 million. Excluding restructuring costs and product return provisions, the Company's Adjusted EBITDA loss is $12.1 million.
Consumer cannabis:
Consumer cannabis net revenue was $28.6 million ($31.1 million excluding provisions), a 25% increase from the prior year. Additionally, Aurora's consumer cannabis derivative products net revenue increased by $1.7 million sequentially, driven by product launches in vapes, edibles and concentrates.
Adjusted gross margin before fair value adjustments on consumer cannabis net revenue1 was 27% in Q2 2021 versus 33% in the prior year period, primarily driven by a $3.3 million increase in cost of sales due to under-utilized capacity as a result of the scaling back production at Aurora Sky, which is expected to partially reverse in subsequent quarters and sales of our lower margin Daily Special value brand which was not present in the prior comparative period. Medical cannabis:
Medical cannabis net revenue1 was $38.9 million ($39 million excluding provisions), a 42% 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 562% over the prior year comparative period.
Adjusted gross margin before fair value adjustments on medical cannabis net revenue1 was 56% in Q2 2021 versus 59% in the prior year and prior quarter, primarily driven by the increase in cost of sales due to the under-utilized capacity as a result of the scaling back production at Aurora Sky.
Selling, General and Administrative ("SG&A") and Adjusted EBITDA:
SG&A, including Research and Development ("R&D"), was $44.4 million in Q2 2021, down $49.7 million or 53% from the prior year period as a result of the Company's Business Transformation Plan.great Included in SG&A and R&D in Q2 2021 is $2.1 million of costs related to restructuring charges, and severance and benefit costs associated with the Business Transformation Plan. Excluding these impacts, Q2 2021 SG&A and R&D was $42.3 million. Adjusted EBITDA1 in Q2 2021 was a loss of $16.8 million ($12.1 million loss excluding the increase in revenue provisions and restructuring costs), compared to the prior year Adjusted EBITDA loss of $69.9 million primarily driven by the substantial decrease in SG&A and R&D expenses. Additional Financial Information:
Cash balance as of February 10, 2021 was approximately $565 million. Aurora continues to increase its operational flexibility to improve its cashflow and better address consumer needs by reducing production and complexity. Of the four cultivation facilities set to close, three are now fully shuttered. Effective December 15, 2020, the Company also shuttered operations at the Aurora Sun facility and reduced production at its Aurora Sky facility by 75%, where it is testing new processes and methodologies proven successful at other premium cultivation sites. Fiscal Q2 2021 Cash Use: Significant Improvement in Cash Used in Operations
Total cash use in Q2 2021 showed significant improvement relative to both Q2 2020 and Q1 2021.
In Q2 2021, the Company used $22.7 million in cash to fund operations, excluding working capital investments. This use included $2.1 million in restructuring/termination payments. Cash used to pay for capital expenditures, net of disposals, in Q2 2021 was $8.8 million versus $15.0 million in the prior quarter, as many long-lead projects are now complete. 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 and consistently over the past several quarters.
Increased net working capital used $30.4 million in the quarter, driven by a $23.9 million decrease in accounts payable and a $11.7 million increase in prepaids, offset by a $16.4 million decrease in accounts receivable. Within working capital, inventory and biological assets used $10.0 million, a marked improvement from the $25.1 million in Q1 2021 demonstrating the Company's progress to more closely align production levels with demand.
Given Aurora's continued strong gross margins, reduced level of SG&A expense and capital expenditures, and ongoing improvements in working capital investment, management expects the Company to continue its progress toward positive cash flow.
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