NASDAQ | TSX: ACB
- Achieves Second Sequential Quarter of
Positive Adjusted EBITDA1
- Net Revenue Reaches $64
Million, Increasing 4% Sequentially and 27% YoY;
Driving Adjusted Gross Profit1 of
$30.6 Million
- Balance Sheet Remains Strong With a Cash Position of
~$230 Million Cash on
Hand with ~$80 Million of Convertible
Notes Remaining Outstanding
- Clear Path to Achieve Positive Free Cash Flow by the End
of Calendar Year 2024 Through Additional $40
Million of Annualized Cost Efficiencies
EDMONTON, AB, June 14,
2023 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (NASDAQ: ACB) (TSX: ACB), the
Canadian company opening the world to cannabis, today announced its
financial and operational results for the third quarter and fiscal
year 2023 results. As a reminder, Fiscal 2023 is comprised of three
quarters ending March 31, 2023.
"We are proud to have delivered our second sequential quarter of
positive Adjusted EBITDA1 in Q3 2023, demonstrating our
commitment to financial discipline. Over the last three years, our
ongoing business transformation initiatives have delivered
~$400 million in annualized cost
savings that have significantly reduced cash used in operating
activities. In fact, cash use continues to improve as
evidenced by the reduction from $35.5
million in Q2 2023 to $15.1
million in Q3 2023, excluding working capital. This
impressive improvement is the launching point for the initiatives
that will support our drive to our new financial target of positive
free cash flow by end of calendar year 2024," said Miguel Martin, Chief Executive Officer of
Aurora.
"This quarter, revenues in both our global medical cannabis and
Canadian consumer cannabis segments held mostly steady at
$38 million and $14.5 million, respectively, and we benefitted
from a strong $10.7 million
contribution from our Bevo acquisition due to the onset of its
traditionally strong seasonal period. Our adjusted gross profit
rose to $30.6 million while our
adjusted gross margins remained healthy with our medical business
generating a stable, adjusted gross margin of 60%. Our consumer
business produced an adjusted gross margin of 25%, up 500 bps from
the prior quarter," he stated.
"Aurora is best differentiated from its peers by our high
margin, core global medical business spanning 12 countries, and our
ability to find new profitable markets for growth. We stand poised
to be opportunistic with our strong balance sheet and net cash
position in the current market environment. Our determination and
ability to showcase our strategic progress positions us for
significant value creation," he concluded.
|
1 This press
release includes certain non-GAAP financial measures, which are
intended to supplement, not substitute for, comparable GAAP
financial measures. See "Non-GAAP Measures" below for
reconciliations of non-GAAP financial measures to GAAP financial
measures
|
|
Third Quarter 2023 Highlights
(Unless otherwise stated, comparisons are made between fiscal
Q3 2023, Q2 2023, and Q3 2022 results and are in Canadian
dollars)
Consolidated:
Total net revenue1 was $64
million, as compared to the prior quarter net
revenue1 of $61.7
million and $50.4 million in
the prior year period. The increase from the prior quarter was due
to the contribution of $10.8 million
from Bevo, acquired in August
2022.
Excluding the impact of the non-core bulk wholesales, adjusted
gross margin before fair value adjustments on cannabis net
revenue1 for Q3 2023 remained strong and steady, and well
above the industry average, increasing to 51% from 49% in Q2
2023.
Medical Cannabis:
Medical cannabis net revenue1 was $38 million, a 3% decrease from the prior
quarter, delivering 59% of Aurora's Q3 2023 consolidated net
revenue[1] and 75% of Adjusted gross profit before fair value
adjustments1.
The slight decrease in net revenue1 from Q2 2023 is largely
due to a temporary situation of limited supply of high-demand
cultivars in certain EU markets as the Company had production
issues at its Nordic production facility. Following the year end,
in May 2023, the Company made the
decision to close the Nordic production facility and to return to
providing European supply from Canada, a change expected to improve
reliability of supply of existing and new, high potency cultivars,
and increase gross margins over time. The revenue decrease was
partially offset with higher volumes sold into Australia, a key export market for the
Company.
Adjusted gross margin before fair value
adjustments1 on medical cannabis net revenue
remained steady at 60% for the three months ended March 31, 2023 as compared to 61% in the prior
quarter, and within the Company's target range of 60% and above.
The continuing positive impact of Aurora's new yield, high potency
cultivars is expected to maintain margins in the target range for
our medical business.
Consumer Cannabis:
Despite the significant structural challenges of the Canadian
adult use market, Aurora's consumer cannabis net
revenue1 was steady at $14.5
million, compared to $14.6
million in the prior quarter.
Adjusted gross margin before fair value adjustments1
on consumer cannabis net revenue was 25%, increasing by 5% compared
to the prior quarter. The increase from the prior quarter is
primarily driven by a mix shift in the quarter to core segment
brands and lower per unit cost of goods sold from the consolidation
of manufacturing assets.
Plant Propagation:
Plant propagation net revenue1 was wholly
comprised from the Bevo business, contributing $10.8 million of net
revenue1 and represents an increase of $4.1 million from the prior quarter. The increase
is due to the seasonality of the Bevo business which delivers
higher revenues in the late winter and spring months as orders are
fulfilled.
Adjusted gross margin before fair value adjustments1
on plant propagation revenue was 36% for the Q3 2023 period as
compared to 15% in the prior quarter. Due to seasonality of the
vegetable and ornamental plant industry, it is expected that the
late Winter and Spring months would deliver higher margins relative
to the rest of the year as there is a high volume of production and
orders being fulfilled in these months.
Selling, General and Administrative
("SG&A"):
Adjusted SG&A1, was $28.4
million in Q3 2023 which excludes $11
million of restructuring, non-recurring, and out-of-period
costs, and $1 million in market
development costs. Excluding the non-routine items, Adjusted
SG&A1continue to be well controlled and below the
Company's target of $30 million.
Adjusted R&D1, was $1.9
million in Q3 2023, increasing by $0.7 million compared to the prior quarter.
The increase from the prior quarter
relates primarily to additional costs from
the use of cannabis materials and supplies as the Company
continues to focus on product innovation.
Net Loss:
Net loss for the three months ended March
31, 2023 was $87 million
compared to $67.2 million in the
prior quarter. The increase in net loss of $20 million from the prior quarter was primarily
due to an increase of $60 million in
other expenses driven by changes in fair value on derivative
investments. Offsetting these mark-to-market changes, the Company
improved gross profit by $34.8
million and decreased operating expenses by $4.1 million.
Adjusted EBITDA:
Adjusted EBITDA1 was $0.3
million for the three months ended March 31, 2023, as compared to $1.4 million in the prior quarter. The change in
Adjusted EBITDA is largely due to additional professional fees and
consultant costs as the Company balanced lower corporate headcounts
with ongoing compliance and regulatory needs.
Fiscal Q1 2024 Expectations:
The Company expects cannabis net revenue1 for
fiscal Q1 2024 to be largely similar to fiscal Q3 2023, with the
geographical mix slightly weighted towards the international
medical segment. For plant propagation, we expect to see a
seasonally strong quarter as we reach our peak selling period.
Furthermore, the Company expects Adjusted Gross Margins to be
consistent with fiscal Q3 2023 and expects to maintain our stated
objective of a quarterly SG&A expense run rate below
$30 million.
Operational Efficiency Plan, Balance Sheet Strength, &
Cash Use:
Aurora completed its previously announced strategic
transformation plan. The achievement of significant and sustainable
operating cost and SG&A reductions resulted in two consecutive
quarters with positive Adjusted EBITDA and is paving the path as
the Company works towards positive free cashflow by the end of
calendar 2024.
In Q3 2023, our operations used a net $15.1 million, excluding changes in working
capital. The $15.1 million includes
approximately $2.1 million in
non-recurring termination costs. During fiscal 2024, the
Company is working to:
- Reduce operations cash use by a minimum of $5 million per quarter, by eliminating less
efficient operations and focusing on supplying the globe from
Aurora's highly efficient, high quality production
facilities.
- Removing a minimum of $5 million
a quarter from several targeted efficiency and cost reduction
initiatives in operations and SG&A.
In addition, compared to Q3 2023, the Company expects to save
approximately $2 million per quarter
in interest as the remaining $80
million of convertible debt is settled before the end of
this fiscal year.
Capital expenditures were approximately $3.6 million dollars in Q3 2023, and in fiscal
2024, are targeted to an average of $2
million quarterly, expected to save over $1 million a quarter compared to Q3 2023.
Aurora is now realizing the benefit of its long term commitment
to science and quality cultivation in that demand for the Company's
products globally is beginning to outpace supply. Revenue
growth, as it arrives, would be incremental to the path to positive
cash flow.
Aurora has one of the most robust balance sheets in the Canadian
Cannabis industry with approximately $230
million of cash and cash equivalents on hand and
approximately $80 million outstanding
in convertible debentures. The Company believes its cash on hand is
sufficient to fund operations until the Company is cash flow
positive, and is positioned with financial strength and realistic
growth prospects to thrive over the long term as the global
cannabis market expands.
Additionally, the Company has access to US$650.0 million under a Base Shelf Prospectus
filed on April 27, 2023 (the "2023
Shelf Prospectus"), pursuant to which approximately US$409 million is allocated to the potential
exercise of currently outstanding warrants issued in financing
transactions from 2020 to 2022. As a result, approximately
US$241 million is available for
potential new issuances of common shares, warrants, options,
subscription receipts, debt securities or any combination thereof
during the 25-month period that the 2023 Shelf Prospectus remains
effective. Volatility in the cannabis industry, stock market and
the Company's share price may impact the amount and our ability to
raise financing under the 2023 Shelf Prospectus.
During the three months ended March 31,
2023, the Company issued 4,650,088 common shares under the
2021 at-the- market (ATM) program (the "ATM Program") for net
proceeds of US$3.6 million.
Subsequent to March 31, 2023, the
Company issued 2,145,350 common shares under the ATM Program for
gross proceeds of US$1.4 million.
Following the filing of the 2023 Shelf Prospectus the ATM Program
ceased to operate. The Company may in the future file a supplement
to the 2023 Shelf Prospectus in order to utilize a new ATM program
to support strategic initiatives or debt settlement.
Subsequent to March 31, 2023, the
Company repurchased approximately U.S$50.9
million aggregate principal amount of convertible senior
notes for aggregate cash consideration of approximately
U.S$46.0 million, and issued
6,354,529.00 Common Shares in settlement of a further
U.S$4.0 million principal of this
debt.
Key Quarterly Financial and Operating Results
|
($ thousands, except
Operational Results)
|
Q3
2023
|
Q3
2022
|
$
Change
|
%
Change
|
Q2
2023
|
$
Change
|
|
%
Change
|
|
Financial Results
|
|
|
|
|
|
|
|
|
|
Total net revenue (1)(2a)
|
$64,026
|
$50,434
|
$13,592
|
27 %
|
$61,679
|
$2,347
|
|
4 %
|
|
Medical cannabis net revenue (1)(2a)
|
$37,986
|
$39,359
|
($1,373)
|
(3 %)
|
$39,514
|
($1,528)
|
|
(4 %)
|
|
Consumer cannabis net
revenue (1)(2a)
|
$14,491
|
$10,339
|
$4,152
|
40 %
|
$14,647
|
($156)
|
|
(1 %)
|
|
Plant propagation net
revenue (1)(2a)
|
$10,754
|
$—
|
$10,754
|
100 %
|
$6,630
|
$4,124
|
|
62 %
|
|
Adjusted gross
margin before FV adjustments on
|
|
|
|
|
|
|
|
|
|
total net revenue (2b)
|
48 %
|
54 %
|
N/A
|
(6 %)
|
45 %
|
N/A
|
|
3 %
|
|
Adjusted gross
margin before FV adjustments on
|
|
|
|
|
|
|
|
|
|
core cannabis net revenue (2b)
|
51 %
|
57 %
|
N/A
|
(6 %)
|
49 %
|
N/A
|
|
2 %
|
|
Adjusted gross
margin before FV adjustments on
|
|
|
|
|
|
|
|
|
|
medical cannabis net revenue (2b)
|
60 %
|
64 %
|
N/A
|
(4 %)
|
61 %
|
N/A
|
|
(1 %)
|
|
Adjusted gross
margin before FV adjustments on
|
|
|
|
|
|
|
|
|
|
consumer cannabis net revenue (2b)
|
25 %
|
29 %
|
N/A
|
(4 %)
|
20 %
|
N/A
|
|
5 %
|
|
Adjusted gross
margin before FV adjustments on
|
|
|
|
|
|
|
|
|
|
plant propagation net
revenue (2b)
|
36 %
|
— %
|
N/A
|
36 %
|
15 %
|
N/A
|
|
21 %
|
|
Adjusted SG&A expense(2d)(5)
|
$28,351
|
$35,637
|
($7,286)
|
(20 %)
|
$25,428
|
$2,923
|
|
11 %
|
|
Adjusted R&D expense(2d)
|
$1,987
|
$2,637
|
($650)
|
(25 %)
|
$1,217
|
$770
|
|
63 %
|
|
Adjusted EBITDA (2c)(5)
|
$310
|
($10,018)
|
$10,328
|
103 %
|
$1,428
|
($1,118)
|
|
(78 %)
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
|
|
|
|
|
|
|
|
|
|
Working capital (2e,f)
|
$237,623
|
$577,566
|
($339,943)
|
(59 %)
|
$409,729
|
($172,106)
|
|
(42) %
|
|
Cannabis inventory and
biological assets (3)
|
$93,081
|
$118,729
|
($25,648)
|
(22 %)
|
$93,675
|
($594)
|
|
(1) %
|
|
Total
assets
|
$926,322
|
$1,570,252
|
($643,930)
|
(41 %)
|
$1,023,835
|
($97,513)
|
|
(10) %
|
|
|
|
|
|
|
|
|
|
|
Operational Results – Cannabis
|
|
|
|
|
|
|
|
|
|
Average net selling price
of dried cannabis
|
|
|
|
|
|
|
|
|
|
excluding bulk sales
(2g)
|
$4.75
|
$5.41
|
($0.66)
|
(12 %)
|
$4.79
|
($0.04)
|
|
(1) %
|
|
Kilograms sold
(4)
|
16,578
|
9,722
|
6,856
|
71 %
|
15,269
|
1,309
|
|
9 %
|
|
|
|
(1)
|
Includes the impact of
actual and expected product returns and price adjustments (Q3 2023
- $0.3 million; Q2 2023 - $2.0 million; Q3 2022 - $0.4
million).
|
|
(2)
|
These terms are defined in the "Cautionary Statement Regarding Certain
Non-GAAP Performance Measures"
section of this MD&A. Refer to the following sections
for reconciliation of Non-GAAP Measures to the IFRS equivalent
measure:
|
|
a.
|
Refer to the "Revenue"
and "Cost of Sales and Gross Margin" section for a reconciliation
of cannabis net revenue to the IFRS equivalent.
|
|
b.
|
Refer to the "Adjusted
Gross Margin" section for reconciliation to
the IFRS equivalent.
|
|
c.
|
Refer to the "Adjusted
EBITDA" section for reconciliation to
the IFRS equivalent.
|
|
d.
|
Refer to the "Operating
Expenses" section for reconciliation to
the IFRS equivalent.
|
|
e.
|
"Working capital" is
defined as Current Assets less Current Liabilities as reported on
the Company's Consolidated Statements of Financial
Position.
|
|
f.
|
Current liabilities
includes the current portion of convertible debentures. As at March
31, 2023, the remaining balance of convertible debentures
outstanding is included in current liabilities.
|
|
g.
|
Net selling price of
dried cannabis excluding bulk sales is comprised of revenue from
dried cannabis excluding bulk sales (Q3 2023 - $37.2 million; Q2
2023 - $41.5 million; Q3 2022 - $40.1 million) less excise taxes on
dried cannabis revenue excluding bulk sales (Q3 2023 - $4.5
million; Q2 2023 $5.7 million; Q3 2022 - $5.0 million).
|
|
(3)
|
Represents total
biological assets and inventory, exclusive of merchandise,
accessories, supplies, consumables and plant propagation biological
assets.
|
|
(4)
|
The kilograms sold is
offset by the grams returned during the period.
|
|
(5)
|
Prior
period comparatives were recast to include the adjustments for markets under development, business
transformation costs, and non-recurring charges
related to non-core bulk cannabis wholesales to be comparable to
the current period presentation.
|
Conference Call
Aurora will host a conference call today, Wednesday, June 14, 2023, to discuss these
results. Miguel Martin, Chief Executive Officer, and
Glen Ibbott, Chief Financial
Officer, will host the call starting at 8:15 a.m. Eastern time
| 6:15 a.m. Mountain Time. A question
and answer session will follow management's presentation.
Conference Call Details
|
DATE:
|
Wednesday,
June 14, 2023
|
|
TIME:
|
8:15 a.m. Eastern Time
| 6:15 a.m. Mountain Time
|
|
WEBCAST:
|
Click here
|
This weblink has also been posted to the Company's "Investor
Info" link at https://auroramj.com/investors under "Events".
About Aurora
Aurora is opening the world to cannabis, 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 adult-use brand portfolio includes Aurora Drift, San
Rafael '71, Daily Special, Whistler, Being and Greybeard, as well
as CBD brands, Reliva and KG7. Medical cannabis brands include
MedReleaf, CanniMed, Aurora and Whistler Medical Marijuana Co, as
well as international brands, Pedanios, Bidiol and CraftPlant.
Aurora also has a controlling interest in Bevo Farms Ltd.,
North America's leading supplier
of propagated agricultural plants. Driven by science and
innovation, and with a focus on high-quality cannabis products,
Aurora's brands continue to break through as industry leaders in
the medical, performance, wellness and adult recreational markets
wherever they are launched. Learn more at www.auroramj.com and
follow us on Twitter and LinkedIn. Aurora's common shares trade on
the NASDAQ and TSX under the symbol "ACB".
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, but are not limited to, statements with respect
to:
pro forma measures including revenue, cash flow, Adjusted gross
margin before fair value adjustments1, and expected
SG&A run-rates; the Company's achievement of the previously
announced strategic transformation plan and positive Adjusted
EBITDA1;planned cost efficiencies and the Company's path
and timing to achieve positive free cash flow; the Company's
continued focus on profitable growth opportunities, ongoing
discipline in capital deployment, cost savings and financial
targets; competitive advantages including, but not limited to, the
Company's high margin, core global medical business, balance sheet
strength and net cash position, strategic progress, and the
associated anticipated value creation; the Company's ability to
fund operations until it is cash flow positive; the availability of
funds under the 2023 Shelf Prospectus; the Company's ability to
navigate complex import/export licensing requirements to
participate in high-growth markets; balance sheet strength and
availability of funds under the ATM Program; the acquisition of
Bevo and the anticipated contribution to top line and Adjusted
EBITDA1; and future shareholder value creation.
These forward-looking statements are only predictions. Forward
looking information or statements contained in this news release
have been developed based on assumptions management considers to be
reasonable. 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. 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. 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 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, and other risks, uncertainties and factors set out under
the heading "Risk Factors" in the Company's annual information form
dated September 20, 2022 (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.sec.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
This news release contains reference to 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. Non-GAAP Measures should be
considered together with other data prepared in 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 to assist management
and investors in assessing financial performance and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS.
The information included under the heading "Cautionary
Statement Regarding Certain Non-GAAP Performance Measures" in
the Company's management's discussion and analysis for the three
and nine months ended March 31, 2023
and 2023 (the "MD&A") is incorporated by reference into
this news release. The MD&A is available on the Company's
issuer profile on SEDAR at www.sedar.com.
As a reminder, fiscal 2023 is comprised of three quarters
ending March 31, 2023, and the
comparative year of fiscal 2022 is comprised of four
quarters
Consolidated Statements of Financial Position
|
(Amounts reflected in
thousands of Canadian dollars, unaudited)
|
|
|
|
March 31, 2023
|
June 30, 2022
|
|
|
$
|
$
|
|
Assets
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash
equivalents
|
|
234,942
|
437,807
|
|
Restricted cash
|
|
65,900
|
50,972
|
|
Accounts
receivable
|
|
41,308
|
46,995
|
|
Income
taxes receivable
|
|
37
|
57
|
|
Marketable securities
|
|
—
|
1,331
|
|
Biological assets
|
|
22,690
|
23,827
|
|
Inventory
|
|
106,132
|
116,098
|
|
Prepaids
and other current assets
|
|
8,280
|
6,539
|
|
Assets held for sale
|
|
638
|
61,495
|
|
|
479,927
|
745,121
|
|
Property, plant and equipment
|
|
322,969
|
233,465
|
|
Derivatives
|
|
7,249
|
26,283
|
|
Deposits
and other long-term assets
|
|
15,786
|
3,150
|
|
Investments in associates and joint ventures
|
|
—
|
1,207
|
|
Lease
receivable
|
|
6,496
|
4,434
|
|
Intangible assets
|
|
59,680
|
70,696
|
|
Goodwill
|
|
18,715
|
—
|
|
Deferred tax assets
|
|
15,500
|
—
|
|
Total
assets
|
|
926,322
|
1,084,356
|
|
Liabilities
|
|
|
|
|
Current
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
75,825
|
69,874
|
|
Income
taxes payable
|
|
161
|
167
|
|
Deferred
revenue
|
|
1,739
|
3,850
|
|
Convertible debentures
|
|
132,571
|
26,854
|
|
Loans
and borrowings
|
|
9,571
|
—
|
|
Lease
liabilities
|
|
5,413
|
6,150
|
|
Provisions
|
|
4,453
|
5,410
|
|
Other
current liabilities
|
|
12,572
|
12,564
|
|
Liabilities held
for sale
|
|
—
|
5,988
|
|
|
242,305
|
130,857
|
|
|
|
|
|
Convertible debentures
|
|
—
|
199,650
|
|
Loans
and borrowings
|
|
36,163
|
—
|
|
Lease
liabilities
|
|
43,804
|
36,837
|
|
Derivative liability
|
|
9,634
|
37,297
|
|
Contingent consideration payable
|
|
12,487
|
14,371
|
|
Other long-term liability
|
|
48,047
|
128
|
|
Deferred tax liability
|
|
16,745
|
2,862
|
|
Total
liabilities
|
|
409,185
|
422,002
|
|
Shareholders' equity
|
|
|
|
|
Share
capital
|
|
6,841,234
|
6,754,626
|
|
Reserves
|
|
154,040
|
157,213
|
|
Accumulated other comprehensive loss
|
|
(212,365)
|
(211,721)
|
|
Deficit
|
|
(6,296,833)
|
(6,038,275)
|
|
Total
equity attributable to Aurora shareholders
|
|
486,076
|
661,843
|
|
Non-controlling
interests
|
|
31,061
|
511
|
|
Total
equity
|
|
517,137
|
662,354
|
|
Total liabilities and equity
|
|
926,322
|
1,084,356
|
Consolidated Statements of Profit and Loss
|
(Amounts reflected in
thousands of Canadian dollars, except share and per share amounts,
unaudited)
|
|
|
|
|
|
|
|
Nine months
ended
|
Year
ended
|
|
|
March 31 2023
|
June 30, 2022
|
|
|
$
|
$
|
|
Revenue
from sale of goods
|
|
195,497
|
251,607
|
|
Revenue
from provision of services
|
|
1,088
|
1,696
|
|
Excise taxes
|
|
(21,617)
|
(31,964)
|
|
Net revenue
|
|
174,968
|
221,339
|
|
|
|
|
|
Cost of sales
|
|
150,835
|
212,713
|
|
Gross
profit before fair value adjustments
|
|
24,133
|
8,626
|
|
|
|
|
|
Changes
in fair value
of inventory and biological assets
sold
|
|
57,487
|
106,072
|
|
|
|
|
|
Unrealized gain on changes in fair value
of biological assets
|
|
(34,129)
|
(118,671)
|
|
Gross profit
|
|
775
|
21,225
|
|
|
|
|
|
Expense
|
|
|
|
|
General
and administration
|
|
83,164
|
113,212
|
|
Sales
and marketing
|
|
39,475
|
62,025
|
|
Acquisition costs
|
|
5,638
|
4,689
|
|
Research
and development
|
|
4,921
|
10,389
|
|
Depreciation and amortization
|
|
14,916
|
48,602
|
|
Share-based compensation
|
|
10,764
|
13,757
|
|
|
158,878
|
252,674
|
|
Loss from operations
|
|
(158,103)
|
(231,449)
|
|
|
|
|
|
Other Income (expense)
|
|
|
|
|
|
|
|
|
Legal
settlement and contract termination fees
|
|
(2,644)
|
(1,227)
|
|
Interest
and other income
|
|
14,252
|
4,507
|
|
Finance
and other costs
|
|
(29,596)
|
(71,813)
|
|
Foreign
exchange (loss) gain
|
|
5,975
|
(299)
|
|
Other (losses) gains
|
|
(5,109)
|
47,088
|
|
Restructuring charges
|
|
(325)
|
(3,131)
|
|
Impairment of property, plant
and equipment
|
|
(22,249)
|
(259,115)
|
|
Impairment of investment in associates
|
|
(1,240)
|
(5,479)
|
|
Impairment of intangible assets
and goodwill
|
|
(22,493)
|
(1,199,202)
|
|
|
(63,429)
|
(1,488,671)
|
|
Loss before taxes
|
|
(221,532)
|
(1,720,120)
|
|
|
|
|
|
Income
tax (expense) recovery
|
|
|
|
|
Current
|
|
(3,167)
|
(52)
|
|
Deferred, net
|
|
18,404
|
2,193
|
|
|
15,237
|
2,141
|
|
Net loss
|
|
(206,295)
|
(1,717,979)
|
Consolidated Statements of Cash Flows
|
(Amounts reflected in
thousands of Canadian dollars, unaudited)
|
|
|
|
Nine months ended
|
Year
ended
|
|
|
March 31 2023
|
June 30, 2022
|
|
|
$
|
$
|
|
Operating activities
|
|
|
|
|
Net loss
|
|
(206,295)
|
(1,717,979)
|
|
Adjustments for non-cash items:
|
|
|
|
|
Unrealized gain on changes in fair value
of biological assets
|
|
(34,129)
|
(118,671)
|
|
Changes
in fair value
included in inventory sold
|
|
57,487
|
106,072
|
|
Depreciation of property, plant
and equipment
|
|
31,987
|
60,174
|
|
Amortization of intangible assets
|
|
693
|
33,486
|
|
Share-based compensation
|
|
10,764
|
13,757
|
|
Impairment of property, plant
and equipment
|
|
22,249
|
259,115
|
|
Impairment of investments in associates
|
|
1,240
|
5,479
|
|
Impairment of loans receivable
|
|
—
|
10,509
|
|
Impairment of intangible assets
and goodwill
|
|
22,493
|
1,199,202
|
|
Accrued
interest and accretion expense
|
|
15,866
|
30,082
|
|
Interest
and other income
|
|
(168)
|
(433)
|
|
Deferred
tax recovery
|
|
(18,404)
|
(2,193)
|
|
Other
losses (gains)
|
|
5,112
|
(39,604)
|
|
Foreign
exchange loss
|
|
(1,503)
|
(1,915)
|
|
Deferred
compensation amortization
|
|
1,903
|
—
|
|
Changes in non-cash working capital
|
|
(25,116)
|
52,652
|
|
Net cash
used in operating activities
|
|
(115,821)
|
(110,267)
|
|
Investing activities
|
|
|
|
|
Proceeds
from investment in derivatives
|
|
3,362
|
—
|
|
Purchase
of property, plant
and equipment and intangible assets
|
|
(12,132)
|
(32,213)
|
|
Disposal
of property, plant and equipment
|
|
20,253
|
19,648
|
|
Acquisition of businesses, net
of cash acquired
|
|
(38,790)
|
(23,171)
|
|
Payment
of contingent consideration
|
|
—
|
(250)
|
|
Deposits (paid)
received
|
|
16
|
(185)
|
|
Net cash
used in investing activities
|
|
(27,291)
|
(36,171)
|
|
Financing activities
|
|
|
|
|
Proceeds
from long-term loans
|
|
7,242
|
—
|
|
Repayment of long-term loans
|
|
(3,053)
|
—
|
|
Repayment of convertible debenture
|
|
(128,706)
|
(163,286)
|
|
Payments
of principal portion of lease liabilities
|
|
(5,148)
|
(7,545)
|
|
Restricted cash
|
|
(14,928)
|
(31,578)
|
|
Shares issued
for cash, net of share
issue costs
|
|
73,187
|
350,188
|
|
Net cash provided by (used in) financing activities
|
(71,406)
|
147,779
|
|
Effect of foreign exchange on cash and cash equivalents
|
11,653
|
15,009
|
|
Increase
(decrease) in cash
and cash equivalents
|
(202,865)
|
16,350
|
|
Cash and
cash equivalents, beginning of period
|
437,807
|
421,457
|
|
Cash and cash equivalents, end of period
|
234,942
|
437,807
|
Net Revenue, Adjusted Gross Profit and Margin
Net revenue, adjusted gross profit before FV adjustments, and
adjusted gross margin before FV adjustments are Non-GAAP Measures
and can be reconciled with revenue, gross profit and gross margin,
the most directly comparable GAAP financial measures, respectively,
as follows:
|
($ thousands)
|
Medical
Cannabis
|
Consumer
Cannabis
|
Core
Wholesale
Bulk
Cannabis
|
Total Core
Cannabis
|
Non-Core
Wholesale
Bulk
Cannabis
|
Plant
Propagation
|
Total
|
|
Three months ended March
31, 2023
|
|
|
|
|
|
|
|
|
Gross revenue
|
40,667
|
18,956
|
307
|
59,930
|
488
|
10,754
|
71,172
|
|
Excise taxes
|
(2,681)
|
(4,465)
|
—
|
(7,146)
|
—
|
—
|
(7,146)
|
|
Net revenue (1)
|
37,986
|
14,491
|
307
|
52,784
|
488
|
10,754
|
64,026
|
|
Cost of sales
|
(20,041)
|
(14,556)
|
(173)
|
(34,770)
|
(646)
|
(8,032)
|
(43,448)
|
|
Depreciation
|
2,453
|
1,773
|
21
|
4,247
|
77
|
877
|
5,201
|
|
Inventory impairment, non-recurring, out-of-
|
|
|
|
|
|
|
|
|
period and
market development costs
|
|
|
|
|
|
|
|
|
included in cost of sales (2)(3)(4)(7)
|
2,555
|
1,912
|
25
|
4,492
|
96
|
233
|
4,821
|
|
Adjusted gross
profit (loss) before FV
|
|
|
|
|
|
|
|
|
adjustments (1)
|
22,953
|
3,620
|
180
|
26,753
|
15
|
3,832
|
30,600
|
|
Adjusted gross
margin before FV
|
|
|
|
|
|
|
|
|
adjustments (1)
|
60 %
|
25 %
|
59 %
|
51 %
|
3 %
|
36 %
|
48 %
|
|
Three months ended
December 31, 2022
|
|
|
|
|
|
|
|
|
Gross revenue
|
42,340
|
19,820
|
664
|
62,824
|
224
|
6,630
|
69,678
|
|
Excise taxes
|
(2,826)
|
(5,173)
|
—
|
(7,999)
|
—
|
—
|
(7,999)
|
|
Net revenue(1)
|
39,514
|
14,647
|
664
|
54,825
|
224
|
6,630
|
61,679
|
|
Cost of sales
|
(26,380)
|
(22,673)
|
(1,013)
|
(50,066)
|
(1,417)
|
(8,080)
|
(59,563)
|
|
Depreciation
|
2,055
|
1,560
|
68
|
3,683
|
95
|
843
|
4,621
|
|
Inventory impairment, non-recurring,
|
|
|
|
|
|
|
|
|
business transformation, and market
|
|
|
|
|
|
|
|
|
development costs
included in cost of sales
|
|
|
|
|
|
|
|
|
(2)(3)(4)(5)
|
8,855
|
9,370
|
436
|
18,661
|
609
|
1,578
|
20,848
|
|
Adjusted gross
profit (loss) before FV
|
|
|
|
|
|
|
|
adjustments (1)
|
24,044
|
2,904
|
155
|
27,103
|
(489)
971
|
27,585
|
|
Adjusted gross
margin before FV
|
|
|
|
|
|
|
|
adjustments (1)
|
61 %
|
20 %
|
23 %
|
49 %
|
(218%)
15%
|
45 %
|
|
Three months ended
March 31, 2022 (6)
|
|
|
|
|
|
|
|
|
Gross revenue
|
42,262
|
13,869
|
—
|
56,131
|
736
|
—
|
56,867
|
|
Excise taxes
|
(2,903)
|
(3,530)
|
—
|
(6,433)
|
—
|
—
|
(6,433)
|
|
Net revenue(1)
|
39,359
|
10,339
|
—
|
49,698
|
736
|
—
|
50,434
|
|
Cost of sales
|
(31,275)
|
(23,242)
|
—
|
(54,517)
|
(5,920)
|
—
|
(60,437)
|
|
Depreciation
|
4,198
|
2,165
|
—
|
6,363
|
482
|
—
|
6,845
|
|
Inventory impairment and out-of-period
|
|
|
|
|
|
|
|
|
adjustments included in cost of sales (2)(7)
|
12,873
|
13,749
|
—
|
26,622
|
3,806
|
—
|
30,428
|
|
Adjusted gross
profit (loss) before FV
|
|
|
|
|
|
|
|
|
adjustments (1)
|
25,155
|
3,011
|
—
|
28,166
|
(896)
|
—
|
27,270
|
|
Adjusted gross
margin before FV
|
|
|
|
|
|
|
|
|
adjustments (1)
|
64 %
|
29 %
|
— %
|
57 %
|
(122 %)
|
— %
|
54 %
|
|
|
|
(1)
|
These terms are Non-GAAP Measures
and are defined
in the "Cautionary Statement Regarding
Certain Non-GAAP Performance Measures" section of
this MD&A.
|
|
(2)
|
Inventory impairment
includes inventory write-downs due to lower of cost or net
realizable value adjustments, obsolescence provision adjustments,
and inventory destruction.
|
|
(3)
|
Markets under development represents the adjustment for business operations focused on developing international markets prior to
commercialization.
|
|
(4)
|
Non-recurring items
includes one-time excise tax refunds, inventory count adjustments
resulting from facility shutdowns and inter-site transfers,
and abnormal spikes to utilities costs on its plant propagation
business.
|
|
(5)
|
Business
transformation includes costs in connection with the re-purposing of the Company's
Sky facility.
|
|
(6)
|
Prior
year comparatives have been recast to conform
to the current period's presentation.
|
|
(7)
|
Out-of-period
adjustments include adjustments to year-end bonus accruals included
in the current quarter but relating to prior quarters and
adjustments to input assumptions related to fair value of
biological assets.
|
Net Selling Price of Dried Cannabis Excluding Bulk
Sales
Net selling price of dried cannabis excluding bulk sales is a
Non-GAAP Measure comprised of revenue from dried cannabis excluding
bulk sales less excise taxes on dried cannabis revenue excluding
bulk sales and can be reconciled with revenue, the most directly
comparable GAAP financial measure, as follows:
|
($
thousands)
|
Three months
ended
|
|
Nine months
ended
|
|
March 31,
2023
|
|
September 30,
2022
|
|
March 31,
2022
|
|
March 31,
2023
|
|
March 31,
2022
|
|
|
Gross revenue from
dried cannabis excluding bulk sales
|
37,180
|
|
41,479
|
|
40,089
|
|
112,364
|
|
139,981
|
|
|
Excise taxes
|
(4,506)
|
|
(5,738)
|
|
(4,963)
|
|
(14,668)
|
|
(18,906)
|
|
|
Net revenue from
dried cannabis excluding bulk sales
|
32,674
|
|
35,741
|
|
35,126
|
|
97,696
|
|
121,075
|
|
Adjusted EBITDA
Adjusted EBITDA is a Non-GAAP Measure and can be reconciled with
net income (loss), the most directly comparable GAAP financial
measure, as follows:
|
Three months
ended
|
Nine months
ended
|
Year
ended
|
|
($ thousands)
|
March 31, 2023
|
December 31,
2022
|
March 31, 2022(5)
|
March 31,
2023
|
June 30,
2022 (5)
|
|
Net loss from
continuing operations
|
(87,225)
|
(67,183)
|
(1,012,175)
|
(206,295)
|
(1,717,979)
|
|
Income tax expense
(recovery)
|
(3,162)
|
(98)
|
(202)
|
(15,237)
|
(2,141)
|
|
Other income
(expense)
|
57,704
|
(4,315)
|
939,996
|
63,429
|
1,488,671
|
|
Share-based
compensation
|
3,620
|
4,281
|
3,538
|
10,764
|
13,757
|
|
Depreciation and
amortization
|
10,017
|
11,165
|
18,647
|
29,400
|
83,067
|
|
Acquisition
costs
|
696
|
3,028
|
585
|
5,638
|
4,689
|
|
Inventory and
biological assets fair value and
|
|
|
|
|
|
impairment
adjustments
|
6,477
|
34,265
|
31,239
|
69,026
|
52,518
|
|
Business
transformation related charges (1)
|
7,253
|
11,893
|
2,125
|
28,202
|
11,891
|
|
Out-of-period
adjustments (2)
|
1,333
|
516
|
4,074
|
2,316
|
11,779
|
|
Non-recurring items
(3)
|
2,425
|
6,803
|
896
|
3,823
|
7,473
|
|
Markets under
development (4)
|
1,172
|
1,073
|
1,259
|
3,308
|
5,205
|
|
Adjusted EBITDA (5)
|
310
|
1,428
|
(10,018)
|
(5,626)
|
(41,070)
|
|
|
|
(1)
|
Business transformation
related charges includes costs related to closed facilities,
certain IT project costs, costs associated with the repurposing of
Sky, severance and retention costs in connection with the
business transformation plan, costs associated with the retention
of certain medical aggregators, and payroll costs exited prior
to the end of Q2 2023 associated with the medical cannabis
business.
|
|
(2)
|
Out-of-period
adjustments reflect adjustments to net loss for the financial
impact of transactions recorded in the current period that relate
to prior periods.
|
|
(3)
|
Non-recurring items
includes one-time excise tax refunds, non-core adjusted wholesale
bulk margins, inventory count adjustments resulting from
facility shutdowns and inter-site transfers, litigation and
non-recurring project costs, an abnormal mildew issue on certain
cultivation lots, additional
expenses associated with the change
in fiscal year end to March 31,
2023, one-time break
fees with certain vendors, and temporary
abnormal utilities costs within the plant
propagation business.
|
|
(4)
|
Markets under
development represents the adjustment for business operations
focused on developing international markets prior to
commercialization.
|
|
(5)
|
Adjusted EBITDA is a
Non-GAAP 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. Prior period comparatives were recast to include the
adjustments for markets under development, business
transformation costs, and non-recurring charges related to non-core
bulk cannabis wholesales to be comparable to the current
period presentation.
|
Adjusted SG&A
Adjusted SG&A is a Non-GAAP Measure and can be reconciled
with sales and marketing and general and administrative expenses,
the most directly comparable GAAP financial measure, as
follows:
|
Three months
ended
|
|
Nine months
ended
|
|
Year
ended
|
|
($ thousands)
|
March 31,
2023
|
December 31,
2022
|
|
March 31,
2022
|
|
March 31,
2023
|
|
June 30,
2022
|
|
Sales and
marketing
|
13,494
|
13,174
|
|
15,934
|
|
39,475
|
|
62,025
|
|
General and
administration
|
26,679
|
27,112
|
|
23,696
|
|
83,164
|
|
113,212
|
|
Business
transformation costs
|
(7,209)
|
(11,249)
|
|
(2,035)
|
|
(27,328)
|
|
(11,801)
|
|
Out-of-period
adjustments
|
(818)
|
(516)
|
|
(699)
|
|
(1,801)
|
|
(9,195)
|
|
Non-recurring
costs
|
(2,837)
|
(2,179)
|
|
—
|
|
(6,154)
|
|
(1,127)
|
|
Market development
costs
|
(958)
|
(914)
|
|
(1,259)
|
|
(2,935)
|
|
(5,205)
|
|
Adjusted SG&A
(1)
|
28,351
|
25,428
|
|
35,637
|
|
84,421
|
|
147,909
|
|
|
(1) These terms are defined in the "Cautionary Statement Regarding Certain
Non-GAAP Performance Measures" section of the MD&A.
|
Adjusted R&D
Adjusted R&D is a Non-GAAP Measure and can be reconciled
with research and development expenses, the most directly
comparable GAAP financial measure, as follows:
|
Three
months ended
|
|
Nine months
ended
|
|
Year
ended
|
|
($ thousands)
|
March
31, 2023
|
|
December
31,
2022
|
|
March
31, 2022
|
|
March
31, 2023
|
|
June 30, 2022
|
|
General and administration
|
2,031
|
|
1,287
|
|
2,637
|
|
4,921
|
|
10,389
|
|
Share-based compensation
|
(44)
|
|
(70)
|
|
—
|
|
(300)
|
|
—
|
|
Adjusted R&D (1)
|
1,987
|
|
1,217
|
|
2,637
|
|
4,621
|
|
10,389
|
|
|
(1) These terms are defined
in the "Cautionary Statement Regarding
Certain Non-GAAP Performance Measures" section of this MD&A.
|
Working Capital
Working capital is a Non-GAAP Measure and can be reconciled with
total current assets and total current liabilities, the most
directly comparable GAAP financial measure, as follows:
|
March 31,
2023
|
|
December 31,
2022
|
|
Year Ended
June 30, 2022
|
|
($
thousands)
|
|
|
|
|
|
|
Total current
assets
|
479,927
|
|
542,791
|
|
745,121
|
|
Total current
liabilities
|
(242,305)
|
|
(133,062)
|
|
(130,857)
|
|
Working
capital
|
237,622
|
|
409,729
|
|
614,264
|
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SOURCE Aurora Cannabis Inc.