NASDAQ | TSX: ACB
- #1 Canadian LP in Global Medical Cannabis; Total Medical
Cannabis Net Revenue Rose 9% Compared to Prior Year; Strong
Adjusted Gross Margin before FVA of 68%
- Business Transformation Plan on Track; Reiterates Annual
Cost Savings of $60 Million to
$80 Million, Providing Clear Pathway
to Adjusted EBITDA Profitability
- Balance Sheet Remains Strong with $440.9 Million of Cash at June 30, 2021; Working Capital Improves by
$404.3 Million Compared to Prior
Year
- Adjusted EBITDA Loss, Excluding Restructuring Costs,
Narrows to $13.9
Million, a $17.6 Million
Improvement Compared to Prior Year
- Total Cannabis Net Revenue, Net of Provisions, of
$54.8 Million Compared to
$55.2 Million in the Prior Quarter,
and $67.5 Million in the Year-Ago
Period
EDMONTON, AB, Sept. 27, 2021 /PRNewswire/ - Aurora
Cannabis Inc. (the "Company" or "Aurora") (NASDAQ: ACB) (TSX: ACB),
the Canadian company defining the future of cannabinoids worldwide,
today announced its financial and operational results for the
fourth quarter and full year fiscal 2021 ended June 30, 2021.
"We are very pleased with our strategic and financial progress
in growing our high-margin medical revenue, rationalizing expenses,
strengthening our balance sheet, and reducing our cash burn during
fiscal year 2021. Given ongoing challenges in the Canadian adult
recreational market, our broad diversification across domestic
medical, international medical, and adult recreational segments
provides us with underlying strength, stability, and growth
opportunities in an evolving industry for global cannabinoids.
Additionally, our enviable leadership position as the #1 Canadian
LP in global medical cannabis by revenue on a trailing twelve-month
basis, supported by regulatory and compliance expertise, is a
tailwind that we expect to enable us to ultimately expand into
global adult recreational as medical regimes evolve" stated
Miguel Martin, Chief Executive
Officer of Aurora Cannabis.
"During the quarter, we delivered another strong yet steady
performance in domestic medical, the largest federally regulated
medical market globally, exceptional year-over-year growth in our
high-margin international medical segment, where we remain the #2
Canadian LP by revenue on a trailing twelve-month basis, and
quarterly sequential growth in adult recreational which included
higher sales of premium cultivars. We are now delighted to announce
a long-term supply agreement with Cantek in Israel that we expect to provide us with a
steady stream of high-margin revenue that could also evolve into a
larger partnership over time. We further believe our Canadian adult
recreational segment is poised for recovery due to our product
portfolio enhancements coupled with an acceleration of new store
openings and rising consumer demand," he continued.
"We have positioned ourselves for long-term success by
delivering further improvement in our industry-leading Adjusted
gross margin and substantially narrowing our Adjusted EBITDA loss
compared to the year-ago period. With annual cost savings of
approximately $60 to $80 million across selling, general and
administrative ("SG&A"), production cost, facility and logistic
expenses, we have a clear pathway to achieve Adjusted EBITDA
profitability. Importantly, our considerable cash balance of
$440.9 million, substantial
improvement in working capital, and strong balance sheet support
our organic growth and can be utilized for opportunistic M&A,
particularly in the U.S," he concluded.
Fourth Quarter 2021 Highlights
(Unless otherwise
stated, comparisons are made between fiscal Q4 2021 and Q4 2020
results and are in Canadian dollars)
Medical cannabis:
- Medical cannabis net revenue1 was $35.0 million, a 9% increase from the prior year
period. The increase was primarily attributable to continued growth
in the international medical business, 88% over the prior year
comparative period, as the Company continued to grow new, high
margin medical markets.
- Adjusted gross margin before fair value adjustments on medical
cannabis net revenue1 was 68% versus 64% in
the prior year, as a result of overall reduction in production
costs due to the closure of non-core facilities as part of our
business transformation plan and higher sales coming from our
international sales, which yield higher margins.
Consumer cannabis:
- Consumer cannabis net revenue1 was $19.5 million ($20.2
million excluding provisions), a 45% decrease from
$35.3 million ($37.1 million excluding provisions) in the prior
year. This was due primarily to a reduction in orders from
Provinces in response to slower consumer demand, reflecting the
impact of lockdown restrictions related to COVID-19. Sequentially,
consumer cannabis net revenue increased 8% over the prior quarter
mainly due to completion of the transition of our fixed sales force
to Great North and a $2.5 million
reduction in actual net returns, price adjustments and provisions
as the company completed its product swap initiative to replace low
quality product with higher potency product at the provinces.
- Adjusted gross margin before fair value adjustments on consumer
cannabis net revenue[1] was 31% vs 36% in the prior year
period. This was primarily driven by an increase in cost of sales
due to under-utilized capacity at Aurora Sky as a result of the
scaling back production (expected to partially reverse in future
quarters), offset by an increase in the consumer cannabis sales mix
attributed to our core and premium brands, contributing to an
increase in our average net selling price per gram of dried
cannabis.
Consolidated:
- Adjusted gross margin before fair value adjustments on cannabis
net revenue1 was 54% in Q4 2021 versus 49% in the prior year period
and 44% in Q3 2021. The increase in Adjusted gross margin compared
to Q4 2020 is due primarily to a shift in sales mix towards the
medical market which commands higher average net selling prices and
margins.
- Adjusted EBITDA1 loss improved to $19.3 million in Q4 2021 ($13.9 million loss excluding restructuring
charges) compared to the prior year Adjusted EBITDA
loss1 of $33.3 million
($31.5 million loss excluding
restructuring charges) primarily driven by the substantial decrease
in SG&A and R&D expenses and an increase in gross
margins.
- Q4 2021 total cannabis net revenue1 was $54.8 million, essentially flat sequentially, and
a 19% decrease in over fiscal Q4 of the prior year.
- Reflecting the shift in mix toward our medical businesses, the
Q4 2021 average net selling price per gram of dried
cannabis1 increased to $5.11 per gram from $3.60 in Q4 2020 and $5.00 in Q3 2021. This excludes the impact of
bulk wholesale of excess mid-potency cannabis flower at clear-out
pricing.
Selling, General and Administrative
("SG&A"):
- SG&A, including Research and Development ("R&D"), was
$44.8 million, excluding $5.2 million in severance and restructuring costs
($49.9 million reported), down
$19.1 million or 30% from the prior
year as a result of our business transformation plan.
Operational Efficiency Plan, Balance Sheet Strength, &
Working Capital Improvement
Aurora has identified cash savings of $60
million to $80 million. We
expect to deliver $30 million to
$40 million of annualized cash
savings within the next year, and the remainder by the end of Q2
fiscal 2023.
___________________________________
|
1
|
These terms are
non-GAAP measures, see "Non-GAAP Measures" below.
|
Approximately 60% of the savings are expected to be driven out
of our network through asset consolidation, and operational and
supply chain efficiencies. In fact, last week we announced the
centralization of much of our Canadian manufacturing processes to
our River facility in Bradford,
Ontario and the resultant closure of our western
Canada manufacturing facility. The
remaining 40% of savings are intended to be sourced through
SG&A; a portion of those savings will be via insurance
structures that are already partially executed.
These cash savings will be reflected in our P&L either as
they occur for SG&A savings, or as inventory is drawn down for
production-related savings. These efficiencies are
incremental to the approximately $300
million of total cost reductions achieved since the
announcement of the Company's business transformation plan in
February 2020.
Aurora materially improved its balance sheet during fiscal year
2021 through a number of purposeful actions including repaying the
credit facility in full in June 2021,
which resulted in interest and principal repayment reductions of
approximately $25 million annually.
The Company views a strong balance sheet as critical to operating
the business, executing its strategic plans, and pursuing growth
opportunities in an unconstrained manner, including within the
U.S.
At June 30, 2021 Aurora has a cash
balance of approximately $440.9
million, comprised of $421.5
million of cash and cash equivalents and $19.4 million in restricted cash, no secured term
debt, and access to US$1 billion of
capital under its shelf prospectus.
The Company's focus on realizing operational efficiencies and
ability to manage cash has greatly improved operating cash flow;
reducing the need for incremental capital. In Q4 2021, Aurora
managed cash flow tightly using $7.8
million in cash to fund operations, including working
capital investments and restructuring and severance payments of
$5.1 million. Cash inflow from
capital expenditures, net of $17.5
million disposals and government grant income, in Q4 2021
was $6.2 million versus $32.8 million of cash used in Q4 2020 and
$12.2 million of cash used in Q3
2021. Cash used in operations and for capital expenditures are
crucial metrics in Aurora's drive toward generating sustainable
positive free cash flow, and both have improved significantly over
the past year. The Company's ongoing business transformation, with
the additional cost efficiency savings described earlier, is
expected to move the operating cash flow metric in a positive
direction over the coming quarters.
Fiscal Q4 2021 Cash Use
The main components of cash source and use in Q4 2021 were as
follows:
($
thousands)
|
Q4
2021
|
Q4
2020(4)
|
Q3
2021(4)
|
Cash
Flow
|
|
|
|
Cash,
Opening
|
$520,238
|
$230,208
|
$434,386
|
|
|
|
|
Cash used in
operations including working
capital
|
($7,840)
|
($64,199)
|
($66,215)
|
Capital expenditures,
net of disposals and
government grant income
|
$6,230
|
($32,789)
|
($12,320)
|
Debt and interest
payments
|
($90,141)(3)
|
($52,979)
|
($7,766)
|
Cash use
|
($91,751)
|
($149,967)
|
($86,301)
|
|
|
|
|
Proceeds raised from
sale of marketable
securities and investments in associates
|
11,929
|
33,673
|
$-
|
Proceeds raised
through debt
|
-
|
-
|
-
|
Proceeds raised
through equity financing
|
$435
|
$48,265
|
$172,153(1)
|
Cash
raised
|
$12,364
|
$81,938
|
$172,153
|
|
|
|
|
Cash,
Ending
|
$440,851
|
$162,179
|
$520,238(2)
|
(1)
|
Includes impact of
foreign exchange rates on USD cash raised from financing
|
(2)
|
Includes restricted
cash of $50.0M for Q3 2021 held as cash collateral under the BMO
Credit Facility.
|
(3)
|
Includes $88.7
million full principal repayment on the BMO Credit Facility. As of
June 30, 2021, the BMO Credit Facility has been fully settled and
discharged.
|
(4)
|
Previously reported amounts have been
retroactively recast for the biological assets and inventory
non-material prior period error. Refer to the "Significant
Accounting Policies and Judgments" section in Note 2(h) of the
Financial Statements.
|
Refer to the "Consolidated Statement of Cash Flows" in the
"Consolidated Financial Statements" for our cash flow statements
prepared in accordance with IAS 7 – Statement of Cash Flows.
($ thousands,
except Operational Results)
|
Q4
2021
|
Q4
2020(5)(6)
|
$
Change
|
%
Change
|
Q3 2021
(5)(6)
|
$
Change
|
%
Change
|
Financial
Results
|
|
|
|
|
|
|
|
Total net revenue
(1)
|
$54,825
|
|
$68,426
|
|
($13,601)
|
|
(20)
|
%
|
$55,161
|
|
($336)
|
|
(1)
|
%
|
Cannabis net revenue
(1)(2a)
|
$54,825
|
|
$67,492
|
|
($12,667)
|
|
(19)
|
%
|
$55,161
|
|
($336)
|
|
(1)
|
%
|
Medical cannabis net
revenue (2a)
|
$35,022
|
|
$32,226
|
|
$2,796
|
|
9
|
%
|
$36,378
|
|
($1,356)
|
|
(4)
|
%
|
Consumer cannabis net
revenue (1)(2a)
|
$19,514
|
|
$35,266
|
|
($15,752)
|
|
(45)
|
%
|
$18,023
|
|
$1,491
|
|
8
|
%
|
Adjusted gross margin
before FV adjustments
on cannabis net revenue (2b)
|
54
|
%
|
49
|
%
|
N/A
|
5
|
%
|
44
|
%
|
N/A
|
10
|
%
|
Adjusted gross margin
before FV adjustments
on medical cannabis net revenue (2b)
|
68
|
%
|
64
|
%
|
N/A
|
4
|
%
|
53
|
%
|
N/A
|
15
|
%
|
Adjusted gross margin
before FV adjustments
on consumer cannabis net revenue (2b)
|
31
|
%
|
36
|
%
|
N/A
|
(5)
|
%
|
33
|
%
|
N/A
|
(2)
|
%
|
SG&A
expense
|
$46,902
|
|
$57,969
|
|
($11,067)
|
|
(19)
|
%
|
$41,684
|
|
$5,218
|
|
13
|
%
|
R&D
expense
|
$3,034
|
|
$7,645
|
|
($4,611)
|
|
(60)
|
%
|
$3,398
|
|
($364)
|
|
(11)
|
%
|
Adjusted EBITDA
(2c)
|
($19,256)
|
|
($33,349)
|
|
$14,093
|
|
42
|
%
|
($23,853)
|
|
$4,597
|
|
19
|
%
|
|
|
|
|
|
|
|
|
Balance
Sheet
|
|
|
|
|
|
|
|
Working
capital
|
$549,517
|
|
$145,258
|
|
$404,259
|
|
278
|
%
|
$646,310
|
|
($96,793)
|
|
(15)
|
%
|
Cannabis inventory
and biological
assets(3) (2)(3)(7)
|
$120,297
|
|
$135,973
|
|
($15,676)
|
|
(12)
|
%
|
$102,637
|
|
$17,660
|
|
17
|
%
|
Total
assets
|
$2,604,731
|
|
$2,779,921
|
|
($175,190)
|
|
(6)
|
%
|
$2,839,155
|
|
($234,424)
|
|
(8)
|
%
|
|
|
|
|
|
|
|
|
Operational
Results – Cannabis
|
|
|
|
|
|
|
|
Average net selling
price of dried cannabis
excluding bulk sales (2)
|
$5.11
|
|
$3.60
|
|
$1.51
|
|
42
|
%
|
$5.00
|
|
$0.11
|
|
2
|
%
|
Kilograms sold
(4)
|
11,346
|
|
16,748
|
|
(5,402)
|
|
(32)
|
%
|
13,520
|
|
(2,174)
|
|
(16)
|
%
|
(1)
|
Includes the impact
of actual and expected product returns and price adjustments (Q4
2021 - $0.7 million; Q3 2021 - $3.2 million; Q4 2020 - $1.9
million).
|
(2)
|
These terms are
defined in the "Cautionary Statement Regarding Certain Non-GAAP
Performance Measures" of the MD&A. Refer to the following
MD&A 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.
|
(3)
|
Represents total
biological assets and cannabis inventory, exclusive of merchandise,
accessories, supplies and consumables.
|
(4)
|
The kilograms sold is
offset by the grams returned during the period.
|
(5)
|
As a result of the
Company's dissolution and divestment of its wholly owned
subsidiaries, Hempco Food and Fiber Inc. ("Hempco"), Aurora Larssen
Projects ("ALPS"), Aurora Hemp Europe ("AHE"), the operations of
Hempco, ALPS and AHE have been presented as discontinued operations
and the Company's operational results have been retroactively
restated, as required. Refer to Note 12(b) of the Financial
Statements for more information about the divestitures.
|
(6)
|
Amounts have been
retroactively recast for the biological assets and inventory
non-material prior period error. Refer to the "Significant
Accounting Policies and Judgments" section in Note 2(h) of the
Financial Statements.
|
Conference Call
Aurora will host a conference call today, September 27,
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:
|
|
Tuesday, September
27, 2021
|
TIME:
|
|
5:00 p.m. Eastern
Time | 3:00 p.m. Mountain Time
|
WEBCAST:
|
|
http://public.viavid.com/index.php?id=146159
|
Investors may submit questions in advance or during the
conference call itself through same weblink listed above. This
weblink has also been posted to the Company's "Investor Info" link
at https://investor.auroramj.com/ under "News & Events".
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, MedReleaf, CanniMed, Whistler, and
Reliva CBD. 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. For more
information, please visit our website at www.auroramj.com.
Aurora's common shares trade on the NASDAQ and TSX under the
symbol "ACB" and is a constituent of the S&P/TSX Composite
Index.
Forward Looking Statements
This news release contains certain statements which may
constitute "forward-looking information" and "forward-looking
statements" within the meaning of Canadian securities law
requirements (collectively, "forward-looking statements"). These
forward-looking statements are made as of the date of this news
release and the Company does not intend, and does not assume any
obligation, to update these forward-looking statements, except as
required under applicable securities legislation. Forward-looking
statements relate to future events or future performance and
reflect Company management's expectations or beliefs regarding
future events. In certain cases, forward-looking statements can be
identified by the use of words such as "plans", "expects" or "does
not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or statements
that certain actions, events or results "may", "could", "would",
"might" or "will be taken", "occur" or "be achieved" or the
negative of these terms or comparable terminology. In this
document, certain forward-looking statements are identified by
words including "may", "future", "expected", "intends" and
"estimates". By their very nature forward-looking statements
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
the Company to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. The Company provides no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. Forward-looking
statements in this news release include, but are not limited to,
statements with respect to: :
- pro forma measures including revenue, Adjusted gross margin
before fair value adjustments, expected SG&A run-rates, and
grams produced;
- the Company's ability to execute on its business transformation
plan and path to Adjusted EBITDA profitability;
- planned cost efficiencies, including the execution of the
Company's costs savings plan, including, but not limited to, asset
consolidation, supply chain efficiency and other reductions in
SG&A expenses;
- the recovery of the Company's domestic adult recreational
segment;
- growth opportunities, including the expansion into additional
international adult recreational markets;
- the continued supply of product to Israel and associated revenue growth;
- product portfolio enhancements and innovation;
- future strategic plans and growth, including, but not limited
to, M&A in the United
States;
- expectations regarding production capacity, costs and yields;
and
- product sales expectations and corresponding forecasted
increases in revenues.
The above and other aspects of the Company's anticipated future
operations are forward-looking in nature and, as a result, are
subject to certain risks and uncertainties. Although the Company
believes that the expectations reflected in these forward-looking
statements are reasonable, undue reliance should not be placed on
them as actual results may differ materially from the
forward-looking statements. Such forward-looking statements are
estimates reflecting the Company's best judgment based upon current
information and involve a number of risks and uncertainties, and
there can be no assurance that other factors will not affect the
accuracy of such 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 availability of additional capital to
complete construction projects and facilities improvements, 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 as set out under "Risk Factors" contained
herein. 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.
Should one or more of these risks or uncertainties materialize,
or should underlying factors or assumptions prove incorrect, actual
results may vary materially from those described in forward looking
statements. 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.
Although the Company believes that the expectations conveyed by
the forward-looking statements are reasonable based on the
information available to the Company on the date hereof, no
assurance can be given as to future results, approvals or
achievements. Forward-looking statements contained in this
news release and in the documents incorporated by reference herein
are expressly qualified by this cautionary statement. The
Company disclaims any duty to update any of the forward-looking
statements after the date of this news release except as otherwise
required by applicable law.
Non-GAAP Measures
This news release contains 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.
- 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 cannabis only.
- Ancillary net revenue represents non-cannabis net revenue for
ancillary support functions 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 of international dried
cannabis represents the average net selling price per gram for
international dried cannabis sales only, excluding wholesale bulk
cannabis sold in the period.
- Average net selling price per gram and gram equivalent of
Canadian medical cannabis represents the average net selling price
per gram and gram equivalent for dried cannabis and cannabis
derivatives sold in the Canadian medical market.
- Average net selling price per gram and gram equivalent of
medical cannabis represents the average net selling price per gram
and gram equivalent for dried cannabis and cannabis derivatives
sold in the medical market.
- 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.
- Gross profit before FV adjustments on cannabis net revenue is
calculated by subtracting (i) cost of sales, before the effects of
changes in FV of biological assets and inventory, and (ii) cost of
sales from non-cannabis ancillary support functions, from total
cannabis net revenue. Gross margin before FV adjustments on
cannabis net revenue is calculated by dividing gross profit before
FV adjustments on cannabis net revenue divided by cannabis net
revenue. Management believes that these measures provide useful
information to assess the profitability of our cannabis operations
as it excludes the effects of non-cash FV adjustments on inventory
and biological assets, which are required by IFRS.
- 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 ancillary support functions; and removing (iii)
depreciation in cost of sales; (iv) cannabis inventory impairment;
and (v) out-of-period adjustments. 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 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 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 gross profit and
gross margin before FV adjustments on sales generated from
wholesale bulk cannabis only.
- Adjusted gross profit and gross margin before FV adjustments on
ancillary net revenue represents gross profit and gross margin
before FV adjustments on sales generated from ancillary support
functions onl
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 (i)
out-of-period adjustments to provide information that reflects
current period results; and (ii) 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, out-of-period adjustments, 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, and excludes out-of-period
adjustments that are not reflective of current operating results.
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
|
June 30,
2021
|
June 30, 2020
(1)
|
March 31,
2021
|
Medical cannabis net
revenue
|
35,022
|
32,226
|
36,378
|
Consumer cannabis net
revenue
|
19,514
|
35,266
|
18,023
|
Wholesale bulk
cannabis net revenue
|
289
|
-
|
760
|
Total cannabis net
revenue
|
54,825
|
67,492
|
55,161
|
Total net
revenue
|
54,825
|
68,426
|
55,161
|
|
|
|
|
|
(1)
|
As a result of the
Company's dissolution and divestment of its wholly owned
subsidiaries Hempco, ALPS and AHE, the operations of Hempco, ALPS
and AHE have been presented as discontinued operations and the
Company's results have been retroactively restated, as required.
Refer to Note 12(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 June 30, 2021
|
|
|
|
|
|
Gross
revenue
|
38,076
|
|
26,037
|
|
289
|
|
—
|
|
64,402
|
|
Excise
taxes
|
(3,054)
|
|
(6,523)
|
|
—
|
|
—
|
|
(9,577)
|
|
Out-of-period revenue
adjustments (4)
|
—
|
|
908
|
|
—
|
|
—
|
|
908
|
|
Net
revenue
|
35,022
|
|
20,422
|
|
289
|
|
—
|
|
55,733
|
|
Cost of
sales
|
(17,558)
|
|
(19,726)
|
|
(331)
|
|
—
|
|
(37,615)
|
|
Gross profit
(loss) before FV adjustments (1)
|
17,464
|
|
696
|
|
(42)
|
|
—
|
|
18,118
|
|
Depreciation
|
5,245
|
|
3,587
|
|
40
|
|
—
|
|
8,872
|
|
Inventory impairment
and out-of-period adjustments in
cost of sales (4)
|
1,028
|
|
2,017
|
|
—
|
|
—
|
|
3,045
|
|
Adjusted gross
profit (loss) before FV adjustments (1)
|
23,737
|
|
6,300
|
|
(2)
|
|
—
|
|
30,035
|
|
Adjusted gross
margin before FV adjustments (1)
|
68
|
%
|
31
|
%
|
(1)
|
%
|
—
|
%
|
54
|
%
|
|
|
|
|
|
|
Three months
ended June 30, 2020 (2)(3)
|
|
|
|
|
|
Gross
revenue
|
35,494
|
|
48,299
|
|
—
|
|
934
|
|
84,727
|
|
Excise
taxes
|
(3,268)
|
|
(13,033)
|
|
—
|
|
—
|
|
(16,301)
|
|
Net
revenue
|
32,226
|
|
35,266
|
|
—
|
|
934
|
|
68,426
|
|
Cost of
sales
|
(34,215)
|
|
(98,262)
|
|
—
|
|
(2,910)
|
|
(135,387)
|
|
Gross loss before
FV adjustments (1)
|
(1,989)
|
|
(62,996)
|
|
—
|
|
(1,976)
|
|
(66,961)
|
|
Depreciation
|
3,283
|
|
4,468
|
|
—
|
|
—
|
|
7,751
|
|
Inventory impairment
in cost of sales
|
19,248
|
|
71,331
|
|
—
|
|
1,177
|
|
91,756
|
|
Adjusted gross
profit (loss) before FV adjustments (1)
|
20,542
|
|
12,803
|
|
—
|
|
(799)
|
|
32,546
|
|
Adjusted gross
margin before FV adjustments (1)
|
64
|
%
|
36
|
%
|
—
|
%
|
(86)
|
%
|
48
|
%
|
|
|
|
|
|
|
|
Three months
ended March 31, 2021 (2)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
(50,672)
|
|
(71,332)
|
|
(1,708)
|
|
—
|
|
(123,712)
|
|
Gross loss before
FV adjustments (1)
|
(14,294)
|
|
(53,309)
|
|
(948)
|
|
—
|
|
(68,551)
|
|
Depreciation
|
4,107
|
|
5,781
|
|
138
|
|
—
|
|
10,026
|
|
Inventory impairment
in cost of sales
|
29,466
|
|
53,446
|
|
—
|
|
—
|
|
82,912
|
|
Adjusted gross
profit (loss) before FV adjustments (1)
|
19,279
|
|
5,918
|
|
(810)
|
|
—
|
|
24,387
|
|
Adjusted gross
margin before FV adjustments (1)
|
53
|
%
|
33
|
%
|
(107)
|
%
|
—
|
%
|
44
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These terms are
defined in the "Cautionary Statement Regarding Certain Non-GAAP
Performance Measures" of the MD&A.
|
(2)
|
Amounts have been
retroactively recast for the biological assets and inventory
non-material prior period error. Refer to the "Significant
Accounting Policies and Judgments" section in Note 2(h) of the
Financial Statements.
|
(3)
|
As a result of the
Company's dissolution and divestment of its wholly owned
subsidiaries Hempco, ALPS and AHE, the operations of Hempco, ALPS
and AHE have been presented as discontinued operations and the
Company's results have been retroactively restated, as
required. Refer to Note 12(b) of the Financial Statements for
information about the divestitures.
|
(4)
|
Included in
out-of-period adjustments is a $5.5 million Q4 2021 cost of sales
adjustment related to a catch-up of prior year raw material count
reconciliations and a $0.9 million out-of-period revenue adjustment
to reclassify prior period rebates against net revenue.
|
Adjusted EBITDA
($
thousands)
|
Three months
ended
|
Year
ended
|
June 30,
2021
|
March 31, 2021
(1)(2)
|
June 30, 2020
(1)(2)
|
June 30,
2021
|
June 30, 2020
(1)(2)
|
Net (loss) income
from continuing operations
|
(133,969)
|
(160.625)
|
(1,843,978)
|
(693,477)
|
(3,257,499)
|
Finance
costs
|
15,973
|
16,990
|
28,369
|
66,437
|
76,115
|
Interest (income)
expense
|
(1,295)
|
(1,467)
|
627
|
(5,745)
|
(5,913)
|
Income tax expense
(recovery)
|
(9,970)
|
(129)
|
(61,436)
|
(6,321)
|
(82,235)
|
Depreciation and
amortization
|
22,956
|
17,206
|
22,321
|
87,276
|
95,444
|
EBITDA
|
(106,305)
|
(128,025)
|
(1,854,097)
|
(551,830)
|
(3,174,088)
|
Changes in fair value
of inventory sold
|
20,111
|
50,368
|
60,131
|
118,707
|
149,099
|
Unrealized gain on
changes in fair value of
biological assets
|
(15,546)
|
(37,483)
|
(37,732)
|
(109,178)
|
(125,448)
|
Share-based
compensation
|
2,162
|
5,233
|
6,021
|
20,243
|
59,176
|
Acquisition
costs
|
4,657
|
—
|
2,170
|
5,761
|
6,493
|
Foreign exchange loss
(gain)
|
3,248
|
7,035
|
(3,003)
|
3,383
|
13,141
|
Share of loss from
investment in associates
|
10
|
9
|
2,601
|
509
|
11,534
|
Government grant
income
|
(4,119)
|
(4,692)
|
—
|
(32,489)
|
—
|
Losses (gains) on
financial instruments (3)
|
(12,640)
|
(2,566)
|
(3,265)
|
9,469
|
27,148
|
Loss on loss of
control of subsidiary
|
—
|
—
|
—
|
—
|
(500)
|
Losses (gains) on
deemed disposal of
significant influence investment
|
—
|
(204)
|
(11,955)
|
1,239
|
(11,955)
|
Gains (losses) on
disposal of assets held for
sale and property, plant, and equipment
|
(9,685)
|
(1,595)
|
—
|
(11,119)
|
—
|
Restructuring
charges
|
—
|
801
|
1,947
|
1,011
|
1,947
|
Onerous contract
provision
|
—
|
—
|
—
|
2,000
|
—
|
Out-of-period
adjustments (4)
|
66
|
(194)
|
—
|
1,325
|
—
|
Impairment of
deposit, inventory, investment in
associate, property, plant and
equipment, intangibles, and goodwill
|
98,785
|
87,460
|
1,803,833
|
426,844
|
2,854,873
|
Adjusted EBITDA
(5)
|
(19,256)
|
(23,853)
|
(33,349)
|
(114,125)
|
(188,580)
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts have been
retroactively recast for the biological assets and inventory
non-material prior period error. Refer to the "Significant
Accounting Policies and Judgments" section in Note 2(h) of the
Financial Statements.
|
(2)
|
As a result of the
Company's dissolution and divestment of its wholly owned
subsidiaries Hempco, ALPS and AHE, the operations of Hempco, ALPS
and AHE have been presented as discontinued operations and the
Company's results have been retroactively restated, as required.
Refer to Note 12(b) of the Financial Statements for information
about the divestitures. Including the results of Hempco, AHE, and
ALPS, Adjusted EBITDA loss would have been $19.5 million and $115.4
million for the three and twelve months ended June 30, 2021,
respectively, and $36.5 million and $205.2 million for the three
and twelve months ended June 30, 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 and settlement of debt. Refer
to Note 22 of the Financial Statements.
|
(4)
|
Included in
out-of-period adjustments in Q4 2021 is (i) a $5.5 million cost of
sales adjustment related to a catch-up of prior year raw material
count reconciliations, (ii) a $0.9 million out-of-period 2021
revenue adjustment to reclassify prior period rebates against net
revenue; offset by (iii) a $6.4 million other gain relating to
prior periods identified through our period end reconciliations
(year ended June 30, 2021 - $5.5 million raw materials cost of
sales adjustment; offset by a $4.2 million other gain relating to
prior periods identified through our period end
reconciliations).
|
(5)
|
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 Q4 2021 Adjusted EBITDA loss is $5.1 million (Q3 2021 - $3.2 million; Q4 2020 - $1.0 million) related to restructuring charges,
severance and benefits associated with the business transformation
plan, $nil (Q3 2021 - $2.2 million;
Q4 2020 - $0.8 million) legal
settlement and contract termination fees, and $0.3 million (Q3 2021 - $1.9 million; Q4 2020 – nil) 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
$13.9 million (Q3 2021 - $16.5 million; Q4 2020 - $31.5 million).
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SOURCE Aurora Cannabis Inc.