Aurora Cannabis Inc. Announces Results for the Fourth Quarter and 2018 Fiscal Year
Aurora Cannabis Inc. Announces Results for the Fourth Quarter and 2018 Fiscal Year |
[24-September-2018] |
223% Top Line Annual Revenue Growth – Well Positioned for Canadian Adult Consumer Use Market - Process Commenced to List Securities on Senior U.S. Exchange TSX: ACB EDMONTON, Sept. 24, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora" or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM), announced today its financial and operational results for the fourth quarter and fiscal year ended June 30, 2018.
Q4 2018 Financial and Operational Highlights
Q4 2018 Highlights:
Fiscal 2018 Highlights:
A comprehensive discussion of Aurora's financials and operations are provided in the Company's Management's Discussion & Analysis ("MD&A") and Financial Statements which will be filed on SEDAR at www.sedar.com and on the Aurora website. Management Commentary "Aurora made substantial progress toward our strategic goal of becoming the global scale and margin leader in the cannabis industry, establishing a vertically integrated company with a broadly diversified product offering with a large global footprint," said Terry Booth, CEO of Aurora. "Our high-pace, consistent execution has enabled us to complete a number of transformative acquisitions, bringing together industry-leading companies in terms of scale, quality, efficiencies, plant and medical science, product development and innovation, brands, and international distribution." Mr. Booth added, "With coast-to-coast supply arrangements, and our strategic investment in Alcanna, we are very well positioned to capitalize on the significant adult consumer use opportunity in Canada. With reported Q4 revenues of $19.1 million, pro-forma Q4 revenues of over $33.1 million, and production capacity scaling up rapidly, we anticipate accelerated revenue growth during fiscal 2019. We have invested heavily in our organizational capabilities, including sales, marketing, and corporate talent and capacity, to ensure we will continue to drive strong and sustainable long-term growth." Mr. Booth concluded, "Today, Aurora ticks all the boxes for sustainable success and leadership in the cannabis industry. Aurora is capitalizing on a once in a lifetime opportunity, and establishing new industry standards in terms of execution, science, cultivation, international expansion and product development that position us exceptionally well to do so. We are very proud of our achievements over the past year, and we look forward to fiscal 2019 as we continue to execute." U.S. Listing Aurora intends to list its securities on a senior U.S stock exchange. In advance of a listing on a senior U.S. exchange, Aurora will file a Form 40-F Registration Statement with the United States Securities and Exchange Commission. The listing of the Company's securities remains subject to exchange approval and the satisfaction of all applicable listing and regulatory requirements. A trading date will be made public once all regulatory formalities are satisfied. Terry Booth, Aurora's CEO added: "Listing our shares on a senior U.S. exchange reflects the level of corporate and business maturity and our high-paced execution. This listing provides access to a broader investor audience who gain the opportunity to participate in our continued success." Operational Highlights Subsequent to June 30, 2018 Facilities and Production update During and subsequent to the quarter, the Company made significant progress towards increasing its production capacity. As at September 2018, the annualized run rate of Aurora's in-service production rooms is 45,000 kgs. Management anticipates that around calendar year end 2018, the Company will have a production run rate in excess of 150,000 kg per annum, with subsequent scale up to over 500,000 kg per annum. Aurora Sky Aurora has completed full cycles in its first two licensed grow rooms and its mother room, and has submitted for final inspection towards obtaining its sales permit for Aurora Sky. The Company is pleased to announce that Health Canada has licensed two further production bays, each with more canopy space than the entire Aurora Mountain facility. Aurora has commenced populating these additional bays, bringing the total number of bays now in production (including mother room) to 5 of 17. The Company is in an ongoing process of obtaining production licenses as new bays come online, and anticipates submitting the license applications for the final rooms in November. Minor construction and commissioning items remain, which will be completed in advance of new bays coming online. Consequently, the Company continues on schedule towards reaching full 100,000 kg per annum production capacity around the end of calendar 2018. Aurora Mountain Continuous process improvement programs have resulted in an increase in production at Aurora Mountain, one of the Company's EU GMP certified facilities. Management anticipates production at Mountain to reach 6,000 kg per annum, up by 25% from the facility's previously disclosed capacity. The increase in production capacity at Mountain ensures the Company will be able to allocate more product to the supply restrained international markets. Aurora Vie The Company received its sales license for Aurora Vie in July 2018. The facility is now at full capacity, producing at a run rate of 4,000 kg per annum. In Q4 2018, the Company completed the installation of Capcium softgel manufacturing equipment at Aurora Vie. The production line has been commissioned successfully, and the facility is currently producing high volumes of softgels for the adult consumer-use market to fulfill with orders received from provincial buyers. Aurora Eau Aurora's newest facility received its production license in September 2018 and is now ramping up to full capacity at 4,500 kg per annum. Aurora Eau was purpose-built to EU GMP standards and represents the next evolution of Aurora's indoor-grow facilities, where novel and exotic strains will be grown for both the medical and adult consumer-use markets. Aurora Nordic, Phase I Phase I of Aurora Nordic, the Company's Danish facility, has been populated with genetics propagated from Aurora Mountain. The facility will ramp up to its full 8,000 kg per annum capacity in the coming months, increasing product availability for the EU markets. MedReleaf Bradford The MedReleaf Bradford facility is ramping up to full production capacity of 28,000 kg per annum. Currently, the facility is producing at a rate of approximately 10,000 kg per annum. The Bradford facility has large-scale oil production capacity, which will fuel the Company's ability to produce higher margin products. Aurora Sun On April 16, 2018, the Company acquired approximately 71 acres of land in Medicine Hat, Alberta, for the construction of "Aurora Sun", a highly automated cannabis production facility with ultra-low operating costs. The new facility will be 1.2 million square feet, 50% larger than Aurora's Sky, a 100,000+ kg per annum Health Canada licensed facility at the Edmonton International Airport. Construction of Aurora Sun is on schedule with site preparation works completed and foundation work commenced. Product Licensing In addition to the licensing developments described above, Aurora reports it has received the following product and development licenses, broadening the Company's higher-margin product offering, while facilitating research and exports:
Canadian Adult Consumer-Use Market In preparation for the commencement of legalized adult consumer use sales in Canada, from October 17, 2018 onwards, the Company has entered into supply arrangements with provinces and territories accounting for over 98% of the Canadian population. Consumer brands sold by Aurora, its subsidiaries and strategic partners will be available in Ontario, Québec, Alberta, British Columbia, Saskatchewan, Manitoba, Nova Scotia, the Yukon, North West Territories, Prince Edward Island, and Newfoundland and Labrador. During and subsequent to the quarter, the Company has been able to significantly increase its inventory. With production from the Company's licensed facilities ramping up to full capacity, Aurora anticipates producing at a rate in excess of 150,000 kg per annum by the end of Q2 2019. Alcanna Inc. ("Alcanna") Acquisitions The Company continued to execute on its strategy to build a global scale, science and margin leader. To this end, a number of acquisitions were completed, further increasing production capacity, geographic reach, science-driven product and technology development, and brand strength. Subsequent to the end of Q4 2018, Aurora acquired:
Integration The Company has developed the integration of acquisitions into a core competency. Under the leadership of Andre Jerome, SVP, Business Integrations, who formerly implemented global business integrations for Vodafone, a $65 billion telecommunications company, the Company has developed a methodology that ensures rapid integration of acquired companies into the Aurora organization. Integration of CanniMed was fully completed within the targeted 90-day timeline, and has resulted in an acceleration of its development, including a significant improvement in production rates of dried cannabis and cannabis oils. Integration of MedReleaf into the Aurora organization has commenced and is progressing according to schedule. Mutual learning and implementation of best practices is a core aspect of the MedReleaf integration, and teams at both companies have identified key performance indicators, based on which the integration program is being executed. Strategic Investments & Agreements During and subsequent to the quarter, the Company made a number of strategic investments in both public and private companies. As at June 30, 2018, the unrealized gains on its public investments made to date stood at $372.0 million. Significant strategic investments made subsequent to June 30, 2018 consist of:
International Developments Aurora continues to expand its international footprint and capitalize on its early mover advantage in key growth markets:
Financing
Q4 2018 Operational Highlights Strategic Investments
Supply Agreements and Partnerships
Acquisitions
International Developments
Outlook Aurora is exceptionally well‑positioned in all of its markets, including adult consumer-use market, Canadian medical and the international medical markets, with compelling brands and strong patient and consumer recognition. In fiscal 2019, the Company will continue to focus on expanding capacity and sales growth in all its markets, in addition to further product development, continued international expansion and realization of acquisition synergies. Aurora is rapidly accelerating production out of its newly licensed facilities, starting with Aurora Sky, which is expected to ramp to full 100,000 kg per annum capacity around calendar year end 2018. The Company anticipates to reach a production run rate of approximately 150,000 kg per annum around year end, scaling up subsequently to over 500,000 kg per annum through further "Sky Class" facilities, Aurora Sun and Aurora Nordic. The high degree of automation, and customized and fully controlled growing conditions at the Sky Class facilities are anticipated to result in production costs well below one dollar per gram. Management believes these factors together will deliver high growth and continuously improving margins. While the historic milestone of Canada becoming the first G7 nation to legalize the adult consumer-use market creates a very significant growth opportunity, the Company maintains its position that the international medical has the most significant growth prospects, and is expected to grow to 10 million kilograms per annum. The Company has established significant early mover advantage, has a presence on five continents, and is Europe's largest distributor of medical cannabis. Aurora also owns two of only six facilities in the world that are EU GMP certified, ensuring continued access to restrictive markets. This early mover advantage, management believes, will enable the Company to establish significant market share in the global medical market. Financial review Q4 2018 Revenue In the fourth quarter of 2018 ("Q4 2018") cannabis revenue grew to $14.9 million, a 38% increase compared to the third quarter of 2018 ("Q3 2018") and a 113% increase compared to the fourth quarter of 2017 ("Q4 2017"). Total revenue grew to $19.1 million, representing a 19% increase compared to Q3 2018 and a 223% increase compared to Q4 2017. Revenue growth compared to the same quarter in the prior year was attributable mainly to higher patient numbers following the acquisition of CanniMed, increased product availability through scale up of operations and the CanniMed acquisition, an increase in the average net selling price of dried cannabis, development of international markets, and product diversification. Average price of product sold was $9.20 per gram in Q4 2018, an increase of 15% compared to Q3 2018 and 23% compared to Q4 2017 as a result of an increase in cannabis oils sold. Total product sold was 1,617 kilograms of dried cannabis and cannabis oils in Q4 2018, an increase of 19% as compared to Q3 2018, and 114% compared to Q4 2017. Total cannabis inventory and biological assets increased 248% to $41.0 million in Q4 2018 compared to Q4 2017 as Aurora chose to constrain international sales in order to continue servicing the Canadian medical market, while building inventory in preparation for the Canadian adult consumer-use market. This onetime constraint on international sales has been alleviated by the rapid completion of Aurora's Canadian production facilities (including Sky, Vie & Eau), as well as the EU GMP certification of MedReleaf's Markham facility, and ongoing yield improvements at CanniMed. Operating Expenses Throughout 2018, Aurora continued to make significant investments in its infrastructure and talent, scaling the organization to better realize the tremendous opportunity ahead in the domestic and international medical cannabis markets, and the upcoming Canadian adult consumer-use market. As a result, general and administration costs ("G&A") increased to $22.6 million in Q4 2018, compared to $9.8 million in Q3 2018. Sales and marketing costs (S&M) in Q4 2018 increased to $14.8 million dollars, from $5.9 million in Q3 2018, as a result of investments in our overall brand strategy which included certain one-time activities in preparation for the impending adult consumer-use recreational market in Canada. The integration of CanniMed accounted for 25% of the increase to G&A and 19% of the increase to S&M. Cost of sales Cash cost of sales per gram of dried cannabis sold and cash cost to produce per gram of dried cannabis sold increased by $0.07 and $0.17 respectively from the prior quarter, mainly due to the inclusion of CanniMed's higher per unit production costs, partially offset by lower utility costs in the summer months. Aurora continues to drive yield and efficiency improvements at CanniMed in line with Aurora's other operating facilities, and anticipates production costs to come down further. Gross Profit Q4 2018 gross profit was $20.6 million, compared to a $5.8 million in Q4 2017. The increase in gross profit during the period was partially attributable to the net effect of changes in fair value of biological assets and a decrease in the cost of sales for medical cannabis on a per gram basis. Net Income Q4 2018 net income increased to $79.3 million, compared to a net loss of $20.8 million in Q3 2018 and $4.8 million in Q4 2017. The increase was primarily attributable to the unrealized non-cash gain on derivatives and marketable securities, which was partially offset by increased finance costs, share-based payments, acquisition and project evaluation costs. Cash Position, Cash Flows, and Working Capital Net cash and cash equivalents on hand decreased from $159.7 million at the end of Q4 2017 to $89.2 million as at Q4 2018. Non-cash working capital at the end of Q4 2018 was $56.4 million, as compared to $10.4 million at the end of Q4 2017. The change in working capital was largely attributable to an increase in marketable securities and the planned buildup of inventory, partially offset by accounts payable and accrued liabilities related to construction of our production facilities. Additionally, as at September 21, 2018, the market value of the Company's investments in public companies exceeded $700 million. The Company anticipates that it has sufficient liquidity and capital resources to meet all of its currently planned expenditures for the next twelve months. Pro-Forma Reconciliation For the three months ended June 30, 2018, pro-forma revenue, including the results of MedReleaf, would have been $33.1 million. As at June 30, 2018, cash and cash equivalents would have been $255.2 million and cannabis inventory and biological assets would have been $88.8 million. About Aurora Headquartered in Edmonton, Alberta, Canada with funded capacity in excess of 500,000 kg per annum and sales and operations in 18 countries across five continents, Aurora is one of the world's largest and leading cannabis companies. Aurora is vertically integrated and horizontally diversified across every key segment of the value chain, from facility engineering and design to cannabis breeding and genetics research, cannabis and hemp production, derivatives, high value-add product development, home cultivation, wholesale and retail distribution. Highly differentiated from its peers, Aurora has established a uniquely advanced, consistent and efficient production strategy, based on purpose-built facilities that integrate leading-edge technologies across all processes, defined by extensive automation and customization, resulting in the massive scale production of high quality product at ultra-low costs. Intended to be replicable and scalable globally, these production facilities are designed to produce cannabis of significant scale, with high quality, industry-leading yields, and ultra-low per gram production costs. Each of Aurora's facilities is built to meet EU GMP standards, and its first production facility, the recently acquired MedReleaf Markham facility, and its wholly owned European medical cannabis distributor Aurora Deutschland (formerly Pedanios), have achieved this level of certification. In addition to the Company's rapid organic growth and strong execution on strategic M&A, which to date includes 15 companies – MedReleaf, CanvasRX, Peloton Pharmaceutical, Aurora Deutschland (formerly Pedanios), H2 Biopharma, Urban Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia Labs, HotHouse Consulting, Agropro, Borela, and the pending acquisition of ICC Labs – Aurora is distinguished by its reputation as a partner and employer of choice in the global cannabis sector, having invested in and established strategic partnerships with a range of leading innovators, including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ). Aurora's Common Shares trade on the TSX under the symbol "ACB", and are a constituent of the S&P/TSX Composite Index. For more information about Aurora, please visit our investor website, investor.auroramj.com, Twitter, Facebook or Instagram Terry Booth, CEO 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 and include, but are not limited to the variety of cannabis products that Aurora will supply to the adult use market.. These 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 and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. 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 law. Neither TSX nor its Regulation Services Provider (as that term is defined in the policies of Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release. SOURCE Aurora Cannabis Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Codes: OTC-QB:ACBFF, Toronto:ACB |
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