Yesterday, Aurora Cannabis Inc. (TSX: ACB) (Nasdaq: ACB) released first quarter financial results and received mixed responses from broker-dealers.
We believe the most important takeaway from the quarter is related to how the Canadian cannabis company is highly focused on expanding its footprint in the United States (US). Below, we highlighted what we considered to be the 5 most important takeaways from the quarterly earnings report:
- Aurora is highly focused on cutting costs and reported to have identified between $60 million to $80 million of cash savings. The management team said it expects to recognize all of the savings before the end of the second quarter of fiscal year 2023. Approx. 60% of the savings are expected to be from consolidating assets and by improving operational and supply chain efficiencies. The rest of the savings are expected to be from lowering selling, general and administrative (SG&A) expenses.
- In February 2020, Aurora started to execute on a business transformation strategy that was highly focused on cutting costs. Since the announcement, the management team reported to have lowered cost reductions by approx. $300 million. We are impressed with how the management team has focused achieving profitability by optimizing operations from an efficiency standpoint.
- During the quarter, Aurora reported to have generated $60.1 million of revenue from the sale of medical and recreational cannabis. When compared to the prior quarter and year, the amount of recreational cannabis revenue has decreased by approx. 2% and 44%, respectively. Aurora has certain international cannabis markets to thank for the 23% increase in medical cannabis revenue (on a year-over-year basis). When compared to the prior quarter and year, the amount of recreational cannabis revenue has decreased by approx. 84% and 146%, respectively. We will monitor how the international side of the business continues to perform as we consider it to be Aurora’s best chance at surviving in the cannabis industry.
- During the quarter, Aurora reported a more than $12 million adjusted EBITDA (non-GAAP measures) loss. When compared to the prior quarter and year, this is a significant improvement (loss in the last quarter and year was $19.7 million and $58.1 million, respectively).
- As of September 30th, Aurora reported to have approx. $424.3 million of cash that is comprised of $372.8 million of cash and cash equivalents and $51.5 million in restricted cash. The cannabis company reported that as of September 30th, it had no secured term debt and access to $1 billion of capital from its shelf prospectus. Aurora’s business transformation strategy is starting to bear fruit and reported that the realization of operational efficiencies has positively impacted operating cash flow
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