Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aurora Cannabis Inc (ACB, Financial) reported a 12% increase in net revenue to $83.4 million compared to the same period last year.
- The company achieved record revenue in Canadian and international medical cannabis, as well as in plant propagation.
- Adjusted EBITDA rose by 87%, marking the seventh consecutive quarter of positive adjusted EBITDA.
- Aurora Cannabis Inc (ACB) reached positive free cash flow six months earlier than projected.
- The company maintained a strong balance sheet with approximately $182 million in cash and no debt on its cannabis business.
Negative Points
- Consumer cannabis net revenue declined to $11.5 million from $12.8 million a year ago.
- Adjusted gross margin for consumer cannabis decreased to 24% from 26% in the prior year period.
- Plant propagation adjusted gross margin fell to 18% from 22% due to changes in product mix and a prolonged growing season.
- The company does not expect to reach positive free cash flow in Q2 due to several significant annual and one-time cash payments.
- Sales in Poland softened in Q1 compared to the same period last year due to the import permit process.
Q & A Highlights
Q: Can you discuss the underlying trends in Germany and the strength of your franchise there?
A: Miguel Martin, CEO: The passing of the Cannabis Act in Germany has increased patient access and eased the distribution process, allowing for significant market growth. Aurora's strengths include established presence with innovative products, stringent registration processes, and in-country manufacturing, which provide a competitive advantage.
Q: What drove the 12% revenue growth in Q1 2025?
A: Simona King, CFO: Revenue growth was driven by a 13% increase in medical cannabis sales, with significant contributions from international markets like Australia and Germany. The Canadian medical cannabis market also saw growth due to higher sales to both insurance-covered and self-paying patients.
Q: How did Aurora achieve a record 69% adjusted gross margin in medical cannabis?
A: Simona King, CFO: The record margin was achieved through sustainable cost reductions, higher selling prices in Australia, and improved production efficiency. These factors combined to exceed our 60% target.
Q: What are the expectations for free cash flow in the upcoming quarters?
A: Simona King, CFO: We do not expect to reach positive free cash flow in Q2 due to significant annual and one-time cash payments. However, we anticipate positive free cash flow in Q3 driven by increased global medical cannabis revenue, strong adjusted EBITDA, and disciplined working capital management.
Q: Can you elaborate on the strategic importance of the Australian market?
A: Miguel Martin, CEO: Australia is rapidly becoming the largest medical market outside North America. Aurora's MedReleaf Australia subsidiary is the number two player in the market, benefiting from Aurora's innovation platform and high regulatory standards, which provide a significant barrier to entry for competitors.
Q: How is Aurora positioned in the Canadian medical cannabis market?
A: Miguel Martin, CEO: Aurora maintained its number one position in the Canadian medical cannabis market, with revenue rising nearly 7%. The company focuses on serving insured patients and is encouraged by increased interest from unions and other entities considering adding medical cannabis as a member benefit.
Q: What are the key factors contributing to Aurora's leadership in the European market?
A: Miguel Martin, CEO: Aurora's leadership in Europe is driven by its strong credentials in Germany, high regulatory standards, and the ability to meet stringent testing protocols. The company's EU GMP-certified facilities and in-country manufacturing capabilities provide a significant competitive advantage.
Q: What are the future growth opportunities for Aurora in the global medical cannabis market?
A: Miguel Martin, CEO: Aurora is well-positioned to capitalize on evolving regulatory environments in key international markets. The company plans to expand its presence in these markets, benefiting from high-margin contributions from the medical cannabis segment, leading to long-term EBITDA and free cash flow growth.
Q: How did Aurora achieve positive adjusted EBITDA for the seventh consecutive quarter?
A: Simona King, CFO: Positive adjusted EBITDA was achieved through revenue growth, higher adjusted gross margins, and disciplined cost management. The company's focus on high-margin medical cannabis and operational efficiency contributed to this success.
Q: What are the expectations for the plant propagation segment in the upcoming quarters?
A: Simona King, CFO: We expect seasonally reduced revenues and gross profit in Q2 for the plant propagation segment, in line with historical performance. However, we anticipate strong performance in the second half of the calendar year, consistent with seasonal trends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
