Release Date: November 06, 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 29% increase in net revenue, with global medical cannabis revenue growing by 41% year-over-year.
- The company achieved record adjusted EBITDA, marking its eighth consecutive quarter of positive adjusted EBITDA.
- International medical cannabis revenue increased by 93%, with high-margin international revenue surpassing Canadian medical cannabis revenue for the first time.
- Aurora Cannabis Inc (ACB) maintained a strong balance sheet with approximately $152 million in cash and cash equivalents and no debt in its cannabis business.
- The company expanded its product offerings in Australia, contributing to increased sales and market presence.
Negative Points
- Consumer cannabis net revenue declined to $10.4 million from $12 million in the previous year, reflecting a strategic focus on higher-margin international business.
- Adjusted gross margin in consumer cannabis decreased to 14% from 27% due to a shift in product sales.
- The plant propagation segment experienced a decrease in adjusted gross margin to 19% from 22%, attributed to seasonal fluctuations and ramp-up costs.
- The company faces regulatory hurdles in international markets, which can impact the timing and consistency of shipments.
- Aurora Cannabis Inc (ACB) continues to operate in a challenging Canadian recreational cannabis market with lower margins and regulatory complexities.
Q & A Highlights
Q: Can you comment on the sustainability of the revenue growth in global medical cannabis sales, given the volatility due to shipment timings?
A: Miguel Martin, CEO, stated that the current sales levels are sustainable and expected to grow. He acknowledged that shipments can be lumpy due to factors like permitting processes, but the breadth of their model across multiple markets helps smooth out these fluctuations. Simona King, CFO, added that this quarter included the full revenue from their Australian business post-acquisition, contributing to growth.
Q: How do you view the recreational cannabis (RAC) business in Canada compared to your medical platform? Is there potential for growth, or does it make sense to maintain it given your focus on medical cannabis?
A: Miguel Martin, CEO, explained that while the recreational market in Canada is challenging with lower margins, they maintain a small position to gain consumer insights and prepare for potential international recreational markets. The primary focus remains on the high-margin medical cannabis business.
Q: With your strong cash position and no debt, how do you plan to allocate capital? Is M&A a consideration, or will you focus on organic growth?
A: Miguel Martin, CEO, emphasized three areas of capital allocation: maintaining a strong balance sheet, investing in internal business enhancements, and being opportunistic with potential acquisitions as valuations become more reasonable. Simona King, CFO, agreed with this approach.
Q: What are your thoughts on the impact of the US election results on Aurora, especially considering the focus on medical cannabis?
A: Miguel Martin, CEO, noted that the election results reinforce Aurora's focus on global medical cannabis, which is consistent and high-margin. He highlighted the potential for medical cannabis in the US and emphasized Aurora's strong position to capitalize on future opportunities.
Q: How do your operations in Australia compare to Germany, and is there room for similar integration in Germany as seen in Australia?
A: Miguel Martin, CEO, stated that Aurora is already well-integrated in Germany with a production facility and necessary infrastructure. The acquisition in Australia was to enhance their position, and the market allows for a broader range of products, which aligns with Aurora's portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
