Aurora Cannabis stock drops after earnings, as pot sales miss revised target – MarketWatch

Aurora Cannabis stock drops after earnings, as pot sales miss revised target - MarketWatch
Marijuana Stocks: Aurora Cannabis Earnings Are Due As Weed Giant Looks To Take Lead In Canada
Aurora Cannabis Inc. shares declined nearly 10% in the extended session Wednesday after the pot company missed revenue expectations even after trimming its forecast.

The Edmonton, Alberta-based Aurora ACB, +3.34% ACB, +3.15%  announced a fiscal fourth-quarter net loss of C$2.26 million on net revenue of C$98.94 million, with an adjusted Ebitda loss of C$11.7 million ($8.9 million). In a separate filing, Aurora said that its net loss attributable to common shareholders was less than C$200,000, and less than a penny a share, with the rest of the losses attributed to two subsidiaries non-controlling interests.

This news also 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 execution of definitive agreements and the closing of the transaction. 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. 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 adult-use  sales channels, managements estimation 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, the ability to expand and maintain distribution capabilities, the impact of competition, and the possibility for changes in laws, rules, and regulations in the industry. 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.

Earlier this year, Aurora executives had said the company was on track to achieve a sort of profitability: On an adjusted basis, the company would post a positive figure for earnings before interest, taxes, depreciation and amortization. Aurora adjusts its Ebitda figure for biological asset transformation, among other things.

But in August, the company appeared to walk back the figure, saying in a news release that it was on track to achieve positive adjusted Ebitda without mentioning a specific time frame, as it had previously. In the outlook provided in Wednesdays announcement, Aurora even stopped pointing to that adjusted profitability, saying instead that it expects adjusted Ebitda to continue to improve in the future due to expected revenue growth, improvements in gross margin and prudent SG&A growth.

Prior to the August guidance, analysts polled by FactSet had estimated fourth-quarter revenue of C$111.9 million. In the August update, the company tamped down expectations, telling investors that it was now on track to book sales of C$100 million to C$107 million, net of excise taxes, but it failed to hit that mark in the end.

In 2019 Aurora took its place as the global leader in cannabis production, research, innovation and international market development, Chief Executive Terry Booth said in Wednesdays announcement. We are executing on all our strategic priorities.

Aurora Cannabis Q4 2019 Key Performance Indicators (CNW Group/Aurora Cannabis Inc.)More”In 2019 Aurora took its place as the global leader in cannabis production, research, innovation, and international market development. We are executing on all our strategic priorities,” said Terry Booth , CEO. “Our best in class cultivation methods allow us to grow consistent, high-quality cannabis at scale. Because of this, weve delivered solid revenue growth in the fourth quarter. We are working to extend our reach in the U.S. markets. Our partnership with the UFC is a basis to explore CBD-from-hemp and hemp food products. We are also exploring additional opportunities and leveraging our Strategic Advisor. We are focused on building a sustainable, high-margin business while providing patients and consumers with access to safe and reliable medicine.”

Auroras fourth-quarter results arrive amid a swath of disappointing top-line results from the largest Canadian pot companies. Difficulties growing and packaging the plant have contributed to the lackluster start to legal recreational cannabis in Canada, as has the relatively small number of retail locations in provinces such as Ontario, the most populous.

For the quarter, the company — which reports in Canadian dollars — booked 98.9 million Canadian dollars in net revenue. This was up by 52% over the previous quarter and 415% higher on a year-over-year basis. It was also on the back of an 86% quarter-over-quarter increase in production volume, to 29,034 kilos. The rise in production was due in no small measure to the addition of two new cultivation facilities.

Much like other cannabis companies that purchased cultivation and other production assets ahead of recreational legalization last October, Aurora carries a substantial amount of goodwill on its balance sheet, roughly C$2.4 billion according to its third-quarter financial results. Its difficult to determine when and if the company will write down the value.

On average, analysts who track the stock were expecting a top-line result of CA$108 million, and a per-share adjusted net loss of CA$0.06 (Aurora has not yet provided a per-share net loss figure for Q4). The company had guided investors to expect CA$100 million to CA$107 million on the top line, and production available for sale toward the upper end of the 25,000 to 30,000 kilos range.

Though Aurora sold its stake in Green Organic Dutchman Holdings Ltd. TGOD, +5.02% TGODF, +4.86%  for C$86.5 million on Sept. 4, those shares were still on the books during the June quarter. The companys bottom line has in the past been affected by the value of a number of its investments in other cannabis companies, such as Dutchman, and swings in the sector.

U.S.-traded shares of Aurora have gained 30% this year, with the S&P 500 index SPX, +0.72%  rising 18.9%.

The highest share (47%) of the companys cannabis revenue, not surprisingly, came from the consumer segment. Recreational marijuana has been legal in Auroras native Canada for nearly a year. Medical cannabis comprised 31%, while wholesale bulk product made up the remainder.

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