Aurora Cannabis speeds up cost-cutting plan as quarterly results see it deep in the red
Edmonton-based company reports $164.7M loss, aims to find $80M in savings
Aurora Cannabis Inc. is on the hunt for savings again after reporting a $164.7-million net loss in its latest quarter.
The Edmonton-based company on Thursday unveiled a plan to accelerate between $60 million and $80 million in annualized cost efficiencies over the next 12 to 18 months, as its third-quarter loss topped the $139.3-million loss it reported in the same period last year.
Aurora said its plan will target production costs, facility and logistic expenses, organizational efficiencies and insurance and capital markets spending. It hopes to gain more traction when COVID-19 lockdowns have been lifted.
"We are not simply waiting the process out in anticipation of normalization followed by an eventual rebound," Aurora's chief executive Miguel Martin told analysts Thursday.
"We are determined to continue pulling the levers that we can to reduce our cost structure and extract further efficiencies from our operations."
Martin will mark one year at the helm of Aurora this fall. Much of that year was spent laying off workers and closing facilities as part of a broad restructuring Aurora embarked on in February 2020 to deliver $300 million in total annualized expenses.
Martin signalled the dramatic moves were tapering off last quarter but he still has his work cut out for him.
The company's third quarter showed its consumer cannabis net revenue plummeted to about $18 million, down from roughly $38 million at the same time last year.
Its total cannabis net revenue before provisions slipped by 19.5 per cent year-over-year to reach $58.4 million.
Troubles with distributors, retailers
The quarter was hampered by provincial pot distributors who cut the amount of product they had on hand, and retailers that were forced to switch to curbside pickup to quell the spread of COVID-19, said Martin.
He called market conditions "competitive" but noted many are temporary.
"There is a glut of what I would describe as low-cost flour in the market and that's causing some irrational pricing, but I do believe — having talked to the provinces and talked to retailers — that there is an interest in holding margins up and people actually making money," he said.
"Maybe it'll take a little bit longer than people would have wanted because of just the situation we're in with COVID."
While the pandemic rages on, Martin appears to be focusing on the company's medical cannabis business, which generated a 17 per cent increase in net revenues in the latest quarter.
He's also keeping an eye on the U.S., which is edging toward federally legalizing recreational cannabis and introducing legislation to make it easier for pot companies to bank south of the border.
But unlike his rivals, Martin doesn't appear to be in a buying mood.
In recent months, Tilray Inc. and Aphria Inc. merged, Hexo Corp. announced plans to buy Zenabis Global Inc., and Canopy Growth Corp. snatched up Supreme Cannabis and Ace Valley Cannabis.
He said there's a chance it would buy something technology-related, if the right deal cropped up.
Martin's remarks were made as Aurora's loss amounted to 85 cents per share in the quarter ended March 31 compared with a loss of $1.40 last year.
Its net revenue reached $55.2 million in the third quarter, down from $73.5 million last year.
The company was expected to report a net loss of 21 cents per share on revenues of $68.5 million, according to financial data firm Refinitiv.
The company also announced it will transfer its U.S. stock exchange listing from the New York Stock Exchange to the Nasdaq on May 24.