ACB - Earnings call transcript Q2 2021

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Operator

Greetings and welcome to the Aurora Cannabis Second Quarter 2021 Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a remainder this conference is being recorded. I would now like to turn the conference over to your host Ananth Krishnan, Vice President, Corporate Development and Investor Relations.

Ananth Krishnan

ended afternoon Aurora thank XXXX Cannabis for three good us for conference and the the XXXX. for second months Maria everyone, you and joining call Thanks XX, December quarter fiscal call being XXXX. today, February Thursday, This XX, is recorded Miguel Aurora's and CFO, With CEO, Glen me Martin are Ibbott. release second close quarter. of news Aurora results financial issued today, the our for After a markets announcing the fiscal SEDAR and and accompanying analysis and profiles. This the financial or statements on management website news our available are discussion EDGAR on our release and Listeners to are Aurora's matters to risks certain that discussed in answers that the today's or relating reminded that could future statements conference financial may questions forward-looking to uncertainties call be constitute or subject given business are and asked performance. anticipated statements. forward those Actual in these results could looking materially differ from detailed that annual registration statements. The may Aurora's, and periodic are results affect filings in other factors and form, information risk be These databases. documents the EDGAR may SEDAR and accessed via calls may issues crosstalk respective are our remote conducting we the call. there during other today's or locations, Since delays, from minor brief be technical patience in We thank for and advance understanding. you your

the themselves that, turn and call ask will analysts session. over limit Miguel. a question-and-answer ahead, possible, question. one get Glen, ensure to questions the remarks Miguel we Following conduct To we as go Please Miguel. to we I'd many by like With to prepared as to the

Miguel Martin

Thank you, Ananth and good afternoon.

of I us. will out review. quarter. strategic believe to Let excellent call tracking Glen we'd progress advantage level in financial why of pleased me we to high laid begin the discuss the very his global second September to well opportunity we're then I'll an which massive take short, After we're CEO. when turn positioned the ahead I come be some cannabis became and about In plan the comments quarter. to And for to back date our with over to

growth, regulated that give cash we maximum flexibility that very are CPG drive are a I quarters. to us value the shareholder We strategy in know will confident executing coming proven flow now and well. One

strategic on from a where second now will Early Our fiscal behind in the our team, quarter on but the statements coming is intent trend. tough, of accretive our our strategy ultimately already statements, represents entire data. friendly continuing are progress we've this plan. that business, market future. assured squarely that foundation pursuing We initiatives. the year made But strides shareholder full We're our offence. mobilize the they and Aurora's share significant reflected financial for lay organized for Aurora pivot essentially reorganize reset a financial and Rest beyond margin quarters, in decisions

know, our you core As parts. four business has

high International First, Medical are we continue where to medical strong second, revenue; one number see by growth. we where margin Canadian

both just initiated US seen Reliva, we be provides US. a the is reduced Neilson we production Generation number Sky fact, of when and four, both had full efforts. not velocity XX% business targeted significant we recently significantly the CBD one during in ranked Aurora fixed products optionality facility relationship should our across We're the announced to enhance CBD Three of to to the where rack would platform impacted slightly, that XX% been order total to have higher returns low was relatively an our revenue note was react us positively ability business accelerate Gen Canadian a the that in product margins second cannabis a In our that and and margin business. X ago the we've our the X gross open our strategic in market brand which to continues to million, with the pleased provisions for quality and period. And important net time XXs. costs channel applied the quarter, XX.X the products. It's excluding increase Adjusted versus but year steady

Fortunately, medical basis. represents our the run businesses and last Combining onetime charge in of markets our strategic associated US margins million XX.X are a Canada, plan. these second with Europe quarter. mostly SG&A this XX% was year's a in CBD. a steady higher dramatic from margin rate on in excluding was generally by offset decrease XX% or This

Finally, as to and a QX, it relates year-over-year provisions. excluding we million materially loss restructuring our improved EBITDA $XX revenue swing million to with adjusted XX.X

versus Another opportunity QX on quarter our newfound as share rises. allows was to and improvement us million. act strength and in grow XXX our use cash balance than more our was big the the hand quickly XXXX. of reduced burn for sheet positive yesterday cash by flexibility to take plus And The an cash XX% to market

market. feel about strategy to great Glen team, it I'll We're the our So we strategic of and to advantage the the momentum execute as quarter we details. exciting we a place take over firmly line And turn building in and progress. financial believe the plan. the and dynamic walk now our the is bottom through tools to have we

Glen Ibbott

QX performance. note the press Thanks, and period issued represents Miguel. in over the our Please afternoon. would I the this can release We are dollars note best everyone. Good we this afternoon, all for improved company's found today that and the measure be of also going be today figures I'll XXXX. comparative Canadian analysis transformation that in believe is the

appropriate, sequential period For note also comparisons. will the I

we the we consumer with especially the our XXXX, fiscal margin quarter business, a medical three transform in to month performance second continue shift period international sales. our higher higher ended business December For saw strong to And quality XX, products. XXXX,

demand. volumes to significantly to We made also decision align with production the reduce

initiated million, expect gross product. sturdy coming revenue $XX.X returns revenues be excluding cash was provisions QX, accelerating XXXX, open channels sales In XX% the from margins the in to return in it $X.X cannabis foundation sales product higher all provincial support we in QX, to provide targeted our but Yeah, a businesses production to of they flow in And range. quarters. product We and impacted net actions premium of to margins QX million. recorded order for our these ratio to and

consumer segment quarter. generating million continued Adjusted cannabis fair to and prior margin revenue Our net at accelerate, our cannabis $XX adjustments in $XX.X sales. remained XX% medical delivered to business the in million net XX% gross comparative in to before strong value these cannabis provisions, revenue compared on return

Excluding period. the $X.X provisions, QX of product points returned is million our margin than basis overall prior XXX just gross the adjusted lower

it to it flower margins our Importantly, at I to in should brands produce to align QX. premium decision did to production impact point out demand reduce that our with reposition and Sky gross

reduction to So under capacity X% an in margins. gross utilization resulted close in overall of

future, is full at a Some of in as Sky. quarter reduced this cost of have expected to we the reverse

insights some and Now additional revenue I'll provide recorded margins. into

Firstly, lose not of here let's and in business importance our sight of internationally. medical the Canada

XX.X% Not was revenue this Our significant, the primarily sequentially. medical due only XX% carries International performance business, growth was which and in XX.X% was strong but and segment to was margins. revenue year-over-year, up sequentially. up Medical highest our This year-over-year, also XXX%

XX% by growth price been would important five our the fact our the have QX Canadian saw medical driver medical that is revenues is to was that gross been over back quarters which should Israel. by at year-over-year. of Sky scaled selling up the is XX% dollars ago it our as years margins, European differentiator to at to and I'd revenue markets attention Aurora a we growing we've million like the continued our consistent utilization that the in four segment, future size underscored and capacity with and Europe, now cannabis were and important XX% Cantek under this and gross So key the X.X% In driven in adjusted business advantage $XX have in medical progress overall part market increase draw first XX% it's also at year and relatively times is comparative compression. production seen and to by medical ongoing continue note for margins a And also quarter It's Holdings shipment little cash Canadian to capacity. margins But and plus smartly that medical in be full share. was flow. of for margins in an your to in clear an a impacted currently medical With no have were this gross sequentially.

was QX Looking not million now including business, Aurora's at QX down XXXX return from provisions. $XX.X X% revenue our consumer

included, consumer derivatives and our our was pleased up revenue was $XX.X with driven net on such concentrates. reported provisions vapes, revenue over However, XX.X% edibles an that as very We're increase the focus by million, higher period. sequentially. products was This comparative margin our XX.X% of

margin Consumer rose and to and and related just prior continuing Sky a consumer in in return Adjusting of at X% premium halted XX.X%. XX% have would the derivative this costs in flower Also towards our Sun quarter, XX% selling the been due we demand sales margins price consumer and average in alignment, the provisions, is because increase our underutilized were overhead return to production quarter our mix provisions. Alberta. increase facility Our at in gross construction shift product for compared in an brands. to the

during forward for route is quarter for the million not As a approximately impairment we non-cash shutdown. this facility the the clear, yet recorded of $XXX

million we run R&D, related excludes to SG&A termination $XX QX. of business transformation. with approximately are $X which million to our rate now Looking our in pleased includes costs This

the of quarter's bit, that's So year-over-year past change this engineered significant at sales in we've in sales a XXX% year prior comparative. XX% and stepping of versus by back highlighted coming SG&A

continue spend We supporting to revenue this much of on. SG&A of a higher is quite capable and level believe sustainable

that's our this That's So million I'm QX further see costs. XXXX EBITDA related prior to EBITDA to and million loss adjusted a and pulling was adjusted run year together, and excluding of dramatic improvement loss $X in of sales was $XX.X revenue facility provisions rate comparative. our from an production continues $XX.X all restructuring There cost to QX EBITDA dollars improve. rationalization. that a we regenerated in of that million pleased in

flows cash in rationalizing made Now levels our from million as balance to Inventory regarding position. we previous significant that's a important $XX biological And current points a increased quarter. improvement the sheet, progress, cash demand. production assets and few

But As important decision you a variable step towards to an more our does agile know, model. was incredibly our take with shifting adjust alignment an to agricultural time. goal December product production of our and

million the Another costs. We over operations in area $XX.X the quarter in fund further million used our cash. down materially quarter and is from is use improvement investments down $X.X of capital employee cash of and operations from Both working prior contract is year. cash excluding of XX% the termination past prior are and dramatic cash used to this

$X.X paid $XXX prior also the comparative. expenditures year the million QX, quarter net and in a We million in million down prior in from XX capital down for from

CapEx $XX.X net working be the Increased this year. cash to expect used to continue below quarter. used capital fiscal in We for for million $XX million

accounts in and marked net receivable mainly was to from inventory which during the levels time. payable shifts this in However, due accounts and Critically, closely in $XX to million align QX, improvement change over $XX.X used a with assets million quarter, the out our we the to demonstrating progress more levels demand. in expect of cash settle production biological

in of $XX end today, have the with of that a $XXX calendar outstanding we of due debt not cash position strong very term Finally, until and million bank, as about million is the XXXX.

non-diluted announced receive related next inflows We additional and months. the facility several COVID sales also grants some to government previously expect over from cash

are people really think the away take results from QX I what following. need our So to

in supported have margin in and our cash a and firm financial internationally. a mix satisfied in We positively with and trajectory. company taken and in and important product items we We're on deliver quite medical results controlled SG&A changing our very performance strong consumer balance excellent high our Canada have improve, sheet. steps both repositioning pleased today business production. continue that the is continue I'm business I'm by rationalizing seeing and a well positioned to well flow recent to

to Now back I to the turn like Miguel. over call

Miguel Martin

Glen. you, Thank

from costs and where between going. having and significantly we're We an XXXX today the decisions calendar be know, some and several year. of tough our balance is you premium say long-term back a drive the difficult and cash business where strategy. over house lower dealing our new speak formulated in strengthening growth and revenue opinion cost know to structure, The faced plan goal opportunities mostly the simple, industry introduced least production of opportunity. and it's variable by will As more challenges, creating economic products made on to upshot will strikes higher flow, Yet I stronger entire I is with model fall team. that our right When the and attract returns and financial was The margins, new for the thrilled lead in And my the sizing costs. shareholder fixed our untold profitable which was I be order pursuing offence, pandemic. sheet a balance we

subsequent to dive with medical. go starting let we Before our take deeper a and questions, into strategies businesses me

a Our high over domestic year's and and margins increase international XX% the medical second in XX% businesses quarter delivered generated last revenue range. consistently

number today, come. revenue we medical one cannabis grow company opportunity to of have we lots yet Canada As still I've are the years mentioned, by the in in to

to with the share These support consumer pockets medical for that but one of patient group and continue patient online meaningful the growth the lead place the patient can generate of for have the veterans. intake channel, and moving Just to sticky is medical our we infrastructure, very in XX% Over patients of These margins many the expectation our the channel investments uniquely substantially for to regulatory a represent compliance medical in our significant Aurora we see may see Canadian entry systems our choices foreseeable to groups barrier future. opportunities the key market. where demand continue represent some take attributes medical channel now to we experience initiatives that migrate and time to is Canadian and Aurora. positioned offer represent more and products. medical gross in experience a our business landscape can

Our medical increase segment consistent been performer, quarter-over-quarter. a reported XX% international revenue has and

successfully strategic oil brand agreement already with one opportunity and leading with to global In three entered for momentum all to we we generating n the flower were cannabis lots, supplier today. regimes. Aurora footprints and French In We're leading great We of tender one these see Aurora in opportunities in countries into November cannabis a industry opportunities the us flower expand program. Israel, about Cannabis lives XX to they the are Cantek which January, Ethypharm providing Germany, included nine continue global of represent partner revenue providers the awarded Medical of largest medical our our a of excited in science. market. has the and early available and medical

and a is Israel runner country. the strategic our sustainable January, with however, transferable long-term GMP in provides in Germany, position commitment we light, in us Australia Additionally, exclusively a an and front to in won't that MedReleaf MedReleaf platform with CanniMed brands That growth MedReleaf, Aurora, and us agreement cultivation EU by regulated enter announced has distribute in medical other more as This and we Australia will pharmacists new range in expect markets. experience markets also a and Australia our testing, to ability to to high to began new science, of help access and we Aurora patients be to favorably We're countries framework. quality to seeing Aurora's and and physicians, it Aurora approach be cannabis medicines. accident compliance, cannabis highly result knowledge globally. compassionately medical to compliant operate unique in asset

attention US, has been well segment, US CBD Now, as control democratic the receiving let's of due both Presidency which of a the Congress. houses the to in our to turn as lot of

retailers the top US brick XX,XXX some relationships ranked new on an wholesalers US our platform, high remains an enviable CBD products athletic brand experience primary and the the be in and provides with brand Nielsen's and to distribution, mortar growth stores of announcing is strategic Reliva we're critical in called and Our stores. [ph] brand coming the in and regulatory KG-X market. excited for us supplier and Reliva weeks. are a Reliva extension focuses CBD key focused nationally, CBD over largest

in a and CapEx, the they market, the positioning. big parts well the global cost and it's US if the said Aurora's the US. on Aurora current have but of variable as in market, wouldn't which US federally cannabinoid that doesn't with won't legal as today. say science bigger. way. clearly to and THC businesses would world, to to a specifically say markets one for non-THC require we US. model exposure The me largest to would would frameworks, our will THC companies I of bodes largest is as surprise an under in parts the expect FDA company the are of US like could Aurora in positive roots participate be We'll comprehensive its our particularly foothold that can Stepping and our the opportunity portfolio, leverage in any back science following. but with in I action legislation. portfolio Reliva we continue market firmly the I commit believe Given market meaningful it We deep I operating will legislative the THC With gain and a not as in wait for that much operate reform how it simply allow THC we'll to experience innovation

shareholders ways is I legally One is landscape drive in it. assessing we will to look justice legislation reforms are the de-scheduled. that in very And when we thing address Although, US competitive different addition today to our is am economic will social believe comprehensive THC ultimately in the if in confident and place.

we strategic For the whether in shareholders. businesses, done be do for clarity US, it carefully our and in whatever be or will that THC make sense and thoughtfully non-THC

our this there more an to the store seeing market effort month, the are In of stores Canadian we on including entered near which it Canada's and last currently Canada. Canadian established cannabis province whitespace see the capitalize X,XXX with national having North Distributors, significant the retailers every and in to and a industry. in across cannabis. double opportunity, consumer Moving are cannabis provincially across new to just with count reaches is largest Canada, owned operated in given We retailers of the Great They private than relationships adult as rollout retail use stores. market, exclusive brands. can Currently for first Canada's believe future. strategic Great we a North sales legalize into broker now representative agreement

our first, high plan brands in focus flower, Whistler, brands includes particularly our with driving , such as Beyond agreement, strategic on premium quality, this high of premium sales Aurora.

accretive vapor, win growth pre-rolls, formats, concentrates. Secondly, in key share margin and edibles

Third, production as we've from variable. to mentioned, our away we steps costs fixed meaningful already and manufacturing align taken

great the individually. of is segment. dynamic, are Aurora in categories trying share. Core Let's premium and to having importance pre-rolls across of premium quality for each the topics market a offerings vapes the We as and touch premium therefore a tiers. brands provides. of these even experience doing more because value it product in is build the brand have price long-term, upon and shifting premium we brands opening different time will with multiple on consumers appreciate so market the over the consumer and loyalty based and flower attract important This This

in best in Whistler on pay infrastructure. to to goal high across growing consumers high around significantly work of production these As in premium terpene, pieces and Daily the premium when on basis our to Rafael on US, consistent more we seen few there a segment chain. in states we them ecosystems margin the our always CBG the Achieving We're potency, generate of program brand need or willing a well times are a gram our premium key and a dollars formats that point exceeding that various way consumers low each difference will cultivating five pay provide San potency building key and for product. greater for this every acquire our gross who category, they of the can To Recall are for vibrant Therefore alignment don't San Special. many premium on that Aurora, four, gross premium Special building We're greater profit cultivars be could with contribution premium resources with a industry, consumers. and brand focusing be out reaching blessed choices Rafael offerings greater. We're value that premium per flower do on Daily and we products. between flower a Aurora, the a to consumer there's categories all in the price cannabis Whistler. to visibility foster

As off market sourcing efficiently. a better these that mover first wholesale decisions, we're in in the more product

itself and Of in and course innovation proof concentrates foster in engagement lend lot packaging trade be alignment supportive to classic marketing, elements does premium also within affinity not returns, as much the to consumer improvement sales, the awareness, We've will prominent methodologies and pre-rolls, strategy, marketing, and vapes and experienced already a and pre-rolls there's like traditional outsized a segments CPG most with classic generate our flower build of bring to. edibles. also vape of CPG significant category in opportunity point

categories our share approximately launched to basically zero Specifically, X% Chem and [ph] we is great the new and our start a to extremely in OCS we've September We've similar marginal really news. out. excited products product been the market OG vape other in up which has recently, would gains seeing seen other go from market expect as at about concentrate, strong new in created reaction that also roll

we're those very bit several I'm the confirm I as have four highlighted, progress margin construction and of Aurora I facility. derivative the detail across fiscal cause. announced can reduced strategy. We will higher already on give we are capacity end at successfully Sky of facility And terminated We're To facilities Most strategy. making our value a us to And you closure of allow recently, facilities products our at focus the top higher this facility. at quality with data that at pleased flower cultivation winning Aurora more network. Sun by shuttered. that now line XXXX. is on premium tail This a XX% utilization So seeing

operationally financially. strategically, is has So been better takeaway and in closing, Aurora think the I main today never that positioned

have Canada, brands some Operator? cannabis million leading And business in in industry medical strongest you one the available, and to it with the quarters. now keeping the at coming that cannabis us say We segment the I I of gross updated the margins over I'll a cash in in number on seizing industry. look and generational operator for time medical We industry when turn to XXX all the presented over the questions. our a moment cannabis opportunity. in is forward intend

Operator

a we question-and-answer this session. be conducting At time, will

question is first Vivien Our question. your proceed Azer Cowen. with with Please from

Vivien Azer

good Miguel, you're substantially kind you that. about XX of you're next margin segment, guys of question business on targets is call for the and evening over of getting share XX as any in hope higher or satisfied Hi, thanks. that you 'XX by clearly very with see the kind revenue your on the the months, Do to mix think medical My you business mix than it have cannabis you terms internal can of end Thanks. fiscal by instance? the considering

Miguel Martin

thank I'm get dynamic. of little exact It's Yeah, to to it. you, Vivien. a bit specifics not the going

sort you tell to to you. I and sound mix familiar me how look is this going at Let very of

about in revenue something I'd to we the discount interplay you to have two. when think between a price discount. the perfect foremost, premium to and me mix, with, a but gaps, premium is like at and you from mix, standpoint see to discount a First deal want to about to really world, look XX-XX

products some Now, those pre-roll as a a may a moniker a X concentrate product, clearly as carries carry but higher such that vapor discount you product Daily Special, aspects product, a margin. Gen mentioned,

XX of retailers clearly, products to greater would guess, through per XX-XX a way flower. to a on I plus sort to as to of and be profitability inventories the low leveling of see that We're more size, flower a more the that continue on and also to as a from as and X from rationalization, Gen X seeing them or those product is discount So a just a having sort they're Gen forward. in accretive Operator? to pathway and price. you're a skew cut premium think versus be right focus would XX skew approach cost Canada, flower business clearly the provinces premium well will be focus of as there'll to I that go premium that to up discount margin pertains out starting discount the interest the do going I

Operator

with Our Sandler. next your question Michael is Piper with proceed with Lavery Please question.

Michael Lavery

Thank I US. evening. to on you. thoughts little get more just would the love Good a

you've – you of You've touched interest move it another have there a is what making it on significant for that? in that would mind? what's for like is something of what on it clear some an ahead radar? got Or Canopy's And/or a reform. made acreage your Maybe sort you've pathway sufficient in catalyst take – deal, maybe

Miguel Martin

great Absolutely, mean, the that's taking legislation to and in policy we're landscape it's a Michael, question. I close obviously, US. shifting the staying very place

think, I talk reframe I'll bit triggers. the a sort to the and question then about of

we what understand important the it's think, going successful is type I be company of think to in US.

US We is believe to in continue a agencies other be or play in federal believe a in companies like company regulated that cannabis a role a construct, going and in the Aurora of that history play FDA cannabis us environment clearly highly or like like federal a will operating a I compliant, to have US. Canada Germany federal role will advantaged. In

labeling, experience but that science bit based to are companies say sales that's operated successfully, the world benefit. that's US. will their that MSOs LPs And ISO, think will and that have successful successful be marketing have those significant up based not practices don't short Canadian advantages, own that compliance around all have been whether a so in and It's that those wouldn't have manufacturing, I in little there, GMP, companies the sighted say legs also have the and to

right. that I around think, and is legislation make to course commerce, act, a bit Interstate cash there's that I it's Senator say, on sense. like SAFE can IP, a is Act I and company you're whether to then whether see, I when makes genetics, clarity and have is would We're at be to a like its think ourselves, US through that. And many experience, I the parties, we it's first to foremost it's others. take balance about see something financials, its excited what version can its obviously, whether key significant that's we're heard We've to has including benefit companies to more advantage the Aurora I the is cannabis, in from different Banking say and be or seeing Banking there Aurora of hard from a and think what opportunistic, the of I sheet comments, of M&A its to of of that. but interest have lot of investment think And put going I a clearly, monetize think, clearly that think on sense, of – the that type more that's in time the time's brands, Now, SAFE we'll Schumer catalysts, and through the promising. iterations advantage states legalizes of the partnership and allow terms but will a we Act think which ways going or

Operator

next question proceed Fitzgerald. from is with Cantor Pablo Our your Please Zuanic with question.

Pablo Zuanic

a Glenn. Good, was just this quarter gross medical your for mean, question XX% Obviously, profit. of look, I

of domestic is market medical terms in business the So market, that not growing.

probably it's to get competitive. So going more

question attractive, saying medical, Because given companies are share the in that gross about but also talking yes, in which is other business? you stickiness maintain that. very the the leader, are there, And your gaining Glen margins second you related You're to talk margins. but about

there? million to X this stay quarter? exports, your you off's some there number Or that million. sustainable? new XX you. Do Is were doubled You Thank one

Glen Ibbott

experience in on seen possible. segment, a we've put actually as we're very actually Canada. mentioned, [Technical continued last on questions. as there. strength seeing seeing we're Canada growth with what Pablo, What the that in we've in Difficulty] And the focus and is renewed in I medical making that growth, very, And great growth Thanks hard we're as working new quarter leadership easy patient is in year-over-year,

think actually see high focus they not signing And make Amazon, see we our to the to Pablo on You to tremendous a this presumption the experience. just there, be value in right, beautiful just milked it market patients, a end. and a to a through opportunity up that we're

a yes, growth in XX%, be strong the some of Germany Israel. is significant expect the the have we across So $X benefited quarter-over-quarter. internal rest over are number little couple no, years. up that. countries itself part from a of out that of into we That Internationally, targets next we about And good UK, would a Poland, growth had sale We certainly that was showing of of over Europe sell growth. million. countries this in. quarter we plan that

you're little might others. even quarter-over-quarter. business that the continues of what But growing a to And accelerate. our so face COVID hearing counter that's been And in headwinds from sound international medical to

new adding we're countries. Now

just be Israel a the going supply you. lumpy bit be So important quarter-over-quarter, but market Thank it's long-term to in us. agreement for modeling little an it may

Operator

Please question. your with Our proceed David question with with next Markets. ATB Capital is Kideckel

David Kideckel

a I'm level Congrats all. that as industry Hi, deep what with I good strong to here, just the genetics? cover. and this pretty take your evening. and the quarter Miguel, you wanted ramifications recent Pharmaceuticals for of science company think wondering Aurora, other plant Thanks. given also whole, I high on but base acquisition GW are the the within specifically,

Miguel Martin

David thanks the for great question.

I is validation. think it

getting, clearly were they they of a genetics, you in that if it, the scientific at things how If at paid economics what what lot, talked look all biosynthesis, about you you they recognized was IP, a that a look base, as if situation. value strong at you the into significant plugged look for,

think it I validation. is So

aspects of of approach those most that a IP of that other the no be the of right deep some US there fits, will but US. a reason and there really it's to be type to operate category important of that will work bench stage I and like for the there. opportunities to where will categories of this farmer in cannabinoids Monsanto, companies now be how is believe litigation going there's won't and the obviously that the GW against There's and think set types genetics – One assets

thought the recent day very see it of in we've US, of in that that there. Germany, Clearly was bullish I with sort compliance So and value representation that when the have the seen and for tenders. in science France you experience we the

after You time, companies time was one see it and there the in after winning these clearly, time same other be appear of them. markets. And to

think as the untold one is we of US, and the category, really piece why brands a part outside piece Consumer the I bullish that and the really the the it an that's pertains rack right, reasons so and you're because to the of Action we're And the on particularly of have experience. of story really science But exciting it.

Operator

from your question. question proceed next is with with Carter Stifel. Please Our Andrew

Miguel Martin

hearing not Andrew we're you.

Andrew Carter

apologize. me you I hear Can now?

Miguel Martin

We can ahead. go

Andrew Carter

Absolutely.

– from of flat? of because for quarter. us Wanted – Canadian a of shipments consumer ask kind the that. are consumer adjustment, of that's You've obviously, assume business in a obviously lockdowns of kind expectations about next Sorry of thinking lower business lot the hitting that the the to how taken trending seasonally provinces, the COVID the about what's give kind your is we now. have place kind be a the right should quarter, I

Miguel Martin

got convoluted a of it. Well, a answer. You bit listen, it's

couple now, what's make So of to predict exactly think of in what's about sort that if things happening happening. a difficult right it Canada, there's you

you in open First products. mentioned and to ability to their Ontario, stores COVID, and of an foremost, consumers that's access in be impact, the particularly having

sort start like to Secondly, aspects you're to variety way of of rationalization, it. other having the provinces and very in skew things a aggressive bring a in

there lot are Third cost LPs low is flower. are sort that of on sitting a of

of months, that's lot every I quarter's to now, to next in expectation for I optimistic X,XXX way back up. the do but winded there's think, for that. we to that's to to stores, a think in it double COVID that long we'll expect don't a about going bit open we're going growth, stores X,XXX, there's see environment the back So until I incentive see to think and to I say last get six normal be and you're Right I and growth this longer roughly we're going a think double.

type see market to this continue into move market. of the the also volume legacy illicit or from We market

Andrew, seeing an that it's probably think disruption will And aggressively. is you so we obviously business, beginning medical things pretty I impact seen off you're to gets is and think which the but flip think in summer right that take side now us. really The hard I this I of then haven't the predict, to of the really strong for

think I to Aurora. you're same medical those in folks the of the type not participate so like for which And going disruption benefits business, that see

Operator

with is your Our proceed question. John CIBC. with with next question Please Zamparo

John Zamparo

this on the to growth quarters? or addressable going Medical working arrangements up countries, just to see the the share to now Thanks. I is Thanks. no next International taking the market presuming do are be right you evening. of business primary major that Good over growth? that the mean, over potentially driver Cantek we on couple years, And on wanted question coming earlier any similar of think I follow legalization secondly, could then there you're

Miguel Martin

John, you. Yeah, thank

patience, systems the if international think And medical opportunities, going accustomed seen I we in you're more the you've a developed, more like growth sales, you become economics think products to become see markets. even about think then developed, growth more the to the if US. the in as existing markets I become see in

on in we're medical so some movement, bullish very to that's markets. And see a from obviously, What existing Israel. in a and these also markets of is rack you potential

UK prepared remarks the mentioned I days, remarks happening the the and nine written are really think of in we're is there. Between significant and evolution in those but markets, an in about France there of Israel what's the in there is seeing exciting We tenders or France. three terms very getting what Cantek. with early

as that markets a requires requires we're as experience, it's about can't a facility in those take we be manufacturing always is do expensive, one so the while to which Netherlands So our international barrier thrilled is EU in continue looking international to in to cases, the why amount believe skill share a pretty requires our of describe there's to many no significant and competitors, we'll set, from we see have we high GMP Nordic. certain reason market of grow. And things entry,

markets, opening not. on in get a optimistic and up the very massive And international of countries terms or movement so we whether bullish I'm

Operator

question proceed next Our with Capital BMO with Chen with your is question. Tamy Please Markets.

Tamy Chen

And missed to much margin, the full how you headwind Hi, again, headwind reverse clarify larger fixed expect I better it's I talk the and gross about fiscal even this. the I to that the could less I was absorption Whistler? have mix apologize, the you're you how of I But because thanks what you. quarter if understand on possibly Aurora, costs, I Glen, that quantify San meant when just by a do us in able Daily help that for mean, this you quarter, think Thank wondering impact. is just was was under apologize utilization if revenue of missed much we might I quarter, this. this to or Special as category question. that or kind course? your of if understand consumer may the then And wanted QX you Rafael,

Glen Ibbott

referring the costs the Miguel, expecting think Special and with out – start of you And kind me the of you are announced production is publicly Daily Tamy that we reduction in the costs December the vary and level. I to we actually margin, with that Let with Sky chime to I on in gross of go. took or is some can What headcount quarter. right at end very saw mid was that

we'll cost those costs down. much in quarter, be is gone production a that the will What full didn't although actually we took of reduction in we quarter. see get the So QX for

our little of more those to capacity. to a terms each Obviously, expect little costs unit on efficiency we per operating costs some we're wholly, is and unit a So basis there XX% bit not bit recover per in fixed when in put make fixed in expensive. a measure a there, a

we I really decisions tell value. Tamy, long-term create to and and think taking So you, purposeful improvement EBITDA about should we're QX. business, just like have when the in we see margins to so

able QX, this thing, to Sky. fast like but know our little big production because going look Yes, it's what a the a right with will the – our part we to that economics, we're I'm alluded difference of over say dollars. to, premium this, at doing aligning I'm in not in we're our three, what the time, So so we're demand, And about our Miguel but be times to almost repositioning from is as selling produce you think the facility of Sky products as importantly more gross profit products. generates four or can when

part it. a of big So that's

facility. full to? wanted the are but a Daily things, you shifting and Miguel, at importantly, two margins the coming expect average through just we cost to out of the of improve quarter selling Special we more where price where to on recovery, touch we So and that higher

Miguel Martin

significant Daily Yeah, of watermark made We've that on had XX, to roughly And at XX product. of Special levels of April, and that. changes to Daily point not focused it's I significant pretty price discount, but Special we're that's mentioned, changes the a say back it potency I high half really to now that as March sort itself. in mean, and share in turret

we'll honest, in that parts and to really sort turnaround that to falls, and still days think Rafael early and interested much see where on plan. It's Aurora more got be Whistler to San have I I'm three it. of

and already buddy it on high know The through see that We'll it first fire and been and on of it some will some start the Whistler. you'll further quarters, headset start on you'll to And on pick quality see and up getting look I hand other Aurora at. provinces Quebec, work data to and with data then lower in be the the We've seen which is that. than other we've days pretty product. higher pleased

premium say So area, cost as not come where the I thing, from earlier, but and long-term particularly knowing going Vivien's flower. the to mentioned hard we'd like X discount products comment, and from of competitive revenue XX% to land XX% with to Gen that's see low our

you'll mix start the and on that think in to see launch think tell it with flower. Tamy, better I next were terms blend. first quarter, I you give that. and I'll longer is be We you product. The that I able little answer bit answer and a this best the and was of can But our with quarter So next to vapor concentrates takes a pleased

Operator

is question your with proceed Our with Canaccord Matt Please with Genuity. Bottomley next question.

Matt Bottomley

Thank you. Good everyone. evening

here on – maybe users a took mindshare, consumer the in sales because across of balances here, color But board these little the think out it's look wanted we and to can your end any you players to Just in think the of how the sales lower use in when penetration at declines I as inventory the back give the a days sequential here here dispensaries dig your to in adult step all side. Canada. in affecting you on consumer deeper

any quarter? relative just get to any last commentary branded products then on know that particularly break And color even quarter, you'd actually to last these selling lastly, dispensaries, how next I adjusted said potentially for your close think your are on you you So quarter. in season EBITDA earnings this

So is QX? fiscal you. that possible as we look Thank to

Miguel Martin

it. got You

financing the able it. the want interested part business. you people EBITDA, are I understand to the But run us in in quarter. to to on allowed adjusted your do EBITDA targets not be to So change of to there hardwire have are by things that naturally

do we product, wouldn't impacted the So as investment right it we singularly to consumer. that provinces which the were we it right the put If on business, is thing it, through an back lower made nor example, the not focused just quality for accelerate is hasn't the the significant quality for take the higher thing EBITDA. product into system,

or hardwiring yourself here you can run think significantly. disservice. done you, it's this I a doing what goal is to intent It tell giving we stated to guidance have to my dynamic category but our make date, think this particular intend that. I We've So business, keep moving And a a profitable a when I do you that's quickly, and pretty that to Matt, progress.

accounts a a would a bit Meta you we Tide rates. on terms are In or what our or move partner see expect. others [ph] that – The that we Tume or quality, quick with I is newer of take better vapor doing key we're High get from the we launch. well. product, X% the mentioned, higher potency higher say much Concentrates what we really takeaway I that or some Nova some in of data, saw would

to the adjust how about handling, it's them on And they're all skew rest how also they're a products, I they you respect a to, going particularly happening. long is is COVID how a handling us the I that many navigate sides the bumpy. It's and well, as I in But how new bit there the of they're definitely the it category, are on think so of as the change. just of impact of it's I what's it's rationalization, thing LPs, I I stores. think for though, for definitely think, trying hand, handling will adding give be you're the of provinces evolution right tell not think as days as the a run, lot it flower. you're bit some right cadence across an What will though, other early days

There think across of a I bit in the system. a weird we're are impacts here. time So

stores getting give something As the a terms gets pleased better, of the from. answer retail used of I'll The we other you COVID. better to of better the you're and in open other on to and data which data some with. side takeaway more your really get is The much core metrics be able we're hearing data. syndicated is that

Operator

question. Our next question is with Matt McGinley from Needham. proceed Please with your

Matt McGinley

Thank you.

see substantially inflection flow You present strong burned. continued noted larger a back be cross that flow like or free without the state top revert of to doesn't structure. revenue improvement at in look positive cash the you cash it'll enough expect in the But line rate to to

is cash visibility M&A M&A generative, do So fundamentals seldom is? the where you're the much you such if Do offence cash risk? strategic at feel burning still improved with that which without rate? could operating like can play high at the is company question there you the you a it is into putting how Unless

Miguel Martin

progress to think things we're look to historically. have different expect lot they I a Listen, close than where we continue a – getting point make on, to

at able need plan, don't we execute you what If to we it. do our be look need to to cash

we facility EU business to Netherlands we rack Our around. of significant to the make finishing needed investment last was turn the big GMP. the And do expect to

parts of doing our well. The really other business three are

with comfortable we're So it.

that know, there be that a would woods out don't allow efficiencies the obvious, something would the it of it. cash a have able for to going think that sheets balance about make period the position state not is time. terms we're had. This the We've way it's to more forward. be of to – would in In long being it to play, our of I upside ever but to find continue best had And is been concerned we're best this and we've work the

our need and to So needed concerned order concerned we to to. all I'm at not not execute I'm what that have what if move a need we we have we in we plan don't that make

Operator

next Cowen. with Our Vivien proceed question. Please is with your with question Azer

Vivien Azer

apologize shift given the the misunderstood My Miguel, Thanks follow just I my question cannabis for taking was wanted I you medical clarify didn't between up. and medical your it high business. on to if very consumer I margins question targeted around or deliver well. mix

Miguel Martin

you it sure expect articulate. medical I'm Vivien slightly as say it. potentially didn't wrong. steady to quite sure I Glen be misunderstood off and I I'm was

that We seen in margin have not compression business.

don't know believe that I that do – we expect Canadian see and potentially but is then business all put to medical not think In internationally a going only we from the rack to we share. terms decline difference, in grow, growth other of can we do and business saying mix the gain to upside medically. together than don't is how

the such think Israel. medical seen that, describe we seeing benefits sort how It's accounts that You've to moving legacy business. that also markets store me union be stronger. and to the in How of some some that market potential Canada? expect from to as that announcements COVID for grow Internationally, plays early medical but and key do We're pretty folks other into opportunity. out that's in there's Poland. opportunities cannabis in around And Germany I with the significant now hard it. give business the growth rack say seeing all it. in I days We're has would

that the precision give that apologize So you I may you if doesn't want.

Operator

with Adam your Please Buckman from proceed is Scotiabank. with question next question. Our

Adam Buckman

taking Good my evening, for thanks question.

just to the wanted Now business touch if really, possible. really on the

terms line the to then it And a like a believe Can of this historicals. through in looks month what side? which on we bottleneck in a for is acceleration X.X basis, be walk it quarter million you contributed us should on bit is CBD line? catalysts million Now six X roughly versus maybe I what top and of the in looking the the little deceleration

Miguel Martin

see news, pointing was the Great, in I the there's seen Aurora, pharmacies and what some about additive was that. a like. potential genetics place has Reliva is a positive so I regulation. convenience we'll as of of Reliva with advanced optionality I It where you puts framework, that have catalyst a right believe of foot supermarkets, mean companies supplement is with simple. late wonderful has would companies, talked now large for and Shea FDA tobacco seen in same a It's they when be to around always within vapor affect my it deep that things, it the stores, bit as dietary out very think nature pretty FDA Reliva. that stores, dramatically reason way and and being deceleration is COVID you've company placement traffic. and of the a a grocery The We've I that saw the advantaged the connected variety belief looks very around FDA up science CBD other

as just is And so viable. not it

have in XX,XXX fact time we learnings around will are products Now, leg at regulation, up those I significant a that that in top the wholesalers the ingestibles. particularly to garner comprehensive regulatory are US FDA we experiences, said, three in a the which believe pretty in and stores, being it in give continue significant stores and

else, excited is under protocol it by based would X KG-X and definitely an in to is mortar how see may about will up and stores. it. big an sale prepared will variety X in I system FDA part legislation, And So companies. for a everything I that to have billion is of the a think US age Aurora other to to be think ways are And called that today. at but launching time seeing the we that's that brand. the to a us international Reliva. I like describe it brand or point that's you brand I material going in the business different in and the a science compliant expertise of advantage And brick think I XX the e-com of in and Reliva mortar And Reliva want say that's you that Reliva. we for the markets I we CBD The believe is so And a advantaged. requires going mentioned throughout other which know remarks. allows expect is situation billion we're our comprehensive clearly that be new that I brick only make time for that Amazon reality billion of which be We'll or in compliment is would Reliva that's be a And regulatory FDA exciting, countries. that in the lot a pass even those operate CBD. open for And a I infrastructure whether

and quarters. another that's future that think I to So piece of on it, more follow

Operator

your question proceed with Market. Desjardins John Capital question. Please next Our with with is Chu

John Chu

the Sky to is I a here or is with flower. producing my premium evening. premium guess key capable whether good focus, for question me main pivot the Hi, not is of question

So the of I've read I'll MD&A. just the texts in flick some from

conducting an of how bit produce tests Sky's Thanks. on premium Sky able are is Because But us insight premium still as can core abilities. to these flower give being you to You're to a tests progressing? this obviously, strategy. that

Miguel Martin

significant price. everybody I'd a Sky. quality let is one producing first I the is mean an high remind and important we me flower in piece facilities Obviously Sky happy low be largest though, of other have Yeah, John, at beyond

facilities or whether our Nordic at or experience, whether tremendous Ridge Whistler it's that's facility. have we River or So like

high and high we're to levels product potency new not like XX it's producing with temp plus So quality.

argue, products. we long with taking and Sky are Rafael tough the decision the pivot, have to production experience the that the pertains the allows to at some making of it cultivars that there's We with some Aurora us So systems facility. being I would of ability and about made best It mechanisms test of XX% genetics Sky, though and a and is scientists. history Whistler, progress. it a San And different no a and successful deepest we that. there's of as of to variety question down

And so we're that. see well on our way to

us external think that process, is, flexibility. additional also take that allows through the I can down. complementing what We the just describe to to made early are But I in December we we're buy, which process best on decision thing it

for be other I in isn't This about new facility. think developing It's establishing it it skills been we've quarters. the able taking or protocols coming we'll isn't able to reinventing the the talk this do for new more to wheel. specifically Sky applying in and what facilities to years But us.

it. describe So that's I how would

Operator

reached end back the have the to And we call gentlemen, I question-and-answer the and to Executive would Chief of Ladies Officer. Martin, turn Miguel over session. like

Miguel Martin

the to best. can is families tell track better the the Well, look all company for your where and also about questions. new even in everyone. about We Thank appreciate CEO, well, company We're as strategic you really days Bye. I the quarters it's all appreciate you to results me excited entire even We're you. the more your well it. and is are We on forward your plan the going. the thank infrastructure the interest. I we and excited bringing team, is. where early We appreciate And hope safe come. while you

Operator

today's conference. concludes This

your You time. you may Thank participation. this disconnect your for lines at

Aurora Cannabis (ACB) 12 Feb 212021 Q2 Earnings call transcript