ACB - Earnings call transcript Q3 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Aurora Cannabis Inc.

Third Quarter 2021 Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to your host, Ananth Krishnan, Vice President, Corporate Development and Investor Relations. Please go ahead.

Ananth Krishnan

months good the and fiscal Aurora call the and joining you XXXX Hector, XXXX. for for XX, us Cannabis X you, afternoon, thank everyone, for conference Thank March ended third quarter This is XX, Thursday, XXXX. recorded being today, May Aurora's today Martin; Miguel are Ibbott. and With Glen CEO, me CFO, After a release markets announcing fiscal our issued of the the quarter. Aurora financial third close today, news results for and MD&A EDGAR and the on accompanying are the available release and or on news This our statements SEDAR profiles. website our financial

annual detailed financial from EDGAR you databases. to documents certain thank technical today's addition, factors may QX during could that forward-looking and call via information in In subject brief SEDAR delays that are be minor find may call These this can or may remote be the supplemental and Listeners other Aurora's be statements. risks conference those may deck are are performance. a future affect accessed constitute website. the IR given differ these in Actual risk Since filings are Information on registration and results and anticipated could conducting results periodic our or for other we The call. uncertainties forward-looking from to statements. there or today's matters crosstalk related our answers your in materially that and statements business reminded advance questions that to Aurora's respective the locations, you discussed We patience in issues understanding. form

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

Miguel Martin

including our his review. for and good international challenges afternoon. the I'll to address in the our discussion on brief some thoughts business. and start plans Afterwards, the then Ananth, and financial medical provide like would businesses, will with Canadian a adult-use I quarter, of you, Thank domestic near-term Glen

more Aurora, space. Canadian I'll an cannabis market, strategy within about cannabis global why and largest the LP the has believe in that Finally, the pure-play talk incredible broadly we opportunity as

from benefits having I diversified international that medical is the stability and greatly matter across results adult-use This with how evolves. industry our from domestic global Aurora business built provides both clear think and a recreational no markets. growth it cannabinoids us medical,

the peers our Notably, of demonstrating double largest medical approximately growth straight you our infrastructure, The medical experience. exhibit covers First, #X solid a through let clearing, even units sequential estimated is that onboarding, to on sophisticated direct-to-patient domestic know, model about these patient as international federally very many should domestic me It We're say experienced XX% period, which allowing technology margins. in next the market, by consultation as business is end-to-end declines. by regulated market ground. market share which, our is Canada's world. business, largest our of in also revenue talking thrived competitor. during is nearly the business And cannabis medical our medical that by is be fulfillment. medical of unique for mentioned that infrastructure as both represents it medical This powered patient prescription an gross distribution

markets expertise will cost layer a points. and extremely offer the entry Canadian carefully product service patient it medical professional coverage counseling in to core to countries We've treatments. direct-to-patient in capabilities retail to countries medical recreational low We channel. advanced from providing the in scale. are supports not press publicly ensure the exploring is and should to confirmed Companies to key enviable unique is we In regulations, overlooked second replicated legalizing global would a represents provincial believe price alternative regulated entry, medical of and leveraging Further, have fully segments. time We on success leadership, internationally. that to channel medical happens. be by a markets patients, federal March and variety experience. not a cannabis adult-use to journalist, environment exhibit Canadian like looking United conditions positioning think advantaged to a approach a grow. we've point investment medical a systems growing multiple complexity, medical use. medical, FDA selection with cannabis of take typically when translate anyone the export sold platform. in cannabis sustainable, focus We this Canadian regulated that as In adding to business. their adult its a of medical influence welcome, of question in made system, And in President is from Taking operating medical continue number to portfolio and this barrier further, and factor governed we Biden tailwind step into shown Health in the the leader secretary a terms continue expansive open maintain industry proud at launching a and for look at Aurora barriers into up LP our infrastructure by will the as the in this into over we White international to going for to X in that across our to can like of guidance April cannabis And middlemen, success German sales medical Aurora and of quarter, and States, cannabis and of Canadian during medical continues that channel's regimes. unparalleled tangible is the technology medical view XX high-margin navigating cannabis. are curated XX, high-touch we was Canada model medical significant as we and expertise wide It a new to that medical the the piece program. global Aurora's largest success the the when medical the federally assistance gained success the those that these medical cannabis federal diversification provides the Aurora Aurora new most response expect to that Under or the on uniquely easily We country believe base This first my we be in House patient federally adult-use then countries for we XX, health cannabis for

twofold: and support of shareholder the world incremental creation. challenges in to We peers, around online as related the the credibility lockdowns made Still, more first, have in ordering the grown States consumer problems pursue were difficult In delivery Canada, our with curbside Canadian view, it and pick for consumers for to up quarter. these value our despite has M&A retail; COVID key presented available at consistent during business and access challenges opportunities products United options. the

slowed of been newly COVID and have which licensed opening expected. stores, Additionally, construction

on attuned the distributors to all rationalizing to returns, due Second, managing and more volatile SKUs provincial their limit environment, per to SKU. profitability focusing of have inventory, their the become

a premium into low-cost our flower. will that undeniable versus time it plays thought. great margin having it to to focused of even well exists more as pertains take taking we retailer However, This, course, accretive are, more therefore, just strategy, there assortment, a approach in X.X and initially if they more it's interest products than

business. centers have for best mature forward a we quality, manufacturing which path markets, excellence more As the innovation adult-use our in seen strategy on and product is

sustainable think a revenue in current it's annual and that not impact so, inventories build traction businesses to the corporate the process will strategic provincial anticipate and financial to product as this retail pulling Our execution team, bios, individuals ability to reductions while we eventual achievable the objectives reduce overall to growth and all demand. levers expected lockdowns to solidify logistic going will of of are we in on Canadian be savings may related from will positioning the ourselves of cost meet with to initiatives remind that anticipation for to $XXX we previous skill enhance hired cash million our are adult-use which once extract our determined and segments. Alex any like originally to current over operations, expenses still. not to normalization further clear normalizes, are opportunity, extent, are better followed more Lori will highly savings than afternoon out the our expense X that additional Schick the $XX and our HR; to $XX can efficiencies believe also are in continue of and identified few in Instead, These lesser our Still, they and, their margins release. market at production to primarily million we in Alex savings a have efficiencies the requisite simply our costs, have we by are but and sets experiences our have COVID us Miller aligned our ease million I'd we quarters our our already an efficiencies in I'm More months. enable operations and reduce read our help respective cash structure to approximately flow And and delivered the provided that plans We burn, identified these an rebound. facility efficiency not flexibility. and XX financial more take in plan, incremental or be business skilled waiting but areas will annualized across I our our and realized we doing These generation. To assist the that positively our targeted to time our SG&A. of Lori the press expected. inhibit realized were next specifically, announced you

out and Canadian businesses balance opportunistic industry is, today growth economic confidence position the is and to model This sum course, that Both balance initiatives accretive of we between basis. that on organic strikes value supports as sheet Aurora will by maintain as have international long-term on the both our going. things profitable plan anchored the unique optimism ability up, M&A shareholder are healthy it's for an we in creation. laid well, well and opportunities where calls. to a our performing the pursue growth we margin Ultimately, create So and previous medical a where

the Glen, to item. Before address call one to over I want more I turn

Aurora's gratitude set stepped the time. the for Ron We you in as to will continuing as his Funk immediately. Singer Glen. of transition As when role role founder over know, period We these CEO; traditional Interim all for February voice and reliable Executive Chairman. and stepped as directors XXXX, that Michael, proven of both over effective a huge in Board over was well consistent owe to that addition to Chairman from Independent to Director grow the oversight many of to boardroom the during down years. up will in his took as and and Michael leadership a of has With a be look reins turn more to Board Ron I'll Aurora forward as continues broader that, expand. back move to it Michael and Independent Lead

Glen Ibbott

best We note afternoon, and or financial figures note this MD&A believe are in EDGAR. and also we sequential analysis comparative performance. good period will everyone. appropriate, of in in on would this and our afternoon the I'll be the be and all measure Miguel, Thanks, can for filed is company's XXXX. and reviewing QX that transformation press Canadian Where improved the the that release today I note found today comparatives. the period SEDAR I the QX dollars represents statements Please also issued

results, products. regarding remind and discussed number a of like For XXXX February we initiatives part financial this we Last you transformation our a focus consumer higher-margin our year. to business. outlined talked the December of I'd of We to quality, of context you about QX to our as higher moment in of quarter, plan a take on

certain there. standards Miguel say previous Sky Sky rate run and XX% success so But for bit at through the Sky by its The reduced will and all our cost the now, gross in we allow to process costs absorption goods our production strengthen Sky, of of resulted changes the run overhead has of in under quality cultivation we flow rate A operations. then to impact which the significant encouraged greatly flower that at at are later, for performance across fact, and margin of to speak to improvement So in far. to I'll reduced in quarter.

long-term right clearly it short gross although in creation So our decision. the hurts the shareholder term, margin value it's

seeing we're Sky results should this truly from improved in the as a to allow perform As quality that industry. facility gem

our allowing reduction production in higher into volumes noted the for production expected XX% of the transformation sales would our production QX significant in align to at to allow range. a levels the that cannabis quality Sky Sky we we And demand. to us overall addition facility, In in to with ratio be

In consumer XX% the fact, in business, QX, the we of we despite produced. of challenges what sold

We order deliver flowers open We product without higher to premium also terpene Raf sales to very San in lower and explain, discussed replacing Miguel targeted a this, product. QX potency and pre-rolls standards that new THC will that brands potency exception. the did initiating with in returns older, channels including profile

impacted result QX in product net swaps the our returns course, did million, Of and $X.X margin numbers. a which revenue of provision

terpenes not the quality network an fair margin write-down inventory that our value THC cleared new QX This in aspects. also $XX our necessitated million. approximately gross action We reported before for of cannabis that and adjustments by all did specs out meet impacted

impact Now they sturdy revenue, margins, in these provide coming the higher margins cash foundation support of flows all a actions gross reported short-term and accelerating quarters. to but

start few comments. So demonstrated a high-level now with business. Aurora's and the diversified cannabis results, revenue of XXXX importance to QX actual I'll QX

standard, the brief, perform from high-margin $X.X all revenues. the million, market and of to revenue, market delivering continue QX leading product well, being and growth businesses Europe million. consumer return businesses consumer headwinds, it Canadian COVID in development medical net was repositioned in $XX.X and exceptionally our provisions In general excluding higher the business While Canada's was of a to Canada in faced Aurora our

to the average return for value cannabis and year-over-year our to XX% to $XX.X the cannabis overall accelerate, delivered at Our revenue $XX.X compared the price $X an Adjusted combined comparative our gram sequentially. in medical XX% cannabis continued business, consumer and and margin provisions. value selling net of in generating in on segment prior cannabis consumer million net sales, dried rose X% our business diversified before medical remained million of fair to strong Demonstrating increase gross flower, businesses per of adjustments revenue quarter. XX%

QX wholesale overheads SG&A Excluding Sky the our XX%. unabsorbed short-term restructuring. return of at and margin provisions well-controlled normalized adjusted of potency low cannabis, remained $XX.X and clearout low at impacts gross million, the excluding and was

financial year-over-year. medical the XX% performance in And So from primarily medical results. now me business, revenue let was Sky. our opening this at XXX% the Not reduced up face this at delivered up dig despite growth revenue which because Medical into a of was but of significant, deeper QX which overheads strong and resilience stable the in the year-over-year, course, our also market. additional in highest the international has of business, bit coming Canadian revenues of carries the our XX% challenges continued consumer QX, [indiscernible] medical our leading of segment in margins, from was even absorbing from only

revenue compression, price near-term Poland, should delivering I have over European market been with international important Aurora quarter, and resilient a strength second flow. for margins, for Israel and that the selling did we medical little year, be is key resume and of Germany clear U.K. the our sales with the seen our future in to QX an years Israel and XX% quarter, medical driver delivering develops. markets and do We've and XX% in X Our becoming no differentiator its business to further it's revenues cash broad as recognize and largest and that Canadian third the exceptional of this Aurora's over sales to respectively. show footprint up medical this to note to markets, we continued prior expect European while in should into not in compared

this new the Sky. Thinking XX%. and year quarter. and comparative because Miguel with would we've cultivation successful from gross return gross were Adjusting QX for provisions QX return at margins XX% cost increase to business; bio, immune materially the margin of consumer coming product have was Looking that prior at longer-term consumer from made margins of produce overhead and of high now cultivars that plan a the COVID increasing introduction changes to described. under-absorbed in revenue the we cost the Aurora's with processing breeding our flower. XXXX provisions, because profile produce the was the is $XX.X work high to genetics as consumer million can without at QX XX% the our business, before just This reposition the and now of return mainly the THC, in weather company And flower Sky program business our been provisions. about to down also headwinds in techniques our Consumer initiated through compared consumer we terpene

proportion in power see the expect we to to our a cultivation So consumer over hard production, focus successfully margins premium on leaning as science premium our XX to the quarter was into of expertise kilograms pricing. our to consumer the strengthening low we risk business and opportunity product of months to trim about next clear pivot XX did written note that at take of should in greater out flower at product. we being of I also This X,XXX off. potency

did into instead turn elected cash $XXX,XXX margins. we So in that impact it reported to

SG&A, to R&D. includes Now which

at million million $XX to million $XX.X range, costs QX. our of at contract targeted We termination low $X.X our coming in transformation. This in to employee continue excludes business operate related and approximately

noted, to quarters. over rate a improvement previously on continue to coming we've the see that further run we we the Although as Miguel deliver targeted, path

quarter. $XX.X slightly million previous larger but loss adjusted the million, QX restructuring. comparative, is So year XXXX from $XX.X in adjusted than prior continued represents a the excluding in the loss for EBITDA provisions pulling all loss of this revenue at together, This an we and in that's generated improvement EBITDA a

revenue quarter, our million was about previous despite the strength down business solid margins and EBITDA being overall in from our show the net However, $X diversified million. fact $XX.X impacted only of by the that our business of medical

So EBITDA can we run it comes, growth, as incremental rate the believe realize confident can with efficiencies, positive continued and growth without we to get show XX we rely expansion, when positive that we will earnings. business months; are having revenue and within margin the transformation next to on Aurora up

used flow of $X.X working a few and cash contract $XX.X cash regarding excluding for points we capital, important used million position. fund million We and Now termination employee cash to costs. and operations,

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

on So CapEx receivable $XX from $XX River. spending approximately million before at completed government quarter. capital and change With of cogeneration that's the taking related fiscal Net in grant a million we're our track reduce settle into accounts account And we to this accounts used was million now expected shifts an in out to time. year. over for production to payable, levels working further roughly capital due received offset aligned, to and be this $X.X project working in to to to expect which mainly demand the come

have the grants, non-dilutive in the months, about with inflows today, bank pay we and coming direct receive asset position down. from to to outstanding cash $XXX of million plan as term $XX Finally, term debt we a cash of additional to noncore In very strong and we less which sales million debt. expect than

on for our Global and exchange. listing after NASDAQ This approval highest Market, the couple to listing XX close on and required action any is any shareholder. with to exchange an NASDAQ intended to peers result market the on from is NASDAQ impact we transfer not innovative align to housekeeping is Before effective growth-oriented up, notes, expected to the the will cost trading of opportunity in listing, Aurora be savings Select TSX May transfer known Aurora U.S. nor No I received wrap our of from tier for shareholders. companies. a and This our the our

identify acquisition operations. program. a that for we need do opportunities, need our to the exposure those XXX new business opportunities. U.S. believe strategic to including not we as file ATM announced do But expect supplement also we today We our million We be intend prepared to USD ATM current we for for

I our the track. need to following. are and financial people up really to So take from growth believe away wrap profitability path and what results on is health QX Aurora's to financial

important to SG&A consumer now our production. We strong which reiterate businesses controlled, have that and underway. some business pass, to well We've had our great maintaining well cash steps the of high-margin remains success back taken I'd is call headwinds, while in turn the we transformation our focus to and also may medical on rationalizing industry flow facing and Miguel. a on in sheet. over take time balance like

Miguel Martin

Thanks, Glen.

earlier, underlying be can a diversified As broken X I that into Aurora's is strength we parts. referenced that are down business

X, business. that key these First, across finally, U.S. adult all Medical have CBD headwinds, our in #X, some facing business, X, Canadian and is we're medical business the fact; Canadian COVID when The X an near-term X, business; rec latter platforms. conditions related confident will strong international but business; a clearly a we use abate,

believe Although cannabis we already company we ahead. #X Canada still are revenue, by growth the still medical have significant we that in

XX% to market. like there Aurora That that medical of for than in us into. make LPs of roughly potential top the that grow there Canadian is half the a out to This of plenty that of up being with I'd LPs the are represent First, that. means market, of medical X channel lot the XX% less highlight

are to experience opportunities further technology and and intake product patient to lower and Second, our service times, wait choices. there increase leverage user levels improved

infrastructure, business requisite a XX% regulatory in to compliance moat investments groups, sustain and for gross effectively approximately the the patient create have supporting the made key enabling have systems margins foreseeable and us necessary experience our that while future. We around

consistent been has medical a winner. Our XX international countries revenue generates segment and across

in also there. leading Germany oil but large flower, We bullish have the are on growing position and in dry a market

a supply in inroads Cantek. made agreement have through we with strategic Additionally, Israel

tenders, awarded medical medical the Ethypharm, the also our flower French French program pilot representing involved dried program. all cannabis of partner, in are the tender the to X with tenders of where we supply We X won

Senator X/XX he the Chuck is Senate that holiday, that and said cannabis on As a Schumer unofficial marijuana the American legalizing now level. on national floor, know, supports you

decriminalizing a say that I cannabis. White question cannabis asked the federal don't medical and medical federally to successful the likely this to have this advantages. course, As the framework, a he ability will up Canadian when decisions with leaving before, But that success. In legalizing U.S. world, enviable same while records if very EU GMP chances secretary science, supported day, and referenced position cultivation to opportunity. happen. the But replied be to within for say at that states, an was I in regarding regulated successful recreation level, as and President framework, highly that can our supports That's certainty around testing, LPs actualize been on wherewithal legalization Aurora's the puts House uses the to by press criminal supports the the the this regulated I use, frame confident prior in any time have to not own of commitment expunging operate like have experience Aurora about feel and their not Aurora's compliant We, MSOs well. us do know for or automatically labeling for

Turning market in to the the is top CBD largest segment. ranked for the Nielsen, US brand CBD our world. cannabinoid Reliva

related the recently COVID and the new stores. have supplying term, channel. over of spanning focused think affecting are brand retailers a distribution new In near the we product will nationally a also and U.S. line We've C-store We softness this with wholesalers on disruption shelves largest our some offset this sports XX,XXX market, on to the footprint, extended now quarter. would launch and

greatest U.S. long of critical regulatory However, FDA experience and that potential established framework. within supplement we CBD already going term, the in regulation placement for sales market and distribution, catalyst the forward, relationships single believe given dietary the Reliva it's a is

of U.S. XX Reliva in because So we be CBD that believe X stores the under a year CAD time, whether a billion our of e-commerce. regulatory over business advantaged the brick-and-mortar operating billion FDA in age will CAD even expertise a is or protocols

of the particularly surprised the we THC in our that THC are also positive big of FDA add non with me be not and parts portfolio, as if U.S. action parts ultimately Let the portfolio as would our

Canadian the market. consumer to on Moving

improving winning to made quality X-step Our addition investments This includes the of approach trimming, techniques significant innovative hand hand packaging. is first, the and we've our of follows: products. drawing as

up have our our also potency, X and we've the Today, from XX%, brands. potency minimum terpenes specs has we dry Importantly, minimum largest best-selling increased our flower of a straight both Rafael on improved Special San potency and some of Daily XX% tubes.

innovation. Secondly, leading with

We that make the of continue evolving to needs meet rapidly investments increased our consumers.

inefficient European market, our launches new Nordic parties launches the generation as X chain the we manufacturing to of third, leveraging facilities. manufacturing our cultivation to time; categories ramp-up of new and and includes third network. have total EU business about throughout and and excited Over speed last increase supply key accounted production of needed over for optimizing XX% closing the medical our X revenue, and are the across Aurora to streamline months, X GMP to product shipments over and This

for future these our the appropriate our complexity top and lead new are sales we new who going of state to with the a the we Brand a Head our accelerate broker initiatives a Marketing in efficiency have number strategy, further We working initiatives. cannabis which progress, contract believe Management and market. will national is current of They To Great new closely now operations. Canada. reduce to team like one today's even force, for with in North We Head is be at Distributors, line

will our talk to strategy want molecules, particularly commercialize I of globally of the production use deep our a tremendous the regulations cannabinoid moment intellectual about it to molecules as science program. to relates a to take amount topic up, a wrap we that biosynthesis. believe The airtime, is huge and generates minor property be and the Before isolation cannabinoid as We evolve. including of cannabinoids

potentially the that the U.S., CBD important today With it use of consumers isolate, is in to for to deeply IP Aurora pathways. commercialize interested Aurora's production stakeholders, brought and the the carried goes position Anandia. to science the on rights to our on The the Through business this cannabinoid to And cannabinoids, and Reliva X sells as global plant This together of tremendously biosynthetic and commercial back deals, defend them. particularly in USA produce both the than intellectual of fact, exploring work biosynthesis. In aspects acquisition licenses cannabinoids, it highlight this, be key our Century at to our of Group X%. evolution opportunities. plant closely are of we less discovery cannabinoids development products ability was to parties which to connection this well levels, the which together minor other to out promises infringing plant team by as cannabinoids, through IP typically property unlocks the companies as are Aurora from our occur working XXnd in actively valuable it more low licensing share on technology means to very efficient

end about transformation Let me ago, we great with Since a our business this. have first year accomplished deal. announcing a

revenue. we our production with production to operator We all with Specifically, these cultivation us sources G&A and XX%. leverage savings. to North the it a said would we of turn delivered quarters contract delivered we Thank coming ratio we to in we'll you demand. QX would chain. cut and the multiple upshot that now interest. on breakeven enable in The external align we that supply would Operator? of EBITDA announced over in that having the million force. for sales onboarded plus for our the said We We've in bringing reductions incremental external reach achieved new your current depend will expertise said in questions. without to $XX-plus sales Great And to quarterly today SG&A expense initiatives, We

Operator

Instructions]. [Operator

of Vivien Azer from comes with the Cowen. question first line Our

Vivien Azer

So adult-use in with dynamic competitive my market Canada. has to the in question do the

challenging store X.X sure. well of the you a be of terms guys, COVID opening shutdowns, So understood, perhaps the your all delays you peers, rollout. and issue comp bit more all then for for the to in uniquely, little And

think introduction I Daily of the So of that lot and doing peers were a Special.

difference though, market revenue aside, changes there's and of All that share. in between a declines

kind it board, is this at include operators doesn't later the degradation like that when last Miguel, picking Quebec, top market. share. your the the sequential across the landscape. share, are high on up there in look presumably in aggregate And like curious understand, which smaller buyer of year data, entrants Because versus is so to the obviously seems into year, looks was perspective And just I'm it in your market I operators it competitive

So are about kind to of you benefits you have share? versus movers how way who first the thinking of displacing smaller market second of compete mover are the against the balance being

Miguel Martin

it's Great. great a Well, question.

of the this. line address I COVID answer. just But think think of to the has the that me because everybody issues face it's also top sort Let sort understand everyone I -- is macro

had provinces massive act hand You on with the as to reacted. making days cuts as they wholesalers their

X talking had that And impact. in reduction So sort market. to onetime new provinces they and We're massive a a X of about terms to of the seeing we're that's that allowed also pieces. figure be SKUs brought

is So a would a I the just ways. and curbside that say portion different lot of stores bit of that only And in to not revenue that's story. of delivery say timing opening, a

to about dynamics, directions. take your market Vivian, in Now let X question it me

I'm XX% very controlling where what the it given a and of dilutive a market category. you're X maybe and have is So used to to first top used LPs to, XX%, what compared foremost, you

don't in Canada the business today. cannabis in that You see

where key vape, X that's that. is, of pre see category, So XX%, now dry roll, flower, XX% representing the things it top companies like you maybe

Secondly, as knows, in share not is isolation bellwether. everyone a well market really good

And lower We've hold. say a are a market I take days the value seeing lot bit. from products. see than by share to we're premium products those would little early a products starting start seen up discount to of premium that way standpoint. it picked seeing you're You're of deep margins and what

seen some also others. You've

products seeing You're X of Gen in Gen acceleration and Canada. X an also really

So if flower you look months, up over like XX% the last XX to XX%. be might

might those Canadian If you everything it a up products. that delay X be in the X with And there that. think understands everyone look was at Gen else, I Gen Xx and market

going rolls, pre those are higher that. have So vapor of when about you to think margins and in concentrates regardless

because would I the than I of brutally interest is, causing bit have provinces to to do Lastly, with people actually little and the wanted respectful what be would our glut people a would holding it's lastly, temporary. as the in longer I in making take be I up talking an money. and then market, than a is of Vivian, flower as And market a to lot taking just in believe, bit bit to Maybe we're you've these seen of it'd some hope. having of that's COVID. situation pricing. about longer retailers, think are honest, little and question guess, irrational competitive a There talked a I there your I low-cost share, dynamics think, describe margins

a and other products. bit quality let can't wholesale, our and talked items, We of had that. you snap your so retail. Glen mentioned, little talk bit as flush to about; to unlike massive CPG fingers And me about just the changes make; And flush I a

out I had and potency while with in a new $X.X is we board get of changes million. get do think and that system. the to you So on encouraging. the It across that saw at to made provision But the retail takes that we've items the

I think really is lot. a not about coverage talked retail GND and

around as Just you. what in the see for say SKU, stock XX%. From Canada, our is terms data data, is in of it X I point won't that #X which in we

tackling. low XX% in data has one So of can like on number great strong that the be That's is number abysmally us, for really blocking systems traditional and that calls make SKU of any think the the will We Xx only national sort coverage CPG. someone stores. an of as GND

have I'm compression parts and lot So to which really the with other not goes going improvements, -- way while it, not strength see the are that the of of we're of of less we're a provide happy but opportunities. and way our definitely business, steadier to timing

Operator

with from Our Cantor line next question Pablo of Zuanic comes the Fitzgerald.

Pablo Zuanic

Miguel, how brands been the comment of a the in can what's If I that the about the about question. brands? Have with hurt share, you on? these with that's on what just can Aurora context boards, all on the company have relationships going And with losing retailers? boards I'm right? And Because the of of ask suffered that. result in the -- asking as relationships a the and consumer. following those last of with issues, the -- maybe up Talk

Miguel Martin

you when boards, the mean you boards? mean Pablo, provincial the

Pablo Zuanic

Yes. Yes. Yes.

relationship companies like right? the time surprised wonder. So with they the parties is stores, makes that what boards, I'm you it consumer the are all So brands. the three cutting able there's with with a right? your and list at relationship in new SKUs to the retailers, to relationship little then Because Your see story, boards we terms your new with SKUS, just that the being these of

Miguel Martin

are you Okay, very welcome.

So if in I let X those can see me take parts.

evolving, this I of for everything would to So operate remember, I trying midst wholesaler. they trying got boards. old, the of say they're obviously, the are is and years a they're tremendous respect only X amount the mean, provincial to I've boards in COVID. as thing the do do provincial

And I a have relationship good think, so with them. Pablo, we

They think all favorites. it can in I you have always cases, really be better. play don't

So whether same the a manufacturer, have you you're a large manufacturer, small opportunity.

beverage many is the the particularly of like benefit from Now company decision-makers background, sophisticated with side. what I a coming is will you're seeing are and Aurora, very in cases, my sort think evolving, which CPG now

conditions, manufacturers shipping scoring on stock in rates, provisions. fill So

of the to and how take, All that. effort SKUs put to things And difference what start retailers. are of terms are of core they those time spending on them, those to out they lot we're in a make fill going how a

it just seems all in everybody's So treated the terms like I of for same. know now, a right free

the bigger a Also, I about think in price from flower pieces. segments, or compression benefits XX gram we And and are gram. boards concerned that's that starting think changing. a to definitely key on they whether put also X.X are some hearing that provincial that's I floors

are used chain controlled a think, interesting in today I market. are out stores. which Now or overall raising us. smaller business, we not to becoming in And may terms albeit of also a the Canada, significant of don't there amount sophisticated most there, which the have for say, centrally retailers, to, some more that is number chain And I'm they XX insignificant. chains it's that XXX, an is game are

events. because us coverage, advantage gives call series a COVID. I particularly importance of post think connected the of GND an And we're developing in

which a upside why country ton the stock. to traditional there SKU and #X the a of inducements, made significant know in retail only which Now And CPG There's is tackling, investments before ban I you blocking we've a mentioned is they're restricts alignment our again, is -- on in profitability. XX% infrastructure. in why for that that manufacture looking from, well But when say, program. a

XXX will categories vapor week. you though, important in points, XXX all basis of really up to a your game say, think basis a our consumers be one. we're seeing, folks I an points in better place. step terms in the unlike cover, And evolve lastly, so had quality. we flower to other I going swing And that and mature We're XXX think I all the seeing business is say, that's point Today, basis in in to points.

as well and and and new is investments like So as in company significant consumer that, terms of amount And will hash to value receptivity quality is and items the they around a like concentrates respecting think, resins. rosins are a and get, that's what of significant innovation. there. made I Aurora in moving And seeing we benefit

you're be where aggregate, traditional in what think trends top seeing state. would is in future XX%, that XXs category and start to the not And in expect LPs you're do in more to you'd so I going the seeing I X the here XXs. the XX%, stocks see

the execution, it's seeing consistent brand. at I always seeing don't place national You're there'll though you're be it's at regional just more brand level today. and a a think even a experience, for

Operator

David of markets. ATB next with from Capital Our comes question line Kideckel the

Frederico Yokota Choucair Gomes

for in chiming Frederico, actually is Dave. This

you really do in I maybe am have has not we've you for guys see U.S., M&A plans So just are that's looking environment, you in then? M&A wondering anything at seen specifically off the here that mean, your taken there, other in or I plan activity Canada game Canada. what's Canada. So how wise

Miguel Martin

of it's Frederico, been some there's an acquisitions interesting So late. Obviously, question. notable

that I -- it I think have. details. would without in what got way is anything giving specific this, We describe the Canada any donâ€™t we to I see

right think play share, buying of now, not share Canada. I renting nature is a market market dynamic in the or great Given

that Now we saw we maybe didn’t in would that team, that was accretive, was category a be need, that if management said, something technology, a interest. being something a it of or then

-- you Aurora of tear of think absolute is early terms I know, days. in on the was an many as in acquisition

lab out. we it's as in of got order or technology in and manufacturing it [indiscernible] a of whether India acquisitions in have and to terms infrastructure plenty of so fill or IP And plenty

going in rec, strength and you're think a Canada would we're but in our renting add as given share, a there to to $XXX really systemic position that describe in in the if softness in focus I chase we'd of to and think saw what us to, with I little be in a $XXX the or million, we sustainable medical was to see the a order order to I if going there, bit to international Clearly, we don't medical with it reason market million do it unless it. through portfolio. in needed do ATM,

would describe I how So that's Frederico. it,

Operator

of Lavery from the question Michael Your Piper next with comes line Sandler.

Michael Lavery

on make You sure out. think mean, how approach And cost laid that, to I some And It I versus like you gross got you by that want savings just initiatives things I high-touch about guess so. the terms of on also medical net. understand increasingly sounds out like that on side. you've mapped I touched the in good the color maybe some

is that, should things to maybe the some, I well? going of net will reinvestment to flow Or hand there through? expect as a number some XX% be XX% that like fund we And trim, to guess,

Miguel Martin

talked $XX GMP is feel that unpack efficiencies. I products got that, in in Israel. able I to $XX Nordic past for Michael, up sort that we've the to in we're deliver going facility the that would you producing tell now straight about you, confident and we to mean, EU of if million Europe we for be million

Obviously, we efficiencies some as our a redundancies, bit the as infrastructure overall rightsizing means the So for creates business. We've well we in inefficiency. little forward current redundancies. that have some seen have today going business

with XX-month as And going have has expect point EBITDA would have to different. period. expectation view, up straight to it's you savings. see that no neutral happen don't or to they XX% in a we deliver of say our And we'll grow be into when margin. way this record I say, the had from the of And that XX% track they're know, my on the need to that, I company my So strong see anything to

So I'd Did take Michael? answer it is. as that your question,

Operator

Balsky from comes question line Heather America. the with Bank of of Next

Heather Balsky

improves? balance the sheet, also, maybe the we cash how the timing savings curious and of are getting to guess, I your getting environment your thoughts the especially press you release your about around cost environment, to about cash you how guess, flow I'm the do U.S.? if And balance in sheet flow you, positive direction. a feel also in comment negotiation on about your in and federal metric thinking positive your cash closer moving this hopefully as I about in cash inch

Miguel Martin

kick to want you on? one Glen, that

Glen Ibbott

Yes. Thanks, Heather.

outlined listen, few think, consumed, savings, So QX being yes, look in big at of is look terms where some Certainly, was in a the Miguel operational we there. we part consumed and a what cash of there still operations. that. If was unpack cost to things we

But if so of million that the of cash flow and equates this operations. into We ways long bit and towards quarter. million think April. million achieve can that an operations. this yet capital, you is were we Working from we there gets at million or a on $XX $XX cost quarter. savings, $XX receivable That your million anomaly a we collected there not just quarter these $XX a to we're our So believe EBITDA $XX that maybe minus to positive

collected seen that capital. would the working we course So let's investment just the have in March, say during of we single-digit

So production and a with aligns little stabilize that, should roughly think bit. out capital working to kind even start and of demand we our

we there'll we got that think be term, under control capital now So tightly your in a piece reduced of should certainly relatively talked let's investment now, our inventory grow. -- be just much as mean this, done as that say, store, but we working new you homework. well as and how And CapEx we our that, our fine. of But we've long manage you've bit we I we've are finally about to I know, little

we CapEx a year what know spending on You were ago.

we've we're where now, we and our at projects think got or X complete. know You X of

$XX don't we're fiscal million the year that. $XX -- So track we end forward And I that's this going even top year. spent -- next over us million spend see there, if to on for

there and way we've the don't that, in So want just to that got having these to of in when place. cost impart on revenue a want make the -- number expect it, And do we to the in growth. described means depend say Miguel SG&A get to next that we didnâ€™t to plan pieces over execute what operations the on are quarters, really, that sure by we without we revenue us is no Absolutely. growth. reductions And do

believe Our international we thrive on track. medical to plans Canadian Miguel And place business put get in Medical to grow, the that continues as back we've outlined. pieces in to consumer

we that breakeven So to but a make and on to past, want we in flow pull sure as EBITDA depending talked least we've about growth. on cash growth, without the do we expect get levers, at to that the us

when up, flow. So earnings growth the cash as it shows and example, incremental shows up for

is as continued of we additional picking on costs That's XX flows cash think to how rationalization about plan. over see to next that's we of get how then growth. going the months the we're So the up and there XX back

Operator

from of & McGinley Matt comes with the Our next question line Needham Company.

Matthew McGinley

in months the normalizing, versus up contingent the consumer disruptions seems on quarter third. obviously, My upon And fourth quarter. to before fourth business financial only you'd quarter rationalization I impact, changes won't any pretty think, the the what really on COVID about have but ground question is for the an make about the in the Growth performance X.X lost have ends.

Or expect of we expect like think we this we as So the quarter? would before improvements should to improvements? see more should fourth in XXXX

Miguel Martin

you that? on want Glen, do

Glen Ibbott

business. the on sides but I'd I on side, on what also here's No, rec trends positive say different guess, the trends that. the are are, have -- We're trends of the what we

Miguel Martin

the in quarter. don't I midst guidance get give of ahead and to the want

of saying. There's other other we're side. There that cost on you also the are are pieces what think heard pieces steady. I sort

When business some laid I other figures trends making going for have sorry, where provinces of we what think of want it. in is give in think the the on I'm myself So I time exact terms the hard. pretty of it a which side the It's on can't is. plus been POs the And don't that of you, of I aggregate change want, steady. side, out answer really you medical but you from talk point you the X at I when those to sort the happens that I international get ahead in and pieces about what there, then of was look on

think want I'd put I -- it anything leave add Glen, you there. to So sort that? to of

Glen Ibbott

over And right fly there. there adjusting recognize, well. we've things kind that don't are dynamic We -- of that's just quarter we market what you now. No, seen, last the the doing consumer day can, to the market We're as on fine. as we that are in are the but the described, provinces our

look So we'll next out, laid we've focus for continue on improvement each quarter. just and quarters number the to of plan over is the which

Operator

Chen next line comes of BMO Markets. the with Tamy Our from Capital question

Tamy Chen

on Miguel, a and the you've I Sky. wanted more to ask bit at made changes production the pivot all

been think the move that things very I guys definitely on if highlighted that, well aside all So pretty we difficult for premium made you strategy. pivot headwinds just that's COVID because the

of of lot speak which Because that produce high-quality for the one aside, stuff. consistency have sort keep I thought again, that that enough once here, the the stuff, bit just just headwinds that that, the aside, the dynamic, side to right if not we of there's would things of space. Sky strategy you move at average can been sort we could COVID So opportunity in is a of to COVID have tackle that apparent a of there's hearing, now trying market And to now, perfect white high-quality flower? the that quality but your would

about Because consistency? possible right just production the and about white implications thinking forward. inventory, space that bit a also higher but hit tackle really you I'm to thresholds level can write-down in for of going talk I did the also your the at on and know the all inventory that you terms impairment quarter, can premium ability flower? to I the potency this want are big of consistency understand required you the So

Miguel Martin

Sure. It's Tamy. a great question,

back So a let go bit. little me

hammering which not ago, X-level important. low potency the lot quality, First sold market aspects out was were that and at And one of other a foremost, time, year a on products. in moisture, bud everybody quality Sky that XX%, XX.X% as have with a you could was terp, knows, as

a long, really easy, is Some would do. some make. that look XX, to all it Today, potency Daily was moved product. of is for it, It consumer was things. you for it's to a other market. as in Special, hard day case potency in making the flower wholesale the was really is great, be in hard retail XX will And potency XX above market, you everybody in. can sell products of the If that Anything market thing market buy product, as but some hard that And the to quickly. XX and other be the you an access has if at pricing example, maybe every can thing

So we have to Sky. pivot

that have D.C., about really production the also in want organic consistent. I'll anyone West of second, talk to lose the to very and manufacturing facility River, in in other but they've fact high-quality Now in-soil Whistler, consistent, sight don't we Coast been you Ridge, I X facilities, Sky the

question And so Tamy, Sky, been about Sky. to on working we've your

it. down we took still to it through and is XX%, working As know, it -- announced, you we a

we to but Canada. be reads our have early point, infrastructure. ascertain was GMP out we is be of what Glen's in have across to are though, going have now able Some news need apply whole with totality those And cycle to Sky. what understanding Nordic, We're of redundancies it we and we you're good The can of the get us, fixed close don't overall out painful the have Sky. And to you to EU see in there to get. in to we domestically order able what costs to system of coming encouraging, for to produce that through the

that with XX, what product importantly, delivering to is cost a order that So we and that the have rightsized In retail options value, structure Sky XX environment in. regardless enough that is potency happens of project. we're at for

little to follow-on that. So bit I think a

not of either and we way don't coming Whistler, because River, option like you soon. of production talk are We redundancy, is not expect which that's terms goes, the it one historical to only XXX% overall have one, it's that's an the And an But give update it at at in we them. Ridge the when of their aspects about of why utilization. but not

Operator

Next CIBC. question the with comes of Zamparo line from John

John Zamparo

of many that's a countrywide trended have And to you share. referenced is wanted you let's on can how that. at your to comment say, about the retail not, if SKU distribution made is maybe a you directionally, in or couple are you talk stores on look this curious follow-up how I'm competitors' quarters. -- I I'm you're percent and and not number but Miguel, past, willing how sure what if handy, and of you just a year over or

Miguel Martin

of a I from So incredible come John, world analytics.

is stores, I XXX,XXX business. that it I in information had I stock all. online. to get Our takeaway. come both In had my wholesale wholesale just Canada, and retail SKU, mean I weekly by We had -- I competitive shipments conditions, business starting had

of why Great to it with see systems. provinces significant the was It we You the starting the core there. some are information, CRM of North went one retail with their get and reasons

just and can't now fingers get snap you So -- can you what imagine, and are we it. your

the monthly are of the industry is that gather from on mundane them basic X,XXX of a volume stores, the following which cannabis business anywhere to where X,XXX going visit roughly the visiting visiting and XX% twice to is a of cannabis. stores month, We're are information, we're which blocks know to or is. I beginning between starting XX% all of all account and the you, but and are to basis. We open higher We'll selling the seem

overall most SKUs. to First XX commonly sold XX say, distribution, is

retail both and Secondly to is retail to wholesale pricing, consumer.

with store. matter. in to go share and what Third nice is the will the be would And calls is which Canada potentially be come then why that's location. stock imagine, in of the which what as listed, One, then X have to And launches secondly, And conditions, you or in can new ways. would brand authorized physically weekly timing speed, signage can those and of space. in

business is So is quoted data or of encompass and where you retail done internal takeaway because large data. a that piece to information lot CRM overall have sophisticated of chains is value widely not even the who I of independence systems, therefore, available doesn't the an data that and that that information the do

So of upside manufacturer. ton there's think a a in as I that

in the business many having this for a have. been is who, not in upside other long time they for are The couldn't cases, because retailers

so and that And for provincial insights really think it's providing as like basics wildly CPG which all we insights any profitability be it the at. and additive sure, I'm partners, the sounds consumer with we're I I will our new a and category it leverage And needs. for Aurora big retail but company, think data where for suit stores that, And us is opportunity. optimization stores existing and

Operator

next with Our Markets. Chu John Capital of Desjardins comes from line the question

John Chu

talking the just European on market. Canadian maybe So and the medical

well guess bit small little point really of markets, fronts. time. a on those just and this in I I X maybe find doing But at both You're kind those underwhelming

market been pretty the So can can maybe otherwise? outlook that Europe right a of we've has rec far me market, just more you is indications because color give maybe market underwhelming. med if Canadian the for XXth Canadian now, you in market just about then maybe us size, the I the bit potential, seen terms just growth And give some think so the of

just in So talk about general. markets maybe those X

Miguel Martin

XX% of you broader Canadian Yes. represent picture exactly the I mean, look John, I I so we to medical, find roughly medical it business. -- think if of the but the I understand have sentiment, at

is closest next upside. our mentioned, ton I As that. a half of There's

We benefits and movement and also a from see carriers. unions

an is So upside to that Medical. we there believe

at what with part or margins lot there's to great moat bar a into. it, steady there's is And see whether a and a or are we deep France around dealing XX%. Germany of U.K. business. the it's expansion. of is Internationally, And really it's get solid a The other you're and really Medical high

to think significant One and people to to would winning really interested are to going same reason and that medical margin the is be a today be from probably standpoint. continue are win grow, I it's it in tomorrow, the going threefold. is

typically medical tremendous those of regulatory Secondly the is all and is compliance, in efficiencies legal, the is, things. forward packaging, same you it have manufacturing, rec, and pathway on regulators,

on that having both rec. the is this is example. a there think strong, Canadian a wonderful I quarter, so is synergies And medical in and And great quarter company

level. you just rec. you And is rec environment. in were federal And the the multibillion-dollar of is the have see regulate to where it's at not that this medical. gotten that to to to bets to commerce, from Canada scenario I things. a what companies to going first made this respect of a have the with If this in just piece believe says I that, scenario overall big macro see don't think hammered quarter, due a have taxation going happened those is in where the lastly, steps and because we're FDA the one U.S. didn't all Medical interstate I going revenue. also not be a see going federal going regulated, CPG of business I some see would the you to that we're be really category, MSOs, global really large have all gain highly the stand don't government

not story, is It's and do whether all new growing, markets. medical of the economics, it tomorrow's think near or those just rec It's anywhere well is get it's it I part because it. at important attention. and today's synergies So we of the just doesn't an

Glen Ibbott

a to things of like just to I'd couple Miguel, add that.

Miguel Martin

Sure.

Glen Ibbott

the thing. A medical follow-on about

Just market sizing. about you're talking

In of X% Canadian maybe I of X/XX population population patients. X% medical medical consumers. would are Germany, It's -- of Canada are German let's that. it's say X/XX cannabis So currently of cannabis

of realize And patients so don't the patients tell XX% they're as our there's would leadership medical out in there yet. you Germany

myopically penetration benefits them so more cannabis an -- delivering simply talked in I industry got job the our margin. go Canada. could that, But just you importantly, and opportunity about kind sort of it's in the opportunity, same don't We XX% so And XX-fold of medical help reiterate there. is growth point, focus anybody XX% and we just I'll getting our understand of when margins, we've on see miss revenue, because important we to

operating that market. XX% So XX% worth the margin to consumer me, to dollars is at XX% in somebody consumer twice the

shouldn't lose we It's of a business. So of sight our part that. massive

are the growth opportunities excellent. think I

support for future reasons a the opportunities. is into Miguel you all excellent. business to I cash-generating said, And leads think the the that it ability

So as I of the It's the to don't -- want it poorer incredibly to, important part leave a poor the cousin rest of the business. business. an sort of

Operator

Ladies I'd turn for and to question-and-answer gentlemen, we like back session, Miguel have and reached the call remarks. Mr. closing end of the the Martin to

Miguel Martin

We all forward of you. you is Aurora. with and on look We of Well, thank Thank to best. the all your All in everyone this well your want say hope I to in safe delivering behalf interest plan. And you of and families. us.

Operator

conference. concludes This today's

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

Aurora Cannabis (ACB) 14 May 212021 Q3 Earnings call transcript