Release Date: February 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aurora Cannabis Inc (ACB, Financial) reported a record third quarter for medical cannabis revenue, net income, adjusted EBITDA, and free cash flow.
- Overall net revenue grew 37%, driven by a 51% year-over-year growth in global medical cannabis.
- International revenue increased 112%, surpassing Canadian medical cannabis revenue for the second consecutive quarter.
- The company achieved a record adjusted gross margin of 65% and a record adjusted EBITDA of $23.1 million.
- Aurora Cannabis Inc (ACB) ended the quarter with $180.2 million in cash and cash equivalents and no cannabis business debt.
Negative Points
- Consumer cannabis net revenue decreased to $9.9 million from $11.6 million in the year-ago period.
- Adjusted gross margins for consumer cannabis fell to 26% from 29% due to changes in sales mix.
- The Canadian recreational cannabis segment saw a decline in revenue, highlighting challenges in extracting value from high-quality products.
- The company faces complexities in supplying international markets due to varying regulatory challenges.
- Bevo's plant propagation business, while growing, is subject to seasonal revenue fluctuations.
Q & A Highlights
Q: Are there any supply constraints affecting Aurora's ability to meet growing demand?
A: Miguel Martin, CEO, stated that Aurora feels confident about their supply capabilities. Supplying international markets involves regulatory complexities, but Aurora is well-positioned to meet the needs of key markets like Poland, Germany, Australia, and the UK.
Q: Were there any unique or non-repeatable factors that positively impacted Q3 results?
A: Miguel Martin, CEO, confirmed that there were no unusual or one-time factors affecting Q3 results. The international markets can fluctuate due to permitting, but overall, the quarter's performance was consistent with expectations.
Q: How does Aurora view competition in the international medical cannabis market?
A: Miguel Martin, CEO, noted that while competition exists, the international market is more consolidated compared to North America. The EU GMP and regulatory requirements create barriers that favor companies like Aurora with significant investments in product innovation and infrastructure.
Q: What is Aurora's approach to capital allocation now that it is free cash flow positive?
A: Miguel Martin, CEO, emphasized Aurora's strong balance sheet and lack of debt in its cannabis business. The company plans to be opportunistic with investments, focusing on accretive opportunities that align with its core competency in medical cannabis.
Q: Can you provide insights into the sustainability of Aurora's high gross margins in medical cannabis?
A: Simona King, CFO, explained that high margins are driven by favorable pricing and operational efficiencies. The company expects these margins to remain favorable, supported by growth in international markets and cost management.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
