Aurora Cannabis Inc. blamed COVID-19 lockdowns for a 45 per cent plunge in consumer sales that it experienced as it continued to restructure its operations in its fourth quarter.
The Edmonton-based cannabis company said the health crisis pushed its net revenue from consumer sales to $19.5 million for the three months ended June 30, down from $35.3-million in the fourth quarter of 2020.
But that didn’t appear to have the company’s executives worried.
“Canadian rec will come back and that timeline won’t impede our strategic or financial progress,” said Miguel Martin, Aurora’s chief executive, on a Monday call with analysts that had been rescheduled from the week prior.
“We’ve shown an incredible agility over the last two years and the final leg of our transformation is well underway.”
The transformation Martin was referring to has been ongoing for the last year and has already encompassed several sizable reductions of Aurora’s workforce and the shutdown of many facilities.
Last week, Aurora announced about eight per cent of its global workforce will be impacted by the forthcoming closure of its Aurora Polaris property in Edmonton.
The transformation is meant to streamline its operations, align its product offerings with current and future demand levels and put the company on a path to profitability.
But analysts feel those tasks won’t be easy.
Bill Kirk, an analyst and executive director with MKM Partners, said in a Sept. 17 note that Aurora has “limited prospects” to improve its position in the recreational cannabis market and is unlikely to beat profitability expectations.
He pointed out that in the 17 quarters Aurora has reported as a public company, it missed consensus EBITDA expectations 17 times and he felt the firm would barely generate $50 million in revenue.
Retail investors also questioned Aurora’s track record on EBITDA on Monday’s call, asking Martin why they should believe the company is headed for profitability now because they’ve heard those promises before.
“I can absolutely sympathize with the frustration around past milestones not being achieved, but there’s a big difference between what we’re saying now and what was said then,” Martin told the investors.
“Those forecasts were based on assumptions of revenue growth and that’s not what we’re saying here now.”
Martin said he had confidence in the renewed forecasts because they are based on “aggressive cost” saving measures and not dependent on a need to grow revenue and increase margins.
His remarks came as Aurora announced its medical cannabis net revenue was $35 million, up from $32 million in the fourth quarter of 2020.
Aurora reported a net loss of $135.1 million, compared with a net loss of $1.86 billion a year earlier.
On an adjusted basis, it lost $19.3 million, compared with a loss of $33.3 million in the same quarter the year before.
Included in the adjusted loss is $5.1 million in restructuring costs. Aurora says it has identified $60 to $80 million in annualized cash efficiencies as part of its restructurings.
Aurora expects to deliver $30 million to $40 million of annualized cash savings with the next year, and the remainder by the end of the second quarter of 2023.
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