Aurora Cannabis Financials Should Spark Investor Interest

Aurora Cannabis Inc. (TSX:ACB) saw its full-year 2018 net revenues surge 206% to $55.2 million

SmallCapPower | September 28, 2018: Aurora Cannabis Inc. (TSX:ACB) Monday reported its Q4 2018 and FY2018 financial results and investors in general seemed pleased. Shares of Aurora Cannabis rose nearly 4% on Monday and another 4% on Tuesday.

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Aurora Cannabis saw its full-year 2018 net revenues surge 206% to $55.2 million, driven by a strong growth in sales of cannabis coupled with higher average selling prices. Gross margins for FY2018 were 65%, up 16% compared to FY2017. The increase is attributed to a higher average selling price per gram of dried cannabis and a higher proportion of cannabis oil sales in product mix.

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In FY2018, Aurora Cannabis produced 5,632 thousand kilograms of cannabis, up 85% and sold 5,022 thousand kilograms of cannabis, up 111% compared to FY2017. Average net selling price of dried cannabis increased 18% to $7.65 and average selling price of cannabis oil decreased by 24% to $13.68. Higher revenues along with improved gross and operating margins helped Aurora Cannabis report net income of $69.2 million compared to a loss of $12.9 million in FY2017.

Aurora Cannabis has made 12 strategic acquisitions during the fiscal year, out of which 11 have been closed. Management’s guidance for FY2019 is very compelling, with its year-end 2018 production rate expected to exceed 150,000 kg per annum and subsequent scale up to over 500,000 kg per annum. The Company is eyeing production & sales expansion internationally as well as in the home front, product development & enhancement, and synergies from acquisitions. Aurora is rapidly accelerating production out of its newly-licensed facilities, starting with Aurora Sky, which is expected to ramp to a full 100,000 kg per annum capacity at about calendar year-end 2018. The above stated factors should help the Company attain favourable buoyancy and better margins going forward. Further, Aurora Cannabis revealed plans to list on a senior U.S stock exchange.

Aurora Cannabis CEO Terry Booth said, “Aurora made substantial progress toward our strategic goal of becoming the global scale and margin leader in the cannabis industry, establishing a vertically integrated company with a broadly diversified product offering with a large global footprint. Our high-pace, consistent execution has enabled us to complete a number of transformative acquisitions, bringing together industry-leading companies in terms of scale, quality, efficiencies, plant and medical science, product development and innovation, brands, and international distribution. With coast-to-coast supply arrangements, and our strategic investment in Alcanna, we are very well positioned to capitalize on the significant adult consumer use opportunity in Canada. With reported Q4 revenues of $19.1 million, pro-forma Q4 revenues of over $33.1 million, and production capacity scaling up rapidly, we anticipate accelerated revenue growth during fiscal 2019. We have invested heavily in our organizational capabilities, including sales, marketing, and corporate talent and capacity, to ensure we will continue to drive strong and sustainable long-term growth.”

Aurora Cannabis currently trades at a market capitalization of $11.71 billion with price-to-book multiple of 4.4x.

Disclosure: Neither the author nor his family own shares in the company mentioned above.

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