After breaking off a little preview of the company’s financial position at the end of August, Rich is back to discuss Aurora Cannabis Inc.’s (TSX:ACB) (NYSE:ACB) fourth-quarter 2019 financial statements.
“Aurora is showing pretty big growth if you ask me,” he says.
Aurora is one of the biggest cannabis companies in the world, so when it releases information about its financials, the whole sector stands up and takes notice. The Edmonton-based, vertically integrated cannabis giant is currently an industry leader in terms of production and reach. It has a funded capacity of more than 625,000 kg per year, as well as operations in 25 countries across the globe.
Aurora’s Revenue is Up Big Time
The big headline from Aurora’s Q4 2019 financials is that, in the months of April, May, and June of this year, the company generated $98.9 million CAD in net revenue, up an impressive 52 percent from the previous quarter. Most of that, as you’d expect, came from cannabis sales.
“This is record-breaking revenue for any cannabis company in the world,” says Rich. “All I see is growth across the board for Aurora.”
To break the numbers down a little further, Canadian cannabis sales rose by 52 percent, as did medical cannabis sales, which are up 10 percent for the company. In addition, the cost of production per gram fell 20 percent, sitting now at $1.14, and total production volume increased 86 percent from Q3 to 29,034 kgs.
“To put this into perspective, Zenabis did 1,300 kgs, and Aurora just did 29,000 kgs,” says Rich. “These guys are just huge.”
As this quarter also represents the end of Aurora’s 2019 fiscal year, the company released data from its last twelve months of operations as well.
Between July 1, 2018, and June 30, 2019, net revenue grew by 349 percent. The company generated a total of $247.9 million in the last year. Again, most of that came from cannabis, of which the company sold 36,638 kgs, representing a 629 percent production increase compared to fiscal 2018.
In all, the company produced 57,442 kgs of cannabis, a 920 percent increase from the previous fiscal year.
But ACB Stock is Still Down
Despite establishing a new high for cannabis revenue, Aurora’s report wasn’t all good news. ACB posted a loss of $11.7 million in adjusted EBITDA (earnings before interest, tax, depreciation, and amortization). Though this loss represents a 68 percent improvement compared to the previous quarter, a loss is still a loss.
“This is where the stock is going down. The adjusted EBITDA loss is what people are going to focus on,” explains Rich.
Rich goes on to explain that, though companies like Zenabis (TSX:ZENA) (OTCPK:ZBISF) and MediPharm Labs (TSX:LABS) (OTCQX:MEDIF) have started turning profits, Aurora is still investing money in becoming a worldwide cannabis leader. Establishing itself in 25 countries costs a lot of money, but has the potential to pay off further down the road. For now, the company is less interested in profit, and more interested in opportunity.
“They’ve got money behind them from three of the five largest Canadian banks. That’s $360 million,” says Rich. “So what’s an $11.7 million quarterly loss when you’re growing exponentially? When this stock goes down, all it does is present an amazing buying opportunity.”
This morning, ACB stock fell 10 percent from $8.51 to $7.72.
What are your thoughts on Aurora Cannabis? Is it worth the long-term investment, or is it a stock that simply can’t turn a profit? Let us hear your take in the comments below.
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