It’s time for Aurora Cannabis Inc. to grow up.
After years of spending capital to become one of the world’s biggest cannabis companies, the Edmonton-based pot giant’s interim Chief Executive Officer is using its latest quarterly report to hit the reset button.
Out is the company’s founder and former CEO Terry Booth, along with 500 other staff amid a company-wide effort to cut spending. Aurora also wrote down $1 billion in assets in its second-quarter, while reporting on Thursday an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss that missed analyst expectations due to a sharp decline in cannabis production.
“It really is time to almost grow up and mature as an organization and start delivering … profitability,” interim Aurora Chief Executive Michael Singer told BNN Bloomberg in a phone interview.
“Once you do that, you’re no longer dependent on the market to fund your operations.”
Aurora isn’t alone in how its business has suffered alongside its cannabis sector peers in a recreational market stymied by supply problems, a stunted rollout of legal retail outlets and a still-thriving illicit market. However, the company says it also overestimated the demand for legal cannabis domestically and in the medical market abroad.
“I would never say we made mistakes. The decisions we made in the past made sense at that time,” Singer said. “But the market has changed. You have to take a step back and think pragmatically today and think ‘What do we need to do today to adapt for a changing environment?’”
Singer said the company is now “recalibrating” its expectations of the Canadian cannabis market, launching a new value product dubbed the “Daily Special” aimed at combating the illicit market, while still finding creative ways to drive down costs, such as reducing its directors and officers insurance.
He added there are no plans to further cut jobs materially, and emphasizes any capital the company intends to spend needs to be “rationalized” and immediately show value. “The only thing that we have in front of us is our ability to control costs,” he said.
But Singer isn’t ruling out any more major moves – they just need to make sense. He noted Aurora will continue to keep a focus on its entry into the U.S. cannabis market, highlighted by the appointment of Kraft Foods and Mondelēz International Inc. executive Lance Friedmann.
“It is a market that we cannot ignore,” Singer said. “If we look at acquiring something in the U.S., it’s something that has to be federally legal, complement our business, has to be instantly accretive, has to be cash-flow positive and has to add to my balance sheet, not take away from it.”
Investors may be warming to the company’s latest moves. Aurora’s stock rose slightly higher Thursday after the company reported its latest quarterly results, although it has plunged more than 87 per cent since hitting a high of $15.95 in Oct. 2018. The Horizons Marijuana Life Sciences Index ETF has declined by about 66 per cent during that same period.
The positive stock move comes despite a decline in net revenue in the quarter at $56.6 million, down 26 per cent from the prior three-month period, while reporting an adjusted EBITDA loss of $80.2 million, up from $39.7 million in the prior quarter. The company also reported a 26 per cent quarter-over-quarter decline in cannabis production attributed to production changes. Analysts expected Aurora to report $61.7 million in revenue and an EBITDA loss of $62.5 million in the three months ending Dec. 31, according to Bloomberg data.
But analysts remain skeptical Aurora can successfully turn the ship around amid a perilous cash position and reduced access to the company’s credit facility, not to mention a fickle consumer market that is still awaiting the full rollout of so-called Cannabis 2.0 products.
“This (quarter) was a function of the company beginning in their quest to underpromise and overdeliver, something which has been the reverse to date in most of the sector, and will be key going forward if the company are to rebuild trust with investors and the wider market,” said Jefferies LLC analyst Owen Bennett, in a report to clients on Thursday.
Singer appears confident the company will be able to stick around long enough for the cannabis market to rebound back to a level that could reach those original, lofty expectations.
“If we conclude that there’s certain areas that no longer warrant that investment, we’re going to strip those out as well,” he said.
“We’re going to continue to provide that level of discipline and fiscal responsibility that hasn’t existed before to ensure we have the right size of the business to meet the current market opportunity with an eye on the future.”
Cannabis Canada is BNN Bloomberg’s in-depth series exploring the stunning formation of the entirely new — and controversial — Canadian recreational marijuana industry. Read more from the special series here and subscribe to our Cannabis Canada newsletter to have the latest marijuana news delivered directly to your inbox every day.
3 new COVID-19 outbreaks declared in Calgary | CTV News – CTV Toronto
Three new COVID-19 outbreaks were declared in Calgary on Friday, including 13 cases being reported from a private gathering, five cases at a Cargill meat processing facility and five at a childcare centre in the southwest.
An outbreak was also declared in the community of Fort Mackay in northeastern Alberta, with five cases being reported at CNRL Albian.
Alberta Health Services would not comment on where or when the private gathering was held but said of the 13 cases, nine are considered active and four recovered.
Five active cases were reported at the Cargill plant in the 0-100 block of Freeport Way N.E.
Two active cases and three recovered cases were reported at Fledglings Educare Centre in the 1100 block of Canterbury Drive S.W.
An outbreak is declared in acute and long-term care facilities when there are two or more cases, and in a community setting when there are five or more cases. The outbreak is considered over when four weeks passes without any new cases being declared.
A total of 84 new cases were reported by the province on Friday, with 20 of those in the Calgary Zone and 52 in the Edmonton Zone.
There are now 12,053 cases of COVID-19 in Alberta, with 1,036 of those active and 10,796 recovered. There are 48 people in hospital with 13 of those in ICU.
One additional death was reported Friday, bringing the provincial total at 221.
COVID-19 outbreak declared at new Cargill plant as Alberta reports 84 new cases province-wide – Calgary Herald
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“This plant in terms of the pre-existing conditions was better,” Hesse said. “But the question is what Cargill does now.”
Alberta also announced two other new Calgary outbreaks Friday. One is at Fledglings Educare Centre, where two staff and three children were infected with COVID-19. Two of the children have now recovered. As well, an outbreak at a private gathering is linked to 13 cases, nine of which remain active.
Also Friday, Alberta reported 84 new cases of the novel coronavirus, bringing the province’s total to 12,053.
The new cases came from about 8,200 tests, a one per cent positive rate. More than 800,000 tests have now been conducted in Alberta.
Both active cases and hospitalization rates stayed stagnant from Thursday. There are 1,036 active coronavirus cases in Alberta, while 48 Albertans remain in hospital with the virus, including 13 receiving treatment in intensive-care units.
One new death from COVID-19 in Alberta, a woman in her 60s from the AHS South zone, was reported Friday, bringing the province’s total to 221.
Elsewhere Friday, Calgary’s public and Catholic school boards each announced that they were mandating masks for all students in schools. Previously, Alberta Education only required students in Grades 4 to 12 to wear masks.
Trump says 'whatever' to concerns about WeChat ban hurting Apple – AppleInsider
During a press conference Friday, President Donald Trump appeared unconcerned with the possible impact that a WeChat ban could have on Apple’s business.
Earlier in August, Trump signed a pair of executive orders that would bar any transactions between U.S. companies and Chinese-owned TikTok and WeChat. That, in effect, would ban both apps from the U.S., though it’s unclear what impact it might have globally.
On Friday, Apple joined a growing number of other major companies calling for the president to end the executive orders. That includes Disney, Ford, and Walmart.
When asked by a Bloomberg reporter at a White House press conference Friday morning about whether he was concerned about the effect the ban could have on iPhone sales in China and other markets, Trump simply responded “whatever.”
“Gotta do what’s good in terms of the security of our country,” Trump said. “We’ve been very badly let down by China.”
WeChat is a wildly popular app among Chinese users. And in a Bloomberg survey conducted in August, 95% of respondents in China said that they would rather give up their iPhones for Androids than lose out on WeChat.
On Monday, analyst Ming-Chi Kuo cautioned than an outright ban on WeChat could cut global iPhone shipments by about 30%.
It isn’t clear whether the U.S. ban would only bar WeChat’s use in the country, or if its vague wording could force Apple to pull it from the global App Store. WeChat parent company TenCent said that it is seeking clarity.
Trump’s order to ban TikTok could be stopped if a U.S. company acquires the social media platform — which Microsoft is in talks to do. Such an acquisition has not been discussed for WeChat.
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