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?’”
Bruce Campbell compares Hexo, Aurora and Canopy
Bruce Campbell, president and portfolio manager at StoneCastle Investment Management, compares Hexo, Aurora and Canopy.
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.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
