Aurora Cannabis Inc (NYSE:ACB) Q2 2020 Earnings Conference Call - Final Transcript

Feb 13, 2020 • 08:00 am ET


Aurora Cannabis Inc (NYSE:ACB) Q2 2020 Earnings Conference Call - Final Transcript


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Good morning, everyone. And welcome to the Aurora Cannabis' Second Quarter Fiscal 2020 Conference Call for the three months ending December 31, 2019. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to the risks and uncertainties relating to Aurora's future financial or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in Aurora's Annual Information Form and other periodic filings and registration statements. These documents may be accessed via SEDAR and EDGAR databases. I'd like to remind everyone that this call is being recorded today, Thursday, February 13, 2020.

I would now like to introduce Mr. Michael Singer, Interim Chief Executive Officer and Executive Chairman of Aurora Cannabis. Please go ahead, Mr. Singer.

Michael Singer

Good morning everyone and thank you for joining today's call. With me today is Glen Ibbott, our Chief Financial Officer. Given that we just addressed the market last week with a very fulsome call on our succession plans, board expansion, business rationalization, and pre-release of certain Q2 financial information. I think this call will be a bit shorter than normal. I'll do a quick review of the quarter including operational highlights. Then Glen will discuss our financial results in greater detail, followed by a question-and-answer session. To start things off, I'd like to address the current state of the market, which I briefly summarized on last week's call. First, the past year has been challenging for the broader cannabis industry, with issues of retail constraints, evolving consumer demand and provincial distributor inventory management adjustments. As we said in our first quarter conference call, it's important to remind ourselves that the Canadian consumer market is just over a year old and will take time to develop, but we remain extremely bullish on the long-term potential of the Canadian medical and consumer markets as well as established international medical markets.

We firmly believe cannabis is a secular growth story, but as is the case with all growth industries, we need to be patient as the markets evolve. With that as a backdrop and consistent with what we told you last week, our total net revenue excluding provisions totaled CAD67 million for Q2, we did not record some product return and price reduction provisions that Glen will address shortly. It's worth highlighting that our core consumer revenue actually saw modest growth quarter-over-quarter before the impact of these returns and price reductions. We are proud of our strong cultivation capability, highlighted by over 30,000 kilograms of production in fiscal Q2. Our Q2 2020 gross margins on cannabis net revenue of 44% were impacted by the provision for returns and price reductions we took in the quarter.

I'm also proud to report that our high-tech cultivation facilities continue to deliver leading indoor cash costs to produce below CAD1 a gram and in this quarter came in at CAD0.88 per gram