Aurora Cannabis earnings: surprise profit, eyes US listing

A
Canadian flag emblazoned with a marijuana leaf flies at a
legalization rally outside the countries
parliament.
REUTERS/Patrick
Doyle

Aurora Cannabis, the second-largest marijuana producer by market
cap, reported a surprise profit on Tuesday as the company eyes a
US stock listing.

For its fiscal fourth quarter, Aurora earned 0.40 Canadian
dollars, easily beating the 0.03 Canadian dollars loss that
analysts surveyed by Bloomberg were expecting. Revenue more than
doubled from the same quarter last year, coming in at 19.1
million Canadian dollars, missing the 23 million Canadian dollars
that was expected.

Aurora, which trades in Toronto and is tracked via an
over-the-counter (OTC) ticker in the US, rose about 3.6%
following the release.

“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,” Aurora CEO Terry Booth said in a press
release.

“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.” 

The company’s average selling price for dried cannabis increased
to 8.02 Canadian dollars per gram from 7.30 Canadian dollars per
gram last quarter, while its production costs rose to 1.70
Canadian dollars from 1.52 Canadian dollars. This increase helped
the company’s full-year margins grow to 65% from 56% last year.
In total, Aurora said it produced 2.2 million kilograms of
cannabis and sold 1.6 million this year.

Shares of Aurora are up 130% since its mid-August low of 4.10.
The subsequent rally was fueled in part by
reported talks with Coca-Cola to produce a CBD-infused
beverage. The company has said it does not comment on
exploratory discussions. Wall Street analysts have an
average price target of $11 a share, a 10% premium to Monday’s
closing price.

Aurora’s surging stock has complicated trading for some
investors. After a
series of trading halts, US brokerage
Robinhood blocked its users from buying new shares of
ACBFF — Aurora’s OTC listing — citing issues at
its execution venues related to the high demand from
customers. Aurora is held by more than 72,000 Robinhood
customers, making it the 21st most popular stock on the app’s “Top
100” list. 

The cannabis producer plans to file a a Form 40-F with US
regulators soon, a regulatory form that Canadian company’s must
file to register on an American exchange, a move that will allow
it to access more capital on the world’s largest exchanges.

“Listing our shares on a senior U.S. exchange reflects the
level of corporate and business maturity and our high-paced
execution,” Booth said. “This listing provides access to a
broader investor audience who gain the opportunity to participate
in our continued success.”

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