Aurora Cannabis Inc. shaved $590.4 million off its net loss in its most recent quarter as it continued its search for savings and began laying the groundwork for a future orchid business.
The Edmonton-based pot business revealed Thursday that its first-quarter net loss amounted to $28.3 million compared with a net loss of $618.8 million a year earlier.
It attributed the dramatic decrease seen in the three months ended June 30 to an increase in gross profit along with lower impairment charges and operating expenses — the fruits of an ongoing transformation plan that uncovered $400 million in savings so far and aims to generate another $40 million soon.
"Our target of removing a further $40 million of cost during fiscal 2024 is ambitious, but when considering how much we've already accomplished through our business transformation, it is entirely within our wheelhouse," said Aurora's chief executive Miguel Martin on a Thursday call with analysts.
Aurora's transformation — plotted over Martin's almost three years helming the company — has so far involved staffing cuts along with facility closures, including the shutdown of Aurora's Nordic production facility in Denmark.
But it has also placed more attention on Aurora's non-cannabis businesses like Bevo Agtech Inc., a supplier of vegetable seedlings and flowers.
Aurora acquired a 50.1 per cent stake in Bevo last year for $45 million plus up to an additional $12 million that is conditional on Bevo achieving certain financial milestones at its Site One facility in Langley, B.C.
Bevo alone delivered $19.9 million in net revenue to Aurora in its first quarter, higher than the $13.2 million attributable to consumer cannabis, but lower than the $41.6 million the medical pot business brought in.
Altogether, the company's net revenue for the quarter totalled $75.1 million, up from $50.1 million a year prior.
Aurora expects the Bevo portion to get a boost in the next two to three years from orchids, an industry he described as "ready for supply chain disruption."
"Prefinished orchids in North America are mainly sourced from overseas with the cost and quality issues that brings, but the capital required to build the highly controlled environment to grow orchids in North America is a barrier," he said.
Luckily for Bevo, Aurora has "underutilized" facilities like Aurora Sky in Leduc, Alta., ready for orchid growing.
Bevo's customers will be "the same blue-chip retailers that they have already served for years," Martin said.
The company expects to make its first sale of orchids grown at Aurora Sky later this year with further sales from its Aurora Sun facility in Medicine Hat, Alta., to begin in the first half of its next fiscal year.
Aside from the orchid business, Martin appeared enthusiastic about the company's first quarter adjusted earnings before interest, taxes, depreciation (EBITDA), and amortization of $2.2 million compared with a loss of $8.8 million a year prior.
The $2.2-million figure was a first-quarter record for the company and marked the third consecutive quarter of positive adjusted EBITDA, giving the company confidence it will reach its goal of being cash-flow positive by next year.
This report by The Canadian Press was first published Aug. 10, 2023.
Companies in this story: (TSX:ACB)
Tara Deschamps, The Canadian Press
