After some scandals and weak earnings reports rocked the cannabis industry over the last couple of months, most of the companies competing in the sector experienced downward pressure on their share prices, as the industry floundered to find some positive news that reinforced the long-term viability of the cannabis sector.
Aurora Cannabis (ACB) delivered that good news via its preliminary Q4 guidance that showed the positive narrative of the company specifically, and the industry in general, remains in place, even though some players aren’t going to perform, and in some cases, even survive over the long haul…
Guidance
While Aurora management was clear that the numbers it was providing are unaudited, it also said it expects them to be close to what is is guiding for in its fourth fiscal quarter ended June 30.
Concerning revenue, it is looking for it to be in a range of C$100 million ($75.8 million) to C$107 million. That is significantly up from the C$19.1 million year-over-year, although I wouldn’t get too excited about that because it was pre-legalization numbers in Canada.
Comparisons for the prior year will be more relevant in the first calendar quarter of 2020, and most accurate in the second quarter. The reason is the last calendar quarter of 2018 wasn’t a full one because of legalization coming in the second half of October, and of course it taking time to effectively roll out.
But that doesn’t take away from the revenue growth of Aurora, which did very well sequentially too. Revenue in the prior quarter was C$65.1 million, and net revenues for the reporting period are guided for C$90 million to C$95 million. That is an impressive performance, and the company shouldn’t slow down anytime soon, as it’s just starting to approach the enormous production capacity of over 625,000 kilograms annually in a couple of quarters.
With the company guiding for growth to continue across all its business segments, the future does look very bright for Aurora.
As for full-year guidance, net revenue is projected to reach a range of C$249 million to C$256 million.
Product available for sale in Q4 2019 will be on the upper end of the range of 25,000 kilograms and 30,000 kilograms, according to the company. Previous guidance had in coming in at about 25,000 kilograms for the quarter.
Also significant was the reiteration of its past assertion that the company should generate positive adjusted EBITDA in the reporting period. It also sees improvements in important metrics like cash cost per gram, gross margins and the amount of kilograms sold.
Overall importance
There are a couple of important things to note in this guidance. The first is, it counters some of the bearish comments analysts, pundits and financial writers made concerning Aurora Cannabis after its last earnings report, which was good, but…
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