Mr. Miguel Martin reports

AURORA CANNABIS ANNOUNCES FISCAL 2023 THIRD QUARTER AND FILES FULL YEAR RESULTS

Aurora Cannabis Inc. has released its financial and operational results for the third quarter and fiscal year 2023. As a reminder, fiscal 2023 comprises three quarters ending March 31, 2023.

"We are proud to have delivered our second sequential quarter of positive adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] in Q3 2023, demonstrating our commitment to financial discipline. Over the last three years, our ongoing business transformation initiatives have delivered approximately $400-million in annualized cost savings that have significantly reduced cash used in operating activities. In fact, cash use continues to improve, as evidenced by the reduction from $35.5-million in Q2 2023 to $15.1-million in Q3 2023, excluding working capital. This impressive improvement is the launching point for the initiatives that will support our drive to our new financial target of positive free cash flow by end of calendar year 2024," said Miguel Martin, chief executive officer of Aurora.

"This quarter, revenues in both our global medical cannabis and Canadian consumer cannabis segments held mostly steady at $38-million and $14.5-million, respectively, and we benefited from a strong $10.7-million contribution from our Bevo acquisition, due to the onset of its traditionally strong seasonal period. Our adjusted gross profit rose to $30.6-million while our adjusted gross margins remained healthy, with our medical business generating a stable, adjusted gross margin of 60 per cent. Our consumer business produced an adjusted gross margin of 25 per cent, up 500 bps [basis points] from the prior quarter," he stated.

"Aurora is best differentiated from its peers by our high-margin, core global medical business spanning 12 countries, and our ability to find new profitable markets for growth. We stand poised to be opportunistic with our strong balance sheet and net cash position in the current market environment. Our determination and ability to showcase our strategic progress positions us for significant value creation," he concluded.

Third quarter 2023 highlights

Unless otherwise stated, comparisons are made between fiscal Q3 2023, Q2 2023 and Q3 2022 results.

Consolidated

Total net revenue was $64-million, as compared with the prior quarter net revenue of $61.7-million and $50.4-million in the prior-year period. The increase from the prior quarter was due to the contribution of $10.8-million from Bevo, acquired in August, 2022.

Excluding the impact of the non-core bulk wholesales, adjusted gross margin before fair value adjustments on cannabis net revenue for Q3 2023 remained strong and steady, and well above the industry average, increasing to 51 per cent from 49 per cent in Q2 2023.

Medical cannabis

Medical cannabis net revenue was $38-million, a 3-per-cent decrease from the prior quarter, delivering 59 per cent of Aurora's Q3 2023 consolidated net revenue and 75 per cent of adjusted gross profit before fair value adjustments.

The slight decrease in net revenue from Q2 2023 is largely due to a temporary situation of limited supply of high-demand cultivars in certain EU (European Union) markets as the company had production issues at its Nordic production facility. Following the year-end, in May, 2023, the company made the decision to close the Nordic production facility and to return to providing European supply from Canada, a change expected to improve reliability of supply of existing and new, high-potency cultivars, and increase gross margins over time. The revenue decrease was partially offset with higher volumes sold into Australia, a key export market for the company.

Adjusted gross margin before fair value adjustments on medical cannabis net revenue remained steady at 60 per cent for the three months ended March 31, 2023, as compared with 61 per cent in the prior quarter, and within the company's target range of 60 per cent and above. The continuing positive impact of Aurora's new yield, high-potency cultivars is expected to maintain margins in the target range for the company's medical business.

Consumer cannabis

Despite the significant structural challenges of the Canadian adult-use market, Aurora's consumer cannabis net revenue was steady at $14.5-million, compared with $14.6-million in the prior quarter.

Adjusted gross margin before fair value adjustments on consumer cannabis net revenue was 25 per cent, increasing by 5 per cent compared with the prior quarter. The increase from the prior quarter is primarily driven by a mix shift in the quarter to core segment brands and lower per-unit cost of goods sold from the consolidation of manufacturing assets.

Plant propagation

Plant propagation net revenue was wholly comprised from the Bevo business, contributing $10.8-million of net revenue and represents an increase of $4.1-million from the prior quarter. The increase is due to the seasonality of the Bevo business, which delivers higher revenues in the late winter and spring months as orders are fulfilled.

Adjusted gross margin before fair value adjustments on plant propagation revenue was 36 per cent for the Q3 2023 period as compared with 15 per cent in the prior quarter. Due to seasonality of the vegetable and ornamental plant industry, it is expected that the late winter and spring months would deliver higher margins relative to the rest of the year, as there is a high volume of production and orders being fulfilled in these months.

Selling, general and administrative (SG&A)

Adjusted SG&A was $28.4-million in Q3 2023, which excludes $11-million of restructuring, non-recurring and out-of-period costs, and $1-million in market development costs. Excluding the non-routine items, adjusted SG&A continue to be well controlled and below the company's target of $30-million.

Adjusted R&D (research and development), was $1.9-million in Q3 2023, increasing by $700,000 compared with the prior quarter. The increase from the prior quarter relates primarily to additional costs from the use of cannabis materials and supplies as the company continues to focus on product innovation.

Net loss

Net loss for the three months ended March 31, 2023, was $87-million compared with $67.2-million in the prior quarter. The increase in net loss of $20-million from the prior quarter was primarily due to an increase of $60-million in other expenses, driven by changes in fair value on derivative investments. Offsetting these mark-to-market changes, the company improved gross profit by $34.8-million and decreased operating expenses by $4.1-million.

Adjusted EBITDA

Adjusted EBITDA was $300,000 for the three months ended March 31, 2023, as compared with $1.4-million in the prior quarter. The change in adjusted EBITDA is largely due to additional professional fees and consultant costs as the company balanced lower corporate headcounts with continuing compliance and regulatory needs.

Fiscal Q1 2024 expectations

The company expects cannabis net revenue for fiscal Q1 2024 to be largely similar to fiscal Q3 2023, with the geographical mix slightly weighted toward the international medical segment. For plant propagation, Aurora expects to see a seasonally strong quarter as the company reaches its peak selling period. Furthermore, the company expects adjusted gross margins to be consistent with fiscal Q3 2023 and expects to maintain its stated objective of a quarterly SG&A expense run rate below $30-million.

Operational efficiency plan, balance sheet strength and cash use

Aurora completed its previously announced strategic transformation plan. The achievement of significant and sustainable operating cost and SG&A reductions resulted in two consecutive quarters with positive adjusted EBITDA, and is paving the path as the company works toward positive free cash flow by the end of calendar 2024.

In Q3 2023, Aurora's operations used a net $15.1-million, excluding changes in working capital. The $15.1-million includes approximately $2.1-million in non-recurring termination costs. During fiscal 2024, the company is working to:

• Reduce operations cash use by a minimum of $5-million per quarter, by eliminating less-efficient operations and focusing on supplying the globe from Aurora's highly efficient, high-quality production facilities.
• Removing a minimum of $5-million a quarter from several targeted efficiency and cost-reduction initiatives in operations and SG&A.

In addition, compared with Q3 2023, the company expects to save approximately $2-million per quarter in interest, as the remaining $80-million of convertible debt is settled before the end of this fiscal year.

Capital expenditures were approximately $3.6-million in Q3 2023 and, in fiscal 2024, are targeted to an average of $2-million quarterly, expected to save over $1-million a quarter compared with Q3 2023.

Aurora is now realizing the benefit of its long-term commitment to science and quality cultivation in that demand for the company's products globally is beginning to outpace supply. Revenue growth, as it arrives, would be incremental to the path to positive cash flow.

Aurora has one of the most robust balance sheets in the Canadian cannabis industry, with approximately $230-million of cash and cash equivalents on hand, and approximately $80-million outstanding in convertible debentures. The company believes its cash on hand is sufficient to finance operations until the company is cash flow positive, and is positioned with financial strength and realistic growth prospects to thrive over the long term as the global cannabis market expands.

Additionally, the company has access to $650-million (U.S.) under a base shelf prospectus filed on April 27, 2023, pursuant to which, approximately $409-million (U.S.) is allocated to the potential exercise of currently outstanding warrants issued in financing transactions from 2020 to 2022. As a result, approximately $241-million (U.S.) is available for potential new issuances of common shares, warrants, options, subscription receipts, debt securities or any combination thereof during the 25-month period that the 2023 shelf prospectus remains effective. Volatility in the cannabis industry, stock market and the company's share price may impact the amount and its ability to raise financing under the 2023 shelf prospectus.

During the three months ended March 31, 2023, the company issued 4,650,088 common shares under the 2021 at-the-market (ATM) program for net proceeds of $3.6-million (U.S.). Subsequent to March 31, 2023, the company issued 2,145,350 common shares under the ATM program for gross proceeds of $1.4-million (U.S.). Following the filing of the 2023 shelf prospectus, the ATM program ceased to operate. The company may, in the future, file a supplement to the 2023 shelf prospectus in order to utilize a new ATM program to support strategic initiatives or debt settlement.

Subsequent to March 31, 2023, the company repurchased approximately $50.9-million (U.S.) aggregate principal amount of convertible senior notes for aggregate cash consideration of approximately $46-million (U.S.), and issued 6,354,529 common shares in settlement of a further $4-million (U.S.) principal of this debt.

Conference call

Aurora will host a conference call today, Wednesday, June 14, 2023, to discuss these results. Mr. Martin, chief executive officer, and Glen Ibbott, chief financial officer, will host the call starting at 8:15 a.m. ET (6:15 a.m. MT). A question-and-answer session will follow management's presentation.

Conference call details

Date:  Wednesday, June 14, 2023

Time:  8:15 a.m. ET (6:15 a.m. MT)

Webcast:  access on-line

A link has also been posted to the company's investor info page at the company's website, under events.

About Aurora Cannabis Inc.

Aurora is opening the world to cannabis, serving both the medical and consumer markets. Headquartered in Edmonton, Alta., Aurora is a pioneer in global cannabis, dedicated to helping people improve their lives. The company's adult-use brand portfolio includes Aurora Drift, San Rafael '71, Daily Special, Whistler, Being and Greybeard, as well as cannabidiol brands Reliva and KG7. Medical cannabis brands include MedReleaf, CanniMed, Aurora and Whistler Medical Marijuana Co., as well as international brands Pedanios, Bidiol and CraftPlant. Aurora also has a controlling interest in Bevo Farms Ltd., North America's leading supplier of propagated agricultural plants. Driven by science and innovation, and with a focus on high-quality cannabis products, Aurora's brands continue to break through as industry leaders in the medical, performance, wellness and adult recreational markets wherever they are launched.

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