Turning moments in markets are great opportunities that can shift momentum, reconfigure trajectories, and recalibrate outlook. They can turn a losing game into a win and rearrange the path forward in a brighter light.
And that's exactly what Aurora Cannabis (NYSE 🙂 (TSX 🙂 investors will look forward to when one of the world's largest marijuana growers in North America unveils its latest quarterly earnings later this month – a turnaround that will see improvements. show in key areas.
The Edmonton-based cannabis producer has had a terrible year. Inventory is not only down 68% since January, but it also booked two consecutive quarters and consistently posted negative operating results.
Will the reversal materialize? As the fourth quarter earnings are announced on September 22, the clock is ticking.
The first concrete sign of a turnaround in reshaping the company's future came last week when Aurora announced the appointment of a new CEO.
Miguel Martin was named new CEO, cutting a vacancy that the company had been struggling with for nearly six months. Martin takes over after a brief stint as Aurora's Chief Commercial Officer, a title he has held since July. Before that, Martin was the CEO of Reliva, which took over Aurora a few months ago. Martin was also the president of Logic Technology, a major electronic cigarette manufacturer, and the senior vice president of Altria Sales and Distribution, a subsidiary of Altria (NYSE :), the US tobacco giant.
Taking on the task of reshaping Aurora will be no small feat. Yesterday, the company announced that it will record impairment charges totaling between C $ 1.6 billion (US $ 1.21 billion) and C $ 1.8 billion (US $ 1.368 billion).
Further complicating the company's turnaround was the statement it released on Monday that it expects to "report certain material weaknesses in the company's internal control framework."
Aurora said these weaknesses are the result of "significant changes to the business during the fiscal year, including the business transformation plan announced in February 2020".
The company does not expect to make any changes to previously released results.
Another sign that it is cleaning up the store, the grower shared plans to end its multi-year CBD deal with US mixed martial arts promoter, UFC, which is expected to cost Aurora $ 30 million.
What To Watch Out For
Aurora Must Show Sales Growth. In the previous quarter, revenues increased from C $ 41 million (US $ 31.16) to C $ 56 million (US $ 42.56). Part of the increase was due to consumers stocking up during COVID-19 lockdowns. So it is not certain that this upward trend is something the company can sustain.
The other important measure is EBITDA, which stands for earnings before interest, taxes, depreciation and amortization. Aurora has promised it would achieve positive EBITDA in the first quarter of fiscal 2021. In the third quarter of 2020, it reported an adjusted EBITDA loss of C $ 45.9 million (US $ 34.89). So this number has to go up.
Industry viewers are mixed on how successful Aurora will be. On September 9, Stifel lowered its target price for Aurora shares to C $ 10.50 (US $ 7.98) from C $ 16 (US $ 12.16), while on September 8 ATB Capital raised its target price from C $ 10. 40 to C $ 11.30 (US $ 8.59). (US $ 7.91).
Yesterday, Aurora shares rose about 3% to close at C $ 9.47 in Toronto and $ 7.18 in New York.