The company has been trimming its expenses over the past two years by selling off and consolidating its various production facilities, while looking overseas for growth opportunities as the U.S. remains in legalization purgatory. The restructuring also included reducing employee headcount where it could.
The company said September 2021 that it would shutter the Alberta property and move operations to its Aurora Sky facility, which it ended up offloading after the company acquired a majority stake in grow giant Bevo Farms.
Despite the cost-cutting paradigm, cash burn rate remains a concern, according to Cantor Fitzgerald analyst Pablo Zuanic.
Zuanic pointed to the company’s free cash flow figures, which include a $37 million outflow in the most recent quarter, versus the trailing four quarters average of $35.5 million. At the same time, the share count increased 52% to 304.5 million shares – 324.3 million as of Nov. 9 – between June 2021 and September 2022.
“The company’s cash generation ability has not improved, despite hefty shareholder dilution,” Zuanic wrote. “Accordingly, although the company has made great strides in reducing the convertible debt over the past 18 months (down $84 million to $244 million), net cash has remained in the $85 million range ($369 million gross cash).”
“True, for the LP group’s standards, ACB has a stronger balance sheet, but we think cash burn remains an issue.”
In the news release, Aurora continued to tout the company’s balance sheet, which it said now shows $320 million worth of cash and cash equivalents after the sale, including approximately $63 million of restricted cash.
The company also reiterated its expectation of achieving adjusted EBITDA profitability for the quarter ending Dec. 31, 2022.
Management believes it will hit the positive adjusted EBITDA target, as well as reduce it’s cash burn rate to $30 million or below, in part due to its $150 million-$170 million annualized cost savings plan.