Aurora Cannabis To Shutter Five Facilities, Faces Impairments of $200 Million

Aurora Cannabis (TSX: ACB) (NYSE: ACB) this morning released an update in relation to its ongoing business transformation plan. The latest developments include significant headcount reductions as well as the closing of five production facilities over the next two quarters as the company looks to cut costs and work towards profitability.

Headcount reductions were stated to be approximately a 25% cut for the firms selling, general and administrative staff, in addition to approximately 30% of all production staff. In terms of SG&A staff, reductions will have an immediate effect, while the production staff will be laid off over the next two quarters as facilities close. The company also revealed that the recent retirement of President Steve Dobler was essentially forced as a means of reducing costs.

With these additional headcount reductions, the company now expects the first quarter of 2021 to have a selling, general, and administrative expense run rate of approximately $42 million. Aurora anticipates this will be capable of supporting higher levels of revenue while not further increasing costs.

More shocking than headcount reductions however is that five production facilities are scheduled to be shut down over the next two quarters, including facilities acquired in the $1.1 billion acquisition of Saskatchewan-based Cannimed Therapeutics in 2018. Facilities include:

  • Aurora Mountain
  • Aurora Prairie
  • Aurora Ridge
  • Aurora Via
  • Aurora Eau

Part of Aurora Eau is expected to remain operation to allow for higher margin products to be manufactured. Following the closures, production and manufacturing will be consolidated to Aurora River, Aurora Sky, Whistler Pemberton and Polaris.

In connection with the headcount reductions and facility shutdowns, the company expects to take an asset impairment charge of up to $60 million during the fourth quarter of 2020. Even more significantly however, is that a $140 million impairment in the carrying value of inventory is to be taken as well – 40% of which is simply related to the company valuing the product higher than it sells for. The impairment amounts to 55.7% of the inventory value that was on the books as of March 31, 2020.

Aurora Cannabis last traded at $14.28 on the NYSE.


Information for this briefing was found via Sedar and Aurora Cannabis. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply

Video Articles

Endeavour Mining Q1 Earnings: Cash Flow Is King

G Mining Oko West Feasibility: Move Fast, Break.. Nothing?

New Gold Q1 Earnings: What’s Behind The Market’s Surprising Reaction?

Recommended

First Majestic Posts Record Cash Flows In Q1 As Production Costs Fall

Brazil Potash Secures Funding In Support Of US$2.5 Billion Autozales Project

Related News

Visualizing the Aurora Cannabis Rollback

It’s times like this that The Dive‘s West Coast office is thankful or the under-rated...

Wednesday, April 15, 2020, 11:30:39 AM

PI Financial Lowers Price Target on Aurora Cannabis

Aurora Cannabis (TSX: ACB) (NYSE: ACB) saw PI Financial lower its price target today after...

Thursday, September 12, 2019, 06:03:52 PM

Cannabis Companies Have Begun Moving To Self-Insure

There is a common expression in the cannabis industry that “everything is more expensive.” Even...

Sunday, October 3, 2021, 09:00:00 AM

Aurora Cannabis Sees Product Approved For Irish Market

Aurora Cannabis (TSX: ACB) (NYSE: ACB) announced this morning that the firm has expanded its...

Monday, December 2, 2019, 09:26:32 AM

Aurora Cannabis Caps Rocky Week With Insider Selling 57% of Position

Aurora Cannabis (TSX: ACB) (NYSE: ACB) has had a rough week, and for investors, the...

Friday, December 20, 2019, 10:25:15 PM