Aurora Cannabis Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Frederico Gomes - ATB Capital Markets - Analyst : Hi, good morning and thank you for taking my questions. My first question is on your acquisition in Australia. You mentioned it's a market worth about AUD400 million and that it's rapidly growing. So can you just give us an idea of how fast that market is growing, what are the drivers there behind that growth and as well as what sort of assets you have in place there with that acquisition and the opportunity Australia represents? Thank you.

Question: Frederico Gomes - ATB Capital Markets - Analyst : Thank you for that color. My second question here, just about Germany. We have the [full vote] expected to happen soon. I'm just curious, how do you see that -- that deal that if it passes, how do you think that could impact the medical market and the opportunity there in Germany? Thank you.

Question: Frederico Gomes - ATB Capital Markets - Analyst : Thank you very much.

Question: Matt Bottomley - Canaccord Genuity Limited - Analyst : Hi, good morning, everyone. Thanks for the color so far. Just wanted to pivot back to more domestically in the Canadian medical side of things, not something that gets talked about a lot in general, just given that it's a pretty immaterial portion of most other LPs strategy at this point. So it seems like it's been at this $25 million a quarter, $100 million revenue business for some time. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. FEBRUARY 08, 2024 / 1:00PM, ACB.TO - Q3 2024 Aurora Cannabis Inc Earnings Call And I'm just wondering if you can maybe explain or give some of the more color on the dynamics of is the overall market TAM of medical slowly shrinking, given that retail, it's not hard to find particular provinces like Ontario, and then just strategies maybe in order to increase that share, whether it's through other LPs kind of closing up shop or other strategic initiatives in order to get increased registrations into Aurora?

Question: Matt Bottomley - Canaccord Genuity Limited - Analyst : Great, appreciate all that. Just one more for me on general sort of philosophy or strategy when you kind of look at a number of these international markets. I'm just wondering in terms of the timing of allocation and deployment of capital or M&A dollars into certain markets, particularly in Europe, what are some of the key things that maybe you look at you had one of your US counterparts earlier this week we announced the deal into Poland. I know Poland is a market you guys have talked about a little bit. I think they had mentioned, there's a huge amount of investment in lifetime into getting products registered, which if you get into the market now obviously can be a benefit in terms of first mover. But are there other things you look at it is that the scarcity of licenses, just overall regulatory landscape with respect to how things are written up versus timing of when you expect maybe markets to launch? It's something that gets talked about a lot in this sector. But I think a lot of investors have been more or less, have seen the can get kicked down the road with when markets outside of the US and Canada actually have really started to gain acceleration? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. FEBRUARY 08, 2024 / 1:00PM, ACB.TO - Q3 2024 Aurora Cannabis Inc Earnings Call

Question: Matt Bottomley - Canaccord Genuity Limited - Analyst : Okay, great. I'll get back in queue and I appreciate all the details on that, Miguel.

Question: Tamy Chen - BMO Capital Markets (Canada) - Analyst : Great, thanks. First question is going back to Australia, so Miguel, you talked about how the number of approvals continues to grow a significant increase compared to 2016. I just wanted to revisit this part like what has really caused the Australian market to experience such rapid growth? Like, we see some other medical markets that legalized, but the growth just isn't as significant like has there been some further regulatory changes over the last few years that have really increased or -- yeah, increase the acceptance of medical cannabis amongst physicians there? Just curious what is driving this quite rapid growth. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. FEBRUARY 08, 2024 / 1:00PM, ACB.TO - Q3 2024 Aurora Cannabis Inc Earnings Call

Question: Tamy Chen - BMO Capital Markets (Canada) - Analyst : Great. That's helpful. Well, sticking with that, I was curious to understand why now for timing of acquiring the rest of the stake in MedReleaf Australia. Is it just, as we see in the market you experienced tremendous growth and felt like now was the right time. And lastly, did you say that this business MedReleaf Australia has a higher gross margin than your current international business? Thanks.

Question: Tamy Chen - BMO Capital Markets (Canada) - Analyst : Okay, great. Thank you.

Question: Doug Miehm - RBC Capital Markets - Analyst : Yeah, good morning. My question just has to do with the capital allocation. When you look at the Australian acquisition and the amount of cash use versus shares issued, can you walk through the decision making process there and why you decided you needed so much dilution relative to the [CAD10 million or so or CAD8 million] that you paid out, especially given that your balance sheet is so much better now and you're on the cost of both turning free cash flow positive? Thank you.

Question: Doug Miehm - RBC Capital Markets - Analyst : Okay. That's helpful. And then just maybe as a follow-up there, given that this group is going to be a reasonable-sized shareholder of the company, would you expect them to be long term shareholders of the company?

Question: Doug Miehm - RBC Capital Markets - Analyst : Okay, great. Thank you.

Question: Pablo Zuanic - Zuanic & Associates LLC - Analyst : Good morning, everyone. Miguel, just thinking about the potential acquisitions you need to make in Germany following what you did in Australia, maybe explain the difference of your on the ground business model. In the case of Australia, you were shipping from Canada, right and pretty much MedReleaf Australia was taking care of everything else. In the case of Germany, it seems to me that you have more assets on the ground, more feet on the ground. But once we have a change in the narcotics law and other changes, do you think you will need to make acquisitions in Germany or pretty much it's about you investing on what you have already? Thanks.

Question: Pablo Zuanic - Zuanic & Associates LLC - Analyst : Right. And just a quick follow up the use of Australia, so they don't have production there, you're -- the company you acquire. Is that something you would look at down the road, especially when you see the use of Israel, with dumping claims and the market in Israel shutting down every now and then. Is there a risk in Australia? Would you need to have local production there? And if you can expand on the argument you made about barriers to entry in Australia to other players? Thanks.

Question: Pablo Zuanic - Zuanic & Associates LLC - Analyst : Right, thank you.