Aurora appoints Miguel Martin CEO; forecasts declining revenue, impairment charges
Martin assumed the role of the Edmonton-based licensed producer’s chief commercial officer in July. Prior to that, he was the CEO of Reliva, a Massachusetts-based company specializing in hemp-derived CBD products
As part of its "balance sheet adjustments", Aurora warns investors to expect fixed asset impairment charges of up to $90 million. These are due to "production facility rationalization". Photo by Aurora Cannabis Inc.
Earlier today, Aurora Cannabis Inc. announced it was appointing Miguel Martin its chief executive officer, effectively immediately.
Martin assumed the role of the Edmonton-based licensed producer’s chief commercial officer in July. Prior to that, he was the CEO of Reliva, a Massachusetts-based company specializing in hemp-derived CBD products. Aurora took over Reliva in May in a $40-million share swap. Before his time at Reliva, Martin was president of Logic Technology, a large manufacturer of e-cigarettes.
Martin’s appointment means Michael Singer steps down from his role as Aurora’s interim CEO. Singer assumed that post in February, after company cofounder Terry Booth stepped down as CEO. At the same time that it named Singer interim CEO, Aurora laid off 500 workers.
In a statement released this morning, Singer said, “In his short time at Aurora, Miguel has demonstrated decisive leadership. Miguel is a highly experienced executive with an exceptional track record of performance in a number of consumer products categories. After an extensive search which included evaluation of many highly-respected candidates, Miguel stood apart with both strong commercial and cannabinoid sector expertise, as well as his passion for Aurora’s success.
“The Aurora Board and I firmly believe that under Miguel’s leadership, Aurora’s strategic direction going forward will be characterized by leading market performance, sustainable growth, profitability and value creation for shareholders,” Singer said.
In June, Aurora announced the closure of operations at five of its facilities. It also announced other changes. These included an approximate 25 percent reduction in the company’s Selling, General and Administrative (SG&A) staff. It also promised an approximate 30 percent reduction in production staff over the next two quarters.
A focus on profitability
Today, Aurora touted that it has reduced SG&A costs. They’re down from over $100 million in the second fiscal quarter of 2020 to an expected range of $60 to $65 million in the fourth.
In an update, the company said it is now operating at its quarterly SG&A run-rate in the low $40 million range. It said it expects operational cost reductions from facility closures of up to $10 million per quarter. These reductions will start in the second half of fiscal 2021. “With a tailwind of growth in the Canadian recreational market, the Company is better positioned for its next phase focused on profitability,” the update said.
When Aurora reports its fourth-quarter results in two weeks, however, investors should anticipate some bad news. They can expect to hear about declining revenue and write-downs of up to $1.8 billion Canadian dollars.
Aurora warns investors to expect fixed asset impairment charges of up to $90 million. These are due to “production facility rationalization”. The company also anticipates a charge of approximately $140 million in the carrying value of certain inventory. This will “align inventory on hand with near term expectations for demand.”
For his part, though, Martin struck an upbeat tone. “I am excited to step into the role of CEO at this inflection point in Aurora’s business,” he said in a press release. “In my early days, I have seen the tremendous potential of this organization firsthand—a combination of deep industry knowledge, commitment to quality, great brands and a passion for patients and consumers that is truly differentiated.
“I am confident that we have the infrastructure and capabilities for long term success in the global cannabinoid industry,” Martin said.” Given my 25 years of executing against regulated product opportunities, including serving as President of one of the largest electronic cigarette companies, I believe we will be successful both with the current portfolio and emerging margin accretive formats.”