After the company presented the first sales figures for its second fiscal quarter on January 8, Aurora Cannabis shares (NYSE: ACB) rose 42.9% last month, according to S & P Global Market Intelligence.
Aurora Cannabis is one of Canada's largest marijuana companies. An aggressive acquisition strategy has industry watchers who think that its annual production of marijuana could rise to around 700,000 kilograms from 100,000 kilograms today. It will take a while before investors see the full benefit of the company's expansion plans, but Aurora Cannabis is already witnessing an increase in sales due to its investments
The company disclosed uncontrolled results for the calendar quarter ending December 31st at the beginning of January. The quarterly results include the first sales from the Canadian recreational market, which opened its activities in mid-October.
Management said sales for the last quarter will be between $ 50 million and $ 55 million, compared to just $ 11.7 million last year. Including acquisitions, Aurora Cannabis pro forma revenue was $ 35 million in the previous quarter (its fiscal Q1), so the adult market added $ 15 million to sales during the first six weeks of operations.
Aurora Cannabis has also informed investors that its annual production capacity has reached 100,000 kilograms, compared to 70,000 kilograms in October, and that it is about to increase production at an annual rate of 150,000 kilograms before the end of this quarter. This doubling of production over the last six months puts it in a perfect position to pocket further revenue growth when the Canadian recreational market matures.
Aurora Cannabis is reporting the quarterly results finalized this evening (11 February) after the closing bell. Its CEO, Terry Booth, plans to host a conference call on earnings with investors at 6.00pm. EAST. During the call, investors will want to pay close attention to what they say about the production costs of the company, because reducing expenses per gram is the key to making an operating profit. Booth can also offer financial advice and more information on how quickly Aurora can reach its current production target of 570,000 kilograms a year.
Canadians spend about $ 6 billion a year on marijuana, according to Statistics Canada, so Aurora Cannabis sales could rise much higher from here as revenues move from the black market to regulated markets in Canada . However, the opportunity of the global market could be even more important for the future of Aurora Cannabis. Worldwide, marijuana spending amounts to $ 150 billion a year, according to the UN, so last quarter's results may just be the tip of the iceberg
Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.