AURORA CANNABIS IN (OTCMKTS:ACBFF) has a problem: the company is making too much cash from operations. It’s a great problem to have. It’s the problem most companies want more than anything else. The company is sitting on nearly $130 million in cash with virtually no debt, and it’s still ripping off over 168% y/y topline growth. But this is all part of an emerging and rapidly maturing commodity market. And the best companies in such a situation know that they have a prime responsibility to deploy that cash to buffer against cyclicality, which is sure to reveal itself in the cannabis space before long.
As such, Aurora is very interesting in its foresight, constantly focusing of late on investing in other companies and making acquisitions to diversify its interests. A case in point is its most recent announcement that it has completed the acquisitions of Larssen Ltd, a globally leading greenhouse engineering and design consultancy, and that of H2 Biopharma, a late-stage ACMPR applicant based in Quebec. This news comes as a follow up to its prior press releases of November 23, 2017.
AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF) is a licensed producer of medical marijuana pursuant to the Marijuana for Medical Purposes Regulations and operates a 55,200 square foot expandable state-of-the-art production facility in Alberta, Canada.
ACBFF’s wholly-owned subsidiary, Australis Capital Inc., seeks to be an active participant in the U.S. Cannabis market. Aurora is trading on the Canadian Securities Exchange under the trading symbol “ACB”. The company is headquartered in Vancouver, Canada.
According to company’s materials, “Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company operates a 55,200 square foot, state-of-the-art production facility in Mountain View County, Alberta, is currently constructing a second 800,000 square foot production facility, known as “Aurora Sky”, at the Edmonton International Airport, and has acquired, and is undertaking completion of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on Montreal’s West Island.
In addition, the Company holds approximately 9.6% of the issued shares (12.9% on a fully-diluted basis) in leading extraction technology company Radient Technologies Inc., based in Edmonton, and is in the process of completing an investment in Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1%. Furthermore, Aurora is the cornerstone investor with a 19.9% stake in Cann Group Limited, the first Australian company licensed to conduct research on and cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale importer, exporter, and distributor of medical cannabis in the European Union (“EU”), based in Germany.”
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As noted above, Aurora has been very proactive in its stewardship of the massive cash balance we have watched get built on this balance sheet during recent operations. The deployment of a chunk of resources toward these two acquisitions continues the theme of diversification that is likely going to pay itself back to company shareholders over the long run.
“These are two important acquisitions for Aurora that clearly show how our growing constellation of trusted partners and subsidiaries accelerate shareholder value creation through strategic synergies,” said Terry Booth, CEO. “Larssen’s pedigree in designing the world’s most technologically advanced and efficient greenhouses will be leveraged for the completion of our new Lachute Facility. The addition of this latest facility will increase our capacity to serve the domestic and export markets, and signals our major commitment to operations in Quebec, Canada’s second most populous province.”
According to the company’s press release, the Larssen transaction will be immediately accretive, on pace at this point for $6 million in fiscal 2018 revenues. Completion of the H2 facility is anticipated for early calendar 2018 with production, and therefore additional revenues, anticipated shortly thereafter.
Now commanding a market cap of $2050.3M, ACBFF has a significant war chest ($127.9M) of cash on the books, which must be weighed relative to virtually no total current liabilities. ACBFF is pulling in trailing 12-month revenues of $23.2M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 168.6%. You can bet we will update this one again as new information comes into view. Sign-up for continuing coverage on shares of $ACBFF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $ACBFF, either long or short, and we have not been compensated for this article.