Aurora Cannabis Inc. (ACB) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to Aurora Cannabis conference call. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties relating to Aurora's future financial or business performance. Actual results can differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in Aurora's annual information form and other periodic filings and registration statements. These documents may be accessed via SEDAR and EDGAR databases. I'd like to remind everyone that this call is being recorded, Thursday, February 6, 2020. I would now like to introduce Mr. Michael Singer, Executive Chairman and Interim CEO of Aurora Cannabis. Please go ahead, Mr. Singer.

Good afternoon, and thank you for joining us today on short notice. Joining me on the call today is Glen Ibbott, our CFO. I'm pleased to be addressing you in this new role, and I want to thank the Board of Directors for placing their trust in me to lead Aurora during this important period in our journey. Glen and I plan to take you through the CEO succession plan and the independent Board appointments we announced after market close. We will also detail our business transformation plans to significantly reduce SG&A and capital expenditures near term as we work to better align our resources to current market conditions. And finally, we will discuss our preliminary quarterly results, certain accounting decisions taken and amendments to our credit facility before taking your questions. In terms of succession, the Board has asked me to execute our plan until a permanent CEO is appointed. This change has Terry's full support, and he recognizes that the next leg of our journey will be best led by a CEO with a different skill set. I am excited to help execute our near-term plans, which we believe are necessary to position Aurora for long-term shareholder value creation. The Board has already hired an executive search firm, and efforts are underway to find the best possible candidate to be the permanent CEO. Many of you know Terry and his tremendous legacy at Aurora. Terry deserves an immense amount of credit as an icon and visionary in the cannabis industry and for building what we believe is the world's leading cannabis company. On behalf of the Board of Directors and our entire team, I want to thank Terry for his leadership over the years. He will remain on the board during this transition. Part of our succession plan includes expanding the Board to ensure proper governance, oversight and skills. Aurora's strong market position enabled us to attract Lance Friedmann and Michael Detlefsen to join our Board, which will increase to 10 directors, 7 of which will be independent. We are excited to welcome Lance and Michael and eager to leverage their extensive consumer packaged goods experience. We expect to see cannabinoids grow as a category and believe Lance's tenure at Kraft and Mondelez will be helpful as we drive brand growth. Michael brings extensive strategic transformation and optimization experience that will add an important and new dimension to our Board. These decisions at the executive and Board levels are designed to provide our stakeholders comfort that we have carefully planned for this transition and have the support of the whole organization for the business shifts we are about to execute. It is important for our investors to know that these changes represent the start of a fundamental change in focus for Aurora as we look to generate sustainable, profitable growth, which is even more important in the context of our business rationalization. As you know, we have been building Aurora to capitalize on a global opportunity, which meant investing in infrastructure and people and allocating capital to projects around the world. We remain firmly of the opinion that a tremendous global opportunity still exists, but Aurora needs to rationalize the business today and drive as quickly as we can to generating positive cash flow. Consequently, we intend to significantly reduce SG&A and capital spending and have taken a hard look at our balance sheet. While Glen will provide more details on each of these items, as a whole, we believe they will dramatically improve our P&L even on our current revenue run rate and should result in an improved balance sheet. We believe they will also help us conserve cash near term, which should result in a balance sheet that better reflects the environment today. Speaking of the market, let's start with Canada. We believe Canada is a solid market with lots of potential but one that will take time to develop. We have discussed most recently in our Q1 call in November of last year that the Canadian cannabis industry has been facing a number of headwinds, including slow rollout of retail stores in key provinces; changes to inventory and purchasing patterns of the provincial distributors and changing consumer preferences in the dried flower segment. All of these challenges have persisted into our fiscal Q2 and are largely still headwinds today. While the pace of retail openings is out of our control, today, we are planning to fix the things within our control to enable Aurora to be a sustainable company regardless of market dynamics at play. For example, we plan to begin distribution to the provinces next week for our new dried flower brand, [ Daily Special ], to compete in the value segment of the market. We believe this brand will offer consumers some of the highest-quality dried flower at a competitive price point. However, we believe the most impactful actions we can take are those that reset our cost structure, which will allow us to thrive under any market conditions. The international opportunity is also developing, and we believe we are uniquely positioned to capitalize on it over time. We recently announced EU GMP certification has been received at our third facility in Bradford, known as Aurora River, and that we've resumed sales into Germany after a short pause due to regulatory process. We believe the international opportunity is as exciting as the opportunity we see in Canada. However, similar to what we're experiencing in Canada, the market evolution in countries like Germany is progressing slower than we or the industry had previously expected. There is tremendous potential, and we're prudently allocating the right level of resources to enable us to capture it today. And this will allow us to better capitalize and take advantage of the long-term international opportunity from a position of strength in the future. So in summary, we believe our succession plan, expansion of the Board and the rationalization of our business will make Aurora much stronger and more focused than ever before. We believe these are the right moves at the right time and put our shareholders in the best position for value creation. At this point, let me turn the call over to Glen.

Thank you, Michael, and good evening, everyone. Let me first begin with an overview of the cost rationalization initiatives we announced in our press release this evening. To better align our business with the current cannabis market conditions in Canada, we are making transformational changes to our expenses and cash requirements, including plans for significant decreases in SG&A expenses and a reduction in capital investments. These changes will help improve our balance sheet, and importantly, support our focus on creating a sustainable platform for long-term growth. We view this opportunity not only as a reset of our company, but quite frankly, also as a reset of our relationship with investors and the broader capital markets. In the coming quarters, we expect to demonstrate the tangible results of this plan and look forward to building a record of delivering on what we say we're going to do. Focusing on SG&A. We now plan to manage the business to an SG&A range of $40 million to $45 million per quarter, which we expect to achieve as we exit our fiscal Q4 2020. Clearly, this represents a substantial decrease from our Q2 unaudited preliminary SG&A range of $98 million to $108 million. To achieve this, management will focus the business on its core operations in the Canadian consumer market, the Canadian medical market and established international medical markets. We will also continue to pursue our U.S. strategy in a manner that is consistent with the financial discipline we are outlining here today. As part of our planned operational changes, we are eliminating almost 500 full-time equivalent positions across most departments and locations but mainly focused on corporate staff, where we are reducing approximately 25% of existing positions. This was an incredibly difficult decision and not one taken lightly, but it is a critical step in our plan to put Aurora on a near-term path to profitability. Both Michael and I would like to take this opportunity to thank the impacted employees for their dedicated service to Aurora. Severance and other onetime charges related to these cost reductions are expected to be approximately $2 million to $4 million and have been incurred across both our fiscal second and third quarters of this year. In addition to the staffing reductions, we are also restructuring spending plans on information technology projects, sales and marketing initiatives, contractors and professional services and other nonrevenue-generating third party services. An important part of this initiative is to instill a culture of financial discipline across all of our operations. As such, we believe there may be further opportunity to reduce the complexity of our organization and find additional medium-term cost efficiencies. Over the last several weeks, our leadership team has done an extensive evaluation of our existing capital projects and made difficult decisions with respect to either continuing or ratcheting back further investment in each. In terms of capital expenditures, for the second half of our fiscal 2020, we expect to reduce the level to below $100 million. This compares to the almost $225 million in the first half of 2020. To be clear, this reduction in our capital investment does not mean we don't intend to grow. But it does mean that, generally, we believe our assets today are sufficient to supply the Canadian market for the foreseeable future. Future capital allocation decisions will be scrutinized, first and foremost, through a lens of optimizing near-term investor returns. Once we have established and proven our ability to generate cash flow, we will be in a better position to evaluate projects that are more strategic in nature, but always through the lens of profitability and return on investment. As our press release outlined, today, we're also announcing amendments to our secured credit facilities, which we believe will better align the company's balance sheet and cash flow expectations with current market conditions. We believe the amendments will also give us much greater financial flexibility and provide clarity for our investors as it relates to the stability of our balance sheet and a time line to being EBITDA positive. I'd like to thank our banking partners for their continued strong support of the company. The amendments include the complete removal of all EBITDA ratio covenants, which had originally been set to commence in the period ending September 30, 2020; the complete removal of the fixed charge coverage ratio covenant; an adjustment of the total funded debt-to-equity covenant to 0.2:1, commencing in our fiscal third quarter 2020 from the 0.25:1 that had been in place until now; also a reduction of the total facility size available by $142 million, which includes canceling Facility D, which have been tagged for the full Aurora Sun project, and use of the restricted cash of $45 million to pay down the Facility C term debt. So currently, outstanding unsecured debt following the Facility C paydown is $162 million. Also, there is an introduction of a new minimum liquidity covenant of $35 million. And finally, there's the introduction of a covenant requiring Aurora to achieve positive EBITDA threshold beginning in fiscal Q1 2021 that we believe are consistent with today's announced changes. These thresholds are mid-single digits for the first couple of quarters of fiscal 2021, increasing in the back half to a total of $51 million of positive EBITDA cumulative for the entire fiscal 2021 year. We've also announced today that we've undertaken a thorough review of business operations and current public market valuations and have concluded that certain of our assets and goodwill values as at December 31, 2019, warranted revaluation and adjustment. Therefore, when we report our second quarter next week, we will record our impairments on certain intangible assets and property, plant and equipment in the range of $190 million to $225 million, and we'll write down goodwill in the range of $740 million to $775 million. The good news is that following these noncash charges, we believe we have a much more conservative balance sheet and will remain compliant with our revised total debt-to-equity covenant. The impaired assets are primarily associated with our operations in South America and Denmark, where the markets are taking much longer to develop than we had originally anticipated. It is important to note that our core Canadian cannabis assets are not impacted by these noncash charges. We believe that the long-term opportunity for Aurora remains very compelling despite a slower-than-anticipated rate of industry growth in the near term. We also believe our approach to rationalizing the business and conservatively improving our balance sheet positions Aurora in a more stable position for sustainable growth going forward. Finally, I would like to take a moment to talk about how all of these changes will help to address our liquidity position. As at December 31, 2019, our consolidated cash position was $156 million, excluding $45 million of restricted cash. We have utilized our aftermarket financing program and have raised gross proceeds of $325 million in our 2020 fiscal year-to-date and have approximately $200 million remaining under that facility. Our announced reductions in CapEx and SG&A here should provide comfort to investors that we are laser-focused on the health of our balance sheet and that our plan is to generate cash from our cannabis operations as soon as possible. We expect that utilization of the remaining ATM capacity will be sufficient to fund our operations and remaining capital expenditures to the point where positive EBITDA and free cash flow are achieved. I'd now like to review certain unaudited preliminary fiscal second quarter financial results. For our Q2 2020, we expect cannabis revenues to be approximately $62 million to $66 million net of excise taxes. We then expect to record provisions for returns, price reductions and future provisions of approximately $12 million. Almost all of this provision relates to products that were sold in previous quarters, for the most part, in the first half of calendar 2019. Therefore, net cannabis revenue, after giving effects to these offsets, are expected to be between $50 million to $54 million. These revenue results reflect consistency in our Canadian medical revenues, a decrease in international revenues for the short-term German supply interruption and much lower bulk sales. It is worth noting that Aurora's consumer cannabis revenues reflects modest quarter-over-quarter growth prior to applying these offsetting return and price reduction allowances. In terms of costs, we expect our Q2 cash cost to produce per gram of dried cannabis to remain below $1, while sales and marketing expenses are expected to be between $28 million and $32 million, and general and administrative expenses are expected to be between $70 million and $75 million. Finally, I'd like to provide a bit of color on our outlook for fiscal Q3. Our expectation for cannabis revenue in the third quarter is that it is likely to continue to be impacted by the general industry headwinds mentioned above. Although, as Michael noted earlier, we are launching a strong brand into the value segment, we think it's best to be prudent in our expectations for the next while. As such, we expect Q3 will likely show little to no growth relative to fiscal Q2's cannabis revenues of $62 million to $66 million prior to the Q2 return provisions. In summary, while we are bullish on the long-term potential of the global cannabis market, we are cautious in our short-term outlook for the Canadian market. Until we see material growth in Canadian retail store licensing, we are being careful with our revenue growth expectations and are managing our business to achieve positive EBITDA under a very low growth scenario for the next few quarters. We will report our full fiscal 2020 second quarter financial results on February 13 next week. With that, I will turn things back to Michael.

Thank you, Glen. In closing, our organization is focused on the execution of our transformational business plan. We are best positioning Aurora for sustainable long-term growth, and the opportunities we have ahead are robust, particularly in Canada and internationally. But we need to manage our business for the realities of today's market. Aurora remains uniquely positioned in the cannabis industry and is poised for future success with our robust, low-cost, high-scale cultivation capabilities; high-potency premium cannabis with strong brand positioning and a track record of product development and innovation to connect with new and existing consumers, strengthening our competitive advantage. Our leadership team, along with the support of our Board of Directors, is focused on creating value for shareholders, and today is an important step forward towards that objective. We look forward to updating you on our progress. We appreciate your participation on today's call. Glen and I are now available to take your questions. We would like to keep the questions focused on the information we're announcing today, and we'll speak more about Q2 when we host our formal conference call next week. Operator?

[Operator Instructions] Our first question is from Vivien Azer with Cowen & Company.

Just 2 questions, please. Michael, a strategic one for you. And then, Glen, a financial one for you. So Michael, I heard you loud and clear on the geographic priorities. It makes sense. Canada, your home market where you've committed a lot of infrastructure, definitely generate the operating leverage there. Can you be a little bit more specific in terms of how you define developed international? And then outside of developed international, like how are you thinking about like what you're going to do with those assets? Because with South Africa and Denmark developing more slowly than anticipated, it could present risk of further asset write-downs.

Sure. Vivien, so we obviously believe in the core part of our business, which is why we're focusing our business today and rationalizing our business towards those opportunities. International opportunities continue to be important, but again, we're focusing on those markets that we believe will provide near-term value for us. And so any investment of our capital, our shareholders' capital, has to be with an eye on bringing near-term positive returns for our investors. In additional markets that, like you say, we may have certain assets, part of the write-downs today that we've taken are certainly with regards to our Latin American operation. It's not to say that we don't believe in those markets and the potential in the future. It's just that we're taking a pause. And until we see that demand significantly increase, we're certainly taking a view of focusing again more on our core business and key international markets where we see the initial return and less focused on those new market opportunities until that global demand picks up.

So Vivien, it's Glen. I'm just going to jump in quickly to respond to one thing you mentioned there. We've tried to be very conservative. The write-downs that you've seen are taking pretty much most of the book value off for, say, South American and Danish assets. So as we've gone through this exercise of looking at our balance sheet, we've really tried to be prudent, I think, in looking at forecasts over the next number of years, regionally, in Canada, et cetera, with the eye to, I'm going to say, minimizing the likelihood of write-down in the near future. Listen, we all know that this is a volatile market so I'm not making promises. But that was -- part of our consideration was to err on the conservative side and not to be shy about taking an impairment where impairment was warranted.

That was really helpful. And then just, Glen, back to you. I guess it's actually 2 questions, I apologize. The price reductions in the Q2 provisions, what products -- and the returns, what types of products does that apply to specifically, please?

Yes. It was the lower-potency dried cannabis products, for the most part, Vivien. We've talked before there was a lot of inventory put into the channel, mid-2019, by most of the LPs. And we saw it just as we got towards the end of the year. And they're rationalizing. They're driving their inventories down. It was products like one of our strains called Banana Split that we're not producing anymore with a 14% THC, and it just wasn't selling. So we either offered price reductions to the provinces, which is reflected in the allowance, or took returns, and we may repackage and use them in extraction. So it's not completely wasted. But this is a provision that almost wholly relates to products that were not sold in Q2 as in prior quarters. So I'm just trying to make that point so that people understand that this isn't a provision against our Q2 revenues, even though this is the first time we set it up. So it looks kind of large in relation to Q2 revenues. Most of it is for that product that was sold in the spring and the early summer of 2019.

And so there's not going to -- since you're not growing Banana Split, the risk of another wave of return provisions on low-potency dried flower specifically would be what?

Yes, it's quite low. And again, in the spirit of being very conservative and prudent, we actually went through all of the inventory sitting with the provincial distributors with an eye to anything that looks like it was moving slowly or low potency and set up a provision for it. And so that also includes a few things that came back in January. All that's captured in our Q2 provision. So I think we tried to scrub it pretty thoroughly, Vivien, and make sure that, again, while we're kind of resetting the company and resetting the balance sheet that we're not looking at -- we're trying to be conservative. I'll leave it at that.

Our next question is from Tamy Chen with BMO Capital Markets.

My first question is on the write-downs you've taken for goodwill, some intangibles and some PP&E, you said that most of it related to the international businesses. I'm just wondering, it seems apparent that from both your news today and from some of the peers that the outlook and the dynamics in the Canadian market has certainly changed and not generally lived up to expectation. So I'm just wondering, did you take a look at the goodwill and other asset values that relate to the Canadian business? And just wondering why there was not impairments taken from the Canadian side given how the dynamics have changed in the Canadian market.

Yes, sure, Tamy. So listen, yes, of course, we scrubbed everything in this quarter. And to be quite frank, as we all know, when you look at valuations, a lot of the value is being brought -- driven under the long-term potential of these markets. So as we look at the Canadian market, I haven't seen anybody backing off of the long-term potential here. We all know that there's an accessible market, which is pretty large. And so the question is how long is it going to take to get there. How long until we can actually access that? So when we looked at our forecast in the Canadian market, and believe me, we used a lot of valuation experts. We've gone through this with our auditors, we made sure we are being very conservative and prudent, particularly over the next number of years, and that we're using all the third-party data and the consensus of market sizes and when they'll be there and being very kind of cautious on what share of that market we're going to take. But when you peel all that back, Tamy, the Canadian market potential is still there. So what you're really seeing is just -- it's going to take us longer to get there. And therefore, when you do the value, it looks a little bit lower. But we don't -- none of our assets -- the MedReleaf, the CanniMed and the Aurora assets, Whistler included, our core cannabis assets, are still doing very well. And we believe they're going to serve us well for the long term. So that's what's underpinning the valuation, just not to get too technical, but of course, we always need to pay attention to market capital -- the capitalization in the market. It's right when I look at the company. And so when we looked at December 31, despite our positive attitude towards the long term, we and the market recognize that in the short term, there's some headwinds, as Michael said. So that's what's reflected, I think, in the goodwill write-down. But the assets themselves are operating really well. I think I mentioned today we continue to produce at sub-$1 in our production costs. So again on that, that piece of the business is very healthy.

Okay. And just a follow-up. On the permanent CEO search, just wondering if, to the extent that you can, if you can provide a bit more color in terms of anticipated time line. You mentioned that the Board has already engaged search firms, the scope of the search. Just a bit more color on that search would be helpful.

Sure, Tamy. Yes. So as I note earlier, we have been -- we've engaged, obviously, a global firm several weeks back and are currently in an active process for that. At this time, I think it's -- we're not going to provide much color. But we are certainly looking for a new CEO, a new permanent CEO, that certainly will fit right into where we see the industry growing into. So likely something with CPG experience and ability to sort of take the company that's going to have a much stronger balance sheet and be in a much stronger financial position to sort of leverage that into an opportunity, a more global opportunity as we see demand picking up, if you want, in the later quarters.

Our next question is from David Kideckel with AltaCorp Capital.

So a couple of questions here. The first I want to say is congrats, Michael Singer, on your new interim CEO appointment. You mentioned at the outset you fundamentally bring a different skill set versus the previous CEO, Terry Booth. So I'm just wondering because a lot of our investors are asking, like what is the different skill set that we can communicate with your skills versus Terry Booth's?

Sure. So look, the plan that we've laid out, the strategic plan that we've presented to our investors today is one where we're really sort of pivoting as an organization. And we would have to become more financially disciplined than ever before. This is an exciting time for the company. And obviously, I think my background more on -- I guess I was -- I've been a CFO in the pharmaceutical industry for almost 20 years. Experience, obviously, operating from a financial discipline point of view, really ensuring that we drive this company in a much more mature manner towards near-term profitability. Something that, obviously, I have more experience doing and why the Board felt very confident in putting me into that role. We're going to work very closely with our management team. Everybody is aligned here internally in terms of what we need to do to ensure that we drive this company to profitability. And my background and my skill set is one where I can ensure that we are going to sort of stay focused in ensuring we meet that key objective, which is what we've laid out today.

Okay. That's very helpful. My next question is just going back to the U.S. opportunity there. If I'm reading your press release -- Aurora's press releases, Canada still seems to be the major focus of interest, although there are plenty of international, including United States opportunities. So how should analysts and the general investor community be thinking about Aurora? Is this, in the short term, a Canadian play as far as derivatives are concerned? And once that comes online, is the U.S. as far as any legal opportunities come around, like hemp, for example, like what is the story line for Aurora right now?

Well, look, the U.S. market is an incredible large market with tremendous opportunity and one that we continue to have our eye on. So it isn't something that we are certainly going to ignore, even though we're focused on driving this company to profitability. But what I can tell you is the opportunities that we're going to explore and we continue to look at are ones that are going to be accretive to Aurora as we reposition the company and one that is cash flow positive. So in other words, anything that we look at has to meet certain key criteria that we've laid out today, which will continue to strengthen our balance sheet and not put us in a position where we have to dig deeper into our pockets. So we see the U.S. market and a number of opportunities fit that specific sort of criteria, which is at minimum, the things we're looking at but things that are complementary to Aurora as we're positioned today. And so that effectively remains sort of the criteria that we would consider for furthering those opportunities.

Okay. So just to go back then to the Canadian market. I mean is it fair to assume for analysts and investors that Canada, or derivatives, in particular, is still your primary focus? Or should we be shifting our sights to other markets?

David, it's Glen. Listen, I think we're all aware that Canada is probably the most advanced opportunity for us. We have the market share, the production facilities. And I will go so far to say it's -- if we think about all of our opportunities over the next short while, this is where we'll generate the cash. This is where we'll generate the profit. We have to make sure that we stay focused on that opportunity. As you know, in the industry globally, there is a lot of things to look at and pay attention to. But fundamentally, we need to drive that cash and profitability. So that's why we're kind of reemphasizing a focus on the core. As Michael described, if there are, and there are, opportunities in the States or globally that makes sense and fit our criteria, then, of course, we'll proceed with those. But the criteria, being focused on financial discipline and returns, short-term returns. So I think that's the way you should think about it. Don't read us in our emphasis on Canada as thinking that we stopped growing. What we're doing is focusing on this opportunity to generate cash and profit and then making sure that we make decisions with our prudent use of our capital. That's it.

Our next question is from Chris Carey with Bank of America Merrill Lynch.

Okay. And so I guess I'm just trying to square some numbers. So if I take your cash ex restricted last quarter of about $150 million and you've got about $150 million this quarter and you've issued about CAD 260 million in stock under the ATM, I guess I get free cash burn of over $250 million in the quarter. Number one, maybe I'm wrong there, but it seems like that's what the math is suggesting. And then the credit facility has reduced by about $140 million. And so is there anything remaining on that facility? Because I had understood it was about $200 million tapped as of last quarter. And I guess what I'm getting at here is if I look at the free cash burn this quarter and some of the initiatives that you're announcing are really going to be hitting in the fiscal Q4 and you've only got $200 million left on the ATM, I mean, it seems like cash is still going to be pretty tight. So maybe just help me plug the gap a little bit. Am I wrong on some of those numbers? I guess I'm just trying to get a sense of the cash bridge, and it still seems like things are going to be really lean into the fiscal year. And so that's my first question.

Yes, Chris. So yes, I know exactly what you're trying to get at here. So yes, just to be clear, I mentioned CapEx of $100 million. That's meant over the second half. So that's like Q3 and Q4. And then we did say, in terms of operating results, that Q3 will probably look like Q2. We haven't told you what we expect for Q4. We're just trying to be cautious and prudent. So I would say that I think you're talking on a number of $200 million in the quarter. I don't get to that number. But you can certainly see -- if you do your math over the half, where you might get to numbers like that. So I'm not going to tell you for a moment that it's not tight. We are operating this because we recognize the current market conditions. So the -- driving the costs down, and we talked about our exit rate in Q4, I think, you'd probably picked up from our comments that a lot of that has happened today. It's just that there are some initiatives that take a little bit of time to implement, and they're going to play out over the next quarter or so. So we're trying to maybe not sort of overpromise here, but this was -- Chris, we let go almost 500 people, most of them today and we have reset all our budgets internally, most of it today. So we expect, kind of, here we are in mid-quarter in Q3 that we will start to see some improvement. What we are talking about in terms of where the quarter is, but we were talking about top line. We're trying to be prudent on the top line on the revenue side. So Chris, yes, it's -- I'm not -- we're not flushed with cash, but we think that would be access to the ATM and these changes here should allow us to get to the cash flow positive situation that we're trying to get to.

Okay. And just to confirm on that, how much is left on -- that's not my second question, but just -- it was in the first. How much is left on the credit facility? Or is there anything left, said another way?

Yes. There is some -- listen, we've kind of -- as you saw in our press releases, we have reduced the amount under the term debt facility. So there's some loan that we're going to back off of. But there is some left on the revolver. I'm going to say, probably, accessible right now in the $25 million range. But it's not a huge amount there, Chris. The ATM, there's about CAD 200 million left on that as we stand here today. And so that's the, I guess, basic sources of cash. Yes. I'll leave it there.

And Chris, just to sort of -- this is where this new mindset in our organization, this notion of financial discipline is really important. And why the Board felt confident in offering me the opportunity to lead this initiative. We are going to be very, very diligent in ensuring that we are very careful about how we allocate resources. And any resource that we allocate has to provide that near-term return or it's just not worth the investment today. There'll be a time -- a point in time where we could think a little differently about how we're allocating resources. But today, it is really focused on driving, exclusively, this company, to being cash flow positive. And we are confident that we have laid out a plan and have access to the funding gap that we need to get this company to meet that objective.

Our next question is from Michael Lavery with Piper Sandler.

So when you talk about Canada rec, Canada medical, the established medical and the U.S., I guess, in terms of anything of any consequence, there's not much else. But how much in terms of costs would that long tail have had? Is that a real source of savings, more significant than it may seem?

I hope I'm interpreting your question properly. There's a lot of complexity in our business, and that's really what we've been actively trying to reduce here. We have built the company over the last number of years with a lot optionality, if you will. And basically, for now, our finger is in pretty much every pie, waiting to see where the value in this industry would obviously be created. I think that's become increasingly clear over the last year or so. Certainly, in the consumer market, for instance, the value brand or the value segment is really kind of -- basically, the market's taken a hard turn to the value segment. If you show up with good, potent product at a great price point, you're going to sell a lot of cannabis. So as we look at those sorts of situations, the clarity about how we'll generate cash flow and profits, it does mean that we can look at the rest of our business and reduce complexity. I will -- just as an example, an anecdote, we had about 85 different information technology projects on the go because we are expanding kind of all over the globe. Now if we pull back in a few places like we've talked in South America, and Denmark, just pause, and wait for those markets to develop a lot, that actually has a really important impact on the organization, in terms for this year effort and the amount of money that costs to do everything on that one. So part of this is just focus on the core and reduce the complexity. And it's actually quite amazing how much cost that drives out. Beyond that, though, we have driven cost out across the organization, where we just have to say that there is a set of skills, a number of functions that were important to get Aurora to where it is today. But if you take out your white sheet of paper and say, where do I need to go forward, you need either less of those functions or reduced part of those functions. And so that's some of the decisions we made today that we need to spend less in certain areas and really focus on the core Canadian cannabis to get the cash flow.

No, that's helpful. And a little bit maybe following up on Tamy's question. Did you look at any capacity rationalization in your -- in Canada in your core markets? And if so, why not any announcements there? Do you feel like you've got the right footprint? And what kind of utilization are you running at relative to your, obviously, pretty large size?

Yes. I'll just kind of harken back like Michael's introduction of himself. I think the financial discipline will take care of it. We'll continually look at our organization to determine what's needed to go forward. But yet to be determined is how big of a share would pick up in the value segment, for instance. We've built this Ferrari, to be simple, to race in exactly this situation. We are a very automated, low-cost, high-scale producer. It's time to take advantage of that. So we'll see, as we move forward, and how much of that capacity we can actually utilize or how much of the share of the market we can capture. Just to the statement, we're being prudent in our growth assumptions, but it's heartening to hear Premier Ford, in Ontario, last week, claiming that they will soon have more stores in Ontario than rest of Canada. I mean I know it's a little bit of political hyperbole. But the point is, we're not planning for that growth. But when it comes, we'll be ready for it. So I guess what I'm saying in summary is there's still things to be proven in terms of how much capacity we need, but we will take that financial discipline and if the situation warrants, then we'll make the decisions that are most prudent.

Our next question is from Doug Miehm with RBC Capital Markets.

Two questions. The first one really has to do with the pacing of revenues. I'm glad you laid it out the way you did. But to have sort of flat or almost flat growth between Q2 and Q3 on a fiscal basis, can you explain how your 2.0 sales look relative to your dried flower then? Or are you actually going to see growth by your just being conservative?

Yes, Doug. So we -- I think, by and large, we had a pretty good launch into 2.0. I mean we were first into some of the markets, that was great. And a lot of our products seem to be well received. We are trying to be prudent. There's just -- there's not a lot of retail out there. I think I've mentioned, quarter-over-quarter and our kind of consumer revenue did grow. We saw most of that in December, a little bit 2.0, some of it growth in flower. Quite honestly, I think, what I'll be keeping my eye on very closely is our success in the value segment. It's amazing how hard the market has turned over the last few months into the value segment. But there seems to be a complete abdication of the middle of the market by consumers. They're either willing to pay for a premium product or they're going hard to get walking into the cannabis store and asking for give me something over 18%, I want that at the lowest price you got. So again, that's -- we're built for that situation. So we'll see. But I think that we are trying to be very cautious in getting too far ahead of ourselves here. We're resetting. Quite clearly, we're resetting the organization. The worst thing in the world is to plan for something that may take longer to develop that we hoped. If [ something ] really takes off , that's great. There will just be more money on the bottom line for us. So that's the way we're thinking about it. Plan for a low-growth scenario. If it exceeds that, we'll see more money on our EBITDA line, and that would be delightful.

Okay. Perfect. And then just a follow-up question is, when you talk about, I guess, Q1 of 2021 having positive EBITDA, can you give us an indication of, I guess, number one, what's retail store count you're expecting in Ontario at that point to get to? I guess -- and what's the revenue for that quarter need to be to have positive EBITDA?

Okay. So I'll back into this, I mean, and again say, we're trying to plan for a low-growth scenario. So we have internal forecasts, and that's all great. And that's what our sales team is running hard after. What we're planning for, as a company, and what we're talking about externally, we'll plan for low growth. And so if we grow only modestly over the next number of quarters then -- and we need to either meet our EBITDA target, we'll make sure we do with the best of financial discipline. There is a way to operate companies. Yes, we're in the cannabis industry, but we've all -- I mean Michael and I and the rest of us are all the same age. We've got lots of gray hair here. We know how to operate and drive this company to profitability. So we think we've taken the steps now to get us there. And we'll continue to look at reducing complexity. But it's not so much about revenue. It's about controlling the cost in the organization there. And -- but we're quite comfortable with those EBITDA thresholds that they are pointing to.

Our next question is from Graeme Kreindler with Eight Capital.

I guess it's a good follow-up in terms of the previous question that was asked. I just want to, as a housekeeping, make sure I heard that right that the covenant on EBITDA for fiscal 2021, that's $51 million cumulative for the year. Is that correct?

Yes, it is, but it's 80% back-end loaded. So it's, as I said, mid-single digits for Q1 and Q2, it's 5 and 5 for Q1 and Q2. So we basically say that's pretty modest. I have to say, our banking syndicate has been incredibly supportive. We have unanimous support on the changes we made to their -- our debt agreement. And you can imagine, with everybody that's worried about this current market climate, they still believe in us and they believe in what we're doing. And so they signed up for this. What they're just looking for is just, again, hold our kind of hands to the fire, as Michael says, and we're all aligned in the same objective, we will get to EBITDA positive. They just want to see that progress. We'll start off modestly and then build up. And such that when that debt matures at the end of that term, we'll be going cash flow positive. And then the maturity is not an issue if you're showing the bank positive EBITDA.

Yes. I'll just add, it's Michael. I'll just add that the nice thing about our relationship with our banking syndicate is we found a very creative way to sort of match the new covenants to our strategic plan, and it's consistent, which we're very confident in. And again, this drives to our notion of ensuring that financial discipline. We are going to keep a very close eye on that to ensure that we, at minimum, meet, and our objective would be to significantly beat those expectations. And that will give, obviously, our banking syndicate confidence. But as you can see by virtue of some of the changes we've made today with our lending syndicate, they're incredibly supportive of our story. And they're great partners. And they just want to effectively see us execute on the strategic plan, which is what Glen and I are laser-focused on.

Yes. Okay, understood. And then just -- so I appreciate that commentary. And then as an area of follow-up, there was commentary about, I guess, the quarter-over-quarter changes in revenue. And there was a bit of a decrease in the revenue on the international side, mentioning particularly Germany. So I guess, to follow-up on the questions about the overall taking a look at the international portfolio, you mentioned 2 specific jurisdictions here. But was there a discussion at all in terms of the German portfolio and what that could look like in terms of carrying value versus expectations, given that -- the revenues from there have been a bit softer as of late?