Connect with us

Cannabis

Aphria Inc. Announces Third Consecutive Quarter of Positive Adjusted EBITDA and a 46% Increase in Adult-Use Cannabis Revenue From Prior Quarter

Vlad Poptamas

Published

on

 

Aphria Inc. (“Aphria” or the “Company“) (TSX: APHA and NYSE: APHA) today reported its results for the second quarter ended November 30, 2019. All amounts are expressed in thousands of Canadian dollars, unless otherwise noted and except for per gram, kilogram, kilogram equivalents, and per share amounts. The Company also announced that Irwin D. Simon, will officially remove “interim” from his title, effective today. In addition to his responsibilities as Aphria’s Chairman of the Board, Mr. Simon had been serving as Interim Chief Executive Officer since February 2019.

“We are very pleased with our strong growth and execution in Canada demonstrated by our increase in adult-use cannabis revenue and positive adjusted EBITDA as a result of our compelling brands and market positioning,” stated Irwin D. Simon, Chairman and Chief Executive Officer. “We are continuing to expand our capabilities internationally with solid progress during the quarter in Germany and South America and look to monetize non-core assets. We are confident in our market position and our ability to generate sustainable profit growth. I am honoured to continue to work closely with our tremendous team around the world to fuel growth and value for all of our stakeholders. Going forward, we believe our brands, cultivation expertise, cash position and balance sheet will continue to differentiate us in the cannabis industry, and we remain focused on the highest return opportunities for growth.”

Key Operating Highlights

  • Revenue for adult-use cannabis of $29.0 million in the second quarter, an increase of 46% from prior quarter.
  • Net cannabis revenue of $33.7 million in the second quarter, an increase of 9% from prior quarter.
  • Net revenue of $120.6 million in the second quarter, an increase of 457% from prior year quarter and decrease of 4% from prior quarter.
  • Net loss of $7.9 million, however reported positive adjusted EBITDA of $1.9 million in the second quarter.
  • Adjusted EBITDA from cannabis operations of $3.4 million in the second quarter, an increase of 155% from the prior quarter.
  • Ended quarter with a strong balance sheet and liquidity, including $497.7 million of cash and cash equivalents, to fund planned Canadian and International growth.
  • Received cultivation license for its subsidiary Aphria Diamond, featuring 1.3 million square feet of greenhouse production.
  • Recognized for seven awards at the 6th Annual Canadian Cannabis Awards with all five of Aphria’s medical and recreational brands receiving awards, as well as Broken Coast’s Master Grower, Kevin Anderson, winning ‘Master Grower’ accolades and Aphria’s Solei’s CBN Renew oil ‘Innovation of the Year’.
  • Elected Jodi Butts to the Board of Directors.
  • Strengthened executive leadership team with key appointments and promotions.
  • Secured an $80 million senior secured credit facility for Aphria Diamond, strengthening the balance sheet without being dilutive to shareholders.

Subsequent Events

  • Received confirmation of compliance with the requirements of the European Union’s Commission Directive 2003/94/EC relating to the Good Manufacturing Practices in respect of medicinal products for human use and investigational medicinal products for human use, from the Malta Medicines Authority at the Company’s ARA – Avanti Rx Analytics.
  • Company’s Jamaican subsidiary Marigold Projects Jamaica Limited (“Marigold”) received a Processing (Tier 1) Licence from Jamaica’s Cannabis Licensing Authority (“CLA”) which permits the processing of cannabis-based products for medical, therapeutic and scientific purposes.
  • Marigold also received its second Retail (Herb House) licence from Jamaica’s CLA to open a store in Negril, Jamaica.

Key Financial Highlights

Three months ended

Three months ended

November 30, 2019

November 30, 2018

Net revenue

$120,600

$21,668

Gross profit

$39,589

$5,983

Adjusted cannabis gross profit 1

$19,079

$10,122

Adjusted cannabis gross margin 1

56.6%

49.3%

Adjusted distribution gross profit 1

$10,959

$35

Adjusted distribution gross margin 1

12.7%

3.1%

Net income (loss)

($7,929)

$54,774

Adjusted EBITDA 1

$1,903

($9,530)

Q2-2020

Q1-2020

Distribution revenue

$86,442

$95,327

Net cannabis revenue

$33,708

$30,785

Net revenue

$120,600

$126,112

Kilograms (or kilogram equivalents) sold 1

7,062

5,969

Cash cost to produce dried cannabis / gram 1

$1.11

$1.43

“All-in” cost of goods sold / gram 1

$1.98

$2.52

Adjusted EBITDA from cannabis operations 1

$3,386

$1,329

Adjusted EBITDA from businesses under development 1

($3,547)

($4,234)

Adjusted EBITDA from distribution operations 1

$2,064

$3,940

Cash and cash equivalents & marketable securities

$497,694

$464,319

Working capital

$675,917

$612,973

Capital and intangible asset expenditures – wholly-owned subsidiaries 1

$8,230

$19,277

Net revenue for the three months ended November 30, 2019 was $120.6 million, an increase of 457% from $21.7 million in the same period last year.  Second quarter fiscal 2020 net revenues were lower when compared to the prior quarter net revenues of $126.1 million as a result of a decrease in distribution revenue from $95.3 million to $86.4 million associated with the change in the German government’s medical reimbursement model and seasonality in CC Pharma. The decrease in distribution revenue was partially offset by an increase in net cannabis revenue of $33.7 million from $30.8 million. Net revenue includes over 5,567 kilogram equivalents sold for the adult-use market and 1,237 kilogram equivalents for medical cannabis sales.

The average retail selling price of medical cannabis (exclusive of wholesale), before excise tax, increased to $8.16 per gram in the quarter, compared to $7.56 in the prior quarter, primarily related to a higher percentage of total medical sales coming from Broken Coast in the prior quarter. The average selling price of adult-use cannabis, before excise tax, decreased to $5.22 per gram in the quarter, compared to $6.02 per gram in the prior quarter, primarily as a result of a change in sales mix. Customer demand exceeded the Company’s supply capabilities in the second quarter as a result of the timing of Aphria Diamond’s license receipt and as a short-term measure the Company purchased wholesale product from other Licensed Producers to supplement its near-term supply capabilities. Wholesale product purchases resulted in a higher cost and less margin opportunity for those sales.

Adjusted cannabis gross profit for the second quarter was $19.1 million, with an adjusted cannabis gross margin of 56.6%, compared to $15.3 million with an adjusted gross margin of 49.8% in the prior quarter. The increase in adjusted gross margin was primarily due to lower wholesale sales to other licensed producers which carry lower selling prices, as well as reduced cultivation costs in the quarter.

Adjusted distribution gross profit for the second quarter was $11.0 million, with an adjusted gross margin of 12.7%, compared to $12.2 million with an adjusted gross margin of 12.8% in the prior quarter.

Selling, general, and administrative costs in the quarter increased to $49.2 million from $41.4 million in the prior quarter, and increased from $27.5 million in the prior year. The increase from the prior quarter is mainly related to a $2.6 million increase in share-based compensation and a $4.4 million increase in selling, marketing and promotion primarily associated with increased sales.

Net loss for the second quarter of fiscal 2020 was $7.9 million, or a loss of $0.03 per share, compared to net income of $16.4 million, or $0.07 per share in the prior quarter, and net income of $54.8 million, or $0.22 per share for the same period last year. The decrease in net income was primarily due to provisions associated with the Company’s Tier 3 passive investment portfolio.

Adjusted EBITDA increased $0.9 million to $1.9 million for the second quarter compared to $1.0 million in the prior quarter. Adjusted EBITDA from cannabis operations for the second quarter was $3.4 million compared to $1.3 million in the prior quarter. The adjusted EBITDA loss from businesses under development for the second quarter was $3.5 million compared to a loss of $4.2 million in the prior quarter. Adjusted EBITDA from distribution operations for the second quarter was $2.1 million, compared to $3.9 million the prior quarter. The increase in adjusted EBITDA is primarily attributable to increased sales in the Company’s cannabis business.

1 – In this press release, reference is made to adjusted cannabis gross profit, adjusted cannabis gross margin, adjusted distribution gross profit, adjusted distribution gross margin, adjusted EBITDA, net loss, adjusted EBITDA from cannabis operations, adjusted EBITDA from businesses under development, adjusted EBITDA from distribution operations, kilogram equivalents sold, cash costs to produce dried cannabis per gram, “all-in” costs to produce dried cannabis per gram and investments in capital and intangible assets – wholly-owned subsidiaries, which are not measures of financial performance under International Financial Reporting Standards (IFRS).  These metrics and measures are not recognized measures under IFRS do not have meanings prescribed under IFRS and are as a result unlikely to be comparable to similar measures presented by other companies. These measures are provided as information complimentary to those IFRS measures by providing a further understanding of our operating results from the perspective of management. As such, these measures should not be considered in isolation or in lieu of review of our financial information reported under IFRS. Definitions and reconciliations for all terms above can be found in the Company’s November 30, 2019 Management’s Discussion and Analysis, filed on SEDAR and EDGAR. 

Outlook

Carl Merton, Aphria’s Chief Financial Officer commented, “We are updating our annual outlook with a little over four months left in our fiscal year to reflect certain market dynamics that have evolved relative to our initial expectations.  We look forward to generating an acceleration in our revenue and profit growth in the second half of the fiscal year and continue to believe the Canadian and international cannabis industry outlook remains robust. Aphria is well positioned for long-term sustainable growth as we continue to manage the controllable aspects of our business.”

For fiscal year 2020, the Company is updating its guidance to primarily reflect certain market dynamics including a slower than expected retail location rollout in Ontario with more than 40 store openings still pending, the temporary banning of vape products in the Province of Alberta while it studies the impact of vape products, the higher costs of third-party supply as a result of the timing of the receipt of Aphria Diamond’s license, and a slowing in CC Pharma’s growth arising from recent changes in the German government’s medical reimbursement model.  The Company expects the following for fiscal year 2020:

  • Net revenue of approximately $575 million to $625 million, with distribution revenue representing slightly more than half of the total net revenue
  • Adjusted EBITDA of approximately $35 million to $42 million

Conference Call

Aphria executives will host a conference call to discuss these results today at 8:00 am ET. To listen to the live call, dial (888) 231-8191 from Canada and the U.S. or (647) 427-7450 from International locations and use the passcode 1575423. A telephone replay will be available approximately two hours after the call concludes through January 28, 2020. To access the recording dial (855) 859-2056 and use the passcode 1575423.

There will also be a simultaneous, live webcast available on the Investors section of Aphria’s website at aphriainc.com. The webcast will be archived for 30 days.

We Have A Good Thing Growing

 

SOURCE Aphria Inc.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Cannabis

Village Farms Opts to Receive $5.94 Million Cash Refund from Pure Sunfarms

Vlad Poptamas

Published

on

Photo source: bigbendsentinel.com

 

Village Farms International, Inc. (“Village Farms“) (TSX: VFF; Nasdaq: VFF) today announced that it has opted to receive a $5.94 million cash refund from Pure Sunfarms Corp. (“Pure Sunfarms“) relating to an additional equity contribution that Village Farms made to Pure Sunfarms on November 19, 2019 (the “VF Additional Equity Contribution“).

As previously disclosed by Emerald Health Therapeutics, Inc. (“Emerald“), it has been disputing Village Farms’ ability to make the VF Additional Equity Contribution of $5.94 million, as well as the cancellation of 5,940,000 common shares of Pure Sunfarms placed in escrow pending payment by Emerald of its related $5.94 million equity contribution, following its failure to make its required equity contribution to Pure Sunfarms on November 1, 2019. In an effort to narrow the issues in dispute and accelerate the resolution of this shareholder dispute, Village Farms decided to unwind the VF Additional Equity Contribution, which has now been completed, with Pure Sunfarms providing Village Farms with the $5.94 million cash refund. The $5.94 million cash refund to Village Farms also eliminates the costs and delays involved in obtaining an independent appraisal of Pure Sunfarms that resulted from the VF Additional Equity Contribution.

Village Farms continues to seek the cancellation of 5,940,000 common shares of Pure Sunfarms that were placed in escrow pending payment by Emerald of its related equity contribution (the “Emerald Share Cancellation“), which was not made as required. It is Village Farms’ position that the Emerald Share Cancellation is expressly provided for in the applicable legal agreements.

“Due to the arbitration process related to the Emerald Share Cancellation taking significantly longer than originally anticipated, and with the resulting number of incremental shares for our $5.94 million equity contribution unknown, we decided to reduce the number of items in dispute in an effort to bring the matter to resolution sooner for Village Farms and its shareholders,” said Michael DeGiglio, CEO, Village Farms. “In addition, as a result of the $5.94 million cash refund to Village Farms, we anticipate that Pure Sunfarms may call for additional equity contributions by each of Village Farms and Emerald.”

If Village Farms is successful in the arbitration and Emerald’s escrowed shares are cancelled, Village Farms would own 53.5% of Pure Sunfarms and Emerald would own 46.5% effective as of November 19, 2019. Village Farms expects a decision from the arbitration panel during the second half of 2020.

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking information within the meaning of applicable securities laws (“forward-looking statements”). Forward-looking statements may relate to Village Farms’ future outlook or financial position and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, litigation, projected production, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving Village Farms and Pure Sunfarms. Particularly, statements regarding future results, performance, achievements, prospects or opportunities for Village Farms, Pure Sunfarms, the greenhouse vegetable industry or the cannabis and hemp industries are forward-looking statements. In some cases, forward-looking information can be identified by such terms as “outlook”, “may”, “might”, “will”, “could”, “should”, “would”, “occur”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue”, “likely”, “schedule”, “objectives”, or the negative or grammatical variation thereof or other similar expressions concerning matters that are not historical facts.

Although the forward-looking statements contained in this press release are based upon assumptions that management believes are reasonable based on information currently available to management, there can be no assurance that actual results or events will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond Village Farms’ control, that may cause Village Farms’ or the industry’s actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the factors contained in Village Farms’ filings with U.S. and Canadian securities regulators, including as detailed in Village Farms’ annual information form and management’s discussion and analysis for the year-ended December 31, 2018 and for the three and nine-month periods ended September 30, 2019.

When relying on forward-looking statements to make decisions, Village Farms cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future results, events, performance, achievements, prospects and opportunities. The forward-looking statements made in this press release only relate to events or information as of the date on which the statements are made in this press release. Except as required by law, Village Farms undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

SOURCE Village Farms International, Inc.

Continue Reading

Cannabis

Canada House Wellness Group Announces Results of Annual General Meeting and Issuance of Stock Options

Vlad Poptamas

Published

on

Photo source: williamchurchill.design

 

Canada House Wellness Group Inc. (CSE: CHV) (“Canada House” or the “Company“) is pleased to announce the results of the company’s Annual General Meeting of shareholders that was held in Fredericton, New Brunswick on Thursday, December 19, 2019, where two business items were presented and approved by the shareholders in attendance.

The Directors of the Company that were nominated at the meeting – Norman BettsChris Churchill-SmithShawn GrahamGaetan Lussier, and Dennis Moir – were elected to hold office until the next Annual General Meeting of Shareholders, or until their successors are elected or appointed.

In addition, Ernst & Young LLP were appointed as auditors of the Company for the following year and the Directors were authorized to fix their remuneration.

The business summary presented at the Annual General Meeting is available on the Investor Centre section of Canada House’s website at https://canadahouse.ca.

The Company is also pleased to announce the immediate granting of 500,000 stock options to senior employees and advisors at an exercise price of $0.05 and with a term of 5-years. The grant was made in accordance with the Company’s stock option plan and the policies of the Canadian Securities Exchange.

 

SOURCE Canada House Wellness Group Inc.

Continue Reading

Cannabis

Canopy Growth Revises Beverage Launch Timeline

Vlad Poptamas

Published

on

 

Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED), (NYSE: CGC) submitted its final documentation for its beverage facility to Health Canada in late June 2019 and subsequently received the licence in late November 2019. In the seven weeks since receiving the licence, the Company has made meaningful progress towards scaling the production process for its cannabis beverages from lab scale to commercial scale.

Management remains very confident in the underlying beverage science and in its ability to scale production and deliver high quality, differentiated cannabis beverages to the market. However, the scaling process is not complete, and the Company is extending its to-market date while the internal teams complete the final steps.

“Canopy has had seven weeks to work with THC in the brand new beverage facility to scale processes and IP it has developed in the R&D environment,” said David Klein, CEO, Canopy Growth. “In order to deliver products that meet our customer’s high standards we are electing to revise the launch date while we work through the final details.”

Cannabis beverages have disruptive power and in time, may introduce new consumers to the cannabis category. Canopy does not believe this delay will have a material impact on its FY20 revenue.

The Company intends to provide an update with the release of its Q3 FY20 financial results.

Here’s to Future (Cannabis Category) Growth.

 

SOURCE Canopy Growth Corporation

Continue Reading

Trending Online

Grassnews is part of PICANTE Media and Events, a leading media and boutique event organizer in the European Union with a monthly reach of +50,000 readers. The official company (PROSHIRT SRL), has been listed for 4 years in a row among the top 3 Advertising and market research agencies in the local Top Business Romania Microcompanies based on the Financial Reports. Grassnews digests / hand picks the latest news about the CBD / Legal Cannabis industry and serves them to you daily.

Contact us: sales@picante.today

Editorial / PR Submissions

© Grassnews .com 2019 - 2020 - part of PICANTE Media. All rights reserved. Registered in Romania under Proshirt SRL, Company number: 2134306, EU VAT ID: RO21343605. Office address: Blvd. 1 Decembrie 1918 nr.5, Targu Mures, Romania