Aphria Records Revenue Increase of 17% in Quarter and 81% Year Over Year

Aphria Inc. (TSX: APH or USOTCQB: APHQF) today reported its results, for its fourth quarter and year ended May 31, 2018. All amounts are expressed in Canadian dollars.


$2.2 million in adjusted EBITDA from ACMPR operations1 in the quarter and $8.4 million for the year, a 38% increase over the prior year.

  • Improved cash costs to produce dried cannabis per gram1 (“Money costs”) to $0.95, a decrease of $0.01 in the quarter, remaining below $1.00 for the second consecutive quarter. Subsequent to year-end, declared access to additional countries including Jamaica and Brazil in the fall.
  • Annual production capacity in Canada currently at 30,000 kgs in Aphria One and 5,000 kgs in Broken Coast.
  • Annual production capacity in Canada growing to 255,000 kgs, with initial sale expected in January 2019, all expansions remain on time, pending Health Canada approval, and on budget.
  • Secured partnership with one of North America’s largest liquor distributors, Southern Glazer’s through their Canadian subsidiary, Great North Distributors, providing Aphria with an exclusive for cannabis representation2
  • Signed MOU’s with British Columbia, Alberta, Manitoba, Quebec, New Brunswick and the Yukon Territory, with more agreements to be declared in the short-term.
  • Continued leadership in cannabis product creation with announcement of a significant investment in our Extraction Centre of Excellence.
  • “We had a healthy fourth quarter and a solid year with many achievements we are proud of,” said Vic Neufeld, Chief Executive Officer, Aphria. “We are excited and ready to hit the ground running on the first day of legal adult-use. It will not be without its challenges but we have a plan and the team set up to get it done. We continue to sign supply agreements with states and territories, and our Southern Glazer’s sales network partnership is unmatched, making sure our products and brands are available and represented by retailers across the country.”

    “Beyond that, we will continue to expand our industry-leading experience and expertise into global markets. We’ve had an exciting year adding more depth and experience to our senior leadership team that has helped expand our global operations and presence outside of Canada, US and Australia into another eight countries, and look forward to continued expansion within LATAM,” continued Neufeld.

    “Our continued growth and success is a direct result of their hard work and dedication of our employees and partners in delivering quality merchandise and value to our clients, and establishing Aphria as the premier cannabis business in Canada and around the world,” concluded Neufeld.

    Key Financial Highlights

    For an industry leading eleventh consecutive quarter, the Company reported positive adjusted EBITDA from ACMPR operations1. In the quarter, the Company reported $2.2 million in adjusted EBITDA from ACMPR operations1 and $8.4 million for the year, an increase of 53%. During the quarter, the Company refined its definition of adjusted EBITDA to include an EBITDA definition from both ACMPR surgeries and non-ACMPR operations. The Company defines ACMPR operations as activities, earnings, expenses and adjusted EBITDA from its Aphria One, Aphria Diamond and Broken Coast facilities. The remaining adjusted EBITDA relates to activities at Aphria International. For the quarter ended, the Company incurred an adjusted EBITDA loss of $2.8 million in Aphria International.

    The Company remains committed to the responsible use of our customers’ investment in Aphria, with a focus on profitable execution of our activities. The Company has consistently demonstrated the proven ability to create positive EBITDA from its operating facilities. As the cannabis business and the Company transitions from medical use to adult-use in Canada and to significant global exposure, the Company will continue to make targeted, measured and ROI established investments in its growing portfolio of recreational brands, alternative uses of cannabis, including the transition of cannabis from a product to an ingredient, and worldwide opportunities. However, in the short-term, investments could result in lower corporate adjusted EBITDA1.

    During the quarter, the Company bolstered its position among the industry’s lowest cost producers. For the second consecutive quarter, the Company reported Money costs of $0.95, remaining below $1.00. As previously disclosed, the business’s”All-in” prices of dried cannabis per gram1 (“All-in prices”) increased minorly from $1.56 to $1.60, prices consistent with the additional personnel levels added in advance of production capacity increases in the quarter.

    The Company believes in full financial reporting transparency to investors and will continue to report financial metrics with an appropriate foundation of grams, or kilograms where relevant, to ensure shareholders are capable of correctly comparing metrics amongst industry participants. Further, when reporting non-IFRS steps, the Company will continue to provide detailed disclosure, and transparency tied to its published financial statements.

    Revenue for the three months ended May 31, 2018 was $12,026, representing a 17% increase over the previous quarter’s earnings of $10,267. The gain in the quarter was driven primarily by reporting Broken Coast results for a complete quarter, compared to one month in the previous quarter, increased sales to medical patients in Aphria, all offset by the Company’s previously announced decision to discontinue wholesales sales to other licensed manufacturers, to provide greater stock for its eventual pipeline fill for adult-use and worldwide market opportunities during the next six to nine months. Cannabis oil sales, as a percentage of volume, decreased from 33.1percent to 29.2percent in the quarter, largely driven by the significantly lower percentage of volume sales of oil purchased by Broken Coast medical patients.

    Adjusted gross profit for the fourth quarter was $9,468, with an adjusted gross margin of 78.7 percent, compared to $4,903with an adjusted gross margin of 85.7% in the previous year’s fourth quarter, representing an increase of over 90%. The gain in the adjusted gross margin in the previous quarter is consistent with the increase in revenues combined with improved cost structures.

    The increase in adjusted gross profit for the year is consistent with the Company’s increase in earnings over the period.

    Net loss for the three months ended May 31, 2018 was $4,992 or $0.06 per share, instead of a net loss of $2,593 or $0.02 per share in the previous year. The decrease in net earnings for the quarter relates to $6.5 million in incremental share based compensation, $3.3 million of costs associated with Aphria International, $8.6 million in net losses on the Company’s investment portfolio, all offset by nearly $13.0 million in incremental gross profit.

    Net earnings for the year ended May 31, 2018 was $29,448 or $0.18 per share, as opposed to $4,198 or $0.04 in the previous year. The increase in net earnings for the year relates to fair value adjustments related to biological assets and unrealized gains on the Company’s investment portfolio.

    Adjusted EBITDA from ACMPR operations1 for the fourth quarter was $2.2 million compared to $2.5 million in the previous year. The decrease in adjusted EBITDA from ACMPR operations1 relates to $1.9 million in incremental selling, general and administrative expenses associated with preparations for adult-use, offset by $1.5 million of additional adjusted gross profit1. The difference between adjusted EBITDA from ACMPR operations and adjusted EBITDA1 is the $2.8 million adjusted EBITDA1 loss on Aphria International operations.

    The increase in adjusted EBITDA from ACMPR operations1 relates to capacity increases at Aphria One, the acquisition of Broken Coast offset by bigger selling, general and administrative expenses. Adjusted EBITDA1 for the year was $5.6 million compared to $5.5 million in the previous year.

    We’ve Got A Fantastic Thing Growing.

    1 — In this press release, reference is made to adjusted gross profit, adjusted gross margin, adjusted EBITDA from ACMPR surgeries, kilogram
    (or kilogram equivalents) sold, cash costs to produce dried cannabis per gram,”all-in” prices to produce dried cannabis per gram and investments 
    in capital and intangible assets — wholly-owned subs, which aren’t measures of financial performance under International Financial Reporting 
    Standards. Definitions for all terms above can be found at the Company’s May 31, 2018 Management’s Discussion and Analysis, filed on SEDAR

    2 — Aphria asserts a cannabis exclusive with Great North Distributors for licensed manufacturers with annual production capacities above 2,000 kgs.

    Aphria is a major global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. Headquartered in Leamington, Ontario — the greenhouse capital of Canada — Aphria has been setting the standard for its low-cost production of safe, clean and pure pharmaceutical-grade cannabis at scale, grown in the most natural conditions possible. Focusing on untapped opportunities and backed by the latest technology, Aphria is dedicated to bringing breakthrough innovation to the global cannabis market. The Company’s portfolio of brands is grounded in expertly-researched consumer insights developed to fulfill the needs of each consumer segment. Rooted in our founders’ multi-generational experience in commercial agriculture, Aphria drives sustainable long-term shareholder value through a diversified approach to innovation, strategic partnerships and global expansion, with a presence in more than 10 countries across 5 continents.

    For more information, visit aphria.ca.

    SOURCE

    Published at Wed, 01 Aug 2018 14:59:48 +0000

    Posted in: News

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