Aphria Records Solid Revenue Growth in First Quarter of 2019

Aphria Records Solid Revenue Growth in First Quarter of 2019

    • Significant growth in g sold in the quarter, driven by wholesale orders being used in clinical drug trials and rebalancing of inventory related to cannabis trimming
    • Annual production capacity in Canada currently at 30,000 kgs in Aphria One and 5,000 kgs in Broken Coast
    • Canadian-based production capacity on schedule to reach 255,000 kgs per annum, with initial sale from Part IV expected in January 2019 pending Health Canada approval
    • Signed Supply Agreements with every province in Canada and the Yukon Territory, ensuring access to Aphria products for 99.8% of the Canadian population
    • Signed LOI with Perennial to establish joint venture to create new, consumer-centric, cannabis-infused product categories and brands
    • Final full quarter of inventory build for adult-use market in Canada and International opportunities
    • Entered into a representative agreement to be the exclusive sales representative for We Grow BC Ltd..
    • Launched the Company’s initial portfolio of adult-use brands: Solei Sungrown Cannabis, RIFF, very good Supply, and Goodfields
    • Successfully divested of all US cannabis assets subsequent to quarter-end
    • Closed a bought deal common share offering during the period to raise net proceeds of more than $245 million

    “Aphria started financial 2019 by taking substantial actions to solidify our position as a premier global cannabis company,” stated Vic Neufeld, Chief Executive Officer, Aphria. “We advanced the build out of our growth in Leamington, signed coast-to-coast distribution agreements, launched our powerful portfolio of adult-use brands, and created strategic collborations with leading companies like Perennial that will ensure Aphria continues to lead the consumer experience as the cannabis industry evolves.”

    “Going forward, we are well positioned not only for the recreational market in Canada, but also the continuing growth and leadership of the medical cannabis market internationally. With committed supply agreements, a substantial and rising production footprint, a diversified brand portfolio, proven product development and innovation capabilities, and strong global alliances, Aphria is focused on driving sustainable long-term profitable growth and capitalizing on the most accretive cannabis opportunities around the world.”

    “As we maintained, the legalization of adult-use cannabis in Canada is a significant inflection point for the industry and all licensed manufacturers, Aphria included. While we experienced a short-term decrease in adjusted earning in the first quarter, we continued to ramp up our production capabilities, with our Part IV and Part V expansions of Aphria One, added considerable strength to our workforce, and continued to move forward aggressively with the implementation of our automation infrastructure, which is expected to streamline production over the medium to longer terms. We believe the automation investment in particular will provide Aphria with a substantial competitive advantage and further our industry-leading low-cost structure.”

    “On behalf of everyone at Aphria, we are thrilled to welcome the legalization of adult-use cannabis in Canada next week. We are ready to usher the business into an exciting new era and fulfill the growing demand for cannabis, in Canada and internationally, for a long time to come,” said Mr. Neufeld.

    The gain in the quarter was driven primarily by increased orders, accounting for 313 kgs.  The rise in wholesale orders was comprised of approximately 200 kgs of cannabis trim offered to other LPs, to properly balance inventory levels of specific strains which were not in demand by the Provincial Control Boards and roughly 100 kgs of dried cannabis and cannabis oil, provided to third party partners conducting clinical drug trials.  Cannabis oil earnings, as a percentage of volume, increased from 29.2% to 39.1% in the quarter, driven primarily by an internal formula change for our equivalency factor. On a year-over-year basis, earnings in the quarter climbed 117.2%.

    The decrease in the gross margin and adjusted gross profit from the prior quarter relates to our internal decision to dispose of 13,642 plants before harvest.  During the period, the Company was unable to fill all of the open greenhouse positions because of lack of qualified labor, which left it to harvest the levels of production. As a consequence of the staff levels, the crop rotation of one week outgrew its harvest period. To keep the highest quality for the patients, and to properly balance production requirements, the Company disposed of the plants that were affected to ensure the next week’s harvest was grown in optimal conditions. Had this write-off not happened, the adjusted gross margin could have been higher by 7.4% (or 71.0%). Following the quarter, Aphria doubled the size of the greenhouse staff in Leamington. Automation, as part of the Part IV growth, is expected to be fully operational by the end of Q2-2019, which will further permit Aphria to preserve but increase its industry leading production criteria.

    Net earnings for the three months ended August 31, 2018 was $21,176 or $0.09 per share, as opposed to $15,041 or $0.11per share in the prior year. The increase in net earnings for the quarter relates to profits within our long-term investment portfolio, primarily our investments in Liberty Health Sciences and Hiku Brands Company Ltd. and the increase in fair value of biological assets caused by the production growth associated with our Part III Expansion project.

    The decrease in adjusted EBITDA from ACMPR operations1relates to a decrease of $1.0 million in adjusted gross profit1 and $1.2 million in advertising, marketing and advertising expenses connected with preparations for adult-use. Adjusted EBITDA1 loss for the first quarter was $4.0 million, compared to $0.6 million in the prior quarter. The difference between adjusted EBITDA from ACMPR operations and adjusted EBITDA1 is the $3.1 million adjusted EBITDA1 loss on Aphria International operations.

    We Have A Fantastic Thing Growing.

    1 — In this press release, reference is made to adjusted gross profit, adjusted gross margin, adjusted EBITDA from ACMPR operations, adjusted EBTIDA loss from ACMPR surgeries, kilogram (or kilogram equivalents) sold, cash costs to produce dried cannabis per gram,”all-in” prices to create 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 in the organization’s August 31, 2018 Management’s Discussion and Analysis, filed on SEDAR.

    Aphria is a worldwide cannabis company driven by an unrelenting commitment to our clients, product quality and innovation. Headquartered in Leamington, Ontario — the greenhouse capital of Canada — Aphria has been setting the benchmark for its low-cost production of safe, pure and clean pharmaceutical-grade cannabis at scale . Focusing on opportunities that are untapped and backed by the latest technologies, Aphria is committed to bringing breakthrough innovation to the cannabis industry that is global. The Company’s portfolio of brands is grounded in consumer insights designed to meet with the needs of every customer segment. Rooted in our founders’ experience in agriculture, Aphria drives sustainable shareholder value to strategic partnerships, innovation and growth , with a presence in more than 10 countries across 5 continents.

    For more information, visit aphria.ca.

    SOURCE

    Published at Fri, 12 Oct 2018 14:27:09 +0000

    Posted in: Investing

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