Aphria Records Solid Revenue Growth in First Quarter of 2019

Aphria Inc. (TSX: APH or US OTC: APHQF) today reported its results, for the first quarter and quarter ended August 31, 2018.


Three months ended August 31,


Three months ended August 31,



$  13,292


$  6,120

$  13,764

Gross profit

$  7,903

$  8,458

Adjusted gross profit 1

$  4,774


Adjusted gross margin 1


$  21,176

$  15,041

Adjusted EBITDA 1

$  2,227






$  13,292


$  12,026

Adjusted EBITDA from ACMPR operations 1

$  2,227

$  1.30

Money cost to produce dried cannabis / gram 1

$  0.95

$  1.83

“All-in” cost of goods sold / g 1

$  1.60

$  313,982

$  104,799

$  363,245

Working capital

$  150,758

$  28,036

Investment in capital and intangible assets — wholly-owned subs 1

$  39,042

Aphria Inc. (CNW Group/Aphria Inc.)

Key Operating Highlights

  • Significant increase 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 now 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 first sale from Part IV anticipated in January 2019 pending Health Canada approval
  • Signed Supply Agreements with every province in Canada and the Yukon Territory, ensuring accessibility to Aphria products for 99.8% of the Canadian population
  • Signed LOI with Perennial to set up joint venture to develop new, consumer-centric, cannabis-infused product categories and brands
  • Closing full quarter of inventory build for adult-use market in Canada and global chances
  • Entered into a representative agreement to be the exclusive sales representative for We Grow BC Ltd..
  • Launched the Provider’s initial portfolio of adult-use brands: Solei Sungrown Cannabis, RIFF, Decent Supply, and Goodfields
  • Successfully divested of all US cannabis assets following quarter-end
  • Closed a bought deal common share offering during the period to raise net proceeds of over $245 million

“Aphria started fiscal 2019 by taking significant steps to solidify our position as a premier international cannabis company,” stated Vic Neufeld, Chief Executive Officer, Aphria. “We advanced the build out of our expansion in Leamington, signed coast-to-coast distribution agreements, established our powerful portfolio of adult-use manufacturers, and created strategic collborations with leading companies such as Perennial that will ensure Aphria continues to direct the consumer experience as the cannabis industry evolves.”

“Going forward, we’re 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 distribution agreements, a substantial and rising production footprint, a diversified brand portfolio, proven product development and innovation capabilities, and strong international 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 producers, Aphria included. While we experienced a short-term decrease in adjusted earning the first quarter, we continued to ramp up our production capabilities, together 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 execution of our automation infrastructure, which is expected to streamline production over the medium to longer terms. We consider the automation investment particularly will provide Aphria with a significant competitive edge and further our industry-leading low-cost structure.”

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

Key Financial Highlights

Revenue for the three months ended August 31, 2018 was $13,292, representing a 10% increase over the prior quarter’s earnings of $12,026 and a 217% increase over the same period last year. The gain in the quarter was driven by increased orders, accounting for 313 kgs.  The increase 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, supplied to third party partners conducting clinical drug trials.  Cannabis oil earnings, as a proportion of volume, increased from 29.2% to 39.1% in the quarter, driven primarily by an inner formula change for our equivalency factor. On a year-over-year basis, earnings in the quarter climbed 217.2%.

Adjusted gross profit for the first quarter was $8,458, with an adjusted gross margin of 63.6%, compared to $9,468 having an adjusted gross margin of 78.7% in the prior quarter. The reduction in the gross margin and adjusted gain from the prior quarter primarily relates to our decision to dispose of 13,642 plants before harvest.  Throughout the period, the Company could not fill all the open greenhouse positions because of lack of qualified local labor, which left it with staff to harvest production produced from the Aphria One greenhouse in the first summer’s levels. As a consequence of the decrease staff levels, the crop rotation of one week outgrew its harvest period. To balance production requirements, and to maintain the highest quality for its patients, 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 occurred, the adjusted gross margin could have been greater by 7.4% (or 71.0%). Subsequent to the quarter, the size of the greenhouse staff doubled in Leamington. Automation, as part of the Part IV expansion, is expected to be operational at the end of Q2-2019, which will permit Aphria to preserve but enhance its industry leading production criteria.

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

Adjusted EBITDA loss from ACMPR surgeries 1 for the first quarter was $0.8 million compared to adjusted EBTIDA from ACMPR surgeries 1 $2.2 million in the prior quarter. The reduction in adjusted EBITDA from ACMPR surgeries 1 relates to a reduction of $1.0 million in adjusted gross profit1 and $1.2 million in selling, marketing and promotion expenses associated 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 that the $3.1 million adjusted EBITDA1 loss on Aphria International operations.

Conference Call On October 12, 2018

The Company invites you to join its analyst conference call this morning at 9:00 am EST to discuss its financial results for the quarter-ended August 31, 2018 ended. An audio replay of this call will be available until November 9, 2018.

Conference Call Details:



Friday, October 12, 2018


9:00 am EST

Dial In:  


Conference ID: 





Replay Passcode: 


We Have A Thing Growing.

1 — In this press release, reference is made to adjusted gross profit, adjusted gross margin, adjusted EBITDA from ACMPR operations, corrected EBTIDA loss from ACMPR operations, kilogram (or kilogram equivalents) sold, cash costs to produce dried cannabis per gram,”all-in” costs to create dried cannabis per gram and investments in capital and intangible assets — wholly-owned subs, which are not measures of financial performance under International Financial Reporting Standards. Definitions for all terms above are available in the organization’s August 31, 2018 Management’s Discussion and Analysis.

About Aphria

Aphria is a global cannabis company driven by an unrelenting dedication to product quality our clients and innovation. Headquartered in Leamington, Ontario — Canada’s greenhouse capital — Aphria has been setting the benchmark for clean, safe and pure cannabis’ low-cost production at scale, grown in the ordinary conditions . Focusing on opportunities that are untapped and backed by the latest technology, 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 consumer segment. Rooted in our founders’ experience in commercial agriculture, Aphria drives sustainable long-term shareholder value to international expansion, strategic partnerships and innovation , with a presence in over 10 countries across 5 continents.

To find out more, see aphria.ca.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain information in this news release represents forward-looking statements. May be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as”may”,”should”,”anticipate”,”expect”,”potential”,”believe”,”intend” or the negative of these terms and similar expressions. Forward-looking statements in this news release include, but are not limited to, statements with regard to internal expectations, estimated margins, expectations for future growing capacity and costs, the conclusion of any capital project or expansions, any comment related to the legalization of cannabis and the timing related thereto, expectations of Health Canada approvals and expectations with respect to future production expenses. Forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks related to general economic conditions; adverse business events; advertising costs; loss of markets; future legislative and regulatory developments involving medical cannabis or adult use of cannabis; inability to access sufficient capital from internal and external resources, and/or inability to access sufficient capital on favourable terms; the medical cannabis industry in Canada generally, income tax and regulatory issues; the ability of Aphria to implement its business strategies; contest; crop failure; interest and currency rate fluctuations and other risks.

Readers are cautioned that the foregoing list isn’t exhaustive. Readers are cautioned not to place undue reliance on forward-looking statements since there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management may prove to be incorrect and actual results may differ materially from those expected. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

SOURCE Aphria Inc..

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Released at Fri, 12 Oct 2018 11:06:31 +0000

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