Lowered cash costs for the quarter, furthering
commitment to being a low-cost producer
Four-part
greenhouse expansion on track for completion in 2018, poised to
meet expected recreational demand
LEAMINGTON, ON, Oct. 13, 2017 /CNW/ - Aphria Inc.
("Aphria" or the "Company") (TSX: APH or
USOTCQB: APHQF) today reported its results, for the
first quarter ended August 31,
2017. All amounts are expressed in Canadian dollars.
|
|
|
Q1 -
2018
|
|
Q1-2017
|
$
6,120,359
|
Revenue
|
$
4,375,512
|
7,904,441
|
Gross
profit
|
3,782,145
|
4,774,197
|
Adjusted gross
profit1
|
3,331,596
|
78.0%
|
Adjusted gross
margin1
|
76.1%
|
15,040,168
|
Net income
(loss)
|
895,269
|
1,548,149
|
EBITDA from
operations1
|
1,054,269
|
|
|
|
|
|
|
Q1-2018
|
|
Q4-2017
|
852.0
|
Kilograms (or
kilogram equivalents) sold
|
738.3
|
$
6,120,359
|
Revenue
|
$
5,717,866
|
$
1,548,149
|
EBITDA from
operations1
|
$
2,826,667
|
$
0.95
|
Cash cost to produce
dried cannabis / gram – using Aphria's
definition1
|
$
1.11
|
$
1.61
|
"All-in" cost of
goods sold / gram1
|
$
1.67
|
$
118,731,275
|
Cash and cash
equivalents & marketable securities
|
$
167,257,202
|
$
135,127,644
|
Working
capital
|
$
169,051,562
|
$
23,704,138
|
Investment in capital
and intangible assets
|
$
31,955,214
|
$
20,131,330
|
Strategic
investments1
|
$
33,561,864
|
Operating highlights
- Eighth consecutive quarter of positive EBITDA. $1.5 million in EBITDA from operations in the
quarter, a 47% increase from the prior year.
- First harvest and first sale of product flowered exclusively in
the new facility expansion.
- Construction on Part III and Part IV expansion progressing as
scheduled with first sale from Part III expected in late
May 2018 and from Part IV in
mid-to-late January 2019. Economies
of scale achieved as a result of the completion of these expansion
projects will further promote Aphria's commitment to being one of
the lowest cost producers in the industry.
- Improved "all-in" costs to produce dried cannabis per gram from
$1.67 to $1.61 in the quarter, a
decrease of 3.5%.
- Lowered cash costs to produce dried cannabis per gram from
$1.11 to $0.95 in the quarter, a
decrease of 14.4%.
- Made the step change in the quarter from a company reporting
cumulative losses greater than cumulative net income (deficit) to
cumulative net income exceeding cumulative losses (retained
earnings). Aphria becomes one of only a few publicly listed
Licensed Producers in this position.
- Deployed approximately $20.1
million of capital in the form of strategic investments
including additional investments in Copperstate Farms Investors,
LLC, Green Acre Capital Fund I and investments in TS BrandCo
Holdings Inc., HydRX Farms Inc. (d/b/a Scientus Pharma) and Nuuvera
Corp.
- Deployed approximately $23.7
million of capital in the form of capital expenditures
related to our Part II, Part III and Part IV expansion
projects.
"In the first quarter of 2018, Aphria increased revenue and
grams sold, and lowered cash costs, in addition to recording our
eighth consecutive quarter of positive EBITDA," said Vic Neufeld, Chief Executive Officer, Aphria. "A
key driver of our continued performance has been our ability to
maintain leadership as one of the lowest-cost producers in the
industry. As legal recreational cannabis comes into market in 2018,
low costs per gram will be a critical factor for the entire supply
chain. Our proven ability to grow to scale while keeping costs low
is an important competitive advantage; it positions Aphria to
profitably meet projected demand for cannabis and deliver
sustainable value to our shareholders."
"Looking ahead, we are on track to meet critical short- and
long-term goals: Our fully-funded facility expansion is well
underway, and we expect to achieve further economies of scale once
the expansion projects are completed in 2018. Additionally, we
continue to develop new product innovations and invest in our
recreational infrastructure and brand. This will enable us to serve
growing demand from medical cannabis patients in the near term and
will eventually support Aphria's position as a leader in
Canada's recreational market, once
federal and provincial regulatory frameworks are in place," said
Mr. Neufeld.
Financial highlights
For the eighth consecutive quarter, the Company reported
positive EBITDA. In the quarter, the Company reported
$1.5 million in EBITDA from
operations, a 47% increase over the prior year. The Company
remains committed to the responsible use of our shareholders'
investment in Aphria. The Company continues to invest in its
recreational brand, continues to proceed diligently on its capital
investment plans and continues to explore other opportunities to
increase shareholder value, including strategic investments, while
ensuring appropriate liquidity risk mitigation strategies are in
place.
Revenue for the three months ended August
31, 2017 was approximately $6.1
million, representing a 7% increase over the prior quarter's
revenue of approximately $5.7
million, in a quarter in which the Company was effectively
capacity constrained as the first sale from the Part II expansion
did not occur until late in August. Further, on a kilogram and
kilogram equivalent basis, the Company increased its sales by 15%,
from 738.3 kgs to 852.0 kgs. Cannabis oil sales, as a
percentage of all revenue, remained constant in the quarter at 32%
of revenue.
Gross profit before fair value adjustments for the first quarter
was approximately $4.8 million with a
gross margin before fair value adjustments of 78%, generated from
both retail and wholesale shipments of medical cannabis. The
decrease in the gross margin before fair value adjustments from the
prior quarter was a function of replacing sales to veterans, once
their three gram per day limit became effective, with a combination
of retail sales to patients and wholesale sales to other Licensed
Producers.
During the quarter, our "all-in" costs of dried cannabis per
gram decreased from $1.67 to
$1.60. The decrease was largely
related to economies of scale achieved as a result of the
completion of our Part II expansion. Similarly, our cash
costs of dried cannabis per gram decreased from $1.11 to $0.95, for
the same reason.
During the quarter, the Company reported significant activity as
it relates to its strategic investment portfolio, as follows:
|
|
|
|
Q1-2018
|
Q4-2017
|
Foreign exchange
(loss) gain
|
$
(150,702)
|
417,165
|
(Loss) gain on
marketable securities
|
(1,746,367)
|
194,633
|
Gain on dilution of
ownership in equity accounted investee
|
7,551,158
|
--
|
(Loss) gain from
equity accounted investee
|
(8,840,264)
|
210,400
|
Finance income,
net
|
479,719
|
29,765
|
Unrealized gain on
embedded derivatives
|
532,750
|
--
|
Unrealized gain
(loss) on long-term investments
|
19,081,556
|
(5,572,278)
|
Total
|
16,428,131
|
(4,720,315)
|
The largest increases in the strategic investment portfolio
relate to the increase in fair value of the Company's investment in
Copperstate Farms Investors, LLC and the increase in the value of
the Company investment in its equity accounted investee, Liberty
Health Sciences, Ltd. ("Liberty"). The largest
offsetting decrease in the strategic investment portfolio was the
Company's share of its equity accounted investee's, Liberty's, net
loss for the quarter. The Company's share was $8.8 million, with the vast majority of the loss
($8.4 million) relating to Liberty's
listing fees as part of its reverse takeover, go public,
transaction.
Net income for the three months ended August 31, 2017 was approximately $15 million or $0.11 per share as opposed to a net income of
approximately $0.9 million or
$0.01 per share in the same quarter
in the previous year and a loss of approximately $2.6 million or $0.02 per share in the previous quarter.
The increase in net income for Aphria in the quarter is directly
related to the net gains on the Company's strategic investment
portfolio in the quarter.
EBITDA from operations for the first quarter was approximately
$1.5 million, compared to an EBITDA
from operations of $1 million in the
same period of the prior year and EBITDA from operations of
$2.8 million in the previous
quarter.
We have A Good Thing Growing.
About Aphria
Aphria Inc., one of Canada's
lowest cost producers, produces, supplies and sells medical
cannabis. Located in Leamington,
Ontario, the greenhouse capital of Canada. Aphria is truly powered by sunlight,
allowing for the most natural growing conditions available. We are
committed to providing pharma-grade medical cannabis, superior
patient care while balancing patient economics and returns to
shareholders.
For more information, visit www.Aphria.ca.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain
information in this news release constitutes forward-looking
statements under applicable securities laws. Any statements that
are contained in this news release that are not statements of
historical fact 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 respect to internal expectations,
estimated margins, expectations for future growing capacity and
costs, the completion of any capital project or expansions, any
commentary related to the legalization of cannabis and the timing
related thereto, expectations of Health Canada approvals and
expectations with respect to future production costs.
Forward-looking statements necessarily involve known and unknown
risks, including, without limitation, risks associated with general
economic conditions; adverse industry events; marketing 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 sources,
and/or inability to access sufficient capital on favourable terms;
the medical cannabis industry in Canada generally, income tax and regulatory
matters; the ability of Aphria to implement its business
strategies; competition; crop failure; currency and interest rate
fluctuations and other risks.
Readers are cautioned that the foregoing list is not exhaustive.
Readers are further cautioned not to place undue reliance on
forward-looking statements as 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 at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement.
1 – In
this press release, reference is made to "all-in" costs to produce
dried cannabis per gram, cash costs to produce dried cannabis,
gross profit before fair value adjustments, gross margin before
fair value adjustments, EBITDA from operations and strategic
investments which are not measures of financial performance under
International Financial Reporting Standards. Definitions for all
terms above can be found in the Company's August 31, 2017
Management's Discussion and Analysis, filed on SEDAR.
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SOURCE Aphria Inc.