Ninth consecutive quarter of positive adjusted
EBITDA from operations2
Announced capacity run rate in early 2019 in
excess of 200,000 kgs
Provides leading supply position in early
stages of expected under supplied adult-use market
LEAMINGTON, ON, Jan. 10, 2018 /CNW/ - Aphria Inc.
("Aphria" or the "Company") (TSX: APH or
USOTCQB: APHQF) today reported its results, for the
second quarter ended November 30,
2017. All amounts are expressed in thousands of Canadian
dollars.
|
|
|
Q2–2018
(000's)
|
|
Q2–2017
(000's)
|
$
8,504
|
Revenue
|
$
5,227
|
$ 6,202
|
Gross
profit
|
$ 4,121
|
$ 5,758
|
Gross profit before
fair value adjustments2
|
$ 4,047
|
67.7%
|
Adjusted gross
margin2
|
77.4%
|
$ 6,455
|
Net income
(loss)
|
$ 945
|
$ 1,621
|
Adjusted EBITDA from
operations2
|
$ 1,199
|
|
|
|
Q2–2018
(000's)
|
|
Q1–2018
(000's)
|
1,237.0
|
Kilograms (or
kilogram equivalents) sold1
|
852.0
|
$
8,504
|
Revenue
|
$
6,120
|
$
1,621
|
Adjusted EBITDA from
operations2
|
$
1,699
|
$
1.45
|
Cash cost to produce
dried cannabis / gram2
|
$
0.95
|
$
2.13
|
"All-in" cost of
sales of dried cannabis / gram2
|
$
1.61
|
$
171,942
|
Cash and cash
equivalents & marketable securities
|
$
118,731
|
$
178,782
|
Working
capital
|
$
135,128
|
$
35,319
|
Investment in capital
and intangible assets
|
$
23,704
|
$
5,600
|
Strategic
investments2
|
$
20,134
|
Operating highlights
- Ninth consecutive quarter of positive adjusted EBITDA from
operations2. $1.6
million in adjusted EBITDA from operations2 in
the quarter, a 35% increase from the prior year.
- Constuction of Part III and Part IV fully capitalized expansion
progressing as scheduled with first sale from Part III expected in
late May 2018 and from Part IV in
late January 2019. Upon completion of
both projects, the Company anticipates 100,000 kgs in annualized
production capacity at 1,000,000 sq. ft. of cumulative greenhouse
growing space.
- Increased our annualized production capability expectations to
220,000 kgs through subsequent event of GrowCo investment.
- Continues to be one of only a few publicly-traded licensed
producers to have reached milestone of reporting cumulative net
earnings in excess of cumulative losses.
- Increased our annualized production capability expectations to
210,000 kgs through subsequent event of GrowCo investment.
- Deployed $5,600 of capital in the
form of strategic investments2 including additional
investments in Green Tank Holdings Corp. and Nuuvera Corp.
- Closed bought deal financing generating net proceeds of almost
$87,000 in the quarter and an
additional approximately $109,000
subsequent to the quarter-end, to be used primarily to fund the
construction or acquisition of domestic production facilities and
non-United States international
strategic investments.
"We closed the quarter with strong top-line gains – revenue and
Kilograms sold reached record highs and we moved closer to our
increased our production capacity expectations," said Vic Neufeld, CEO of Aphria. "With a growing
product mix and patient base from both new and exsiting clients, we
continue to affirm our positon as a strong Canadian market leader
as we remain focused on executing our strategy to drive sustainable
growth and shareholder value."
"Looking ahead, we continue to explore strategic opportunities
and partnerships to extend the Aphria brand and our product
offerings in both the medical and adult-use marketplace. With our
four-part facility expansion on schedule to be completed with first
sales by January 2019, we are in a
enviable position to aptly supply Canadian and international
markets with high-quality cannabis to meet the growing global
demand. As a well-capitalized company, we have the expertise,
leadership and drive to extend our footprint and the Aphria
Know-How system around the world."
Financial highlights
For the ninth consecutive quarter, the Company reported positive
adjusted EBITDA from operations2. In the quarter,
the Company reported $1.6 million in
adjusted EBITDA from operations2, a 35% increase over
the prior year. The Company continues to remain focused on
product innovation for both the medical and adult-use market, build
on its expansion plans in both domestic and international markets,
and explore strategic investments and other opportunities to drive
shareholder value.
Revenue for the three months ended November 30, 2017 was $8,504 versus $5,227 in the same period of the prior year, an
increase of over 60% and $6,120 in
the first quarter of fiscal 2018, an increase of almost 40%. The
increase in revenue from the same period in the prior year was
largely related to continued growth of both wholesale shipments and
sales to existing patients, as well as continued acceleration of
patient onboarding and an increased average selling price
(excluding wholesale).
Gross profit for the second quarter was $6,202, compared to $4,121 in the same quarter in the prior year and
$7,904 in the previous quarter. The
increase in gross profit from the prior year is consistent with the
much larger patient base over the prior year offset by the
increased costs per gram equivalent and the increase in the fair
value adjustment for biological assets against the decrease in the
average selling price per gram equivalent. The decrease from the
prior quarter is consistent with the increased costs per gram and
the decrease in the net fair value adjustment related to biological
assets.
During the quarter, our "all-in" costs of sales of dried
cannabis per gram temporarily increased from $1.61 to $2.13. In
an effort to bring an increased supply of cannabis to its patients
as soon as possible after obtaining Health Canada approval of its
Part II expansion, the Company transferred less than ideal aged
vegetative plants into the expansion upon receiving approval.
The plants transferred were older than we traditionally transfer,
as we dealt with a longer than expected approval process. The
impact of transferring older plants was a decrease in yield, which
spread our actual costs across lower harvest yields and resulted in
a significant amount of unabsorbed overhead that was expensed in
the quarter. Similarly, our per gram cash costs to produce
dried cannabis increased from $0.95
to $1.45 due to the same challenges.
Despite the increase, Aphria continues to have one of the lowest
costs per gram in the industry.
Net income for the three months ended November 30, 2017 was $6,455 or $0.05 per
share compared to a net income of $945 or $0.01 per
share in the same period of the prior year.
Adjusted EBITDA from operations2 for the quarter was
$1,621 compared to $1,699 in the prior quarter. The decrease
in the quarter, despite the increase in adjusted gross profit of
almost $1,000, relates primarily to a
$900 increase in selling, marketing
and promotion, related to investments in the development of our
adult-use brands and increases in patient acquisition and
maintenance costs consistent with the increase in revenue.
CONFERENCE CALL ON JANUARY 10,
2018
Management will hold a conference call on January 10, 2018 at 9:00
am EST to discuss its financial results for the
quarter-ended November 30, 2017.
Interested participants may take part by dialing (888) 231-8191. A
replay of this call will be available until February 10, 2018 by dialing (855) 859-2056 with
the passcode 6395256.
We Have a Good Thing Growing.
1 –
References in this press release to Kilograms shall be defined as
kilograms and kilogram equivalents.
|
2 – In
this press release, reference is made to (i) Gross profit before
fair value adjustments, (ii) adjusted gross margin; (iii) adjusted
EBITDA from operations; (iv) cash cost to produce dried cannabis
per gram; (v) "all-in" cost of sales to produce dried cannabis per
gram; and, (vi) 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 November 30, 2017 Management's Discussion and
Analysis, filed on SEDAR.
|
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.
SOURCE Aphria Inc.