Reports Profitable Fourth
Quarter
Record Net Revenue of $128.6 Million, Up 75% from Prior Quarter
Revenue for Adult-use Cannabis of $18.5
Million, Up 158% from Prior Quarter
Provides
Fiscal Year 2020 Outlook
LEAMINGTON, ON, Aug. 1, 2019 /PRNewswire/ - Aphria Inc.
("Aphria" or the "Company") (TSX: APHA and NYSE:
APHA) today reported its results for the fourth quarter and fiscal
year ended May 31, 2019. All amounts
are expressed in thousands of Canadian dollars, unless otherwise
noted and except for per gram, kilogram, kilogram equivalents, and
per share amounts.
"It's a new day at Aphria. Our team's solid execution across key
areas of our business resulted in strong adult-use revenue growth
and a profitable fourth quarter," stated Irwin D. Simon. "Over the last six months, our
organization identified immediate priorities to help generate
substantial progress near-term and long-term. We built upon
existing business fundamentals and capabilities, streamlined
processes, strengthened governance, and focused on building brand
awareness. Together, we have nurtured an entrepreneurial culture of
accountability through data-driven decision-making for value
creation in the global medical and adult-use cannabis
industry. Today's Aphria has a stronger foundation for
long-term growth and success."
Key Operating Highlights
- Net revenue of $128.6 million in
the fourth quarter, an increase of 75% from prior quarter and 969%
from prior year.
- Revenue for adult-use cannabis of $18.5
million in the fourth quarter, up 158% from prior
quarter.
- Net income of $15.8 million and
adjusted EBITDA of $0.2 million in
the fourth quarter.
- Adjusted EBITDA from cannabis operations of $1.9 million in the fourth quarter.
- Closed a 5.25% convertible senior notes offering for net
proceeds of over US $335
million.
- Ended quarter with a strong balance sheet and liquidity,
including $571 million of cash, cash
equivalents and liquid marketable securities, to fund planned
Canadian and International growth.
- Settlement of Green Growth Brands takeover bid resulting in
$50 million cash received and an
additional $39 million to be received
in November.
- Planted more than 200,000 plants in the new expanded area of
Aphria One cultivation.
- On-track for annual production capacity of 255,000 kilograms
when all facilities are fully licensed.
- Granted the maximum amount of lots within the German tender
process, a total of five, and is the only licensed producer in
Germany with the permission to
grow all three strains of medical cannabis approved by the German
Federal Institute for Drugs and Medical Devices.
- Introduced a CBD-based nutraceutical product line for the
German market.
- Enhanced the executive team with appointment of several key
positions.
Subsequent Events
- Signed on as a PAX Era brand partner for the PAX Era device and
platform.
- Aphria's subsidiary Marigold Projects Jamaica Limited received
a retail Herb House license from
Jamaica's Cannabis Licensing
Authority to open its first store at the Peter Tosh Square, Unit
#51, Pulse Center, 38a Trafalgar Road, overlooking the Peter Tosh
Museum in New Kingston,
Jamaica.
Key Financial Highlights
|
Three months
ended
|
Three months
ended
|
|
Twelve months
ended
|
Twelve months
ended
|
|
May 31,
2019
|
May 31,
2018
|
|
May 31,
2019
|
May 31,
2018
|
Net
revenue
|
$128,568
|
$12,026
|
|
$237,110
|
$36,917
|
Gross
profit
|
$36,007
|
$18,212
|
|
$75,421
|
$40,887
|
Adjusted cannabis
gross profit 1
|
$15,165
|
$9,468
|
|
$40,596
|
$27,912
|
Adjusted cannabis
gross margin 1
|
53.0%
|
78.7%
|
|
53.3%
|
75.6%
|
Adjusted distribution
gross profit 1
|
$12,274
|
$0
|
|
$19,805
|
$0
|
Adjusted distribution
gross margin 1
|
12.4%
|
0%
|
|
12.5%
|
0%
|
Net income
(loss)
|
$15,760
|
($4,992)
|
|
($16,499)
|
$29,448
|
Adjusted EBITDA
1
|
$209
|
($1,162)
|
|
($27,720)
|
$4,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4-2019
|
Q3-2019
|
|
|
|
Distribution
revenue
|
$99,186
|
$57,599
|
|
|
|
Net cannabis
revenue
|
$28,608
|
$15,438
|
|
|
|
Net
revenue
|
$128,568
|
$73,582
|
|
|
|
Kilograms (or
kilogram equivalents) sold 1
|
5,574.0
|
2,636.5
|
|
|
|
Cash cost to produce
dried cannabis / gram 1
|
$1.35
|
$1.48
|
|
|
|
"All-in" cost of
goods sold / gram 1
|
$2.35
|
$2.86
|
|
|
|
Adjusted EBITDA from
cannabis operations 1
|
$1,851
|
($12,694)
|
|
|
|
Adjusted EBITDA from
businesses under development 1
|
($5,514)
|
($3,990)
|
|
|
|
Adjusted EBITDA from
distribution operations 1
|
$3,872
|
$2,249
|
|
|
|
Cash and cash
equivalents & marketable securities
|
$570,996
|
$134,736
|
|
|
|
Working
capital
|
$642,284
|
$131,278
|
|
|
|
Capital and
intangible asset expenditures - wholly-owned subsidiaries
1
|
$26,828
|
$29,016
|
|
|
|
Net revenue for the three months ended May 31, 2019 was $128.6
million, compared to $73.6
million in the prior quarter and $12.0 million in the same period last year.
Higher revenue in the quarter was driven by $99.2 million of distribution revenue from CC
Pharma and other distribution companies and $33.5 million of revenue from cannabis produced.
Net revenue includes over 3,228 kilogram equivalents sold for the
adult-use market and 1,417 kilogram equivalents for medical
cannabis sales.
The average retail selling price of medical cannabis (exclusive
of wholesale), before excise tax, decreased to $7.66 per gram in the quarter, compared to
$8.03 in the prior quarter, primarily
related to a higher percentage of total medical sales coming from
Aphria. The average selling price of adult-use cannabis, before
excise tax, increased to $5.73 per
gram in the quarter, compared to $5.14 per gram in the prior quarter.
Adjusted cannabis gross profit for the fourth quarter was
$15.2 million, with an adjusted
cannabis gross margin of 53.0%, compared to $7.6 million with an adjusted gross margin of
49.5% in the prior quarter. The increase in adjusted gross margin
was primarily due to the increase in average selling price per gram
in the quarter.
Adjusted distribution gross profit for the fourth quarter was
$12.3 million, with an adjusted gross
margin of 12.4%, compared to $7.8
million with an adjusted gross margin of 13.6% in the prior
quarter.
Selling, general, and administrative costs in the quarter
decreased to $62.4 million, from
$106.6 million in the prior quarter
and increased from $22.6 million in
the prior year. The decrease from the prior quarter is mainly
related to the decrease of $58
million in impairment expense and $11
million in share-based compensation, partially offset by
$20 million in transaction costs
primarily associated with the issuance of the senior convertible
debenture.
Net income for the fourth quarter of 2019 was $15.8 million or $0.05 per share, compared to net loss of
$108.2 million or $0.43 per share in the prior quarter, and net
loss of $5.0 million or $0.04 per share for the same period last year.
Excluding the non-cash impairment charges in the third quarter,
adjusted net loss was $50.2 million,
or $0.02 per share. The increase in
net income was primarily due to the increase in sales and the net
fair value adjustment for biological assets, and decrease in the
impairment expense, offset by increase in SG&A related to
G&A and transaction costs.
Adjusted EBITDA from cannabis operations for the fourth
quarter was $1.9 million compared to
a loss of $12.7 million in the prior
quarter. The adjusted EBITDA loss from businesses under
development for the fourth quarter was $5.5 million compared to a loss of
$3.9 million in the prior quarter.
Adjusted EBITDA from distribution operations for the fourth quarter
was $3.9 million compared to
$2.2 million in the prior
quarter. The increased adjusted EBITDA is primarily
attributable to the increase in gross profit as explained
above.
1 – In this press release, reference is made to
adjusted cannabis gross profit, adjusted cannabis gross margin,
adjusted distribution gross profit, adjusted distribution gross
margin, adjusted net loss, adjusted EBITDA from cannabis
operations, adjusted EBITDA from businesses under development,
adjusted EBITDA from distribution operations, kilogram (or kilogram
equivalents) sold, cash costs to produce dried cannabis per gram,
"all-in" costs to produce dried cannabis per gram and investments
in capital and intangible assets – wholly-owned subsidiaries, which
are not measures of financial performance under International
Financial Reporting Standards (IFRS). These metrics and
measures are not recognized measures under IFRS do not have
meanings prescribed under IFRS and are as a result unlikely to be
comparable to similar measures presented by other companies. These
measures are provided as information complimentary to those IFRS
measures by providing a further understanding of our operating
results from the perspective of management. As such, these measures
should not be considered in isolation or in lieu of review of our
financial information reported under IFRS. Definitions and
reconciliations for all terms above can be found in the Company's
May 31, 2019 Management's Discussion
and Analysis, filed on SEDAR and EDGAR.
Outlook
For fiscal year 2020, the Company expects:
- Net revenue of approximately $650
million to $700 million, with
distribution revenue representing slightly more than half of the
total net revenue
- Adjusted EBITDA of approximately $88
million to $95 million
Conference Call
Aphria executives will host a conference call to discuss these
results today at 5:00 pm ET. To
listen to the live call, dial (888) 231-8191 from Canada and the U.S. or (647) 427-7450 from
International locations and use the passcode 5081017. A telephone
replay will be available approximately two hours after the call
concludes through August 15, 2019. To
access the recording dial (855) 859-2056 and use the passcode
5081017.
There will also be a simultaneous, live webcast available on the
Investors section of Aphria's website at aphriainc.com. The webcast
will be archived for 30 days.
We Have A Good Thing Growing
About Aphria
Aphria Inc. is a leading global cannabis company driven by an
unrelenting commitment to our people, the planet, product quality
and innovation. Headquartered in Leamington, Ontario – the greenhouse capital
of Canada – Aphria Inc. has been a
leader in low-cost production of high-quality cannabis at scale,
grown in natural conditions. Focusing on untapped opportunities and
backed by the latest technologies, Aphria Inc. is committed to
bringing breakthrough innovation to the global cannabis market. The
Company's portfolio of brands is grounded in expertly-researched
consumer insights designed to meet the needs of every consumer
segment. Aphria Inc. 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: aphriainc.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain
information in this news release constitutes forward-looking
statements under applicable securities laws and are expressly
qualified by this cautionary statement. 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 revenue and Adjusted
EBITDA guidance, internal expectations, estimated margins,
expectations with respect to actual production volumes,
expectations for future growing capacity and costs, the completion
of any capital project or expansions, and expectations with respect
to future production costs. Various assumptions were used in
drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates
of management at the date the statements are made, and are subject
to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from
those projected in the forward-looking statements. 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
cannabis; inability to access sufficient capital from internal and
external sources, and/or inability to access sufficient capital on
favorable terms; the cannabis industry in Canada generally, income tax and regulatory
matters; the ability of Aphria to meet its liquidity requirements
to fund ongoing operations; the ability of Aphria to implement its
business strategies; competition; crop failure; currency and
interest rate fluctuations.
Readers are cautioned that the foregoing list is not exhaustive
and should consider as other factors discussed under the heading
"Risk Factors" in Aphria's most recent Annual Information Form and
MD&A for the financial year ended May
31, 2019 filed on SEDAR at www.sedar.com and in the United States on Edgar under Form 40-F at
www.sec.gov. 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.
The forward-looking statements included in this news release are
made as of the date of this news release and the Company does not
undertake an obligation to publicly update such forward-looking
statements to reflect new information, subsequent events or
otherwise unless required by applicable securities laws.
Neither TSX nor its Regulation Services Provider (as that term is
defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Below schedule is an excerpt of Aphria Inc.'s financial
statements prepared on a basis consistent with IFRS for the
financial year ended May 31, 2019
filed on SEDAR at www.sedar.com and in the United States on Edgar under Form 40-F at
www.sec.gov. This schedule does not contain all the information in
Aphria Inc.'s annual report and Form 40-F that is important to you.
You should read the financial statements and Form 40-F carefully to
obtain a comprehensive understanding of Aphria Inc.'s financial
statements under IFRS and related information.
Aphria
Inc. Consolidated Statements of Income and Comprehensive
Income (In thousands of Canadian dollars, except share and
per share amounts)
|
|
|
|
|
|
|
|
|
|
For the year
ended
May 31,
|
|
|
|
Note
|
2019
|
2018
|
|
Revenue from cannabis
produced
|
|
|
$
86,348
|
$
36,917
|
|
Distribution
revenue
|
|
|
157,931
|
--
|
|
Other
revenue
|
|
|
3,035
|
--
|
|
Excise
taxes
|
|
|
(10,204)
|
--
|
|
|
|
|
|
|
Net
revenue
|
|
|
237,110
|
36,917
|
|
|
|
|
|
|
|
Production
costs
|
|
6
|
35,548
|
8,692
|
|
Cost of goods
purchased
|
|
|
138,126
|
--
|
|
Other costs of
sales
|
|
|
898
|
313
|
|
|
|
|
|
|
Gross profit
before fair value adjustments
|
|
|
62,538
|
27,912
|
|
|
|
|
|
|
|
Fair value adjustment
on sale of inventory
|
|
6
|
27,724
|
10,327
|
|
Fair value adjustment
on growth of biological assets
|
|
7
|
(40,607)
|
(23,302)
|
|
|
|
|
|
|
Gross
profit
|
|
|
75,421
|
40,887
|
Operating
expenses:
|
|
|
|
|
|
General and
administrative
|
|
25
|
69,752
|
13,901
|
|
Share-based
compensation
|
|
26
|
26,080
|
17,874
|
|
Selling, marketing
and promotion
|
|
|
27,971
|
11,873
|
|
Amortization
|
|
|
14,084
|
3,985
|
|
Research and
development
|
|
|
1,391
|
490
|
|
Impairment
|
|
11
|
58,039
|
--
|
|
Transaction
costs
|
|
|
23,259
|
5,192
|
|
|
|
|
220,576
|
53,315
|
|
|
|
|
|
|
Operating
loss
|
|
|
(145,155)
|
(12,428)
|
|
|
|
|
|
|
|
Non-operating
income
|
|
27
|
129,510
|
48,284
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
|
|
(15,645)
|
35,856
|
|
|
|
|
|
|
Income
taxes
|
|
16
|
854
|
6,408
|
Net income
(loss)
|
|
|
(16,499)
|
29,448
|
|
|
|
|
|
|
Other
comprehensive loss
|
|
|
|
|
|
Other comprehensive
loss
|
|
|
(119)
|
(801)
|
Net comprehensive
income (loss)
|
|
|
$
(16,618)
|
$
28,647
|
|
|
|
|
|
|
Total
comprehensive income (loss) is attributable to:
|
|
|
|
|
Shareholders of
Aphria Inc.
|
|
|
(14,667)
|
28,867
|
|
Non-controlling
interest
|
|
24
|
(1,951)
|
(220)
|
|
|
|
|
$
(16,618)
|
$
28,647
|
|
|
|
|
|
|
Weighted average
number of common shares - basic
|
|
|
242,763,558
|
161,026,463
|
Weighted average
number of common shares - diluted
|
|
|
242,763,558
|
165,914,000
|
|
|
|
|
|
|
Earnings (loss)
per share - basic
|
|
29
|
$
(0.07)
|
$
0.18
|
Earnings (loss)
per share - diluted
|
|
29
|
$
(0.07)
|
$
0.18
|
Aphria
Inc. Consolidated Statements of Financial
Position (In thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
Note
|
May 31,
2019
|
May 31,
2018
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
550,797
|
$
59,737
|
|
Marketable
securities
|
|
4
|
20,199
|
45,062
|
|
Accounts
receivable
|
|
|
25,488
|
3,386
|
|
Prepaids and other
current assets
|
|
5
|
23,391
|
14,384
|
|
Inventory
|
|
6
|
91,529
|
22,150
|
|
Biological
assets
|
|
7
|
18,725
|
7,331
|
|
Assets held for
sale
|
|
|
--
|
40,620
|
|
Promissory notes
receivable
|
|
15
|
39,200
|
--
|
|
Current portion of
convertible notes receivable
|
|
12
|
11,500
|
1,942
|
|
|
|
|
780,829
|
194,612
|
|
Capital
assets
|
|
9
|
503,898
|
303,151
|
|
Intangible
assets
|
|
10
|
392,056
|
226,444
|
|
Convertible notes
receivable
|
|
12
|
20,730
|
16,129
|
|
Interest in equity
investees
|
|
13
|
9,311
|
4,966
|
|
Long-term
investments
|
|
14
|
64,922
|
46,028
|
|
Goodwill
|
|
11
|
669,846
|
522,762
|
|
|
|
|
$
2,441,592
|
$
1,314,092
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
|
$
105,813
|
$
31,517
|
|
Income taxes
payable
|
|
|
2,722
|
3,584
|
|
Deferred
revenue
|
|
|
23,678
|
2,607
|
|
Current portion of
promissory note payable
|
|
18
|
--
|
610
|
|
Current portion of
long-term debt
|
|
19
|
6,332
|
2,140
|
|
Current portion of
derivative liability
|
|
|
--
|
3,396
|
|
|
|
|
138,545
|
43,854
|
Long-term
liabilities
|
|
|
|
|
|
Long-term
debt
|
|
19
|
60,895
|
28,337
|
|
Convertible
debentures
|
|
20
|
421,366
|
--
|
|
Derivative
liability
|
|
|
--
|
9,055
|
|
Deferred tax
liability
|
|
16
|
87,633
|
59,253
|
|
|
|
|
708,439
|
140,499
|
Shareholders'
equity
|
|
|
|
|
|
Share
capital
|
|
21
|
1,655,273
|
1,113,981
|
|
Warrants
|
|
22
|
1,336
|
1,375
|
|
Share-based payment
reserve
|
|
|
36,151
|
22,006
|
|
Accumulated other
comprehensive loss
|
|
|
(119)
|
(801)
|
|
Non-controlling
interest
|
|
24
|
28,409
|
9,580
|
|
Retained
earnings
|
|
|
12,103
|
27,452
|
|
|
|
|
1,733,153
|
1,173,593
|
|
|
|
|
2,441,592
|
$
1,314,092
|
|
Three months
ended
May 31,
|
For the year
ended
May 31,
|
2019
|
2018
|
2019
|
2018
|
Net income
(loss)
|
$
15,760
|
$
(4,992)
|
$
(16,499)
|
$
29,448
|
Income taxes
(recovery)
|
453
|
(1,731)
|
854
|
6,408
|
Non-operating
(income) loss
|
(40,206)
|
2,351
|
(129,510)
|
(48,284)
|
Amortization
|
8,611
|
3,809
|
22,940
|
6,678
|
Share-based
compensation
|
3,084
|
7,206
|
26,080
|
17,874
|
Fair value adjustment
on sale of inventory
|
9,649
|
3,077
|
27,724
|
10,327
|
Fair value adjustment
on growth of biological assets
|
(17,471)
|
(11,821)
|
(40,607)
|
(23,302)
|
Impairment
|
--
|
--
|
58,039
|
--
|
Transaction
costs
|
20,329
|
939
|
23,259
|
5,192
|
Adjusted EBITDA from
businesses under
|
|
|
|
|
development
|
5,514
|
2,834
|
16,240
|
2,834
|
Adjusted EBITDA from
distribution operations
|
(3,872)
|
--
|
(6,036)
|
--
|
Adjusted EBITDA
from cannabis
|
|
|
|
|
operations
|
$
1,851
|
$
1,672
|
$
(17,516)
|
$
7,175
|
|
Three months
ended
May 31,
|
For the year
ended
May 31,
|
2019
|
2018
|
2019
|
2018
|
Adjusted EBITDA from
cannabis operations
|
$
1,851
|
$
1,672
|
$
(17,516)
|
$
7,175
|
Adjusted EBITDA from
businesses under development
|
(5,514)
|
(2,834)
|
(16,240)
|
(2,834)
|
Adjusted EBITDA from
distribution operations
|
3,872
|
--
|
6,036
|
--
|
Adjusted
EBITDA
|
$
209
|
$
(1,162)
|
$
(27,720)
|
$
4,341
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/aphria-inc-announces-158-increase-in-adult-use-sales-and-profitable-fourth-quarter-300895331.html
SOURCE Aphria Inc.