Canadian Cannabis Stock News: Aphria (TSX: $APH)
(OTCQB: $APHQF) Records fifth consecutive quarter of profitability
Increases
capacity expectations for Part II, III & IV expansion projects to meet
growing demand
LEAMINGTON, ONTARIO - April
13, 2017 (Investorideas.com Newswire) Aphria Inc. ("Aphria" or the
"Company") (TSX:APH)(OTCQB:APHQF) today reported its third quarter
results, for the three and nine months ended February 28, 2017. All amounts are
expressed in Canadian dollars.
Business
highlights
- Fifth
consecutive quarter of profitability
- Over $3.2
million of year-to-date EBITDA
- Increased our
capacity expectations for Part II (to 8,000 kgs), Part III (to 22,000 kgs)
& to Part IV (75,000 kgs)
- Invested
$1,000,000 in Resolve Digital Health Inc.
- Invested
$1,000,000 in Tetra Bio-Pharma Inc., which was subsequently increased to
$2,300,000 after exercising warrants in the subsequent events period
- Secured 200
acres of serviced farm land in Leamington, Ontario for $6,240,000 as a
secondary site to our existing campus
- Invested an
additional $1,300,000 USD in Copperstate Farms Investors, LLC, which was
subsequently increased by a further $3,000,000 USD investment in the
subsequent events period
- Invested
$8,400,000 in Canabo Medical Inc.
- Received Board
approval to commence Part IV expansion with a $137,000,000 capital budget
- Committed
$2,000,000 in investment to Green Acres Capital Fund, advancing $300,000
- Invested just
over $2,000,000 in Kalytera Therapeutics Ltd.
- Raised $53,869,357
in a bought deal financing which closed on February 24, 2017
- Received final
approval to list on the Toronto Stock Exchange ("TSX"). Shares
commenced trading on the TSX and were delisted from the TSX-Venture
Exchange on March 22, 2017
"With five consecutive
quarters of profitability and further growth in our production capacity, Aphria
continued to build strong, positive momentum in the third quarter," said
Vic Neufeld, Chief Executive Officer, Aphria. "Despite unusual weather
conditions that temporarily added to our growing costs for the quarter, we
continue to report costs per gram that are among the lowest in the industry. At
the same time, we are making strategic investments that will increase our
supply of high-quality cannabis and position Aphria to drive further growth in
our medical-grade cannabis business, meet future demand for recreational
cannabis, and drive strong, sustainable shareholder value creation."
Financial highlights
For the fifth consecutive
quarter, the Company reported profitability. In the last five quarters, the
Company reported income before tax of $3,720, $102,164, $895,269, $945,678 and
$4,950,250, respectively. The increased pre-tax profitability is primarily a
result of the increase in fair value of long-term investment portfolio.
The Company continued to
report strong EBITDA levels, reporting $1,005,073 of EBITDA in the quarter.
This is the Company's third consecutive quarter with EBITDA greater than $1
million. Reported EBITDA levels reflect the Company's continued focus on low
cost producer status and industry leading patient care service.
Revenue for the three months
ended February 28, 2017 was $5,118,516, representing a 2% decrease over the
prior quarter's revenue of $5,226,589. The decrease in revenue for the quarter
was consistent with expectations and was primarily a result of the $8.50 per
gram cap placed on the price of medical cannabis for veterans. The impact of
the price cap on revenue was offset by increased revenue per gram for
non-veterans, primarly a result of selling less wholesale product and the
continued growth of our cannabis oils.
Adjusted gross profit for the
third quarter was $3,582,312 with an adjusted gross margin of 70.0%, generated
from both retail and wholesale shipments of medical cannabis. The decrease in
the adjusted gross margin from the prior quarter is consistent with the
reduction in revenues in the quarter.
During the quarter, our
"all-in" costs of dried cannabis per gram increased from $1.79 in the
prior quarter to $2.23 in the current quarter, representing a $0.44 increase.
The increase largely related to abnormal winter weather conditions in
Leamington but also included costs related to preparing for our Part II
expansion.
This winter the Leamington
area experienced unusual conditions related to the amount of sunlight it
received. The most common measure of light intensity is referred to as lumens.
During the quarter, the Leamington area received approximately 80% of the
historical three-year average of lumens for this period. More specifically, the
month of January was 67% of the three-year lumen average and the month of
February was 76% of the three-year lumen average. This reduced lumen measure
directly led to (i) lower yields on individual cannabis plants during the quarter
which caused a $0.20 increase in our "all-in" costs of dried cannabis
per gram; and, (ii) increased heating and electrical costs, which caused a
$0.14 increase in our "all-in" costs of dried cannabis per gram.
The remaining $0.10 per gram
related to incremental labour costs as we added greenhouse staff during the
quarter so they would be fully trained to work in our Part II expansion, the
moment the area is approved by Health Canada. As we move from Health Canada's
approval to use our Part II expansion toward the first sale from that area, we
will continue to incur incremental labour costs in our vault and packaging
staff. These incremental costs will be directly tied to revised head counts as
we properly train staff in advance of additional product flow that will result
from the increase in our annual harvest from 2,600 kgs to 8,000 kgs.
Net income for the three
months ended February 28, 2017 was $4,950,250 or $0.04 per share as opposed to
a net income of $3,720 or $0.00 per share in the same quarter in the previous
year and an income before tax of $945,678 or $0.01 per share in the previous
quarter.
EBITDA for the third quarter
was $1,005,516, compared to an EBITDA of $423,350 in the same period of the
prior year and EBITDA of $1,198,620 in the previous quarter.
We have A Good Thing Growing.
Read this release in full at http://www.investorideas.com/420cannabisinvestorideas/Companies/APH/news/2017/04131Profitability.asp
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. We are the first public licenced producer to report positive cash
flow from operations and the first to report positive earnings in consecutive
quarters.
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
marijuana 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 marijuana; inability
to access sufficient capital from internal and external sources, and/or
inability to access sufficient capital on favourable terms; the medical
marijuana 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.
Contact Information
Vic Neufeld
President & CEO
1-844-427-4742
President & CEO
1-844-427-4742
Disclosure: Aphria Inc. (TSX:APH) (OTCQB:APHQF) is a
featured company on the 420 Cannabis Investor Ideas of 2017 at www.420cannabisinvestorideas.com
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