Net Cannabis Revenue Increased 103% from Prior
Year Quarter
Adjusted EBITDA from Cannabis Business of
$10.4 Million Increased 11% from
Prior Quarter
Cash Cost Per Gram Remained Below
$1.00 and Decreased for the Fourth
Consecutive Quarter to $0.87
LEAMINGTON, ON, Oct. 15, 2020 /PRNewswire/ - Aphria Inc.
("Aphria" or the "Company") (TSX: APHA) (Nasdaq:
APHA), a leading global cannabis company inspiring and empowering
the worldwide community to live their very best life, today
reported its financial results for the first quarter ended
August 31, 2020. All amounts are
expressed in Canadian dollars, unless otherwise noted and except
for per gram, kilogram, kilogram equivalents, and per share
amounts.
"Our strong first quarter results reflect the continued robust
growth and development of Aphria's adult-use cannabis brands in
Canada," said Irwin D. Simon, Chairman and Chief Executive
Officer. "We are consistently taking a diversified approach to our
innovation, strategic partnerships, global expansion and corporate
citizenship to fuel sustainable, long-term growth. We believe that
the strength of our balance sheet and cash position, combined
with our consistent focus on our highest-return priorities, will
generate sustainable long-term value for all stakeholders."
Key Operating Highlights – First Quarter Fiscal 2021
- Record gross revenue for adult-use cannabis of $69.6 million in the first quarter, an increase
of 23% from prior quarter and the sixth consecutive quarter of
growth.
- Net cannabis revenue of $62.5
million in the first quarter, an increase of 103% from prior
year quarter.
- Net revenue of $145.7 million in
the first quarter, an increase of 16% from prior year quarter and
decrease of 4% from prior quarter, solely due to lower distribution
revenue driven by the COVID-19 global health crisis.
- Cash cost to produce dried cannabis per gram of $0.87 in the first quarter, a decrease of 1% from
the prior quarter, and decreased for the fourth consecutive
quarter.
- Adjusted EBITDA from cannabis business of $10.4 million in the first quarter, an increase
of 11% from the prior quarter.
- Adjusted EBITDA of $10.0 million
in the first quarter, an increase of 17% from the prior
quarter.
- Ended first quarter with a strong balance sheet and liquidity,
including $400.0 million of cash and
cash equivalents to fund planned Canadian and International
growth.
- Aphria transferred its stock exchange listing from the New York
Stock Exchange to The Nasdaq Global Select Market ("Nasdaq") on
June 8, 2020. This transition did not
impact the Company's primary listing on the Toronto Stock Exchange
(TSX: APHA).
- Filed Prospectus supplement for $100
million (USD) At-the-Market program ("ATM Program") on
July 29, 2020 which the Company plans
to use for acquisition opportunities.
- Good Supply and P'tite Pof launched large-format SKUs, and
launched new brand B!NGO, a large format, economy brand utilizing
lower potency cannabis.
Subsequent Events
- Aphria entered into a Strategic Supply Agreement with Canndoc
Ltd. ("Canndoc"), a subsidiary of InterCure Ltd., (TASE:
INCR/INCR.TA), one of Israel's
largest and most established medical cannabis producers on
August 4, 2020.
- Liquidated the convertible note receivable from HydRx Farms
Ltd.
- Company completed its first certified European Union Good
Manufacturing Practices ("EU GMP") shipment of dried flower from
its Aphria One EU GMP facility to CC Pharma, a leading distributor
of pharmaceutical products to more than 13,000 pharmacies in
Germany.
Key Financial Highlights
(In thousands of Canadian
dollars)
|
|
|
|
Three months
ended
|
Three months
ended
|
|
August 31,
2020
|
August 31,
2019
|
Net
revenue
|
$145,689
|
$126,112
|
Gross
profit
|
$75,279
|
$45,421
|
Adjusted cannabis
gross profit 1
|
$31,530
|
$15,331
|
Adjusted cannabis
gross margin 1
|
49.7%
|
49.8%
|
Adjusted distribution
gross profit 1
|
$11,802
|
$12,223
|
Adjusted distribution
gross margin 1
|
14.4%
|
12.8%
|
Net (loss)
income
|
($5,095)
|
$16,441
|
Adjusted EBITDA
1
|
$10,006
|
$1,035
|
|
|
|
|
|
|
|
Q1-2020
|
Q4-2020
|
Distribution
revenue
|
$82,198
|
$99,137
|
Net cannabis
revenue
|
$62,491
|
$53,066
|
Net
revenue
|
$145,689
|
$152,203
|
Kilograms (or
kilogram equivalents) sold 1
|
20,882
|
12,557
|
Cash cost to produce
dried cannabis / gram1
|
$0.87
|
$0.88
|
"All-in" cost of
goods sold / gram1
|
$1.41
|
$1.69
|
Adjusted EBITDA from
cannabis business 1
|
$10,399
|
$9,360
|
Adjusted EBITDA from
businesses under development 1
|
($2,820)
|
($2,745)
|
Adjusted EBITDA from
distribution business 1
|
$2,427
|
$1,943
|
Cash and cash
equivalents & marketable securities
|
$400,019
|
$497,222
|
Working
capital
|
$725,512
|
$732,908
|
Capital and
intangible asset expenditures -wholly-owned
subsidiaries1
|
$15,808
|
$25,569
|
Source: Aphria Inc.
August 31, 2020 MD&A11
|
_______________
|
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 EBITDA, adjusted
EBITDA from cannabis business, adjusted EBITDA from distribution
business, adjusted EBITDA from businesses under development, gram
equivalents, cash costs to produce dried cannabis per gram,
"all-in" cost of sales of dried cannabis per gram and capital and
intangible asset expenditures – 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 Management's
Discussion and Analysis for the three months ended August 31, 2020,
filed on SEDAR and EDGAR.
|
Net revenue for the three months ended August 31, 2020 was $145.7
million, an increase of 16% from $126.1 million in the same period last year.
First quarter fiscal year 2021 net revenue was 4% lower when
compared to the prior quarter net revenue of $152.2 million, as significant increases in net
cannabis revenue were offset by lower distribution revenue at CC
Pharma in Germany. The decline in distribution revenue is
largely a function of the impacts of the COVID-19 global health
crisis, including a reduction in the number of elective medical
procedures and in-person visits to physicians and pharmacies
The average retail selling price of medical cannabis, before
excise tax, increased to $7.38 per
gram in the quarter, compared to $6.63 in the prior quarter. The average selling
price of adult-use cannabis, before excise tax, decreased to
$4.15 per gram in the quarter,
compared to $5.23 per gram in the
prior quarter, primarily as a result of the initial pipeline fill
of new large format offerings, including the introduction of B!NGO,
an economy brand utilizing lower potency cannabis.
Adjusted cannabis gross profit for the first quarter was
$31.5 million, with an adjusted
cannabis gross margin of 49.7%, compared to $28.1 million and 52.9% in the prior quarter. The
increase in adjusted cannabis gross profit and decrease in adjusted
cannabis gross margin was primarily due to the release of large
format products and the pipeline fill for B!NGO, our economy brand
utilizing lower potency cannabis, which provided an increase in
sales but at lower margins than the Company's other branded
products.
Adjusted distribution gross profit for the first quarter was
$11.8 million, with an adjusted
distribution gross margin of 14.4%, compared to $11.9 million and 12.1% in the prior quarter. The
decrease in adjusted distribution gross profit was a result of the
previously discussed decline in distribution revenue at CC Pharma
in Europe. The increase in the gross margin was a function of
sales mix and improved cost management at CC Pharma in the
quarter.
Selling, general, and administrative costs in the quarter
increased to $54.4 million from
$116.6 million in the prior quarter,
and increased from $41.4 million in
the prior year. The increase from the prior year was primarily due
to increased operating costs associated with increased global
operations and increased selling costs associated with our higher
sales.
Net loss for the first quarter of fiscal year 2021 was
$5.1 million, or a loss of
$0.02 per share, compared to net loss
of $98.8 million, or a loss of
$0.39 per share in the prior quarter,
and net income of $16.4 million, or
$0.07 per share for the same period
last year.
Adjusted EBITDA increased by $1.4
million to $10.0 million for
the first quarter compared to $8.6
million in the prior quarter. Adjusted EBITDA from cannabis
business for the first quarter was $10.4 million compared to $9.4 million in the prior quarter. The adjusted
EBITDA loss from businesses under development for the first
quarter was $2.8 million compared to
a loss of $2.7 million in the
prior quarter. Adjusted EBITDA from distribution business for the
first quarter was $2.4 million,
compared to $1.9 million in the prior
quarter.
Since establishing its US$100
million ATM Program on July 29,
2020, the Company has not drawn on the program.
The Company ended the first quarter with a strong balance sheet,
including $400.0 million of cash and
cash equivalents.
Conference Call
Aphria executives will host a conference call to discuss these
results today at 9:00 am Eastern
Time. 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 5693063.
A telephone replay will be available approximately two hours after
the call concludes through November 14,
2020. To access the recording dial 1-855-859-2056 and use
the passcode 5693063.
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 Inc.
Aphria Inc. is a leading global cannabis company inspiring and
empowering the worldwide community to live their very best life.
Headquartered in Leamington,
Ontario – the greenhouse capital of Canada – Aphria Inc. has been setting the
standard for the low-cost production of high-quality cannabis at
scale, grown in the most natural conditions possible. 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. Rooted in our founders'
multi-generational expertise in commercial agriculture, Aphria Inc.
drives sustainable long-term shareholder value through a
diversified approach to innovation, strategic partnerships and
global expansion.
For more information, visit: aphriainc.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain
information in this news release constitutes forward-looking
information or forward-looking statements (together,
"forward-looking statements") under applicable securities laws and
are expressly qualified by this cautionary statement. Any
information or statements that are contained in this news release
that are not statements of historical fact may be deemed to be
forward-looking statements, including, but not limited to,
statements in this news release with regards to available
cash resources, potential acquisition opportunities, Canadian and
international growth, Aphria's market position, ability to generate
consistent growth, and net revenue and adjusted EBITDA. The
Company uses words such as "forecast", "future",
"should", "could", "enable", "potential", "contemplate", "believe",
"anticipate", "estimate", "plan", "expect", "intend", "may",
"project", "will", "would" and the negative of these terms or
similar expressions to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. Various assumptions were used in drawing
the conclusions contained in the forward-looking statements
throughout this news release. Forward-looking statements
reflect management's current beliefs with respect to future events
and are based on information currently available to management
including based on reasonable assumptions, estimates, internal and
external analysis and opinions of management considering its
experience, perception of trends, current conditions and expected
developments as well as other factors that management believes to
be relevant as at the date such statements are made.
Forward-looking statements involve significant known and unknown
risks and uncertainties. Many factors could cause actual results,
performance or achievement to be materially different from any
future forward-looking statements. Factors that may cause such
differences include, but are not limited to, risks assumptions and
expectations described in the Company's critical accounting
policies and estimates; the adoption and impact of certain
accounting pronouncements; the Company's future financial and
operating performance; the competitive and business strategies of
the Company; the intention to grow the business, operations and
potential activities of the Company; the Company's ability to
provide a return on investment; the Company's ability to maintain a
strong financial position and manage costs; the Company's ability
to maximize the utilization of its existing assets and
investments; the Company's ability to take a leadership
position in the industry; the expected inventory and production
capacity of the Company; the expected category growth of the
Company's products; the anticipated increase in demand for bulk and
saleable flower, and the related growth in the wholesale market;
the expected variability of wholesale cannabis revenue; the market
for the Company's current and proposed products, including vape
pens, as well as the Company's ability to capture market share; the
anticipated timing for the release of expected product offerings;
the development of affiliated brands, product diversification and
future corporate development; expectations with respect to the
Company's product development, product offering and the sales mix
thereof; the Company's satisfaction of international demand for its
products; the Company's plans with respect to
importation/exportation; the Company's ability to meet the
demand for medical cannabis; the Company's plans to establish
strategic partnerships, including collaborations with academic
institutions in Germany; whether
the Company will have sufficient working capital and its ability to
obtain financing required in order to develop its business and
continue operations; the Company's expected ongoing contractual
relationships, and the terms thereof; the Company's ability to
comply with its financial covenants in the future; the applicable
laws, regulations, licensing and any amendments thereof related to
the cultivation, production and sale of cannabis product in the
Canadian and international markets; the grant, renewal and impact
of any licence or supplemental licence to conduct activities with
cannabis or any amendments thereof; the Company's purpose,
mission, vision and values with COVID-19 nationally and globally
which could have a material adverse impact on Aphria's business,
operations and financial results, including disruptions in
cultivation and processing, supply chains and sales channels, as
well as a deterioration of general economic conditions including
national and/or global recessions and the response of governments
to the COVID-19 pandemic in respect of the operation of retail
stores; general economic conditions; adverse industry events and
future steps to be taken in response to COVID-19; the expected
cost to produce a gram of dried cannabis; the expected cost
to process cannabis oil; expectations with respect to crop
rotation and harvest, the anticipated future gross margins of the
Company and the potential for significant growths or losses; the
potential for the Company to record future impairment losses; the
performance of the Company's business and operations; the Company's
ability to capitalize on the US market; future expenditures,
strategic investments and capital activities; the anticipated
timing for the completion of the Company's German cultivation
facility, the first harvest from such facility and the expected
capacity of such facility; and current and future legal actions,
and the Company's ability to cover any costs or judgements arising
from these actions either through insurance or otherwise.
Readers are cautioned that the foregoing list is not exhaustive
and should consider the other factors discussed under the heading
"Risk Factors" in Aphria's most recent Annual Information Form and
under the heading "Industry Trends and Risks" in Aphria's
Management's Discussion and Analysis for the three months ended
August 31, 2020, each available on
SEDAR at www.sedar.com and on EDGAR 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.
The schedule below is an excerpt of Aphria Inc.'s financial
statements prepared on a basis consistent with IFRS for the three
months ended on August 31, 2020 and
filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. This
schedule does not contain all of the information in Aphria Inc.'s
financial statements that is important to you. You should read the
financial statements and Management's Discussion and Analysis
carefully to obtain a comprehensive understanding of Aphria Inc.'s
financial statements and notes thereto 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
three months ended
August 31,
|
|
|
|
|
|
|
Note
|
2020
|
2019
|
|
Cannabis
revenue
|
|
|
|
$
82,229
|
$
35,079
|
|
Distribution
revenue
|
|
|
|
82,198
|
95,327
|
|
Insurance
recovery
|
|
|
|
1,000
|
--
|
|
Excise
taxes
|
|
|
|
(19,738)
|
(4,294)
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
|
|
145,689
|
126,112
|
|
|
|
|
|
|
|
|
|
|
Production
costs
|
|
|
5
|
28,421
|
15,454
|
|
Cost of cannabis
purchased
|
|
|
|
3,540
|
--
|
|
Cost of goods
purchased
|
|
|
|
70,396
|
83,104
|
|
|
|
|
|
|
|
|
|
Gross profit
before fair value adjustments
|
|
|
|
43,332
|
27,554
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustment
on sale of inventory
|
|
|
5
|
27,203
|
7,286
|
|
Fair value adjustment
on growth of biological assets
|
|
|
6
|
(59,150)
|
(25,153)
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
75,279
|
45,421
|
Operating
expenses:
|
|
|
|
|
|
|
General and
administrative
|
|
|
21
|
28,353
|
22,305
|
|
Share-based
compensation
|
|
|
|
22
|
4,261
|
4,956
|
|
Amortization
|
|
|
|
5,409
|
5,008
|
|
Selling
|
|
|
|
7,213
|
1,980
|
|
Marketing and
promotion
|
|
|
|
6,107
|
5,834
|
|
Research and
development
|
|
|
|
149
|
610
|
|
Transaction
costs
|
|
|
|
3,048
|
735
|
|
|
|
|
|
|
|
54,540
|
41,428
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
|
20,739
|
3,993
|
|
|
|
|
|
|
|
|
|
|
Finance income
(expense), net
|
|
|
23
|
(7,203)
|
(5,257)
|
|
Non-operating income
(expense), net
|
|
|
24
|
(17,323)
|
20,303
|
(Loss) income before
income taxes
|
|
|
|
(3,787)
|
19,039
|
|
|
|
|
|
|
|
|
|
Income taxes
(recovery)
|
|
|
13
|
1,308
|
2,598
|
Net (loss)
income
|
|
|
|
(5,095)
|
16,441
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
Other comprehensive
income (loss)
|
|
|
|
2,476
|
(1,686)
|
Comprehensive
(loss) income
|
|
|
|
$
(2,619)
|
$
14,755
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income (loss) attributable to:
|
|
|
|
|
|
|
Shareholders of
Aphria Inc.
|
|
|
|
(18,242)
|
14,926
|
|
Non-controlling
interests
|
|
|
20
|
15,623
|
(171)
|
|
|
|
|
|
|
|
$
(2,619)
|
$
14,755
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares - basic
|
|
|
|
287,504,789
|
251,163,059
|
Weighted average
number of common shares - diluted
|
|
|
|
287,504,789
|
252,741,610
|
|
|
|
|
|
|
|
|
|
(Loss) income per
share - basic
|
|
|
26
|
$
(0.02)
|
$
0.07
|
(Loss) income per
share - diluted
|
|
|
26
|
$
(0.02)
|
$
0.07
|
Aphria
Inc.
Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
|
|
|
|
|
Note
|
August 31,
2020
|
May 31,
2020
|
Assets
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
400,019
|
$
497,222
|
|
Accounts
receivable
|
|
82,532
|
55,796
|
|
Prepaids and other
current assets
|
4
|
51,313
|
42,983
|
|
Inventory
|
5
|
321,347
|
264,321
|
|
Biological
assets
|
6
|
22,340
|
28,341
|
|
Current portion of
convertible notes receivable
|
11
|
13,975
|
14,626
|
|
|
|
|
|
891,526
|
903,289
|
|
Capital
assets
|
8
|
593,558
|
587,163
|
|
Intangible
assets
|
9
|
362,129
|
363,037
|
|
Promissory notes
receivable
|
|
3,000
|
--
|
|
Long-term
investments
|
12
|
22,309
|
27,016
|
|
Goodwill
|
10
|
618,052
|
617,934
|
|
|
|
|
|
$
2,490,574
|
$
2,498,439
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
|
Bank
indebtedness
|
14
|
$
7,923
|
$
537
|
|
Accounts payable and
accrued liabilities
|
|
124,410
|
152,750
|
|
Income taxes
payable
|
|
21,587
|
6,410
|
|
Deferred
revenue
|
|
--
|
902
|
|
Current portion of
lease liabilities
|
|
1,278
|
1,315
|
|
Current portion of
long-term debt
|
15
|
10,816
|
8,467
|
|
|
|
|
|
166,014
|
170,381
|
Long-term
liabilities
|
|
|
|
|
Lease
liabilities
|
|
5,739
|
5,828
|
|
Long-term
debt
|
15
|
128,561
|
129,637
|
|
Convertible
debentures
|
16
|
270,362
|
270,783
|
|
Deferred tax
liability
|
13
|
69,698
|
83,468
|
|
|
|
|
|
640,374
|
660,097
|
Shareholders'
equity
|
|
|
|
|
Share
capital
|
17
|
1,860,353
|
1,846,938
|
|
Warrants
|
18
|
360
|
360
|
|
Share-based payment
reserve
|
|
28,783
|
27,721
|
|
Accumulated other
comprehensive income (loss)
|
|
1,207
|
(1,269)
|
|
Deficit
|
|
(81,933)
|
(61,215)
|
|
|
|
|
|
1,808,770
|
1,812,535
|
|
Non-controlling
interests
|
20
|
41,430
|
25,807
|
|
|
|
|
|
1,850,200
|
1,838,342
|
|
|
|
|
|
$
2,490,574
|
$
2,498,439
|
|
|
|
For the three
months
ended August 31,
|
|
|
2020
|
2019
|
|
Net (loss)
income
|
|
|
$
(5,095)
|
$
16,441
|
|
Income
taxes
|
|
|
1,308
|
2,598
|
|
Finance expense,
net
|
|
|
7,203
|
5,257
|
|
Non-operating
(income) loss, net
|
|
|
17,323
|
(20,303)
|
|
Amortization
|
|
|
13,905
|
9,218
|
|
Share-based
compensation
|
|
|
4,261
|
4,956
|
|
Fair value adjustment
on sale of inventory
|
|
|
27,203
|
7,286
|
|
Fair value adjustment
on growth of biological assets
|
|
|
(59,150)
|
(25,153)
|
|
Transaction
costs
|
|
|
3,048
|
735
|
|
Adjusted EBITDA from
businesses under development
|
|
|
2,820
|
4,234
|
|
Adjusted EBITDA from
distribution business
|
|
|
(2,427)
|
(3,940)
|
Adjusted
EBITDA from cannabis business
|
|
|
$
10,399
|
$
1,329
|
|
|
|
For the three
months
ended August 31,
|
|
|
2020
|
2019
|
|
Adjusted EBITDA from
cannabis business
|
|
|
$
10,399
|
$
1,329
|
|
Adjusted EBITDA from
businesses under development
|
|
|
(2,820)
|
(4,234)
|
|
Adjusted EBITDA from
distribution business
|
|
|
2,427
|
3,940
|
Adjusted
EBITDA
|
|
|
$
10,006
|
$
1,035
|
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SOURCE Aphria Inc.