Adjusted EBITDA from Cannabis Operations of
Strengthened Balance Sheet and Cash Position
Received EU GMP compliance confirmation for ARA-Avanti Rx Analytics
Updates Fiscal Year 2020 Outlook
"We are very pleased with our strong growth and execution in
Key Operating Highlights
- Revenue for adult-use cannabis of
$29.0 million in the second quarter, an increase of 46% from prior quarter. - Net cannabis revenue of
$33.7 million in the second quarter, an increase of 9% from prior quarter. - Net revenue of
$120.6 million in the second quarter, an increase of 457% from prior year quarter and decrease of 4% from prior quarter. - Net loss of
$7.9 million , however reported positive adjusted EBITDA of$1.9 million in the second quarter. - Adjusted EBITDA from cannabis operations of
$3.4 million in the second quarter, an increase of 155% from the prior quarter. - Ended quarter with a strong balance sheet and liquidity, including
$497.7 million of cash and cash equivalents, to fund planned Canadian and International growth. - Received cultivation license for its subsidiary Aphria Diamond, featuring 1.3 million square feet of greenhouse production.
- Recognized for seven awards at the 6th Annual Canadian Cannabis Awards with all five of
Aphria's medical and recreational brands receiving awards, as well asBroken Coast's Master Grower,Kevin Anderson , winning 'Master Grower' accolades andAphria's Solei's CBN Renew oil 'Innovation of the Year'. - Elected
Jodi Butts to the Board of Directors. - Strengthened executive leadership team with key appointments and promotions.
- Secured an
$80 million senior secured credit facility for Aphria Diamond, strengthening the balance sheet without being dilutive to shareholders.
Subsequent Events
- Received confirmation of compliance with the requirements of the
European Union's Commission Directive 2003/94/EC relating to the Good Manufacturing Practices in respect of medicinal products for human use and investigational medicinal products for human use, from theMalta Medicines Authority at the Company's ARA - Avanti Rx Analytics. - Company's Jamaican subsidiary
Marigold Projects Jamaica Limited ("Marigold") received a Processing (Tier 1) Licence fromJamaica's Cannabis Licensing Authority ("CLA") which permits the processing of cannabis-based products for medical, therapeutic and scientific purposes. - Marigold also received its second Retail (
Herb House ) licence fromJamaica's CLA to open a store in Negril,Jamaica .
Key Financial Highlights
Three months ended | Three months ended | |
Net revenue | ||
Gross profit | ||
Adjusted cannabis gross profit 1 | ||
Adjusted cannabis gross margin 1 | 56.6% | 49.3% |
Adjusted distribution gross profit 1 | ||
Adjusted distribution gross margin 1 | 12.7% | 3.1% |
Net income (loss) | ( | |
Adjusted EBITDA 1 | ( | |
Q2-2020 | Q1-2020 | |
Distribution revenue | ||
Net cannabis revenue | ||
Net revenue | ||
Kilograms (or kilogram equivalents) sold 1 | 7,062 | 5,969 |
Cash cost to produce dried cannabis / gram 1 | ||
"All-in" cost of goods sold / gram 1 | ||
Adjusted EBITDA from cannabis operations 1 | ||
Adjusted EBITDA from businesses under development 1 | ( | ( |
Adjusted EBITDA from distribution operations 1 | ||
Cash and cash equivalents & marketable securities | ||
Working capital | ||
Capital and intangible asset expenditures - wholly-owned subsidiaries 1 |
Net revenue for the three months ended
The average retail selling price of medical cannabis (exclusive of wholesale), before excise tax, increased to
Adjusted cannabis gross profit for the second quarter was
Adjusted distribution gross profit for the second quarter was
Selling, general, and administrative costs in the quarter increased to
Net loss for the second quarter of fiscal 2020 was
Adjusted EBITDA increased
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, net loss, adjusted EBITDA from cannabis operations, adjusted EBITDA from businesses under development, adjusted EBITDA from distribution operations, 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 |
Outlook
For fiscal year 2020, the Company is updating its guidance to primarily reflect certain market dynamics including a slower than expected retail location rollout in
- Net revenue of approximately
$575 million to$625 million , with distribution revenue representing slightly more than half of the total net revenue - Adjusted EBITDA of approximately
$35 million to$42 million
Conference Call
There will also be a simultaneous, live webcast available on the Investors section of
We Have A Good Thing Growing
About
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 Net Revenue and Adjusted EBITDA guidance. 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, estimates and perception of trends of management and its beliefs with respect to future events, as 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
Readers are cautioned that the foregoing list is not exhaustive and should consider as other factors discussed under the heading "Risk Factors" in
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
The schedule below is an excerpt of
| ||||||||
For the three months ended | For the six months ended | |||||||
Note | 2019 | 2018 | 2019 | 2018 | ||||
Revenue from cannabis products | $ 39,772 | $ 23,378 | $ 74,851 | $ 36,670 | ||||
Distribution revenue | 86,442 | 1,146 | 181,769 | 1,146 | ||||
Insurance recovery | 450 | -- | 450 | -- | ||||
Excise taxes | (6,064) | (2,856) | (10,358) | (2,856) | ||||
Net revenue | 120,600 | 21,668 | 246,712 | 34,960 | ||||
Production costs | 5 | 13,894 | 10,400 | 29,348 | 15,234 | |||
Cost of cannabis purchased | 735 | -- | 735 | -- | ||||
Cost of goods purchased | 75,483 | 1,111 | 158,587 | 1,111 | ||||
Gross profit before fair value adjustments | 30,488 | 10,157 | 58,042 | 18,615 | ||||
Fair value adjustment on sale of inventory | 5 | 12,391 | 8,328 | 19,677 | 12,533 | |||
Fair value adjustment on growth of biological assets | 6 | (21,492) | (4,154) | (46,645) | (13,665) | |||
Gross profit | 39,589 | 5,983 | 85,010 | 19,747 | ||||
Operating expenses: | ||||||||
General and administrative | 23 | 22,076 | 12,276 | 44,381 | 21,127 | |||
Share-based compensation | 24 | 7,563 | 2,574 | 12,519 | 8,696 | |||
Selling, marketing and promotion | 12,254 | 8,336 | 20,068 | 13,077 | ||||
Amortization | 5,896 | 2,617 | 10,904 | 5,891 | ||||
Research and development | 672 | 612 | 1,282 | 874 | ||||
Transaction costs | 691 | 1,123 | 1,426 | 1,988 | ||||
49,152 | 27,538 | 90,580 | 51,653 | |||||
Operating income (loss) | (9,563) | (21,555) | (5,570) | (31,906) | ||||
Finance income (expense), net | 25 | (5,006) | 4,855 | (10,263) | 5,914 | |||
Non-operating income, net | 26 | 4,568 | 79,376 | 24,871 | 113,806 | |||
Income (loss) before income taxes | (10,001) | 62,676 | 9,038 | 87,814 | ||||
Income taxes (recovery) | 15 | (2,072) | 7,902 | 526 | 11,864 | |||
Net income (loss) | (7,929) | 54,774 | 8,512 | 75,950 | ||||
Other comprehensive income (loss) | ||||||||
Other comprehensive income (loss) | (310) | -- | (1,996) | -- | ||||
Comprehensive income (loss) | $ (8,239) | $ 54,774 | $ 6,516 | $ 75,950 | ||||
Total comprehensive income (loss) is attributable to: | ||||||||
Shareholders of | (7,876) | 54,970 | 7,050 | 76,357 | ||||
Non-controlling interest | 22 | (363) | (196) | (534) | (407) | |||
$ (8,239) | $ 54,774 | $ 6,516 | $ 75,950 | |||||
Weighted average number of common shares - basic | 251,833,217 | 244,873,891 | 251,468,984 | 235,166,745 | ||||
Weighted average number of common shares - diluted | 251,833,217 | 249,303,182 | 252,427,777 | 239,417,492 | ||||
Earnings (loss) per share - basic | 28 | $ (0.03) | $ 0.22 | $ 0.03 | $ 0.32 | |||
Earnings (loss) per share - diluted | 28 | $ (0.03) | $ 0.22 | $ 0.03 | $ 0.32 |
| ||||||
Note |
|
| ||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ 497,694 | $ 550,797 | ||||
Marketable securities | -- | 20,199 | ||||
Accounts receivable | 60,695 | 25,488 | ||||
Prepaids and other current assets | 4 | 27,339 | 23,391 | |||
Inventory | 5 | 152,196 | 91,529 | |||
Biological assets | 6 | 34,370 | 18,725 | |||
Promissory notes receivable | 14 | 39,200 | 39,200 | |||
Current portion of convertible notes receivable | 11 | 16,926 | 11,500 | |||
828,420 | 780,829 | |||||
Capital assets | 8 | 562,963 | 503,898 | |||
Intangible assets | 9 | 384,671 | 392,056 | |||
Convertible notes receivable | 11 | 8,365 | 20,730 | |||
Interest in equity investees | 12 | -- | 9,311 | |||
Long-term investments | 13 | 34,977 | 64,922 | |||
10 | 669,663 | 669,846 | ||||
$ 2,489,059 | $ 2,441,592 | |||||
Liabilities | ||||||
Current liabilities | ||||||
Bank indebtedness | 16 | $ 2,443 | $ -- | |||
Accounts payable and accrued liabilities | 117,161 | 105,813 | ||||
Income taxes payable | 2,180 | 2,722 | ||||
Deferred revenue | 23,785 | 23,678 | ||||
Current portion of lease liabilities | 3 | 752 | -- | |||
Current portion of long-term debt | 17 | 6,167 | 6,332 | |||
152,488 | 138,545 | |||||
Long-term liabilities | ||||||
Lease liabilities | 3 | 5,849 | -- | |||
Long-term debt | 17 | 132,189 | 60,895 | |||
Convertible debentures | 18 | 358,081 | 421,366 | |||
Deferred tax liability | 15 | 85,106 | 87,633 | |||
733,713 | 708,439 | |||||
Shareholders' equity | ||||||
Share capital | 19 | 1,665,744 | 1,655,273 | |||
Warrants | 20 | 1,336 | 1,336 | |||
Share-based payment reserve | 40,742 | 36,151 | ||||
Accumulated other comprehensive loss | (2,115) | (119) | ||||
Non-controlling interest | 22 | 27,875 | 28,409 | |||
Retained earnings | 21,764 | 12,103 | ||||
1,755,346 | 1,733,153 | |||||
$ 2,489,059 | $ 2,441,592 |
For the three months ended | For the six months ended | ||||
2019 | 2018 | 2019 | 2018 | ||
Net income (loss) | $ (7,929) | $ 54,774 | $ 8,512 | $ 75,950 | |
Income taxes (recovery) | (2,072) | 7,902 | 526 | 11,864 | |
Finance (income) expense, net | 5,006 | (4,855) | 10,263 | (5,914) | |
Non-operating (income) loss | (4,568) | (79,376) | (24,871) | (113,806) | |
Amortization | 12,313 | 4,154 | 21,531 | 8,860 | |
Share-based compensation | 7,563 | 2,574 | 12,519 | 8,696 | |
Fair value adjustment on sale of inventory | 12,391 | 8,328 | 19,677 | 12,533 | |
Fair value adjustment on growth of biological | (21,492) | (4,154) | (46,645) | (13,665) | |
Transaction costs | 691 | 1,123 | 1,426 | 1,988 | |
Adjusted EBITDA from businesses under | 3,547 | 3,327 | 7,781 | 6,463 | |
Adjusted EBITDA from distribution operations | (2,064) | 130 | (6,004) | 130 | |
Adjusted EBITDA from cannabis operations | $ 3,386 | $ (6,073) | $ 4,715 | $ (6,901) |
For the three months ended | For the six months ended | ||||
2019 | 2018 | 2019 | 2018 | ||
Adjusted EBITDA from cannabis operations | $ 3,386 | $ (6,073) | $ 4,715 | $ (6,901) | |
Adjusted EBITDA from businesses under | (3,547) | (3,327) | (7,781) | (6,463) | |
Adjusted EBITDA from distribution operations | 2,064 | (130) | 6,004 | (130) | |
Adjusted EBITDA | $ 1,903 | $ (9,530) | $ 2,938 | $ (13,494) |
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