Aphria Inc. Announces Third Consecutive Quarter of Positive Adjusted EBITDA and a 46% Increase in Adult-Use Cannabis Revenue From Prior Quarter

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Adjusted cannabis gross profit for the second quarter was $19.1 million, with an adjusted cannabis gross margin of 56.6%, compared to $15.3 million with an adjusted gross margin of 49.8% in the prior quarter. The increase in adjusted gross margin was primarily due to lower wholesale sales to other licensed producers which carry lower selling prices, as well as reduced cultivation costs in the quarter.” data-reactid=”55″>Adjusted cannabis gross profit for the second quarter was $19.1 million, with an adjusted cannabis gross margin of 56.6%, compared to $15.3 million with an adjusted gross margin of 49.8% in the prior quarter. The increase in adjusted gross margin was primarily due to lower wholesale sales to other licensed producers which carry lower selling prices, as well as reduced cultivation costs in the quarter.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Adjusted distribution gross profit for the second quarter was $11.0 million, with an adjusted gross margin of 12.7%, compared to $12.2 million with an adjusted gross margin of 12.8% in the prior quarter.” data-reactid=”56″>Adjusted distribution gross profit for the second quarter was $11.0 million, with an adjusted gross margin of 12.7%, compared to $12.2 million with an adjusted gross margin of 12.8% in the prior quarter.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Selling, general, and administrative costs in the quarter increased to $49.2 million from $41.4 million in the prior quarter, and increased from $27.5 million in the prior year. The increase from the prior quarter is mainly related to a $2.6 million increase in share-based compensation and a $4.4 million increase in selling, marketing and promotion primarily associated with increased sales.” data-reactid=”57″>Selling, general, and administrative costs in the quarter increased to $49.2 million from $41.4 million in the prior quarter, and increased from $27.5 million in the prior year. The increase from the prior quarter is mainly related to a $2.6 million increase in share-based compensation and a $4.4 million increase in selling, marketing and promotion primarily associated with increased sales.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Net loss for the second quarter of fiscal 2020 was $7.9 million, or a loss of $0.03 per share, compared to net income of $16.4 million, or $0.07 per share in the prior quarter, and net income of $54.8 million, or $0.22 per share for the same period last year. The&nbsp;decrease&nbsp;in net income was primarily due to provisions associated with the Company’s Tier 3 passive investment portfolio.” data-reactid=”58″>Net loss for the second quarter of fiscal 2020 was $7.9 million, or a loss of $0.03 per share, compared to net income of $16.4 million, or $0.07 per share in the prior quarter, and net income of $54.8 million, or $0.22 per share for the same period last year. The decrease in net income was primarily due to provisions associated with the Company’s Tier 3 passive investment portfolio.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Adjusted EBITDA increased $0.9 million to $1.9 million for the second quarter compared to $1.0 million in the prior quarter. Adjusted EBITDA from cannabis operations&nbsp;for the second quarter was $3.4 million compared to $1.3 million in the prior quarter. The adjusted EBITDA loss from businesses under development&nbsp;for the second quarter was $3.5 million compared to a loss&nbsp;of $4.2 million in the prior quarter. Adjusted EBITDA from distribution operations for the second quarter was $2.1 million, compared to $3.9 million the prior quarter. The increase in adjusted EBITDA is primarily attributable to increased sales in the Company’s cannabis business.” data-reactid=”59″>Adjusted EBITDA increased $0.9 million to $1.9 million for the second quarter compared to $1.0 million in the prior quarter. Adjusted EBITDA from cannabis operations for the second quarter was $3.4 million compared to $1.3 million in the prior quarter. The adjusted EBITDA loss from businesses under development for the second quarter was $3.5 million compared to a loss of $4.2 million in the prior quarter. Adjusted EBITDA from distribution operations for the second quarter was $2.1 million, compared to $3.9 million the prior quarter. The increase in adjusted EBITDA is primarily attributable to increased sales in the Company’s cannabis business.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Outlook” data-reactid=”63″>Outlook

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Carl Merton, Aphria’s Chief Financial Officer commented, "We are updating our annual outlook with a little over four months left in our fiscal year to reflect certain market dynamics that have evolved relative to our initial expectations.&nbsp; We look forward to generating an acceleration in our revenue and profit growth in the second half of the fiscal year and continue to believe the Canadian and international cannabis industry outlook remains robust. Aphria is well positioned for long-term sustainable growth as we continue to manage the controllable aspects of our business."” data-reactid=”64″>Carl Merton, Aphria’s Chief Financial Officer commented, “We are updating our annual outlook with a little over four months left in our fiscal year to reflect certain market dynamics that have evolved relative to our initial expectations.  We look forward to generating an acceleration in our revenue and profit growth in the second half of the fiscal year and continue to believe the Canadian and international cannabis industry outlook remains robust. Aphria is well positioned for long-term sustainable growth as we continue to manage the controllable aspects of our business.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="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 Ontario with more than 40 store openings still pending, the temporary banning of vape products in the Province of Alberta while it studies the impact of vape products, the higher costs of third-party supply as a result of the timing of the receipt of Aphria Diamond’s license, and a slowing in CC Pharma’s growth arising from recent changes in the German government’s medical reimbursement model.&nbsp; The Company expects the following for fiscal year 2020:” data-reactid=”65″>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 Ontario with more than 40 store openings still pending, the temporary banning of vape products in the Province of Alberta while it studies the impact of vape products, the higher costs of third-party supply as a result of the timing of the receipt of Aphria Diamond’s license, and a slowing in CC Pharma’s growth arising from recent changes in the German government’s medical reimbursement model.  The Company expects the following for fiscal year 2020:

• 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

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Conference Call ” data-reactid=”70″>Conference Call

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Aphria executives will host a conference call to discuss these results today at 8:00 am 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 1575423. A telephone replay will be available approximately two hours after the call concludes through January 28, 2020. To access the recording dial (855) 859-2056 and use the passcode 1575423.” data-reactid=”71″>Aphria executives will host a conference call to discuss these results today at 8:00 am 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 1575423. A telephone replay will be available approximately two hours after the call concludes through January 28, 2020. To access the recording dial (855) 859-2056 and use the passcode 1575423.

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

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="About Aphria” data-reactid=”74″>About Aphria

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="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 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.” data-reactid=”75″>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 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.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For more information, visit: aphriainc.com” data-reactid=”76″>For more information, visit: aphriainc.com

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="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 Canada generally, income tax and regulatory matters, including delays in the issuance of licenses, the sale and distribution of vapes; 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; safety of derivative cannabis products; currency and interest rate fluctuations.&nbsp;&nbsp;” data-reactid=”77″>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 Canada generally, income tax and regulatory matters, including delays in the issuance of licenses, the sale and distribution of vapes; 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; safety of derivative cannabis products; currency and interest rate fluctuations.  

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="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 under the heading "Industry Trends and Risks" in Aphria's Management's Discussion and Analysis for the three months ended November 30, 2019, each available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.&nbsp; 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.” data-reactid=”78″>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 under the heading “Industry Trends and Risks” in Aphria’s Management’s Discussion and Analysis for the three months ended November 30, 2019, 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.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="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 November 30, 2019 and filed on SEDAR at www.sedar.com&nbsp;and on EDGAR at www.sec.gov. This schedule does not contain all 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.” data-reactid=”80″>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 November 30, 2019 and filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. This schedule does not contain all 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.

 

 

 

 

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SOURCE Aphria Inc.