Aphria Inc. Announces Second Consecutive Quarter Of Profitability And Positive Adjusted EBITDA

Aphria Inc. (TSX: APHA and NYSE: APHA) reported its results for the first quarter ended August 31, 2019.

About Aphria Inc.

Aphria Inc., with operations based in Leamington, Ontario, Canada, and its subsidiaries produce and sell medical marijuana and its derivatives through retail sales and wholesale channels in 10 countries across 5 continents. 

Q1 Financial Highlights (All amounts are expressed in thousands of Canadian dollars unless otherwise noted and except for per gram, kilogram, kilogram equivalents, and per share amounts and all figures are in comparison to the previous quarter.)

Figure 1: Financial Highlights

Source: Ubika, Company Reports

Liquidity 

• Cash and cash equivalents decreased by 18.4%;
• Total assets decreased by 0.33%;
• Current assets decreased by 5.7%;
• Current liabilities decreased by 11.2%; and
• Long-term debt financing decreased by 0.8%.

Outlook

For the fiscal year 2020, Aphria is reaffirming its guidance of:

• Net revenue of approximately $650M-$700M, with distribution revenue representing slightly more than 50% of the total net revenue and
• Adjusted EBITDA of approx. $88M-$95M.

The above revenue guidance is likely rich as Aphria would have to increase cannabis revenue by 25% next quarter and then double revenue in the two subsequent quarters to meet this target.

Figure 2: Revenue Growth Required to Meet Guidance

(Click on image to enlarge)

Source: Ubika

Risks in achieving the above target are that:

• the expected rollout of 42 and 25 retail stores in Ontario and Quebec, respectively, over the next few months, is unlikely to support the triple-digit growth required to meet the target. In addition,
• there may be delays in the rollout of edibles, as Health Canada still needs to approve packaging, and, given Health Canada’s poor rollout of Cannabis 1.0, it is unlikely Cannabis 2.0’s rollout will be much better.