LEAMINGTON, ONJan. 10, 2018 /CNW/ – Aphria Inc. (“Aphria” or the “Company“) (TSX: APH or USOTCQB:  APHQF) today reported its results, for the second quarter ended November 30, 2017.  All amounts are expressed in thousands of Canadian dollars.





$  8,504


$  5,227

$ 6,202

Gross profit

$ 4,121

$ 5,758

Gross profit before fair value adjustments2

$ 4,047


Adjusted gross margin2


$ 6,455

Net income (loss)

$ 945

$ 1,621

Adjusted EBITDA from operations2

$ 1,199






Kilograms (or kilogram equivalents) sold1


$  8,504


$  6,120

$  1,621

Adjusted EBITDA from operations2

$  1,699

$  1.45

Cash cost to produce dried cannabis / gram2

$  0.95

$  2.13

“All-in” cost of sales of dried cannabis / gram2

$  1.61

$  171,942

Cash and cash equivalents & marketable securities

$  118,731

$  178,782

Working capital

$  135,128

$  35,319

Investment in capital and intangible assets

$  23,704

$  5,600

Strategic investments2

$  20,134

Operating highlights

  • Ninth consecutive quarter of positive adjusted EBITDA from operations2.  $1.6 million in adjusted EBITDA from operations2 in the quarter, a 35% increase from the prior year.
  • Constuction of Part III and Part IV fully capitalized expansion progressing as scheduled with first sale from Part III expected in late May 2018 and from Part IV in late January 2019. Upon completion of both projects, the Company anticipates 100,000 kgs in annualized production capacity at 1,000,000 sq. ft. of cumulative greenhouse growing space.
  • Increased our annualized production capability expectations to 220,000 kgs through subsequent event of GrowCo investment.
  • Continues to be one of only a few publicly-traded licensed producers to have reached milestone of reporting cumulative net earnings in excess of cumulative losses.
  • Increased our annualized production capability expectations to 210,000 kgs through subsequent event of GrowCo investment.
  • Deployed $5,600 of capital in the form of strategic investments2 including additional investments in Green Tank Holdings Corp. and Nuuvera Corp.
  • Closed bought deal financing generating net proceeds of almost $87,000 in the quarter and an additional approximately $109,000 subsequent to the quarter-end, to be used primarily to fund the construction or acquisition of domestic production facilities and non-United States international strategic investments.

“We closed the quarter with strong top-line gains – revenue and Kilograms sold reached record highs and we moved closer to our increased our production capacity expectations,” said Vic Neufeld, CEO of Aphria. “With a growing product mix and patient base from both new and exsiting clients, we continue to affirm our positon as a strong Canadian market leader as we remain focused on executing our strategy to drive sustainable growth and shareholder value.”

“Looking ahead, we continue to explore strategic opportunities and partnerships to extend the Aphria brand and our product offerings in both the medical and adult-use marketplace. With our four-part facility expansion on schedule to be completed with first sales by January 2019, we are in a enviable position to aptly supply Canadian and international markets with high-quality cannabis to meet the growing global demand. As a well-capitalized company, we have the expertise, leadership and drive to extend our footprint and the Aphria Know-How system around the world.”

Financial highlights

For the ninth consecutive quarter, the Company reported positive adjusted EBITDA from operations2.  In the quarter, the Company reported $1.6 million in adjusted EBITDA from operations2, a 35% increase over the prior year.  The Company continues to remain focused on product innovation for both the medical and adult-use market, build on its expansion plans in both domestic and international markets, and explore strategic investments and other opportunities to drive shareholder value.

Revenue for the three months ended November 30, 2017 was $8,504 versus $5,227 in the same period of the prior year, an increase of over 60% and $6,120 in the first quarter of fiscal 2018, an increase of almost 40%. The increase in revenue from the same period in the prior year was largely related to continued growth of both wholesale shipments and sales to existing patients, as well as continued acceleration of patient onboarding and an increased average selling price (excluding wholesale).

Gross profit for the second quarter was $6,202, compared to $4,121 in the same quarter in the prior year and $7,904in the previous quarter. The increase in gross profit from the prior year is consistent with the much larger patient base over the prior year offset by the increased costs per gram equivalent and the increase in the fair value adjustment for biological assets against the decrease in the average selling price per gram equivalent. The decrease from the prior quarter is consistent with the increased costs per gram and the decrease in the net fair value adjustment related to biological assets.

During the quarter, our “all-in” costs of sales of dried cannabis per gram temporarily increased from $1.61 to $2.13. In an effort to bring an increased supply of cannabis to its patients as soon as possible after obtaining Health Canada approval of its Part II expansion, the Company transferred less than ideal aged vegetative plants into the expansion upon receiving approval.  The plants transferred were older than we traditionally transfer, as we dealt with a longer than expected approval process. The impact of transferring older plants was a decrease in yield, which spread our actual costs across lower harvest yields and resulted in a significant amount of unabsorbed overhead that was expensed in the quarter.  Similarly, our per gram cash costs to produce dried cannabis increased from $0.95 to $1.45due to the same challenges. Despite the increase, Aphria continues to have one of the lowest costs per gram in the industry.

Net income for the three months ended November 30, 2017 was $6,455 or $0.05 per share compared to a net income of $945 or $0.01 per share in the same period of the prior year.

Adjusted EBITDA from operations2 for the quarter was $1,621 compared to $1,699 in the prior quarter.  The decrease in the quarter, despite the increase in adjusted gross profit of almost $1,000, relates primarily to a $900 increase in selling, marketing and promotion, related to investments in the development of our adult-use brands and increases in patient acquisition and maintenance costs consistent with the increase in revenue.