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Aphria Inc. – ‘6-K’ for 8/1/19 – ‘EX-99.1’

On:  Thursday, 8/1/19, at 4:35pm ET   ·   For:  8/1/19   ·   Accession #:  1279569-19-1631   ·   File #:  1-38708

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 8/01/19  Aphria Inc.                       6-K         8/01/19    2:154K                                   CNW Group Ltd/FA

Current Report by a Foreign Private Issuer   —   Form 6-K   —   Rule 13a-16 / 15d-16
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 6-K         Current Report by a Foreign Private Issuer          HTML     10K 
 2: EX-99.1     News Release Dated August 1, 2019                   HTML     61K 


‘EX-99.1’   —   News Release Dated August 1, 2019


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Exhibit 99.1

 

 

Aphria Inc. Logo (CNW Group|Aphria Inc.)

 

Aphria Inc. Announces 158% Increase in Adult-Use Sales and Profitable Fourth Quarter

 

Reports Profitable Fourth Quarter
Record Net Revenue of $128.6 Million, Up 75% from Prior Quarter
Revenue for Adult-use Cannabis of $18.5 Million, Up 158% from Prior Quarter
Provides Fiscal Year 2020 Outlook

LEAMINGTON, ON, Aug. 1, 2019 /CNW/ - Aphria Inc. ("Aphria" or the "Company") (TSX: APHA and NYSE: APHA) today reported its results for the fourth quarter and fiscal year ended May 31, 2019. All amounts are expressed in thousands of Canadian dollars, unless otherwise noted and except for per gram, kilogram, kilogram equivalents, and per share amounts.

"It's a new day at Aphria. Our team's solid execution across key areas of our business resulted in strong adult-use revenue growth and a profitable fourth quarter," stated Irwin D. Simon. "Over the last six months, our organization identified immediate priorities to help generate substantial progress near-term and long-term. We built upon existing business fundamentals and capabilities, streamlined processes, strengthened governance, and focused on building brand awareness. Together, we have nurtured an entrepreneurial culture of accountability through data-driven decision-making for value creation in the global medical and adult-use cannabis industry.  Today's Aphria has a stronger foundation for long-term growth and success."

Key Operating Highlights

Subsequent Events 

Key Financial Highlights

  Three months ended Three months ended   Twelve months ended Twelve months ended
  May 31, 2019 May 31, 2018   May 31, 2019 May 31, 2018
Net revenue $128,568 $12,026   $237,110 $36,917
Gross profit $36,007 $18,212   $75,421 $40,887
Adjusted cannabis gross profit 1 $15,165 $9,468   $40,596 $27,912
Adjusted cannabis gross margin 1 53.0% 78.7%   53.3% 75.6%
Adjusted distribution gross profit 1 $12,274 $0   $19,805 $0
Adjusted distribution gross margin 1 12.4% 0%   12.5% 0%
Net income (loss) $15,760 ($4,992)   ($16,499) $29,448
Adjusted EBITDA 1 $209 ($1,162)   ($27,720) $4,341
           
           
  Q4-2019 Q3-2019      
Distribution revenue $99,186 $57,599      
Net cannabis revenue $28,608 $15,438      
Net revenue $128,568 $73,582      
Kilograms (or kilogram equivalents) sold 1 5,574.0 2,636.5      
Cash cost to produce dried cannabis / gram 1 $1.35 $1.48      
"All-in" cost of goods sold / gram 1 $2.35 $2.86      
Adjusted EBITDA from cannabis operations 1 $1,851 ($12,694)      
Adjusted EBITDA from businesses under development 1 ($5,514) ($3,990)      
Adjusted EBITDA from distribution operations 1 $3,872 $2,249      
Cash and cash equivalents & marketable securities $570,996 $134,736      
Working capital $642,284 $131,278      
Capital and intangible asset expenditures - wholly-owned subsidiaries 1 $26,828 $29,016      

 

Net revenue for the three months ended May 31, 2019 was $128.6 million, compared to $73.6 million in the prior quarter and $12.0 million in the same period last year. Higher revenue in the quarter was driven by $99.2 million of distribution revenue from CC Pharma and other distribution companies and $33.5 million of revenue from cannabis produced. Net revenue includes over 3,228 kilogram equivalents sold for the adult-use market and 1,417 kilogram equivalents for medical cannabis sales.

The average retail selling price of medical cannabis (exclusive of wholesale), before excise tax, decreased to $7.66 per gram in the quarter, compared to $8.03 in the prior quarter, primarily related to a higher percentage of total medical sales coming from Aphria. The average selling price of adult-use cannabis, before excise tax, increased to $5.73 per gram in the quarter, compared to $5.14 per gram in the prior quarter.

Adjusted cannabis gross profit for the fourth quarter was $15.2 million, with an adjusted cannabis gross margin of 53.0%, compared to $7.6 million with an adjusted gross margin of 49.5% in the prior quarter. The increase in adjusted gross margin was primarily due to the increase in average selling price per gram in the quarter.

Adjusted distribution gross profit for the fourth quarter was $12.3 million, with an adjusted gross margin of 12.4%, compared to $7.8 million with an adjusted gross margin of 13.6% in the prior quarter.

Selling, general, and administrative costs in the quarter decreased to $62.4 million, from $106.6 million in the prior quarter and increased from $22.6 million in the prior year. The decrease from the prior quarter is mainly related to the decrease of $58 million in impairment expense and $11 million in share-based compensation, partially offset by $20 million in transaction costs primarily associated with the issuance of the senior convertible debenture.

Net income for the fourth quarter of 2019 was $15.8 million or $0.05 per share, compared to net loss of $108.2 million or $0.43 per share in the prior quarter, and net loss of $5.0 million or $0.04 per share for the same period last year. Excluding the non-cash impairment charges in the third quarter, adjusted net loss was $50.2 million, or $0.02 per share. The increase in net income was primarily due to the increase in sales and the net fair value adjustment for biological assets, and decrease in the impairment expense, offset by increase in SG&A related to G&A and transaction costs.

Adjusted EBITDA from cannabis operations for the fourth quarter was $1.9 million compared to a loss of $12.7 million in the prior quarter. The adjusted EBITDA loss from businesses under development for the fourth quarter was $5.5 million compared to a loss of $3.9 million in the prior quarter. Adjusted EBITDA from distribution operations for the fourth quarter was $3.9 million compared to $2.2 million in the prior quarter.  The increased adjusted EBITDA is primarily attributable to the increase in gross profit as explained above.

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 net loss, adjusted EBITDA from cannabis operations, adjusted EBITDA from businesses under development, adjusted EBITDA from distribution operations, kilogram (or 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 May 31, 2019 Management's Discussion and Analysis, filed on SEDAR and EDGAR. 

Outlook

For fiscal year 2020, the Company expects:

Conference Call

Aphria executives will host a conference call to discuss these results today at 5:00 pm 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 5081017. A telephone replay will be available approximately two hours after the call concludes through August 15, 2019. To access the recording dial (855) 859-2056 and use the passcode 5081017.

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

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 a leader in low-cost production of high-quality cannabis at scale, grown in natural conditions. 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. Aphria Inc. drives sustainable long-term shareholder value through a diversified approach to innovation, strategic partnerships and global expansion, with a presence in more than 10 countries across 5 continents.

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 revenue and Adjusted EBITDA guidance, internal expectations, estimated margins, expectations with respect to actual production volumes, expectations for future growing capacity and costs, the completion of any capital project or expansions, and expectations with respect to future production costs. 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 and estimates of management 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; 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; currency and interest rate fluctuations.  

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 MD&A for the financial year ended May 31, 2019 filed on SEDAR at www.sedar.com and in the United States on Edgar under Form 40-F 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.

Below schedule is an excerpt of Aphria Inc.'s financial statements prepared on a basis consistent with IFRS for the financial year ended May 31, 2019 filed on SEDAR at www.sedar.com and in the United States on Edgar under Form 40-F at www.sec.gov. This schedule does not contain all the information in Aphria Inc.'s annual report and Form 40-F that is important to you. You should read the financial statements and Form 40-F carefully to obtain a comprehensive understanding of Aphria Inc.'s financial statements 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 year ended
May 31, 
      Note 2019 2018
  Revenue from cannabis produced     $  86,348 $  36,917
  Distribution revenue     157,931 --
  Other revenue     3,035 --
  Excise taxes     (10,204) --
           
Net revenue     237,110 36,917
           
  Production costs   6 35,548 8,692
  Cost of goods purchased     138,126 --
  Other costs of sales     898 313
           
Gross profit before fair value adjustments     62,538 27,912
           
  Fair value adjustment on sale of inventory   6 27,724 10,327
  Fair value adjustment on growth of biological assets   7 (40,607) (23,302)
           
Gross profit     75,421 40,887
Operating expenses:        
  General and administrative   25 69,752 13,901
  Share-based compensation   26 26,080 17,874
  Selling, marketing and promotion     27,971 11,873
  Amortization     14,084 3,985
  Research and development     1,391 490
  Impairment   11 58,039 --
  Transaction costs     23,259 5,192
        220,576 53,315
           
Operating loss      (145,155) (12,428)
           
  Non-operating income   27 129,510 48,284
           
Income (loss) before income taxes     (15,645) 35,856
           
Income taxes   16 854 6,408
Net income (loss)     (16,499) 29,448
           
Other comprehensive loss        
  Other comprehensive loss     (119) (801)
Net comprehensive income (loss)     $  (16,618) $  28,647
           
Total comprehensive income (loss) is attributable to:        
  Shareholders of Aphria Inc.     (14,667) 28,867
  Non-controlling interest   24 (1,951) (220)
        $  (16,618) $  28,647
           
Weighted average number of common shares - basic     242,763,558 161,026,463
Weighted average number of common shares - diluted     242,763,558 165,914,000
           
Earnings (loss) per share - basic   29 $  (0.07) $  0.18
Earnings (loss) per share - diluted   29 $  (0.07) $  0.18

 

Aphria Inc.
Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
           
      Note May 31,
2019
May 31,
2018
Assets        
Current assets        
  Cash and cash equivalents     $  550,797 $  59,737
  Marketable securities   4 20,199 45,062
  Accounts receivable     25,488 3,386
  Prepaids and other current assets   5 23,391 14,384
  Inventory   6 91,529 22,150
  Biological assets   7 18,725 7,331
  Assets held for sale     -- 40,620
  Promissory notes receivable   15 39,200 --
  Current portion of convertible notes receivable   12 11,500 1,942
        780,829 194,612
  Capital assets   9 503,898 303,151
  Intangible assets   10 392,056 226,444
  Convertible notes receivable   12 20,730 16,129
  Interest in equity investees   13 9,311 4,966
  Long-term investments   14 64,922 46,028
  Goodwill   11 669,846 522,762
        $  2,441,592 $  1,314,092
Liabilities        
Current liabilities        
  Accounts payable and accrued liabilities     $  105,813 $  31,517
  Income taxes payable     2,722 3,584
  Deferred revenue     23,678 2,607
  Current portion of promissory note payable   18 -- 610
  Current portion of long-term debt   19 6,332 2,140
  Current portion of derivative liability     -- 3,396
        138,545 43,854
Long-term liabilities        
  Long-term debt   19 60,895 28,337
  Convertible debentures   20 421,366 --
  Derivative liability     -- 9,055
  Deferred tax liability   16 87,633 59,253
        708,439 140,499
Shareholders' equity        
  Share capital   21 1,655,273 1,113,981
  Warrants   22 1,336 1,375
  Share-based payment reserve     36,151 22,006
  Accumulated other comprehensive loss     (119) (801)
  Non-controlling interest   24 28,409 9,580
  Retained earnings      12,103 27,452
        1,733,153 1,173,593
        2,441,592 $  1,314,092

 

  Three months ended
May 31,
For the year ended
May 31,
2019 2018 2019 2018
Net income (loss) $  15,760 $  (4,992) $  (16,499) $  29,448
Income taxes (recovery) 453 (1,731) 854 6,408
Non-operating (income) loss (40,206) 2,351 (129,510) (48,284)
Amortization 8,611 3,809 22,940 6,678
Share-based compensation 3,084 7,206 26,080 17,874
Fair value adjustment on sale of inventory 9,649 3,077 27,724 10,327
Fair value adjustment on growth of biological assets (17,471) (11,821) (40,607) (23,302)
Impairment -- -- 58,039 --
Transaction costs 20,329 939 23,259 5,192
Adjusted EBITDA from businesses under        
development 5,514 2,834 16,240 2,834
Adjusted EBITDA from distribution operations (3,872) -- (6,036) --
Adjusted EBITDA from cannabis        
operations $  1,851 $  1,672 $  (17,516) $  7,175

 

  Three months ended
May 31,
For the year ended
May 31,
2019 2018 2019 2018
Adjusted EBITDA from cannabis operations $  1,851 $  1,672 $  (17,516) $  7,175
Adjusted EBITDA from businesses under development (5,514) (2,834) (16,240) (2,834)
Adjusted EBITDA from distribution operations 3,872 -- 6,036 --
Adjusted EBITDA $  209 $  (1,162) $  (27,720) $  4,341

 

 

For media inquiries please contact: Tamara Macgregor, Vice President, Communications & Public Affairs, Aphria Inc., tamara.macgregor@aphria.com, 437-343-4000; For investor inquiries please contact: Katie M. Turner, ICR, Inc., katie.turner@icrinc.com, 646-277-1228

 


Dates Referenced Herein

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