eResearch | On August 2, 2019, Aphria Inc. (TSX: APH; NYSE: APHA; LSE: 0UI4; DB: 10E) reported FQ4/2019 earnings ended June 31/19, which beat analyst expectations and the stock was up as much as 34%. The positive earnings came as a surprise to the whole cannabis industry as the rest of the cannabis market has seen stock prices decline for several months; the world’s first cannabis ETF, Horizons Marijuana Life Sciences ETF (TSX:HMMJ), has fallen more than 30% since March 2019 as the cannabis industry matures and investors start to focus on profitability.
Aphria FQ4/2019 Earnings Highlights
In FQ4/2019, revenue increased 75% to C$127.7 million, beating analyst expectations of C$108 million for the quarter.- In FQ4/2019, Aphria reported C$15.7 million in net income, but still lost C$16.4 million on C$243 million of revenue over the full fiscal year.
- Distribution revenue accounted for 77% of Aphria’s total revenue in FQ4/2019, which was mainly attributed to CC Pharma, a German pharmaceutical distribution company acquired in 2018.
- Cash cost-per gram of dried cannabis dropped to C$1.35 from C$1.48, quarter-over-quarter as Aphria continues to scale its production with their development of the Aphria Diamond facility.
- Aphria has C$571 million in cash and cash equivalents, which includes the settlement from Green Growth Brand’s takeover bid, which resulted in C$50 million cash received and an additional C$39 million to be received in November 2019.
- There are two main production sites: Aphria One (1.1 million sq. ft), which is licensed and fully planted with over 500,000 plants, and Aphria Diamond (1.3 million sq. ft.), which completed construction and is awaiting license approval. Once both are fully planted, Aphria will have an estimated 255,500 kgs of dried cannabis production per year.
- Aphria provided guidance for FY2020 outlook with projected revenue of C$650-700 million and adjusted EBITDA of C$89-95 million.
Main Canadian competitors that have also announced earnings include: Canopy Growth Corp. (NYSE: CGC; TSX: WEED; LSE: 0UO9; DB:11L1), which reported FQ4/2019 earnings on June 20, 2019, and Aurora Cannabis Inc. (TSX: ACB; NYSE: ACB; LSE: 0UJG; DB: 21P) which reported expected FQ4/2019 revenue and production guidance on August 6, 2019.
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- In FQ4/2019 ended Mar 31/19, Canopy Growth reported an increase in revenue of 312% to C$94 million from C$22.8 million year-over-year.
- In FY2019, Canopy Growth reported a loss of C$670 million on C$226.3 million of revenue, mainly attributed to sales and marketing, G&A, and stock-based compensation.
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- In FQ3/2019 ended Mar 31/19, Aurora Cannabis reported a loss of C$158 million on C$65 million of revenue, mainly attributed to G&A, share-based compensation, and unrealized loss on derivative liabilities.
- In FQ4/2019 ended June 30, Aurora Cannabis reported guidance that it expects revenue of between C$100 million and C$107 million, compared with C$19.1 million year-over-year.
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The cannabis industry has slowed down in the past year with less significant catalysts such as mergers, acquisitions, and partnerships occurring. As cannabis companies focus on organic growth while scaling operations, fundamental metrics are starting to affect share price more than before.
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Aphria Inc. (TSX: APHA; NYSE: APHA; LSE: 0UI4; DB: 10E)
- Headquartered in Ontario, Canada, Aphria is a Canadian licensed cannabis company that owns Broken Coast Cannabis Inc., which is a globally known cannabis product brand that has won multiple competitions with its strains.
- It currently has two main production facilities, Aphria One and Aphria Diamond, which collectively produces 255,500 kilogram of cannabis per year.
- Aphria is currently trading at C$9.51 with a C$2.4 billion market capitalization.
Aurora Cannabis Inc. (TSX: ACB; NYSE: ACB; LSE: 0UJG; DB: 21P)
- Headquartered in Edmonton, Canada, Aurora is a Canadian licensed cannabis company that is the second largest cannabis company in the world by market capitalization.
- It currently has eight licensed production facilities, five sales licenses, and operations in 24 countries.
- Aurora is currently trading at C$9.09 with a C$9.2 billion market capitalization.
Canopy Growth Corp. (NYSE: CGC; TSX: WEED; LSE: 0UO9; DB:11L1)
- Headquartered in Ontario, Canada, Canopy Growth Corp. is the world’s largest cannabis company, based on market capitalization.
- Canopy was the first company to export cannabis to Germany, the first to make a partnership with a global beverage company, and the first to have an agreement to acquire a U.S.-based cannabis company.
- Canopy is currently trading at C$42.94 per share with a C$14.8 billion market capitalization.
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