PR Newswire
LEAMINGTON, ON, April 12, 2021
Reports Eighth Consecutive Quarter of Positive Adjusted EBITDA and Positive Adjusted EBITDA from Cannabis Business
LEAMINGTON, ON, April 12, 2021 /PRNewswire/ - Aphria Inc. ("Aphria," "we," or the "Company") (TSX: APHA) (NASDAQ: APHA), a leading global cannabis-lifestyle consumer packaged goods company inspiring and empowering the worldwide community to live their very best life, today reported its financial results for the third quarter and nine months ended February 28, 2021. All amounts are expressed in Canadian dollars, unless otherwise noted and except for per gram, kilogram, kilogram equivalents, and per share amounts.
Irwin D. Simon, Chairman and Chief Executive Officer, commented, "Our global team executed well in the very fluid, ongoing COVID-19 operating environment. We proactively managed our expenses and maintained our positive adjusted EBITDA for the third quarter of fiscal 2021. The duration and impact of lockdowns across many of the regions we operate in, particularly in Canada, were greater than we initially anticipated for the cannabis industry and our business; however, we believe Aphria remains well-positioned with our leading brands and market share to experience a robust increase in our top-line as the market improves. In the U.S., we had a solid first full quarter of contribution from SweetWater even with lower on-premise sales compared to the prior year quarter as many foodservice industry establishments were still operating with limited capacity. Going forward, we are excited about the strategic opportunities for incremental growth as we look to parlay our branded consumer products into additional complementary product offerings in Canada, the U.S. and internationally."
Mr. Simon continued, "We remain excited with the opportunities created for both Aphria shareholders and Tilray stockholders in completing our proposed business combination with Tilray, and believe that together, we will create one of the strongest global cannabis and consumer packaged goods companies in the world. We expect to have a tremendous runway for long-term sustainable growth as we build upon our existing foundation in Canada and internationally by increasing the scale of our global operations. We expect Aphria and Tilray's complementary cultures of innovation, brand development and cultivation to further set us apart from others in the industry along with the strength of our balance sheet and cash availability as we enhance value for all stakeholders."
Key Operating Highlights – Third Quarter Fiscal 2021
Subsequent Events
Key Financial Highlights (In thousands of Canadian dollars)
| Three months ended | Three months ended |
| February 28, 2021 | February 29, 2020 |
Net revenue | $153,638 | $144,424 |
Gross profit | $31,689 | $59,575 |
Adjusted cannabis gross profit 1 | $20,272 | $23,744 |
Adjusted cannabis gross margin 1 | 39.2% | 42.7% |
Adjusted beverage alcohol gross profit 1 | $7,092 | N/A |
Adjusted beverage alcohol gross margin 1 | 47.9% | N/A |
Adjusted distribution gross profit 1 | $11,437 | $11,397 |
Adjusted distribution gross margin 1 | 13.1% | 12.9% |
Net income (loss) | ($360,996) | $5,697 |
Adjusted net income (loss) 1 | ($47,924) | ($9,844) |
Adjusted EBITDA 1 | $12,651 | $5,736 |
| | |
| Q3-2021 | Q2-2021 |
Distribution revenue | $87,095 | $91,740 |
Net cannabis revenue | $51,735 | $67,911 |
Net beverage alcohol revenue | $14,808 | $881 |
Net revenue | $153,638 | $160,532 |
Kilograms (or kilogram equivalents) sold 1 | 18,695 | 26,730 |
Cash cost to produce dried cannabis / gram1 | $0.90 | $0.79 |
"All-in" cost of goods sold / gram1 | $1.54 | $1.30 |
Adjusted EBITDA from cannabis business 1 | $7,858 | $12,887 |
Adjusted EBITDA from businesses under development 1 | ($1,495) | ($3,199) |
Adjusted EBITDA from beverage alcohol business 1 | $5,002 | $299 |
Adjusted EBITDA from distribution business 1 | $1,286 | $2,585 |
Cash and cash equivalents & marketable securities | $267,134 | $187,997 |
Working capital | $513,713 | $399,161 |
Capital and intangible asset expenditures - wholly-owned subsidiaries 1 | $4,984 | $16,935 |
Capital and intangible asset expenditures -majority-owned subsidiaries1 | $61 | $2,791 |
Net revenue for the three months ended February 28, 2021 was $153.6 million, an increase of 6.4% from $144.4 million in the same period last year. Third quarter fiscal year 2021 net revenue decreased 4.3% when compared to the prior quarter net revenue of $160.5 million, due to a decrease in net cannabis and distribution revenue, partially offset by an increase in net beverage alcohol revenue from the acquisition of SweetWater.
As a result of the ongoing effects of COVID-19, including provincial lockdowns and provincial boards taking measures to lower their inventory levels which had previously included forecasted cannabis market growth, the Company experienced what it believes is a transitory reduction in demand during the quarter. These provincial government measures resulted in decreased orders from provincial boards and product returns of approximately $5.0 million. The Company mitigated a portion of the product return by finding alternative distribution channels for some of the products, but experienced a reduction in net cannabis revenue as a result of $4.1 million.
The average retail selling price of medical cannabis, before excise tax, decreased to $6.69 per gram in the quarter, compared to $6.96 per gram in the prior quarter. The decline was a result of specific pricing programs offered to assist patients in need who have been negatively impacted by the COVID-19 pandemic, along with other promotional programs.
The average selling price of adult-use cannabis, before excise tax, decreased to $3.82 per gram in the quarter, compared to $4.29 per gram in the prior quarter, primarily due to consumer trends towards the purchase of large-format and price compression in the market.
Adjusted cannabis gross profit for the third quarter was $20.3 million, with an adjusted cannabis gross margin of 39.2%, compared to $31.2 million and 45.9%, respectively in the prior quarter. The decrease in adjusted cannabis gross profit and adjusted cannabis gross margin1 was primarily due to lower yields that are typically experienced in the Company's third quarter, due to less sunlight in December through February, and the impacts of the product returns described above. The remaining difference was due to the overall decrease in average selling price based on sales mix.
Adjusted distribution gross profit for the third quarter was $11.4 million, with an adjusted distribution gross margin of 13.1%, compared to $12.1 million and 13.1% in the prior quarter. The decrease in adjusted distribution gross profit1 was a result of a decrease in distribution revenue at Aphria's CC Pharma subsidiary in Germany driven by COVID-19 restrictions, which negatively impacted pharmacy revenue and the importation of inventory from other countries.
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