Canadian-based Aphria Inc. (APHQF) delivered a solid first quarter as revenues and gross profits rose over last year’s numbers. The low-cost producer reported that revenues for its first quarter ending August 31 were C$6.1 million a 7% increase over last year’s C$4.3 million for the same time period. Gross profits rose to C$7.9 million from last year’s C$3.7 million for the same time period.
The company sold 852 kilograms for the first quarter, which topped last year’s 738 kilograms. More importantly, the cash cost to produce dried cannabis fell 14.4% to 95 cents from the previous year’s C$1.11. The “all-in” costs to produce dried cannabis fell from C$1.67 to C$1.60 as the economies of scale kicked in when the company expanded operations.
“A key driver of our continued performance has been our ability to maintain leadership as one of the lowest-cost producers in the industry,” said Vic Neufeld, Chief Executive Officer at Aphria. “As legal recreational cannabis comes into the market in 2018, low costs per gram will be a critical factor for the entire supply chain. Our proven ability to grow to scale while keeping costs low is an important competitive advantage; it positions Aphria to profitably meet projected demand for cannabis and deliver sustainable value to our shareholders.”
The company noted that it was the first harvest and first sale of product that had flowered exclusively in the new facility expansion. Aphira also said in the release that construction on the next phases of expansion was progressing as scheduled with sales from the Part III expansion expected in late May 2018. Sales from the Part IV expansion are expected in mid-to-late January 2019.
Neufeld added, “Looking ahead, we are on track to meet critical short- and long-term goals: Our fully-funded facility expansion is well underway, and we expect to achieve further economies of scale once the expansion projects are completed in 2018.”
Net income from the quarter was C$15 million or eleven cents per share versus last year’s C$900,000 or one cent per share for the same period and beating the previous quarter’s loss of C$2.6 million. The increase was attributed to net gains on the company’s strategic investment portfolio. The company’s statement read, “The largest increases in the strategic investment portfolio relate to the increase in fair value of the Company’s investment in Copperstate Farms Investors, LLC and the increase in the value of the Company investment in its equity accounted investee, Liberty Health Sciences, Ltd. The largest offsetting decrease in the strategic investment portfolio was the Company’s share of its equity accounted investee’s, Liberty’s, net loss for the quarter. The Company’s share was $8.8 million, with the vast majority of the loss ($8.4 million) relating to Liberty’s listing fees as part of its reverse takeover, go public, transaction.”