Canadian-based cannabis company Aphria Inc. (APHQF) reported increasing sales for its fourth quarter and year ending May 31, 2018. Revenue for the quarter rose 17% sequentially to $12,026. The increase in the quarter was driven primarily by reporting Broken Coast results for a full quarter versus only one month of revenue in the prior quarter.
Adjusted gross profit for the fourth quarter was $ 9,468, with an adjusted gross margin of 78.7%, compared to $4,903 with an adjusted gross margin of 85.7% in the prior year’s fourth quarter, representing an increase of over 90%. The increase in the adjusted gross margin from the prior quarter was consistent with the increase in revenues combined with improved cost structures.
Net loss for the fourth quarter was $4,992 or $0.06 per share versus the net loss of $2,593 or $0.02 per share in the prior year. The decrease in net income for the quarter relates to $6.5 million in incremental share-based compensation, $3.3 million of costs associated with Aphria International, $8.6 million in net losses on the company’s investment portfolio, all offset by almost $13.0 million in incremental gross profit.
For the year revenue increased 81% to $36,917 versus $20,438 for 2017. Adjusted gross profit for the year was $27,912 , with an adjusted gross margin of 75.6%, compared to $15,854 , with an adjusted gross margin of 77.6%, representing an increase of over 75%. The increase in adjusted gross profit for the year is consistent with the company’s increase in revenue over the period.
Net income for the year was $29,448 or $0.18 per share, as opposed to $4,198 or $0.04 in the prior year. The increase in net income for the year relates to fair value adjustments associated with biological assets and unrealized gains on the company’s investment portfolio.
“We had a healthy fourth quarter and a solid year with many achievements we are proud of,” said Vic Neufeld , Chief Executive Officer, Aphria. “We are excited and ready to hit the ground running on the first day of legal adult-use. It won’t be without its challenges but we have a plan and the team in place to get it done. We continue to sign supply agreements with provinces and territories, and our Southern Glazer’s sales network partnership is unmatched, ensuring our brands and products are available and represented by retailers across the country.”
“Beyond that, we will continue to extend our industry-leading expertise and experience into global markets. We’ve had an exciting year adding more depth and experience to our senior leadership team that has helped expand our international operations and presence outside of Canada, US and Australia to an additional eight countries, and look forward to continued expansion within LATAM,” continued Neufeld.
Preparing For Adult Use Sales
Aphria suggested that revenue could dip due to its “previously announced decision to discontinue wholesales sales to other licensed producers, to provide increased inventory for the eventual pipeline fill for adult-use and international market opportunities over the next six to nine months.” Aphria has signed MOU‘s with British Columbia, Alberta, Manitoba, Quebec, New Brunswick and the Yukon Territory, with more agreements to be announced in the short-term.
Aphria believes that its low cost of production will help it to be successful against its peers as adult use sales begin. The company reported improved cash costs to produce dried cannabis per gram to $ 0.95, a decrease of $0.01 in the quarter, remaining below $1.00 for the second consecutive quarter.