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Thursday, August 1, 2019

=Aphria (APHA) reported earnings on Thur 1 Aug 2019 (a/h)

Aphria beats by $0.15, beats on revs; guides FY20 above consensus 

  • Reports Q4 (May) earnings of CC$0.05 per share, excluding non-recurring items, CC$0.15 better than the S&P Capital IQ Consensus of (CC$0.10); revenues rose 971.7% year/year to CC$128.6 mln vs the CC$99.26 mln S&P Capital IQ Consensus.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.
  • Co issues upside guidance for FY20, sees FY20 revs of C$650-700 mln vs. C$642.95 mln S&P Capital IQ Consensus. Adjusted EBITDA of ~$88 million to $95 million.

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    Aphria sold 5,574 kilograms of weed during the quarter, more than double what it sold in the prior quarter. The average retail price of medical pot, excluding wholesale, dipped to $7.66 per gram, due largely to the higher portion of medical sales coming from the company.

    The average selling price of recreational cannabis rose to $5.73.

    Aprhia said it expected net sales of around $650 million to $700 million Canadian for fiscal 2020. 

    Back in April, Aphria said it had to book a $50 million Canadian charge after regulators asked it to conduct an "impairment test" — or a procedure measuring possible changes in an asset's value — related to acquisitions in Latin America and the Caribbean. Aphria said the charge, in part, resulted from a reassessment of the acquired companies' finances that showed higher-than-expected costs.

    Some analysts have wondered whether further impairment charges could be on the horizon.

    Those acquisitions were the target of an attack last year by two short-sellers. Those short-sellers, Quintessential Capital and Hindenburg Research, alleged that the properties acquired were worthless and that Aphria overpaid for them to enrich people in on the deals.

    In the aftermath, CEO Vic Neufeld and co-founder Cole Cacciavillani left their executive and directorship roles. Aphria said their departures had nothing to do with the short-sellers' allegations. A committee ultimately found that the price of the acquisitions was "acceptable." But it also found "conflicting interests" in the deals.

    Trouble For Other Marijuana Stocks
    Aphria's results on Thursday run contrary to what has been a rough spring and summer for some marijuana stocks.

    In June, shares of Hexo (HEXO) dropped after quarterly sales fell — an issue CEO Sebastien St-Louis said resulted from not being able to package dry buds fast enough. Canopy Growth's (CGC) Bruce Linton was ousted last month after beer-and-wine distributor Constellation Brands (STZ), a big investor in Canopy, expressed disappointment with the weed company's financials.

    Also last month, executives at CannTrust (CTST) were fired or asked to resign after Canadian media reports said that they were aware the company was growing cannabis in unlicensed rooms.

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