Aphria posts $98.8 million net loss in Q4, missing analyst estimates

An Aphria worker looks out over a crop of marijuana in this undated handout image. (THE CANADIAN PRESS / Aphria)

Canadians may have clamoured to snatch up cannabis products as COVID-19 ravaged the country, but the demand was not enough to keep Aphria Inc. from incurring a multimillion-dollar loss and impairment charge.

The Leamington, Ont.-based company revealed Wednesday that in its fourth quarter, which ended May 31, it experienced a $98.8 million net loss and a $64 million non-cash asset impairment expense.

The impairment expenses were linked to international markets. About $40 million of the charge is connected to operations in Colombia, $19 million to Jamaica and $5 million to Lesotho.

Tourism, which Jamaica thrives on, was deeply impacted by COVID-19, forcing Aphria to reevaluate its relationships and cash-flow expectations, chief executive Irwin Simon told The Canadian Press.

"There's no one going to Jamaica right now, so there's no business and with that we just shut down those stores and said, 'why would we invest in those stores?" he said.

Over in Lesthoto, where borders were closed, Aphria's partners and senior management team have not been able to access facilities because they reside outside the country.

"It was a small market that was really supposed to come along with some other acquisitions, but we just decided to close that down," Simon said.

The international struggles came as Aphria reported a loss that amounted to 39 cents per share for the quarter, compared with a year-earlier profit of $15.8 million or five cents per share.

Analysts had estimated a net loss of four cents per share, according to financial markets data firm Refinitiv.

The results caused Aphria's stock to slide by more than 16 per cent or $1.31 in midday trading to reach $6.71.

Aphria's net revenue, however, increased 18 per cent to $152.2 million from $128.6 million, as Canadians stocked up on cannabis while their companies forced them to work from home and to physically distance as much as possible.

"I think there was a little bit of pantry-loading, but we are seeing a good repeat in sales right now," said Irwin.

Those repeat sales pushed Aphria's recreational cannabis market share in Ontario to 16.1 per cent from 13 per cent in the prior quarter and snatch up 12 per cent of market share in Alberta.

Looking forward, Simon said the company would be looking at how to supply Latin American demand.

It will use products from Canada for now, but that could change, he said.

"We are exploring our mid- to long-term options of whether a smaller production footprint would be appropriate or whether to outsource production to a third-party or simply to ship product from Canada," he said on the company's earnings call.

The company is also looking at adding to its brands, which currently include Solei, Broken Coast Cannabis, RIFF and Good Supply.

Irwin said consumers can expect two new brands in fiscal 2021, but offered no details about how they will be positioned.

For the full year, Aphria's net loss attributable to shareholders surged to $92 million or 33 cents per share, from $14.7 million or seven cents in 2019. Revenues increased 130 per cent to $543.3 million from $237.1 million.

This report by The Canadian Press was first published July 29, 2020