Cannabis firm Aphria records profit in Q4, expects further growth
An Aphria worker looks out over a crop of marijuana in this undated handout image. (THE CANADIAN PRESS / Aphria)
LEAMINGTON, Ont. -- Cannabis company Aphria Inc. says the results of its internal strategic review can be seen in the strong recreational cannabis revenue growth and profitable fourth quarter.
The firm based in Leamington, Ont., said three months ago that it would work with a consulting firm to develop a plan to assess market opportunities, prioritize initiatives and ensure it was investing in profitable opportunities that would prepare for long-term growth.
"In the fourth quarter we've already started to implement many of those outcomes from the 90-day plan which help us narrow our focus on the highest returns and the priorities for growth," interim chief executive Irwin Simon said in a conference call.
Simon said the company and its 1,000 employees have come together in a challenging time for the organization over the last six months.
It built upon existing business fundamentals and capabilities, streamlined processes, strengthened its governance and focused on building brand awareness, all with an emphasis on consistent execution, he said.
"The Aphria of today is not the Aphria of yesterday and won't be the Aphria of tomorrow. We strive to be better at all that we do so we can further our industry-leading position."
Aphria said it earned net income of $15.8 million in the final period of its fiscal year, up sharply from a $5 million loss a year ago, fuelled by growth in recreational pot sales.
The profit for the three months ended May 31 amounted to five cents per share, compared to a net loss of four cents during the same period in 2018.
Net revenue for the quarter totalled $128.6 million, up sharply from $12 million a year earlier, as revenues from adult-use cannabis rose more than 150 per cent to $18.5 million.
Analysts on average expected a quarterly net loss per share of six cents, according to financial markets data firm Refinitiv.
For the full year, Aphria reported a net loss of $16.5 million compared to $29.4 million in net income during the previous financial year.
The company reiterated its goal of generating $1 billion of annualized revenue by the end of calendar year 2020.
With an expertise building a consumer packaged goods business in the United States, Simon says he understands that the potentially lucrative market still faces challenges from legalization and questions about cannabis use food and personal care products.
"We're always looking for opportunities in the U.S. but it needs to be the right opportunity, one that will create real and long-term value for our shareholders," he told analysts.
"If we look to the future, Aphria will be the consumer packaged goods company with plenty of options in the U.S. market."
In Canada, the company is anticipating the legalization later this year of pot-infused edibles and other next-generation products.
Simon said he expects vapes and concentrates will represent close to 30 per cent of the Canadian adult use market by 2021.
"We believe the expected legalization of vapes and concentrates will mark a significant turning point in the Canadian market, providing more choices, new experiences while opening the door to a range of new consumers."
Aphria's upper ranks have seen a major shakeup in recent months.
In May, Aphria announced its president Jakob Ripshtein's resignation and that he would be vacating the role as after June 7.
In addition, the cannabis company has been without a permanent chief executive since Vic Neufeld left the top job on March 1 after Aphria faced allegations in December by short-sellers who questioned the pot firm's recent acquisitions in Latin America, calling them "largely worthless" and purchased at "vastly inflated" prices to benefit insiders.
Aphria denied the allegations and a special committee formed by Aphria's board to review the deals in question found in February that the takeover of companies in Jamaica, Argentina and Colombia were within an acceptable price range.