Out of all the Canadian cannabis companies expected to become profitably, few would have guessed that the former black sheep of the industry would reign supreme.
Aphria Earnings
Aphria (NYSE: APHA) reported it’s recent financial results, impressing investors by reporting a net profit. This makes them the first major Canadian cannabis company to do so, which saw it’s share rise by 32 percent in after-hours trading in what has been among the best, single-day gains for the company this year.
The Ontario-based pot grower ha reported $15.8 million in the recent quarter with total revenues of $129 million. This had completely blown away analyst expectations, up 75 percent from the previous quarter where Aphria reported a massive drop in its gross margin alongside a $50 million write-down on its Latin American assets.
The overall cost per gram of dried cannabis to produce also fell from $1.48 to $1.35. Net revenue for fiscal 2020 is estimated to reach $650 to $700 million, while EBITDA would end up between $88 million and $95 million.
Aphria Executive Comments
“It’s a new day at Aphria. Our team’s solid execution across key areas of our business resulted in strong adult-use revenue growth and a profitable fourth quarter,” stated Irwin D. Simon in a company press release. “Over the last six months, our organization identified immediate priorities to help generate substantial progress near-term and long-term. We built upon existing business fundamentals and capabilities, streamlined processes, strengthened governance, and focused on building brand awareness. Together, we have nurtured an entrepreneurial culture of accountability through data-driven decision-making for value creation in the global medical and adult-use cannabis industry. Today’s Aphria has a stronger foundation for long-term growth and success.”
While shares were down 3.6 percent over the course of the day, they shot up drastically in after-hours trading after the company reported these impressive results. It’s a surprising development for some, as Aphria back in late 2018/early 2019 became the black sheep of the cannabis industry.
Losing around half it’s stock price thanks to investigative reports that exposed fraudulent, insider dealing regarding their Latin American and Caribbean acquisitions. Paying tens of millions for supposedly almost worthless assets, the company ended up seeing the departure of its CEO and other chief executives before the stock saw a comeback.
The major reason why Aphria has had such a strong recovery is due to being arguably the lowest cost producer of cannabis in Canada. This ability to grow marijuana for significantly less than its competition gives it a major advantage in terms of its profit margins and makes the stock one of the most attractive from a fundamental perspective.
The only reason why the stock wasn’t more desirably was due to the recent scandal it had which greatly tarnished its image, but the strength of its Canadian operations is strong enough that the business can make a comeback in time.
Aphria Company Profile
Aphria Inc and its subsidiaries produce and sell medical marijuana. Its products include Capsules, Oral solutions, and Vaporizers. The company’s operations are based in Leamington, Ontario. It is focused on producing and selling medical marijuana and its derivatives through retail sales and wholesale channels. – Warrior Trading News
