Aphria Stock Rises on Earnings Beat

Aphria (APHA) reported its earnings results for Q4 and fiscal 2019 after the market closed today. Will the positive results lift cannabis sentiment overall?

Adam Jones - Author

Aug. 1 2019, Published 5:18 p.m. ET

uploads///Aphria Stock Rises on Earnings Beat

Aphria (APHA) reported its earnings results for Q4 and fiscal 2019 after the market closed today. The company reported a better-than-expected top line of 128 million Canadian dollars, compared to the previous expectation of 108 million Canadian dollars at the time of the earnings report. The company also reported a better-than-expected bottom line with a net income of 15.8 million Canadian dollars compared to an expectation of a net loss of 13.9 million Canadian dollars. Following the earnings beat, Aphria stock rose nearly 19% in the after-hours trading session.

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Other key metrics behind Aphria’s earnings results

During the fourth quarter, Aphria stock reported a gross profit of 36 million Canadian dollars—which translated into a gross margin of 28%. The company’s gross margins improved sequentially from 23% in the third quarter. Note that I’m comparing the company’s current quarter results with the previous quarter only because it represented a full quarter of recreational cannabis sales.

During the fourth quarter, the company sold 5,574 kilograms of cannabis and equivalents. This total grew sequentially from 2,636 kilograms in the third quarter. You can see a significant improvement here, with sequential growth of 111%. Plus, this rise indicates healthy demand for cannabis products.

Aphria also reported a positive adjusted EBITDA of 0.209 million Canadian dollars, up from -14 million in Q3 of 2019. Aphria joins the list of very few Canadian cannabis companies to report a positive adjusted EBITDA, alongside OrganiGram. OrganiGram (OGI) reported its earnings earlier this month with a positive EBITDA. Check out how the company’s latest earnings performed at OrganiGram’s Third-Quarter Earnings.

Other updates for cannabis investors

For fiscal 2020, Aphria expects to generate total revenue of 650 million–700 million Canadian dollars. The company also guided that it expects adjusted EBITDA in the range of 88 million–95 million. Aphria reiterated its confidence in its cannabis business and highlighted growth initiatives and recent developments. These include a partnership with the PAX Era brand for vaping devices and a recent receipt of a license to open a retail store in Jamaica. Learn more in Aphria Falls before 4Q and Fiscal 2019 Earnings.

Aphria’s upbeat earnings appear to have boosted sentiment for cannabis peers, including Canopy Growth (WEED)(CGC), Aurora Cannabis (ACB), and Tilray (TLRY). Both Tilray and Canopy Growth were trading higher in the after-hours trading session today.

Aurora Cannabis, on the other hand, was trading in negative territory. The cannabis industry is embroiled in scandals that have soured investor sentiment. To learn more, check out Curaleaf Stock: Latest Updates for Investors and CannTrust and HEXO Try to Calm Investors. Stay tuned for more updates.


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