Aphria Inc (CVE:APH) Increases Capacity Expectations For Its Projects

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With five successive quarters of profitability and added growth in its production capacity, Aphria Inc (CVE:APH) continued to build positive momentum in Q3 2016. Vic Neufeld, the Chief Executive Officer, reported that despite rare weather conditions that provisionally added to company’s growing costs for the third quarter, they continue to post costs/gram that comes in the list of the lowest costs in the industry.

At the same time, the company is doing strategic investments that will surge supply of high-quality cannabis and place Aphria in a leading position to drive growth in medicinal-grade cannabis business, fulfill demand for recreational cannabis, and lead strong, justifiable shareholder value creation.

The highlights

For the fifth successive quarter, Aphria posted profits on its books. The improved pre-tax profitability is mainly a product of the increase in fair value of investment portfolio. For the reported quarter, EBITDA came at over $1 million, marking the third successive quarter with EBITDA of more than $1 million. Reported EBITDA levels showcase the firm’s continued focus on industry major patient care service and low cost producer status.

Revenue for the quarter closed February 28, 2017 came at over $5.118 million, indicating a 2% decline over the previous quarter’s revenue of over $5.226 million. The decline in revenue for the third quarter came as per projections and was mainly an outcome of the $8.50/gram cap put on the price of medicinal cannabis for veterans.

The effect of the price cap on Aphria’s revenue was offset by better revenue/gram for non-veterans, mainly due to selling less wholesale goods and the continued advancement of cannabis oils. Adjusted gross profit for Q3 2016 came at over $3.582 million with an adjusted gross margin of 70%, generated from both wholesale and retail shipments of medicinal cannabis. The decline in the adjusted gross margin over the prior quarter is at par with the decline in revenues in the quarter.

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