In a little over two months, the date Canadian cannabis enthusiasts and investors have long been waiting for will finally arrive. On October 17, recreational marijuana will officially go on sale in our neighbor to the north, following passage of the Cannabis Act in June. Canada will become the first industrialized country in the world to allow adults to legally purchase marijuana.
Though estimates vary wildly since no country the size of Canada has ever given adult-use weed the green light before, most pundits predict in the neighborhood of $5 billion in added annual sales once the industry is operating at full capacity. Between domestic medical and recreational demand, and the ability of most major growers to export medical cannabis to overseas markets where the substance has been legalized in some capacity, the legal cannabis industry is viewed by some as a surefire growth industry…
Aphria’s fourth-quarter and full-year report may look like business as usual…
However, growth doesn’t come without its occasional speed bumps, as Aphria‘s (NASDAQOTH:APHQF) shareholders found out this past week.
On Wednesday, August 1, the Ontario-based grower, which currently sits third in the pecking order in terms of forecasted peak annual production at 255,000 kilograms of cannabis-equivalent output, delivered genuinely subpar results.
If you were purely focused on the headline numbers, you’d have figured it was business as usual. Sales for the fourth quarter and full year improved 17% and 81%, respectively, with the company turning in a full-year profit of 0.18 Canadian dollars per share, compared to CA$0.04 per share in net income in the previous fiscal year.
In fact, the quarterly press release rattled off no shortage of quarterly highlights, including:
- An improvement in cash costs to produce dried cannabis per gram to CA$0.95, down CA$0.01 from the sequential quarter.
- The securing of a distribution partnership with Southern Glazer, one of North America’s largest liquid distributors.
- Signed memorandums of understanding with six provinces to supply cannabis.
- Reported its 11th consecutive quarter of positive EBITDA (earnings before interest, taxes, depreciation, and amortization) from its domestic medical cannabis operations.
But if you did any digging whatsoever into the company’s quarterly or full-year results, or, worse yet, if you read the commentary from CEO Vic Neufeld, you’d realize that this was actually a very poor report. According to Neufeld…
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