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Aphria’s Stunning Revenue Gains Overshadowed By Impairment Charges

By Investing.com (Brenda O'Farrell/Investing.com)Stock MarketsAug 04, 2020 03:11PM ET
www.investing.com/analysis/aphrias-stunning-revenue-gains-overshadowed-by-impairment-charges-200532894
Aphria’s Stunning Revenue Gains Overshadowed By Impairment Charges
By Investing.com (Brenda O'Farrell/Investing.com)   |  Aug 04, 2020 03:11PM ET
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The anticipation of a major revenue boost and positive earnings results were struck with the crushing blow of reality when one of the biggest players in the cannabis sector reported its latest quarterly earnings last week.

Aphria (NASDAQ:APHA), (TSX:APHA) was riding a wave of positive expectations in the immediate runup to its financial disclosure last Wednesday. Stock prices had surged just under 43% in the two-and-a-half weeks before the Ontario-based pot producer unveiled its fourth-quarter figures for the period ending May 31, hitting a high of US$6.13.

Aphria On NASDAQ Weekly Chart
Aphria On NASDAQ Weekly Chart

The usual headline figures were positive, beating analysts’ expectations on most counts. It recorded C$152.2 million (US$113.76 million) in revenue, surpassing the anticipated figure of about C$148.96 million (US$111.41 million).

The marijuana grower also recorded C$8.6 million (US$6.43 million) in adjusted earnings before interest, taxes, depreciation and amortization, up slightly from the analysts’ figure, which was pegged C$8.5 million (US$6.35 million).

But both metrics were wildly overshadowed by huge impairment costs. The company took C$63.9 million (US$47.76 million) in a write-down due to what it described as pandemic-related impacts on its operations in Jamaica, Colombia, Argentina and the African country of Lesotho; and additional impairments of $27 million to revalue its convertible debentures.

The end result: a net loss of C$98.8 million (US$73.85 million) for the quarter.

The market reacted immediately, as shares of Aphria dropped almost 31% last Thursday, closing at US$4.85.

Shares bounced back somewhat yesterday, rising 2.83% to close at US$4.91 on the NASDAQ. Canadian markets were closed Monday for a civic holiday.

Aphria CEO Irwin Simon pointed to the company’s revenue gains in media interviews, explaining the large impairment charges “make sense” in the long term.

All of this is happening with the backdrop of the cannabis industry’s continually shifting landscape. Aphria’s high revenue in the last quarter could allow it to claim the title of Canada’s biggest seller of legal cannabis, a position currently held by Canopy Growth (NYSE:CGC), (TSX:WEED) described as the single largest marijuana grower in the world. That determination will only be made, however, after Canopy reports its latest financial results on Aug. 10.

Another item of note that was included in Aphria’s financial report: it sold C$65.5 million (US$48.96 million) in cannabis last quarter – the largest total so far sold by a Canadian marijuana grower.

52-Week Highs From These 3 Names

The share prices of three marijuana companies hit 52-week highs recently.

Green Thumb Industries (OTC:GTBIF), (CSE:GTII) closed yesterday at US$13.93, just over 8.4% higher on the day, surpassing Friday’s close of US$13.41. The company’s shares are up just over 47% in the last year.

Trulieve Cannabis (OTC:TCNNF), (CSE:TRUL) the Florida-based grower, also continues its climb, closing yesterday at US16.82, adding 3.83% on the day, bettering its 52-week high. The stock soared just over 61.5% in the last 12 months.

And Curaleaf Holdings (OTC:CURLF), (CSE:CURA) is building on its 52-week high, closing yesterday at US$8.98, an increase of almost 6.5% on the day. In the past year, it has gained 14.6%.

Aphria’s Stunning Revenue Gains Overshadowed By Impairment Charges
 

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Aphria’s Stunning Revenue Gains Overshadowed By Impairment Charges

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Comments (1)
Paul Wills
Paul Wills Aug 04, 2020 11:39AM ET
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you said absolutely nothing
Luis Mora
Luis Mora Aug 04, 2020 11:39AM ET
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He copy and pasted to look cool
Luis Mora
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