Major Canadian cannabis producer Aphria on Wednesday reported strong quarterly EBITDA growth, despite coronavirus-related impairment charges from its international operations that contributed to a net loss.
The Leamington, Ontario-based company reported adjusted EBITDA of 8.6 million Canadian dollars ($6.4 million) for the quarter ended May 31, up 49% from the third quarter.
Net revenue grew by 5% from the previous quarter to CA$152.2 million, with net cannabis revenue of CA$53.1 million as gross adult-use revenue increased by 27% over the previous quarter.
Aphria’s average gross selling price for a gram of recreational cannabis decreased by 4.4% quarter-over-quarter to CA$5.23.
The company cited increased consumer demand for its Good Supply value brand and “price reductions in key markets to solidify market share.”
Aphria still has plenty of liquidity available, with CA$497.2 in cash and cash equivalents at the end of the quarter.
That cash position “is sufficient to take advantage of any attractive distressed asset sales in Canada, U.S. expansion or other income statement-accretive opportunities and protect us from any adverse impacts of the pandemic,” Chief Financial Officer Carl Merton said during a conference call with investors.
CEO Irwin Simon said attractive assets could include cannabis-derivative manufacturing assets in Canada or existing consumer brands in Canada or the U.S. that could be converted to marijuana brands in the future.
All told, Aphria reported a CA$98.8 million net loss for the quarter, compared with net income of CA$5.7 million in the third quarter.
That loss included CA$64 million in noncash impairment charges, attributable to the impact of the COVID-19 crisis on some of its international operations.
The company put construction of its Colombia facility on hold in light of the pandemic, and management was unable to access a facility in Lesotho after the country closed its borders.
An impairment charge in Jamaica was attributed to a fall in tourist demand for cannabis.
CFO Merton said Aphria’s German expansion is continuing, with plans to spend about CA$15 million to finish that project.
“While our commitment to grow our business internationally remains the same, we have pivoted our business models in international markets away from a large (capital expenditure) spend,” CEO Simon said on the earnings call.
“In the short term, we will supply our demand in (Latin America) with cannabis products sourced from Canada and are exploring our mid- to long-term options of whether a smaller production footprint would be appropriate, or whether to outsource production to a third party or simply ship product from Canada.”
Aphria trades as APHA on the Toronto Stock Exchange.
In June, the company moved its U.S. listing from the New York Stock Exchange to the Nasdaq, where it also trades as APHA.