Pot-grower Aphria tanks after slashing full-year profit forecasts
- Pot-grower Aphria posted fiscal second-quarter revenue figures Tuesday that fell below analysts' lowest expectation and profits that landed in-line with estimates.
- The Canadian firm cut its full-year revenue guidance due to "certain market dynamics" and slower-than-expected rollout of its retail stores in Ontario.
- Aphria stock fell as much as 8.8% in Tuesday trading.
- The pot producer's chief financial officer hinted at a possible dividend for the company's shareholders down the road, an unexpected statement amid market turmoil for Canadian weed stocks.
- Watch Aphria trade live here.
Pot producer Aphria posted fiscal second-quarter revenue Tuesday that fell under analysts' lowest estimate and profits that landed in-line with projections.
The firm slashed its full-year revenue guidance, citing "certain market dynamics" and slower-than-expected retail development in Ontario. Aphria's updated revenue forecast remains higher than the $571.1 million estimate from analysts surveyed by Bloomberg.
The report touted Aphria's third consecutive quarter of positive adjusted Ebitda, while non-adjusted figures still posted a quarterly loss of 3 cents.
Aphria stock fell as much as 8.8% on the news before paring losses.
Here are the key numbers (in Canadian dollars):
Revenue: $120.6 million, versus the $130.4 million estimate
Loss per share: 3 cents, in line with analysts' 3-cent estimate
Kilogram equivalents sold: 7,062, up from 5,969 in the fiscal first quarter
Full-year revenue guidance: $575 million to $625 million, versus the $571.1 million estimate (previously expected $650 million to $700 million)
"As I like to say, 'cash is king,' and we're proving it," CEO and chairman Irwin Simon said in an analyst call. "We believe that as the cannabis industry continues to evolve globally, our balance sheet and financial flexibility will continue to further and differentiate us."
The Canadian company also hinted the possibility of a regular dividend payment down the road. Aphria is looking to reach a position where it is able "to provide an annual return to our shareholders through dividends," chief financial officer Carl Merton told analysts Tuesday.
The company's positive adjusted Ebitda and consideration of a dividend arrives amid a severe downtrend for Canadian marijuana stocks. Popular exchange-traded fund Horizons Marijuana Life Sciences slumped to a record low on January 8 after numerous regulatory hurdles dragged on members including Canopy Growth, Aurora Cannabis, and Tilray.
The ETF has since recovered slightly, but government restrictions on the fledgling industry could keep pot stocks near lows, Stifel analyst W. Andrew Carter wrote in a December 20 note.
"There are certain restrictions imposed by Canadian regulators and provinces that could continue to impede quicker development of the market," Carter said.
Aphria traded at $5.18 per share as of 1:05 p.m. ET Tuesday, up roughly 9.5% year-to-date.
The company has seven "buy" ratings, four "hold" ratings, and one "sell" rating from analysts, with a consensus price target of $6.99, according to Bloomberg data.
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