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Breaking Down Earnings Calls For Top Canadian Cannabis Producers

Jun. 12, 2020 12:20 PM ETACB, TLRY, CGC, CRON, CRON:CA, WEED:CA, TLRY:CA, ACB:CA15 Comments
Bay Area Kid profile picture
Bay Area Kid


  • As the cannabis industry moves into a bull market, Canadian cannabis companies have been rebounding from recent lows.
  • Inventory, equipment and facility write offs have led to cost reductions among the largest Canadian LPs.
  • After restructuring these company hope to reach profitability in the near-term.

The Canadian cannabis industry has been nothing short of a disaster for investors and companies alike. The two largest Canadian provinces, Ontario and Quebec, limited the rollout of retail outlets and severely curtailed the ability of cannabis companies to get its product into the hands of consumers. This has resulted in an oversupply of cannabis in the market, driving down prices and forcing companies to close facilities and halt construction of partially completed projects. Certain companies have felt this negative pressure more than others, and it's been reflected in their earnings and share price.

Over the last month, the four largest Canadian licensed producers (LP's) reported their most recent quarterly financial results. Below are highlights from the financial statements and earnings calls of Canopy Growth (CGC), Aurora Cannabis (ACB), Cronos Group (CRON) and Aphria (APHA).


Q3 2020 Earnings Highlights

  • Net revenue of $144.4 million, up 96% Q3 2019 and 20% from the prior quarter
  • Net income of $5.7 million, or $0.02 per share
  • Operating income of $8.7 million, compared to a loss of $9.6 million in the prior quarter
  • Adjusted EBITDA of $5.7 million
  • A fourth consecutive quarter of positive adjusted EBITDA
  • Cannabis-related EBITDA increased by 78%
  • German distribution subsidiary sales increased by 50%
  • Raised $100 million in January
  • Both Aphria One and Aphria Diamond growing facilities are in full operation
  • Cultivation cost per gram fell below $1; the all-in cost of sales per gram fell 14.6%
  • 77% vape market share in Ontario; three of the top five brands
  • Edibles, beverages and topicals to be released in the coming months

"We are proud of our sustained growth in Canada and continued expansion of our international capabilities. During this unprecedented time, the well-being of our employees, patients, consumers, partners and the communities we operate in is our primary focus. Our facilities, offices and patient care teams

This article was written by

Bay Area Kid profile picture
I'm a Marine veteran, originally from the San Francisco Bay Area. I have a BS in Hospitality Management and an MBA, both from the University of Nevada, Las Vegas.

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Comments (15)

Donnascott profile picture
In the long term which is what I feel most people should focus on, I feel there is much value to be gained from this market. Short term, expect it to be rocky. But the potential is there, like CanaFarma, I do not feel it’s an industry that will disappear. It’s just getting started in many ways. According to financial experts, the cannabis market in Canada is expected to generate approximately $7.17 billion and employ around 3500 local residents by the end of 2020.
@Bay Area Kid ,
$CGC , " $132 Million write-off in Obsolete Product , Hmmm ..
But don't they have Extraction facilities ? …
Lots of ' Juggling ' going on there , Imo ..
That new CEO from $STZ seems to be hard at work , Haa ..
G.L.T.A. invested ...
SA-NJ52 profile picture
i own Delta 9. Along with Valens, it is one of the few companies with a positive EPS.

It is a small company but it appears to be doing well.

The only other stock I owned was Canntrust that is effectively bankrupt now due to management greed and stupidity. You can google the tale of woe on this disasterous company that should have done well.

OneStrawRevolutionFarming2023 profile picture
Yes, steady and visible progress at VRNDF - this looks like one definition of a "build out" :-)
OneStrawRevolutionFarming2023 profile picture
The so-called conventional wisdom has sounded like excuse making :-)

Canada Cannabis 1.0 companies could not grow excellent quality cannabis so they made excuses and said their poor sales were due to a lack of dispensaries; however, now we can clearly see in the USA that excellent quality medicinal hemp sells very well on the Internet and it's delivered by the USPS :-) If the quality is excellent it will sell through in the dispensaries and also online with delivery :-)

Most of the Canada Cannabis 1.0 companies are limited by their mono-cultures: cannabis is a commodity (this is simply factually incorrect; cannabis is not exclusively a commodity: cannabis is what we do with it - saving lives and building out Wellness in communities) is an example; designing business plans based on mono-cropping in expensive facilities which were designed by architects and not necessarily the growers who would use them is another example of this singular/mono thought process :-(

Most Canada Cannabis 1.0 companies continue to invest in indoor hydroponic cannabis which is not as good quality as both Regeneratively "live soil" polyculture, intercropping natural farming and/or Aquaponics "live liquid soil" dual root zone polyculture natural farming; in addition, the costs of the inputs for indoor grows are significantly higher than Regenerative and Aquaponics which do not require NPK "baby bottles" of chemicals :-)

The Canada Cannabis 1.0 companies brought their aura of trying to "dominant" and this is especially unwelcome in the Wellness industry; companies that try to "dominate" with patents and "moats" and price "moats" will likely get boycotted out of business: we don't want unkind commodity metrics people in the Wellness industry; they can please go work in the unethical and immoral tech. industry which generates vast amounts of money and never helps the homeless for example :-( In the Wellness industry we want people who will build out Wellness town by town and live locally :-)

These issues are also seen in the USA where scant attention and meager resources have heretofore been devoted to helping patients and synthetic medication addicts and the homeless :-(

Additionally, segmenting the market based on prices appears to be a risky choice: providing excellent quality of cannabis at all price points - $2-$16 a gram - is working in the Oregon legal jurisdiction and might provide a template for other low-cost states like perhaps MS in the future: hitting all prices points puts pressures on the contiguous legal jurisdictions which might need to lower their prices (this might be true for the Panhandle section of FL when/if MS and AL open up) to compete - why companies are choosing to service only the premium market or only the discount market appears to be another vestige of Prohibition :-(

The companies that do well in the future likely will be the ones which remove all or nearly all of the Prohibition mindsets and work for a polyculture mindset that brings more plants as medicines and food as medicine simultaneously and in complimentary fashion - for example, a pre-roll containing medicinal cannabis and medicinal hemp rolled in mullein leaf - to the market :-)

Canada might also help itself with "farm-to-gate" and "farm-to-sale" and letting farms sell directly to the public :-)

This hopefully is not an attempt to replicate Big Ag (which is failing now and appears to be a fatally flawed model of scale which destroys and has destroyed the earth's biological diversity and topsoil and contaminated our water and depleted the nutrients in our food and in our livestock) nor Big Pharma (which has given us the death of the opioid crisis which kills about 4 people an hour in the USA) nor CPCs filled with chemicals :-(

APHA might be the only Canada Cannabis 1.0 company that has done any visible Wellness work in the community and its effort was to provide a temporary arboretum of sorts for a couple of weeks :-)

Hopefully this will be a horticulture matrix at the local level which endeavors to save lives and help people end their synthetic medication addicts :-)
Bay Area Kid profile picture
"Canada Cannabis 1.0 companies could not grow excellent quality cannabis so they made excuses and said their poor sales were due to a lack of dispensaries"

Well this is totally false. Ontario is by far the most populated province in Canada and had less dispensaries than some of the smallest. Notice sales are increasing along with new dispensary build outs.
OneStrawRevolutionFarming2023 profile picture
Fair enough and thank you :-)

Let's see how those companies do when the outdoor harvests arrive :-)
OneStrawRevolutionFarming2023 profile picture
Are those curbside :-) Or are they walk-in dispensaries :-)
FringDook profile picture
Why no $HEXO ?

They had an important ER yesterday for the industry.
FringDook profile picture
But I think that COVID will actually accelerate the trend for the Canadian Companies. More stores opening, MJ essential, and forcing the hand of people habitualizing visiting the dispensaries. Bullish.


thanks for the writeup.
MyJourney profile picture
SA Editor delay probably. Most articles seem to take about 2 days to get through. Not sure how long or who gets prioritized for review.
Bay Area Kid profile picture
This article ews submitted almost a week ago. Hexo isn't a top tier cannabis company, IMO
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