Company Presentation July 2020 - Aphria Inc.
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Company Presentation
July 2020
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Disclaimer CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Forward-looking information contained in this Presentation is based on certain assumptions regarding expected growth, results of operations, performance, industry trends and growth opportunities. While management considers these assumptions to be reasonable, based on information available, they may prove to be incorrect. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Aphria to be materially different from any future performance or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to risks associated with COVID-19 nationally and globally which could have a material adverse impact on Aphria’s business, operations and financial results, including disruptions in cultivation and processing, supply chains and sales channels, as well as a deterioration of general economic conditions including national and/or global recessions and the response of governments to the COVID-19 pandemic in respect of the operation of retail stores; general economic conditions; adverse industry events; marketing costs; loss of markets; future legislative and regulatory developments involving cannabis or otherwise affecting Aphria’s business or its consumers generally; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favorable terms; the cannabis industry in Canada generally; income tax and regulatory matters, including delays in the issuance of licenses; the sale and distribution of vapes; the ability of Aphria to meet its liquidity requirements to fund ongoing operations; the ability of Aphria to implement its business strategies; competition; crop failure; safety of derivative cannabis products; currency and interest rate fluctuations, and the other risks discussed under the heading “Risk Factors” in Aphria's most recent Annual Information Form and under the heading “Industry Trends and Risks” in Aphria’s annual Management’s Discussion and Analysis for the year ended May 31, 2020. The foregoing factors are not intended to be exhaustive. Although Aphria has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward- looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date hereof and Aphria and its directors, officers and employees disclaim any obligation to update any forward- looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, you should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. All forward-looking information is expressly qualified in its entirety by this cautionary statement. Forward-looking information and other information contained herein concerning management’s general expectations concerning the medical and adult-use cannabis industry are based on estimates prepared by management using data from publicly available industry sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which management believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While management is not aware of any misstatements regarding any industry data presented herein, industry data is subject to change based on various factors. NON-IFRS MEASURES: In this Presentation, reference is made to adjusted EBITDA, which is not a measure of financial performance under International Financial Reporting Standards (IFRS). This metric and measure is not a recognized measure under IFRS does not have meanings prescribed under IFRS and is as a result unlikely to be comparable to similar measures presented by other companies. This measure is provided as information complimentary to those IFRS measures by providing a further understanding of our operating results from the perspective of management. As such, this measure should not be considered in isolation or in lieu of review of our financial information reported under IFRS. Definitions and reconciliations such measure can be found in Aphria’s annual Management’s Discussion and Analysis for the year ended May 31, 2020, filed on SEDAR and EDGAR. This Presentation may not be reproduced, further distributed or published in whole or in part by any other person. Neither this Presentation nor any copy of it may be taken or transmitted into or distributed in any other jurisdiction which prohibits the same except in compliance with applicable laws. Any failure to comply with this restriction may constitute a violation of applicable securities law. Recipients are required to inform themselves of, and comply with, all such restrictions or prohibitions and Aphria does not accept liability to any person in relation thereto.
Aphria Inc. at a Glance
Aphria Inc. (TSX:APHA) (NASDAQ:APHA) is a leading global CPG and wellness leader
Segmented Brands Consistent Financial Performance
Product Innovation Internationally Respected Medical
Platform
Well Capitalized Physical Infrastructure / Scale
Winning Canada + Focused International Strategy = Global Differentiated Cannabis Wellness Leader
FY 2021 – Recreational Brand Portfolio
Economy Value Core Premium Premium +
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Unmistakably Quality Bud. No Find Your Moment Elevate. West Coast,
Quebecoise B.S. Collaborate. Naturally – The
Solei helps Create. best bud in the
P’tite Pof is inspired Embrace the consumers world
by Québécois goodness of discover a path to Not your
classic cannabis
culture, casse- seeing the world conventional Authentic and
Brand DNA
culture.
croûte signage and through moments cannabis brand. effortless build on
your local Good Supply is related to their We are a brand by small batch growing
dépanneur. an insider brand activities creatives for techniques / craft
that speaks your
language and creatives approach.
Straightforward, reminds you of Approachable,
functional, bold, when you first simple, welcoming, An unconventional Broken Coast’s
charming and fell in love with brightening. brand, fueled by reputation for its
cannabis.
iconic. Our creativity and high quality flower;
traditional blue and collaboration aroma, bud
red with a modern composition, and
twist. heavy trichome
appearance delivers
*Quebec Regional an incredible
brand experience.
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Segmented Approach to Customer Brands:
The right brand & product for the right consumer
$ $$$
Unmistakably Quebecoise Quality Bud. No B.S. Find Your Moment Elevate. Collaborate. Create. West Coast, Naturally – The
best bud in the world
Target Audience Target Audience Target Audience Target Audience
The Québécois enthusiast The every-day Enthusiast who Relaxers and Novice who look Male focused segment with a Target Audience
consumer looking for value. wants good weed at a good price. for a simplified cannabis strong interest in exploring The Connoisseur cannabis
experience different formats available in consumer who wants the best.
high-THC
Our brands have been created through a thoughtful research process, including focus groups, to cater to distinct segments of
consumers, from first-timers to the most experienced users and those in between.
Our Brands Won 7 Awards in 2019
7 Canadian Cannabis Awards in 2019
Innovation of the Year: Solei Renew CBN Oil
Top Master Grower: Kevin Anderson, Head Grower
Top Hybrid Pre-roll: Sense Pre-roll
Top High CBD Bottled Oil: CBD 25:1 Oil
Top Sativa Dominant Pre-roll: Jean Guy Pre-roll
Top Indica Dominant Pre-roll: Subway Scientist Pre-roll
Top Hybrid Flower: Ruxton (Sour OG)
Our Brands Continue to Grow Sales and Gain Share Nationally (ON, AB, BC)
Top
+234% +30% +5% Premium+
Flower vs Prior vs Prior vs Prior Flower
Quarter Quarter Quarter
F20-Q4
+437% +12% ~0%
Pre-Roll vs Prior vs Prior NEW
vs Prior
Quarter Quarter LAUNCH!
Quarter
#1 Vape #4 Vape Growth in
Share TBD
Vapes Brand Brand
June 2020 June 2020 Jun vs May
2020
Source: Headset Canadian Insights for retail sales of adult-use cannabis - data represented is for provinces of ON, AB,
BC (May 2020 / June 2020)
Product Mix Evolution Into Derivative Products Supports Accretive
Margin
TINCTURES
FAST ACTING GUMMIES HARD
ENHANCERS CANDY LIQUID
FLOWER PRE-ROLLS CONCENTRATES VAPES EDIBLE OIL CAPSULES TOPICALS CHOCOLATES ENHANCER
Robust portfolio of
differentiated brands
Adult Use supports variety of product
categories & formulations
without cannibalization.
Portfolio shifts from flower
Medical
to non-inhalable
alternatives in dose-
controlled formats.
Wellness CBD-focused portfolio
In-Market
Fiscal H1 2021 In Development
Margin accretive portfolio as product mix shifts from flower to derivative products
Leverages in-house extraction R&D expertise
Value-engineering across the supply chain drives COGS down
Conversion from Illicit to Legal = Winning Canada
Formats Access Quality Price
Execution for Success in Canada
Aphria Inc. has a deliberate strategy to grow market share across Canada
Focus on strengthening Aphria’s position in Canada
Financial results set us apart from peers – adjusted EBITDA positive in last five quarters
Carefully curated brands and segments
Medical cannabis market backed by clinical research and supporting compassionate care
and veterans
Extensive distribution network in all provinces through partnerships with Shoppers Drug
Mart and Great North Distributors
Duncan
State-of-the-art facilities in Leamington, ON (Aphria One, Aphria Diamond); Duncan, BC
(Broken Coast); Brampton, ON (Avanti RX)
EU GMP certified for bulk product at Aphria One and for finished product at Avanti RX
Brampton
LeamingtonExtensive Distribution Model in Canada
Canadian retail pharmacy chain with more than
Agreement with Great North Distributors (Southern 1,300 stores in nine provinces and two territories
Glazer’s Wine & Spirits subsidiary)
Aphria Inc. was the first licensed producer to
Two-way exclusivity agreement (manufacturer and partner with Shoppers
customer) for adult-use cannabis products
throughout Canada
Provides access to Aphria’s products through
Shoppers’ wide-reaching ecommerce platform
Extensive distribution network covers 99.8% of
Canadian population Longer term – Potential to dispense in stores
throughout Canada
Partner of choice for leading cannabis distribution players in CanadaAphria Vape Portfolio: Winning with 29.34% Market Share*
Vapes are projected to represent between 20% and 30% of Adult-use cannabis sales in Canada
Approachable taste profiles for those looking for True to cannabis taste that you can use everyday High potency, 100% cannabis giving you the closest-
cannabis effects with great flavour. 13 SKUs to-cannabis experience on a vape.
20 SKUs 6 SKUs
*Source: OCS data – for the month of July 2020
Launching more than 25 new vape SKUs in FY2021Targeting a $200B+ Disruptive Global Opportunity
Figures in USD
$18B
Estimated total
Canadian cannabis
opportunity
$200B
Estimated global
cannabis opportunity
$50B $150B
Adult-Use and Medical
Medical cannabis Adult-Use
cannabis Medical only
Adult-Use and Medical (U.S.)
Medical only (U.S.)
Sources: Wall Street Research.Focused Global Strategy
Canada Germany LATAM
Canadian adult-use market One of most sought-after Population:
opportunity of $6B+ by 2024 cannabis ready markets ~18x the Canadian market (650+
MM)
Launched vape portfolio in Population:
December 2019 ~2.3x the Canadian market Market Opportunity:
(83MM) ~24x+ the Canadian medical
EU GMP certified at Aphria market due to payor
One and at Avanti Market Opportunity: reimbursement opportunity
~6x+ the Canadian medical
market due to payor Leverage additional supply
reimbursement opportunity capabilities in Canada to import
into South America on a short-
German medical market is term basis
expected to be larger than the
Canadian adult-use + medical
market combinedComprehensive Strategy to Win Germany
Multi-faceted German strategy with domestic cultivation, GMP certified facilities in Canada for
export and import license and large distribution infrastructure
Canada Germany Malta
Neümunster
Bad Bramstedt
Valetta
Densborn Densborn
Brampton
Leamington
Leamington cultivation Bad Bramstedt storage Valetta processing / distribution
Aphria One EU GMP certified State-of-the-art GMP ready cannabis vault in Bad Bramstedt for EU GMP lab ready for incremental
import of cannabis flowers and oil from Canada, Australia and processing which provides access to
Denmark international markets
Brampton processing Densborn distribution Neümunster cultivation
Avanti facility EU GMP certified Purchased CC Pharma in 2019, a Granted 5 / 13 lots for medical
leading importer and distributor to cannabis cultivation, the
more than 13,000 (out of ~19,000) maximum output from the
pharmacies in Germany German tender process
Only German tender winner with the
permission to grow all three strains
of medical cannabisLATAM: Infrastructure and Strategy
Adult-Use and Medical
Medical only
Regional hub for South America
Cultivation license through Colcanna
Colombia Partnership with Colombian Medical Federation
(community of over 70,000 doctors and
professionals)
Wholly-owned subsidiary ABP S.A., a pharmaceutical import
and distribution company
Recent government approval allowed ABP to ship,
distribute and deliver medical cannabis under the
Argentina Argentinean "Compassionate Use" national law for patients
with refractory epilepsy.
Partnership with Hospital Garrahan which recently
published favourable preliminary results in refractory
epileptic patients following treatment with Aphria products
Exclusive supply agreement with Insumos
Paraguay Medicos, S.A., to provide medical cannabisAphria Inc. Financials at a Glance
Largest Cash Balance In The Canadian Quarterly Adult-Use Sales (Millions) (CAD$)
Cannabis Industry Without The Dilution Of A 56.7
Strategic Partner
~$500 million cash as of May 31, 2020
44.7
Already Achieved Positive Adjusted EBITDA
with Strong Growth Prospects Going Forward
29.0
Fifth consecutive quarter of positive adjusted
EBITDA
20.0
18.5
Adult-use cannabis growth of 27% quarter-
over-quarter
7.2
Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
Continues to be a leader in measurable financial performanceCapital Allocation
Continuous cost
Strong liquidity
management to
with ~$500M
increase
cash(1)
profitability
Focus on
Repatriated cash by sustainable and Disciplined
profitable growth spending and
divesting non-core assets
to create value for capital allocation
shareholders
Note: All dollars in CAD unless otherwise stated.
1) As of May 31, 2020.Good Corporate Citizenship
Aphria’s social impact strategy formalized to guide company’s
investments in and commitment to community, social and environmental
impact while helping to drive overall business objectives and results.
Established Aphria’s Values, as well as a framework that allows activities to
be tracked, managed, measured and reported on the shared value being
delivered.
Entered into a charter agreement with Drug Free Kids Canada to help
educate Canadians on youth drug-use prevention.
Administered the creation of custom-made cannabis oil for Jorja
Emerson, a little girl in the UK battling life-threatening epilepsy to ensure
she receives uninterrupted treatment.
Launched Aphria’s social impact campaign, Plant Positivity, to increase
awareness about the power that plants have to improve people’s everyday
well-being.
Developed and launched a robust education campaign with stakeholders
and retailers for patients & consumers.
Environmental, Social and Governance (ESG) Benchmarking underway.
We are committed to strengthening local communities around the world,
including LATAM where we worked with the Universidad de Caldas to
complete a sociodemographic characterization and partnered with the
local government to facilitate initiatives focused on education, career
development, and health and safety.
Committed to reporting on CSR & Sustainability
initiativesOur Values
Why Values We Put People First We Respect
Matter the Earth
Values are essential to developing a shared We’re committed to the needs of our patients As a conscientious company, we pride ourselves
language to define the standards of behaviour in and consumers whether they are looking for on providing a natural product for our patients
our company. They drive and define culture and natural options for medical needs, exploring the and consumers. We’re committed to ensuring
decision-making across all parts of the business. options in wellness, or seeking alternatives to that our actions and those of our employees
their lifestyle. We’re driven by a desire to help have a positive impact on the environment
At Aphria, we’re proud of who we are, what we
stand for and where we’re going, together. others live their best life. around us, no matter where we operate.
We Lead By Example We Take
We’re passionate about pushing our industry Responsibility to
forward. Our commitment to innovation means
Heart
we’re always on the lookout for new
opportunities, that we attract those who share
We believe it is our responsibility to protect the
our outlook, and that we never stop focusing
safety of our employees, patients, consumers, and
and imagining on what’s coming next.
society. Our partnerships and programs reflect our
ongoing commitment to the safety of our
communities through education, responsible use,
and meaningful corporate citizenship.You can also read
