2015 aphria medical marijuana investor presentation
TRANSCRIPT
Forward‐Looking StatementsCertain information in this presentation constitutes forward‐looking statements under applicable securities law. Any statements that are contained in this presentation that are not statements of historical fact may be deemed to be forward‐looking statements. Forward‐looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expect”, “intend” and similar expressions. Forward‐looking statements in this presentation include, but are not limited to, statements with respect to Aphria’s intended business focus.
Forward‐looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economicconditions; adverse industry events; marketing costs; loss of markets; future legislative and regulatory developments involving medical marijuana; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the medical marijuana industry in Canada generally, income tax and regulatory matters; the ability of Aphria to implement its business strategies; competition; crop failure; currency and interest rate fluctuations and other risks.
Readers are cautioned that the foregoing list is not exhaustive. Readers are further cautioned not to place undue reliance on forward‐looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward‐looking statements contained in this presentation are expressly qualified by this cautionary statement.
Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this presentation.
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HIGHLY EXPERIENCED MANAGEMENT TEAM
Vic NeufeldChief Executive Officer
20+Years in pharma
CEO of Jamieson Laboratories 1993‐2014
Beneficial ownership: 1.3% of APH shares
Cole CacciavillaniCo‐Founder & Chief Operating Officer
35+Years in agri‐business
Greenhouse industry pioneer and veteran
First‐hand knowledge of Aphria’s greenhouses
John CerviniCo‐Founder & Chief Agronomist Officer
20+Years in agri‐business
Fourth generation greenhouse grower
Proven growth and expansion track record
Beneficial ownership: 21.9% of APH shares Beneficial ownership: 18.9% of APH shares
Demonstrated vision, growth & performance
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INVESTMENT HIGHLIGHTS
Established operations & experienced management
Low costs underpin attractive economic model
High growth industry offers significant opportunity
License to sell MMJ provides critical barrier to entry
Well capitalized
Attractive cash flow potential
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CANADIAN LICENSED MEDICAL MARIJUANA PRODUCERS
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In the Zone
WMMC
ThunderbirdBiomedical
Tilray
Canna Farms
CannimedDelta 9Bio‐Tech
OrganiGram
TweedBedrocan
Peace Naturals Project
Med ReleafMettrumAphria
Broken Coast Cannabis
HIGH GROWTH CANADIAN MMJ INDUSTRY
40,000MMJ
PatientUsers
400,000MMJ
Patient Users
2014
By 2024
$150 Million
$1.4 Billion• Canadian medical marijuana industry
(MMJ) industry expected to grow exponentially over next 10 years
– Patient users anticipated to increase from 40K to 400K
– Sales projected to grow from $150M to $1.4B
• MMJ clinics opening up across Canada
• Increasing awareness of MMJ
Source: Health Canada 6
GROWING PRODUCTION, INVENTORY AND SALES
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0.00
100.00
200.00
300.00
400.00
500.00
600.00
700.00
800.00
900.00
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
KGs produced Estimate Sales (KG) Ending Inventory
Aphria’s monthly production is estimated to reach a run rate of 110‐120 kg (2 harvests per month) by June 2015 as sales ramp commensurate with patient acquisition growth.
June 2015 inventory: ~ 550 kg
A SCALABLE LOW COST PRODUCER
OR
Labour24%
Material Input18%Overhead
43%
Packaging15%
LabourMaterial InputOverheadPackaging
Cost per gram is approximately $1.30
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~
~
~
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SIGNIFICANT OPPORTUNITIES FOR NEAR TO MID‐TERM GROWTH
1
x
1 x
2
x
3
Patient Acquisition
Increase Harvest Yields
Facility Expansion
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Dec‐14 Jan‐15 Feb‐15 Mar‐15 Apr‐15 May‐15 Jun‐15 Jul‐15 Aug‐15 Sep‐15 Oct‐15 Nov‐15
2,000‐3,000Patient
Registrations
PATIENT ACQUISITIONS: 12‐MONTH ESTIMATE
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STATE‐OF‐THE‐ART FACILITY EXPANSION
Aphria’s current licensed operating space is 30,000 sq. ft.
Current footprint provides opportunity for capability
No municipal restrictions to enlarge facilities
Only licensed producer growing 100% of MMJ in greenhouses
Greenhouses provide low cost production & tax advantages
Facility is owned and leased to Aphria by co‐founder
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FACILITY EXPANSION: 2015 SCHEDULED CAPEX
$0.8
$0.3
$2.65
$3.75
Fiscal quarter endedAug 31, 2015
Fiscal quarter endedNov 30, 2015
Fiscal quarter endedFeb 28, 2016
Fiscal quarter endedMay 31, 2016
• January 1, 2015 cash position: ~$10.0 million
• Plans to quadruple production capacity to 100,000 sq. ft.
• Estimated cost of expansion: $7.5 million
• Facility expansion scheduled to be completed 12 months from start date
2015 Capital Expenditure Schedule ($M)
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‐$2,000,000.00
‐$1,500,000.00
‐$1,000,000.00
‐$500,000.00
$0.00
$500,000.00
$1,000,000.00
Operating Cash Flow12‐Month Period Ending November 30, 2015
Unsual Expenses
Regular Operating Cashflows
CASH FLOW BREAK EVEN EXPECTED IN BY END OF 2015 (EXCLUDES CAPEX)
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Fiscal quarter ended February 28, 2015
Late 2015Fiscal quarter ended May 31, 2015*
Fiscal quarter ended November 30, 2015
Note: Aphria’s fiscal year end is May 31, 2015
A FUTURE FULL OF OPPORTUNITIES
Increased Yields
Patient Acquisition
Facility Expansion
Changes in Regulations
ConsolidationGeographic Expansion
Near to Mid‐term• Patient acquisition• Increased yields• Facility expansion
Mid to Long‐term• Changes in regulatory environment
– Edibles & oil– Legalization of recreational use
• Geographic expansion• Industry consolidation
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CAPITAL STRUCTURE
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Amount Percentage NotesCommon Shares Outstanding 52,479,587 69.5%
Warrants ‐ Financing Round @ $1.20 5,173,127 6.8% Expire June 3, 2016 Broker Warrants ‐ RTO @ $1.10 802,268 1.1% Expire December 2, 2016 Compensation Warrants @ $0.60 618,333 0.8% Expire June 3, 2019 Stock Options @$0.60 2,600,000 3.4% Expire June 2, 2019 Stock Options @$1.10 1,550,000 2.1% Expiries range from Oct 2017 to Aug 2019 Warrants ‐ RTO @ $1.50 11,500,000 15.2% Expire December 2, 2019 Broker Warrants ‐ RTO @ $1.50 802,268 1.1% Expire December 2, 2019
Fully Diluted Shares 75,525,583 100.0%
Aphria Inc.
P.O. Box 20009 269 Erie St. South
Leamington, Ontario N8H 3C0
[email protected]‐844‐427‐4742