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It is all about earnings in the early hours of this Tuesday morning in marijuana. Supreme Cannabis is raising expectations ahead of its Q4 results due next month while MediPharm Labs and Village Farms International both exceeded analyst expectations with profitable results released after markets closed Monday.

– Jameson Berkow

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Supreme Cannabis raises Q4 expectations

More than a month before Supreme Cannabis plans to release fourth quarter results, the Toronto-based licenced producer said Tuesday the company is on course to double Q4 revenues and turn a profit in 2020.

Supreme generated $19-million in total revenue for the three-month period that ended on June 30, which compares to less than $10-million generated in the previous quarter and analyst expectations of 12.7-million in Q4. The company also said it intends to report positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) during the quarter.

While it did not specify the level of Q4 profit investors should expect when Supreme releases its complete and audited quarterly financials on September 17, analysts are currently forecasting Supreme will report negative adjusted EBITDA of roughly $2-million in Q4.

“Our company has taken deliberate steps to grow in a focused, responsible and compliant manner,” CEO Navdeep Dhaliwal said in the release. “In a sector dominated by headlines, our measures approach to capital deployment and brand-building sets us apart.”

Supreme also disclosed outlook for its 2020 fiscal year, setting revenue expectations between $150-million and $180-million with positive adjusted EBITDA on aggregate over the course of the full 12 month period. The company also said it no longer intends to pursue a 5-to-1 share consolidation plan that was approved at its most recent shareholder meeting.

Aurora revises down Q4 2019 expectations, analysts maintain positive outlooks

Supreme is also not the first cannabis company to preempt its latest quarterly earnings. Edmonton-based Aurora Cannabis released its own Q4 outlook last week, but with the intention of ratcheting expectations down instead of up.

– Jameson Berkow

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Pot extractor MediPharm Labs post Q2 profit ahead of Cannabis 2.0

Cannabis extractor MediPharm Labs on Monday reported its revenue at more than $31-million and a 4-million profit in the second quarter of 2019 as the industry prepares for the legalization of marijuana derivative products such as vaporizers and edibles.

The profitable quarter came as many companies operating in other parts of the cannabis supply chain, such as licensed producers and retailers, continue to expand business operations and report quarterly losses despite surging revenues.

MediPharm Labs, which is headquartered in Barrie, Ont., specializes in cannabis extraction, distillation, purification and cannabinoid isolation, and said its revenue for the three-month period ended June 30 was $31.5 million. This was up 43 per cent from the first quarter of 2019. Net income before tax for the second quarter reached $4.1 million compared with a net loss of $300,000 in the first quarter.

Products made from extracted cannabis are set to be legalized later this year, with industry expectations for these new products to be on retail shelves by December 2019 or January 2020.

During the second quarter, MediPharm secured an agreement to supply Cronos Group with roughly $30 million of cannabis concentrate over 18 months with the potential to double this to $60 million over 24 months, it said.

In June, MediPharm procured 9,000 kilograms of dried cannabis for process and sale in the third quarter of 2019. Its annual capacity in Canada rose to 300,000 kg and is expected to increase to more than 500,000 kg later this year, MediPharm reported.

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MediPharm is also active in Australia, where it has a manufacturing licence and is constructing an extraction facility. It said it also exported medical cannabis concentrate to AusCann there.

– Marcy Nicholson

Village Farms cannabis JV has third straight profitable quarter

Greenhouse operator Village Farms International is getting even more profit from its cannabis business.

The Vancouver-based company, which primarily grows vegetables in its greenhouses, announced second quarter results late Monday that included record sales of dried cannabis produced from its 1.1 million square foot facility in British Columbia’s lower mainland. Pure Sunfarms, the 50/50 joint venture Village Farms operates on behalf of Victoria, B.C.-based licenced cannabis producer Emerald Health Therapeutics, sold $32.4-million worth of dried cannabis on a wholesale basis to other LPs during Q2.

Earnings before interest, taxes, depreciation and amortization (EBITDA) nearly doubled from Q1 to $25.2-million for Pure Sunfarms, which is split down the middle between Emerald and Village Farms. The positive EBITDA represented the third consecutive profitable quarter for the Pure Sunfarms JV.

All-in cost of production came in at $0.65 per gram, which is near the lowest among Canadian cannabis cultivators, resulting in a gross margin of 84 per cent.

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Village Farms also received a cannabis processing licence from Health Canada during Q2, which “will enable the development and manufacture of products derived from the cannabis plant, including cannabis oil, as well as concentrates and edibles, as regulations permit,” the company said in a release. The company also anticipates receipt of a sales licence soon, which will enable direct sales to provincial distributors such as the Ontario Cannabis Store, with which the company already has a supply agreement in place.

Part of the JV agreement entitles Emerald to purchase up to 40 per cent of Pure Sunfarms’ production. That would equate to roughly 30,000 kg of dried cannabis per year, based on the facility’s annual run rate of 75,000 kg. However, Village Farms said in its Q2 release that “recently Emerald... has been electing not to fully exercise its right.”

“Pure Sunfarms has sold, and continues to sell, all portions of the production that Emerald did not purchase to other licenced producers in the spot market," the company said, "where it has been realizing pricing in excess of the predetermined selling price to Emerald.”

– Jameson Berkow

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