There wasn't much to be excited about the last time Canopy Rivers (CNPO.F 1.78%) (CNPO.F 1.78%) (CNPO.F 1.78%) announced its quarterly results in July. Operating income was down by 225%, and the company went from a net income of 14.6 million in Canadian dollars in the prior-year period to a net loss of CA$1.4 million.
Investors learned how Canopy Rivers performed in the first quarter on Tuesday, when the company provided a quarterly update before the market opened. Here's what you need to know about Canopy Rivers' first-quarter results.
By the numbers
Canopy Rivers announced first-quarter operating income of CA$2.68 million. This represented a 261% increase from the CA$744,000 reported in the same quarter of the previous year.
The company reported a net loss in the first quarter of CA$2.96 million, or CA$0.02 per share. This reflected an improvement from the prior-year period net loss of CA$6.6 million, or CA$0.05 per share.
Canopy Rivers ended the first quarter with cash, cash equivalents, and short-term investments totaling CA$88.75 million. This was a decrease from the CA$104.2 million on hand as of March 31, 2019.
Behind the numbers
The good news for Canopy Rivers was that its revenue from royalties, interest, and leases with companies in its investment portfolio increased from the prior-year period. Canopy Rivers attributed this increase largely to its royalty and debenture deals with Agripharm, Greenhouse Juice, JWC, and Radicle, its lease agreement with Spot Therapeutics, and its shareholder loan agreement with PharmHouse.
However, there were some other factors at play with Canopy Rivers' big jump in operating income. The company benefited from a CA$1.5 million net increase in the fair value of financial assets. This was offset in part by a CA$1 million loss from its stakes in companies including Canapar, Radicle, and PharmHouse.
Canopy Rivers' bottom line was also helped by lower spending. The company reported operating expenses in the second quarter of CA$5.8 million, down from CA$7.3 million in the prior-year period. Around CA$3.7 million of Canopy Rivers' Q1 operating expenses stemmed from share-based compensation. The company said that "a significant portion" of this expense related to options granted to nonemployees in the past. These options must be revalued at the end of each period.
There are multiple ways to invest in marijuana stocks. Canopy Rivers provides an intriguing way to do so, with its investments in a diversified portfolio of 18 cannabis-related companies. That total is likely to increase in the future.
Canopy Rivers made several investments in the first quarter that could pay off down the road. New CEO Narbe Alexandrian thinks that plant sciences and cannabis brands "are primed for real growth in the cannabis sector."
The company expects to soon move its stock listing to the Toronto Stock Exchange, which should give Canopy Rivers increased exposure to investors. It also stands to benefit as the companies in which it has invested grow.
Some analysts think that Canopy Rivers stock could double in value over the next year. It remains to be seen if that can be achieved, but the company's first-quarter results show that it's at least headed in the right direction.