2019 wasn't a great year for cannabis stocks. The industry -- as measured by the Horizons Marijuana Life Sciences Index ETF -- shed about 35% of its value during the year. By contrast, the S&P 500 was up by about 30% over the same period. That being said, some pot companies performed better than others, and one of the better stocks was Aphria (NYSE:APHA), whose shares were down by just 8% in 2019.

One of the reasons behind Aphria's comparatively decent performance was the fact that unlike many of its peers, the Ontario-based pot grower recorded relatively strong financial results, particularly during the third quarter, which corresponds to Aphria's first quarter of its fiscal year 2020. Aphria will release its earnings report for the second quarter of its current fiscal year on Jan. 14, and with that in mind, here are two things investors should pay attention to when the marijuana company releases its earnings. 

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1. Distribution revenue 

Aphria has a strong presence in international markets. In particular, the company's German footprint is impressive. In early 2019, Aphria acquired CC Pharma -- which distributes medical products to about 13,000 pharmacies in Germany -- for about $21 million in cash, and additional payments of up to $26 million if certain milestones are met. Aphria also completed the German tender process and acquired five lots (the maximum allowed) to grow all three strains of cannabis approved by the relevant German authorities. The company expects to begin "supplying Germany's first domestically grown medical cannabis in early calendar 2020." Aphria's operations in Germany have contributed significantly to the company's revenue in its most recent quarters. 

During the fourth quarter of its fiscal year 2019, Aphria reported a net revenue figure of 128 million Canadian dollars ($98.4 million). Its distribution revenue (the revenue it generates via its distribution business) was about CA$99 million ($75.8 million), and CA$97 million ($74.2 million) of which came from CC Pharma. Similarly, during the first quarter of its current fiscal year, Aphria reported a net revenue figure of 126 million Canadian dollars ($96.3 million), which included distribution revenue of CA$95 million ($73 million). Once again, CC Pharma, with its revenue of CA$93.5 million ($71.5 million), accounted for almost all of Aphria's distribution revenue. When Aphria reports its second-quarter financial results, it will be interesting to find out what percentage of its total revenue its distribution revenue accounted for, and whether this revenue increased sequentially.   

2. Will Aphria be profitable once more?

Most cannabis companies aren't profitable yet. However, Aphria managed to record a net profit during its two most recent quarters. For the fourth quarter of its fiscal year 2019, Aphria's net income was CA$15.8 million ($12 million), while during the first quarter of its fiscal year 2020, Aphria recorded a net profit of 16.4 million Canadian dollars ($12.5 million).

To be fair, Aphria's positive bottom line last time around wasn't exactly due to its operations. The company benefited from fair value adjustments for the sale of inventory and the growth of biological assets of about CA$17.9 million ($13.7 million). Whether the company will manage to report another round of profitability during its second quarter is uncertain, but that is one of the things investors will want to pay close attention to when Aphria reports its financial results.

Is Aphria a buy before earnings?

Despite posting good financial results of late, I still don't think Aphria is a buy, and here's why. Though the company's distribution revenue is contributing significantly to its bottom line, this isn't a particularly high margin business for Aphria. During its latest reported quarter, Aphria's adjusted distribution margin was 12.8%, although that was up by 0.4% sequentially. Furthermore, Aphria will continue to face headwinds, including industry-specific obstacles; after all, the marijuana industry is still a bit volatile. For those reasons, I think it's best to steer clear of Aphria at the moment.