Revenue Increased 409% to $51.1 (C$67.8) Million in the Third
Quarter of 2019 Compared to the Prior Year Period
International Medical Revenue Grew More Than Five-Fold Compared
to the Prior Year Period
Tilray, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY), a
global pioneer in cannabis research, cultivation, production and
distribution, reports financial results for the third quarter ended
September 30, 2019. All financial information in this press release
is reported in U.S. dollars, unless otherwise indicated.
“Our performance in the third quarter, including solid revenue
growth and sequential gross margin expansion, reflects the positive
business trends we have underway,” said Brendan Kennedy, Tilray’s
President and Chief Executive Officer. “We are in the early days of
seeing our strategic initiatives bear fruit – including our
European expansion, brand portfolio evolution and strategic
partnership product launches. We continue to expect significant
growth in the fourth quarter and into 2020.”
He continued, “Beyond that, our strong global infrastructure and
supply chain are a critical competitive advantage and our team is
focused on maximizing the substantial opportunity we have to
deliver long-term, sustainable value to our shareholders.”
Third Quarter 2019 Financial Highlights
- Revenue increased 408.6% to $51.1 million (C$67.8 million),
compared to the third quarter of last year, driven by the Canadian
adult-use market, the Manitoba Harvest acquisition, and growth in
international medical markets as a result of the first GMP
certification of the Portugal facility. Excluding excise tax,
revenue was $48.2 (C$64.1) million.
Three months ended September
30,
Nine months ended September
30,
2019
2018
$ Change
% Change
2019
2018
$ Change
% Change
Adult-use
$
15,834
$
—
$
15,834
N/A
$
38,756
$
—
$
38,756
N/A
ACMPR (direct to patient & bulk)
13,909
9,098
4,811
53
%
30,750
25,743
5,007
19
%
Hemp products
15,650
—
15,650
N/A
41,167
—
41,167
N/A
International - medical
5,708
949
4,759
501
%
9,370
1,856
7,514
405
%
Total revenue
$
51,101
$
10,047
$
41,054
409
%
$
120,043
$
27,599
$
92,444
335
%
Excise tax included in revenue
$
2,931
$
—
$
2,931
N/A
$
8,707
$
—
$
8,707
N/A
- Total kilogram equivalents sold increased over six-fold to
10,848 kilograms from 1,613 kilograms in the prior year
period.
- Average net selling price per gram decreased to $3.25 (C$4.32)
compared to $6.21 (C$8.26) in the prior year period. The average
net selling price excluding excise taxes for adult-use was $2.98
(C$3.96) per gram for the third quarter of 2019. The decrease was
due to a shift in product and channel mix.
- Gross margin increased sequentially to 31% from 27% in the
prior quarter and was flat compared to the third quarter of
2018.
- Net loss for the quarter was $35.7 million or $0.36 per share
compared to a loss of $18.7 million or $0.20 per share for the
prior year period. Adjusted EBITDA was a loss of $23.5 million
compared to a loss of $7.4 million in the prior year period. The
increased net loss and Adjusted EBITDA declines were primarily due
to the increase in operating expenses related to growth
initiatives, expansion of international teams, and the addition of
Manitoba Harvest and Natura businesses.
Business Highlights
- Signed definitive agreement with Privateer Holdings, Inc. to
extend lock-up for up to two years and provide for orderly release
of the 75 million Tilray common shares held by Privateer Holdings,
Inc.
- Announced definitive agreement to acquire 420 Investments Ltd.
(“FOUR20”), an adult-use cannabis retail operator headquartered in
Calgary, Alberta. The transaction is expected to close by the end
of the first quarter of 2020.
- Significant capacity expansion:
- Increased international export capacity with an additional 20
hectares (50 acres) of outdoor cultivation space in Portugal
through a Definitive Agreement with Esporão, one of the largest and
most sophisticated agricultural businesses in Portugal. This
agreement expands Tilray’s total production and manufacturing
footprint to 3.4 million square feet worldwide.
- Key international market developments:
- Exported first shipment of medical cannabis from EU Campus in
Portugal to Germany to supply patients in need.
- Imported GMP-certified finished medical cannabis oil solutions
into Ireland for nationwide distribution under the Medical Cannabis
Access Programme.
- Expanding our brand portfolio:
- Fluent Beverage Company, a joint venture between Anheuser‐Busch
InBev and Tilray through subsidiaries Labatt Breweries of Canada
and High Park, announced plans to distribute CBD Beverages in
Canada in December 2019 once regulations allow.1
- High Park™, a subsidiary of Tilray, Inc., unveiled the second
phase of its adult-use product portfolio set to launch throughout
Canada over the course of the next year as permitted by
regulations. The expanded broad-based portfolio includes innovative
cannabis products and formats, including CBD beverages, edibles,
and vape products.2
- Acquired Smith & Sinclair, an innovative U.K.-based
confectionary company that will introduce CBD-infused consumer
products under the brand, Pollen, in the U.S. and U.K. within
applicable regulations.
- Clinical research developments:
- Imported medical cannabinoids into the United States to support
two clinical trials led by NYU School of Medicine for patients with
Alcohol Use Disorder and Post-Traumatic Stress Disorder.
- Imported medical cannabis into the United States from Canada
for a new clinical trial evaluating the efficacy of medical
cannabis as a treatment for taxane-induced peripheral neuropathy
(TIPN) secondary to treatment with paclitaxel or docetaxel.3 TIPN
affects more than 67 percent of women undergoing breast cancer
treatment.
Conference Call
The Company will host a conference call to discuss these results
today at 5:00 p.m. ET. Investors interested in participating in the
live call can dial 877-489-6528 from the U.S. and 629-228-0736
internationally. A telephone replay will be available approximately
two hours after the call concludes through Tuesday, November 26,
2019, by dialing 855-859-2056 from the U.S., or 404-537-3406 from
international locations, and entering confirmation code
7038019.
There will also be a simultaneous, live webcast available on the
Investors section of the Company’s website at www.tilray.com. The
webcast will be archived for 30 days.
About Tilray®
Tilray is a global pioneer in the research, cultivation,
production and distribution of cannabis and cannabinoids currently
serving tens of thousands of patients and consumers in 13 countries
spanning five continents.
1 Announced October 10, 2019 2 Announced October 16, 2019 3
Announced October 24, 2019
Forward Looking Statements
This press release contains “forward-looking statements”, which
may be identified by the use of words such as, “may”, “would”,
“could”, “will”, “likely”, “expect”, “anticipate”, “believe,
“intend”, “plan”, “forecast”, “project”, “estimate”, “outlook” and
other similar expressions, including statements regarding our
growth potential, the sustainability of growth, demand for our
products and the medical and adult-use cannabis markets,
anticipated plans for strategic partnerships and acquisitions, and
the closing of the downstream merger with Privateer Holdings, Inc.
Forward-looking statements are not a guarantee of future
performance and are based upon a number of estimates and
assumptions of management in light of management’s experience and
perception of trends, current conditions and expected developments,
as well as other factors that management believes to be relevant
and reasonable in the circumstances, including assumptions in
respect of current and future market conditions. Actual results,
performance or achievement could differ materially from that
expressed in, or implied by, any forward-looking statements in this
press release, and, accordingly, you should not place undue
reliance on any such forward-looking statements and they are not
guarantees of future results. Forward-looking statements involve
significant risks, assumptions, uncertainties and other factors
that may cause actual future results or anticipated events to
differ materially from those expressed or implied in any
forward-looking statements. Please see the heading “Risk Factors”
in Tilray’s Quarterly Report on Form 10-Q, which was filed with the
Securities and Exchange Commission on August 13, 2019, for a
discussion of the material risk factors that could cause actual
results to differ materially from the forward-looking information.
Tilray does not undertake to update any forward-looking statements
that are included herein, except in accordance with applicable
securities laws.
Use of Non-U.S. GAAP Financial Measures
To supplement its financial statements, the Company provides
investors with information related to Adjusted EBITDA, which is not
a financial measure calculated in accordance with generally
accepted accounting principles in the United States (“U.S. GAAP”).
Adjusted EBITDA is calculated as net income (loss) before interest
expense, net; other income, net; deferred income tax expense
(recovery), current income tax expense; foreign exchange loss
(gain), net; depreciation and amortization expense; stock-based
compensation expense; acquisition-related (income) expense; and
amortization of inventory step-up. A reconciliation of Adjusted
EBITDA to net loss, the most directly comparable GAAP measure, has
been provided in the financial statement tables included below in
this press release. The Company believes Adjusted EBITDA provides
useful information to management and investors regarding certain
financial and business trends relating to the Company’s financial
condition and results of operations. Management uses Adjusted
EBITDA to compare the Company's performance to that of prior
periods for trend analyses and planning purposes. Adjusted EBITDA
is also presented to the Company’s Board of Directors.
Non-U.S. GAAP measures should not be considered a substitute
for, or superior to, financial measures calculated in accordance
with U.S. GAAP. Non-U.S. GAAP measures exclude significant expenses
that are required by U.S. GAAP to be recorded in the Company's
financial statements and are subject to inherent limitations.
TILRAY, INC.
Condensed Consolidated
Statements of Net Loss and Comprehensive Loss
(in thousands of U.S. dollars,
except for share and per share data, unaudited)
Three months ended September
30,
Nine months ended September
30,
2019
2018
2019
2018
Revenue
$
51,101
$
10,047
$
120,043
$
27,599
Cost of sales
35,248
6,979
86,532
16,458
Gross profit
15,853
3,068
33,511
11,141
General and administrative expense
19,978
7,001
49,240
16,488
Sales and marketing expense
16,974
3,493
39,161
9,061
Depreciation and amortization expense
3,190
529
7,438
1,032
Stock-based compensation expense
8,315
11,245
21,206
16,877
Research and development expense
2,315
802
4,891
2,416
Loss from equity method investments
1,837
—
1,837
—
Acquisition-related (income) expense,
net
(13,454
)
10
(6,598
)
10
Operating loss
(23,302
)
(20,012
)
(83,664
)
(34,743
)
Foreign exchange loss (gain), net
2,585
(1,591
)
1,153
913
Interest expense, net
8,687
480
26,018
1,393
Finance income from ABG Profit
Participation Arrangement
(210
)
—
(557
)
—
Other income, net
(1,313
)
(225
)
(5,661
)
(422
)
Loss before income taxes
(33,051
)
(18,676
)
(104,617
)
(36,627
)
Deferred income tax expense (recovery)
2,432
—
(3,987
)
—
Current income tax expense
195
24
402
87
Net loss
$
(35,678
)
$
(18,700
)
$
(101,032
)
$
(36,714
)
Net loss per share - basic and diluted
(0.36
)
(0.20
)
(1.04
)
(0.39
)
Weighted average shares used in
computation of net loss per
share - basic and diluted
98,130,507
93,144,042
96,742,626
93,144,042
Net loss
$
(35,678
)
$
(18,700
)
$
(101,032
)
$
(36,714
)
Foreign currency translation loss
(4,863
)
(451
)
(2,414
)
(538
)
Unrealized (loss) gain on cash equivalents
and investments
(301
)
—
345
—
Other comprehensive loss
(5,164
)
(451
)
(2,069
)
(538
)
Comprehensive loss
$
(40,842
)
$
(19,151
)
$
(103,101
)
$
(37,252
)
TILRAY, INC.
Condensed Consolidated Balance
Sheets
(in thousands of U.S. dollars,
except for share and par value data, unaudited)
September 30, 2019
December 31, 2018
Assets
Current assets
Cash and cash equivalents
$
100,159
$
487,255
Short-term investments
22,213
30,335
Accounts receivable, net of allowance for
doubtful accounts of $612 and $292, respectively
36,040
16,525
Other receivables
2,886
969
Inventory
110,487
16,211
Prepaid expenses and other current
assets
58,895
3,007
Total current assets
330,680
554,302
Property and equipment, net
166,489
80,214
Intangible assets, net
329,928
4,486
Goodwill
163,041
—
Investments
42,318
16,911
Deposits and other assets
7,744
754
Total assets
$
1,040,200
$
656,667
Liabilities
Current liabilities
Accounts payable
58,688
10,649
Accrued expenses and other current
liabilities
71,387
14,818
Accrued obligations under capital
lease
127
470
Total current liabilities
130,202
25,937
Accrued obligations under capital
lease
9,166
8,286
Deferred tax liability
57,100
4,424
Convertible Notes, net of issuance
cost
427,983
420,367
Total liabilities
$
624,451
$
459,014
Stockholders’ equity
Class 1 common stock ($0.0001 par value,
250,000,000 shares authorized;
16,666,667 shares issued and
outstanding)
2
2
Class 2 common stock ($0.0001 par value;
500,000,000 shares authorized;
83,605,076 and 76,504,200 shares issued
and outstanding, respectively
8
8
Additional paid-in capital
623,254
302,057
Accumulated other comprehensive income
1,694
3,763
Accumulated deficit
(209,209
)
(108,177
)
Total stockholders’ equity
415,749
197,653
Total liabilities and stockholders’
equity
$
1,040,200
$
656,667
Three months ended September
30,
Nine months ended September
30,
2019
2018
2019
2018
Adjusted EBITDA reconciliation:
Net loss
$
(35,678
)
$
(18,700
)
$
(101,032
)
$
(36,714
)
Depreciation and amortization expense
4,686
1,404
10,441
2,552
Stock-based compensation expense
8,315
11,245
21,206
16,877
Acquisition-related (income) expense,
net
(13,454
)
10
(6,598
)
10
Foreign exchange loss (gain), net
2,585
(1,591
)
1,153
913
Interest expense, net
8,687
480
26,018
1,393
Other income, net
(1,313
)
(225
)
(5,661
)
(422
)
Amortization of inventory step-up
—
—
2,041
—
Deferred income tax expense (recovery)
2,432
—
(3,987
)
—
Current income tax expense
195
24
402
87
Adjusted EBITDA
$
(23,545
)
$
(7,353
)
$
(56,017
)
$
(15,304
)
Three months ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Adjusted net loss
reconciliation:
Net loss
$
(35,678
)
$
(18,700
)
$
(101,032
)
$
(36,714
)
Acquisition-related (income) expense,
net
(13,454
)
10
(6,598
)
10
Amortization of inventory step-up
—
—
2,041
—
Adjusted net loss
$
(49,132
)
$
(18,690
)
$
(105,589
)
$
(36,704
)
Adjusted net loss per share - basic and
diluted
(0.50
)
(0.20
)
(1.09
)
(0.39
)
Weighted average shares used in
computation of adjusted net loss per share - basic and diluted
98,130,507
93,144,042
96,742,626
93,144,042
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191112005953/en/
Media, Global: Chrissy Roebuck, +1-833-206-8161, news@tilray.com
Investors: Rachel Perkins, +1-646-277-1221,
rachel.perkins@icrinc.com
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