Total Revenue of $51.4 Million was Flat Versus Q3 2019 and Up
2.0% Compared to Q2 2020 - Excluding Bulk Sales in the Prior Year
Period, Total Revenue Increased 25%
Total Annualized Savings of Approximately $55 Million to be
Achieved by Q4 2020
Net Loss of $(2.3) Million Versus Net Loss of $(36.4) Million in
Q3 2019 and $(81.7) Million in Q2 2020
Adjusted EBITDA Loss Narrowed to $(1.5) Million Compared to
$(12.3) Million in Q2 2020
Q3 2020 Ending Cash Balance of $155.2 Million with $209 Million
Remaining Available on ATM
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, 2020. All financial information in this press release
is reported in U.S. dollars, unless otherwise indicated.
“Our third quarter results demonstrate the significant progress
we have made throughout the organization despite the unprecedented
challenges presented by the COVID-19 pandemic. We realized solid
year over year revenue growth in our core businesses and have
achieved a significantly more focused, efficient and competitive
cost structure, all of which position Tilray for future success. We
look forward to building on these accomplishments and remain
focused on our goal of achieving break-even or positive Adjusted
EBITDA in the fourth quarter,” said Brendan Kennedy, Tilray’s Chief
Executive Officer.
Third Quarter 2020 Financial Highlights
- Total revenue of $51.4 million (C$68.1 million) was flat
compared to the third quarter of 2019. Cannabis segment revenue
decreased 11% to $31.4 million (C$41.6 million), due to the
discontinuation of bulk sales and a slight decrease in Canada
Medical sales. Adult-Use and International Medical sales grew 26%
and 42%, respectively. Excluding the year-over-year impact related
to bulk sales, total cannabis revenue increased 24%. Hemp segment
revenue increased 28% to $20.0 million (C$26.5 million).
- Total revenue increased 2% compared to the second quarter of
2020. Cannabis segment revenue increased 4%, driven by a 13%
increase in Adult-Use sales which was offset by a 11% decrease in
Canada Medical sales, a 3% decline in International Medical sales,
and a 1% decline in Hemp sales.
Three months ended
September 30,
Nine months ended
September 30,
2020
2019
$ Change
% Change
2020
2019
$ Change
% Change
Cannabis
Adult-use
$
19,926
$
15,835
$
4,091
26
%
$
58,466
$
38,758
$
19,708
51
%
Canada - medical
3,399
3,898
(499
)
(13
)%
11,285
9,222
2,063
22
%
International - medical
8,101
5,708
2,393
42
%
22,220
9,370
12,850
137
%
Bulk
—
10,010
(10,010
)
(100
)%
402
21,526
(21,124
)
(98
)%
Total Cannabis revenue
$
31,426
$
35,451
$
(4,025
)
(11
)%
$
92,373
$
78,876
13,497
17
%
Hemp
19,980
15,650
4,330
28
%
61,549
41,167
20,382
50
%
Total
$
51,406
$
51,101
$
305
1
%
$
153,922
$
120,043
$
33,879
28
%
Excise duties included in revenue
$
4,213
$
2,931
$
1,282
44
%
$
13,325
$
8,707
$
4,618
53
%
- Total cannabis kilogram equivalents sold decreased 53% to 5,107
kilograms from 10,848 kilograms in the prior year’s third quarter.
The decrease was due almost entirely to the reduction of bulk
sales.
- Average cannabis net selling price per gram increased to $6.15
(C$8.15) compared to $3.25 (C$4.32) in the third quarter of 2019
and $2.64 (C$3.59) in the second quarter of 2020. The increase was
due to a continued shift in distribution channels and product mix,
including growth in International Medical sales, a shift in sales
to higher potency and higher priced products in the Adult-Use
market, and the continued growth of Cannabis 2.0 products in
Canada.
- Average cannabis net cost per gram increased to $4.23 (C$5.61)
compared to $2.28 (C$3.03) in the third quarter of 2019 and $2.06
(C$2.80) in the second quarter of 2020. The year-over-year increase
was the result of lower kilograms sold due to the discontinuation
of bulk sales and partly due to increased sales of Cannabis 2.0
products which have higher costs than dried flower.
- Gross margin decreased to 7% from 31% in the third quarter of
2019 and increased from gross margin loss of 11% in the second
quarter of 2020.
- Gross margin, excluding inventory valuation adjustments,
increased to 33% from 31% in the third quarter of 2019 and 26% in
the second quarter of 2020.
- Gross margins for cannabis, excluding inventory valuation
adjustments, was 27% in both the third quarters of 2020 and 2019
and increased from 10% in the second quarter of 2020. The
sequential increase in gross margin was partly due to channel and
product mix and partly due to lower costs at our facilities
resulting from our cost cutting measures.
- Gross margin for hemp, excluding inventory valuation
adjustments, remained steady at 43% as compared to the third
quarter of 2019 and decreased from 50% in the second quarter of
2020.
- Net loss was $(2.3) million, or $(0.02) per share, compared to
a net loss of $(36.4) million, or $(0.37) per share, in the third
quarter of 2019 and a net loss of $(81.7) million, or $(0.66) per
share in the second quarter of 2020. The most significant driver of
the change in net loss during the period was the revaluation of the
outstanding warrants associated with the equity offering completed
in March. The warrants will continue to be revalued in future
periods which may result in ongoing and meaningful impacts to net
loss/net income.
- Adjusted EBITDA loss of $(1.5) million was a 93% improvement
compared to the $(21.9) million loss in the third quarter of 2019
and an 87% improvement compared to the $(12.3) million loss in the
second quarter of 2020. Our significant efforts to implement cost
reductions and operating efficiencies had a meaningful impact on
Adjusted EBITDA.
- Cash and cash equivalents totaled $155.2 million at the end of
the third quarter 2020. Existing cash balances, reduced cash burn,
and access to the remaining $209 million on the ATM are expected to
provide sufficient capital and access to capital to manage
operations and execute plans for the remainder of 2020 and well
into 2021.
- Construction on the Company’s Portuguese cultivation facility
remains largely on track to be completed by the end of the fourth
quarter 2020 with total costs expected to be less than the original
budget of approximately $33.0 million.
Recent Business Developments
- On October 5, 2020, our wholly-owned subsidiary, High Park
Holdings Ltd., announced the newest addition to its
cannabis-infused edible product line: Chowie Wowie Gummies. Chowie
Wowie Gummies are handcrafted using clean and simple ingredients,
are vegan and gluten free, and feature a delicious taste profile.
THC Watermelon Gummies and THC/CBD Pineapple Mango Gummies are
currently available in select provinces across Canada and a THC
Sour Cherry flavored gummy will be available in the near
future.
- On September 28, 2020, we announced that Australian researchers
published preliminary results indicating one of our GMP-produced
products may reduce nausea and vomiting for cancer patients
undergoing chemotherapy. The pilot phase of the study ran for
two-and-a-half years with 81 participants enrolled. The trial will
now move to a phase III clinical trial to determine with much more
certainty the effectiveness of medicinal cannabis to combat nausea
and vomiting and determine if it should be considered for use in
routine cancer care.
Outlook
Given the broad based improvements we have achieved through the
third quarter of 2020, we believe we are poised to deliver positive
or break even Adjusted EBITDA in the fourth quarter of 2020.
Looking to 2021 we are optimistic about the prospects for our core
businesses including:
- Canada Adult Use – we see continued opportunities to leverage
our Kindred partnership structure and focused selling strategy to
grow market share and revenues
- International Medical – the completion of our Portuguese
facility and our brand strength will allow us to strengthen our
International footprint and position Tilray for “first mover”
advantage as new international markets legalize medical and/or
recreational cannabis
- Hemp Products – our market reach will allow us to leverage the
plant based food trends in the United States and broaden our
product offerings to include CBD once the FDA provides guidance on
a nationwide basis
Our diversified product offerings and geographical footprint set
Tilray apart. These strategic advantages provide us a foundation
from which we see ample and continued opportunity to strengthen our
position as the most trusted cannabis and hemp company during
2021.
COVID-19 As COVID-19 continues to spread around the
world, and governments and businesses take unprecedented measures
in response, the actions taken, or that may be taken, have or may
materially adversely affect our business, results of operations,
financial condition and stock price. Due to COVID-19, governments
have imposed restrictions on travel and business operations,
temporarily closed businesses, and implemented quarantines and
shelter-in-place orders. Consequently, the COVID-19 pandemic has
negatively impacted global economic activity, caused significant
volatility and disruption in global financial markets, and
generally introduced significant uncertainty and unpredictability
throughout the world.
Our business has been negatively impacted during 2020, due to
the restrictions on, or temporary closure of, retail outlets, and
the challenges faced by patients accessing clinics and doctors for
prescriptions for our products and due to the vast majority of our
employees working remotely. We continue to operate our
manufacturing facilities at normal production levels while our
administrative offices remain closed. We have taken all recommended
actions to protect public health and the health and safety of
employees and continue to work on safely re-opening our offices,
subject to local rules and regulations.
We are unable to predict the future impacts of COVID-19 on our
operational and financial performance. The nature and extent of any
impacts are very uncertain and depend on many factors outside our
control, including, the timing, extent, and duration of the
pandemic, the development and availability of effective treatments
and vaccines, the imposition of protective public safety measures,
and the impact of the pandemic on the global economy and demand for
our products.
Conference Call Tilray 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 877-407-0792 from the
U.S. and 201-689-8263 internationally.
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 also be archived after the call concludes.
About Tilray® Tilray (Nasdaq: TLRY) 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 15 countries spanning five
continents.
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, the optimization of our facilities and estimated net
savings, our ability to become Adjusted EBITDA positive by the end
of 2020, demand for our products and the medical and Adult-Use
cannabis markets, anticipated plans for strategic partnerships and
acquisitions, and future sales of our common stock. 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 November 9, 2020, 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 and Adjusted Gross Margin,
both of which exclude inventory valuation adjustments, which are
financial measures that are not calculated in accordance with
generally accepted accounting principles in the United States
(“U.S. GAAP”).
Adjusted EBITDA is calculated as net income (loss) before
inventory valuation adjustments; interest expenses, net; other
expenses (income), net; deferred income tax (recoveries) expenses,
current income tax expenses (benefit); foreign exchange gain
(loss), net; depreciation and amortization expenses; stock-based
compensation expenses; loss from equity method investments; finance
income from ABG; loss on disposal of property and equipment;
amortization of inventory step-up; severance costs; impairment of
assets; and change in fair value of warrant liability. 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. Gross
margin, excluding inventory valuation adjustments, is calculated as
revenue less cost of sales adjusted to add back inventory valuation
adjustments and amortization of inventory step-up, divided by
revenue. A reconciliation of Gross margin, excluding inventory
valuation adjustments, to gross margin, the most directly
comparable GAAP measure, has been provided in the financial
statement tables included below in this press release.
The Company believes these non-GAAP financial measures provide
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 these non-GAAP
financial measures to compare the Company's performance to that of
prior periods for trend analyses and planning purposes. These
non-GAAP financial measures are 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 United States
dollars, except for share and per share data, unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2020
2019
2020
2019
Revenue
$
51,406
$
51,101
$
153,922
$
120,043
Cost of sales Product costs
34,224
35,047
108,616
85,806
Inventory valuation adjustments
13,443
201
36,116
726
Gross profit
3,739
15,853
9,190
33,511
General and administrative expenses
12,665
20,122
49,030
49,618
Sales and marketing expenses
10,000
16,974
40,709
39,161
Research and development expenses
921
2,315
2,831
4,891
Stock-based compensation expenses
8,080
8,644
23,404
22,303
Depreciation and amortization expenses
3,425
3,200
10,353
7,457
Impairment of assets
—
—
58,210
—
Acquisition-related expenses (income), net
—
(13,454
)
—
(6,566
)
Loss from equity method investments
1,420
1,837
4,495
1,837
Operating loss
(32,772
)
(23,785
)
(179,842
)
(85,190
)
Foreign exchange (gain) loss, net
(9,319
)
2,585
5,424
1,153
Change in fair value of warrant liability
(31,913
)
—
51,275
—
Interest expenses, net
10,437
8,680
30,147
26,005
Finance income from ABG
—
(210
)
—
(557
)
Other expense (income), net
(38
)
(1,116
)
4,944
(6,185
)
Loss before income taxes
(1,939
)
(33,724
)
(271,632
)
(105,606
)
Deferred income tax expenses (recoveries)
134
2,432
(4,013
)
(3,987
)
Current income tax expenses (benefit)
243
195
505
402
Net loss
$
(2,316
)
$
(36,351
)
$
(268,124
)
$
(102,021
)
Net loss per share - basic and diluted
(0.02
)
(0.37
)
(2.23
)
(1.05
)
Weighted average shares used in computation of net loss
per share - basic and diluted
129,100,909
98,130,507
120,128,856
96,742,626
Net loss
$
(2,316
)
$
(36,351
)
$
(268,124
)
$
(102,021
)
Foreign currency translation gain (loss), net
2,265
(4,863
)
(7,184
)
(2,414
)
Unrealized gain on available-for-sale debt securities
193
11
154
80
Other comprehensive income (loss)
2,458
(4,852
)
(7,030
)
(2,334
)
Comprehensive income (loss)
$
142
$
(41,203
)
$
(275,154
)
$
(104,355
)
TILRAY, INC.
Condensed Consolidated Balance
Sheets
(in thousands of United States
dollars, except for share and par value data, unaudited)
September 30, 2020 December 31, 2019
Assets Current assets Cash and cash equivalents
$
155,205
$
96,791
Accounts receivable, net of allowance for credit losses of $826 and
provision for sales returns of $1,212 (December 31, 2019 - $615 and
$1,400, respectively)
24,805
36,202
Inventory
89,917
87,861
Prepayments and other current assets
28,154
38,173
Assets held for sale
6,797
—
Total current assets
304,878
259,027
Property and equipment, net
187,630
184,217
Operating lease, right-of-use assets
18,460
17,514
Intangible assets, net
180,853
228,828
Goodwill
159,595
163,251
Equity method investments
8,911
11,448
Other investments
22,710
24,184
Other assets
4,324
7,861
Total assets
$
887,361
$
896,330
Liabilities Current liabilities Accounts payable
26,137
39,125
Accrued expenses and other current liabilities
32,526
50,829
Accrued lease obligations
3,230
2,473
Warrant liability
71,636
—
Total current liabilities
133,529
92,427
Accrued lease obligations
30,075
29,407
Deferred tax liability
48,090
53,363
Convertible notes, net of issuance costs
438,154
430,210
Senior Facility, net of transaction costs
45,944
—
Other liabilities
4,852
5,652
Total liabilities
$
700,644
$
611,059
Commitments and contingencies (refer to Note 18)
Stockholders’
equity Class 1 common stock ($0.0001 par value, 233,333,333 and
250,000,000 shares authorized, respectively; 0 and 16,666,667
shares issued and outstanding, respectively)
—
2
Class 2 common stock ($0.0001 par value; 500,000,000 shares
authorized; 133,289,944 and 86,114,560 shares issued
and outstanding, respectively)
13
9
Additional paid-in capital
911,171
705,671
Accumulated other comprehensive income
2,689
9,719
Accumulated deficit
(727,156
)
(430,130
)
Total stockholders’ equity
186,717
285,271
Total liabilities and stockholders’ equity
$
887,361
$
896,330
(in thousands of United States
dollars)
Three months ended
September 30,
Nine months ended
September 30,
2020
2019
2020
2019
Adjusted EBITDA reconciliation: Net loss
$
(2,316
)
$
(36,351
)
$
(268,124
)
$
(102,021
)
Inventory valuation adjustments
13,443
201
36,116
726
Severance costs
239
—
3,576
—
Depreciation and amortization expenses (1)
5,346
4,686
14,232
10,460
Stock-based compensation expenses
8,080
8,644
23,404
22,303
Impairment of assets
—
—
58,210
—
Loss from equity method investments
1,420
1,837
4,495
1,837
Foreign exchange (gain) loss, net
(9,319
)
2,585
5,424
1,153
Change in fair value of warrant liability
(31,913
)
—
51,275
—
Interest expenses, net
10,437
8,680
30,147
26,005
Finance income from ABG
—
(210
)
—
(557
)
(Gain) Loss from disposal of property and equipment
457
—
893
112
Other expense (income), net
2,202
(14,570
)
11,329
(12,751
)
Amortization of inventory step-up
—
—
—
2,041
Deferred income tax expenses (recoveries)
134
2,432
(4,013
)
(3,987
)
Current income tax expenses (benefit)
243
195
505
402
Adjusted EBITDA
$
(1,547
)
$
(21,871
)
$
(32,531
)
$
(54,277
)
(in thousands of United States
dollars)
For the three months ended September 30,
2020
2019
2020
2019
2020
2019
Gross margin, excluding inventory valuation adjustments
reconciliation: Cannabis Hemp Total
Revenue
$
31,426
$
35,451
$
19,980
$
15,650
$
51,406
$
51,101
Cost of sales Product costs
22,825
26,102
11,399
8,945
34,224
35,047
Inventory valuation adjustments
13,318
124
125
77
13,443
201
Gross profit
(4,717
)
9,225
8,456
6,628
3,739
15,853
Inventory valuation adjustments
13,318
124
125
77
13,443
201
Gross profit, excluding inventory valuation adjustments
$
8,601
$
9,349
$
8,581
$
6,705
$
17,182
$
16,054
Gross margin, excluding inventory valuation adjustments
27
%
26
%
43
%
43
%
33
%
31
%
For the nine months ended September 30,
2020
2019
2020
2019
2020
2019
Gross margin, excluding inventory valuation adjustments
reconciliation: Cannabis Hemp Total
Revenue
$
92,373
$
78,876
$
61,549
$
41,167
$
153,922
$
120,043
Cost of sales Product costs
74,610
62,053
34,006
23,753
108,616
85,806
Inventory valuation adjustments
31,626
610
4,490
116
36,116
726
Gross profit
(13,863
)
16,213
23,053
17,298
9,190
33,511
Inventory valuation adjustments
31,626
610
4,490
116
36,116
726
Amortization of inventory step-up
—
—
—
2,041
—
2,041
Gross profit, excluding inventory valuation adjustments
$
17,763
$
16,823
$
27,543
$
19,455
$
45,306
$
36,278
Gross margin, excluding inventory valuation adjustments
19
%
21
%
45
%
47
%
29
%
30
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201109006102/en/
Media: Tilray Media Team, +1-833-206-8161, news@tilray.com
Investors: Raphael Gross, +1-203-682-8253,
Raphael.Gross@icrinc.com
Tilray Brands (NASDAQ:TLRY)
Historical Stock Chart
From Mar 2024 to Apr 2024
Tilray Brands (NASDAQ:TLRY)
Historical Stock Chart
From Apr 2023 to Apr 2024