Revenue Rises 110.0% to $43.1 (C$56.4) Million in 2018Strategic
Partnerships and Acquisitions Position Tilray to Accelerate Global
Sales Growth and Drive Long-Term Shareholder Value
Tilray, Inc., (“Tilray” or the “Company”) (Nasdaq: TLRY) a
global leader in cannabis research, cultivation, production and
distribution, today reported financial results for the fourth
quarter and year ended December 31, 2018. All financial information
in this press release is reported in U.S. dollars, unless otherwise
indicated.
“2018 was a very successful year for Tilray with many corporate
milestones. Our team made significant progress on our long-term
initiatives including increasing production capacity, expanding and
strengthening strategic partnerships, and acquiring complementary
businesses to accelerate our future growth and leadership position
in medical and adult-use cannabis,” commented Brendan Kennedy,
President and Chief Executive Officer of Tilray. “Looking ahead, we
remain committed to pursuing global growth opportunities and will
be disciplined in deploying capital, particularly in the United
States and Europe, where we believe we have multiple paths for
value creation.”
2018 Financial Highlights
- Revenue increased to $43.1 (C$56.4)
million, up 110.0% compared to last year. The increase in revenue
was driven by bulk sales, the inaugural sales for the Canadian
adult-use market and accelerated wholesale distribution in export
markets.
- Total kilogram equivalents sold
increased over two-fold to 6,478 kilograms from 3,024 kilograms in
the prior year.
- Average net selling price per gram
increased to $6.61 (C$8.59) compared to $6.52 (C$8.42) in the prior
year. In 2018, there was significant revenue growth for extract
products compared to dried flower, where extracts represented 49%
of the sales mix in 2018 compared to 20% in 2017.
- Net loss for the year was $67.7
million, or $0.82 per share, compared to $7.8 million, or $0.10 per
share, for 2017. Net loss includes non-cash stock-based
compensation charges of $21.0 million compared to a $0.1 million
charge in the prior-year. Adjusted EBITDA was a loss of $33.1
million compared to a loss of $5.5 million the prior year. The
increased net loss and Adjusted EBITDA declines were primarily due
to the increase in operating expenses related to continued growth,
expansion of international teams, and costs related to financings
and the initial public offering (“IPO”). See “Use of Non-U.S. GAAP
Financial Measures.”
Fourth Quarter 2018 Financial Highlights
- Revenue increased to $15.5 (C$20.9)
million, up 203.8% compared to the fourth quarter of last year,
driven by bulk sales, inaugural sales in the Canadian adult-use
market and accelerated wholesale distribution in export
markets.
- Total kilogram equivalents sold
increased almost three-fold to 2,053 kilograms from 694 kilograms
in the prior year period.
- Average net selling price per gram
increased to $7.52 (C$10.05) compared to $7.13 (C$9.12) in the
prior year period.
- Net loss for the quarter was $31.0
million or $0.33 per share compared to $3.0 million or $0.04 per
share for the prior year period. Net loss includes non-cash
stock-based compensation charges of $4.1 million compared to $34
thousand in the prior year period. Adjusted EBITDA was a loss of
$17.8 million compared to a loss of $2.1 million 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 costs
related to financings and M&A activities.
Business Highlights
- Expanded strategic alliance with
Sandoz, a Novartis Division, globally to increase access to medical
cannabis products to patients in need across the world.
- Announced research and development
partnership with AB InBev focused on non-alcohol THC and CBD
beverages. Each company intends to invest up to $50 million, for a
total of up to $100 million.
- Announced a long-term revenue sharing
agreement with Authentic Brands Group (“ABG”) to leverage their
portfolio of brands and develop, market and distribute consumer
cannabis products across the world. This global partnership will
focus on CBD products in the United States and THC/CBD products in
Canada, and elsewhere as regulations permit.1
- Acquired Manitoba Harvest, a hemp and
natural foods producer in Winnipeg, Manitoba, for up to $317
(C$419) million, subject to certain revenue milestones. Manitoba
Harvest distributes its products to over 16,000 retail locations in
the United States and Canada.2
- Acquired Natura Naturals Holdings Inc.,
a licensed cannabis cultivation facility in Leamington, Ontario,
for up to $53.4 (C$70.0) million, subject to certain cultivation
milestones.3
- Invested $5.7 (C$7.5) million in
Quebec-based cannabis producer ROSE Lifescience Inc. and entered
into a sale, supply, distribution, and marketing agreement for ROSE
to deliver adult-use cannabis products in Québec.
- Acquired Alef Biotechnology SpA, a
licensed cannabis company in Chile, which will allow Tilray to
import, produce and distribute Tilray branded medical cannabis
throughout Latin America.
- Signed Supply Agreement for
Hemp-Derived CBD from LiveWell Canada, which will be sourced from
the United States and Canada and be used for wellness and medical
products across North America.
- Partnered with researchers at the
Lambert Initiative for Cannabinoid Therapeutics at the University
of Sydney to complete a study examining the effects of cannabis on
driving and cognitive function.
- Formed an International Advisory Board
to provide guidance to the Company’s executive team and Board of
Directors on global expansion.
- Expanded global senior leadership team
with six strategic hires: Andrew Pucher as Chief Corporate
Development Officer; Greg Christopher as EVP of Operations; Rita
Seguin as EVP of Human Resources; Dara Redler as General Counsel;
Charlie Cain as VP of Retail; and Sascha Mielcarek as Managing
Director Europe.4
- Completed a successful harvest of
medical cannabis at the Company’s European Union campus in Portugal
and expect multiple harvests in the coming months.5
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 United States and
629-228-0736 internationally. A telephone replay will be available
approximately two hours after the call concludes through Monday,
April 1, 2019, by dialing 855-859-2056 from the United States, or
404-537-3406 from international locations and entering confirmation
code 6093459.
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 twelve
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, demand for our
products and the medical and adult-use cannabis markets and
anticipated plans for strategic partnerships. 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 14, 2018, 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 recovery, tax expense; foreign exchange (gain)
loss; depreciation and amortization; and stock-based compensation
expense. 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.
____________________________
1 Announced January 14, 20192 Announced February 20, 20193
Announced February 19, 20194 Announcements made on January 31,
2019, February 7, 2019 and March 18, 20195 Announced March 6,
2019
TILRAY, INC.
Consolidated Statements of Net Loss and Comprehensive Loss
(in thousands of U.S. dollars, except for per share data)
Three months ended Twelve
months ended
December 31, December 31, 2018 2017
2018 2017 Revenue $ 15,531 $ 5,113 $ 43,130 $ 20,538
Cost of sales 12,397 2,179
28,855 9,161 Gross margin 3,134
2,934 14,275 11,377
Research and development expenses 1,848 739 4,264 3,171 Sales and
marketing expenses 6,305 3,252 15,366 7,164 General and
administrative expenses 13,778 1,521 31,307 8,401 Stock-based
compensation expense 4,111 34
20,988 139 Operating loss (22,908 )
(2,612 ) (57,650 ) (7,498 ) Foreign exchange
loss (gain), net 6,321 55 7,234 (1,363 ) Interest expense, net
7,717 258 9,110 1,686 Other (income) expense, net (1,398 )
3 (1,820 ) (12 ) Loss before income
taxes (35,548 ) (2,928 ) (72,174 ) (7,809 ) Deferred income tax
recovery (4,485 ) — (4,485 ) — Current income tax (recovery)
expense (53 ) — 34 —
Net loss $ (31,010 ) $ (2,928 ) $ (67,723 ) $ (7,809 ) Net
loss per share - basic and diluted (0.33 ) (0.04 ) (0.82 ) (0.10 )
Weighted average shares used in computation of net loss per share -
basic and diluted 93,169,688 75,000,000 83,009,656 75,000,000 Net
loss $ (31,010 ) $ (2,928 ) $ (67,723 ) $ (7,809 ) Foreign currency
translation gain 127 523 662 282 Loss on investments classified as
available-for-sale (765 ) — (765 )
— Comprehensive loss $ (31,648 ) $ (2,405 ) $ (67,826
) $ (7,527 )
TILRAY, INC. Consolidated
Balance Sheets (in thousands of U.S. dollars, except for per
share data) December 31, December
31, 2018 2017 Assets Current assets Cash
and cash equivalents $ 487,255 $ 2,323 Short-term investments
30,335 — Accounts receivable, net of allowance of $292 and $8 as of
December 31, 2018 and 2017, respectively 16,525 983 Other
receivables 969 1,131 Inventory 16,211 7,421 Prepaid expenses and
other current assets 3,007 545 Total
current assets 554,302 12,403 Property
and equipment, net 80,214 39,985 Intangible assets, net 4,486 934
Investments 16,911 — Deposits and other assets 754
626 Total assets $ 656,667 $ 53,948
Liabilities Current liabilities: Accounts payable $ 10,649 $
5,563 Accrued expenses and other current liabilities 14,818 2,021
Accrued obligations under capital lease 470 379 Current portion of
long-term debt — 9,432 Privateer Holdings debt facilities —
32,826 Total current liabilities 25,937
50,221 Accrued obligations under capital lease
8,286 8,579 Deferred tax liability 4,424 — Convertible senior notes
due 2023, net of issuance costs 420,367 —
Total liabilities $ 459,014 $ 58,800
Stockholders’ equity (deficit) Class 1 common stock ($0.0001
par value, 250,000,000 shares authorized and 16,666,667 shares
issued and outstanding at December 31, 2018; none authorized,
issued or outstanding at December 31, 2017) 2 — Class 2 common
stock ($0.001 par value; 500,000,000 shares authorized and
76,504,200 shares issued and outstanding at December 31, 2018; none
authorized, issued or outstanding at December 31, 2017) 8 — Capital
stock (none authorized, issued or outstanding at December 31, 2018;
1 share authorized, issued and outstanding
at December 31, 2017)
— — Additional paid-in capital 302,057 31,736 Accumulated other
comprehensive income 3,763 3,866 Accumulated deficit
(108,177 ) (40,454 ) Total stockholders’ equity (deficit)
197,653 (4,852 )
Total liabilities and
stockholders’ equity (deficit) $ 656,667 $ 53,948
Three Months Ended Twelve Months
Ended December 31, December 31, 2018
2017 2018 2017 Adjusted
EBITDA reconciliation: Net loss $ (31,010 ) $ (2,928 ) $
(67,723 ) $ (7,809 ) Stock-based compensation expense 4,111 34
20,988 139 Foreign exchange loss (gain), net 6,321 55 7,234 (1,363
) Interest expense, net 7,717 258 9,110 1,686 Other (income)
expense, net (1,398 ) 3 (1,820 ) (12 ) Deferred income tax recovery
(4,485 ) — (4,485 ) — Current income tax (recovery) expense (53 ) —
34 — Depreciation and amortization 1,009 452
3,562 1,853 Adjusted EBITDA $
(17,788 ) $ (2,126 ) $ (33,100 ) $ (5,506 )
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190318005756/en/
Media: Chrissy Roebuck, +1-833-206-8161,
news@tilray.comInvestors: Katie Turner, +1-646-277-1228,
katie.turner@icrinc.com
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