Revenue Rises 371.1% to $45.9 (C$60.9) Million in the Second
Quarter Compared to the Prior Year Period
Canadian Adult-Use Revenue Nearly Doubles to $15.0 (C$20.0)
Million Compared to Prior Quarter
Key Investments Made in Europe and the U.S. as Part of Ongoing
Focus on Global Expansion
Tilray, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY), a
global pioneer in cannabis research, cultivation, production and
distribution, today reported financial results for the second
quarter ended June 30, 2019. All financial information in this
press release is reported in U.S. dollars, unless otherwise
indicated.
“We are pleased with our second quarter results and strong
business momentum,” said Brendan Kennedy, Tilray President and
Chief Executive Officer. “Our team has executed against our plan,
with adult-use revenue nearly doubling in the second quarter
compared to the first quarter and gross margin increasing
sequentially for the second quarter in a row. As we continue to
grow, we remain focused on our long-term strategic objectives and
deploying capital to maximize stockholder value.”
Second Quarter 2019 Financial Highlights
- Revenue increased 371.1% to $45.9 (C$60.9) million, compared to
the second quarter of last year, driven by the Manitoba Harvest
acquisition, the legalization of the Canadian adult-use market, and
growth in international medical markets, particularly in Europe.
Excluding excise tax, revenue was $42.0 (C$55.8) million.
Three months ended June
30,
Six months ended June
30,
2019
2018
$ Change
% Change
2019
2018
$ Change
% Change
Adult-use
$
15,041
$
—
$
15,041
N/A
$
22,922
$
—
$
22,922
N/A
ACMPR (direct to patient & bulk)
9,078
9,267
(189
)
(2
)%
16,841
16,645
196
1
%
Food products
19,935
—
19,935
N/A
25,517
—
25,517
N/A
International - medical
1,850
477
1,373
288
3,662
907
2,755
304
Total revenue
$
45,904
$
9,744
$
36,160
371
%
$
68,942
$
17,552
$
51,390
293
%
Excise tax included in revenue
$
3,862
$
—
3,862
N/A
$
5,776
$
—
5,776
N/A
- Total kilogram equivalents sold more than tripled to 5,588
kilograms from 1,514 kilograms in the prior year period.
- Average net selling price per gram decreased to $4.61 (C$6.12)
compared to $6.38 (C$8.36) in the prior year period. The average
net selling price excluding excise taxes was $3.92 (C$5.20) per
gram for the second quarter of 2019. The decrease was due to a
reduced mix of higher priced extract products and a greater mix of
adult-use revenue, which are at lower prices per gram compared to
other channels.
- Gross margin increased sequentially to 27% from 23% in the
prior quarter. Gross margin in the second quarter of 2018 was 43%.
Gross margin continues to be impacted by increased costs incurred
with the ramping up of cultivation facilities in Canada and
Portugal and acquiring third party supply. Food product margins
were also impacted by a $1.4 million non-cash charge related to
purchase accounting for the fair value of inventory. Excluding this
purchase accounting charge, gross margin was 30% for the
quarter.
- Net loss for the quarter was $35.1 million or $0.36 per share
compared to a loss of $12.8 million or $0.17 per share for the
prior year period. The adjusted net loss for the quarter was $31.2
million or $0.32 per share for the second quarter of 2019. The
adjustments to the net loss are non-recurring acquisition related
charges and a non-recurring non-cash charge related to purchase
accounting for the fair value of inventory. Adjusted EBITDA was a
loss of $17.9 million compared to a loss of $4.7 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, interest expense from our convertible notes,
the addition of Manitoba Harvest and Natura businesses, and the
expansion of international operations.
Business Highlights
- Signed Letter of Intent (LOI) with Privateer Holdings, Inc. to
extend lock-up for up to two years and provide for orderly release
of the 75 million Tilray shares held by Privateer.
- Significant capacity expansion:
- Expanded international export capacity with standard
manufacturing license and Good Manufacturing Practices (GMP)
certification for EU Campus that allows Tilray Portugal to
manufacture and export GMP-certified dried cannabis as an active
substance for medicinal products.
- 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.1 This
agreement will expand Tilray’s total production and manufacturing
footprint to 3.4 million square feet worldwide.
- Announced an investment of $32.6 million to increase our
Canadian production and manufacturing footprint by 203,000 square
feet across three facilities in Nanaimo, British Columbia,
Leamington, Ontario, and London, Ontario.
- Key international market developments:
- Imported GMP-certified finished medical cannabis oil solutions
into Ireland for nationwide distribution under the Medical Cannabis
Access Programme.2
- Manitoba Harvest launched a Broad Spectrum Hemp Extract line
that is Generally Recognized as Safe (GRAS) in the United States,
marking Tilray’s first entry into the U.S. CBD market under this
brand.
- Expanding our brand portfolio:
- Acquired Smith & Sinclair, an innovative U.K.-based
confectionary company that will introduce CBD-infused consumer
products where regulations permit.3
- Clinical research developments:
- Announced support of two new clinical studies: a pilot study
led by Murdoch Children’s Research Institute (MCRI) in Melbourne,
Australia, to evaluate the feasibility and acceptability of a
larger randomized placebo-controlled trial of cannabis extract as a
form of treatment for reducing Severe Behavioral Problems (SBP) in
pediatric patients with Intellectual Disabilities (ID); and a study
with McGill University Health Centre’s Division of Infectious
Diseases and Chronic Viral Illness in Quebec, Canada to examine the
effectiveness of medical cannabis on immune activation in People
Living with HIV.
- Imported an initial shipment of medical cannabinoids into the
United States, with approval from the U.S. government, to support
two clinical trials led by NYU School of Medicine for patients with
Alcohol Use Disorder and Post-Traumatic Stress Disorder with
Alcohol Use Disorder.4
- Expanded global senior leadership team:
- Appointed Kristina Adamski as Executive Vice President of
Corporate Affairs, globally overseeing communications, government
affairs and corporate social responsibility.
- Strengthened European leadership team with the appointment of
Arne Wilkens as Vice President, Business Expansion, Europe; José
Tempero as Medical Affairs Director, Europe; Maike Gerlach as Vice
President, Marketing, Europe; Nadja Frenzel as Vice President,
Commercial Development, Europe; and Natalie Bucceri as Director,
Global Portfolio Expansion.5
1 Announced August 7, 2019 2 Announced July 11, 2019 3 Announced
July 23, 2019 4 Announced August 8, 2019 5 Announced July 5,
2019
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, August 27,
2019, by dialing 855-859-2056 from the U.S., or 404-537-3406 from
international locations, and entering confirmation code
1489081.
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 cannabis research, cultivation,
production and distribution currently serving tens of thousands of
patients and consumers in 13 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,
anticipated plans for strategic partnerships, and the closing of
the downstream merger with Privateer. 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 recovery,
current income tax expense; foreign exchange (gain) loss, net;
depreciation and amortization expense; stock-based compensation
expense; and acquisition and integration expenses. 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 June
30,
Six months ended June
30,
2019
2018
2019
2018
Revenue
$
45,904
$
9,744
$
68,942
$
17,552
Cost of sales
33,631
5,567
51,284
9,479
Gross profit
12,273
4,177
17,658
8,073
General and administrative expenses
16,465
5,342
29,262
9,487
Sales and marketing expenses
14,366
3,305
22,187
5,568
Depreciation and amortization expense
2,385
281
4,248
503
Stock-based compensation expense
7,585
5,601
12,891
5,632
Research and development expenses
1,528
639
2,576
1,614
Acquisition and integration expenses
2,464
—
6,888
—
Operating loss
(32,520
)
(10,991
)
(60,394
)
(14,731
)
Foreign exchange (gain) loss, net
(1,611
)
1,358
(1,432
)
2,504
Interest expense, net
8,586
497
17,331
913
Finance income from ABG Profit
Participation Arrangement
(212
)
—
(347
)
—
Other income, net
(2,035
)
(76
)
(4,380
)
(197
)
Loss before income taxes
(37,248
)
(12,770
)
(71,566
)
(17,951
)
Deferred income tax recovery
(2,642
)
—
(6,419
)
—
Current income tax expense
447
63
207
63
Net loss
$
(35,053
)
$
(12,833
)
$
(65,354
)
$
(18,014
)
Net loss per share - basic and diluted
(0.36
)
(0.17
)
(0.68
)
(0.24
)
Weighted average shares used in
computation of net loss
per share - basic and diluted
97,231,839
75,000,000
96,037,142
75,000,000
Net loss
$
(35,053
)
$
(12,833
)
$
(65,354
)
$
(18,014
)
Foreign currency translation gain
(loss)
2,924
(86
)
2,449
(87
)
Unrealized (loss) gain on cash equivalents
and investments
(762
)
—
646
—
Other comprehensive income (loss)
2,162
(86
)
3,095
(87
)
Comprehensive loss
$
(32,891
)
$
(12,919
)
$
(62,259
)
$
(18,101
)
TILRAY, INC.
Condensed Consolidated Balance
Sheets
(in thousands of U.S. dollars,
except for share and par value data, unaudited)
June 30, 2019
December 31, 2018
Assets
Current assets
Cash and cash equivalents
$
184,551
$
487,255
Short-term investments
36,323
30,335
Accounts receivable, net of allowance for
doubtful accounts of $1,854 and
$292, respectively
24,612
16,525
Other receivables
1,195
969
Inventory
75,317
16,211
Prepaid expenses and other current
assets
36,633
3,007
Total current assets
358,631
554,302
Property and equipment, net
147,558
80,214
Intangible assets, net
331,983
4,486
Goodwill
154,954
—
Investments
23,195
16,911
Deposits and other assets
7,810
754
Total assets
$
1,024,131
$
656,667
Liabilities
Current liabilities
Accounts payable
$
24,368
$
10,649
Accrued expenses and other current
liabilities
151,288
14,818
Accrued obligations under capital
lease
252
470
Total current liabilities
175,908
25,937
Accrued obligations under capital
lease
9,032
8,286
Deferred tax liability
53,624
4,424
Convertible Notes, net of issuance
cost
425,400
420,367
Total liabilities
$
663,964
$
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;
80,690,864 and 76,504,200 shares issued
and outstanding, respectively)
8
8
Additional paid-in capital
526,830
302,057
Accumulated other comprehensive income
6,858
3,763
Accumulated deficit
(173,531
)
(108,177
)
Total stockholders’ equity
360,167
197,653
Total liabilities and stockholders’
equity
$
1,024,131
$
656,667
Three months ended June
30,
Six months ended June
30,
2019
2018
2019
2018
Adjusted EBITDA reconciliation:
Net loss
$
(35,053
)
$
(12,833
)
$
(65,354
)
$
(18,014
)
Depreciation and amortization expense
2,985
671
5,755
1,148
Stock-based compensation expense
7,585
5,601
12,891
5,632
Acquisition and integration expenses
2,464
—
6,888
—
Foreign exchange (gain) loss, net
(1,611
)
1,358
(1,432
)
2,504
Interest expense, net
8,586
497
17,331
913
Other income, net
(2,035
)
(76
)
(4,380
)
(197
)
Amortization of inventory step-up
1,360
—
2,041
—
Deferred income tax recovery
(2,642
)
—
(6,419
)
—
Current income tax expense
447
63
207
63
Adjusted EBITDA
$
(17,914
)
$
(4,719
)
$
(32,472
)
$
(7,951
)
Three months ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Adjusted net loss
reconciliation:
Net loss
$
(35,053
)
$
(12,833
)
$
(65,354
)
$
(18,014
)
Acquisition and integration expenses
2,464
—
6,888
—
Amortization of inventory step-up
1,360
1,358
2,041
—
Adjusted net loss
$
(31,229
)
$
(11,475
)
$
(56,425
)
$
(18,014
)
Adjusted net loss per share - basic and
diluted
(0.32
)
(0.15
)
(0.59
)
(0.24
)
Weighted average shares used in
computation of adjusted
net loss per share - basic and diluted
97,231,839
75,000,000
96,037,142
75,000,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190813005696/en/
Media, Global: Chrissy Roebuck, +1-833-206-8161, news@tilray.com
Investors: Katie Turner, +1-646-277-1228,
katie.turner@icrinc.com
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