Revenue Increased 287% to $167.0 (C$217.4) Million in Full
Fiscal Year 2019 Compared to the Prior Year
Adult-Use Revenue Increased Over Three-Fold in the Fourth
Quarter Compared to the Prior Year Period; 7% Sequential Quarterly
Revenue Growth
Signed and Closed $60 Million Senior Credit Facility
Tilray, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY), a
global pioneer in cannabis production, research, cultivation and
distribution, reports financial results for the fourth quarter and
full fiscal year ended December 31, 2019. All financial information
in this press release is reported in U.S. dollars, unless otherwise
indicated.
“Our full year results demonstrate strong sales growth momentum,
which we expect to continue in 2020,” said Brendan Kennedy,
Tilray’s Chief Executive Officer. “Like our peers, we have faced
industry challenges, but we remain committed to driving long-term
value for our shareholders. Tilray has a diversified business model
comprised of global medical, Canada adult-use and hemp products
which positions us well in the current volatile market environment.
We are still in the early days of this emerging growth industry and
will continue being good stewards of shareholder capital as we aim
to build the world’s most trusted and valued cannabis and hemp
company.”
2019 Financial Highlights
- Revenue increased to $167.0 (C$217.4) million, up 287.2%
compared to last year. The increase in revenue was driven by
significant growth in sales for the Canadian adult-use market,
international medical markets as well as the acquisition of
Manitoba Harvest.
For the three months ended
December 31,
For the year ended December
31,
2019
2018
$ Change
% Change
2019
2018
$ Change
% Change
Cannabis Adult-use
$
17,007
$
4,660
$
12,347
265%
$
55,763
$
3,521
$
52,242
N/A
Canada - medical
3,332
2,845
487
17%
12,556
18,052
(5,496
)
(30)%
International - medical
4,008
1,056
2,952
280%
13,378
2,912
10,466
359%
Bulk
3,924
6,970
(3,046
)
(44)%
25,450
18,645
6,805
36%
Total cannabis revenue
28,271
15,531
12,740
82%
107,147
43,130
64,017
148%
Hemp
18,665
—
18,665
N/A
59,832
—
59,832
N/A
Total revenue
$
46,936
$
15,531
$
31,405
202%
$
166,979
$
43,130
$
123,849
287%
Excise tax included in revenue
$
4,429
$
1,203
$
3,226
268%
$
13,136
$
1,200
$
11,936
N/A
N/A: Not a meaningful percentage.
- Total cannabis kilogram equivalents sold increased over 446% to
35,380 kilograms from 6,478 kilograms in the prior year.
- Average cannabis net selling price per gram (excluding bulk
sales) increased to $7.90 (C$10.28) compared to $6.63 (C$8.63) in
the prior year.
- Net loss for the year was $321.2 million, or $3.20 per share,
compared to $67.7 million, or $0.82 per share, for 2018. In 2019,
the Company recorded non-cash charges of $112.1 million related to
impairment of the Authentic Brands Group LLC (“ABG”) agreement as
well as $68.6 million in inventory reserves. Adjusted EBITDA was a
loss of $89.8 million compared to a loss of $28.3 million the prior
year.
Fourth Quarter 2019 Financial Highlights
- Revenue increased 202.2% to $46.9 million (C$61.0 million),
compared to the fourth quarter of last year, driven by the Canadian
adult-use market, the Manitoba Harvest acquisition, and growth in
international medical markets. The Company recorded reserves of
$4.2 million related to discounts and returns.
Three months ended March 31, June 30,
September 30, December 31, Cannabis Adult-use
$
7,881
$
15,041
$
15,834
$
17,007
Canada - medical
2,997
2,328
3,899
3,332
International - medical
1,812
1,850
5,708
4,008
Bulk
4,766
6,750
10,010
3,924
Total cannabis revenue
17,456
25,969
35,451
28,271
Hemp
5,582
19,935
15,650
18,665
Total revenue
$
23,038
$
45,904
$
51,101
$
46,936
Excise tax included in revenue
$
1,914
$
3,862
$
2,931
$
4,429
- Total cannabis kilogram equivalents sold increased over
seven-fold to 15,039 kilograms from 2,053 kilograms in the prior
year period.
- Average cannabis net selling price per gram (excluding bulk
sales) increased to $8.78 (C$11.43) compared to $7.52 (C$9.79) in
the prior year period. The average net selling price excluding
excise taxes for adult-use was $3.19 (C$4.16) per gram for the
fourth quarter of 2019. The increase was due to a shift in product
and channel mix.
- Gross margin, excluding non-cash return and inventory reserves,
decreased sequentially to 29% from 31% in the prior quarter and
increased compared to the fourth quarter of 2018 gross margin of
20%. Including non-cash charges, gross margin in the fourth quarter
of 2019 was negative 120%.
- Net loss for the quarter was $219.1 million or $2.14 per share
compared to a loss of $31.0 million or $0.33 per share for the
prior year period. Adjusted EBITDA was a loss of $35.3 million
compared to a loss of $13.3 million in the prior year period. The
increased net loss and Adjusted EBITDA declines were primarily due
to increases in operating expenses related to growth initiatives,
expansion of international teams, and the addition of Manitoba
Harvest and Natura Naturals businesses.
Senior Credit Facility
The Company closed a $60 million senior credit facility on
February 28, 2020 that bears interest at prime plus 8% and has a
two year term. The Company ended 2019 with $97 million in cash.
2019 Business Highlights
- Canadian adult-use brand portfolio expansion:
- High Park™, a subsidiary of Tilray, launched the second phase
of its adult-use product portfolio including vape, edible and
beverage products, across Canada where regulations allow. New brand
and product additions include:
- Canaca – pure cannabis oil, all-in-one vape pens and
cartridges;
- Marley Natural – pure cannabis oil vape cartridges;
- Chowie Wowie – cannabis-infused chocolates and gummies in THC
and CBD varieties;
- Everie – non-alcoholic, CBD-infused ready-to-brew teas and
sparkling beverages with all natural flavors. Everie is the debut
brand for Fluent, Tilray’s joint venture with AB InBev, facilitated
through High Park and Labatt Breweries of Canada.
- Addition of Hemp products business:
- Tilray completed its acquisition of Manitoba Harvest. The
Company now has hemp products available in over 17,000 retail doors
and 20 countries around the world.
- Key international market developments:
- Tilray Portugal received two Good Manufacturing Practice (GMP)
certifications in accordance with European Union standards, for its
manufacturing facility in Cantanhede, Portugal. These
certifications permit the Company to manufacture and export
GMP-certified bulk and finished medical cannabis products,
including dried flower and oils, from Portugal to Germany and other
European and international markets with legal medical cannabis
regulations. Tilray remains the only licensed producer to be GMP
certified in two countries, Canada and Portugal.
- Successfully resupplied a bulk amount of medical cannabis in
the U.K. and exported medical cannabis to Ireland.
- Successfully exported medical cannabis to Germany and Israel
from Portugal, and to Switzerland from Germany. In total, Tilray’s
medical cannabis products have been made available in 15 countries
on 5 continents across the world.
- Executive leadership team expansion:
- Jon Levin, formerly of Revlon, joined the Company as Chief
Operating Officer.
- Michael Kruteck, formerly of Molson Coors and Pharmaca, joined
the Company as Chief Financial Officer. Mark Castaneda, the
Company’s Chief Financial Officer, will transition to a strategic
business development role after the 10-K has been filed for the
fiscal year ended December 31, 2019.1
- Katy Dickson, formerly of Mattel and General Mills, joined the
Company as President of Manitoba Harvest.
- Clinical research developments:
- 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. TIPN
affects more than 67% of women undergoing breast cancer
treatment.
- Announced support for additional global clinical trials;
studying the efficacy of medical cannabis as treatment in reducing
severe behavioral problems in children with intellectual
disabilities; and another trial examining the safety, tolerability
and effectiveness of medical cannabis on immune activation in
people living with HIV.
- Tilray closed its merger with Privateer Holdings, Inc. in
December.
__________ 1 Announced January 14, 2020
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 Monday, March 16, 2020,
by dialing 855-859-2056 from the U.S., or 404-537-3406 from
international locations, and entering confirmation code
8197352.
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 (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, 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 Annual Report on Form 10-K,
which was filed with the Securities and Exchange Commission on
March 2, 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, 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 inventory
valuation adjustments; interest expenses, net; other income, net;
deferred income tax (recoveries) expenses, current income tax
expenses; foreign exchange gain (loss), net; depreciation and
amortization expenses; stock-based compensation expenses; other
stock-based compensation related expenses; loss from equity method
investments; finance income from ABG; loss on disposal of property
and equipment; 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.
Consolidated Statements of Net
Loss and Comprehensive Loss
(in thousands of U.S. dollars,
except for share and per share data)
Three months ended December
31,
Twelve months ended December
31,
2019
2018
2019
2018
Revenue (inclusive of excise duties of $4,429, $1,203, $13,136, and
$1,200, respectively)
$
46,936
$
15,531
$
166,979
$
43,130
Cost of sales Product costs
35,870
8,117
121,892
24,294
Inventory valuation adjustments
68,073
4,280
68,583
4,561
Gross (loss) profit
(57,007
)
3,134
(23,496
)
14,275
General and administrative expenses
32,462
12,973
81,968
29,461
Sales and marketing expenses
21,923
6,305
61,084
15,366
Research and development expenses
1,667
1,848
6,558
4,264
Stock-based compensation
9,539
4,111
31,842
20,988
Depreciation and amortization expenses
4,150
566
11,607
1,598
Impairment of assets
112,070
—
112,070
— Acquisition-related (income) expenses, net
(24,861
)
239
(31,427
)
248
Loss from equity method investments
2,667
—
4,504
— Operating loss
(216,624
)
(22,908
)
(301,702
)
(57,650
)
Foreign exchange (gain) loss, net
(7,097
)
6,321
(5,944
)
7,234
Interest expenses, net
8,685
7,717
34,690
9,110
Finance income from ABG
(207
)
—
(764
)
— Loss on disposal of property and equipment
2,436
190
2,436
190
Other income, net
3,572
(1,588
)
(2,501
)
(2,010
)
Loss before income taxes
(224,013
)
(35,548
)
(329,619
)
(72,174
)
Deferred income tax recoveries
(4,860
)
(4,485
)
(8,847
)
(4,485
)
Current income tax (recoveries) expenses
(5
)
(53
)
397
34
Net loss
(219,148
)
(31,010
)
(321,169
)
(67,723
)
Net loss per share - basic and diluted
$
(2.14
)
$
(0.33
)
$
(3.20
)
$
(0.82
)
Weighted average shares used in computation of net loss per share -
basic and diluted
102,405,646
93,169,688
100,455,677
83,009,656
Net loss
(219,148
)
(31,010
)
(321,169
)
(67,723
)
Foreign currency translation gain, net
7,588
127
5,174
662
Unrealized loss on investments
(101
)
(765
)
(21
)
(765
)
Other comprehensive income (loss)
7,487
(638
)
5,153
(103
)
Comprehensive loss
$
(211,661
)
$
(31,648
)
$
(316,016
)
$
(67,826
)
In the fourth quarter of 2019, the Company adopted ASU
2016-01, ASC 842, ASC 606 and ASU 2018-07. Each interim period in
2019 has been recast to reflect the effects of this adoption.
TILRAY, INC.
Consolidated Balance
Sheets
(in thousands of U.S. dollars,
except for share and par value data)
December 31, 2019 December 31, 2018
Assets Current assets: Cash and cash equivalents
$
96,791
$
487,255
Short-term investments —
30,335
Accounts receivable, net of allowance for doubtful accounts of
$2,015 and $292, respectively
36,202
16,525
Inventory
87,861
16,211
Prepayments and other current assets
38,173
3,976
Total current assets
259,027
554,302
Property and equipment, net
184,217
80,214
Operating lease, right-of-use assets
17,514
— Intangible assets, net
228,828
4,486
Goodwill
163,251
— Equity method investments
11,448
— Other investments
24,184
16,911
ABG finance receivable and other assets
7,861
754
Total assets
$
896,330
$
656,667
Liabilities Current liabilities Accounts payable
39,125
10,649
Accrued expenses and other current liabilities
50,829
14,818
Accrued obligations under finance lease —
470
Accrued obligations under operating lease
2,473
— Total current liabilities
92,427
25,937
Accrued obligations under finance lease
14,152
8,286
Accrued obligations under operating lease
15,255
— ABG finance liability
5,566
— Deferred tax liability
53,363
4,424
Convertible notes, net of issuance costs
430,210
420,367
Other liabilities
86
— Total liabilities
$
611,059
$
459,014
Commitments and contingent liabilities
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; 86,114,558 and 76,504,200 shares issued and
outstanding, respectively)
9
8
Additional paid-in capital
705,671
302,057
Accumulated other comprehensive income
9,719
3,763
Accumulated deficit
(430,130
)
(108,177
)
Total stockholders' equity
$
285,271
$
197,653
Total liabilities and stockholders' equity
$
896,330
$
656,667
Three months ended December
31,
Twelve months ended December
31,
2019
2018
2019
2018
Adjusted EBITDA reconciliation: Net loss
$
(219,148
)
$
(31,010
)
$
(321,169
)
$
(67,723
)
Inventory valuation adjustments
68,073
4,280
68,583
4,561
Depreciation and amortization expenses
5,421
1,009
15,849
3,562
Stock-based compensation expenses
9,539
4,111
31,842
20,988
Other stock-based compensation related expenses
8,411
—
8,411
— Impairment of assets
112,070
—
112,070
— Acquisition-related (income) expenses, net
(24,861
)
239
(31,427
)
248
Loss from equity method investments
2,667
—
4,504
— Foreign exchange (gain) loss, net
(7,097
)
6,321
(5,944
)
7,234
Interest expenses, net
8,685
7,717
34,690
9,110
Finance income from ABG
(207
)
—
(764
)
— Loss on disposal of property and equipment
2,436
190
2,436
190
Other income, net
3,572
(1,588
)
(2,501
)
(2,010
)
Amortization of inventory step-up — —
2,041
— Deferred income tax (recoveries) expenses
(4,860
)
(4,485
)
(8,847
)
(4,485
)
Current income tax expenses
(5
)
(53
)
397
34
Adjusted EBITDA
$
(35,304
)
$
(13,269
)
$
(89,829
)
$
(28,291
)
Three months ended December
31,
Twelve months ended December
31,
2019
2018
2019
2018
Adjusted net loss reconciliation: Net loss
$
(219,148
)
$
(31,010
)
$
(321,169
)
$
(67,723
)
Inventory valuation adjustments
68,073
4,280
68,583
4,561
Impairment of assets
112,070
—
112,070
— Acquisition-related (income) expenses, net
(24,861
)
239
(31,427
)
— Amortization of inventory step-up — —
2,041
— Adjusted net loss
$
(63,866
)
$
(26,491
)
$
(169,902
)
$
(63,162
)
Adjusted net loss per share - basic and diluted
(0.62
)
(0.28
)
(1.69
)
(0.76
)
Weighted average shares used in computation of adjusted Net loss
per share - basic and diluted
102,405,646
93,169,688
100,455,677
83,009,656
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200302005917/en/
For further information: 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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