Tilray, Inc. Reports Third Quarter 2019 Financial Results – Business Wire

NANAIMO, British Columbia–(BUSINESS WIRE)–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

 

Source: https://www.businesswire.com/news/home/20191112005953/en/Tilray-Reports-Quarter-2019-Financial-Results

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