Revenue Rises 195.1% to $23.0 (C$31.0) Million in the First
Quarter; Company closes two acquisitions: Manitoba Harvest and
Natura Naturals
Tilray, Inc., (“Tilray” or the “Company”) (Nasdaq: TLRY) a
global leader in cannabis research, cultivation, production and
distribution, today reported financial results for the first
quarter ended March 31, 2019. All financial information in this
press release is reported in U.S. dollars, unless otherwise
indicated.
“We are pleased with our first quarter results and the ongoing,
substantial progress our team has made to position Tilray as a
global leader in the cannabis industry,” said Brendan Kennedy,
Tilray President and CEO. “We have made significant progress
integrating our recent acquisitions of Manitoba Harvest and Natura
Naturals, accelerating our entry into the United States hemp and
CBD markets, and increasing our production and manufacturing
capacity in North America and Europe. As we expand our operations
around the world, we remain focused on making disciplined
investments to maximize the multiple paths to value creation we are
aggressively pursuing for our visionary investors.”
First Quarter 2019 Financial Highlights
- Revenue increased 195.1% to $23.0
(C$31.0) million, compared to the first quarter of last year,
driven by the legalization of Canadian adult-use in 2018, the
addition of hemp food sales from the Manitoba Harvest acquisition
during the quarter, and strong growth in international medical
markets. Excluding excise tax, revenue was $21.5 million.
Three months ended March 31, Three months
ended March 31, Cannabis revenue mix 2019
2018
$ Change
% Change Adult-use $ 7,881 $ — $ 7,881 N/A
ACMPR (direct to patient & bulk) 7,763 7,378 385 5 % Food
products 5,582 — 5,582 N/A International - medical 1,812
430 1,382 321 Total $ 23,038 $ 7,808 $ 15,230
195 %
- Total kilogram equivalents sold
increased over two-fold to 3,012 kilograms from 1,299 kilograms in
the prior year period.
- Average net selling price per gram
decreased to $5.60 (C$7.54) compared to $5.94 (C$8.00) in the prior
year period. The average net selling price excluding excise taxes
was $5.28 (C$7.02) per gram for the first quarter of 2019.
- Gross margin increased sequentially to
23% from 20% in the prior quarter. Gross margin in the first
quarter of 2018 was 50%. 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.
Additionally, food product margins were impacted by an
approximately $0.7 million non-cash charge related to purchase
accounting for the fair value of inventory. The remaining non-cash
charge of approximately $1.4 million will be incurred in the second
quarter of 2019.
- Net loss for the quarter was $30.3
million or $0.32 per share compared to a loss of $5.2 million or
$0.07 per share for the prior year period. The non-GAAP adjusted
Net loss for the quarter was $25.2 million or $0.27 per share for
the first quarter of 2019. The adjustments to the net loss are
non-recurring acquisition related charges. Adjusted EBITDA was a
loss of $14.6 million compared to a loss of $3.2 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, the addition of Manitoba Harvest, and the
expansion of international teams.
Business Highlights
- Acquired Manitoba Harvest, a hemp and
natural foods producer in Winnipeg, Manitoba, for up to $310
(C$410) million, subject to certain revenue milestones. Manitoba
Harvest distributes its products to over 16,000 retail locations in
the United States and Canada.
- Acquired Natura Naturals Holdings, a
licensed cannabis cultivation facility in Leamington, Ontario, for
up to $54 (C$71) million, subject to certain cultivation
milestones.
- Completed 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. The partnership will initially
focus on CBD products in the U.S. and THC/CBD products in Canada
and expand globally as regulations permit.
- Completed a successful harvest of
medical cannabis and hosted inauguration1 at the Company’s European
Union (“EU”) campus in Cantanhede, Portugal. The Company expects
multiple harvests from this facility in the coming months.
- Announced support of two new clinical
studies: a pilot study led by Murdoch Children’s Research Institute
(MCRI) in Melbourne, 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, to examine the
effectiveness of medical cannabis on immune activation in People
Living with HIV.2
- 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.3 The investment will expand Tilray’s total production and
manufacturing footprint from 1.1 million to 1.3 million square feet
worldwide.
1 Announced April 24, 20192 Announced April 1, 20193 Announced
May 8, 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, May 28, 2019,
by dialing 855-859-2056 from the U.S., or 404-537-3406 from
international locations, and entering confirmation code
9896647.
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 Annual Report on
Form 10-K, which was filed with the Securities and Exchange
Commission on March 25, 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, income 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.
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 March 31, 2019 2018 Revenue
23,038 $ 7,808 Cost of sales 17,653 3,912
Gross margin 5,385 3,896 General
and administrative expenses 12,797 4,145 Sales and marketing
expenses 7,821 2,263 Depreciation and amortization expense 1,863
222 Stock-based compensation expense 5,306 31 Research and
development expenses 1,048 975 Acquisition and integration expenses
4,424 — Operating loss (27,874 )
(3,740 ) Foreign exchange loss, net 179 1,146 Interest
expense, net 8,745 416 Finance income from ABG Profit Participation
Arrangement (135 ) — Other income, net (2,345 ) (121
) Loss before income taxes (34,318 ) (5,181 ) Deferred income tax
recovery (3,777 ) — Current income tax recovery (240 )
— Net loss $ (30,301 ) $ (5,181 ) Net loss per share
- basic and diluted (0.32 ) (0.07 ) Weighted average shares used in
computation of net loss per share
- basic and diluted
94,875,351 75,000,000 Net loss $ (30,301 ) $ (5,181 ) Foreign
currency translation loss (475 ) (1 ) Unrealized gain on cash
equivalents and investments 1,408 —
Other comprehensive income 933 (1 )
Comprehensive loss $ (29,368 ) $ (5,182 )
TILRAY,
INC. Condensed Consolidated Balance Sheets (in
thousands of U.S. dollars, except for share and par value data,
unaudited) March 31, 2019 December 31,
2018 Assets Current assets Cash and cash equivalents $
294,205 $ 487,255 Short-term investments 31,229 30,335 Accounts
receivable, net of allowance for doubtful accounts of $972 and
$292, respectively 19,708 16,525 Other receivables 378 969
Inventory 48,712 16,211 Prepaid expenses and other current assets
5,357 3,007 Total current assets
399,589 554,302 Property and equipment, net
128,963 80,214 Intangible assets, net 364,060 4,486 Goodwill
156,364 — Investments 19,650 16,911 Deposits and other assets
7,970 754 Total assets $ 1,076,596
$ 656,667
Liabilities Current liabilities
Accounts payable $ 17,179 $ 10,649 Accrued expenses and other
current liabilities 152,819 14,818 Accrued obligations under
capital lease 366 470 Total current
liabilities 170,364 25,937 Accrued
obligations under capital lease 8,661 8,286 Deferred tax liability
92,220 4,424 Convertible Notes, net of issuance cost 422,868
420,367 Other liabilities 563 — Total
liabilities $ 694,676 $ 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; 80,131,560 and 76,504,200 shares
issued and outstanding, respectively)
8 8 Additional paid-in capital 515,692 302,057 Accumulated other
comprehensive income 4,696 3,763 Accumulated deficit
(138,478 ) (108,177 ) Total stockholders’ equity
381,920 197,653
Total liabilities and
stockholders’ equity $ 1,076,596 $ 656,667
Three months ended March 31, 2019 2018
Adjusted EBITDA reconciliation: Net loss $ (30,301 ) $
(5,181 ) Depreciation and amortization expense 2,770 479
Stock-based compensation expense 5,306 31 Acquisition and
integration expenses 4,424 — Foreign exchange loss, net 179 1,146
Interest expense, net 8,745 416 Other income, net (2,345 ) (121 )
Amortization of inventory step-up 681 — Deferred income tax
recovery (3,777 ) — Current income tax recovery (240 )
— Adjusted EBITDA $ (14,558 ) $ (3,230 )
Three months ended March 31, 2019
2018 Adjusted net loss reconciliation:
Net loss $ (30,301 ) $ (5,181 ) Acquisition and integration
expenses 4,424 — Amortization of inventory step-up 681
— Adjusted net loss $ (25,196 ) $ (5,181 )
Adjusted net loss per share - basic and diluted (0.27 ) (0.07 )
Weighted average shares used in computation of adjusted net loss
per share
- basic and diluted
94,875,351 75,000,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190514006019/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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