Tilray, Inc. Reports Third Quarter 2019 Financial Results
Revenue Increased 409% to $51.1 (C$67.8) Million in the Third Quarter of 2019 Compared to the Prior Year Period
International Medical Revenue Grew More Than Five-Fold Compared to the Prior Year Period
NANAIMO, BRITISH COLUMBIA – 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.
· 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:
o 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:
o Exported first shipment of medical cannabis from EU Campus in Portugal to Germany to supply patients in need.
o Imported GMP-certified finished medical cannabis oil solutions into Ireland for nationwide distribution under the Medical Cannabis Access Programme.
· Expanding our brand portfolio:
o 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]
o 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]
o 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:
o 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.
o 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.
[1] Announced October 10, 2019
[2] Announced October 16, 2019
[3] Announced October 24, 2019