Tilray, Inc. Reports Full Year 2018 Financial Results
Revenue Rises 110.0% to
Strategic
Partnerships and Acquisitions Position Tilray to Accelerate Global Sales
Growth and Drive Long-Term Shareholder Value
“2018 was a very successful year for
2018 Financial Highlights
-
Revenue increased to
$43.1 (C$56.4) million , up 110.0% compared to last year. The increase in revenue was driven by bulk sales, the inaugural sales for the Canadian adult-use market and accelerated wholesale distribution in export markets. - Total kilogram equivalents sold increased over two-fold to 6,478 kilograms from 3,024 kilograms in the prior year.
-
Average net selling price per gram increased to
$6.61 (C$8.59) compared to$6.52 (C$8.42) in the prior year. In 2018, there was significant revenue growth for extract products compared to dried flower, where extracts represented 49% of the sales mix in 2018 compared to 20% in 2017. -
Net loss for the year was
$67.7 million , or$0.82 per share, compared to$7.8 million , or$0.10 per share, for 2017. Net loss includes non-cash stock-based compensation charges of$21.0 million compared to a$0.1 million charge in the prior-year. Adjusted EBITDA was a loss of$33.1 million compared to a loss of$5.5 million the prior year. The increased net loss and Adjusted EBITDA declines were primarily due to the increase in operating expenses related to continued growth, expansion of international teams, and costs related to financings and the initial public offering (“IPO”). See “Use of Non-U.S. GAAP Financial Measures.”
Fourth Quarter 2018 Financial Highlights
-
Revenue increased to
$15.5 (C$20.9) million , up 203.8% compared to the fourth quarter of last year, driven by bulk sales, inaugural sales in the Canadian adult-use market and accelerated wholesale distribution in export markets. - Total kilogram equivalents sold increased almost three-fold to 2,053 kilograms from 694 kilograms in the prior year period.
-
Average net selling price per gram increased to
$7.52 (C$10.05) compared to$7.13 (C$9.12) in the prior year period. -
Net loss for the quarter was
$31.0 million or$0.33 per share compared to$3.0 million or$0.04 per share for the prior year period. Net loss includes non-cash stock-based compensation charges of$4.1 million compared to$34 thousand in the prior year period. Adjusted EBITDA was a loss of$17.8 million compared to a loss of$2.1 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, expansion of international teams and costs related to financings and M&A activities.
Business Highlights
-
Expanded strategic alliance with
Sandoz , a Novartis Division, globally to increase access to medical cannabis products to patients in need across the world. -
Announced research and development partnership with AB InBev focused
on non-alcohol THC and CBD beverages. Each company intends to invest
up to
$50 million , for a total of up to$100 million . -
Announced 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. This global partnership will focus on CBD products inthe United States and THC/CBD products inCanada , and elsewhere as regulations permit.1 -
Acquired Manitoba Harvest, a hemp and natural foods producer in
Winnipeg, Manitoba , for up to$317 (C$419) million , subject to certain revenue milestones. Manitoba Harvest distributes its products to over 16,000 retail locations inthe United States andCanada .2 Acquired Natura Naturals Holdings Inc. , a licensed cannabis cultivation facility inLeamington, Ontario , for up to$53.4 (C$70.0) million , subject to certain cultivation milestones.3-
Invested
$5.7 (C$7.5) million inQuebec -based cannabis producerROSE Lifescience Inc. and entered into a sale, supply, distribution, and marketing agreement for ROSE to deliver adult-use cannabis products in Québec. -
Acquired Alef Biotechnology SpA, a licensed cannabis company in
Chile , which will allowTilray to import, produce and distributeTilray branded medical cannabis throughoutLatin America . -
Signed Supply Agreement for Hemp-Derived CBD from
LiveWell Canada , which will be sourced fromthe United States andCanada and be used for wellness and medical products acrossNorth America . -
Partnered with researchers at the Lambert Initiative for Cannabinoid
Therapeutics at the
University of Sydney to complete a study examining the effects of cannabis on driving and cognitive function. -
Formed an
International Advisory Board to provide guidance to the Company’s executive team and Board of Directors on global expansion. -
Expanded global senior leadership team with six strategic hires:
Andrew Pucher as Chief Corporate Development Officer;Greg Christopher as EVP of Operations;Rita Seguin as EVP of Human Resources;Dara Redler as General Counsel;Charlie Cain as VP of Retail; andSascha Mielcarek as Managing Director Europe.4 -
Completed a successful harvest of medical cannabis at the Company’s
European Union campus inPortugal and expect multiple harvests in the coming months.5
Conference Call
The Company will host a conference call to discuss these results today
at
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®
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 Quarterly Report on Form 10-Q, which was filed with the
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, 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.
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TILRAY, INC. |
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Consolidated Statements of Net Loss and Comprehensive Loss | ||||||||||||||||
(in thousands of U.S. dollars, except for per share data) | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
|
December 31, | December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenue | $ | 15,531 | $ | 5,113 | $ | 43,130 | $ | 20,538 | ||||||||
Cost of sales | 12,397 | 2,179 | 28,855 | 9,161 | ||||||||||||
Gross margin | 3,134 | 2,934 | 14,275 | 11,377 | ||||||||||||
Research and development expenses | 1,848 | 739 | 4,264 | 3,171 | ||||||||||||
Sales and marketing expenses | 6,305 | 3,252 | 15,366 | 7,164 | ||||||||||||
General and administrative expenses | 13,778 | 1,521 | 31,307 | 8,401 | ||||||||||||
Stock-based compensation expense | 4,111 | 34 | 20,988 | 139 | ||||||||||||
Operating loss | (22,908 | ) | (2,612 | ) | (57,650 | ) | (7,498 | ) | ||||||||
Foreign exchange loss (gain), net | 6,321 | 55 | 7,234 | (1,363 | ) | |||||||||||
Interest expense, net | 7,717 | 258 | 9,110 | 1,686 | ||||||||||||
Other (income) expense, net | (1,398 | ) | 3 | (1,820 | ) | (12 | ) | |||||||||
Loss before income taxes | (35,548 | ) | (2,928 | ) | (72,174 | ) | (7,809 | ) | ||||||||
Deferred income tax recovery | (4,485 | ) | — | (4,485 | ) | — | ||||||||||
Current income tax (recovery) expense | (53 | ) | — | 34 | — | |||||||||||
Net loss | $ | (31,010 | ) | $ | (2,928 | ) | $ | (67,723 | ) | $ | (7,809 | ) | ||||
Net loss per share - basic and diluted | (0.33 | ) | (0.04 | ) | (0.82 | ) | (0.10 | ) | ||||||||
Weighted average shares used in computation of net loss per share - basic and diluted | 93,169,688 | 75,000,000 | 83,009,656 | 75,000,000 | ||||||||||||
Net loss | $ | (31,010 | ) | $ | (2,928 | ) | $ | (67,723 | ) | $ | (7,809 | ) | ||||
Foreign currency translation gain | 127 | 523 | 662 | 282 | ||||||||||||
Loss on investments classified as available-for-sale | (765 | ) | — | (765 | ) | — | ||||||||||
Comprehensive loss | $ | (31,648 | ) | $ | (2,405 | ) | $ | (67,826 | ) | $ | (7,527 | ) | ||||
TILRAY, INC. | ||||||||
Consolidated Balance Sheets | ||||||||
(in thousands of U.S. dollars, except for per share data) | ||||||||
December 31, | December 31, | |||||||
2018 | 2017 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 487,255 | $ | 2,323 | ||||
Short-term investments | 30,335 | — | ||||||
Accounts receivable, net of allowance of $292 and $8 as of December 31, 2018 and 2017, respectively | 16,525 | 983 | ||||||
Other receivables | 969 | 1,131 | ||||||
Inventory | 16,211 | 7,421 | ||||||
Prepaid expenses and other current assets | 3,007 | 545 | ||||||
Total current assets | 554,302 | 12,403 | ||||||
Property and equipment, net | 80,214 | 39,985 | ||||||
Intangible assets, net | 4,486 | 934 | ||||||
Investments | 16,911 | — | ||||||
Deposits and other assets | 754 | 626 | ||||||
Total assets | $ | 656,667 | $ | 53,948 | ||||
Liabilities | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 10,649 | $ | 5,563 | ||||
Accrued expenses and other current liabilities | 14,818 | 2,021 | ||||||
Accrued obligations under capital lease | 470 | 379 | ||||||
Current portion of long-term debt | — | 9,432 | ||||||
Privateer Holdings debt facilities | — | 32,826 | ||||||
Total current liabilities | 25,937 | 50,221 | ||||||
Accrued obligations under capital lease | 8,286 | 8,579 | ||||||
Deferred tax liability | 4,424 | — | ||||||
Convertible senior notes due 2023, net of issuance costs | 420,367 | — | ||||||
Total liabilities | $ | 459,014 | $ | 58,800 | ||||
Stockholders’ equity (deficit) | ||||||||
Class 1 common stock ($0.0001 par value, 250,000,000 shares authorized and 16,666,667 shares issued and outstanding at December 31, 2018; none authorized, issued or outstanding at December 31, 2017) | 2 | — | ||||||
Class 2 common stock ($0.001 par value; 500,000,000 shares authorized and 76,504,200 shares issued and outstanding at December 31, 2018; none authorized, issued or outstanding at December 31, 2017) | 8 | — | ||||||
Capital stock (none authorized, issued or outstanding at December
31, 2018;
1 share authorized, issued and outstanding at December 31, 2017) |
— | — | ||||||
Additional paid-in capital | 302,057 | 31,736 | ||||||
Accumulated other comprehensive income | 3,763 | 3,866 | ||||||
Accumulated deficit | (108,177 | ) | (40,454 | ) | ||||
Total stockholders’ equity (deficit) | 197,653 | (4,852 | ) | |||||
Total liabilities and stockholders’ equity (deficit) | $ | 656,667 | $ | 53,948 | ||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Adjusted EBITDA reconciliation: | ||||||||||||||||
Net loss | $ | (31,010 | ) | $ | (2,928 | ) | $ | (67,723 | ) | $ | (7,809 | ) | ||||
Stock-based compensation expense | 4,111 | 34 | 20,988 | 139 | ||||||||||||
Foreign exchange loss (gain), net | 6,321 | 55 | 7,234 | (1,363 | ) | |||||||||||
Interest expense, net | 7,717 | 258 | 9,110 | 1,686 | ||||||||||||
Other (income) expense, net | (1,398 | ) | 3 | (1,820 | ) | (12 | ) | |||||||||
Deferred income tax recovery | (4,485 | ) | — | (4,485 | ) | — | ||||||||||
Current income tax (recovery) expense | (53 | ) | — | 34 | — | |||||||||||
Depreciation and amortization | 1,009 | 452 | 3,562 | 1,853 | ||||||||||||
Adjusted EBITDA | $ | (17,788 | ) | $ | (2,126 | ) | $ | (33,100 | ) | $ | (5,506 | ) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190318005756/en/
Source:
Media: Chrissy Roebuck, +1-833-206-8161, news@tilray.com
Investors:
Katie Turner, +1-646-277-1228, katie.turner@icrinc.com