tlry20220918_8k.htm
false 0001731348 0001731348 2022-10-07 2022-10-07
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 7, 2022
 
 
Tilray Brands, Inc.
(Exact name of Registrant as Specified in Its Charter)
 
 
Delaware
001-38594
82-4310622
(State or Other Jurisdiction
(Commission File
(IRS Employer
of Incorporation)
Number)
Identification No.)
265 Talbot Street West,
   
Leamington, ON
 
N8H 5L4
(Address of Principal Executive Offices,
 
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (844) 845-7291
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading
Name of each exchange on which registered
 
 
Symbol(s)
   
Class 2 Common Stock, $0.0001 par
 
TLRY
     
value per share
   
The Nasdaq Global Select Market
 
           
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 

 
 
 
Item 2.02          Results of Operations and Financial Condition.
 
On October 7, 2022, Tilray Brands, Inc. (“Tilray”) issued a press release announcing financial results for its first quarter ended August 31, 2022. A copy of the press release is furnished herewith as Exhibit 99.1.
 
The information in this current report on Form 8-K, including the press release attached as Exhibit 99.1 hereto, is being furnished, but shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by Tilray, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
 
Item 9.01
 
Financial Statements and Exhibits.
 
(d) Exhibits
       
Exhibit
 
Description
 
Number
     
99.1
     
           
104
   
Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
           
 
 

 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Tilray Brands, Inc.
 
Date: October 7, 2022                                                                                      By:                                                                                                                  /s/ Mitchell Gendel
 
 
Global General Counsel
 
ex_425033.htm

Exhibit 99.1

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PRESS RELEASE

 

Tilray Brands' First Quarter Fiscal Year 2023 Performance Affirms Global Cannabis Leadership

 

Reported Net Revenue at $153.2 Million; On a Constant Currency Basis, Net Revenue Remained Strong at $166.5 Million

 

Cannabis Gross Margin Increased to 51% from 43% in the Prior Year Quarter

 

Delivered $108 Million in Annualized Cash Savings to Date, Expects to Deliver $130 Million Across Corporate Optimization Plans

 

Second Highest Adjusted EBITDA in Company's History Marking the 14th Consecutive Quarter of Positive Adjusted EBITDA

 

Strong Balance Sheet with ~$500 Million in Cash

 

Company Reconfirms Guidance to Generate $70-$80 Million of Adjusted EBITDA and be Free-Cash Flow Positive in Its Operating Business Units this Fiscal Year

 

Tilray Brands Maintains #1 Cannabis Market Share in Canada and Germany

 

 

LEAMINGTON, Ontario and NEW YORK, October 7, 2022 – Tilray Brands, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY; TSX: TLRY), a leading global cannabis-lifestyle and consumer packaged goods company inspiring and empowering the worldwide community to live their very best life, today reported financial results for the first fiscal quarter ended August 31, 2022. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.

 

Financial Highlights First Quarter Fiscal 2023

 

Reported net revenue was $153.2 million. On a constant currency basis, net revenue remained strong at $166.5 million for the quarter.

Maintained #1 position in Canada with 8.5% cannabis market share, driven by Tilray’s comprehensive portfolio of adult-use brands.

International cannabis revenue was $10.4 million. On a constant currency basis, international cannabis revenue was $11.9 million.

Achieved $108 million in annualized cash cost-savings since the closing of the Tilray – Aphria transaction in May 2021, up from $85 million as of May 31, 2022.

Net loss of $66 million. Adjusted EBITDA of $13.5 million, marking the 14th consecutive quarter of positive adjusted EBITDA and second highest achieved in the Company's history.

 

Irwin D. Simon, Tilray’s Chairman and Chief Executive Officer, stated, “Tilray Brands’ top and bottom-line results during the first quarter reflect successful realignment of the business to maximize revenue and market share gains across core business segments and geographies. Most notably, we are now the leader in net cannabis revenue worldwide, highlighted by medical cannabis leadership globally and adult-use cannabis market share primacy in Canada. These achievements affirm that, amid market disruption and macroeconomic challenges, we have leveraged our scale, marketing acumen and CPG expertise to deliver strong -- and sustainable -- top line growth.”

 

He continued, “We have also optimized our performance through an ambitious and expanded cost savings across the platform. Through the end of the first quarter, we have realized $95 million of our revised and increased $100 million goal of annualized cost savings. In addition, we realized an additional $13 million of cost savings from our recently launched $30 million cost optimization plan for our existing cannabis business. In aggregate, we expect to remove $130 million of costs from the business. We also plan to realize an additional $40 million in revenue and interest payments from the strategic HEXO transaction. These initiatives, combined with our market share and revenue gains, should position Tilray Brands extraordinarily well for the future, allowing us to reconfirm our guidance of $70 - $80 million of adjusted EBITDA and be free cash flow positive.”

 

Leading Position in Global Cannabis Markets

 

#1 in Global Cannabis Revenue – Excluding the U.S., Tilray Brands now has the leading cannabis revenue in federally legal markets across the global cannabis industry – uniquely enviable positioning as legal cannabis continues to take hold globally.

 

#1 Market Position in Canada and Strategic Initiatives Underway to Accelerate Growth – Tilray Brands has implemented strategic price adjustments, expanded distribution through its coast-to-coast agreements with Rose Life Sciences and Great North Distributors, and accelerated product innovation.

 

 

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PRESS RELEASE
 

Strategic Expansion Across Europe and Leading Market Share in Germany – Germany is poised to lead the European cannabis market and Tilray Medical already leads in medical cannabis within Germany with market share of approximately 20%1 with whole flower, extracts and Dronabinol products. Based on Tilray’s unparalleled production capability and investments in brands and people, the Company is positioned exceptionally well for adult-use cannabis legalization. Tilray’s sales arrangements through major distribution channels in Germany, the UK, and other key markets, coupled with strong relationships with local governments and patient trust, helps ensure the infrastructure and platform to drive accelerated growth across Europe.

 

A Leading U.S. CPG and Craft-Beverage Portfolio Provides Growth Platform – In the U.S., Tilray’s businesses include SweetWater Brewing Company, the 10th largest craft brewer in the nation and leading lifestyle brand, Breckenridge Distillery, and Manitoba Harvest, a pioneer in hemp, CBD and wellness products. The Company is focused on driving revenue gains across each of these businesses, which will ultimately create a strong channel for additional revenue in adult-use cannabis, pending federal legalization.

 

Strategic Growth Actions

 

On October 5, 2022 - Broken Coast Ranks #1 at the Budtender's Association Collector's Cup

On October 4, 2022 - Tilray Medical Relaunches Cannabis Oral Solution Across Ireland

On September 28, 2022 - SweetWater Brewing Company Unveils New Fall Craft-Beer Releases

On September 22, 2022 - Tilray Medical Receives Approval to Extend Market Authorization in Italy

On September 15, 2022 - RIFF Cannabis Brand Launches New ‘Drumsticks’ Product

On September 8, 2022 - Breckenridge Distillery Announces Nationwide Alignment and Renewed Distribution Agreement With Republic National Distributing Company

On September 1, 2022 - Good Supply Launches New High-Potency Product Drop and Unveils Exclusive Orange Frost Live Resin

On August 26, 2022 – Tilray Medical Launches New Products and ‘CannaPoints’ Program to Support Patients Across Canada

On August 23, 2022 – Tilray Medical Receives Verification From the Natural Health Science Foundation in Australia and New Zealand

On August 17, 2022 – Tilray Medical Bolsters Market Leading Position in Europe With Market Authorization in Poland

On August 4, 2022 – Breckenridge Distillery and Denver Broncos Release Limited-Edition Mile High Bourbon Blends

On August 3, 2022 – Tilray Wellness Announces U.S. Distribution Agreement with Southern Glazer’s Wine & Spirits for CBD Beverages

On July 19, 2022 – Tilray Medical Launches Cannabis Education Platform ‘WeCare-MedicalCannabis’ Across Europe

On July 14, 2022 – Tilray Brands’ Potently Canadian Cannabis Brand, CANACA Joins this Year’s Calgary Stampede and Releases ‘Wild West’ Product Lineup

On July 12, 2022 – Tilray Brands Announces Closing of Transaction with HEXO, Laying Groundwork for the Next Evolution of Canadian Cannabis

On July 6, 2022 – Good Supply Brand Expands its Cannabis Portfolio in Québec

On June 29, 2022 – Tilray Medical Expands Portfolio of Medical Cannabis Products in the UK

On June 22, 2022 – Tilray Medical Welcomes Government of Luxembourg Delegation Visit to European Campus in Portugal

On June 16, 2022 – Broken Coast Cannabis Launches Full Spectrum ‘woah’

On June 14, 2022 – Tilray Brands Announces Enhancements to Accretive Strategic Transaction with HEXO

On June 7, 2022 – Tilray Medical Launches Sleep-Oriented CBN Night Oil for Medical Cannabis Patients in Canada

 

Live Conference Call and Audio Webcast

Tilray Brands will host a webcast to discuss these results today at 8:30 a.m. ET. Investors may join the live webcast available on the Investors section of the Company’s website at www.tilray.com. The webcast will also be archived after the call concludes.

 

About Tilray Brands

Tilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), is a leading global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is changing people's lives for the better – one person at a time. Tilray Brands delivers on this mission by inspiring and empowering the worldwide community to live their very best life, enhanced by moments of connection and wellbeing. Patients and consumers trust Tilray Brands to be the most responsible, trusted and market leading cannabis consumer products company in the world with a portfolio of innovative, high-quality and beloved brands that address the needs of the consumers, customers and patients we serve. A pioneer in cannabis research, cultivation, and distribution, Tilray Brands’ unprecedented production platform supports over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and craft beverages.

 

For more information on Tilray Brands, visit www.Tilray.com and follow @Tilray

 

Cautionary Statement Concerning Forward-Looking Statements

Certain statements in this press release constitute forward-looking information or forward-looking statements (together, “forward-looking statements”) under Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the “safe harbor” created by those sections and other applicable laws. Forward-looking statements can be identified by words such as “forecast,” “future,” “should,” “could,” “enable,” “potential,” “contemplate,” “believe,” “anticipate,” “estimate,” “plan,” “expect,” “intend,” “may,” “project,” “will,” “would” and the negative of these terms or similar expressions, although not all forward-looking statements contain these identifying words. Certain material factors, estimates, goals, projections or assumptions were used in drawing the conclusions contained in the forward-looking statements throughout this communication.

 

 

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PRESS RELEASE
 

Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the Company’s ability to become the world's leading cannabis-focused consumer branded company and achieve $4B in revenue by the end of fiscal 2024; the Company’s ability to generate $70-$80 million of Adjusted EBITDA and expectation to be free-cash flow positive in its operating business units in FY 2023; the Company’s ability to achieve operational scale, market share, distribution, profitability and revenue growth in particular markets, including in Canada, the U.S. and the EU; and the Company’s ability to successfully achieve the expected production efficiencies, synergies and cost savings relating to the HEXO transactions and agreed commercial arrangements; and the Company’s anticipated investments, including in organic and strategic growth, partnership efforts, product offerings and other initiatives.

Many factors could cause actual results, performance or achievement to be materially different from any forward-looking statements, and other risks and uncertainties not presently known to the Company or that the Company deems immaterial could also cause actual results or events to differ materially from those expressed in the forward-looking statements contained herein. For a more detailed discussion of these risks and other factors, see the most recently filed annual information form of the Company and the Annual Report on Form 10-K (and other periodic reports filed with the SEC) of the Company made with the SEC and available on EDGAR. The forward-looking statements included in this communication are made as of the date of this communication and the Company does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws.

 

Use of Non-U.S. GAAP Financial Measures

This press release and the accompanying tables include non-GAAP financial measures, including adjusted gross margin, Adjusted EBITDA and free cash flow. Management believes that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the Company's operations and are useful for period-over-period comparisons of operations. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read only in connection with the Company's Consolidated Statements of Operations and Cash Flows presented in accordance with GAAP.

 

Certain forward-looking non-GAAP financial measures included in this press release are not reconciled to the comparable forward-looking GAAP financial measures. The Company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures but would not impact the non-GAAP measures. Such items may include litigation and related expenses, transaction costs, impairments, foreign exchange movements and other items. The unavailable information could have a significant impact on the Company's GAAP financial results.

 

The Company believes presenting net sales at constant currency provides useful information to investors because it provides transparency to underlying performance in the Company's consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.

 

Adjusted EBITDA is calculated as net income (loss) before income tax expense (recovery); interest expense, net; non-operating income (expense), net; amortization; stock-based compensation; change in fair value of contingent consideration; purchase price accounting step-up; facility start-up and closure costs; lease expense; litigation costs; and transaction costs. 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. Gross margin, excluding inventory valuation adjustments, is calculated as revenue less cost of sales adjusted to add back inventory valuation adjustments and amortization of inventory step-up, divided by revenue. A reconciliation of Gross margin, excluding inventory valuation adjustments, to gross margin, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Free cash flow is comprised of two GAAP measures deducted from each other which are net cash flow provided by (used in) operating activities less investments in capital and intangible assets. A reconciliation of net cash flow provided by (used in) operating activities to free cash flow, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release.

 

For further information:

 

Media: Berrin Noorata, news@tilray.com

Investors: Raphael Gross, +1-203-682-8253, Raphael.Gross@icrinc.com

 

 

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PRESS RELEASE
 

Consolidated Statements of Financial Position

 

   

August 31,

   

May 31,

 

(in thousands of US dollars)

 

2022

   

2022

 

Assets

               

Current assets

               

Cash and cash equivalents

  $ 490,643     $ 415,909  

Accounts receivable, net

    98,347       95,279  

Inventory

    244,654       245,529  

Prepaids and other current assets

    77,237       46,786  

Total current assets

    910,881       803,503  

Capital assets

    553,606       587,499  

Right-of-use assets

    11,884       12,996  

Intangible assets

    1,210,578       1,277,875  

Goodwill

    2,617,696       2,641,305  

Interest in equity investees

    4,764       4,952  

Long-term investments

    8,879       10,050  

Convertible notes receivable

    269,440       111,200  

Other assets

    4,754       314  

Total assets

  $ 5,592,482     $ 5,449,694  

Liabilities

               

Current liabilities

               

Bank indebtedness

  $ 18,282     $ 18,123  

Accounts payable and accrued liabilities

    154,663       157,431  

Contingent consideration

    16,218       16,007  

Warrant liability

    12,707       14,255  

Current portion of lease liabilities

    7,290       6,703  

Current portion of long-term debt

    64,098       67,823  

Total current liabilities

    273,258       280,342  

Long - term liabilities

               

Lease liabilities

    9,580       11,329  

Long-term debt

    114,294       117,879  

Convertible debentures

    444,275       401,949  

Deferred tax liability

    187,714       196,638  

Other liabilities

    179       191  

Total liabilities

    1,029,300       1,008,328  

Commitments and contingencies (refer to Note 18)

               

Stockholders' equity

               

Common stock ($0.0001 par value; 990,000,000 shares authorized; 600,954,939 and 532,674,887 shares issued and outstanding, respectively)

    60       53  

Additional paid-in capital

    5,641,348       5,382,367  

Accumulated other comprehensive loss

    (79,732 )     (20,764 )

Accumulated Deficit

    (1,036,333 )     (962,851 )

Total Tilray Brands, Inc. stockholders' equity

    4,525,343       4,398,805  

Non-controlling interests

    37,839       42,561  

Total stockholders' equity

    4,563,182       4,441,366  

Total liabilities and stockholders' equity

  $ 5,592,482     $ 5,449,694  

 

 

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PRESS RELEASE
 

Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)

 

   

For the three months

                 
   

ended August 31,

   

Change

   

% Change

 

(in thousands of U.S. dollars, except for per share data)

 

2022

   

2021

   

2022 vs. 2021

 

Net revenue

  $ 153,211     $ 168,023     $ (14,812 )     (9 )%

Cost of goods sold

    104,597       117,068       (12,471 )     (11 )%

Gross profit

    48,614       50,955       (2,341 )     (5 )%

Operating expenses:

                               

General and administrative

    40,508       49,487       (8,979 )     (18 )%

Selling

    9,671       7,432       2,239       30 %

Amortization

    24,359       30,739       (6,380 )     (21 )%

Marketing and promotion

    7,248       5,465       1,783       33 %

Research and development

    166       785       (619 )     (79 )%

Change in fair value of contingent consideration

    211       837       (626 )     (75 )%

Litigation costs

    445       1,194       (749 )     (63 )%

Transaction (income) costs

    (12,816 )     24,385       (37,201 )     (153 )%

Total operating expenses

    69,792       120,324       (50,532 )     (42 )%

Operating loss

    (21,178 )     (69,369 )     48,191       (69 )%

Interest expense, net

    (4,413 )     (10,170 )     5,757       (57 )%

Non-operating (expense) income, net

    (32,992 )     49,697       (82,689 )     (166 )%

Income (loss) before income taxes

    (58,583 )     (29,842 )     (28,741 )     96 %

Income taxes (recovery)

    7,211       4,762       2,449       51 %

Net income (loss)

  $ (65,794 )   $ (34,604 )   $ (31,190 )     90 %

Net loss per share - basic and diluted

  $ (0.13 )   $ (0.08 )   $ (0.05 )     60 %

 

Net Revenue by Operating Segment

 

   

Three months ended

           

Three months ended

         

(In thousands of U.S. dollars)

 

August 31, 2022

   

% of Total Revenue

   

August 31, 2021

   

% of Total Revenue

 

Cannabis business

  $ 58,570       38 %   $ 70,449       42 %

Distribution business

    60,585       40 %     67,186       40 %

Beverage alcohol business

    20,654       13 %     15,461       9 %

Wellness business

    13,402       9 %     14,927       9 %

Total net revenue

  $ 153,211       100 %   $ 168,023       100 %

 

Net Revenue by Operating Segment in Constant Currency

 

   

Three months ended

           

Three months ended

         
   

August 31, 2022

           

August 31, 2021

         

(In thousands of U.S. dollars)

  as reported in constant currency    

% of Total Revenue

    as reported in constant currency    

% of Total Revenue

 

Cannabis business

  $ 61,579       38 %   $ 70,449       42 %

Distribution business

    70,580       42 %     67,186       40 %

Beverage alcohol business

    20,654       12 %     15,461       9 %

Wellness business

    13,685       8 %     14,927       9 %

Total net revenue

  $ 166,498       100 %   $ 168,023       100 %

 

 

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PRESS RELEASE
 

Net Cannabis Revenue by Market Channel

 

   

Three months ended

           

Three months ended

         

(In thousands of U.S. dollars)

 

August 31, 2022

   

% of Total Revenue

   

August 31, 2021

   

% of Total Revenue

 

Revenue from Canadian medical cannabis products

  $ 6,520       11 %   $ 8,374       12 %

Revenue from Canadian adult-use cannabis products

    58,355       99 %     69,593       99 %

Revenue from wholesale cannabis products

    392       1 %     1,700       2 %

Revenue from international cannabis products

    10,422       18 %     10,266       15 %

Less excise taxes

    (17,119 )     -29 %     (19,484 )     -28 %

Total

  $ 58,570       100 %   $ 70,449       100 %

 

Net Cannabis Revenue by Market Channel in Constant Currency

 

   

Three months ended

           

Three months ended

         
   

August 31, 2022

           

August 31, 2022

         

(In thousands of U.S. dollars)

  as reported in constant currency    

% of Total Revenue

    as reported in constant currency    

% of Total Revenue

 

Revenue from Canadian medical cannabis products

  $ 6,831       11 %   $ 8,374       12 %

Revenue from Canadian adult-use cannabis products

    60,421       98 %     69,593       99 %

Revenue from wholesale cannabis products

    412       1 %     1,700       2 %

Revenue from international cannabis products

    11,869       19 %     10,266       15 %

Less excise taxes

    (17,954 )     -29 %     (19,484 )     -28 %

Total

  $ 61,579       100 %   $ 70,449       100 %

 

Other Financial Information: Key Operating Metrics

 

   

For the three months

 
   

ended August 31,

 

(in thousands of U.S. dollars)

 

2022

   

2021

 

Net cannabis revenue

  $ 58,570     $ 70,449  

Net beverage alcohol revenue

    20,654       15,461  

Distribution revenue

    60,585       67,186  

Wellness revenue

    13,402       14,927  

Cannabis costs

    28,861       40,190  

Beverage alcohol costs

    10,849       6,663  

Distribution costs

    54,984       59,290  

Wellness costs

    9,903       10,925  

Adjusted gross profit (excluding PPA step-up) (1)

    49,721       50,955  

Cannabis gross margin

    51 %     43 %

Beverage alcohol adjusted gross margin (excluding PPA step-up) (1)

    47 %     57 %

Distribution gross margin

    9 %     12 %

Wellness gross margin

    26 %     27 %

Adjusted EBITDA (1)

  $ 13,531     $ 12,697  

Cash and cash equivalents

    490,643       376,297  

Working capital

    637,623       317,789  

 

 

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PRESS RELEASE
 

Other Financial Information: Gross Margin and Adjusted Gross Margin

 

   

For the three months ended August 31, 2022

 

(In thousands of U.S. dollars)

 

Cannabis

   

Beverage

   

Distribution

   

Wellness

   

Total

 

Net revenue

  $ 58,570     $ 20,654     $ 60,585     $ 13,402     $ 153,211  

Cost of goods sold

    28,861       10,849       54,984       9,903       104,597  

Gross profit

    29,709       9,805       5,601       3,499       48,614  

Gross margin

    51 %     47 %     9 %     26 %     32 %

Adjustments:

                                       

Purchase price accounting step-up

    -       1,107       -       -       1,107  

Adjusted gross profit

    29,709       10,912       5,601       3,499       49,721  

Adjusted gross margin

    51 %     53 %     9 %     26 %     32 %

 

   

For the three months ended August 31, 2021

 

(In thousands of U.S. dollars)

 

Cannabis

   

Beverage

   

Distribution

   

Wellness

   

Total

 

Net revenue

  $ 70,449     $ 15,461     $ 67,186     $ 14,927     $ 168,023  

Cost of goods sold

    40,190       6,663       59,290       10,925       117,068  

Gross profit

    30,259       8,798       7,896       4,002       50,955  

Gross margin

    43 %     57 %     12 %     27 %     30 %

Adjustments:

                                       

Purchase price accounting step-up

    -       -       -       -       -  

Adjusted gross profit

    30,259       8,798       7,896       4,002       50,955  

Adjusted gross margin

    43 %     57 %     12 %     27 %     30 %

 

Other Financial Information: Adjusted Earnings before Interest, Taxes, and Amortization

 

   

For the three months

                 

(In thousands of U.S. dollars)

 

ended August 31,

   

Change

   

% Change

 

Adjusted EBITDA reconciliation:

 

2022

   

2021

   

2022 vs. 2021

 

Net loss

  $ (65,794 )   $ (34,604 )   $ (31,190 )     90 %

Income taxes

    7,211       4,762       2,449       51 %

Interest expense, net

    4,413       10,170       (5,757 )     (57 )%

Non-operating income (expense), net

    32,992       (49,697 )     82,689       (166 )%

Amortization

    34,069       39,333       (5,264 )     (13 )%

Stock-based compensation

    9,193       9,417       (224 )     (2 )%

Change in fair value of contingent consideration

    211       837       (626 )     NM  

Purchase price accounting step-up

    1,107             1,107       NM  

Facility start-up and closure costs

    1,800       6,200       (4,400 )     (71 )%

Lease expense

    700       700             0 %

Litigation costs

    445       1,194       (749 )     (63 )%

Transaction (income) costs

    (12,816 )     24,385       (37,201 )     (153 )%

Adjusted EBITDA

  $ 13,531     $ 12,697     $ 834       7 %

 

 

 https://cdn.kscope.io/5f629072f269f3809a4842a9ccfe8b42-image01.jpg

PRESS RELEASE
 

Adjusted Net Loss

 

   

For the three months

 

(In thousands of U.S. dollars)

 

ended August 31,

 

Adjusted net loss reconciliation:

 

2022

   

2021

 

Net loss

  $ (65,794 )   $ (34,604 )

Non-operating income (expense), net

    32,992     $ (49,697 )

Change in fair value of contingent consideration

    211       837  

Litigation costs

    445       1,194  

Transaction (income) costs

    (12,816 )     24,385  

Adjusted net loss

  $ (44,962 )   $ (57,885 )

Adjusted net loss per share - basic and diluted

  $ (0.08 )   $ (0.13 )

 

Free Cash Flow

 

   

For the three months

 

(In thousands of U.S. dollars)

 

ended August 31,

 

Free cash flow

 

2022

   

2021

 

Net cash provided by (used in) operating activities

  $ (46,269 )   $ (93,227 )

Less: investments in capital and intangible assets, net

    (1,537 )     (8,620 )

Free cash flow

  $ (47,806 )   $ (101,847 )