- Revenue rises 85.8% to $10.0 (C$12.9) million in the third quarter
and 78.9% to $27.6 (C$35.5) million year-to-date
- Tilray medical cannabis products available to patients in 12
countries on five continents
- Signed agreements to supply adult-use cannabis to consumers in
eight Canadian provinces and territories
- Completed successful $475.0 (C$610.6) million Convertible Senior
Notes offering in October
NANAIMO, British Columbia -- (Business Wire)
Tilray, Inc. (“Tilray” or the “Company”) (NASDAQ: TLRY), a global leader
in cannabis production and distribution, today reported financial
results for the third quarter and nine months ended September 30, 2018.
All financial information in this press release is reported in U.S.
dollars, unless otherwise indicated.
“The cannabis industry remains very robust and we are pleased with our
revenue momentum and strategic achievements in the third quarter,” said
Brendan Kennedy, President and Chief Executive Officer of Tilray. “We
are in the early stages of achieving our growth potential and our team
continues to strategically execute on disciplined operational
initiatives and investments to support Tilray’s long-term, sustainable
growth as the pace of legalization continues to accelerate around the
world. Going forward, the demand for our products is strong and we
remain committed to expanding our leadership in the global medical and
adult-use cannabis markets.”
Third Quarter 2018 Financial Highlights
-
Revenue increased to $10.0 (C$12.9) million, up 85.8% compared to the
third quarter of last year. The increase in revenue was driven by
increased patient demand, bulk sales to other Licensed Producers, and
accelerated wholesale distribution in export markets.
-
Total kilogram equivalents sold increased over two-fold to 1,613
kilograms from 684 kilograms in the prior year.
-
Average net selling price per gram was $6.21 (C$7.98) compared to
$7.53 (C$9.34) for the three months ended September 30, 2017. The
reduction in 2018 compared to 2017 was primarily due to an increase in
bulk sales as a percentage of total revenue.
-
Net loss for the quarter was $18.7 million or $0.20 per share compared
to $1.8 million or $0.02 per share for the third quarter of 2017. Net
loss includes non-cash stock based compensation charges of $11.2
million compared to a $35 thousand charged in the prior year period.
Excluding non-cash compensation, net loss was $7.5 million or $0.08
per share. Adjusted EBITDA was a loss of $7.4 million compared to a
loss of $1.7 million the third quarter last 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 financing and the initial
public offering (“IPO”).
Business Highlights
Global expansion of medical business and participation in clinical
trials:
-
Acquired Alef Biotechnology SpA for $3.9 (C$5.0) million to allow
Tilray to import, produce, and distribute Tilray branded medical
cannabis products to Chile and to create a hub to distribute
throughout Latin America.
-
Imported 2:100 CBD oil to the United Kingdom.
-
Received regulatory permits in Canada and Germany to export medical
cannabis flower to Germany, making Tilray the first and only company
to import both flower and oil medical cannabis products to the German
market.
-
Received regulatory approval from U.S. Government to import a medical
cannabis study drug in capsule form for a clinical trial at the
University of California San Diego Center for Medicinal Cannabis
Research to examine the safety, tolerability, and efficacy of cannabis
for Essential Tremor (ET).
-
Exported CBD 100 medical cannabis, an oral solution of cannabinoid
extract, from Canada to Australia to distribute to critically ill
children in Australia suffering from intractable epilepsy through a
compassionate access program.
Adult-use Business Developments, which occurred in advance of
legalization in Canada in October:
-
Signed agreement with Prince Edward Island to supply cannabis to
adult-use consumers; eight agreements now signed in Canadian provinces
and territories (British Columbia, Manitoba, Nova Scotia, Ontario,
Quebec, the Yukon territory, the Northwest Territories, and Prince
Edward Island).
-
High Park Farms™, a subsidiary of Tilray, received cannabis sales
license from Health Canada, to supply and sell finished cannabis
products within the Access to Cannabis for Medical Purposes
Regulations, as well as sales in the adult-use market.
Subsequent Events
-
Announced Pricing of $475 (C$610.6) million of Convertible Senior
Notes due in 2023 in a private placement in October 2018; Tilray
intends to use the net proceeds for working capital, future
acquisitions and general corporate purposes, and to repay existing
mortgage related to our facility in Nanaimo, British Columbia.
Conference Call
The Company will host a conference call to discuss these results today
at 4:30 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 27, 2018, by dialing
855-859-2056 from the U.S., or 404-537-3406 from international
locations, and entering confirmation code 9395669.
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 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. 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 29,
2018, 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; 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 non-U.S. GAAP
financial measures provide 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 per share data,
unaudited) |
|
|
|
| Three months ended |
| Nine months ended |
| | September 30, | | September 30, |
| |
| 2018 |
|
|
| 2017 |
| |
| 2018 |
|
|
| 2017 |
|
|
Revenue
| |
$
|
10,047
| | |
$
|
5,406
| | |
$
|
27,599
| | |
$
|
15,425
| |
|
Cost of sales
| |
|
6,979
|
| |
|
2,439
|
| |
|
16,458
|
| |
|
7,001
|
|
|
Gross margin
| |
|
3,068
|
| |
|
2,967
|
| |
|
11,141
|
| |
|
8,424
|
|
|
Research and development expenses
| | |
802
| | | |
729
| | | |
2,416
| | | |
2,431
| |
|
Sales and marketing expenses
| | |
3,493
| | | |
1,469
| | | |
9,061
| | | |
3,912
| |
|
General and administrative expenses
| | |
7,540
| | | |
2,916
| | | |
17,530
| | | |
6,881
| |
|
Stock-based compensation expense
| |
|
11,245
|
| |
|
35
|
| |
|
16,877
|
| |
|
104
|
|
|
Operating loss
| |
|
(20,012
|
)
| |
|
(2,182
|
)
| |
|
(34,743
|
)
| |
|
(4,904
|
)
|
|
Foreign exchange loss (gain), net
| | |
(1,592
|
)
| | |
(838
|
)
| | |
913
| | | |
(1,417
|
)
|
|
Interest expense, net
| | |
480
| | | |
432
| | | |
1,393
| | | |
1,428
| |
|
Other income, net
| |
|
(225
|
)
| |
|
(9
|
)
| |
|
(422
|
)
| |
|
(15
|
)
|
|
Loss before income taxes
| | |
(18,675
|
)
| | |
(1,767
|
)
| | |
(36,627
|
)
| | |
(4,900
|
)
|
|
Income tax expense
| |
|
24
|
| |
|
—
|
| |
|
87
|
| |
|
—
|
|
|
Net loss
| |
$
|
(18,699
|
)
| |
$
|
(1,767
|
)
| |
$
|
(36,714
|
)
| |
$
|
(4,900
|
)
|
|
Net loss per share - basic and diluted
| | |
(0.20
|
)
| | |
(0.02
|
)
| | |
(0.39
|
)
| | |
(0.07
|
)
|
|
Shares used in computation of net loss per share - basic and diluted
| | |
93,144,042
| | | |
75,000,000
| | | |
93,144,042
| | | |
75,000,000
| |
|
Net loss
| |
$
|
(18,699
|
)
| |
$
|
(1,767
|
)
| |
$
|
(36,714
|
)
| |
$
|
(4,900
|
)
|
|
Foreign currency translation gain (loss)
| |
|
450
|
| |
|
(1
|
)
| |
|
538
|
| |
|
(241
|
)
|
|
Comprehensive loss
| |
$
|
(18,249
|
)
| |
$
|
(1,768
|
)
| |
$
|
(36,176
|
)
| |
$
|
(5,141
|
)
|
|
|
| TILRAY, INC. |
| Condensed Consolidated Balance Sheets |
| (in thousands of U.S. dollars, except for per share data,
unaudited) |
|
| |
| |
| | September 30, | | December 31, |
| |
| 2018 |
| |
| 2017 |
|
| Assets | | | | |
|
Current assets
| | | | |
|
Cash and cash equivalents
| |
$
|
104,245
| | |
$
|
2,323
| |
|
Short-term investments
| | |
14,712
| | | |
—
| |
|
Accounts receivable, net
| | |
5,746
| | | |
983
| |
|
Other receivables
| | |
4,696
| | | |
1,131
| |
|
Inventory
| | |
12,107
| | | |
7,421
| |
|
Prepaid expenses and other current assets
| |
|
4,431
|
| |
|
545
|
|
|
Total current assets
| |
|
145,937
|
| |
|
12,403
|
|
|
Property, plant and equipment, net
| | |
75,580
| | | |
39,985
| |
|
Intangible assets, net
| | |
1,387
| | | |
934
| |
|
Deposits and other assets
| |
|
897
|
| |
|
626
|
|
|
Total assets
| |
$
|
223,801
|
| |
$
|
53,948
|
|
| Liabilities | | | | |
|
Current liabilities:
| | | | |
|
Accounts payable
| |
$
|
10,107
| | |
$
|
5,563
| |
|
Accrued expenses and other current liabilities
| | |
7,340
| | | |
2,021
| |
|
Accrued obligations under capital lease
| | |
103
| | | |
379
| |
|
Current portion of long-term debt
| | |
9,348
| | | |
9,432
| |
|
Privateer Holdings debt facilities
| |
|
—
|
| |
|
32,826
|
|
|
Total current liabilities
| |
|
26,898
|
| |
|
50,221
|
|
|
Accrued obligations under capital lease
| |
|
8,789
|
| |
|
8,579
|
|
|
Total liabilities
| |
$
|
35,687
|
| |
$
|
58,800
|
|
Commitments and contingencies
| | | | |
| Stockholders’ equity (deficit) | | | | |
|
Convertible preferred stock ($0.0001 par value, 10,000,000 shares
authorized and none issued or outstanding at September 30, 2018;
none authorized, issued or outstanding at December 31, 2017)
| |
$
|
—
| | |
$
|
—
| |
|
Class 1 common stock ($0.0001 par value, 250,000,000 shares
authorized and 16,666,667 shares issued and outstanding at September
30, 2018; none authorized, issued or outstanding at December 31,
2017)
| | |
2
| | | |
—
| |
|
Class 2 common stock ($0.0001 par value; 500,000,000 shares
authorized and 76,477,375 shares issued and outstanding at September
30, 2018; none authorized, issued or outstanding at December 31,
2017)
| | |
8
| | | |
—
| |
|
Class 3 common stock ($0.0001 par value, none authorized, issued or
outstanding at September 30, 2018; none authorized, issued or
outstanding at December 31, 2017)
| | |
—
| | | |
—
| |
Capital stock (none authorized, issued or outstanding at September
30, 2018; 1 share authorized, issued and outstanding at December
31, 2017)
| | |
—
| | | |
—
| |
|
Additional paid-in capital
| | |
261,944
| | | |
31,736
| |
|
Accumulated other comprehensive income
| | |
3,328
| | | |
3,866
| |
|
Accumulated deficit
| |
|
(77,168
|
)
| |
|
(40,454
|
)
|
|
Total stockholders’ equity (deficit)
| |
|
188,114
|
| |
|
(4,852
|
)
|
| Total liabilities and stockholders’ equity (deficit) | |
$
|
223,801
|
| |
$
|
53,948
|
|
|
|
| TILRAY, INC. |
| Condensed Consolidated Statements of Cash Flows |
| (in thousands of U.S. dollars, except for per share data,
unaudited) |
|
| |
| |
| | Nine months ended September 30, |
| |
| 2018 |
| |
| 2017 |
|
| Operating activities | | | | |
|
Net loss
| |
$
|
(36,714
|
)
| |
$
|
(4,900
|
)
|
|
Adjusted for the following items:
| | | | |
|
Foreign currency loss (gain)
| | |
859
| | | |
(1,417
|
)
|
|
Provision for doubtful accounts
| | |
17
| | | |
(9
|
)
|
|
Inventory write-downs
| | |
281
| | | |
205
| |
|
Depreciation and amortization
| | |
2,552
| | | |
1,402
| |
|
Stock-based compensation expense
| | |
16,877
| | | |
104
| |
|
Non-cash interest expense
| | |
463
| | | |
640
| |
|
Deferred income tax expense
| | |
87
| | | |
—
| |
|
(Gain) loss on disposal of property, plant, and equipment
| | |
(2
|
)
| | |
7
| |
|
Changes in non-cash working capital:
| | | | |
|
Accounts receivable
| | |
(4,808
|
)
| | |
(566
|
)
|
|
Other receivables
| | |
(3,553
|
)
| | |
(267
|
)
|
|
Inventory
| | |
(7,754
|
)
| | |
(2,083
|
)
|
|
Prepaid expenses and other current assets
| | |
(4,686
|
)
| | |
(1,210
|
)
|
|
Accounts payable
| | |
3,399
| | | |
168
| |
|
Due to related parties
| | |
1,014
| | | |
—
| |
|
Accrued expenses and other current liabilities
| |
|
5,528
|
| |
|
1,027
|
|
|
Net cash used in operating activities
| |
|
(26,440
|
)
| |
|
(6,899
|
)
|
| Investing activities | | | | |
|
Purchases of short-term investments
| | |
(44,061
|
)
| | |
—
| |
|
Proceeds from sales of short-term investments
| | |
29,257
| | | |
—
| |
|
Proceeds from maturities of short-term investments
| | |
136
| | | |
—
| |
|
Purchases of property, plant and equipment
| | |
(38,076
|
)
| | |
(3,298
|
)
|
|
Dispositions of property, plant and equipment
| | |
34
| | | |
23
| |
|
Purchases of intangible assets
| |
|
(834
|
)
| |
|
(107
|
)
|
|
Net cash used in investing activities
| |
|
(53,544
|
)
| |
|
(3,382
|
)
|
| Financing activities | | | | |
|
Repayment under Privateer Holdings debt facilities
| | |
(36,940
|
)
| | |
—
| |
|
Advances under Privateer Holdings debt facilities
| | |
3,700
| | | |
4,872
| |
|
Proceeds from Preferred Shares - Series A
| | |
52,638
| | | |
—
| |
|
Lease payments under capital lease
| | |
(516
|
)
| | |
—
| |
|
Proceeds from issuance of common stock pursuant to IPO
| | |
176,084
| | | |
—
| |
|
Payment of costs from issuance of common stock pursuant to IPO
| |
|
(15,299
|
)
| |
|
—
|
|
|
Net cash provided by financing activities
| |
|
179,667
|
| |
|
4,872
|
|
|
Effect of foreign currency translation on cash
| |
|
2,239
|
| |
|
413
|
|
| Cash and cash equivalents | | | | |
|
Increase (decrease) in cash and cash equivalents
| |
|
101,922
|
| |
|
(4,996
|
)
|
|
Cash and cash equivalents, beginning of period
| |
|
2,323
|
| |
|
7,531
|
|
|
Cash and cash equivalents, end of period
| |
$
|
104,245
|
| |
$
|
2,535
|
|
| Supplemental Disclosure for Cash Flow Information | | | | |
|
Cash paid for interest
| |
$
|
930
|
| |
$
|
787
|
|
|
|
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| |
| 2018 |
|
|
| 2017 |
| |
| 2018 |
|
|
| 2017 |
|
| Adjusted EBITDA reconciliation: | | | | | | | | |
|
Net loss
| |
$
|
(18,699
|
)
| |
$
|
(1,767
|
)
| |
$
|
(36,714
|
)
| |
$
|
(4,900
|
)
|
|
Interest expense, net
| | |
480
| | | |
432
| | | |
1,393
| | | |
1,428
| |
|
Other income, net
| | |
(225
|
)
| | |
(9
|
)
| | |
(422
|
)
| | |
(15
|
)
|
|
Income tax expense
| | |
24
| | | |
—
| | | |
87
| | | |
—
| |
|
Foreign exchange loss (gain), net
| | |
(1,592
|
)
| | |
(838
|
)
| | |
913
| | | |
(1,417
|
)
|
|
Depreciation and amortization
| | |
1,404
| | | |
447
| | | |
2,552
| | | |
1,402
| |
|
Stock-based compensation expense
| |
|
11,245
|
| |
|
35
|
| |
|
16,877
|
| |
|
104
|
|
|
Adjusted EBITDA
| |
$
|
(7,363
|
)
| |
$
|
(1,700
|
)
| |
$
|
(15,314
|
)
| |
$
|
(3,398
|
)
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181113006144/en/
Contacts:
For further information:
Media: Zack Hutson,+1-415-534-5541,zack.hutson@tilray.com
Investors:
Katie Turner, +1-646-277-1228, katie.turner@icrinc.com
Source: Tilray, Inc.
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