Mr. Irwin Simon reports
TILRAY, INC. REPORTS PROFITABLE SECOND QUARTER FISCAL YEAR 2022 FINANCIAL RESULTS
Tilray Inc. has released financial results for the second fiscal quarter ended Nov. 30, 2021. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.
The company also announced a new parent name, Tilray Brands Inc., reflecting the company's evolution from a Canadian LP (licensed producer) to a global consumer packaged goods company powerhouse with a market-leading portfolio of cannabis and lifestyle CPG brands.
Irwin D. Simon, Tilray's chairman and chief executive officer, stated: "Our second quarter performance reflects notable success building high-quality and highly sought-after cannabis and lifestyle CPG brands, which, coupled with our scale, operational excellence and broad global distribution, enabled us to increase sales and maintain profitability despite sector-specific and macroeconomic headwinds."
Mr. Simon continued: "Looking at performance highlights across key markets, we maintained our No. 1 cannabis market share position in Canada despite market saturation and related competitive challenges -- on the strength of our brands and adept pricing and marketing adjustments. Importantly, we believe these adjustments will enable us to aggressively recapture share when the market rightsizes. In Germany Europe's largest and most profitable medical cannabis market our nearly 20-per-cent share leads the market. We believe this, coupled with our infrastructure, will also allow us to capture the adult-use market as legalization accelerates under the new coalition government. Turning to the U.S., SweetWater Brewing and Manitoba Harvest continued to invest in product innovation and acquisitions to enhance awareness and distribution. These profitable businesses further provide an opportunity to launch THC-based products upon federal legalization in the U.S. Subsequent to the end of the fiscal quarter, we also expanded our spirits portfolio through the acquisition of Breckenridge Distillery, deepening our presence in the fast-growing spirits sector while also providing an immediate contribution to earnings."
Mr. Simon concluded, "The totality of our performance, our prospects and our global platform make Tilray Brands' opportunity as compelling as ever, driven by our success as a cannabis and lifestyle CPG powerhouse and our relentless focus on delivering shareholder value."
Financial highlights second quarter fiscal 2022:
Net income increased to $6-million from a net loss of $89-million in the previous year quarter.
Net revenue increased about 20 per cent to $155-million during the second quarter from $129-million in the prior-year quarter. The increase was driven by 7-per-cent growth in cannabis revenue to $58.8-million, net beverage alcohol revenue of $13.7-million from SweetWater and wellness segment revenue of $13.8-million from Manitoba Harvest.
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $13.8-million in the second quarter 2022, 8-per-cent growth compared with the preceding prior quarter, and the 11th consecutive quarter of positive adjusted EBITDA.
Gross profit of $32.8-million, a 7-per-cent decrease from $35.3-million in the prior-year quarter.
Adjusted gross margin in the cannabis segment remained strong at 43 per cent.
- Maintained No. 1 cannabis market share in Canada with leading portfolio of comprehensive medical cannabis and adult-use brands, including top position in cannabis flower and prerolls.
- International medical cannabis market leader and No. 1 in Germany with about 20-per-cent market share.
Cost synergies from Aphria-Tilray combination of $70-million achieved on a run rate basis to date, with actual cash savings close to $36-million to date. Expect to reach $80-million synergy target, ahead of schedule, by May 31, 2022, and to generate an additional $20-million in synergies in fiscal 2023.
Strategic growth actions:
On Dec. 21, 2021, SweetWater acquired award-winning craft-beer brands, Alpine Beer and Green Flash Brewing.
- On Dec. 8, 2021, Tilray acquired Breckenridge Distillery, strengthening its strategic position in the Untied States.
- On Nov. 4, 2021, SweetWater entered the spirits category with new ready-to-drink cocktail and cross-brand collaboration with Canadian cannabis brand, Riff.
- On Oct. 26, 2021, Tilray announced European expansion with medical cannabis agreement in Luxembourg.
On Oct. 20, 2021, Tilray announced an expanded distribution agreement with Great North Distributors for adult-use cannabis sales across Canada.
Growth and high potential across key markets:
No. 1 market-leading position in Germany and poised to benefit from recreational legalization: Tilray is also the only company currently supplying the German government with medical cannabis grown in country. The company's state-of-the-art European Union good manufacturing practices-certified cultivation facility in Germany has additional capacity to immediately support entry into the recreational market upon legalization, which the new German coalition government is accelerating.
- Continuing progress across the European Union: Tilray's success across the EU, a powerful growth market worth potentially $1-billion for the company, is backed by its two state-of-the-art cultivation facilities in Portugal and Germany that provide EU GMP-certified pharmaceutical-grade medical cannabis across the region. Tilray is also the only company with two EU GMP-certified cannabis facilities in Europe. This unparalleled production capability coupled with Tilray's sales arrangements through major distribution channels in Germany, the United Kingdom and other key markets, and strong relationships with local governments and the trust of patients give Tilray the ability to drive accelerated growth.
- No. 1 leading cannabis market share in Canada: Amid an intensely competitive and oversaturated market, Tilray remains the market leader in the $4.26-billion Canadian cannabis market, driven by a portfolio of carefully curated brands across all consumer segments; medical, wellness, innovative cannabis 2.0 products across concentrates, edibles and drinks; processing capacity; and distribution. In order to address the saturated marketplace, Tilray has implemented strategic price adjustments, expanded distribution through its coast-to-coast agreement with Rose Life Sciences and Great North Distributors, and doubled down on and accelerated product innovation.
A leading U.S. CPG platform that generates considerable cash flow now and will be immediately leveraged for cannabis products upon federal legalization: In the United States, Tilray's operating businesses include SweetWater, the 11th-largest craft brewer in the nation and leading lifestyle brand, and Manitoba Harvest, a pioneer in hemp, CBD (cannabidiol) and wellness products. Together, they generate approximately $100-million in revenue and are EBITDA and cash flow positive and will expand in the near term into CBD adjacencies and tetrahydrocannabinol-based products upon legalization. Further, the company continues to build its U.S. platform, including through its prior acquisition of a majority of the outstanding senior secured convertible notes of Medmen Enterprises Inc., which marked a critical step toward delivering on its objective of leading the U.S. cannabis market upon federal legalization.
Tilray executives will host a conference call and live audio webcast to discuss these results at 8:30 a.m. Eastern Time, details of which are provided below.
The call-in numbers are 877-407-0792 from Canada and the U.S. or 201-689-8263 from international locations. Please dial in at least 10 minutes prior to the start time.
A telephone replay will be available approximately two hours after the call concludes through Jan. 26, 2022. To access the recording dial 844-512-2921 and use the pass code 13725661.
There will be a simultaneous, live webcast available on the investors section of Tilray's website. The webcast will also be archived.
About Tilray Inc.
Tilray 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 by inspiring and empowering the worldwide community to live their very best life by providing them with products that meet the needs of their mind, body and soul, and invoke a sense of well-being. Tilray's mission is to be the trusted partner for its patients and consumers by providing them with a cultivated experience and health and well-being through high-quality, differentiated brands and innovative products. A pioneer in cannabis research, cultivation and distribution, Tilray's unprecedented production platform supports over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods and alcoholic beverages.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) AND COMPREHENSIVE (LOSS)
(in thousands of dollars)
Three months Three months Six months Six months
ended Nov. 30, ended Nov. 30, ended Nov. 30, ended Nov. 30,
2021 2020 2021 2020
Net revenue $155,153 $129,459 $323,176 $246,949
Cost of goods sold 122,387 94,176 239,455 176,721
Gross profit 32,766 35,283 83,721 70,228
General and administrative 33,469 28,273 82,956 54,245
Selling 9,210 6,079 16,642 11,896
Amortization 29,016 4,208 59,755 8,335
Marketing and promotion 7,120 4,252 12,585 9,177
Research and development 515 225 1,300 345
Transaction costs 8,120 18,206 33,699 20,664
Total operating expenses 87,450 61,243 206,937 104,662
Operating (loss) (54,684) (25,960) (123,216) (34,434)
Interest (expense), net (9,940) (4,832) (20,110) (10,568)
Non-operating income (expense), net 64,750 (72,649) 113,610 (86,008)
Income (loss) before income taxes 126 (103,441) (29,716) (131,010)
Income taxes (recovery) (5,671) (14,192) (909) (20,017)
Net income (loss) 5,797 (89,249) (28,807) (110,993)
Total net income (loss)
attributable to shareholders of Tilray (201) (99,900) (41,850) (134,243)
Net income (loss) per share -- basic (0.00) (0.41) (0.09) (0.55)
Net income (loss) per share -- diluted (0.00) (0.41) (0.09) (0.55)
We seek Safe Harbor.
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