Full Press Release Details
| Exhibit 99.1 | |
| PRESS RELEASE | August 10, 2020 |
Tilray, Inc. Reports 2020 Second Quarter Results
Revenue Increased 10% to $50.4 Million (C$69.4 Million) versus Q2 2019
Cost Savings of $13.0 Million Realized in Q2 2020 - on Pace for Total Annualized Savings of Approximately $55 Million
Net Loss of ($81.7) Million increased $45.4 Million versus Q2 2019 Partially Due to Facilities Closure and Inventory Adjustments
Adjusted EBITDA Loss of ($12.3) Million Represents 32% Improvement compared to both Q2 2019 and Q1 2020
$137 Million Q2 2020 Ending Cash Balance and $250 Million Remaining on ATM
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 second quarter ended June 30, 2020. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.
"Since the beginning of 2020 we have taken bold and significant actions to position Tilray for future growth and success. We have focused on reducing costs, driving international revenue growth, mitigating COVID-19 related challenges, and improving our net loss and reported Adjusted EBITDA. Today's results demonstrate significant progress in all these areas.
Despite a challenging business environment, we generated healthy year-over-year revenue growth, we significantly reduced our cost structure and cash burn, and we improved our Adjusted EBITDA and net loss compared to both the prior quarter of 2019 and the first quarter of 2020. We are particularly encouraged by the revenue growth of our International Medical business during the second quarter. International Medical revenues now exceed those of our Canadian Medical business and we anticipate growth in this segment to outpace our other segments in the coming quarters.
Tilray | www.tilray.com
| Exhibit 99.1 | |
| PRESS RELEASE | August 10, 2020 |
With our significant cost cutting and balance sheet actions behind us, we have positioned Tilray to enter the second half of 2020 in a stronger position so we can remain focused on achieving profitable growth in all our markets and deliver break-even or positive Adjusted EBITDA in the fourth quarter of 2020." said Brendan Kennedy, Tilray's Chief Executive Officer.
Second Quarter 2020 Financial Highlights
(in thousands of United States dollars)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
| 2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||
| Cannabis | ||||||||||||||||||||||||||||||||
| Adult Use | $ | 17,621 | $ | 15,043 | $ | 2,578 | 17 | % | $ | 38,540 | $ | 22,923 | $ | 15,617 | 68 | % | ||||||||||||||||
| Canada - medical | 3,835 | 2,326 | 1,509 | 65 | % | 7,886 | 5,324 | 2,562 | 48 | % | ||||||||||||||||||||||
| International Medical | 8,313 | 1,851 | 6,462 | 349 | % | 14,119 | 3,662 | 10,457 | 286 | % | ||||||||||||||||||||||
| Bulk | 402 | 6,749 | (6,347 | ) | (94 | )% | 402 | 11,516 | (11,114 | ) | (97 | )% | ||||||||||||||||||||
| Total Cannabis revenue | 30,171 | 25,969 | 4,202 | 16 | % | $ | 60,947 | $ | 43,425 | 17,522 | 40 | % | ||||||||||||||||||||
| Hemp | 20,243 | 19,935 | 308 | 2 | % | 41,569 | 25,517 | 16,052 | 63 | % | ||||||||||||||||||||||
| Total | $ | 50,414 | $ | 45,904 | $ | 4,510 | 10 | % | $ | 102,516 | $ | 68,942 | $ | 33,574 | 49 | % | ||||||||||||||||
| Excise duties included in revenue | $ | 4,140 | $ | 3,862 | $ | 278 | 7 | % | $ | 9,112 | $ | 5,776 | $ | 3,336 | 58 | % |
Tilray | www.tilray.com
| Exhibit 99.1 | |
| PRESS RELEASE | August 10, 2020 |
Tilray | www.tilray.com
| Exhibit 99.1 | |
| PRESS RELEASE | August 10, 2020 |
Update to Board of Directors
Maryscott Greenwood intends to resign as a member of our board of directors and all committees thereof, effective as of September 30, 2020. The Company is grateful for Ms. Greenwood's contributions to Tilray.
Effective August 6, 2020, Soren Schroder has been appointed as a Director on the Tilray Board. Soren has served in a variety of agribusiness leadership roles in the United States and Europe. After working for more than 15 years at Continental Grain and Cargill, he joined Bunge Ltd in 2000. Soren served as CEO of Bunge North America, leading Bunge's business operations in the United States, Canada, and Mexico. In June 2013, he was named CEO of Bunge Ltd, serving in this role until 2019. Soren is active in board and advisory roles for emerging companies in the agribusiness and food sectors. His experience lies in building global supply chains, managing risk, logisitics, industrial and value-added activities, and executing on strategy via acquisitions and partnerships on a global scale. Soren is a Danish National and earned a BA in Economics from Connecticut College.
COVID-19 Business Continuity Measures
Since the outset of the global health pandemic, we have remained committed to the health of our employees. We continue to adhere to the regulations outlined by governments and health regulators in all markets in which we do business. Our business continuity plan remains in effect across all offices and facilities to ensure the health and safety of its workforce, consumers, and the communities in which it operates.
Tilray | www.tilray.com
| Exhibit 99.1 | |
| PRESS RELEASE | August 10, 2020 |
We have experienced moderate impacts to our Adult Use revenue and Canadian medical, but no material impact to our operations as a result of the COVID-19 pandemic. While we remain committed to serving our patients and consumers around the world, due to the uncertainty presented by COVID-19 and its potential impact on the our patients, customers, supply chain, markets, employees, and the potential broader ramifications to the global economy, financial markets, and government institutions, we may experience material effects to our business, results of operations and financial condition.
The Company will host a conference call today, August 10, 2020, to discuss these results at 5:00 p.m. ET. Investors interested in participating in the live call can dial 877-407-0792 from the U.S. and 201-689-8263 internationally.
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 also be archived after the call concludes.
Tilray (Nasdaq: TLRY) is a global pioneer in the research, cultivation, production and distribution of cannabis and cannabinoids currently serving tens of thousands of patients and consumers in 15 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, the optimization of our facilities and estimated net savings, our ability to become Adjusted EBITDA positive by the end of 2020, demand for our products and the medical and Adult Use cannabis markets, anticipated plans for strategic partnerships and acquisitions, and future sales of our common stock. 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 10, 2020, for a discussion of the material
Tilray | www.tilray.com
| Exhibit 99.1 | |
| PRESS RELEASE | August 10, 2020 |
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 and Gross margin, excluding inventory valuation adjustments, which are financial measures which are not calculated in accordance with generally accepted accounting principles in the United States ("U.S. GAAP").
Adjusted EBITDA is calculated as net income (loss) before inventory valuation adjustments; interest expenses, net; other expenses (income), net; deferred income tax (recoveries) expenses, current income tax expenses (benefit); foreign exchange gain (loss), net; depreciation and amortization expenses; other stock-based related compensation expenses; loss from equity method investments; finance income from ABG; loss on disposal of property and equipment; acquisition-related (income) expense; amortization of inventory step-up; severance costs; impairment of assets; and change in fair value of warrant liability. 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.
The Company believes these non-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 these non-GAAP financial measures to compare the Company's performance to that of prior periods for trend analyses and planning purposes. These non-GAAP financial measures are 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.
For further information:
Media: Chrissy Roebuck, +1-833-206-8161, news@tilray.com
Investors: Raphael Gross, +1-203-682-8253, Raphael.Gross@icrinc.com
Tilray | www.tilray.com
| Exhibit 99.1 | |
| PRESS RELEASE | August 10, 2020 |
Condensed Consolidated Statements of Net Loss and Comprehensive Loss
(in thousands of United States dollars, except for share and per share data, unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue | $ | 50,414 | $ | 45,904 | $ | 102,516 | $ | 68,942 | ||||||||
| Cost of sales | ||||||||||||||||
| Product costs | 37,204 | 33,430 | 74,392 | 50,759 | ||||||||||||
| Inventory valuation adjustments | 18,629 | 201 | 22,673 | 525 | ||||||||||||
| Gross (loss) profit | (5,419 | ) | 12,273 | 5,451 | 17,658 | |||||||||||
| General and administrative expenses | 14,444 | 16,562 | 32,220 | 29,496 | ||||||||||||
| Sales and marketing expenses | 12,833 | 14,366 | 30,709 | 22,187 | ||||||||||||
| Research and development expenses | 652 | 1,528 | 1,910 | 2,576 | ||||||||||||
| Stock-based compensation expenses | 7,647 | 7,923 | 15,324 | 13,659 | ||||||||||||
| Depreciation and amortization expenses | 3,337 | 2,392 | 6,928 | 4,257 | ||||||||||||
| Impairment of assets | 28,371 | - | 58,210 | - | ||||||||||||
| Acquisition-related expenses, net | 1,790 | 2,464 | 4,145 | 6,888 | ||||||||||||
| Loss from equity method investments | 1,327 | - | 3,075 | - | ||||||||||||
| Operating loss | (75,820 | ) | (32,962 | ) | (147,070 | ) | (61,405 | ) | ||||||||
| Foreign exchange (gain) loss, net | (13,326 | ) | (1,611 | ) | 14,743 | (1,432 | ) | |||||||||
| Change in fair value of warrant liability | 11,210 | - | 83,188 | - | ||||||||||||
| Interest expenses, net | 10,564 | 8,581 | 19,710 | 17,325 | ||||||||||||
| Finance income from ABG | - | (212 | ) | - | (347 | ) | ||||||||||
| Other expense (income), net | 333 | (1,224 | ) | 4,983 | (5,069 | ) | ||||||||||
| Loss before income taxes | (84,601 | ) | (38,496 | ) | (269,694 | ) | (71,882 | ) | ||||||||
| Deferred income tax recoveries | (2,875 | ) | (2,642 | ) | (4,147 | ) | (6,419 | ) | ||||||||
| Current income tax expenses (benefit) | (39 | ) | 447 | 262 | 207 | |||||||||||
| Net loss | $ | (81,687 | ) | $ | (36,301 | ) | $ | (265,809 | ) | $ | (65,670 | ) | ||||
| Net loss per share - basic and diluted | (0.65 | ) | (0.37 | ) | (2.30 | ) | (0.68 | ) | ||||||||
| Weighted average shares used in computation of net loss per share - basic and diluted | 124,763,445 | 97,231,839 | 115,593,533 | 96,037,142 | ||||||||||||
| Net loss | $ | (81,687 | ) | $ | (36,301 | ) | $ | (265,809 | ) | $ | (65,670 | ) | ||||
| Foreign currency translation gain (loss), net | 7,184 | 2,924 | (9,449 | ) | 2,449 | |||||||||||
| Unrealized gain (loss) on available-for-sale debt securities | 35 | 50 | (39 | ) | 69 | |||||||||||
| Other comprehensive income (loss) | 7,219 | 2,974 | (9,488 | ) | 2,518 | |||||||||||
| Comprehensive loss | $ | (74,468 | ) | $ | (33,327 | ) | $ | (275,297 | ) | $ | (63,152 | ) |
In the fourth quarter of 2019, the Company adopted ASU 2016-01, ASC 842, ASC 606 and ASU 2018-07. The first quarter of 2019 has been recast to reflect the effects of this adoption.
Tilray | www.tilray.com
| Exhibit 99.1 | |
| PRESS RELEASE | August 10, 2020 |
Condensed Consolidated Balance Sheets
(in thousands of United States dollars, except for share and par value data, unaudited)
| June 30, 2020 | December 31, 2019 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 137,211 | $ | 96,791 | ||||
| Accounts receivable, net of allowance for credit losses of $889 and provision for sales returns of $1,302 (December 31, 2019 - $615 and $1,400, respectively) | 26,614 | 36,202 | ||||||
| Inventory | 93,089 | 87,861 | ||||||
| Prepayments and other current assets | 26,217 | 38,173 | ||||||
| Assets held for sale | 6,664 | - | ||||||
| Total current assets | 289,795 | 259,027 | ||||||
| Property and equipment, net | 176,080 | 184,217 | ||||||
| Operating lease, right-of-use assets | 17,921 | 17,514 | ||||||
| Intangible assets, net | 179,773 | 228,828 | ||||||
| Goodwill | 156,371 | 163,251 | ||||||
| Equity method investments | 8,743 | 11,448 | ||||||
| Other investments | 22,545 | 24,184 | ||||||
| Other assets | 4,500 | 7,861 | ||||||
| Total assets | $ | 855,728 | $ | 896,330 | ||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable | 22,203 | 39,125 | ||||||
| Accrued expenses and other current liabilities | 34,532 | 50,829 | ||||||
| Accrued lease obligations | 3,383 | 2,473 | ||||||
| Warrant liability | 103,549 | - | ||||||
| Total current liabilities | 163,667 | 92,427 | ||||||
| Accrued lease obligations | 28,522 | 29,407 | ||||||
| Deferred tax liability | 46,866 | 53,363 | ||||||
| Convertible notes, net of issuance costs | 435,454 | 430,210 | ||||||
| Senior Facility, net of transaction costs | 44,638 | - | ||||||
| Other liabilities | 5,094 | 5,652 | ||||||
| Total liabilities | $ | 724,241 | $ | 611,059 | ||||
| Commitments and contingencies (refer to Note 18) | ||||||||
| Stockholders' equity | ||||||||
| Class 1 common stock ($0.0001 par value, 250,000,000 shares authorized; 15,751,745 and 16,666,665 shares issued and outstanding, respectively) | 2 | 2 | ||||||
| Class 2 common stock ($0.0001 par value; 500,000,000 shares authorized; 110,179,667 and 86,114,560 shares issued and outstanding, respectively) | 11 | 9 | ||||||
| Additional paid-in capital | 856,083 | 705,671 | ||||||
| Accumulated other comprehensive income | 231 | 9,719 | ||||||
| Accumulated deficit | (724,840 | ) | (430,130 | ) | ||||
| Total stockholders' equity | 131,487 | 285,271 | ||||||
| Total liabilities and stockholders' equity | $ | 855,728 | $ | 896,330 |
Tilray | www.tilray.com
| Exhibit 99.1 | |
| PRESS RELEASE | August 10, 2020 |
(in thousands of United States dollars)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Adjusted EBITDA reconciliation: | ||||||||||||||||
| Net loss | $ | (81,687 | ) | $ | (36,301 | ) | $ | (265,809 | ) | $ | (65,670 | ) | ||||
| Inventory valuation adjustments | 18,629 | 201 | 22,673 | 525 | ||||||||||||
| Severance costs | 1,475 | - | 3,337 | - | ||||||||||||
| Depreciation and amortization expenses | 4,325 | 2,992 | 8,886 | 5,764 | ||||||||||||
| Stock-based compensation expenses | 7,647 | 7,923 | 15,324 | 13,659 | ||||||||||||
| Impairment of assets | 28,371 | - | 58,210 | - | ||||||||||||
| Acquisition-related expenses, net | 1,790 | 2,464 | 4,145 | 6,888 | ||||||||||||
| Loss from equity method investments | 1,327 | - | 3,075 | - | ||||||||||||
| Foreign exchange (gain) loss, net | (13,326 | ) | (1,611 | ) | 14,743 | (1,432 | ) | |||||||||
| Change in fair value of warrant liability | 11,210 | - | 83,188 | - | ||||||||||||
| Interest expenses, net | 10,564 | 8,581 | 19,710 | 17,325 | ||||||||||||
| Finance income from ABG | - | (212 | ) | - | (347 | ) | ||||||||||
| (Gain) Loss from disposal of property and equipment | (21 | ) | 1 | 436 | 112 | |||||||||||
| Other expense (income), net | 333 | (1,224 | ) | 4,983 | (5,069 | ) | ||||||||||
| Amortization of inventory step-up | - | 1,360 | - | 2,041 | ||||||||||||
| Deferred income tax recoveries | (2,875 | ) | (2,642 | ) | (4,147 | ) | (6,419 | ) | ||||||||
| Current income tax expenses (benefit) | (39 | ) | 447 | 262 | 207 | |||||||||||
| Adjusted EBITDA | $ | (12,277 | ) | $ | (18,021 | ) | $ | (30,984 | ) | $ | (32,416 | ) |
The Company revised its Adjusted EBITDA reconciliation for the six months ended June 30, 2020 to reflect a correction in depreciation and amortization expense amount applied to this non-GAAP financial measures. Non-cash depreciation and amortization expenses includes depreciation expense related to both manufacturing and non-manufacturing assets. In the three months ended March 31, 2020, we incorrectly reported $3.6 million which excluded the portion of the depreciation expense related to the Company's manufacturing assets. The corrected amount in Adjusted EBITDA reconciliation for the three months ended March 31, 2020 is $4.6 million and is correct as reported above within the six months results.
(in thousands of United States dollars, except percentages)
| For the three months ended June 30, | ||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Gross margin, excluding inventory valuation adjustments reconciliation: | Cannabis | Hemp | Total | |||||||||||||||||||||
| Revenue | $ | 30,171 | $ | 25,969 | $ | 20,243 | $ | 19,935 | $ | 50,414 | $ | 45,904 | ||||||||||||
| Cost of sales | ||||||||||||||||||||||||
| Product costs | 27,181 | 22,401 | 10,023 | 11,029 | 37,204 | 33,430 | ||||||||||||||||||
| Inventory valuation adjustments | 15,062 | 201 | 3,567 | - | 18,629 | 201 | ||||||||||||||||||
| Gross profit | (12,072 | ) | 3,367 | 6,653 | 8,906 | (5,419 | ) | 12,273 | ||||||||||||||||
| Inventory valuation adjustments | 15,062 | 201 | 3,567 | - | 18,629 | 201 | ||||||||||||||||||
| Amortization of inventory step-up | - | - | - | 1,360 | - | 1,360 | ||||||||||||||||||
| Gross profit, excluding inventory valuation adjustments | $ | 2,990 | $ | 3,568 | $ | 10,220 | $ | 10,266 | $ | 13,210 | $ | 13,834 | ||||||||||||
| Gross margin, excluding inventory valuation adjustments | 10 | % | 14 | % | 50 | % | 51 | % | 26 | % | 30 | % |
Tilray | www.tilray.com
| Exhibit 99.1 | |
| PRESS RELEASE | August 10, 2020 |
| For the six months ended June 30, | ||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Gross margin, excluding inventory valuation adjustments reconciliation: | Cannabis | Hemp | Total | |||||||||||||||||||||
| Revenue | $ | 60,947 | $ | 43,425 | $ | 41,569 | $ | 25,517 | $ | 102,516 | $ | 68,942 | ||||||||||||
| Cost of sales | ||||||||||||||||||||||||
| Product costs | 51,784 | 35,912 | 22,608 | 14,847 | 74,392 | 50,759 | ||||||||||||||||||
| Inventory valuation adjustments | 18,309 | 525 | 4,364 | - | 22,673 | 525 | ||||||||||||||||||
| Gross profit | (9,146 | ) | 6,988 | 14,597 | 10,670 | 5,451 | 17,658 | |||||||||||||||||
| Inventory valuation adjustments | 18,309 | 525 | 4,364 | - | 22,673 | 525 | ||||||||||||||||||
| Amortization of inventory step-up | - | - | - | 2,041 | - | 2,041 | ||||||||||||||||||
| Gross profit, excluding inventory valuation adjustments | $ | 9,163 | $ | 7,513 | $ | 18,961 | $ | 12,711 | $ | 28,124 | $ | 20,224 | ||||||||||||
| Gross margin, excluding inventory valuation adjustments | 15 | % | 17 | % | 46 | % | 50 | % | 27 | % | 29 | % |
In the fourth quarter of 2019, the Company adopted ASU 2016-01, ASC 842, ASC 606 and ASU 2018-07. The first quarter of 2019 has been recast to reflect the effects of this adoption.
Tilray | www.tilray.com