Tilray, Inc. Reports Profitable Second Quarter Fiscal Year 2022 Financial Results

New Parent Company Name, TILRAY BRANDS, Reflects Growing Portfolio of Leading, Global CPG Brands

New York, New York, UNITED STATES


  • Net Revenue Increased ~20% to $155 Million from the Prior Year Quarter
  • Net Income Improved $95 Million to $6 Million from the Prior Year Quarter

  • Adjusted EBITDA of $13.8 Million, 11th Consecutive Quarter of Positive Adjusted EBITDA

  • Achieved $70 Million in Cost Synergies To Date; On-Track to Exceed Original Plan of $80 Million Ahead of Schedule and to Generate Additional $20 Million of Synergies in Fiscal 2023

  • Leading Medical Cannabis Company in Europe with ~20% Market Share in Germany

NEW YORK, Jan. 10, 2022 (GLOBE NEWSWIRE) -- Tilray, 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 second fiscal quarter ended November 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 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 macro-economic headwinds.”

Mr. Simon continued, “Looking at performance highlights across key markets, we maintained our #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 right-sizes. In Germany – Europe’s largest and most profitable medical cannabis market – our nearly 20% 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 ~20% to $155 million during the second quarter from $129 million in the prior year quarter. The increase was driven by 7% 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 of $13.8 million in the second quarter 2022, 8% growth compared to the preceding prior quarter, and the eleventh consecutive quarter of positive Adjusted EBITDA
  • Gross profit of $32.8 million, a 7% decrease from $35.3 million in the prior year quarter.
  • Adjusted gross margin in the cannabis segment remained strong at 43%.
  • Maintained #1 cannabis market share in Canada1 with leading portfolio of comprehensive medical cannabis and adult-use brands, including top position in cannabis flower and pre-rolls.
  • International medical cannabis market leader and #1 in Germany2 with ~20% 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 December 21, 2021 – SweetWater acquired award-winning craft-beer brands, Alpine Beer and Green Flash Brewing.
  • On December 8, 2021, Tilray acquired Breckenridge Distillery, strengthening its strategic position in the U.S.
  • On November 4, 2021, SweetWater entered the Spirits category with new ready-to-drink cocktail and cross-brand collaboration with Canadian cannabis brand, RIFF.
  • On October 26, 2021, Tilray announced European expansion with medical cannabis agreement in Luxembourg.
  • On October 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

  • #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 EU GMP 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.

  • Ongoing Progress Across the EU - 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 UK, and other key markets, and strong relationships with local governments and the trust of patients give Tilray the ability to drive accelerated growth.

  • #1 Leading Cannabis Market Share in Canada – Amid an intensely competitive and over-saturated market, Tilray remains the market leader in the CAD$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 U.S., Tilray’s operating businesses include SweetWater, the 11th largest craft brewer in the nation3 and leading lifestyle brand, and Manitoba Harvest, a pioneer in hemp, CBD 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 THC-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. (CSE: MMEN) (OTCQX: MMNFF) – which marked a critical step towards delivering on its objective of leading the U.S. cannabis market upon federal legalization.

Conference Call
Tilray executives will host a conference call and live audio webcast to discuss these results at 8:30 am Eastern Time, details of which are provided below.

Call-in Number: (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 January 26, 2022. To access the recording dial (844)-512-2921 and use the passcode 13725661.     

There will be a simultaneous, live webcast available on the Investors section of Tilray’s website at www.tilray.com. The webcast will also be archived.

ICR Conference Participation Today

Tilray executives will also host a virtual fireside chat at the ICR Conference at 1:30 pm Eastern Time today. There will be a simultaneous, live webcast available on the Investors section of Tilray’s website at www.tilray.com. The webcast will also be archived.

About Tilray

Tilray, 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 – 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 wellbeing. Tilray’s mission is to be the trusted partner for its patients and consumers by providing them with a cultivated experience and health and wellbeing 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.

For more information on how we open a world of wellbeing, visit www.Tilray.com.

Forward-Looking Statements

Certain statements in this communication that are not historical facts 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. 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; expectations regarding profitable revenue growth and expected cost savings; and the Company’s ability to commercialize new and innovative beverage products. 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 Tilray and the Annual Report on Form 10-K (and other periodic reports filed with the SEC) of Tilray 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 adjusted 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.

Adjusted EBITDA is calculated as net income (loss) before finance expense, net; non-operating expense (income), net; amortization; stock-based compensation; facility start-up and closure costs; inventory valuation adjustment; lease expense; 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. Adjusted free cash flow removes the cash impact of acquisitions from free cash flow. A reconciliation of net cash flow provided by (used in) operating activities to free cash flow and to adjusted cash flows, 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

1 Based on Hifyre retail data.
2 Insight Health NPI: Panel data of 5,500 pharmacies (29% coverage)
3 The Brewers Association Top 50 Brewing Companies by Sales Volume Report for 2020.

 


Consolidated Statements of Financial Position

(In thousands of United States dollars) November 30,
2021
  May 31,
2021
 
Assets        
Current assets        
Cash and cash equivalents $331,783  $488,466 
Accounts receivable, net  84,575   87,309 
Inventory  233,020   256,429 
Prepaids and other current assets  57,340   48,920 
Convertible notes receivable  1,560   2,485 
Total current assets  708,278   883,609 
Capital assets  604,249   650,698 
Right-of-use assets  13,933   18,267 
Intangible assets  1,450,015   1,605,918 
Goodwill  2,814,163   2,832,794 
Interest in equity investees  4,440   8,106 
Long-term investments  168,244   17,685 
Other assets  164   8,285 
Total assets $5,763,486  $6,025,362 
Liabilities        
Current liabilities        
Bank indebtedness $8,736  $8,717 
Accounts payable and accrued liabilities  168,300   212,813 
Contingent consideration  62,339   60,657 
Warrant liability  40,455   78,168 
Current portion of lease liabilities  3,588   4,264 
Current portion of long-term debt  31,510   36,622 
Total current liabilities  314,928   401,241 
Long - term liabilities        
Lease liabilities  49,265   53,946 
Long-term debt  151,819   167,486 
Convertible debentures  554,854   667,624 
Deferred tax liability  219,311   265,845 
Other liabilities  320   3,907 
Total liabilities  1,290,497   1,560,049 
Shareholders' equity        
Common stock ($0.0001 par value; 990,000,000 shares authorized; 463,802,393 and 265,423,304 shares issued and outstanding, respectively)  46   46 
Additional paid-in capital  4,954,547   4,792,406 
Accumulated other comprehensive income  9,595   152,668 
Accumulated Deficit  (527,900)  (486,050)
Total Tilray shareholders' equity  4,436,288   4,459,070 
Non-controlling interests  36,701   6,243 
Total shareholders' equity  4,472,989   4,465,313 
Total liabilities and shareholders' equity $5,763,486  $6,025,362 


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

  Three months ended
November 30,
  Six months ended
November 30,
  Three months ended
November 30,
  Six months ended
November 30,
 
(In thousands of United States dollars) 2021  2020  2021  2020  Change  %Change  Change  %Change 
Net revenue $155,153  $129,459  $323,176  $246,949  $25,694  20%  $76,227  31% 
Cost of goods sold  122,387   94,176   239,455   176,721   28,211  30%   62,734  35% 
Gross profit  32,766   35,283   83,721   70,228   (2,517) (7%)   13,493  19% 
Operating expenses:                 0      0     
General and administrative  33,469   28,273   82,956   54,245   5,196  18%   28,711  53% 
Selling  9,210   6,079   16,642   11,896   3,131  52%   4,746  40% 
Amortization  29,016   4,208   59,755   8,335   24,808  590%   51,420  617% 
Marketing and promotion  7,120   4,252   12,585   9,177   2,868  67%   3,408  37% 
Research and development  515   225   1,300   345   290  129%   955  277% 
Transaction costs  8,120   18,206   33,699   20,664   (10,086) (55%)   13,035  100% 
Total operating expenses  87,450   61,243   206,937   104,662   26,207  43%   102,275  98% 
Operating loss  (54,684)  (25,960)  (123,216)  (34,434)  (28,724) 111%   (88,782) 258% 
Interest expense, net  (9,940)  (4,832)  (20,110)  (10,568)  (5,108) 106%   (9,542) 90% 
Non-operating income (expense), net  64,750   (72,649)  113,610   (86,008)  137,399  (189%)   199,618  (232%) 
Income (loss) before income taxes  126   (103,441)  (29,716)  (131,010)  103,567  (100%)   101,294  (77%) 
Income taxes (recovery)  (5,671)  (14,192)  (909)  (20,017)  8,521  (60%)   19,108  (95%) 
Net income (loss) $5,797  $(89,249) $(28,807) $(110,993) $95,046  (106%)  $82,186  (74%) 
Total net income (loss) attributable to Shareholders of Tilray Inc. $(201) $(99,900) $(41,850) $(134,243) $99,699  (100%)  $92,393  (69%) 
Weighted average number of common shares - basic  460,254,275   243,477,655   454,797,598   242,207,388                 
Weighted average number of common shares - diluted  460,254,275   243,477,655   454,797,598   242,207,388                 
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)                


Net Revenue by Operating Segment

(In thousands of United States dollars) Three months
ended
November 30,
2021
  % of
Total
revenue
  Three months
ended
November 30,
2020
  % of
Total
revenue
  Six months
ended
November 30,
2021
  % of
Total
revenue
  Six months
ended
November 30,
2020
  % of
Total
revenue
 
Cannabis revenue $58,775  38%  $54,766  42%  $129,224  40%  $105,968  43% 
Distribution revenue  68,869  44%   73,983  57%   136,055  42%   140,271  57% 
Beverage alcohol revenue  13,707  9%   710  1%   29,168  9%   710  0% 
Wellness revenue  13,802  9%     0%   28,729  9%     0% 
Net revenue $155,153  100%  $129,459  100%  $323,176  100%  $246,949  100% 
                                 
                                 

Net Cannabis Revenue by Market Channel

  Three months ended November 30,  Six months ended November 30, 
(In thousands of United States dollars) 2021   2020   2021   2020  
Revenue from Canadian medical cannabis products $7,929  11%  $6,260  9%  $16,303  10%  $12,640  9% 
Revenue from Canadian adult-use cannabis products  49,535  67%   58,175  83%   119,128  73%   115,123  84% 
Revenue from wholesale cannabis products  2,259  3%   1,440  2%   3,959  2%   5,232  4% 
Revenue from international cannabis products  13,706  19%   4,280  6%   23,972  15%   4,280  3% 
Total cannabis revenue  73,429       70,155       163,362       137,275     
Excise taxes  (14,654) (20%)   (15,389) (22%)   (34,138) (21%)   (31,307) (23%) 
Total cannabis net revenue $58,775      $54,766      $129,224      $105,968     

Other Financial Information: Gross Margin and Adjusted Gross Margin

(In thousands of United States dollars) Three months ended November 30, 2021 
  Cannabis  Beverage  Distribution  Wellness  Total 
Gross revenue $73,429  $14,544  $68,869  $13,802  $170,644 
Excise taxes  (14,654)  (837)        (15,491)
Net revenue  58,775   13,707   68,869   13,802   155,153 
Cost of goods sold  45,259   5,921   61,237   9,970   122,387 
Gross profit $13,516  $7,786  $7,632  $3,832  $32,766 
Gross margin  23%  57%  11%  28%  21%
Adjusted gross profit $25,516  $7,786  $7,632  $3,832  $44,766 
Adjusted gross margin  43%  57%  11%  28%  29%
                     
  Three months ended November 30, 2020 
  Cannabis  Beverage  Distribution  Wellness  Total 
Gross revenue $70,155  $754  $73,983  $  $144,892 
Excise taxes  (15,389)  (44)        (15,433)
Net revenue  54,766   710   73,983      129,459 
Cost of goods sold  29,632   281   64,263      94,176 
Gross profit $25,134  $429  $9,720  $  $35,283 
Gross margin  46%  60%  13%      27%
Adjusted gross profit $25,134  $429  $9,720  $  $35,283 
Adjusted gross margin  46%  60%  13%      27%
                     
  Six months ended November 30, 2021 
  Cannabis  Beverage  Distribution  Wellness  Total 
Gross revenue $163,362  $31,027  $136,055  $28,729  $359,173 
Excise taxes  (34,138)  (1,859)        (35,997)
Net revenue  129,224   29,168   136,055   28,729   323,176 
Cost of goods sold  85,450   12,583   120,527   20,895   239,455 
Gross profit $43,774  $16,585  $15,528  $7,834  $83,721 
Gross margin  34%  57%  11%  27%  26%
Adjusted gross profit $55,774  $16,585  $15,528  $7,834  $95,721 
Adjusted gross margin  43%  57%  11%  27%  30%
                     
  Six months ended November 30, 2020 
  Cannabis  Beverage  Distribution  Wellness  Total 
Gross revenue $137,275  $754  $140,271  $  $278,300 
Excise taxes  (31,307)  (44)        (31,351)
Net revenue  105,968   710   140,271      246,949 
Cost of goods sold  55,407   281   121,033      176,721 
Gross profit $50,561  $429  $19,238  $  $70,228 
Gross margin  48%  60%  14%      28%
Adjusted gross profit $50,561  $429  $19,238  $  $70,228 
Adjusted gross margin  48%  60%  14%      28%


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

(In thousands of United States dollars) For the three months ended
November 30,
  For the six months ended
November 30,
 
Adjusted EBITDA reconciliation: 2021  2020  2021  2020 
Net income (loss)  5,797   (89,249)  (28,807)  (110,993)
Income taxes  (5,671)  (14,192)  (909)  (20,017)
Interest expense, net  9,940   4,832   20,110   10,568 
Non-operating expense (income), net  (64,750)  72,649   (113,610)  86,008 
Amortization  37,471   12,031   76,804   23,010 
Stock-based compensation  8,253   5,489   17,670   8,339 
Facility start-up and closure costs  1,700      7,900    
Lease expense  900   373   1,600   630 
Inventory write down  12,000      12,000    
Transaction costs  8,120   18,206   33,699   20,664 
Adjusted EBITDA $13,760  $10,139  $26,457  $18,209 


Other Financial Information: Free Cash Flow and Adjusted Free Cash Flow

  Three months ended
November 30,
  Six months ended
November 30,
 
(In thousands of United States dollars) 2021  2020  2021  2020 
Net cash provided by (used in) operating activities $(17,121) $2,438  $(110,348) $(53,662)
Less: investments in capital and intangible assets, net  (6,972)  (9,301)  (15,592)  (23,256)
Free cash flow $(24,093) $(6,863) $(125,940) $(76,918)
Cash expended related to acquisitions  8,120   18,206   56,510   20,664 
Adjusted free cash flow $(15,973) $11,343  $(69,430) $(56,254)