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Press Release

Tilray, Inc. Reports Second Quarter 2019 Financial Results

2019-08-13 20:05:00

Revenue Rises 371.1% to $45.9 (C$60.9) Million in the Second Quarter Compared to the Prior Year Period

Canadian Adult-Use Revenue Nearly Doubles to $15.0 (C$20.0) Million Compared to Prior Quarter

Key Investments Made in Europe and the U.S. as Part of Ongoing Focus on Global Expansion

NANAIMO, British Columbia--(BUSINESS WIRE)--Tilray, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY), a global pioneer in cannabis research, cultivation, production and distribution, today reported financial results for the second quarter ended June 30, 2019. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.

“We are pleased with our second quarter results and strong business momentum,” said Brendan Kennedy, Tilray President and Chief Executive Officer. “Our team has executed against our plan, with adult-use revenue nearly doubling in the second quarter compared to the first quarter and gross margin increasing sequentially for the second quarter in a row. As we continue to grow, we remain focused on our long-term strategic objectives and deploying capital to maximize stockholder value.”

Second Quarter 2019 Financial Highlights

Three months ended June 30,

Six months ended June 30,

2019

2018

$ Change

% Change

2019

2018

$ Change

% Change

Adult-use

$

15,041

$

$

15,041

N/A

$

22,922

$

$

22,922

N/A

ACMPR (direct to patient & bulk)

9,078

9,267

(189

)

(2

)%

16,841

16,645

196

1

%

Food products

19,935

19,935

N/A

25,517

25,517

N/A

International - medical

1,850

477

1,373

288

3,662

907

2,755

304

Total revenue

$

45,904

$

9,744

$

36,160

371

%

$

68,942

$

17,552

$

51,390

293

%

Excise tax included in revenue

$

3,862

$

3,862

N/A

$

5,776

$

5,776

N/A

Business Highlights

1 Announced August 7, 2019 2 Announced July 11, 2019 3 Announced July 23, 2019 4 Announced August 8, 2019 5 Announced July 5, 2019

Conference Call

The Company will host a conference call to discuss these results today at 5:00 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, August 27, 2019, by dialing 855-859-2056 from the U.S., or 404-537-3406 from international locations, and entering confirmation code 1489081.

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 cannabis research, cultivation, production and distribution currently serving tens of thousands of patients and consumers in 13 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, anticipated plans for strategic partnerships, and the closing of the downstream merger with Privateer. 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 13, 2019, 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; deferred income tax recovery, current income tax expense; foreign exchange (gain) loss, net; depreciation and amortization expense; stock-based compensation expense; and acquisition and integration expenses. 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 Adjusted EBITDA provides 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 share and per share data, unaudited)

Three months ended June 30,

Six months ended June 30,

2019

2018

2019

2018

Revenue

$

45,904

$

9,744

$

68,942

$

17,552

Cost of sales

33,631

5,567

51,284

9,479

Gross profit

12,273

4,177

17,658

8,073

General and administrative expenses

16,465

5,342

29,262

9,487

Sales and marketing expenses

14,366

3,305

22,187

5,568

Depreciation and amortization expense

2,385

281

4,248

503

Stock-based compensation expense

7,585

5,601

12,891

5,632

Research and development expenses

1,528

639

2,576

1,614

Acquisition and integration expenses

2,464

6,888

Operating loss

(32,520

)

(10,991

)

(60,394

)

(14,731

)

Foreign exchange (gain) loss, net

(1,611

)

1,358

(1,432

)

2,504

Interest expense, net

8,586

497

17,331

913

Finance income from ABG Profit Participation Arrangement

(212

)

(347

)

Other income, net

(2,035

)

(76

)

(4,380

)

(197

)

Loss before income taxes

(37,248

)

(12,770

)

(71,566

)

(17,951

)

Deferred income tax recovery

(2,642

)

(6,419

)

Current income tax expense

447

63

207

63

Net loss

$

(35,053

)

$

(12,833

)

$

(65,354

)

$

(18,014

)

Net loss per share - basic and diluted

(0.36

)

(0.17

)

(0.68

)

(0.24

)

Weighted average shares used in computation of net loss

per share - basic and diluted

97,231,839

75,000,000

96,037,142

75,000,000

Net loss

$

(35,053

)

$

(12,833

)

$

(65,354

)

$

(18,014

)

Foreign currency translation gain (loss)

2,924

(86

)

2,449

(87

)

Unrealized (loss) gain on cash equivalents and investments

(762

)

646

Other comprehensive income (loss)

2,162

(86

)

3,095

(87

)

Comprehensive loss

$

(32,891

)

$

(12,919

)

$

(62,259

)

$

(18,101

)

TILRAY, INC.

Condensed Consolidated Balance Sheets

(in thousands of U.S. dollars, except for share and par value data, unaudited)

June 30, 2019

December 31, 2018

Assets

Current assets

Cash and cash equivalents

$

184,551

$

487,255

Short-term investments

36,323

30,335

Accounts receivable, net of allowance for doubtful accounts of $1,854 and

$292, respectively

24,612

16,525

Other receivables

1,195

969

Inventory

75,317

16,211

Prepaid expenses and other current assets

36,633

3,007

Total current assets

358,631

554,302

Property and equipment, net

147,558

80,214

Intangible assets, net

331,983

4,486

Goodwill

154,954

Investments

23,195

16,911

Deposits and other assets

7,810

754

Total assets

$

1,024,131

$

656,667

Liabilities

Current liabilities

Accounts payable

$

24,368

$

10,649

Accrued expenses and other current liabilities

151,288

14,818

Accrued obligations under capital lease

252

470

Total current liabilities

175,908

25,937

Accrued obligations under capital lease

9,032

8,286

Deferred tax liability

53,624

4,424

Convertible Notes, net of issuance cost

425,400

420,367

Total liabilities

$

663,964

$

459,014

Stockholders’ equity

Class 1 common stock ($0.0001 par value, 250,000,000 shares authorized;

16,666,667 shares issued and outstanding)

2

2

Class 2 common stock ($0.0001 par value; 500,000,000 shares authorized;

80,690,864 and 76,504,200 shares issued and outstanding, respectively)

8

8

Additional paid-in capital

526,830

302,057

Accumulated other comprehensive income

6,858

3,763

Accumulated deficit

(173,531

)

(108,177

)

Total stockholders’ equity

360,167

197,653

Total liabilities and stockholders’ equity

$

1,024,131

$

656,667

Three months ended June 30,

Six months ended June 30,

2019

2018

2019

2018

Adjusted EBITDA reconciliation:

Net loss

$

(35,053

)

$

(12,833

)

$

(65,354

)

$

(18,014

)

Depreciation and amortization expense

2,985

671

5,755

1,148

Stock-based compensation expense

7,585

5,601

12,891

5,632

Acquisition and integration expenses

2,464

6,888

Foreign exchange (gain) loss, net

(1,611

)

1,358

(1,432

)

2,504

Interest expense, net

8,586

497

17,331

913

Other income, net

(2,035

)

(76

)

(4,380

)

(197

)

Amortization of inventory step-up

1,360

2,041

Deferred income tax recovery

(2,642

)

(6,419

)

Current income tax expense

447

63

207

63

Adjusted EBITDA

$

(17,914

)

$

(4,719

)

$

(32,472

)

$

(7,951

)

Three months ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Adjusted net loss reconciliation:

Net loss

$

(35,053

)

$

(12,833

)

$

(65,354

)

$

(18,014

)

Acquisition and integration expenses

2,464

6,888

Amortization of inventory step-up

1,360

1,358

2,041

Adjusted net loss

$

(31,229

)

$

(11,475

)

$

(56,425

)

$

(18,014

)

Adjusted net loss per share - basic and diluted

(0.32

)

(0.15

)

(0.59

)

(0.24

)

Weighted average shares used in computation of adjusted

net loss per share - basic and diluted

97,231,839

75,000,000

96,037,142

75,000,000

Media, Global: Chrissy Roebuck, +1-833-206-8161, news@tilray.com Investors: Katie Turner, +1-646-277-1228, katie.turner@icrinc.com

Media, Global: Chrissy Roebuck, +1-833-206-8161, news@tilray.com Investors: Katie Turner, +1-646-277-1228, katie.turner@icrinc.com

Original Press Release