Tilray, Inc. Reports 2021 Fiscal Year and Fourth Quarter Results

Rhea-AI Summary

Tilray reported strong financial results for the fourth quarter and full fiscal year ending May 31, 2021. Net revenue surged 25% to $142.2 million in Q4, driven by a 36% increase in cannabis revenue. The company achieved significant cost synergies of $35 million with a target of $80 million in the next 16 months. Adjusted EBITDA soared 285% in Q4, marking the ninth consecutive quarter of positive performance. However, the net loss widened to $336 million for the fiscal year, impacted by transaction costs and unrealized losses. Strong cash reserves of $488.5 million bolster the company's growth strategy.

Positive

• Net revenue increased 25% to $142.2 million in Q4; 27% to $513.1 million in FY 2021.
• Adjusted EBITDA increased 285% in Q4; 598% for FY 2021.
• Achieved $35 million in cost synergies, with a goal of $80 million.
• Cash and cash equivalents of $488.5 million provide strong liquidity.

Negative

• Net loss widened to $336 million in FY 2021 from $100.8 million in FY 2020.
• Gross profit decreased 19% in Q4 due to a one-time inventory valuation adjustment.

Tilray, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY; TSX: TLRY), a leading global cannabis-lifestyle and consumer packaged goods company, today reported financial results for the full fiscal year and fourth quarter ended May 31, 2021. Results for the full year and fourth quarter include legacy-Aphria’s fiscal 2021 financial results and four weeks of Tilray. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated, and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”).

Irwin D. Simon, Tilray’s Chairman and Chief Executive Officer, stated, “Early results from the new Tilray affirm that, while the global cannabis market remains in its early stages, our vision, scale, access to resources and operational excellence position us optimally to capitalize on the opportunity. In a very short period of time since our business combination was finalized, we transformed and strengthened Tilray, delivered solid results amid continued COVID-19 lockdowns and restrictions and achieved $35 million in synergies to date – well on our way to delivering $80 million in cost savings over the next 16 months.”

Mr. Simon continued, “These are early achievements but they provide the roadmap for our strategy and priorities moving forward. Tilray is now truly leading the global cannabis industry with low cost of production, leading brands, a well-developed distribution network, and unique partnerships that we believe will drive sustainable shareholder value in the quarters to come. We look forward to accelerating and refining our business-level strategies and roadmaps and to ensuring unmistakable, measurable progress as we build the leading consumer-packaged goods business in the cannabis industry.”

Financial Highlights - 2021 Fiscal Fourth Quarter¹

• Net revenue increased 25% to $142.2 million during the fourth quarter from $113.5 million in the prior year quarter. The increase was driven by 36% growth in net cannabis revenue to $53.7 million, which included four weeks of contribution from legacy-Tilray, a 10% decline in distribution revenue, net beverage alcohol revenue of $15.9 million following our SweetWater acquisition on November 25, 2020, and wellness revenue of $5.8 million from Manitoba Harvest.
• Net income of $33.6 million during the fourth quarter compared to net loss of $84.3 million in the prior year quarter.
• Adjusted EBITDA increased 285% to $12.3 million during the fourth quarter from $3.2 million in the prior year quarter marking the ninth consecutive quarter of positive Adjusted EBITDA.
• Gross profit decreased 19% to $22.5 million during the fourth quarter from $27.8 million in the prior year quarter. Included in gross profit was a one-time inventory valuation adjustment of $19.9 million resulting from excess inventory quantities upon the business combination with Aphria. Adjusted gross profit, excluding inventory valuation adjustment, increased 53% to $42.4 million during the fourth quarter from $27.8 million in the prior year quarter.
• Free cash flow increased 112% to $3.3 million in the fourth quarter from ($28.3) million in the prior year quarter.

Financial Highlights- 2021 Fiscal Year

• Net revenue increased 27% to $513.1 million during 2021 from $405.3 million in 2020. The increase was driven by 55% growth in net cannabis revenue to $201.4 million, which included four weeks of contribution from legacy-Tilray, 1% growth in distribution revenue to $277.3 million, net beverage alcohol revenue of $28.6 million following our SweetWater acquisition on November 25, 2020, and wellness revenue of $5.8 million from Manitoba Harvest due to our Tilray reverse acquisition on April 30, 2021.
• Net loss of $336.0 million in 2021 compared to net loss of $100.8 million in 2020 was driven by $63.6 million of transaction costs related to out-of-pocket fees to consummate our business combinations, and $170.5 million of non-cash unrealized loss on our convertible debentures.
• Adjusted EBITDA increased 598% to $40.8 million in 2021 from $5.8 million in 2020.
• Gross profit increased 28% to $123.2 million during 2021 from $96.1 million in the prior year. Included in gross profit was a one-time inventory valuation adjustment of $19.9 million in Q4 resulting from excess inventory quantities upon the business combination with Aphria. Adjusted gross profit, excluding inventory valuation adjustment, increased 50% to $143.9 million in 2021 from $96.1 million in 2020.
• Ended the year with a strong balance sheet and liquidity, including cash and cash equivalents of $488.5 million.

Progress on Cost-Saving Synergies and Strengthening Financial Condition

The Company expects to deliver significant cost synergies totaling approximately $80 million within eighteen months of closing the Aphria Tilray business combination and plans to achieve cost synergies in the key areas of cultivation and production, cannabis and product purchasing, sales, and marketing, and corporate expenses. To date, the Company has achieved $35 million in synergies.

Recent Business Developments Reflect Strong, Ongoing Global Growth and Opportunity

Recent Progress on Expanding International Medical Business and Canadian Adult-Use Product Line

• Tilray has been gaining market share nationally in Canada month-over-month since April 2021.
• On July 19, 2021, our wholly-own subsidiary, SweetWater Brewing Company, the 11^th largest craft brewer in the U.S.², announced the launch of 420 Imperial IPA, the first line extension off of its flagship 420 brand.
• On July 12, 2021, SweetWater Brewing Company announced its West Coast expansion including a new Colorado Brewery and the opening of SweetWater Mountain Taphouse at Denver International Airport.
• On July 7, 2021, we announced the completion and shipment of the first successful EU GMP-certified medical cannabis harvest grown in Germany for German distribution.
• On June 30, 2021, we announced the first cross-brand product collaboration between Canadian craft-cannabis brand Broken Coast and SweetWater to launch U.S. distribution of “Broken Coast BC Lager” and introduce the cannabis brand to consumers across the country.
• On June 25, 2021, our leading Canadian cannabis brand, RIFF, launched new multi-pack of cannabis pre-rolls across Canada.
• On June 8, 2021, we launched our new medical cannabis brand, Symbios, across Canada. Symbios is the inaugural brand from the ‘new’ Tilray developed to offer patients a broader spectrum of medical cannabis formats and cannabinoid ratios at a better price point.
• On April 27, 2021, Tilray was named to TIME’s inaugural list of the TIME100 Most Influential Companies in the world.

Conference Call

Tilray will host a conference call to discuss these results today at 8:30 a.m. ET. Investors interested in participating in the live call can dial (877) 407-0792 from Canada and the U.S. or (201) 689-8263 from international locations.

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.

About Tilray®

Tilray, Inc. 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.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this press release constitute "forward-looking statements" within the meaning of federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictions based on expectations and projections about future events and are not statements of historical fact. You can identify forward-looking statements by the use of forward-looking terminology such as "plan," "continue," "expect," "anticipate," "intend," "predict," "project," "estimate," "likely," "believe," "might," "seek," "may," "will," "remain," "potential," "can," "should," "could," "future" and similar expressions, or the negative of those expressions, or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of the Company's strategic initiatives, including productivity and synergies initiatives, our future performance and results of operations.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, levels of activity, performance or achievements of the Company, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and may not be able to be realized. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations for our business as well as challenges and uncertainty resulting from the COVID-19 pandemic. Certain material factors, estimates, goals, projections or assumptions were used in drawing the conclusions contained in the forward-looking statements throughout this communication. 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 Annual Report on Form 10-K of Tilray for the fiscal year ended May 31, 2021. 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 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 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; stock-based compensation expenses; loss from equity method investments; loss on disposal of property and equipment; 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. 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. A reconciliation of net cash flow provided by (used in) operating activities to free cash flow, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

As a result of the Arrangement on April 30, 2021, the results of operations included herein for the three months and fiscal year ended May 31, 2021 include the result of Aphria for the three and twelve months ended May 31, 2021, respectively and the results of Tilray beginning after April 30, 2021 for the one month ended May 31, 2021. The operating results for the prior periods are those of Aphria.

Consolidated Statements of Financial Position

(In thousands of United States dollars)		May 31, 2021				May 31, 2020
Assets
Current assets
Cash and cash equivalents		$	488,466			$	360,646
Accounts receivable, net			87,309				37,931
Inventory			256,429				139,781
Prepaids and other current assets			48,920				32,660
Convertible notes receivable			2,485				10,609
Total current assets			883,609				581,627
Capital assets			650,698				420,706
Right-of-use assets			18,267				5,356
Intangible assets			1,605,918				263,318
Goodwill			2,832,794				447,330
Interest in equity investees			8,106				—
Long-term investments			17,685				19,595
Other assets			8,285				—
Total assets		$	6,025,362			$	1,737,932
Liabilities
Current liabilities
Bank indebtedness		$	8,717			$	389
Accounts payable and accrued liabilities			212,813				112,411
Contingent consideration			60,657				—
Warrant liability			78,168				—
Current portion of lease liabilities			4,264				954
Current portion of long-term debt			36,622				6,141
Total current liabilities			401,241				119,895
Long - term liabilities
Lease liabilities			53,946				4,227
Long-term debt			167,486				94,028
Convertible debentures			667,624				196,405
Deferred tax liability			265,845				48,446
Other liabilities			3,907				—
Total liabilities			1,560,049				463,001
Commitments and contingencies			—				—
Shareholders' equity
Common stock		46					24
Additional paid-in capital			4,792,406				1,366,736
Accumulated other comprehensive income (loss)			152,668				(5,434	)
Deficit			(486,050	)			(113,352	)
Total Tilray shareholders' equity			4,459,070				1,247,974
Non-controlling interests			6,243				26,957
Total shareholders' equity			4,465,313				1,274,931
Total liabilities and shareholders' equity		$	6,025,362			$	1,737,932

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

		Three months ended May 31,								Years ended May 31,
(In thousands of United States dollars, except for per share data)		2021				2020				2021				2020
Net revenue		$	142,236			$	113,542			$	513,085			$	405,326
Cost of goods sold			119,738				85,735				389,903				309,273
Gross profit			22,498				27,807				123,182				96,053
Operating expenses:
General and administrative			32,847				24,913				111,575				93,789
Selling			8,525				7,320				26,576				18,975
Amortization			16,100				3,645				35,221				15,138
Marketing and promotion			5,103				2,874				17,539				15,266
Research and development			358				430				830				1,916
Impairment			—				50,679				—				50,679
Transaction costs			33,260				1,387				63,612				4,299
Total operating expenses			96,193				91,248				255,353				200,062
Operating loss			(73,695	)			(63,441	)			(132,171	)			(104,009	)
Finance income (expense), net			(9,466	)			(6,411	)			(27,977	)			(19,371	)
Non-operating income (expense), net			121,510				(17,351	)			(184,838	)			14,195
Income (loss) before income taxes			38,349				(87,203	)			(344,986	)			(109,185	)
Income taxes (recovery)			4,744				(2,897	)			(8,972	)			(8,352	)
Net income (loss)		$	33,605			$	(84,306	)		$	(336,014	)		$	(100,833	)
Earnings (Loss) per share - basic and diluted		$	0.18			$	(0.39	)		$	(1.25	)		$	(0.47	)

Net Revenue by Operating Segment

(In thousands of United States dollars)		Three Months Ended May 31, 2021				% of Total revenue				Three Months Ended May 31, 2020				% of Total revenue
Cannabis revenue		$	53,703			38%				$	39,587			35%
Distribution revenue			66,792			47%					73,955			65%
Beverage alcohol revenue			15,947			11%					—			0%
Wellness revenue			5,794			4%					—			0%
Net revenue		$	142,236			100%				$	113,542			100%
(In thousands of United States dollars)		Year Ended May 31, 2021				% of Total revenue				Year Ended May 31, 2020				% of Total revenue
Cannabis revenue		$	201,392			39%				$	129,896			32%
Distribution revenue			277,300			54%					275,430			68%
Beverage alcohol revenue			28,599			6%					—			0%
Wellness revenue			5,794			1%					—			0%
Net revenue		$	513,085			100%				$	405,326			100%

Other Information

(In thousands of United States dollars, except for percent data)

		Three months ended May 31,								Years ended May 31,
Adjusted EBITDA Reconciliation		2021				2020				2021				2020
Net income (loss)		$	33,605			$	(84,306	)		$	(336,014	)		$	(100,833	)
Income taxes			4,744				(2,897	)			(8,972	)			(8,352	)
Finance expense, net			9,466				6,411				27,977				19,371
Non-operating expense (income), net			(121,510	)			17,351				184,838				(14,195	)
Amortization			24,539				10,320				67,832				35,669
Share-based compensation			5,937				3,799				17,351				18,079
Impairment			—				50,679				—				50,679
Inventory valuation adjustments			19,919				—				19,919				—
Purchase price accounting step up			—				—				835				—
Facility start-up costs			2,056				467				2,056				—
Lease expense			303				—				1,337				1,128
Transaction costs			33,260				1,387				63,612				4,299
Adjusted EBITDA		$	12,319			$	3,211			$	40,771			$	5,845

		Three months ended May 31,								Years ended May 31,
Key Operating Metrics		2021				2020				2021				2020
Net cannabis revenue		$	53,703			$	39,587			$	201,392			$	129,896
Net beverage alcohol revenue			15,947				—				28,599				—
Distribution revenue			66,792				73,955				277,300				275,430
Wellness revenue			5,794				—				5,794				—
Cannabis cost of sales			49,731				20,692				130,511				68,551
Beverage alcohol cost of sales			5,349				—				12,687				—
Distribution cost of sales			60,425				65,043				242,472				240,722
Wellness cost of sales			4,233				—				4,233				—
Gross profit (excluding adjustments)			42,417				27,808				143,936				96,053
Cannabis gross margin (excluding adjustments)			44.5	%			47.7	%			45.1	%			47.2	%
Beverage gross margin (excluding adjustments)			66.5	%			—				58.6	%			—
Distribution gross margin (excluding adjustments)			9.5	%			12.1	%			12.6	%			12.6	%
Wellness gross margin (excluding adjustments)			26.9	%			—				26.9	%			—
Adjusted EBITDA			12,319				3,211				40,771				5,845
Cash and cash equivalents			488,466				360,646				488,466				360,646
Working capital			482,368				349,320				482,368				349,320

		Three months ended May 31,								Years ended May 31,
Free Cash Flow		2021				2020				2021				2020
Net cash provided by (used in) operating activities		$	8,281			$	(7,367	)		$	(44,715	)		$	(100,627	)
Less: investments in capital and intangible assets			4,943				20,908				38,874				98,786
Free cash flow			3,338				(28,275	)			(83,589	)			(199,413	)

		Three months ended May 31, 2021
Gross profit (excluding adjustments)		Cannabis				Beverage				Distribution				Wellness				Total
Gross revenue		$	71,358			$	16,549			$	66,792			$	5,794			$	160,493
Excise taxes			(17,655	)			(602	)			—				—				(18,257	)
Net revenue			53,703				15,947				66,792				5,794				142,236
Cost of goods sold			49,731				5,349				60,425				4,233				119,738
Gross profit			3,972				10,598				6,367				1,561				22,498
Gross margin			7	%			66	%			10	%			27	%			16	%
Adjustments:																			—
Inventory valuation adjustment			19,919				—				—				—				19,919
Purchase price accounting step up			—				—				—				—				—
Adjusted gross profit			23,891				10,598				6,367				1,561				42,417
Adjusted gross margin			44	%			66	%			10	%			27	%			30	%
		Three months ended May 31, 2020
Gross profit (excluding adjustments)		Cannabis				Beverage				Distribution				Wellness				Total
Gross revenue		$	48,833			$	—			$	73,955			$	—			$	—
Excise taxes			(9,246	)			—				—				—				—
Net revenue			39,587				—				73,955				—				113,542
Cost of goods sold			20,692								65,043				—				85,735
Gross profit			18,895				—				8,912				—				27,807
Gross margin			48	%			—	%			12	%			—	%			24	%
Adjustments:			—				—				—				—				—
Inventory valuation adjustment			—				—				—				—				—
Purchase price accounting step up			—				—				—				—				—
Adjusted gross profit			18,895				—				8,912				—				27,807
Adjusted gross margin			48	%			—	%			12	%			—	%			24	%
Gross profit		Year ended May 31, 2021
Gross profit (excluding adjustments)		Cannabis				Beverage				Distribution				Wellness				Total
Gross revenue		$	264,334			$	29,661			$	277,300			$	5,794			$	577,089
Excise taxes			(62,942	)			(1,062	)			—				—				(64,004	)
Net revenue			201,392				28,599				277,300				5,794				513,085
Cost of goods sold			130,511				12,687				242,472				4,233				389,903
Gross profit			70,881				15,912				34,828				1,561				123,182
Gross margin			35	%			56	%			13	%			27	%			24	%
Adjustments:																			—
Inventory valuation adjustment			19,919				—				—				—				19,919
Purchase price accounting step up			—				835				—				—				835
Adjusted gross profit			90,800				16,747				34,828				1,561				143,936
Adjusted gross margin			45	%			59	%			13	%			27	%			28	%
		Year ended May 31, 2020
Gross profit (excluding adjustments)		Cannabis				Beverage				Distribution				Wellness				Total
Gross revenue		$	153,477			$	—			$	275,430			$	—			$	428,907
Excise taxes			(23,581	)			—				—				—				(23,581	)
Net revenue			129,896				—				275,430				—				405,326
Cost of goods sold			68,551				—				240,722				—				309,273
Gross profit			61,345				—				34,708				—				96,053
Gross margin			47	%			—	%			13	%			—	%			24	%
Adjustments:																			—
Inventory valuation adjustment			—				—				—				—				—
Purchase price accounting step up			—				—				—				—				—
Adjusted gross profit			61,345				—				34,708				—				96,053
Adjusted gross margin			47	%			—	%			13	%			—	%			24	%

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¹ This press release includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. Reconciliations of non-GAAP financial measures to GAAP financial measures and other non-GAAP financial calculations are provided herein in the tables.

² The Brewers Association Top 50 Brewing Companies by Sales Volume Report for 2020

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005469/en/

FAQ

What were Tilray's financial results for Q4 2021?

Tilray reported a net revenue of $142.2 million for Q4 2021, a 25% increase year-over-year.

How did Tilray's adjusted EBITDA perform in FY 2021?

Tilray's adjusted EBITDA surged 598% to $40.8 million in FY 2021.

What challenges did Tilray face regarding net loss in FY 2021?

Tilray faced a net loss of $336 million in FY 2021, driven by transaction costs and unrealized losses.

What synergies has Tilray achieved from the Aphria merger?

Tilray achieved $35 million in cost synergies and aims for a total of $80 million within 16 months.

What is the current cash position of Tilray?

Tilray ended FY 2021 with cash and cash equivalents of $488.5 million.