Tilray nearly triples cannabis sales as losses mount

Victoria-based cannabis seller sees shares rise after hours

Workers inspect cannabis at a Tilray grow room | submitted

Victoria-based cannabis producer Tilray Inc. (Nasdaq:TLRY) saw shares rise about 5% after hours following the company revealing sales that were ahead of analyst forecasts.

Tilray generated US$23 million in revenue in the first three months of 2019, or nearly triple the US$7.8 million that it generated in the same period a year ago. Analysts surveyed by FactSet had estimated revenue to be in the US$20.5-million range.

The company’s quarterly loss, however, at US$30.3 million, was close to six times the US$5.2 million that it lost in the same three months a year ago. Analysts had expected losses to be in the US$23.7-million range.

“We have made significant progress integrating our recent acquisitions of Manitoba Harvest and Natura Naturals, accelerating our entry into the U.S. hemp and CBD (cannabidiol) markets, and increasing our production and manufacturing capacity in North America and Europe,” Tilray President and CEO Brendan Kennedy said in a release.

“As we expand our operations around the world, we remain focused on making disciplined investments to maximize the multiple paths to value creation we are aggressively pursuing for our visionary investors.”

Some investors will remember Tilray as the company that spiked like a rocketship after it went public on Nasdaq on July 19 last year at an initial price of US$17.

By the end of that first day of trading, Tilray’s shares had closed at US$22.39, up 31.7%.

Steady gains then pushed shares to close on September 19 at US$214.06, which works out to be a 1,159% return in its first two months of trading and a market capitalization more than US$19 billion – making it one of B.C.’s most valuable companies.

Shares hit an intraday peak of US$300 – a value that was 1,664% more than the IPO price, and one that made it B.C.’s most valuable public company.

The frenzy that the company’s shares enjoyed were largely due to only a small number of shares being available for the public to trade.

Tilray’s shares have since been on a long steady decline, to close at US$48.74, on May 14. The shares were up nearly 5% on the day, and in after hours trading were in the US$51.25 range, up another 5%.

Some highlights in the quarter included announcing a US$32.6-million investment to increase our Canadian production and manufacturing footprint by 203,000 square feet across three facilities, including one in B.C., in Nanaimo. The other facilities are in Leamington and in London Ontario. That investment will expand Tilray’s total production and manufacturing footprint to 1.3 million square feet from 1.1 million square feet worldwide.

Tilray also acquired Manitoba Harvest, a hemp and natural foods producer in Winnipeg, Manitoba, for up to US$310 million, subject to certain revenue milestones. Manitoba Harvest distributes its products to over 16,000 retail locations in the United States and Canada.

It also acquired Natura Naturals Holdings, a licensed cannabis cultivation facility in Leamington, Ontario, for up to US$54 million, subject to certain cultivation milestones.

Tilray completed a long-term revenue sharing agreement with Authentic Brands Group (ABG) to leverage their portfolio of brands and develop, market and distribute consumer cannabis products across the world. The partnership will initially focus on CBD products in the U.S. and products that contain Tetrahydrocannabinol (THC) and CBD in Canada, and then the plan is to expand globally as regulations permit.

gkorstrom@biv.com

@GlenKorstrom