Shares in Tilray, Inc. (NASDAQ: TLRY) tumbled over 10 per cent in after-hours trading Monday, following the release of the company’s fourth quarter and annual earnings report five minutes after market close.
The cannabis producer based in Nanaimo, B.C., reported an increase in net losses over the previous year and a slowdown in sales from the previous quarter ending in September, 2019. Tilray attributed its loss in part to an impairment charge of US$112 million and a write down of US$68.6 million in inventory reserves.
According to BNN Bloomberg, the company is facing a $110 million lawsuit from Alberta cannabis retailer 420 Premium Market, who has accused Tilray of backing out of an agreement to acquire it.
The company reported a net loss for the year of US$312.2 million, or US$3.20 per share, compared to US$67.7 million, or US$0.82 per share, in 2018. Tilray’s adjusted EBITDA loss was US$89.8 million compared to US$28.3 million the previous year.
Year-over-year the company said its revenue increased to US$167.0 (C$217.4) million, up 287.2 per cent. Total cannabis kilogram equivalents sold increased over 446 per cent to 35,380 kilograms from 6,478 kilograms in the prior year.
However, selling price per gram increased while gross margins decreased.
Average cannabis net selling price per gram, excluding bulk sales, increased to US$8.78 (C$11.43) compared to US$7.52 (C$9.79) in the prior year period. The average net selling price excluding excise taxes for adult-use was US$3.19 (C$4.16) per gram for the fourth quarter of 2019. The increase was due to a shift in product and channel mix, according to Tilray.
Gross margin, excluding non-cash return and inventory reserves, decreased sequentially to 29 per cent from 31 per cent in the previous quarter and increased compared to the fourth quarter 2018 gross margin of 20 per cent. Including non-cash charges, gross margin in the fourth quarter 2019 was negative 120 per cent.
Tilray’s net loss for the quarter was US$219.1 million, or US$2.14 per share, compared to a loss of US$31.0 million, or $0.33 per share, for the same period 2018. Adjusted EBITDA was a loss of US$35.3 million compared to a loss of US$13.3 million in the same period 2018.
The company said its increased net loss and adjusted EBITDA declines were primarily due to increases in operating expenses related to growth initiatives, expansion of international teams, and the acquisitions of Manitoba Harvest and Natura Naturals.
Tilray said it closed a US$60 million senior credit facility on Feb. 28, 2020. It also reported ending 2019 with US$97 million in cash.
Top image via Tilray