Tilray(TLRY) - 2019 Q4 - Annual Report

Sales and Revenue - Total kilogram equivalents sold increased by 269% to 5,588 kg for the three months ended June 30, 2019, compared to 1,514 kg in the same period of 2018[119] - Revenue for the three months ended June 30, 2019, increased 371% to $45.9 million compared to $9.7 million for the same period in 2018, driven by the acquisition of Manitoba Harvest and growth in the Canadian adult-use market[138] - Cannabis extract products revenue was $3.9 million for the three months ended June 30, 2019, accounting for 15% of revenue from non-food products[141] Production and Capacity - Kilograms harvested increased by 685% to 11,474 kg for the three months ended June 30, 2019, compared to 1,461 kg in the same period of 2018[119] - The company plans to add 203,000 square feet at three existing facilities, increasing production and manufacturing footprint by 18% to 1.3 million square feet worldwide[124] - The acquisition of Natura Naturals Holdings Inc. for approximately $54 million is expected to increase capacity for high-quality cannabis products in Canada[115] Market Trends - The adult-use market is expected to represent a higher proportion of revenues as new consumers participate in Canada's cannabis framework[111] - The company expects continued growth in the Canadian adult-use market and international medical sales for the remainder of 2019[138] - International medical sales revenue increased significantly, with exports to Ireland and the UK contributing to growth[140] Financial Performance - Gross profit for the three months ended June 30, 2019, was $12.3 million, representing a gross profit margin of 27%, down from 43% in the same period of 2018[143][144] - Operating loss for the three months ended June 30, 2019, was $32.5 million, compared to a loss of $11.0 million for the same period in 2018[136] - Net loss for the three months ended June 30, 2019, was $35.1 million, a 173% increase compared to the same period in 2018, and for six months, it was $65.4 million, a 263% increase[154] Expenses - General and administrative expenses increased 208% to $16.5 million for the three months ended June 30, 2019, primarily due to higher employee costs and professional fees[145][146] - Sales and marketing expenses rose 335% to $14.4 million for the three months ended June 30, 2019, reflecting increased investment in market presence[145] - Total operating expenses for the three months ended June 30, 2019, were $44.8 million, representing 98% of revenue[145] Acquisitions - The acquisition of Manitoba Harvest for approximately $310 million will enable expansion into the growing CBD product market in the United States[116] - The acquisition of Manitoba Harvest, the world's largest hemp food manufacturer, was completed on February 28, 2019, enhancing the company's product portfolio[139] - Acquisition and integration expenses increased due to costs related to the acquisitions of Manitoba Harvest and Natura[151] Research and Development - Research and development expenses increased as the company supported two new clinical research studies related to medical cannabis[150] - The company expects an increase in research and development expenses as it pursues more clinical trial opportunities[150] Cost and Pricing - Average net selling price per gram of cannabis decreased by 28% to $4.61 for the three months ended June 30, 2019, compared to $6.38 in the same period of 2018[119] - Average cost per gram sold increased by 16% to $3.86 for the three months ended June 30, 2019, compared to $3.33 in the same period of 2018[129] - The company expects production costs to decrease as operational efficiencies improve and facilities reach capacity[130] Debt and Cash Flow - Interest expense increased to $8.6 million and $17.3 million for the three and six months ended June 30, 2019, respectively, due to the issuance of $475.0 million in Convertible Notes[153] - Cash and cash equivalents as of June 30, 2019, were $184.6 million, down from $487.3 million at the end of 2018[158] - Net cash used in operating activities for the six months ended June 30, 2019, was $(110.2) million, compared to $(2.9) million in 2018[163]