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Tilray Q1 loss widens, meets estimates

Tilray (TLRY) reported a wider loss in the first quarter of 2019 due to higher operating costs and expenses. The company is forced to put capital investments into production capacity expansion for surviving the increasing competition in the marijuana industry. The bottom line came in line with the analysts’ expectations while the top line exceeded consensus estimates.

The unadjusted net loss was $30.3 million or $0.32 per share, wider than $5.2 million or $0.07 per share in the previous year quarter. Adjusted net loss for the latest quarter was $25.2 million or $0.27 per share.

An increase in operating expenses related to growth initiatives, the addition of Manitoba Harvest, and the expansion of international teams hurt the bottom line results.

Tilray first quarter 2019 financial summary snapshot

Revenue soared 195.1% annually to $23 million, helped by the legalization of Canadian adult-use in 2018, the addition of hemp food sales from the Manitoba Harvest acquisition, and strong growth in international medical markets. Excluding excise tax, revenue was $21.5 million.

Total kilogram equivalents sold increased over two-fold to 3,012 kilograms from 1,299 kilograms in the prior year period. However, the average net selling price per gram decreased to $5.28 from $ a year ago.

For the first quarter, gross margin decreased to 23% from 50% in the prior-year quarter. Gross margin continues to be impacted by increased costs incurred with the ramping up of cultivation facilities in Canada and Portugal and acquiring third party supply. Also, food product margins were impacted by a non-cash charge related to purchasing accounting for the fair value of inventory.

Also read: Aurora Cannabis Q3 earnings report

Tilray made significant progress integrating its recent acquisitions of Manitoba Harvest and Natura Naturals, accelerating entry into the United States hemp and CBD markets, and rising production and manufacturing capacity in North America and Europe.

During last week, the company announced an investment of $32.6 million to increase its Canadian production and manufacturing footprint by 203,000 square feet across three facilities in Nanaimo, British Columbia, Leamington, Ontario, and London, Ontario. The investment will expand Tilray’s total production and manufacturing footprint from 1.1 million to 1.3 million square feet worldwide.

Comparing the peers, Aurora Cannabis (ACB) is set to release its third-quarter earnings results today after the bell, while Canopy Growth (CGC) is scheduled to post its fourth-quarter report on June 20, 2019. Last week, GW Pharmaceuticals (GWPH) posted a narrower loss in the first quarter of 2019 helped by lower costs and expenses as well as higher sales from Epidiolex.

Aphria’s (APHA) revenue for the third quarter jumped by 617% helped by distribution revenue from CC Pharma and ABP, while non-cash impairments and non-operating losses hurt the bottom line. After the completion of C$2.4 billion strategic growth investment from Altria Group (MO), Cronos Group Inc. (CRON) more-than-doubled its revenues for the first quarter of 2019, primarily driven by the launch of the adult-use market in Canada, as well as the increased sales in CBD oil.

Shares of Tilray ended Tuesday’s regular session up 4.88% at $48.74 on the Nasdaq. Following the earnings release, the stock inched up over 6% in the after-market session.

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