Tilray Inc. (TLRY shares turned lower Tuesday after the Canadian cannabis group posted a wider-than-expected fourth-quarter loss but said sales nearly tripled in a growing global market for medical marijuana.
Tilary said earnings for the three months ended in December were pegged at a net loss of 33 cents per share, compared to a 4 cents per share profit from the same period in 2017, a figure it put down to "operating expenses related to growth initiatives, expansion of international teams and costs related to financings and M&A activities." Group sales, however, rose more than 200% to $15.5 million, while total kilogram equivalents increased nearly three-fold to 2,053 and the average net selling price rose 5.5% to $7.52 per gram.
"We are still in the early stages of the global transformation of $150 billion worldwide industry," Tilray CEO Brendan Kennedy told investors on a conference call late Monday. "We believe that over the long-term companies such as Tilray with the portfolio of trusted brands powered by multinational supply chain, will win the market by earning the confidence of patients, consumers and governments around the world."
Tilary shares were down 2.5% to $70.54 in midday trading Tuesday, valuing the Nanaimo, British Columbia-based group at around $6.7 billion.
Kennedy, however, also noted that gross margins for the fourth quarter were nearly a third the rate of the previous period, as just 20%, thanks to increased procurement costs and taxes for medical patients. He also said margins would be further pressured by the group's international expansion plans, which includes a new facility in Portugal, and what he called a "temporary lack of industry supply."
"Longer term, we continue to expect 50% plus gross margins as we lower our costs through greenhouse and outdoor cultivation, and as we ramp those facilities past the start-up phase," Kennedy said. "We also expect reduced revenue per unit as selling wholesale and the adult-use market becomes a bigger mix of our revenues."
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