GlobeNewswire Inc | Jan 10, 2022 07:00AM EST

January 10, 2022

-- Net Revenue Increased ~20% to $155 Million from the Prior Year Quarter

-- Net Income Improved $95 Million to $6 Million from the Prior Year Quarter -- Adjusted EBITDA of $13.8 Million, 11th Consecutive Quarter of Positive Adjusted EBITDA -- Achieved $70 Million in Cost Synergies To Date; On-Track to Exceed Original Plan of $80 Million Ahead of Schedule and to Generate Additional $20 Million of Synergies in Fiscal 2023 -- Leading Medical Cannabis Company in Europe with ~20% Market Share in Germany

NEW YORK, Jan. 10, 2022 (GLOBE NEWSWIRE) -- Tilray,Inc. (Tilray or the Company) (Nasdaq: TLRY; TSX: TLRY), a leading global cannabis-lifestyle and consumer packaged goods company inspiring and empowering the worldwide community to live their very best life, today reported financial results for the second fiscal quarter ended November 30, 2021. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.

The Company also announced a new parent name, Tilray Brands, Inc., reflecting the Companys evolution from a Canadian LP to a global consumer packaged goods company powerhouse with a market leading portfolio of cannabis and lifestyle CPG brands.

Irwin D. Simon, Tilrays Chairman and Chief Executive Officer, stated, Our second quarter performance reflects notable success building high-quality and highly sought-after cannabis and lifestyle CPG brands which, coupled with our scale, operational excellence and broad global distribution, enabled us to increase sales and maintain profitability despite sector-specific and macro-economic headwinds.

Mr. Simon continued, Looking at performance highlights across key markets, we maintained our #1 cannabis market share position in Canada despite market saturation and related competitive challenges -- on the strength of our brands and adept pricing and marketing adjustments. Importantly, we believe these adjustments will enable us to aggressively recapture share when the market right-sizes. In Germany Europes largest and most profitable medical cannabis market our nearly 20% share leads the market. We believe this, coupled with our infrastructure, will also allow us to capture the adult-use market as legalization accelerates under the new coalition government. Turning to the U.S., SweetWater Brewing and Manitoba Harvest continued to invest in product innovation and acquisitions to enhance awareness and distribution. These profitable businesses further provide an opportunity to launch THC-based products upon federal legalization in the U.S. Subsequent to the end of the fiscal quarter, we also expanded our spirits portfolio through the acquisition of Breckenridge Distillery, deepening our presence in the fast-growing spirits sector while also providing an immediate contribution to earnings.

Mr. Simon concluded, The totality of our performance, our prospects and our global platform make Tilray Brands' opportunity as compelling as ever, driven by our success as a cannabis and lifestyle CPG powerhouse and our relentless focus on delivering shareholder value.

Financial Highlights Second Quarter Fiscal 2022

-- Net income increased to $6 million from a net loss of $89 million in the previous year quarter. -- Net revenue increased ~20% to $155 million during the second quarter from $129 million in the prior year quarter. The increase was driven by 7% growth in cannabis revenue to $58.8 million, net beverage alcohol revenue of $13.7 million from SweetWater, and wellness segment revenue of $13.8 million from Manitoba Harvest. -- Adjusted EBITDA of $13.8 million in the second quarter 2022, 8% growth compared to the preceding prior quarter, and the eleventh consecutive quarter of positive Adjusted EBITDA -- Gross profit of $32.8 million, a 7% decrease from $35.3 million in the prior year quarter. -- Adjusted gross margin in the cannabis segment remained strong at 43%. -- Maintained #1 cannabis market share in Canada1 with leading portfolio of comprehensive medical cannabis and adult-use brands, including top position in cannabis flower and pre-rolls. -- International medical cannabis market leader and #1 in Germany2 with ~20% market share. -- Cost synergies from Aphria-Tilray combination of $70 million achieved on a run-rate basis to date, with actual cash-savings close to $36 million to date. Expect to reach $80 million synergy target, ahead of schedule, by May 31, 2022 and to generate an additional $20 million in synergies in fiscal 2023.

Strategic Growth Actions

-- On December 21, 2021 SweetWater acquired award-winning craft-beer brands, Alpine Beer and Green Flash Brewing. -- On December 8, 2021, Tilray acquired Breckenridge Distillery, strengthening its strategic position in the U.S. -- On November 4, 2021, SweetWater entered the Spirits category with new ready-to-drink cocktail and cross-brand collaboration with Canadian cannabis brand, RIFF. -- On October 26, 2021, Tilray announced European expansion with medical cannabis agreement in Luxembourg. -- On October 20, 2021, Tilray announced an expanded distribution agreement with Great North Distributors for adult-use cannabis sales across Canada.

Growth and High Potential Across Key Markets

-- #1 Market Leading Position in Germany and Poised to Benefit from Recreational Legalization Tilray is also the only company currently supplying the German government with medical cannabis grown in-country. The Companys state-of-the-art EU GMP certified cultivation facility in Germany has additional capacity to immediately support entry into the recreational market upon legalization, which the new German coalition government is accelerating. -- Ongoing Progress Across the EU - Tilrays success across the EU, a powerful growth market worth potentially $1 billion for the Company, is backed by its two state-of-the-art cultivation facilities in Portugal and Germany that provide EU GMP certified pharmaceutical-grade medical cannabis across the region. Tilray is also the only Company with two EU GMP certified cannabis facilities in Europe. This unparalleled production capability coupled with Tilrays sales arrangements through major distribution channels in Germany, the UK, and other key markets, and strong relationships with local governments and the trust of patients give Tilray the ability to drive accelerated growth. -- #1 Leading Cannabis Market Share in Canada Amid an intensely competitive and over-saturated market, Tilray remains the market leader in the CAD$4.26 billion Canadian cannabis market, driven by a portfolio of carefully curated brands across all consumer segments; medical, wellness, innovative cannabis 2.0 products across concentrates, edibles, and drinks; processing capacity; and distribution. In order to address the saturated marketplace, Tilray has implemented strategic price adjustments, expanded distribution through its coast-to-coast agreement with Rose Life Sciences and Great North Distributors, and doubled-down on and accelerated product innovation. -- A Leading U.S. CPG Platform that Generates Considerable Cash Flow Now and Will Be Immediately Leveraged for Cannabis Products Upon Federal Legalization - In the U.S., Tilrays operating businesses include SweetWater, the 11th largest craft brewer in the nation3 and leading lifestyle brand, and Manitoba Harvest, a pioneer in hemp, CBD and wellness products. Together, they generate approximately $100 million in revenue and are EBITDA and cash flow positive and will expand in the near term into CBD adjacencies and THC-based products upon legalization. Further, the Company continues to build its U.S. platform, including through its prior acquisition of a majority of the outstanding senior secured convertible notes of MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) which marked a critical step towards delivering on its objective of leading the U.S. cannabis market upon federal legalization.

Conference CallTilray executives will host a conference call and live audio webcast to discuss these results at 8:30 am Eastern Time, details of which are provided below.

Call-in Number (877) 407-0792 from Canada and the U.S. or (201) 689-8263 from international locations. Please dial in at least 10 minutes prior to the start time.

A telephone replay will be available approximately two hours after the call concludes through January 26, 2022. To access the recording dial (844)-512-2921 and use the passcode 13725661.

There will be a simultaneous, live webcast available on the Investors section of Tilrays website at www.tilray.com. The webcast will also be archived.

ICR Conference Participation Today

Tilray executives will also host a virtual fireside chat at the ICR Conference at 1:30 pm Eastern Time today. There will be a simultaneous, live webcast available on the Investors section of Tilrays website at www.tilray.com. The webcast will also be archived.

About Tilray

Tilray, Inc. (Nasdaq: TLRY; TSX: TLRY), is a leading global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is changing people's lives for the better one person at a time by inspiring and empowering the worldwide community to live their very best life by providing them with products that meet the needs of their mind, body, and soul and invoke a sense of wellbeing. Tilrays mission is to be the trusted partner for its patients and consumers by providing them with a cultivated experience and health and wellbeing through high-quality, differentiated brands and innovative products. A pioneer in cannabis research, cultivation, and distribution, Tilrays unprecedented production platform supports over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and alcoholic beverages.

For more information on how we open a world of wellbeing, visit www.Tilray.com.

Forward-Looking Statements

Certain statements in this communication that are not historical facts constitute forward-looking information or forward-looking statements (together, forward-looking statements) under Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the safe harbor created by those sections and other applicable laws. Forward-looking statements can be identified by words such as forecast, future, should, could, enable, potential, contemplate, believe, anticipate, estimate, plan, expect, intend, may, project, will, would and the negative of these terms or similar expressions, although not all forward-looking statements contain these identifying words. Certain material factors, estimates, goals, projections or assumptions were used in drawing the conclusions contained in the forward-looking statements throughout this communication. Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the Companys ability to become the world's leading cannabis-focused consumer branded company; expectations regarding profitable revenue growth and expected cost savings; and the Companys ability to commercialize new and innovative beverage products. Many factors could cause actual results, performance or achievement to be materially different from any forward-looking statements, and other risks and uncertainties not presently known to the Company or that the Company deems immaterial could also cause actual results or events to differ materially from those expressed in the forward-looking statements contained herein. For a more detailed discussion of these risks and other factors, see the most recently filed annual information form of Tilray and the Annual Report on Form 10-K (and other periodic reports filed with theSEC) ofTilraymade with the SEC and available on EDGAR. The forward-looking statements included in this communication are made as of the date of this communication and the Company does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws.

Use of Non-U.S. GAAP Financial Measures

This press release and the accompanying tables include non-GAAP financial measures, including adjusted gross margin, Adjusted EBITDA and adjusted free cash flow. Management believes that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the Company's operations and are useful for period-over-period comparisons of operations. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read only in connection with the Company's Consolidated Statements of Operations and Cash Flows presented in accordance with GAAP.

Adjusted EBITDA is calculated as net income (loss) before finance expense, net; non-operating expense (income), net; amortization; stock-based compensation; facility start-up and closure costs; inventory valuation adjustment; lease expense; and transaction costs. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Gross margin, excluding inventory valuation adjustments, is calculated as revenue less cost of sales adjusted to add back inventory valuation adjustments and amortization of inventory step-up, divided by revenue. A reconciliation of Gross margin, excluding inventory valuation adjustments, to gross margin, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Free cash flow is comprised of two GAAP measures deducted from each other which are net cash flow provided by (used in) operating activities less investments in capital and intangible assets. Adjusted free cash flow removes the cash impact of acquisitions from free cash flow. A reconciliation of net cash flow provided by (used in) operating activities to free cash flow and to adjusted cash flows, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release.

For further information:

Media: Berrin Noorata, news@tilray.comInvestors: Raphael Gross, +1-203-682-8253, Raphael.Gross@icrinc.com

1 Based on Hifyre retail data.2 Insight Health NPI: Panel data of 5,500 pharmacies (29% coverage)3 The Brewers Association Top 50 Brewing Companies by Sales Volume Report for 2020.



Consolidated Statements of Financial Position

(In thousands of United States dollars) November 30, May 31, 2021 2021Assets Current assets Cash and cash equivalents $ 331,783 $ 488,466 Accounts receivable, net 84,575 87,309 Inventory 233,020 256,429 Prepaids and other current assets 57,340 48,920 Convertible notes receivable 1,560 2,485 Total current assets 708,278 883,609 Capital assets 604,249 650,698 Right-of-use assets 13,933 18,267 Intangible assets 1,450,015 1,605,918 Goodwill 2,814,163 2,832,794 Interest in equity investees 4,440 8,106 Long-term investments 168,244 17,685 Other assets 164 8,285 Total assets $ 5,763,486 $ 6,025,362 Liabilities Current liabilities Bank indebtedness $ 8,736 $ 8,717 Accounts payable and accrued liabilities 168,300 212,813 Contingent consideration 62,339 60,657 Warrant liability 40,455 78,168 Current portion of lease liabilities 3,588 4,264 Current portion of long-term debt 31,510 36,622 Total current liabilities 314,928 401,241 Long - term liabilities Lease liabilities 49,265 53,946 Long-term debt 151,819 167,486 Convertible debentures 554,854 667,624 Deferred tax liability 219,311 265,845 Other liabilities 320 3,907 Total liabilities 1,290,497 1,560,049 Shareholders' equity Common stock ($0.0001 par value;990,000,000 shares authorized; 46 46 463,802,393 and 265,423,304 shares issuedand outstanding, respectively)Additional paid-in capital 4,954,547 4,792,406 Accumulated other comprehensive income 9,595 152,668 Accumulated Deficit (527,900 ) (486,050 )Total Tilray shareholders' equity 4,436,288 4,459,070 Non-controlling interests 36,701 6,243 Total shareholders' equity 4,472,989 4,465,313 Total liabilities and shareholders' $ 5,763,486 $ 6,025,362 equity

Condensed Consolidated Statements of Net Income (Loss) and Comprehensive (Loss)

Three months ended Six months ended Three months ended Six months ended November 30, November 30, November 30, November 30,(In thousandsof United 2021 2020 2021 2020 Change %Change Change %Change Statesdollars)Net revenue $ 155,153 $ 129,459 $ 323,176 $ 246,949 $ 25,694 20 % $ 76,227 31 % Cost of goods 122,387 94,176 239,455 176,721 28,211 30 % 62,734 35 % soldGross profit 32,766 35,283 83,721 70,228 (2,517 ) (7 %) 13,493 19 % Operating 0 0 expenses:General and 33,469 28,273 82,956 54,245 5,196 18 % 28,711 53 % administrativeSelling 9,210 6,079 16,642 11,896 3,131 52 % 4,746 40 % Amortization 29,016 4,208 59,755 8,335 24,808 590 % 51,420 617 % Marketing and 7,120 4,252 12,585 9,177 2,868 67 % 3,408 37 % promotionResearch and 515 225 1,300 345 290 129 % 955 277 % developmentTransaction 8,120 18,206 33,699 20,664 (10,086 ) (55 %) 13,035 100 % costsTotaloperating 87,450 61,243 206,937 104,662 26,207 43 % 102,275 98 % expensesOperating loss (54,684 ) (25,960 ) (123,216 ) (34,434 ) (28,724 ) 111 % (88,782 ) 258 % Interest (9,940 ) (4,832 ) (20,110 ) (10,568 ) (5,108 ) 106 % (9,542 ) 90 % expense, netNon-operatingincome 64,750 (72,649 ) 113,610 (86,008 ) 137,399 (189 %) 199,618 (232 %) (expense), netIncome (loss)before income 126 (103,441 ) (29,716 ) (131,010 ) 103,567 (100 %) 101,294 (77 %) taxesIncome taxes (5,671 ) (14,192 ) (909 ) (20,017 ) 8,521 (60 %) 19,108 (95 %) (recovery)Net income $ 5,797 $ (89,249 ) $ (28,807 ) $ (110,993 ) $ 95,046 (106 %) $ 82,186 (74 %) (loss)Total netincome (loss)attributable $ (201 ) $ (99,900 ) $ (41,850 ) $ (134,243 ) $ 99,699 (100 %) $ 92,393 (69 %) toShareholdersof Tilray Inc.Weightedaverage number 460,254,275 243,477,655 454,797,598 242,207,388 of commonshares - basicWeightedaverage numberof common 460,254,275 243,477,655 454,797,598 242,207,388 shares -dilutedNet income(loss) per $ (0.00 ) $ (0.41 ) $ (0.09 ) $ (0.55 ) share - basicNet income(loss) per $ (0.00 ) $ (0.41 ) $ (0.09 ) $ (0.55 ) share -diluted

Net Revenue by Operating Segment

Three Three Six Six(In thousands of months % of months % of months % of months % ofUnited States ended Total ended Total ended Total ended Total dollars) November revenue November revenue November revenue November revenue 30, 30, 30, 30, 2021 2020 2021 2020Cannabis revenue $ 58,775 38 % $ 54,766 42 % $ 129,224 40 % $ 105,968 43 % Distribution 68,869 44 % 73,983 57 % 136,055 42 % 140,271 57 % revenueBeverage alcohol 13,707 9 % 710 1 % 29,168 9 % 710 0 % revenueWellness revenue 13,802 9 % ? 0 % 28,729 9 % ? 0 % Net revenue $ 155,153 100 % $ 129,459 100 % $ 323,176 100 % $ 246,949 100 %

Net Cannabis Revenue by Market Channel

Three months ended November 30, Six months ended November 30, (In thousandsof United 2021 2020 2021 2020 Statesdollars)Revenue fromCanadianmedical $ 7,929 11 % $ 6,260 9 % $ 16,303 10 % $ 12,640 9 % cannabisproductsRevenue fromCanadianadult-use 49,535 67 % 58,175 83 % 119,128 73 % 115,123 84 % cannabisproductsRevenue fromwholesale 2,259 3 % 1,440 2 % 3,959 2 % 5,232 4 % cannabisproductsRevenue frominternational 13,706 19 % 4,280 6 % 23,972 15 % 4,280 3 % cannabisproductsTotalcannabis 73,429 70,155 163,362 137,275 revenueExcise taxes (14,654 ) (20 %) (15,389 ) (22 %) (34,138 ) (21 %) (31,307 ) (23 %) Totalcannabis net $ 58,775 $ 54,766 $ 129,224 $ 105,968 revenue

Other Financial Information: Gross Margin and Adjusted Gross Margin

(Inthousandsof United Three months ended November 30, 2021 Statesdollars) Cannabis Beverage Distribution Wellness Total Gross $ 73,429 $ 14,544 $ 68,869 $ 13,802 $ 170,644 revenueExcise (14,654 ) (837 ) ? ? (15,491 )taxesNet 58,775 13,707 68,869 13,802 155,153 revenueCost of 45,259 5,921 61,237 9,970 122,387 goods soldGross $ 13,516 $ 7,786 $ 7,632 $ 3,832 $ 32,766 profitGross 23 % 57 % 11 % 28 % 21 %marginAdjustedgross $ 25,516 $ 7,786 $ 7,632 $ 3,832 $ 44,766 profitAdjustedgross 43 % 57 % 11 % 28 % 29 %margin Three months ended November 30, 2020 Cannabis Beverage Distribution Wellness Total Gross $ 70,155 $ 754 $ 73,983 $ ? $ 144,892 revenueExcise (15,389 ) (44 ) ? ? (15,433 )taxesNet 54,766 710 73,983 ? 129,459 revenueCost of 29,632 281 64,263 ? 94,176 goods soldGross $ 25,134 $ 429 $ 9,720 $ ? $ 35,283 profitGross 46 % 60 % 13 % 27 %marginAdjustedgross $ 25,134 $ 429 $ 9,720 $ ? $ 35,283 profitAdjustedgross 46 % 60 % 13 % 27 %margin Six months ended November 30, 2021 Cannabis Beverage Distribution Wellness Total Gross $ 163,362 $ 31,027 $ 136,055 $ 28,729 $ 359,173 revenueExcise (34,138 ) (1,859 ) ? ? (35,997 )taxesNet 129,224 29,168 136,055 28,729 323,176 revenueCost of 85,450 12,583 120,527 20,895 239,455 goods soldGross $ 43,774 $ 16,585 $ 15,528 $ 7,834 $ 83,721 profitGross 34 % 57 % 11 % 27 % 26 %marginAdjustedgross $ 55,774 $ 16,585 $ 15,528 $ 7,834 $ 95,721 profitAdjustedgross 43 % 57 % 11 % 27 % 30 %margin Six months ended November 30, 2020 Cannabis Beverage Distribution Wellness Total Gross $ 137,275 $ 754 $ 140,271 $ ? $ 278,300 revenueExcise (31,307 ) (44 ) ? ? (31,351 )taxesNet 105,968 710 140,271 ? 246,949 revenueCost of 55,407 281 121,033 ? 176,721 goods soldGross $ 50,561 $ 429 $ 19,238 $ ? $ 70,228 profitGross 48 % 60 % 14 % 28 %marginAdjustedgross $ 50,561 $ 429 $ 19,238 $ ? $ 70,228 profitAdjustedgross 48 % 60 % 14 % 28 %margin

Other Financial Information: Adjusted Earnings before Interest, Taxes, and Amortization

(In thousands of For the three months For the six months endedUnited States ended November 30, dollars) November 30,Adjusted EBITDA 2021 2020 2021 2020 reconciliation:Net income (loss) 5,797 (89,249 ) (28,807 ) (110,993 )Income taxes (5,671 ) (14,192 ) (909 ) (20,017 )Interest expense, net 9,940 4,832 20,110 10,568 Non-operating expense (64,750 ) 72,649 (113,610 ) 86,008 (income), netAmortization 37,471 12,031 76,804 23,010 Stock-based 8,253 5,489 17,670 8,339 compensationFacility start-up and 1,700 ? 7,900 ? closure costsLease expense 900 373 1,600 630 Inventory write down 12,000 ? 12,000 ? Transaction costs 8,120 18,206 33,699 20,664 Adjusted EBITDA $ 13,760 $ 10,139 $ 26,457 $ 18,209

Other Financial Information: Free Cash Flow and Adjusted Free Cash Flow

Three months ended Six months ended November 30, November 30,(Inthousands ofUnited 2021 2020 2021 2020 Statesdollars)Net cashprovided by(used in) $ (17,121 ) $ 2,438 $ (110,348 ) $ (53,662 )operatingactivitiesLess:investmentsin capital (6,972 ) (9,301 ) (15,592 ) (23,256 )andintangibleassets, netFree cash $ (24,093 ) $ (6,863 ) $ (125,940 ) $ (76,918 )flowCashexpended 8,120 18,206 56,510 20,664 related toacquisitionsAdjustedfree cash $ (15,973 ) $ 11,343 $ (69,430 ) $ (56,254 )flow