Canada-based cannabis grower Tilray Inc. (NASDAQ: TLRY) reported first-quarter 2020 earnings results on May 11. The company posted a net loss of $184.1 million ($1.73 per share) on sales of $52.1 million. The loss was six times bigger than the year-ago loss, while revenues more than doubled.

Investors seemed to take comfort in the fact that the largest share of the quarterly loss came in one-time items. The adjusted EBITDA loss for the quarter totaled $19.7 million, compared to a loss of $15.3 million a year ago. The narrow loss was attributed to increased operating costs and expenses related to growth initiatives.

Even so, the company’s year-to-date performance is abysmal. Including a March drop of around 85%, Tilray stock traded down Tuesday morning by around 53%. The S&P 500 traded down about 9.3%.

That last year was a terrible one for marijuana stocks is indisputable. Tilray shares dropped nearly 76% in 2019, Canopy Growth Corp. (NYSE: CGC) dumped 27%, Cronos Group Inc. (NASDAQ: CRON) fell by more than 32% and Aurora Cannabis Corp. (NYSE: ACB) lost nearly 59% of its value.

So far, 2020 has not been much kinder. Aurora’s ability to avoid a bankruptcy may set a tone for the whole year. A 12-for-1 reverse split offered the company a brief respite, but that’s not going to last.

What Tilray Has Done to Keep the Ship Afloat

Investors probably hope that Tilray is finished with dilutive stock offerings for a while. In mid-March, Tilray closed an underwritten offering of 7.25 million units comprised of shares and warrants to raise about $85.3 million in cash. A week later, the board of directors approved a pro rata release of another 11 million shares held by former shareholders of Privateer Holdings, a private equity firm that merged with Tilray last year.

A January deal with an Israeli medical cannabis company calls for Tilray to export 2.5 metric tons of product from its facility in Portugal to Israel. The company also raised nearly $60 million in a senior credit facility to lift its liquidity to $174 million in cash and equivalents.

The company also noted that it has not experienced any material impacts from the COVID-19 pandemic related to its ability to serve patients and consumers around the world. Tilray has eliminated 258 jobs and expects to save $21.0 million, net of severance costs. Together with other cost-saving measures, the company expects annual savings of approximately $40.0 million in overall cost savings annually.

How Tilray Plans to Turn It Around

On a conference call, the company said it expects to post a positive cash flow by the end of this year. Operating cash flow in the first quarter was a negative $54.0 million, more than double the year-ago total.

CEO Brandon Kennedy commented that when the lockdowns began in mid-March, the company saw a bump in sales. The increase plateaued in April but at a higher level than where it had started. Not all of the bump was saved, but a decent portion was.

For the first time in the company’s history, Tilray sold more medicinal marijuana in Europe than it sold in Canada. Not only that, the company foresees its medical marijuana revenues in Europe remaining higher than Canadian revenues.

The fastest-growing segment of Tilray is the company’s Manitoba Harvest hemp business. Sales rose from $5.6 million in the first quarter of last year to $21.3 million in the first quarter of 2020. Sales of recreational cannabis rose from $7.9 million to $20.9 million, while medical marijuana sales rose from $4.8 million to $9.8 million.

Early reactions among analysts were mixed. Benchmark Capital’s Mike Hickey reiterated a Buy rating but chopped his price target from $28 to $14. Gordon Johnson at GLJ was put off by Tilray’s inventory write-downs and has a Sell rating on the shares.

Consensus estimates call for a per-share loss of $0.42 in the second quarter and revenue of $50.6 million. For the full year, analysts are looking for a net loss of $1.31 on revenues of $237.7 million.

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