Marijuana Company Tilray To Report Q4 Results

Close on the heels of top Canadian marijuana producers Aurora Cannabis and Canopy Growth reporting their fourth-quarter results another leading player Tilray Inc will announce its last quarter earnings on Monday.

Tilray is the third-largest Canadian marijuana grower. The results of the quarter until Dec. 31, 2018, are expected after market hours and some surprises are likely.

In the expected results, the outlook of the Alpha school of analysts is that consensus earnings per share (EPS) will be -$0.13 and their consensus Revenue Estimate is $12.85 million. We are offering one more set of analyst expectations below.

Likely highlights of Q4 earnings

Zooming sales via recreational-marijuana: Tilray's earnings report will cover the full first-quarter sales in the Canadian adult-use recreational marijuana market. The bulk of the Q4 revenue will be from recreational-marijuana sales.

According to another section of analysts’ outlook, Tilray's overall revenue is expected to be between $12.2 million and $18.8 million, with the average being nearly $14.5 million. In case, Q4 revenue hits the average estimate that would be a 45 percent surge compared to the previous quarter.

The growth may look impressive but the numbers can pale before Aurora and Canopy. Aurora reported a quarter to quarter sales growth of a massive 83 percent, while Canopy's revenue showed a 256 percent jump over the previous quarter.

So, the following will be likely takeaways.

Boost from Canada’s medical-marijuana: Decent growth in Tilray's medical-marijuana sales can be expected contrary to concerns that medical marijuana sales may fall in Canada after the recreational market was thrown open.

Tilray CEO Brendan Kennedy said in November that demand for medical cannabis soared weeks prior to the legalization of recreational marijuana.

So, Tilray's medical sales must have grown in the fourth quarter. Aurora also had a boost from that segment. But Canopy Growth's medical-cannabis sales plummeted in Q4 compared to the third quarter.

Lower contribution from international markets: Although Tilray has been supplying to medical-cannabis products to other countries with Germany being a major market, international sales are unlikely to give any tangible growth in Tilray’s Q4 results.

Tilray has not released any break up from international revenue figures in the previous quarterly updates.

However, Aurora Cannabis and Canopy Growth are offering international sales numbers. But international sales are still a small percentage of the total revenues for all. It is 6 percent for Aurora and 3 percent for Canopy.

Net loss to repeat despite higher revenue

Tilray reported a third-quarter loss of $18.7 million, that was $0.20 per share. Despite being certain that Tilray will post impressive revenue, there is no chance of escaping a big net loss again in the last quarter.

Analysts think that Tilray's Q4 net loss will be $0.20 per share at its worst and $0.06 as the best. But the majority expectation is that Tilray will post a net loss of $0.12 per share though it may look like a sheer improvement on the bottom line.

But Tilray can take comfort that is it is not at all an isolated case. Aurora lost Ca$237.8 million (US$178 million) in the last quarter. Though Canopy Growth showed a profit in the last quarter, it had more to with the value of convertible notes.

Rising action in the marijuana sector

Meanwhile, rival Aurora Cannabis Inc. (ACI) just enjoyed a market boost when Nelson Peltz, the hedge fund titan joined the company. It sent ACI’s stock soaring 16 percent.

Mergers and acquisitions are also thriving in the marijuana market space. In the U.S, Harvest Health and Recreation bought competitor Verano Holdings for $850 million in an all-stock deal to become the largest cannabis firm in the country.

Put together, Harvest Health and Verano will become one of the largest multi-state operators in the USA with facilities in 16 states.

The U.S. cannabis firms are expanding their chest to take on Canadian giants including Canopy Growth.