Tilray Brands, Inc., a leading global cannabis-lifestyle and consumer packaged goods company, today reported financial results for its second quarter of its fiscal year 2024 ended November 30, 2023. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.
Financial Highlights – 2024 Fiscal Second Quarter
- Record net revenue of $194 million increased 34% in the second quarter compared to $144 million in the prior year quarter.
- Gross profit increased 11% to $47 million, while adjusted gross profit increased 18% to $52 million in the second quarter. Gross margin was 24% and adjusted gross margin was 27%.
- Cannabis net revenue increased 35% to $67 million in the second quarter compared to $50 million in the prior year quarter.
- Cannabis gross margin was 31% in the second quarter compared to 43% in the prior year quarter. Adjusted cannabis gross margin was 35% compared to 43% in the prior year quarter.
- Beverage alcohol net revenue increased 117% to $47 million in the second quarter from $21 million in the prior year quarter.
- Beverage alcohol gross margin was 34% in the second quarter compared to 47% in the prior year quarter and adjusted gross beverage alcohol margin was 38% in the second quarter compared to 52% in the prior quarter. Excluding the newly acquired brands, adjusted gross margin would have been 55% in the current quarter.
- Beverage alcohol gross profit increased to $16 million in the second quarter from $10 million in the prior year quarter. Adjusted beverage alcohol gross profit increased to $18 million from $11 million in the prior year quarter.
- Distribution net revenue increased 12% to $67 million in the second quarter compared to $60 million in the prior year quarter.
- Distribution gross margin was 11% in the second quarter compared to 13% in the prior year quarter, reflecting a change in product mix.
- Net loss decreased to $46 million in the second quarter compared to net loss of $62 million in the prior year quarter. Net loss per share narrowed to ($0.07) compared to ($0.11) in the prior year quarter.
- Adjusted net loss of $2.7 million in the second quarter. Adjusted loss per share of $(0.00).
- Adjusted EBITDA was $10.1 million in the second quarter compared to $11.0 million in the prior year quarter. The difference was primarily related to the HEXO advisory fee revenue in the prior year quarter along with timing differences in recognizing synergies from operating results after completing acquisitions.
- Achieved $22 million in annualized run-rate savings (and $14 million in actual cash cost savings) as part of the $30 million synergy plan related to the HEXO acquisition.
- Strong financial liquidity position of ~$261 million, consisting of $143 million in cash, including restricted cash of $1.5 million and $116 million in marketable securities.
- Reduced outstanding convertible debt by $127 million compared to the first quarter and a further $18 million subsequent to the end of our second quarter.
- Operating cash flow of $(30) million in the second quarter compared to $29 million in the prior year quarter. The increased cash use was primarily related to the settlement of pre-acquisition liabilities and exit costs assumed in connection with the HEXO acquisition. In addition, the prior year period included the cash collection of $18 million related to the purchase price derivative related to our acquisition of the HEXO convertible notes, which did not recur in the current year.
Irwin D. Simon, Tilray Brands’ Chairman and Chief Executive Officer, stated, “Tilray Brands is a major force at the forefront of innovation, disrupting the global CPG industry across medical and adult-use cannabis, wellness foods and snacks, and craft beverages. Our Q2 financial results demonstrate the strength of our brands, our global team, and our diversified growth strategy. We grew revenue, enhanced our capital structure, and realized operating synergies while strengthening Tilray Brands’ position as the #1 cannabis operation and brand portfolio in Canada by sales volume and market share, the European market leader in medical cannabis, and the leader in branded hemp products. We have also emerged as a disruptor in the craft beverage-alcohol industry by assembling a portfolio of highly sought-after brands that are dominating key regions across the U.S. in the Northeast, the Pacific Northwest, and the Southeast. Tilray is now uniquely positioned to become a top 12 beer and alcohol beverage company in the U.S.”
Operating Highlights
Strengthened Operations and Financial Position
- Significantly reduced convertible debt by $127 million of principal of outstanding notes and an additional $18 million subsequent to the quarter ended November 30, 2023, for a total debt reduction of $145 million. The Company intends to continue to opportunistically repurchase additional notes to demonstrate and reinforce its commitment to optimizing its capital structure and enhancing financial flexibility.
- Achieved $22 million in operational synergies and identified an additional $5 million cost savings expected to be realized during the back half of the fiscal year. In aggregate, it is expected that total cost savings related to the HEXO and Truss integration will amount to $30-$35 million in this fiscal year.
Leading Global Cannabis Operations, Brands, and Market Share
- Tilray continues to lead the Canadian cannabis market in revenue, sales volume, and market share with a 12.5% position during the second quarter. The Company led with #1 share in Cannabis Flower, Oils, Concentrates and THC Beverage product categories.
- The HEXO Corp. and Truss Beverage acquisitions together significantly bolstered Tilray’s dominant cannabis position and strengthened low-cost operations and complementary distribution across all Canadian geographies.
- Tilray is focused on growing its leading market share in medical cannabis across Europe and other international markets. This will be accomplished by capitalizing on its unrivaled cultivation and distribution operations and the leadership team’s depth of commercial and regulatory expertise. During the second quarter, the increase in international cannabis revenue was largely driven by expansion into emerging international medical markets.
- In the U.S. today, Tilray does not participate in any cannabis operations and therefore, does not derive any revenue or cash from any cannabis operations in the U.S. The rescheduling of cannabis could open a path for Tilray to leverage its expertise in Canadian and European medical cannabis to distribute medical cannabis in the U.S. In the event of federal cannabis legalization in the U.S., we believe that Tilray is well-positioned to immediately leverage its strong U.S. leadership position and strategic strengths across operations, distribution, and brands to include THC-infused products. We further believe that our MedMen investment in the U.S. will position us to maximize commercial opportunities providing additional revenue opportunities in cannabis.
Growing Leadership Position in CPG and Beverage-Alcohol
- In September 2023, Tilray Brands expanded its beverage portfolio of Sweetwater Brewing Company, Alpine Brewing, Green Flash Brewing, Montauk Brewing, and Breckenridge Distillery by closing on its acquisition of eight beer and beverage brands from Anheuser-Busch (NYSE: BUD). The acquired brands are Shock Top, Breckenridge Brewery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Company, and HiBall Energy (the “Craft Acquisition”). These premium craft brands possess strong consumer loyalty and further diversify Tilray’s U.S. beverage-alcohol segment, which more than doubled in Q2, and elevated Tilray to the 5th largest position in the U.S. craft beer market. Tilray Brands now seeks to become a top 12 U.S. beer and alcohol beverage company through a strategic three-pronged approach that consists of a regional brand growth, national brand expansion, and innovation strategy.
- Tilray’s wellness brand, Manitoba Harvest, expanded its brand leadership position in the U.S. and Canada with increased consumption in both the natural and conventional channels. For the remainder of the fiscal year, Manitoba Harvest will seek to expand the Happy Flower™ beverage brand with retail distribution into key markets, focusing on U.S. states with established CBD permissibility and sales momentum in future periods.
Tilray Brands Strategic Growth Actions – 2024 Fiscal Second Quarter
November 2023
- 10 Barrel Brewing Co. Launches Revitalized Hopburst IPA Collection
- Redecan Cannabis Launches New Holiday Style Redees
- Crafted for the People: SweetWater’s New ‘Half-A-Gummie’ IPA Meets Consumer Demand for Fruity, Easy-Drinking Beers
- Tilray Brands Expands Cannabis Beverage Portfolio with New THC, CBG and CBD Drink Innovations by Top-Performing Canadian Brands
- Good Supply™ Cannabis Launches ‘Get Blitzen’d’ Holiday Campaign and New Limited-Edition Products Across Canada
- SweetWater Brewing Company Launches Special-Edition 420 IPA in Partnership With the Georgia Aquarium, One of the Top Aquariums in the World
October 2023
- Blue Point Brewing Announces Cask Ales Festival and New Beer Lineup
- Sweetwater Brewing Company Unveils Fall Craft Beer Lineup
- Celebrating Five Years of Growth: Tilray Brands Reflects on Industry Leadership in Canadian Cannabis and Looks Forward to its Future
- Good Supply, Tilray’s Best-Selling Cannabis Brand, Launches New Sustainability Campaign, ‘Green You Can Feel Good About’, and Debuts New Hemp Packaging
- Tilray Medical Supports New Clinical Trial to Study Medical Cannabis in Glioblastoma Cancer Treatment
- Montauk Releases Major Wave Chaser Double India Pale Ale
- Tilray Brands Closes Transaction Acquiring Eight Beer & Beverage Brands From Anheuser-Busch; Solidifies Leadership Position in U.S. Craft Beer Market
September 2023
- ‘Potently Canadian’ Cannabis Brand, CANACA, Launches ‘Let ‘Er Rip’ Campaign
- Tilray’s Best-Selling Beers Make Landfall at Atlantis, Bahamas
- Montauk Brewing Expands Distribution Beyond the Northeast
- Tilray Expands Market Leading Cannabis Portfolio with Launch of New Redecan Products Across Canada
About Tilray Brands
Tilray Brands, Inc. 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. Tilray’s mission is to be the trusted partner for its patients and consumers by providing them with a cultivated experience and health and well-being through high-quality, differentiated brands and innovative products.
