Tilray Throws Investors a Bone with Q1 Beat

Tilray Brands Inc. (Nasdaq: TLRY) (TSX: TLRY) posted its first-quarter 2024 financial results ending Aug. 31, showing a mixed bag, with gains in revenue amid shrinking cannabis margins. However, the company still beat analyst predictions.

The Canadian producer, which has been on an M&A binge lately, reported 15% revenue growth to $177 million from the prior year’s $153 million. This beat Yahoo analysts’ average of $174 million.

“Since the beginning of our (fiscal year), we have closed on three transactions: HEXO Corp. in June, Truss Beverage Co. in August, and the acquisition of eight beer and beverage brands from Anheuser-Busch,” CEO Irwin Simon said in a statement Wednesday.

“We have strategically diversified our company globally over the past several years and, as a result, Tilray is now ideally positioned to capture a wide range of opportunities across multiple industries.”

Tilray’s cannabis segment revenue rose by 20% to $70 million, up from $59 million in the same period last year. However, the division’s gross margin registered at 28%, a considerable slump from the 51% reported the previous year. The adjusted gross margin for the segment echoed a similar sentiment, falling to 35% from last year’s 51%.

Factors such as a wholesale deal meant “for inventory optimization,” which generated an additional $3.1 million in cash, influenced this margin shift. The impact of the HEXO advisory fee revenue, included in the prior year, also contributed.

On the opposite end, company’s beverage alcohol division continued its upward trend, with revenues spiking by 17% to reach $24 million, compared to the prior year’s $21 million. The alcohol segment also showcased a marked rise in gross margin, climbing to 53% from the previous year’s 47%.

The company’s net loss was $56 million for the quarter, an improvement against the previous year’s $66 million loss. Adjusted EBITDA was $11.4 million in the first quarter versus $13.5 million in the prior year quarter, mostly as a result of revenue generated from fees paid for advisory services related to the HEXO acquisition.

Tilray anticipates an adjusted EBITDA between $68 million to $78 million for the fiscal year ending May 31, 2024, with expectations of generating a positive adjusted free cash flow.

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