Tilray Pads the Stats with Booze Amid Record Revenues

The plan also includes planting fruits and veggies this month to help utilize unused cultivation plots.

While some alcohol companies dabble in pot to pad cannibalization from new generations of attitudes, Canadian cannabis firm Tilray Brands, Inc. (NASDAQ: TLRY) has leaned on booze to bounce back from over a billion dollars in losses last year.

That plan has panned out so far, as the company delivered record net revenue of $194 million, a 34% rise versus the same period last year. More remarkably, its beverage alcohol division saw a 117% rise in revenue, which is particularly noteworthy given the broader challenges in that industry.

At the helm of that growth is the company’s chairman and CEO, Irwin Simon, who has been steering Tilray through a series of acquisitions and an expansion into diverse segments beyond its core cannabis business, such as beer, but not excluding fruits and veggies.

“Our diversified business model of cannabis CPG lifestyle brands all operating under our strategy innovation… will drive our continued growth and future success, as we demonstrated by our record revenue,” Simon told investors on a call this week, noting the company’s unique position in the market.

Beyond cannabis, Tilray is expanding these new segments, leveraging existing distribution channels and exploring others to introduce its products to a broader consumer base. The acquisition of craft beer brands such as Belgian-style beer brand Shock Top as well as the push into hemp-based wellness products are part of that expansion strategy.

Despite struggling margins, Tilray touted its dominant position in the Canadian cannabis market, with the company holding a leading market share and showing growth in both adult-use and medical cannabis sectors. The international cannabis market also saw impressive growth, with a 55% increase in net revenue, particularly in Europe, where Tilray has established a strong foothold.

“We are the market leader in medical cannabis across Europe, with leading shares in Germany and Poland and other countries in which we participate,” Chief Strategy Officer and Head of International, Denise Faltischek, said.

On the back end of that, management will look to leverage the firm’s expertise and reputation to enter other emerging European markets where medical cannabis is gaining legal acceptance. That includes enhancing its distribution network and engaging with government and healthcare professionals to advocate for medical cannabis.

However, it wasn’t just top-line growth that the Tilray team emphasized. CFO Carl Merton mentioned the company’s efforts to successfully reduce its debt as it tries to reign in on cash burn and optimize asset utilization.

“We have a couple of internal cost savings plans that are going to net us about $5 million over the back half of the year,” he said.

Speaking of acquisitions

Management said it intends on keeping an eye out for acquisitions, particularly those that align with the diversified business approach and can contribute to the firm’s organic growth strategy. The focus seems to be on finding opportunities that align with existing operations, be it in cannabis, beverage alcohol, or wellness segments, and in markets where they already have a strong presence or see potential for growth.

Irwin Simon mentioned Tilray’s attraction toward deals that complement the firm’s existing business lines and aid in its expansion goals.

“We’re looking at strategic [acquisitions]. They got to be accretive. They got to be good value there for us and how do we integrate it into our current infrastructure,” Simon said.

Overall, leaning out has been key for Tilray, especially in light of a competitive market and challenging regulatory scene in North American cannabis.

He echoed how these deals have played a critical role in providing value to the balance sheet. For example, the acquisition of Canadian cannabis producer HEXO and Truss, a THC-infused drink line from Molson Coors Canada, significantly contributed to savings and operational efficiencies.

All of it involves optimizing supply chain management, reducing overhead costs, and enhancing production processes to improve margins. For example, renegotiating the supply agreement with Aphria Diamond to improve profitability fits into that approach.

The call was not just an exposition of past successes but also a forward-looking dialogue. With the potential rescheduling of cannabis in the U.S. being a key mover for the firm, the firm said its poised to leverage its international medical cannabis expertise in a federally legal American market.

“If and when rescheduling of cannabis were to happen in the U.S.,” he said, “we expect this would open the opportunity for certain institutional investors to invest in Tilray.”

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.

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