Tilray Brands, Inc. (Nasdaq: TLRY) reported financial results for the third fiscal quarter ending February 28, 2022. Tilray‘s ret revenue increased 23% to $152 million during the third quarter from $124 million in the prior-year quarter. However, it fell sequentially from the second quarter’s revenue of $155 million and slightly missed the revenue estimates by roughly $4.7 million. The increase was driven by a 32% growth in cannabis revenue to $55 million, 64% growth in beverage alcohol revenue to $20 million, and wellness revenue of $15 million.
The company also reported a net income of $52 million. and earnings per share of $0.09, which beat estimates by $0.17. However, this net income improvement was almost entirely from a $76M non-cash adjustment to the company’s warrant liability and the future value of convertible debentures(which occurs due to the share price falling). Thus, the $54.7 million of operating losses turned into $5.8M in positive net income.
“Our third quarter results reflect progress and momentum across all of our key business segments and geographies, setting the stage to achieve our target for $4B in revenue by the end of fiscal 2024,” said CEO Irwin D. Simon. “Tilray Medical – which now operates under a cohesive strategy and mission – has a near 20% share in Germany, providing clear benefits in its own right as well as a first-mover advantage that we will leverage as Germany and the EU move towards broader adult-use and medical use legalization. In Canada, we maintained our leading market share position amid intense competition – and believe that our strong capital position, operational excellence and pricing and marketing adjustments will work in concert to help ensure we reclaim share in the coming quarters. This effort will gain further support from the fundamental appeal of our brands and product innovation which, as stores continue re-opening, will resonate powerfully with consumers. In the U.S., our SweetWater Brewing, Breckenridge Distillery, and Manitoba Harvest businesses are profitable, growing and emerging as nationwide, iconic brands with loyal followings that will be home to THC-based products upon U.S. federal legalization.”
Tilray said it maintained its number one leadership position in Canada with a 10.2% cannabis market share driven by its portfolio of adult-use brands, and growth in pre-roll and vape product categories. Cost synergies from Aphria-Tilray combination has achieved on a run-rate basis to date $76 million. The company said it expects to reach the $80 million synergy target by May 31, 2022, five months ahead of schedule, and to generate an additional $20 million in synergies in fiscal 2023.
Mr. Simon continued, “We also continued sourcing and executing strategic and shareholder-friendly transactions that provide value with notable upside. Our most recent example is the proposed agreement to purchase the HEXO senior secured convertible notes, which provides a path for meaningful future equity ownership of HEXO as it executes on its transformation. The proposed HEXO transaction is also expected to facilitate complementary commercial and product innovation and drive production and operating efficiencies. As the global economy re-opens, we are confident that the global cannabis powerhouse at the heart of the Tilray Brands’ value proposition will deliver sustained and tangible shareholder value.”