Q2 2024 Earnings
Tilray
Tilray Brands Reports Record Financial Results, Achieves 26% Net Revenue Growth.
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Financial Highlights – 2024 Fiscal Fourth Quarter
Net revenue increased 25% to $229.9 million in the fourth quarter compared to $184.2 million in the prior year quarter
Gross profit was $82.4 million in the fourth quarter compared to $67.2 million in the prior year quarter. Gross margin and adjusted gross margin2 were both 36%
Beverage-alcohol net revenue increased 137% to $76.7 million in the fourth quarter from $32.4 million in the prior year quarter. The increase was led by new product innovation and contributions from our Craft Acquisition brands
Beverage-alcohol gross profit increased 146% to $40.8 million in the fourth quarter from $16.6 million in the prior year quarter. Adjusted beverage-alcohol gross profit increased 130% to $41.0 million from $17.8 million in the prior year quarter
Beverage-alcohol gross margin increased to 53% in the fourth quarter compared to 51% in the prior year quarter and adjusted gross beverage alcohol margin2 was 53% in the fourth quarter compared to 55% in the prior year quarter
Cannabis net revenue increased 12% to $71.9 million in the fourth quarter compared to $64.4 million in the prior year quarter, driven in part by the acquisitions of HEXO and Truss
Cannabis gross profit and adjusted gross profit2 decreased to $28.8 million in the fourth quarter from $39.5 million in the prior year quarter
Cannabis gross margin and adjusted gross margin2 were 40% in the fourth quarter compared to 61% in the prior year quarter. A substantial portion of the decrease is a result of the completion of the HEXO advisory services agreement in Q1 fiscal 2024
Distribution net revenue was $65.6 million in the fourth quarter compared to $72.6 million in the prior year quarter. The decrease was driven by management’s focus on discontinuing less profitable product lines demonstrated by Distribution’s gross margin increasing to 12% in the fourth quarter compared to 9% in the prior year quarter
Wellness net revenue increased 6% to $15.7 million in the fourth quarter from $14.8 million in the prior year quarter
Net loss narrowed to ($15.4) million in the fourth quarter compared to net loss of ($119.8) million in the prior year quarter, almost all of which is a result of non-cash expenses. Adjusted net income2 was $35.1 million in the fourth quarter compared to a loss of ($11.8) million in the prior year quarter
Net loss per share narrowed to ($0.04) compared to ($0.15) in the prior year quarter. Adjusted net income (loss) per share2 was $0.04 compared to a loss of ($0.02) in the prior year quarter
Adjusted EBITDA2 increased 37% to $29.5 million in the fourth quarter compared to $21.5 million in the prior year quarter
Financial Highlights – 2024 Fiscal Year
Net revenue increased 26% to $788.9 million in fiscal 2024 compared to $627.1 million in the prior fiscal year
Gross profit was $223.4 million, while adjusted gross profit2 increased 14% to $235.6 million in fiscal 2024. Gross margin was 28% and adjusted gross margin2 was 30%
Beverage-alcohol net revenue increased 113% to $202.1 million in fiscal 2024 from $95.1 million in the prior fiscal year
Beverage-alcohol gross profit increased 91% to $88.6 million in fiscal 2024 from $46.3 million in the prior fiscal year. Adjusted beverage-alcohol gross profit2 increased to $93.2 million from $50.8 million in the prior fiscal year
Beverage-alcohol gross margin was 44% in fiscal 2024 compared to 49% in the prior fiscal year and adjusted gross beverage alcohol margin2 was 46% in fiscal 2024 compared to 53% in the prior fiscal year, reflecting lower contribution margins from the acquired brands
Cannabis net revenue increased 24% to $272.8 million in fiscal 2024 compared to $220.4 million in the prior fiscal year, reflecting the acquisitions of HEXO and Truss as well as growth across international markets
Cannabis gross profit increased to $90.2 million in fiscal 2024 from $57.7 million in the prior fiscal year. Adjusted gross profit2 was $97.8 million compared to $112.7 million in the prior fiscal year as a result of the advisory service agreement concluding in Q1 fiscal 2024
Cannabis gross margin was 33% in fiscal 2024 compared to 26% in the prior fiscal year. Adjusted cannabis gross margin2 was 36% compared to 51% in the prior fiscal year
Distribution net revenue and gross margin remained consistent at ~$259 million and 11% in fiscal 2024 compared to the prior fiscal year
Wellness net revenue increased 5% to $55.3 million in fiscal 2024 from $52.8 million in the prior fiscal year
Wellness gross margin was 30% in fiscal 2024 compared to 29% in the prior fiscal year
Net loss decreased to ($222.4) million in fiscal 2024 compared to net loss of $(1.4) billion in the prior fiscal year, almost all of which is a result of non-cash expenses. Net loss per share narrowed to $(0.33) and improved compared to a net loss of $(2.35) in the prior fiscal year
Adjusted net income2 increased to $6.2 million in fiscal 2024 compared to adjusted net income2 of $0.4 million in the prior fiscal year. Adjusted net income per share2 narrowed to $0.01 compared to $0.00 in the prior fiscal year
Adjusted EBITDA2 increased to $60.5 million in fiscal 2024 compared to $58.7 million in the prior fiscal year
Strong financial liquidity position of ~$260.5 million, consisting of $228.3 million in cash and $32.2 million in marketable securities
Reduced outstanding principal of the net convertible debt by $291.0 million compared to the previous fiscal year
Net cash used in operating activities was $(30.9) million in fiscal 2024 compared to $7.9 million net cash from operating activities in the prior year
Adjusted free cash flow2 of $6.6 million in fiscal 2024 compared to $19.1 million in the prior year
1 Circana volume sales L26W ending 7/7/24
2 Adjusted EBITDA, Adjusted gross margin, Adjusted net income, adjusted gross profit and adjusted gross margin for each of our segments, and Adjusted net income (loss) are non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measures to GAAP Measures” below for a reconciliation of these Non-GAAP Measures to our most comparable GAAP measure.
Beverage Alcohol Drives Large Majority of Revenue Growth
Tilray Brands (TLRY) Q4 2024 Earnings Call Transcript
Call participants: Irwin Simon—Chairman and CEO; Carl Merton—CFO; Denise Faltischek—President, International Business and Chief Strategy Officer; Berrin Noorata—Chief Corporate Affairs and Communications Officer; Robert Moskow—TD Cowen Analyst; Andrew Carter—Stifel Analyst, Aaron Grey—Alliance Global Partners Analyst, Owen Bennett—Jefferies Analyst, Frederico Gomes—ATB Capital Markets Analyst.
Shock Top finished Q4 with 13.5% growth year over year since Tilray Brands acquired the brand
After its first acquisition in beer (SweetWater), they were selling 2.5 million cases, expects to sell 12–13 million cases of beer next year (FY2025)
All brands, except for Shock Top, have exited their co-manufacturing agreements and are now being produced in Tilray facilities
Goal is to bring consolidated beverage alcohol margins back up above 40%
Prior GM at SweetWater was in the high 40s, low 50s
Plan to launch new hemp-derived delta-9 beverages strategically in selected markets, including Texas and New Jersey, where Tilray can leverage its existing beverage distribution network. Tilray’s beer distributors that have reached out to them, want the product right away because they have seen how well the sales are doing in markets where it is available
Spent ~$30M this year on CapEex, spent a little over $20M the year before
$10M headwind to EBITDA this year from price compression
Product seems to be selling as soon as it comes into the market in Germany
“The cannabis consumer today is just not the Gen Z and millennials. It's an older generation that's looking at cannabis for pain, for sleep, for anxiety, cancer patients, in treating epilepsy and other things. So, cannabis is just not just for relaxation or a product to get high on. It's a product for a lot of medical reasons, it's a product for relaxation, and as we talk about bringing people together through in exciting times. Tilray will continue to evolve into a lifestyle company.” — Irwin Simon