Release Date: October 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tilray Brands Inc (TLRY, Financial) achieved record first-quarter net revenue of $200 million, representing a 13% growth year over year.
- The company's beverage business, including craft beer and spirits, grew 132% in net revenue year over year.
- Tilray Brands Inc (TLRY) strengthened its leadership position as the fifth largest US craft beer brewer with a 5% market share.
- The company reported a 35% increase in gross profit and a gross margin increase of over 500 basis points compared to the prior-year quarter.
- Tilray Brands Inc (TLRY) has a strong financial foundation with ample cash reserves, reduced debt levels, and flexibility to explore potential new acquisitions.
Negative Points
- The cannabis net revenue decreased by 13% compared to the prior-year period, largely due to price compression and strategic focus on margins.
- Adjusted EBITDA decreased from the prior-year quarter, primarily due to increased investment in marketing and promotions at Tilray Beverages.
- Cash flow used in operations was $35.3 million, compared to $15.8 million in the prior-year quarter, indicating increased demand on working capital.
- The international cannabis revenue decreased by 14%, driven by variability in the timing of import and export permits.
- The beverage alcohol gross margin decreased to 41% from 53% in the prior-year quarter, reflecting challenges in optimizing production and controlling costs.
Q & A Highlights
Q: Can you provide an update on how volumes are trending in the Canadian adult-use market?
A: Irwin Simon, CEO, explained that while there is significant volume in Canada, Tilray is focusing on profitable volume. The company has improved margins and introduced new products, selling over 80 million pre-rolls and 350 metric tonnes of flower annually. Blair MacNeil, President of Tilray Canada, added that the industry is seeing healthy growth, with dollar volume up 4.5% to 5% and category volume growing at 9% to 10%.
Q: How is Tilray addressing price compression and supply balance in Canada?
A: Irwin Simon noted that price compression has stabilized, and Tilray is managing inventories well with improved yields. The focus is on high-potency products, which are in demand. The company has lost significant revenue due to price compression but is now seeing stabilization and better inventory management.
Q: What is the strategy for investing in the business and driving EBITDA growth?
A: Irwin Simon highlighted that Q1 is typically the lowest quarter due to seasonality and timing of new product rollouts. The company is focused on cost reduction, especially with the integration of ABI brands, and expects growth in Germany and other markets. New product launches and distribution expansion are key levers for EBITDA growth.
Q: Can you clarify the distribution strategy for hemp-derived THC beverages?
A: Irwin Simon stated that the majority of Delta-9 beverages will be distributed through brick-and-mortar retailers and beer distributors in 19 states. Some products will also be available direct-to-consumer. The company has received initial orders and is excited about the demand.
Q: How does Tilray plan to leverage its competitive advantages in the German market?
A: Denise Faltischek, Chief Strategy Officer, emphasized Tilray's flexible supply chain, cost-efficient production, and strong commercial team in Germany. The company has expanded its cultivation capabilities and is well-positioned to capture market share as regulations evolve. Tilray's reputation and expertise make it a trusted partner for doctors and government officials.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
