Summary

  • Tilray Brands, Inc. is a leading global cannabis lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America.
  • During the period June to August 2022, the company reported net revenue of $153.21 million, which was $168.02 million during the same period of the previous year.
  • For the year ended May 31, 2022, net revenue of the company is reported $628,372 thousands, which was $513,085 thousands a year earlier.
  • Thus, reported operating loss for the two successive years are $610,401 thousands, and $132,171 thousands, respectively. However, the company generated a non-operating income of $197,671 thousands during the latest financial year, which was a loss of $184,838 thousands
  • The company has four reportable segments – Cannabis, Distribution, Beverage alcohol, and Wellness. Revenue from the segments is – 38%, 41%, 11% and 9% of the total revenue, respectively.
  • The brands of Tilray can be grossly divided into four parts – Tilray medical, adult-use brands, craft-beverage brands, Tilray wellness. Some of the Brands are – Tilray, Aphria, Broken Coast, Symbios etc.

Brief Company Overview

Tilray Brands, Inc. (NASDAQ: TLRY; TSX: TLRY) is a cannabis research company established in 2013 in Canada.1 The company received approval from Canadian health Tilray Brands Logoauthority for production and research of medicinal cannabis a year later. Users of the products of the company include doctors, patients, pharmacies, hospitals, authorities, and researchers. Tilray produce its products in three locations – Canada, Germany and Portugal, and exports to 20 countries around 5 continents of the world. The company offers about 20 brands including cannabis offerings, hemp-based foods, and craft beverages.2

Tilray Brands, Inc. is a global cannabis lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America. Tilray’s mission is to be the most responsible, trusted and market leading cannabis consumer products company in the world with a portfolio of innovative, high-quality and beloved brands that address the needs of the consumers, customers and patients.3

Tilray got incorporated in the State of Delaware on January 24, 2018. The company traded publicly on NASDAQ in July 2018 at $17 and subsequently price has increased to $214 by September, 2018 and descended over a year to $29 on August, 2019. On April 30, 2021, Tilray acquired all of the issued and outstanding common shares of Aphria Inc. via a plan of arrangement.

cover photo tilray brands

Financial Analysis

Tilray Brands has four reportable segments: Cannabis business – Cultivation, production, distribution and sale of both medical and adult-use cannabis products, Distribution business – purchase and resale of pharmaceutical and wellness products, Beverage alcohol business – production, marketing and sale of beverage alcohol products, Wellness business – production, marketing and distribution of hemp-based food and other wellness products.

Q3 Results

The financial year of Tilray ends on May 31 each year, therefore, the third quarter ends on August 31. During the period June to August 2022, the company reported net revenue of $153.21 million, which was $168.02 million during the same period of the previous year. Reported gross profit is $48.61 million and $50.09 million for the two periods, respectively. After incurring $69.79 million and $120.32 million of operating expenditures, the company reported $21.18 million and $69.37 million in net operating loss for third quarter of 2022 and that of 2021, respectively. Net loss of the company stands at $65.79 million in the third quarter of 2022 and $34.60 million a year earlier. Earnings per share (EPS) of the company in Q3’22 is negative $0.13, which was negative $0.08 in Q3’21.

Analysis of the Past Year

Income Statement

For the year ended May 31, 2022, net revenue of the company is reported $628,372 thousands, which was $513,085 thousands a year earlier. Gross profit for the outgoing financial year is $116,817 thousands and $123,182 thousands for the previous. Reported operating expenses of the company for the year 2022 is $727,218 thousands, which was $255,353 thousands a year earlier. The operating expenditure during the outgoing year is way higher due to increased amortization cost and impairments during the year. During the year ended May 31, 2022, as a result of delays in product registrations in Latin America and changes in market opportunities, causing a shift in our strategic priorities, management recorded a non-cash impairment of $110,033 thousands of licences, permits and applications and $85,471 thousands of intellectual property, trademarks, knowhow & brands, representing all of the intangible asset values related to those entities, and discounted cash flows. Also, the Company recognized impairment charges of $182,736 thousands in cannabis goodwill recorded in impairment. These impairment charges were a related to changes in market opportunities, causing a shift in the strategic priorities of the company, and market conditions inclusive of higher rates of borrowing and lower foreign exchange rates.

Thus, reported operating loss for the two successive years are $610,401 thousands, and $132,171 thousands, respectively. However, the company generated a non-operating income of $197,671 thousands during the latest financial year, which was a loss of $184,838 thousands. Thus, the big difference between the operating losses has been smoothened out and the company reported $434,132 thousands and $336,014 thousands in net loss, respectively.

Earnings per share (EPS) of the company is reported $0.90 in 2022 and $1.25 in 2021. Weighted average number of shares outstanding during these two years are 481,219,130 and 269,549,852, respectively.

Segment Report

The company has four reportable segments – Cannabis, Distribution, Beverage alcohol, and Wellness. Revenue from the segments is – 38%, 41%, 11% and 9% of the total revenue, respectively.

Cannabis revenues come from primarily four sub-segments – medical cannabis products, adult-use cannabis products, wholesale cannabis products, and international cannabis products. Revenue from Canadian medical cannabis products increased 20% to $30.6 million for the year ended May 31, 2022, compared to revenue of $25.5 million for the year ended May 31, 2021. This increase in revenue from medical cannabis products is primarily driven by the contributions of legacy Tilray’s medical cannabis business resulting from the business combination on April 30, 2021. The increase is also due to new innovative product launches, including the new brand Symbios launched earlier in the year, to address unmet medical needs and to provide patients with more choices in managing their health conditions with medical products. This increase was partially offset by the limitations caused by the COVID-19 pandemic from patients unable or unwilling to see a doctor as well as increased competition from the adult-rec and the price compression therein.

During the year ended, May 31, 2022, gross revenue from Canadian adult-use cannabis product has decreased 6% to $209.5 million compared to revenue of $222.9 million for the prior year. The decline, according to company reports, is due to several reasons including the shocks of Covid-19 pandemic, price competition due to new entrants in the market, and the decline of Canadian dollar compared to the period ended on May 31, 2021.

Revenue from Distribution operations for the year ended May 31, 2022 was $259.7 million as compared to $277.3 million in the prior year, representing a decrease of 6% on a year over year basis. The decrease in distribution revenue for the year ended as compared to prior year was primarily the result of the decrease in the value of the Euro compared to the US dollar totaling a $28.3 million reduction for the year ended May 31, 2022 compared to May 31, 2021 in the company’s CC Pharma business. On a constant currency basis, distribution revenue would have increased by 4% or $10.7 million from the prior year. Revenue for the year ending May 31, 2022, was also impacted by heavy flooding impacted CC Pharma which forced a business closure for approximately five days leading to a decrease in net revenue in the period of almost $5.0 million.

Revenue from Tilray’s Beverage Alcohol operations increased to $71.5 million for the year ended May 31, 2022, compared to revenue of $28.6 million in the year ended May 31, 2021. The increase is largely driven by the fact that the company entered the beverage alcohol space on November 25, 2020, through the acquisition of SweetWater, and thus the prior year comparative only includes 6 months of operations. Further enhancing this increase, the company also acquired Breckenridge distillery on December 7, 2021, which partially contributed to the year over year increase. Sweetwater revenue increased in the year ended May 31, 2022, as Tilray began operating their new brewing facility in Colorado and opened a new taproom at the Denver International Airport in connection with their strategic expansion initiative. In addition, Tilray released an extensive new line of innovative products, including seltzers, as well as a new beer offering developed in collaboration with their Canadian cannabis Broken Coast brand and anew vodka soda offering developed in collaboration with their Canadian cannabis Riff brand as Tilray continues to strengthen its strategic position in the U.S. by expanding its presence through acquisitions and collaboration with other Tilray cannabis brands.

Wellness revenue of Tilray consists of $59.6 million from Manitoba Harvest, for the year ended May 31, 2022, which is compared to $5.8 million for the prior year ended of May 31, 2021. Manitoba Harvest was part of the assets acquired in the Arrangement on April 30, 2021. As a result, the prior period only included one month of operations and thus the large increase in revenue year over year is a result the realization of a full year of operations in the current year.

Adjusted gross profit from Cannabis, Distribution, Beverage alcohol, and Wellness segment of the company is – $102,188, $24,016, $41,673, and $18,154.

Balance sheet

Reported current assets for the company at the end of the latest financial year is $803,503 thousand, which was $883,609 thousands in financial year 2021. Among the long-term assets, the company reported intangible assets, and goodwill less than the preceding financial year. The company incurred impairment expense of $378.2 million on goodwill and intangible assets during the year ended May 31, 2022.4 Thus, the total assets of the company has lessened than the previous year to $5,448,694 from $6,025,362 thousands. Total current liabilities of the company is reported $280,342 thousand, down from $401,241 thousand. The company has reported accumulated deficit of $962,851 thousand at the end of the fiscal year of 2022. However, the company has covered the increased losses by raising additional paid-in capital. Additional paid-in capital has increased from $4.79 billion to $5.38 billion.

Expansions

Tilray Brands, Inc. continue to focus on expanding their product offerings to accommodate the changes in adult-use customers, during the first quarter of fiscal 2022, the company completed their first shipments to Nunavut, Canada. In the second quarter of 2022, it has expanded the terms of distribution partnership with Rose LifeScience, which now represents the entire Tilray portfolio in Quebec.5 In addition, Tilray expanded partnership with Great North Distributors, Inc. to represent the entire Tilray portfolio and cover all of Canada, except for Quebec, using its established network.

Tilray also completed the strategic alliance with HEXO on July 12, 2022. The company plans to leverage this relationship to identify production efficiencies and generate cost savings. The alliance will also allow Tilray to enter into new product categories by utilizing the manufacturing capabilities of both parties.

Business Overview

Tilray is a global leader in cannabis research, cultivation, processing and distribution. The company aspires to lead, legitimize and define the future of the cannabis industry by building the world’s most trusted cannabis and hemp facilities. A proud pioneer, Tilray is the first GMP-certified medical cannabis producer to supply cannabis flower and extract products to tens of thousands of patients, physicians, pharmacies, hospitals, governments and researchers on five continents.6

Tilray cultivates a wide range of strains to meet patient needs including indicas, sativas, hybrids, and CBD-rich varieties. Medical cannabis is available in two primary forms: extracts and dried flower. Each can be administered or consumed via a variety of methods.

In the production process, the company starts with a mother plant and makes clones of it. From the clones, the starter plants are established and vegetated from about two weeks. Another 8-12 weeks are required for plucking the flower of the plants. The flowers are dried, secured, and trimmed as per requirement. The company then extract its necessary elements, analyse and package them into its final product. The products are then boxed and shipped. The company controls the whole process from beginning to the ends and outsources no part of its production cycle.

Brands

The brands of Tilray can be grossly divided into four parts – Tilray medical, adult-use brands, craft-beverage brands, Tilray wellness. Some of the Brands are stated in detail and some are listed here.

Tilray Medical: Tilray

Tilray is the global leader in the advancement of cannabinoid-based medicine, with a keen focus on providing research-backed medical cannabis products to physicians, pharmacies, and patients, around the world. Tilray is dedicated to progressing the science, safety, and efficacy of medical cannabis.

tilray brands Tilray

Tilray Medical: Aphria

Aphria is a Licensed Producer of medical cannabis products.

Aphria Tilray brands

Tilray Medical: Broken Coast

According to company website, Broken Coast is respected by growers across the industry for their mastery of cultivation practices – and symbolizes the respect for the delicate art and intricate science of harvesting the cannabis plant. They produce craft cannabis of exceptional quality on the shores of the Salish Sea, with a mission to provide the highest-grade products to the discerning medical cannabis patient. Broken Coast flower is indoor-grown in small batches in their custom-made cultivation facility, which allows for optimal conditions for every strain.

Broken coast Tilray brands

Tilray Medical: Symbios

According to company website, Symbios was designed with quality, care, and affordability in mind, to help support patients on their medical and wellness journey. Symbios represents the connection between plants and humans and the profound benefits that can be realized when these two organisms come together in perfect harmony.

symbios Tilray brands

Adult-use Brands

In this line of products, the company has – Good Supply, Solei, RIFF, Canaca, Chowie Wowie, and The Batch.7

Craft-Beverage Brands

In this category, the company has these products – SweetWater Brewery, Breckenridge Distillery, Green Flash Brewing Co., Alpine Beer Company, and Montauk Brewing Company.

Recent Developments 

  • Tilray partnered with Charlotte’s Web – another cannabis company, in November, 2022.8
  • Tilray announced its acquisition of Montauk Brewing – the #1 craft brewer in Metro New York, on November, 2022.9
  1. ^ https://tilraymedical.eu.com/about-tilray/
  2. ^ https://ir.tilray.com/
  3. ^ https://www.tilray.com/tilraynews-master/2022/11/9/potently-canadian-cannabis-brand-canaca-launches-new-products-and-feeltheboost-campaign
  4. ^ For further info on impairment see 10-K Filing 2022, p.59
  5. ^ See 10-K Filing 2022, p.53 
  6. ^ https://www.tilray.com/
  7. ^ Refer to https://www.tilray.com/adultuse-brands
  8. ^ https://www.fool.com/investing/2022/11/10/tilray-brands-is-partnering-with-another-us-cannab/
  9. ^ https://www.globenewswire.com/news-release/2022/11/07/2549865/0/en/Tilray-Brands-Acquires-Montauk-Brewing-Company.html
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Created by MD. TOUHIDUL ISLAM on 2022/10/16 01:20
     
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