Tilray Brands (NASDAQ: $TLRY) is a global cannabis company that produces and distributes a diverse portfolio of adult-use and medical cannabis products. It cultivates various strains of cannabis, including high-cannabidiol strains and hemp foods.
On April 9, Tilray Brands reported its Q3 fiscal 2024 results, showcasing impressive revenue growth, improved profitability, and continued progress in integrating recent strategic acquisitions.
Tilray’s Q3 2024 Financial Highlights
Tilray’s net revenue for the third quarter reached $188.3 million, a 30% increase compared to the prior year’s quarter. This strong revenue performance, however, fell short of the analyst estimate of $198.5 million.
The company’s gross profit surged to $49.4 million, compared to a loss of $11.7 million in the same period last year. Adjusted gross profit also increased by 17% to $51.6 million. While gross margin improved to 26% from negative 8% in the prior year quarter, adjusted gross margin decreased to 27% from 30%. Adjusted net income reached $900,000 with an adjusted EPS of $0.00.
Tilray’s net loss narrowed significantly to $105.0 million, a significant change from the $1.2 billion net loss reported last year. This translated to a net loss per share of $0.12, compared to $1.90 in the previous year, more than double the estimates.
Adjusted EBITDA stood at $10.2 million, compared to $13.3 million in the prior year, and adjusted free cash flow came in at $641,000, compared to negative adjusted free cash flow of $12.19 million the previous year.
The company also achieved $27.5 million in annualized run-rate savings as part of the $30-$35 million synergy plan related to the HEXO acquisition, with $15.6 million in actual cash cost savings realized.
Strengthened Financial Position
Despite challenges, Tilray Brands maintains a robust financial liquidity position with $226 million, comprising $146.3 million in cash and $79.6 million in marketable securities. The company successfully reduced its convertible debt by $205.5 million during the fiscal year, demonstrating prudent debt management strategies. Furthermore, Tilray Brands aims to continue repurchasing additional notes to optimize its capital structure and enhance financial flexibility.
2024 Guidance Update
The company has revised its fiscal year 2024 guidance, now targeting an Adjusted EBITDA of $60 million to $63 million, down from the previous range of $68 million to $78 million.
Furthermore, Tilray Brands does not expect positive free cash flow in fiscal 2024 due to delayed cash collection from asset sales. Nonetheless, the company remains committed to its long-term growth strategies and delivering shareholder value in the evolving cannabis industry.
Germany’s Cannabis Reforms: Tilray’s Strategic Advantage
Tilray’s CEO, Irwin Simon, said that despite slightly falling short of earnings estimates in the third quarter, Tilray experienced substantial revenue boosts from cannabis and alcoholic beverage sales. Simon highlighted the noteworthy contributions from cannabis and alcoholic beverages while also acknowledging challenges like the “Dry January” trends and complexities surrounding US marijuana legalization.
Furthermore, Simon emphasized the growing German medical cannabis market, driven by regulatory changes allowing broader prescription capabilities. Leveraging operational facilities in Germany and Portugal, Tilray is well-positioned to serve this growing market, supported by Tilray Pharma’s distribution network.
Challenges like seasonal trends and regulatory restrictions in the U.S. were acknowledged, but Simon remained optimistic, citing Tilray’s diversified portfolio and global presence as key strengths for future growth.
Tilray Stock Performance
On Tuesday, Tilray Brands (TLRY) shares closed at $2.06, a 20.66% decline from the previous close price of $2.59. Over the past month, the stock has seen an increase of 23.05%. However, since the beginning of the year, it has experienced a decline of 9.47%. Looking at its all-time performance, TLRY stock has notably declined by 91.08%, with a 52-week high of $3.40 and a 52-week low of $1.50. On Wednesday, April 9, TLRY shares remained mostly flat, rising 0.97% as of 11:20 AM EDT to $2.0750 per share.
The stock closed the day above its 50-day Moving Average of $1.96, and its 200-day Moving Average of $2.074. It has a market cap of $1.552 billion, with a shares float of approximately 739.2 million, with 15.87% of floating shares, and 15.80% of shares outstanding held in short positions. The company’s trailing price-to-earnings ratio is 57.50, and its Enterprise Value/Revenue ratio is 2.60, higher than that of peer Aurora, which has an Enterprise Value/ Revenue ratio of. 1.47.
Tilray Analyst Consensus: Moderate Buy Rating
In recent market analysis, Wall Street experts have provided price forecasts for Tilray over the next twelve months. The average projection is $2.62, with a high estimate of $4.10 and a low estimate of $2.00. This indicates a potential 27.49% increase from Tilray’s current price of $2.06. The analyst rating consensus for Tilray stands at Moderate Buy.
Is Tilray an Attractive Investment Opportunity?
Tilray Brands’ third-quarter fiscal results for 2024 demonstrated commendable revenue growth and enhanced profitability, underpinned by strategic acquisitions and operational improvements. Despite falling short of analyst revenue estimates, Tilray showcased resilience amidst market challenges, notably reducing net losses significantly.
The company’s strengthened financial position, marked by substantial liquidity and prudent debt management, bodes well for its long-term sustainability. While revised EBITDA guidance reflects adjustments in short-term expectations, Tilray remains committed to its growth trajectory, leveraging its diversified portfolio and global presence to navigate regulatory complexities and capitalize on emerging market opportunities. Analyst consensus signals optimism, suggesting potential for further stock appreciation in the coming months.
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