Company leadership at Tilray Brands (NASDAQ: TLRY) insisted during the quarterly earnings call on Tuesday that an eye-popping $793.5 million net loss for its most recent quarter is no big deal, given that the business is continuing to pivot and expand its footprint internationally in both cannabis and beverages.
The loss was primarily due to a one-time impairment charge of $700 million, CFO Carl Merton noted during the call, which he attributed to "macroeconomic conditions" including the "reduced likelihood of U.S. and or European-Canada regulatory change in the short term."
But CEO Irwin Simon didn't dwell on the negative. Instead, he focused on Tilray's booming revenue streams that have diversified as the company has tapped into the beer and spirits trade, the non-alcoholic beverage sector and hemp-derived THC drinks. The moves were made to offset the company's long-struggling marijuana wing, which Simon said is actually now in solid form internationally due to many of Tilray's Canadian competitors shutting down.
"In five years, our team has transformed Tilray from a business relying on cannabis legalization for growth into a diversified consumer products company providing specialty beverages, cannabis and wellness products worldwide," Simon said. "Beer and cannabis have been consumed for thousands of years. These industries and their consumers are here to stay. They are not going anywhere, and neither is Tilray."
Simon argued that the company's entire platform and portfolio are undervalued and not truly reflected in the current stock price, which took a beating this week due to the huge quarterly net loss.
But the company is also not done pivoting or expanding, Simon said. While Tilray has more to do on identifying operational efficiencies and cost-cutting opportunities, he stated clearly that the company plans to purchase more craft breweries, adding to the 10 craft beer makers it's purchased since 2020.
Tilray also plans to bolster its cannabis production in Canada, Simon said, where it is currently cranking out 137 metric tons of marijuana per year, but has the capacity to grow another 100 metric tons, he estimated. That, the company hopes, will land it more market share internationally, given that price margins are more favorable in several European countries where the company has a medical cannabis wholesale presence.
A major benefit with international sales is the company doesn't have to pay the Canadian excise tax, which cost Tilray about $150 million last year, Irwin said. That why, in part, Tilray is pinning some of its hopes on medical cannabis markets in Germany, Poland, Italy and the United Kingdom.
Simon also is keeping an eye on possible reforms in Canada and the United States that Tilray could leverage. He said the wholesale cannabis market in Canada has become a great opportunity with the closure of so many competitors, and the hemp industry in the U.S. is flourishing.
"The demand for us in the calls that we're getting to supply third parties with cannabis is tremendous," Simon said. "There is a major demand right now in Canada for supply because a lot of these grow facilities have either closed or gone out of business."
During the most recent quarter, Tilray expanded into 10 U.S. state markets with its hemp-infused THC drinks, and Simon estimated that the company has a presence at about 1,000 retail points in the U.S.
"Tilray is also leveraging our established robust national beverage distribution network across our independent retailers, convenience stores, package stores including multi-state retailers such as Total Wine and ABC, who are very excited about this category and new growth opportunity," Simon said.
"No, we're not happy where our stock is, but nobody has given up, nobody's going away. And we are working hard to change that course on our stock," he said.
Also on Tuesday, Tilray executives also shared they were revising their expected revenue guidance for the year downwards to $850 million-$900 million, from an earlier forecast of $950 million-$1 billion.
