Company Performance - Tilray Brands' valuation has plummeted by 94% over the past five years, making it one of the worst-performing cannabis stocks [1] - The company reported an operating loss of $42.2 million for the fiscal period ended Nov. 30, worse than the $41.8 million loss a year ago, despite a 9% increase in revenue [4] - Operating cash flow for the past six months was a negative $76 million, accelerating from the $46.3 million cash burn during the same period a year earlier [4] Diversification Strategy - Tilray has been diversifying by acquiring alcohol brands to expand its presence in the U.S. market, as national marijuana legalization remains uncertain [2] - The company has acquired over 20 alcohol brands, but this has led to a bloated portfolio, with some slow-growing SKUs being removed [5] - The focus on growth through acquisitions may not be leading to a stronger bottom line, as the company appears to prioritize growth over profitability [5] Market and Regulatory Environment - Optimism around marijuana legalization has waned, particularly with the new Republican government, which typically takes a harder stance on drugs [6][7] - The AdvisorShares Pure US Cannabis ETF has declined by 50% in the past three months, reflecting poor investor sentiment [7] - Without significant progress in U.S. marijuana legalization, Tilray's future prospects remain uncertain [8] Investment Outlook - Tilray remains a highly risky stock, with no guarantee of survival over the next five years if it continues to burn cash and incur heavy losses [9][10] - The stock is likely to appeal only to speculative investors with a high risk tolerance, as there are better growth stock options available for most investors [10]

Industry Overview - The marijuana industry is currently facing significant challenges, including heavy competition, high taxation, and inconsistent legalization in the U.S. [1] - Marijuana companies are among the worst performers on the stock exchange, indicating a tough market environment [1] Company Performance: Tilray Brands - Tilray Brands (TLRY) has struggled in 2024, reflecting the broader issues within the cannabis sector [2] - The company has focused on diversifying away from marijuana, particularly by expanding its beverage holdings, which now include a prominent craft beer portfolio in the U.S. [3] - Despite the diversification efforts, the craft beer market is not experiencing significant growth, raising questions about the long-term viability of this strategy [4] Financial Results - In the first quarter of 2025, Tilray reported a 13% year-over-year increase in net revenue, reaching $200 million, largely driven by a 132% increase in beverage sales, which contributed nearly $56 million [5] - However, the core cannabis business saw a decline of 13%, with revenues falling to approximately $61 million [5] - Tilray continues to face profitability challenges, reporting a GAAP net loss of nearly $35 million, although this was an improvement from a loss of slightly under $56 million in the same quarter the previous year [6] Future Prospects - The company is exploring growth opportunities, including efforts to enter the German market, but recent legalization measures in Germany have been lackluster [7] - Many publicly traded marijuana companies, including Tilray, are now viewed as penny stocks, which may deter potential investors [8]

Group 1 - The author has been active in the markets for several years, focusing primarily on long/short equities [1] - The author holds a Bachelor of Science Degree in Finance and Accounting, with a minor in History, and has experience managing investment portfolios [1] - The author has completed internships at a large bank and in managing a university endowment [1] Group 2 - The article emphasizes the importance of conducting due diligence before making any investment decisions [3][4] - It is noted that past performance does not guarantee future results, and no specific investment recommendations are provided [4] - The article clarifies that the author has no current stock or derivative positions in the companies mentioned [2]

Core Insights - Breckenridge Brewery, a subsidiary of Tilray Brands, Inc., has launched a new seasonal beer, Spring Forward Grapefruit IPA, which features a balance of grapefruit and citrus flavors with hop-driven bitterness [1][2][3] - The beer is designed to be enjoyed from January through April 2025, with a packaging that reflects the vibrant energy of spring [3] Company Overview - Breckenridge Brewery has been a pioneer in Colorado's craft beer scene since 1990, focusing on creating balanced and interesting hand-crafted beers [4] - The brewery's portfolio includes unique seasonal beers, barrel-aged specialties, and classic options, emphasizing community connection and beer appreciation [4] Parent Company Overview - Tilray Brands, Inc. is a leading global lifestyle and consumer packaged goods company with operations across multiple regions, including North America and Europe [5] - The company aims to be a premium lifestyle brand with a diverse portfolio of over 40 brands in more than 20 countries, covering cannabis, hemp-based foods, and craft beverages [5]

Market Share and Revenue Growth - Tilray's market share in Canada decreased marginally from 9.8% to 9.4% in the quarter, reflecting efforts to preserve margins amid price compression[129] - Tilray acquired four craft brands and breweries on September 1, 2024, expected to enhance beverage segment revenues and market penetration[144] - Manitoba Harvest's US branded business grew 6.2% in multi-outlet consumption for the six months ended November 30, 2024, driven by value-added innovation[142] - Tilray's international cannabis business benefits from EU-GMP cultivation facilities in Portugal and Germany, along with a fully owned route-to-market infrastructure in key regions[131] Operational Efficiency and Product Innovation - Wellness gross margin increased to 31% for both the three and six months ended November 30, 2024, driven by operational efficiencies and higher-margin product sales[177] - Tilray's Breckenridge Distillery received Double Gold awards, including the World's best finished Bourbon at the 2024 World Whiskies Awards[126] - Tilray launched a lineup of Hemp Derived Delta-9 (HD-D9) products, Non-Alcoholic beverages, and Energy drinks as part of its innovation strategy[128] - In Germany, Tilray received the first license for domestic medical cannabis cultivation under the new MedCanG regulations, leading to increased prescription numbers and business growth[133] Financial Performance and Expenses - Operating expenses increased by $14.2 million (16%) to $103.4 million for the three months and by $32.0 million (19%) to $199.7 million for the six months ended November 30, 2024, primarily due to the inclusion of expenses from the Craft Acquisition II[179] - Selling costs increased by 113% to $16.2 million for the three months and by 93% to $27.9 million for the six months ended November 30, 2024, driven by higher freight costs and increased sales from the Craft Acquisition II[179][187] - Research and development costs increased by 7% to $60,000 for the three months and by 22% to $165,000 for the six months ended November 30, 2024, related to external costs for new product development[179][190] - Salaries and wages increased by 19% to $22.7 million for the three months and by 23% to $44.3 million for the six months ended November 30, 2024, due to the inclusion of employees from the Craft Acquisition II[181] - Office and general expenses increased by 17% to $9.5 million for the three months and by 15% to $18.7 million for the six months ended November 30, 2024, primarily due to the Craft Acquisition II[182] - Stock-based compensation decreased by 12% to $7.2 million for the three months and by 14% to $14.2 million for the six months ended November 30, 2024, due to fully vested stock options and RSUs[184] - Insurance expense increased by 26% to $3.2 million for the three months but decreased by 12% to $5.6 million for the six months ended November 30, 2024, driven by lower premiums and additional policies for the beverage business[185] - Rent expense decreased by 34% to $1.0 million for the three months and by 5% to $2.3 million for the six months ended November 30, 2024, due to the exit from the Truss Lease and reduced lease payments[186] - Marketing and promotion costs increased by 6% to $9.7 million for the three months and by 20% to $21.3 million for the six months ended November 30, 2024, due to the Craft Acquisition II and quarterly variability in discretionary expenses[189] - Change in fair value of contingent consideration was $nil for both the three and six months ended November 30, 2024, compared to a loss of $0.3 million and a gain of $10.8 million in the prior year period[191] - Net loss for the three months ended November 30, 2024, increased by 85% to $(85.275) million compared to $(46.183) million in the same period last year[206] - Adjusted EBITDA for the three months ended November 30, 2024, decreased by 11% to $9.017 million compared to $10.086 million in the same period last year[206] Cash Flow and Debt Management - Long-term investments decreased to $7.416 million as of November 30, 2024, from $7.859 million as of May 31, 2024[56] - The company has drawn down $10,000 from a $30,000 revolving credit facility as of November 30, 2024[59] - Net carrying amount of long-term debt decreased to $164.709 million as of November 30, 2024, from $173.858 million as of May 31, 2024[62] - The company issued 67,210,864 shares under the ATM program, generating gross proceeds of $114.3 million during the six months ended November 30, 2024[213] - Net cash used in operating activities increased to $(76.031) million for the six months ended November 30, 2024, compared to $(46.251) million in the same period last year[215] - Net cash used in investing activities increased to $(60.120) million for the six months ended November 30, 2024, compared to $55.207 million in the same period last year[215] - Cash and marketable securities totaled $252.249 million as of November 30, 2024, compared to $259.791 million as of November 30, 2023[215] - The company repaid the remaining principal of the APHA 24 Notes in cash upon maturity on June 1, 2024[68] - Cash flows from financing activities increased to $38.2 million for the three months ended November 30, 2024, compared to ($85.4) million in the prior year period[219] - Cash flows from financing activities increased to $98.8 million for the six months ended November 30, 2024, compared to ($71.3) million in the prior year period[219] - The company received $21.6 million from the overallotment issuance of TLRY 27 Notes in the prior period ended November 30, 2023[219] - The company repaid $107.3 million for the TLRY 23 and APHA 24 Notes in the prior period ended November 30, 2023[219] Legal and Accounting Matters - The company believes that the reasonably possible losses from litigation are not material and will not have a material adverse effect on its financial position[221] - Critical accounting estimates include revenue recognition, valuation of inventory, long-lived assets, goodwill, intangible assets, stock-based compensation, and deferred tax assets[222] - The company's financial statements are prepared in accordance with U.S. GAAP, requiring significant estimates and assumptions[222] - Recently issued accounting pronouncements may impact the company's financial position and results of operations[223] - There have been no material changes in market risk during the six months ended November 30, 2024[224] Business Expansion and Brand Promotion - The company operates 20 brew pubs across the U.S., including the Breckenridge Distillery restaurant, to promote craft beer brands and drive revenue growth[128] - The company incurred $2.0 million in transaction expenses for the six months ended November 30, 2024, related to acquisitions and strategic transactions[143]

Financial Data and Key Metrics - The company will refer to non-GAAP financial measures during the call, which are intended to provide useful information for investors but should not be considered in isolation or as a substitute for GAAP financial information [4] - A reconciliation of non-GAAP financial measures to GAAP measures is available in the earnings press release [4] Business Line Data and Key Metrics - No specific data or metrics related to individual business lines were provided in the content Market Data and Key Metrics - No specific data or metrics related to individual markets were provided in the content Company Strategy and Industry Competition - No specific information on company strategy or industry competition was provided in the content Management Commentary on Operating Environment and Future Outlook - No specific commentary from management on the operating environment or future outlook was provided in the content Other Important Information - The earnings press release is available on the Investors section of the Tilray Brands' website and has been filed with the SEC and the CSA [3] Q&A Session Summary - No Q&A session content was provided in the documents

Earnings Performance - Tilray's stock dropped 12% after missing analyst sales forecasts, reporting $211 million in revenue compared to the expected $216.3 million for Q2 FY2025 [1] - Despite the revenue miss, the company achieved a 9% year-over-year revenue growth, reaching a record $211 million for Q2 [2] - Adjusted earnings broke even, outperforming the forecasted $0.01 per share loss, but GAAP results showed a net loss of $85 million, or $0.10 per share, which is nearly 50% worse than the previous year's Q2 loss of $0.07 per share [4][5] Business Segment Performance - International cannabis sales grew 25%, beverage revenue increased 36%, and wellness revenue rose 13% year-over-year [2] - Gross profit increased 29%, with growth observed across all four business segments [2] - Total cannabis sales declined by 1.5% to $66 million, despite the strong growth in international cannabis sales [2] Company Outlook - Tilray has consistently reported losses over the past six years and is expected to continue losing money in the coming years [5] - The company's inability to achieve profitability raises concerns about its stock being a viable investment [5]

Performance Overview - Tilray Brands reported revenue of $210 95 million for the quarter ended November 2024, an 8 9% increase compared to the same period last year [3] - The company's EPS was -$0 10, compared to $0 00 in the year-ago quarter [3] - The revenue surprise was -3 33% compared to the Zacks Consensus Estimate of $218 22 million, while the EPS surprise was -150 00% compared to the consensus estimate of -$0 04 [3] Business Segment Performance - Cannabis business revenue was $65 65 million, a -2 2% year-over-year change, slightly below the two-analyst average estimate of $67 19 million [2] - Wellness business revenue was $14 61 million, a 13% year-over-year increase, slightly above the two-analyst average estimate of $14 51 million [2] - Beverage alcohol business revenue was $63 08 million, a 35 6% year-over-year increase, below the two-analyst average estimate of $68 40 million [2] - Distribution business revenue was $67 61 million, a 0 6% year-over-year increase, slightly below the two-analyst average estimate of $68 million [2] Stock Performance - Tilray Brands' shares returned +13 2% over the past month, outperforming the Zacks S&P 500 composite's -2 2% change [1] - The stock currently has a Zacks Rank 3 (Hold), indicating it could perform in line with the broader market in the near term [1] Key Metrics Analysis - Revenue and earnings changes year-over-year, along with comparisons to Wall Street expectations, are critical for investors to determine their next move [4] - Key metrics provide a more accurate picture of the company's financial health and help investors project stock price performance [4]

Stock Performance and Earnings Outlook - Tilray Brands shares have gained approximately 3% year-to-date, outperforming the S&P 500's 0.6% gain [1] - The company's future stock performance will largely depend on management's commentary during the earnings call [1] - Current consensus EPS estimate for the coming quarter is -$0.04 on $219.18 million in revenues, while the fiscal year estimate is -$0.14 on $908.93 million in revenues [3] - The company has surpassed consensus EPS estimates twice in the last four quarters [9] Industry Context and Peer Comparison - The Consumer Products - Staples industry ranks in the top 23% of Zacks industries, with top 50% industries outperforming the bottom 50% by more than 2 to 1 [4] - Church & Dwight, a peer in the same industry, is expected to report quarterly earnings of $0.77 per share, representing an 18.5% year-over-year increase [5] - Church & Dwight's revenues are projected to be $1.56 billion, up 2.4% from the year-ago quarter [6] Earnings Estimate Revisions and Stock Rating - Empirical research shows a strong correlation between near-term stock movements and earnings estimate revisions [7] - Tilray Brands currently has a Zacks Rank 3 (Hold), indicating expected market-aligned performance [8] - The company's recent quarterly report showed a loss of $0.10 per share, significantly missing the consensus estimate of -$0.04 and representing a -150% earnings surprise [10] Financial Performance and Revenue Trends - Tilray Brands reported revenues of $210.95 million for the quarter ended November 2024, missing the Zacks Consensus Estimate by 3.33% [9] - This represents a year-over-year revenue increase from $193.77 million in the same quarter last year [9] - The company has topped consensus revenue estimates only once in the last four quarters [9]

Financial Performance and Revenue Growth - Net revenue for the beverage business increased by 30% to $63.1 million, contributing 30% of total revenue[18] - The cannabis business generated $65.7 million in net revenue, representing 31% of total revenue[18] - Distribution business net revenue was $67.6 million, accounting for 32% of total revenue[18] - Wellness business net revenue grew to $14.6 million, making up 7% of total revenue[18] - Total net revenue increased by 9% to $210.95 million for the three months ended November 30, 2024[26] - Net revenue increased 9% to $211 million in Q2 2025 compared to $194 million in the prior year quarter, with a 10% increase on a constant currency basis[32] - Beverage alcohol net revenue increased 36% to $63 million in Q2 2025, with gross margin rising to 40% from 34% in the prior year quarter[32] - Cannabis net revenue was $66 million in Q2 2025, with gross margin increasing to 35% from 31% in the prior year quarter[34] - Wellness net revenue increased 13% to $15 million in Q2 2025, with gross margin rising to 31% from 29% in the prior year quarter[34] - Distribution net revenue was $68 million in Q2 2025, with gross margin increasing to 12% from 11% in the prior year quarter[34] - Revenue from Canadian adult-use cannabis was $59.077 million, representing 90% of total cannabis revenue in Q2 2025[38] - Revenue from international cannabis increased to $14.865 million, representing 23% of total cannabis revenue in Q2 2025[38] - Net cannabis revenue for the three months ended November 30, 2024, was $65.65 million, a decrease from $67.11 million in the same period in 2023[42] - Net beverage revenue for the three months ended November 30, 2024, increased to $63.08 million from $46.51 million in the same period in 2023[42] - Total net revenue for the six months ended November 30, 2024, was $410.99 million, up from $370.72 million in the same period in 2023[44] Profitability and Margins - Gross profit rose by 29% to $61.2 million, with a gross margin improvement to 29%[26] - Gross profit increased by 29% to $61 million in Q2 2025, with gross margin rising to 29% from 24% in the prior year quarter[32] - Cannabis adjusted gross margin (excluding PPA step-up) remained stable at 35% for both the three months ended November 30, 2024, and 2023[42] - Adjusted gross profit for the six months ended November 30, 2024, was $122.48 million, compared to $101.41 million in the same period in 2023[44] Costs and Expenses - Selling expenses increased by 113% to $16.2 million, primarily due to higher marketing and promotional activities[26] - Net loss for the six months ended November 30, 2024, was $119.9 million, an 18% increase compared to the same period in 2023[16] - Net loss was $(85) million in Q2 2025, with $75 million comprised of non-cash items and $8 million in one-time non-recurring costs[32] - Net loss for the three months ended November 30, 2024, was $85.28 million, an increase of 85% from $46.18 million in the same period in 2023[40] - Net loss attributable to stockholders increased by 74% to $85,342 million in Q3 2024 from $49,008 million in Q3 2023[45] - Restructuring costs surged by 159% to $6,869 million in Q3 2024 compared to $2,655 million in Q3 2023[45] - Adjusted net income improved by 17% to a loss of $2,228 million in Q3 2024 from a loss of $2,685 million in Q3 2023[46] - Stock-based compensation for the six months ended November 30, 2024, was $14.2 million, a 14% decrease compared to the same period in 2023[16] - Stock-based compensation decreased by 12% to $7,237 million in Q3 2024 from $8,201 million in Q3 2023[45] - Litigation costs, net of recoveries, decreased by 70% to $901 million in Q3 2024 from $3,042 million in Q3 2023[45] Cash Flow and Liquidity - Operating cash flow in the quarter was lower due to increased investments in marketing, promotion, and infrastructure for recently acquired brands[1] - Net cash used in operating activities increased by 64% to $76.0 million, compared to $46.3 million in the previous period[17] - Cash and cash equivalents decreased by 31% to $189.7 million as of November 30, 2024[24] - Marketable securities increased by 94% to $62.6 million, reflecting improved short-term liquidity[24] - Free cash flow worsened by 26% to a negative $45,557 million in Q3 2024 from a negative $36,245 million in Q3 2023[46] - Net cash used in operating activities increased by 34% to $40,724 million in Q3 2024 from $30,409 million in Q3 2023[46] - Adjusted free cash flow worsened by 137% to a negative $43,587 million in Q3 2024 from a negative $18,355 million in Q3 2023[46] - Cash and marketable securities as of November 30, 2024, were $252.25 million, slightly down from $259.79 million as of November 30, 2023[42] - Working capital as of November 30, 2024, increased to $428.82 million from $247.04 million as of November 30, 2023[42] Adjusted EBITDA and Non-GAAP Metrics - Achieved $17 million of the $25 million synergy plan as of Q2 2024, with Adjusted EBITDA lower by $1.8 million and $3.2 million for the three and six months ended November 30, 2024, respectively, due to SKU rationalization[1] - Adjusted EBITDA is calculated by excluding items such as income tax benefits, interest expense, and stock-based compensation, with a reconciliation provided in the financial statement tables[13] - Adjusted gross profit excludes the impact of purchase price accounting valuation step-up, with a reconciliation provided in the financial statement tables[14] - Adjusted EBITDA in Q2 2025 was $9 million, impacted by a $1.8 million SKU rationalization in the beverage segment[32] - Adjusted EBITDA for the three months ended November 30, 2024, was $9.02 million, down from $10.09 million in the same period in 2023[42] - Adjusted EBITDA for Q3 2024 decreased by 11% to $9,017 million compared to $10,086 million in Q3 2023[45] Foreign Exchange and Non-Operating Items - Unrealized foreign exchange loss for the six months ended November 30, 2024, was $9.6 million, a 272% increase compared to the same period in 2023[16] - Non-operating income for the three months ended November 30, 2024, was $33.26 million, a significant increase from a loss of $821,000 in the same period in 2023[40] - Non-operating income (expense), net, improved significantly by 4,151% to $33,255 million in Q3 2024 from a loss of $821 million in Q3 2023[45] Guidance and Future Outlook - Company reaffirms fiscal year 2025 guidance of anticipated net revenues between $950 million and $1 billion[9]