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Tilray Brands Reports Second Quarter Fiscal Year 2023 Financial Results

January 9, 2023 at 7:00 AM EST

Achieved $29.2 Million of Operating Cash Flow and $25.4 Million of Free Cash Flow

15th Consecutive Quarter of Positive Adjusted EBITDA

Maintains Leading Market Share Position in Recreational Cannabis in Canada and Medical Cannabis Across Europe

Net Revenue of $144.1 Million, On a Constant Currency Basis $157.6 million

EPS of -$0.11 and Adjusted EPS of -$0.06

Strategy in Place to Build the World’s Leading and Most Diversified Cannabis Lifestyle Consumer Packaged Goods Company 

Completes Acquisition of Montauk Brewing Company, #1 Craft Beer in Metro New York

LEAMINGTON, Ontario and NEW YORK, Jan. 09, 2023 (GLOBE NEWSWIRE) -- Tilray Brands, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY; TSX: TLRY), a leading global cannabis-lifestyle and consumer packaged goods company inspiring and empowering the worldwide community to live their very best life, today reported financial results for the second fiscal quarter ended November 30, 2022. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.

Financial Highlights

  • Strong financial position with $433.5 million in cash and marketable securities.
  • Maintained #1 leadership position in Canada with 8.3% cannabis market share.
  • Beverage-alcohol sales increased 56% to $21.4 million, over the prior year quarter, including revenue from acquisitions.
  • Gross profit rose to $40.1 million, a 22% increase, year over year. Adjusted gross margin held at 29% compared to the year ago quarter.
  • Cannabis gross profit increased 37% to $18.6 million from $13.5 million in the prior year quarter, while the gross margin percentage increased to 37% from 23%. This was driven by our success in implementing numerous cost-savings programs, offset in part by our allocated overhead from intentionally reducing production, coupled with the revenue realized from our strategic alliance with HEXO in the current year and in inventory provision in the prior year.
  • Achieved $119.6 million in annualized cash cost-savings since the closing of the Tilray-Aphria transaction in May 2021, up from $108 million as of August 31, 2022.
  • Adjusted EBITDA of $11.7 million, marking the 15th consecutive quarter of positive adjusted EBITDA.

Irwin D. Simon, Tilray Brands’ Chairman and Chief Executive Officer, stated, “During the second quarter, Tilray Brands took decisive, effective actions to manage operating cash flow and focus the business on accretive acquisitions and a path to long term profitability. And we have certainly done so – even amid an evolving retail environment - by removing costs and driving efficiencies across the platform in supply chain, procurement, packaging, and labor. We are close to achieving our increased annualized cost savings target of $130 million, consistent with our commitment to building a lean, efficient, and dynamic business that will realize tangible and immediate benefits as the market improves.”

Mr. Simon continued, “Tilray Brands’ re-positioning as a global diversified portfolio of brands will drive our ability to seize top-line opportunities across geographies and business lines. In the U.S., this includes investing in, acquiring or building compelling and profitable lifestyle CPG brands across craft beverage-alcohol and wellness consumer products that are cannabis adjacent, resonate powerfully with consumers, and are strongly positioned in key markets. In Europe, we believe that we are extremely well-positioned overall in a cannabis market. And, in Canada, we will be patient and strategic in building our competitive positioning amid the price compression and difficult operating conditions that we expect will, inevitably, consolidate the oversupply of licensed producers. These efforts will be supported and enhanced by one of the strongest balance sheets in the industry with close to $433.5 million in cash and marketable securities on-hand.”

Operating Highlights

Maintained #1 Market Share Leadership in Canada; Positioned for Long-Term Growth in the Market – Against the backdrop of challenging cannabis market operating conditions, Tilray was able to maintain its top market share position due to the strength of its sought-after brands and products. This reflects the strength of the Company’s product innovation, including with respect to both strains and potencies. Looking ahead, Tilray’s focus on using data and consumer insights coupled with ongoing budtender and consumer education is expected to enable the acceleration of both sales and market share growth.

Well-Positioned to Capitalize on Growing Acceptance and Legalization of Cannabis across Europe – Even as Europe contends with a difficult economic climate that has negatively impacted the cannabis industry, the positive trends towards greater acceptance of medical cannabis and legalization of adult-use continue. We believe we are exceptionally well situated to benefit from the meaningful economic growth that will come to our industry as a result of these positive changes, given our ability to provide the most sought-after, consistent and sustainable cannabis products for the medical and adult-use markets. In Germany, we are in a win-win position regardless of whether in-country cultivation is exclusively permitted or whether imports are also allowed given our domestic footprint with our Aphria RX facility located in Germany along with our facility in Portugal. In addition to our supply-chain footprint, we are also uniquely positioned to take advantage of the insights and learnings we have developed through our participation in the Canadian adult-use market. This experience, paired with our competitively advantaged supply-chain footprint, gives us great confidence in our ability to lead the European medical market and German adult-use market in the future.

Continuing to Expand U.S. CPG and Craft-Beverage Portfolio, with Accretive Acquisition of Montauk Brewing Company – In the U.S., Tilray’s businesses include SweetWater Brewing Company, the 10th largest craft brewer in the nation; Breckenridge Distillery; and Manitoba Harvest, a pioneer in hemp, CBD and wellness products; as well as Montauk Brewing Company, the fastest growing craft beer brand and #1 craft brewer in Metro New York, which Tilray Brands acquired in the second quarter of fiscal 2023. The Montauk Brewing transaction was immediately accretive to EBITDA and the Company expects it will deliver strong revenue and adjusted EBITDA on a go-forward basis. This will be accomplished as a result of Tilray’s ability to leverage SweetWater’s excess capacity as well as its nationwide infrastructure to significantly expand Montauk Brewing’s distribution network beyond its concentrated presence in the Northeast, making it a true national brand.

The Company is focused on driving revenue gains across its diverse portfolio of businesses, which we believe will ultimately create a strong channel for additional revenue in adult-use cannabis, pending federal legalization.

Strategic Growth Actions

  • September 2022 - Good Supply Launches New High-Potency Product Drop and Unveils Exclusive Orange Frost Live Resin
  • September 2022 - Breckenridge Distillery Announces Nationwide Alignment and Renewed Distribution Agreement with Republic National Distributing Company
  • September 2022 - RIFF Cannabis Brand Launches New ‘Drumsticks’ Product
  • September 2022 - Tilray Medical Receives Approval to Extend Market Authorization in Italy
  • September 2022 - SweetWater Brewing Company Unveils New Fall Craft-Beer Releases
  • October 2022 - Tilray Medical Relaunches Cannabis Oral Solution Across Ireland
  • October 2022 - Broken Coast Ranks #1 at the Budtender’s Association Collector’s Cup
  • October 2022 - Green Flash Launches New Beers Across the U.S. and Unveils Refreshed Branding
  • October 2022 - Breckenridge Distillery Announces Ultimate Whiskey and Beer Collaboration with Breckenridge Brewery
  • October 2022 - Good Supply Cannabis Brand Reveals New Fall Flower Launches and Expands Distribution of Bestselling High-Potency Products
  • November 2022 - Tilray Brands and Charlotte's Web Announce Strategic Alliance in Canada
  • November 2022 - Leading Independent Proxy Advisory Firms ISS And Glass Lewis Recommend Tilray Stockholders Vote “FOR” Tilray’s Proposal to Protect Stockholders and Promote Accountability
  • November 2022 - Tilray Brands Acquires Montauk Brewing Company
  • November 2022 - ‘Potently Canadian’ Cannabis Brand, CANACA, Launches New Products And #FeelTheBoost Campaign
  • November 2022 - Tilray Launches ‘Take Back Control’ Platform to Provide Women with Free Medical Cannabis Resources
  • December 2022 - Good Supply Cannabis Brand Launches ‘Peppermint Phatty’
  • December 2022 - RIFF Cannabis Brand Launches New Series of Limited-Edition Strains in ‘Joint Effort’ With Craft Growers

Live Conference Call and Audio Webcast
Tilray Brands will host a webcast to discuss these results today at 8:30 a.m. ET. Investors may join the live webcast available on the Investors section of the Company’s website at www.tilray.com. The webcast will also be archived after the call concludes.

About Tilray Brands
Tilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), is a leading global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is changing people's lives for the better – one person at a time. Tilray Brands delivers on this mission by inspiring and empowering the worldwide community to live their very best life, enhanced by moments of connection and wellbeing. Patients and consumers trust Tilray Brands 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 we serve. A pioneer in cannabis research, cultivation, and distribution, Tilray Brands’ unprecedented production platform supports over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and craft beverages.

For more information on Tilray Brands, visit www.Tilray.com and follow @Tilray

Cautionary Statement Concerning Forward-Looking Statements

Certain statements in this press release constitute forward-looking information or forward-looking statements (together, “forward-looking statements”) under Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the “safe harbor” created by those sections and other applicable laws. Forward-looking statements can be identified by words such as “forecast,” “future,” “should,” “could,” “enable,” “potential,” “contemplate,” “believe,” “anticipate,” “estimate,” “plan,” “expect,” “intend,” “may,” “project,” “will,” “would” and the negative of these terms or similar expressions, although not all forward-looking statements contain these identifying words. Certain material factors, estimates, goals, projections or assumptions were used in drawing the conclusions contained in the forward-looking statements throughout this communication.

Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the Company’s ability to become the world's leading cannabis-focused consumer branded company; the Company’s ability to achieve annualized cost savings of $130 million; the Company’s ability to generate $70-$80 million of Adjusted EBITDA; the Company’s expectation to be free-cash flow positive in its operating business units; the Company’s ability to achieve long term profitability; the Company’s ability to achieve operational scale, market share, distribution, profitability and revenue growth in particular business lines and markets; the Company’s ability to successfully achieve production and supply chain efficiencies, synergies and cost savings; expansion of medical and recreational sales legalization across the global cannabis industry, including in Europe; and the Company’s anticipated investments and acquisitions, including in organic and strategic growth, partnership efforts, product offerings and other initiatives.

Many factors could cause actual results, performance or achievement to be materially different from any forward-looking statements, and other risks and uncertainties not presently known to the Company or that the Company deems immaterial could also cause actual results or events to differ materially from those expressed in the forward-looking statements contained herein. For a more detailed discussion of these risks and other factors, see the most recently filed annual information form of the Company and the Annual Report on Form 10-K (and other periodic reports filed with the SEC) of the Company made with the SEC and available on EDGAR. The forward-looking statements included in this communication are made as of the date of this communication and the Company does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws.

Use of Non-U.S. GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures, including adjusted gross margin, Adjusted gross profit, Adjusted EBITDA, Adjusted net income and free cash flow. Management believes that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the Company's operations and are useful for period-over-period comparisons of operations. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read only in connection with the Company's Consolidated Statements of Operations and Cash Flows presented in accordance with GAAP.

Certain forward-looking non-GAAP financial measures included in this press release are not reconciled to the comparable forward-looking GAAP financial measures. The Company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures but would not impact the non-GAAP measures. Such items may include litigation and related expenses, transaction costs, impairments, foreign exchange movements and other items. The unavailable information could have a significant impact on the Company's GAAP financial results.

The Company believes presenting net sales at constant currency provides useful information to investors because it provides transparency to underlying performance in the Company's consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.

Adjusted EBITDA is calculated as net income (loss) before income tax expense (recovery); interest expense, net; non-operating income (expense), net; amortization; stock-based compensation; change in fair value of contingent consideration; purchase price accounting step-up; facility start-up and closure costs; lease expense; litigation costs; and transaction costs. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted gross profit, is calculated as gross profit adjusted to exclude the impact of inventory valuation adjustment and purchase price accounting valuation step-up. A reconciliation of Adjusted gross profit, excluding inventory valuation adjustments and purchase price accounting valuation step-up, to gross profit, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted gross margin, excluding inventory valuation adjustments and purchase price accounting valuation step-up, is calculated as revenue less cost of sales adjusted to add back inventory valuation adjustments and amortization of inventory step-up, divided by revenue. A reconciliation of Adjusted gross margin, excluding inventory valuation adjustments and purchase price accounting valuation step-up, to gross margin, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted net income is calculated as net (loss) income plus (minus) non-operating income (expense), net, change in fair value of contingent consideration, inventory write down, litigation costs, and transaction (income) costs. A reconciliation of Adjusted net income, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Free cash flow is comprised of two GAAP measures deducted from each other which are net cash flow provided by (used in) operating activities less investments in capital and intangible assets. A reconciliation of net cash flow provided by (used in) operating activities to free cash flow, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release.

For further information:

Media: Berrin Noorata, news@tilray.com
Investors: Raphael Gross, +1-203-682-8253, Raphael.Gross@icrinc.com

 

Consolidated Statements of Financial Position          
    November 30,   May 31,  
(in thousands of US dollars)     2022       2022    
Assets          
Current assets          
Cash and cash equivalents   $ 190,218     $ 415,909    
Marketable Securities     243,286       -    
Accounts receivable, net     89,705       95,279    
Inventory     240,946       245,529    
Prepaids and other current assets     50,550       46,786    
Total current assets     814,705       803,503    
Capital assets     539,124       587,499    
Right-of-use assets     11,351       12,996    
Intangible assets     1,214,842       1,277,875    
Goodwill     2,621,401       2,641,305    
Interest in equity investees     4,638       4,952    
Long-term investments     8,211       10,050    
Convertible notes receivable     255,310       111,200    
Other assets     4,797       314    
Total assets   $ 5,474,379     $ 5,449,694    
Liabilities          
Current liabilities          
Bank indebtedness   $ 15,304     $ 18,123    
Accounts payable and accrued liabilities     162,900       157,431    
Contingent consideration     26,463       16,007    
Warrant liability     12,670       14,255    
Current portion of lease liabilities     6,976       6,703    
Current portion of long-term debt     20,681       67,823    
Current portion of convertible debentures payable     181,511       -    
Total current liabilities     426,505       280,342    
Long - term liabilities          
Lease liabilities     8,999       11,329    
Long-term debt     152,150       117,879    
Convertible debentures payable     223,295       401,949    
Deferred tax liabilities     180,099       196,638    
Other liabilities     185       191    
Total liabilities     991,233       1,008,328    
Commitments and contingencies (refer to Note 18)          
Stockholders' equity          
Common stock ($0.0001 par value; 990,000,000 shares authorized; 613,181,559 and 532,674,887 shares issued and outstanding, respectively)     61       53    
Additional paid-in capital     5,697,466       5,382,367    
Accumulated other comprehensive loss     (121,455 )     (20,764 )  
Accumulated Deficit     (1,105,796 )     (962,851 )  
Total Tilray Brands, Inc. stockholders' equity     4,470,276       4,398,805    
Non-controlling interests     12,870       42,561    
Total stockholders' equity     4,483,146       4,441,366    
Total liabilities and stockholders' equity   $ 5,474,379     $ 5,449,694    
           



Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)                      
    For the three months           For the six months          
    ended November 30,   Change   % Change   ended November 30,   Change   % Change  
(in thousands of U.S. dollars, except for per share data)     2022       2021     2022 vs. 2021     2022       2021     2022 vs. 2021  
Net revenue   $ 144,136     $ 155,153     $ (11,017 )   (7 )%   $ 297,347     $ 323,176     $ (25,829 )   (8 )%  
Cost of goods sold     104,012       122,387       (18,375 )   (15 )%     208,609       239,455       (30,846 )   (13 )%  
Gross profit     40,124       32,766       7,358     22 %     88,738       83,721       5,017     6 %  
Operating expenses:                                  
General and administrative     41,672       33,469       8,203     25 %     82,180       82,956       (776 )   (1 )%  
Selling     9,669       9,210       459     5 %     19,340       16,642       2,698     16 %  
Amortization     23,995       29,016       (5,021 )   (17 )%     48,354       59,755       (11,401 )   (19 )%  
Marketing and promotion     8,535       7,120       1,415     20 %     15,783       12,585       3,198     25 %  
Research and development     165       515       (350 )   (68 )%     331       1,300       (969 )   (75 )%  
Change in fair value of contingent consideration           845       (845 )   (100 )%     211       1,682       (1,471 )   (87 )%  
Litigation costs     2,815       1,080       1,735     161 %     3,260       2,274       986     43 %  
Transaction (income) costs     5,064       7,040       (1,976 )   (28 )%     (7,752 )     31,425       (39,177 )   (125 )%  
Total operating expenses     91,915       88,295       3,620     4 %     161,707       208,619       (46,912 )   (22 )%  
Operating loss     (51,791 )     (55,529 )     3,738     (7 )%     (72,969 )     (124,898 )     51,929     (42 )%  
Interest expense, net     (3,107 )     (9,940 )     6,833     (69 )%     (7,520 )     (20,110 )     12,590     (63 )%  
Non-operating income (expense), net     (18,450 )     65,595       (84,045 )   (128 )%     (51,442 )     115,292       (166,734 )   (145 )%  
(Loss) income before income taxes     (73,348 )     126       (73,474 )   (58,313 )%     (131,931 )     (29,716 )     (102,215 )   344 %  
Income taxes (benefit) expense     (11,713 )     (5,671 )     (6,042 )   107 %     (4,502 )     (909 )     (3,593 )   395 %  
Net (loss) income   $ (61,635 )   $ 5,797     $ (67,432 )   (1,163 )%     (127,429 )     (28,807 )     (98,622 )   342 %  
Net loss per share - basic and diluted   $ (0.11 )   $ 0.00     $ (0.11 )   (11,456 )%   $ (0.24 )   $ (0.09 )   $ (0.15 )   164 %  
                                   



Condensed Consolidated Statements of Cash Flows                
    For the six months        
    ended November 30,   Change   % Change
(in thousands of US dollars)     2022       2021     2022 vs. 2021
Cash used in operating activities:                
Net loss   $ (127,429 )   $ (28,807 )   $ (98,622 )   342 %
Adjustments for:                
Deferred income tax recovery     (12,941 )     (11,228 )     (1,713 )   15 %
Unrealized foreign exchange loss     2,261       (6,530 )     8,791     (135 )%
Amortization     67,387       76,804       (9,417 )   (12 )%
Loss on sale of capital assets     2,208       230       1,978     860 %
Inventory valuation write down     -       12,000       (12,000 )   (100 )%
Other non-cash items     8,177       3,739       4,438     119 %
Stock-based compensation     20,136       17,670       2,466     14 %
Loss on long-term investments & equity investments     1,918       2,197       (279 )   (13 )%
Loss (gain) on derivative instruments     18,997       (133,436 )     152,433     (114 )%
Change in fair value of contingent consideration     211       1,682       (1,471 )   (87 )%
Change in non-cash working capital:                
Accounts receivable     6,690       2,734       3,956     145 %
Prepaids and other current assets     (7,780 )     (6,299 )     (1,481 )   24 %
Inventory     5,046       3,409       1,637     48 %
Accounts payable and accrued liabilities     (1,941 )     (44,513 )     42,572     (96 )%
Net cash used in operating activities     (17,060 )     (110,348 )     93,288     (85 )%
Cash used in investing activities:                
Investment in capital and intangible assets     (7,537 )     (23,856 )     16,319     (68 )%
Proceeds from disposal of capital and intangible assets     2,160       8,264       (6,104 )   (74 )%
Purchase of marketable securities     (243,186 )     -       (243,186 )   0 %
Net cash paid for business acquisition     (24,372 )     -       (24,372 )   0 %
Net cash used in investing activities     (272,935 )     (15,592 )     (257,343 )   1650 %
Cash provided by (used in) financing activities:                
Share capital issued, net of cash issuance costs     129,593       -       129,593     0 %
Shares effectively repurchased for employee withholding tax     (1,189 )     (3,927 )     2,738     (70 )%
Proceeds from long-term debt     1,288       -       1,288     0 %
Repayment of long-term debt and convertible debt     (59,395 )     (20,779 )     (38,616 )   186 %
Repayment of lease liabilities     (1,114 )     (3,360 )     2,246     (67 )%
Net (decrease) increase in bank indebtedness     (2,819 )     19       (2,838 )   (14937 )%
Net cash provided by (used in) financing activities     66,364       (28,047 )     94,411     (337 )%
Effect of foreign exchange on cash and cash equivalents     (2,060 )     (2,696 )     636     (24 )%
Net increase (decrease) in cash and cash equivalents     (225,691 )     (156,683 )     (69,008 )   44 %
Cash and cash equivalents, beginning of period     415,909       488,466       (72,557 )   (15 )%
Cash and cash equivalents, end of period   $ 190,218     $ 331,783     $ (141,565 )   (43 )%
                 



Net Revenue by Operating Segment                                  
    For the three months   % of Total Revenue   For the three months   % of Total Revenue   For the six months   % of Total Revenue   For the six months   % of Total Revenue  
(In thousands of U.S. dollars)   November 30, 2022     November 30, 2021     November 30, 2022     November 30, 2021    
Cannabis business   $ 49,898     34 %   $ 58,775     38 %   $ 108,468     36 %   $ 129,224     40 %  
Distribution business     60,188     42 %     68,869     44 %     120,773     41 %     136,055     42 %  
Beverage alcohol business     21,395     15 %     13,707     9 %     42,049     14 %     29,168     9 %  
Wellness business     12,655     9 %     13,802     9 %     26,057     9 %     28,729     9 %  
Total net revenue   $ 144,136     100 %   $ 155,153     100 %   $ 297,347     100 %   $ 323,176     100 %  
                                   
Net Revenue by Operating Segment in Constant Currency                              
                                   
    For the three months       For the three months       For the six months       For the six months      
    November 30, 2022       November 30, 2021       November 30, 2022       November 30, 2021      
(In thousands of U.S. dollars)   as reported in constant currency   % of Total Revenue   as reported in constant currency   % of Total Revenue   as reported in constant currency   % of Total Revenue   as reported in constant currency   % of Total Revenue  
Cannabis business   $ 52,160     33 %   $ 58,775     38 %   $ 113,739     35 %   $ 129,224     40 %  
Distribution business     70,952     45 %     68,869     44 %     141,532     44 %     136,055     42 %  
Beverage alcohol business     21,395     14 %     13,707     9 %     42,049     13 %     29,168     9 %  
Wellness business     13,074     8 %     13,802     9 %     26,759     8 %     28,729     9 %  
Total net revenue   $ 157,581     100 %   $ 155,153     100 %   $ 324,079     100 %   $ 323,176     100 %  
                                   
                                   
Net Cannabis Revenue by Market Channel                                  
    For the three months   % of Total Revenue   For the three months   % of Total Revenue   For the six months   % of Total Revenue   For the six months   % of Total Revenue  
(In thousands of U.S. dollars)   November 30, 2022     November 30, 2021     November 30, 2022     November 30, 2021    
Revenue from Canadian medical cannabis products   $ 6,365     13 %   $ 7,929     13 %   $ 12,885     12 %   $ 16,303     13 %  
Revenue from Canadian adult-use cannabis products   52,390     106 %     49,535     85 %     110,745     101 %     119,128     91 %  
Revenue from wholesale cannabis products     236     0 %     2,259     4 %     628     1 %     3,959     3 %  
Revenue from international cannabis products     7,705     15 %     13,706     23 %     18,127     17 %     23,972     19 %  
Less excise taxes     (16,798 )   -34 %     (14,654 )   -25 %     (33,917 )   -31 %     (34,138 )   -26 %  
Total   $ 49,898     100 %   $ 58,775     100 %   $ 108,468     100 %   $ 129,224     100 %  
                                   
                                   
Net Cannabis Revenue by Market Channel in Constant Currency                              
    For the three months       For the three months       For the six months       For the six months      
    November 30, 2022       November 30, 2021       November 30, 2022       November 30, 2021      
(In thousands of U.S. dollars)   as reported in constant currency   % of Total Revenue   as reported in constant currency   % of Total Revenue   as reported in constant currency   % of Total Revenue   as reported in constant currency   % of Total Revenue  
Revenue from Canadian medical cannabis products   $ 6,820     13 %   $ 7,929     13 %   $ 13,651     12 %   $ 16,303     13 %  
Revenue from Canadian adult-use cannabis products   53,635     103 %     49,535     85 %     114,056     100 %     119,128     91 %  
Revenue from wholesale cannabis products     252     0 %     2,259     4 %     664     1 %     3,959     3 %  
Revenue from international cannabis products     9,489     18 %     13,706     23 %     21,358     19 %     23,972     19 %  
Less excise taxes     (18,036 )   -35 %     (14,654 )   -25 %     (35,990 )   -32 %     (34,138 )   -26 %  
Total   $ 52,160     100 %   $ 58,775     100 %   $ 113,739     100 %   $ 129,224     100 %  
                                   



Other Financial Information: Key Operating Metrics                
    For the three months   For the six months
    ended November 30,   ended November 30,
(in thousands of U.S. dollars)     2022       2021       2022       2021  
Net cannabis revenue   $ 49,898     $ 58,775     $ 108,468     $ 129,224  
Distribution revenue     60,188       68,869       120,773       136,055  
Net beverage alcohol revenue     21,395       13,707       42,049       29,168  
Wellness revenue     12,655       13,802       26,057       28,729  
Cannabis costs     31,335       45,259       60,196       85,450  
Beverage alcohol costs     11,420       5,921       22,269       12,583  
Distribution costs     52,495       61,237       107,479       120,527  
Wellness costs     8,762       9,970       18,665       20,895  
Adjusted gross profit (excluding PPA step-up and inventory valuation adjustments) (1)     41,231       44,766       90,952       95,721  
Cannabis adjusted gross margin (excluding inventory valuation adjustments) (1)     37 %     43 %     45 %     43 %
Beverage alcohol adjusted gross margin (excluding PPA step-up) (1)     52 %     57 %     52 %     57 %
Distribution gross margin     13 %     11 %     11 %     11 %
Wellness gross margin     31 %     28 %     28 %     27 %
Adjusted EBITDA (1)     11,708       13,760       25,239       26,457  
Cash and cash equivalents and marketable securities     433,504       331,783       433,504       331,783  
Working capital     388,200       393,350       388,200       393,350  
                 



Other Financial Information: Gross Margin and Adjusted Gross Margin              
    For the three months ended November 30, 2022  
(In thousands of U.S. dollars)   Cannabis   Beverage   Distribution   Wellness   Total  
Net revenue   $ 49,898     $ 21,395     $ 60,188     $ 12,655     $ 144,136    
Cost of goods sold     31,335       11,420       52,495       8,762       104,012    
Gross profit     18,563       9,975       7,693       3,893       40,124    
Gross margin     37 %     47 %     13 %     31 %     28 %  
Adjustments:                      
Purchase price accounting step-up     -       1,107       -       -       1,107    
Adjusted gross profit     18,563       11,082       7,693       3,893       41,231    
Adjusted gross margin     37 %     52 %     13 %     31 %     29 %  
                       
    For the three months ended November 30, 2021  
(In thousands of U.S. dollars)   Cannabis   Beverage   Distribution   Wellness   Total  
Net revenue   $ 58,775     $ 13,707     $ 68,869     $ 13,802     $ 155,153    
Cost of goods sold     45,259       5,921       61,237       9,970       122,387    
Gross profit     13,516       7,786       7,632       3,832       32,766    
Gross margin     23 %     57 %     11 %     28 %     21 %  
Adjustments:                      
Inventory valuation adjustments     12,000       -       -       -       12,000    
Purchase price accounting step-up     -       -       -       -       -    
Adjusted gross profit     25,516       7,786       7,632       3,832       44,766    
Adjusted gross margin     43 %     57 %     11 %     28 %     29 %  
                       
    For the six months ended November 30, 2022  
(In thousands of U.S. dollars)   Cannabis   Beverage   Distribution   Wellness   Total  
Net revenue   $ 108,468     $ 42,049     $ 120,773     $ 26,057     $ 297,347    
Cost of goods sold     60,196       22,269       107,479       18,665       208,609    
Gross profit     48,272       19,780       13,294       7,392       88,738    
Gross margin     45 %     47 %     11 %     28 %     30 %  
Adjustments:                      
Purchase price accounting step-up     -       2,214       -       -       2,214    
Adjusted gross profit     48,272       21,994       13,294       7,392       90,952    
Adjusted gross margin     45 %     52 %     11 %     28 %     31 %  
                       
    For the six months ended November 30, 2021  
(In thousands of U.S. dollars)   Cannabis   Beverage   Distribution   Wellness   Total  
Net revenue   $ 129,224     $ 29,168     $ 136,055     $ 28,729     $ 323,176    
Cost of goods sold     85,450       12,583       120,527       20,895       239,455    
Gross profit     43,774       16,585       15,528       7,834       83,721    
Gross margin     34 %     57 %     11 %     27 %     26 %  
Adjustments:                      
Inventory valuation adjustments     12,000       -       -       -       12,000    
Adjusted gross profit     55,774       16,585       15,528       7,834       95,721    
Adjusted gross margin     43 %     57 %     11 %     27 %     30 %  
                       



Other Financial Information: Adjusted Earnings Before Interest, Taxes and Amortization                    
    For the three months           For the six months        
    ended November 30,   Change   % Change   ended November 30,   Change   % Change
(In thousands of U.S. dollars)     2022       2021     2022 vs. 2021     2022       2021     2022 vs. 2021
Net (loss) income   $ (61,635 )   $ 5,797     $ (67,432 )   (1,163 )%   $ (127,429 )   $ (28,807 )   $ (98,622 )   342 %
Income taxes (benefit) expense     (11,713 )     (5,671 )     (6,042 )   107 %     (4,502 )     (909 )     (3,593 )   395 %
Interest expense, net     3,107       9,940       (6,833 )   (69 )%     7,520       20,110       (12,590 )   (63 )%
Non-operating income (expense), net     18,450       (65,595 )     84,045     (128 )%     51,442       (115,292 )     166,734     (145 )%
Amortization     33,318       37,471       (4,153 )   (11 )%     67,387       76,804       (9,417 )   (12 )%
Stock-based compensation     10,943       8,253       2,690     33 %     20,136       17,670       2,466     14 %
Change in fair value of contingent consideration     -       845       (845 )   (100 )%     211       1,682       (1,471 )   (87 )%
Purchase price accounting step-up     1,107       -       1,107     NM     2,214       -       2,214     NM
Facility start-up costs     3,000       1,700       1,300     76 %     4,800       2,900       1,900     66 %
Facility closure and exit costs     6,552       -       6,552     NM     6,552       5,000       1,552     31 %
Lease expense     700       900       (200 )   (22 )%     1,400       1,600       (200 )   (13 )%
Litigation costs     2,815       1,080       1,735     161 %     3,260       2,274       986     43 %
Inventory write down     -       12,000       (12,000 )   (100 )%     -       12,000       (12,000 )   (100 )%
Transaction (income) costs     5,064       7,040       (1,976 )   (28 )%     (7,752 )     31,425       (39,177 )   (125 )%
Adjusted EBITDA   $ 11,708     $ 13,760     $ (2,052 )   (15 )%   $ 25,239     $ 26,457     $ (1,218 )   (5 )%
                                 
                                 
Other Financial Information: Adjusted Net Loss                                
    For the three months           For the six months        
    ended November 30,   Change   % Change   ended November 30,   Change   % Change
(In thousands of U.S. dollars)     2022       2021     2022 vs. 2021     2022       2021     2022 vs. 2021
Net (loss) income   $ (61,635 )   $ 5,797     $ (67,432 )   (1,163 )%   $ (127,429 )   $ (28,807 )   $ (98,622 )   342 %
Non-operating income (expense), net     18,450       (65,595 )     84,045     (128 )%     51,442       (115,292 )     166,734     (145 )%
Change in fair value of contingent consideration     -       845       (845 )   (100 )%     211       1,682       (1,471 )   (87 )%
Inventory write down     -       12,000       (12,000 )   (100 )%     -       12,000       (12,000 )   (100 )%
Litigation costs     2,815       1,080       1,735     161 %     3,260       2,274       986     43 %
Transaction (income) costs     5,064       7,040       (1,976 )   (28 )%     (7,752 )     31,425       (39,177 )   (125 )%
Adjusted net loss   $ (35,306 )   $ (38,833 )   $ 3,527     (9 )%   $ (80,268 )   $ (96,718 )   $ 16,450     (17 )%
Adjusted net loss per share - basic and diluted   $ (0.06 )   $ (0.08 )   $ 0.03     (32 )%   $ (0.14 )   $ (0.21 )   $ 0.08     (36 )%
                                 
                                 
Other Financial Information: Free Cash Flow                                
    For the three months           For the six months        
    ended November 30,   Change   % Change   ended November 30,   Change   % Change
(In thousands of U.S. dollars)     2022       2021     2022 vs. 2021     2022       2021     2022 vs. 2021
Net cash provided by (used in) operating activities   $ 29,209     $ (17,121 )   $ 46,330     (0,271 )%   $ (17,060 )   $ (110,348 )   $ 93,288     -85 %
Less: investments in capital and intangible assets, net     (3,840 )     (6,972 )     3,132     (45 )%     (5,377 )     (15,592 )     10,215     (66 )%
Free cash flow   $ 25,369     $ (24,093 )   $ 49,462     (205 )%   $ (22,437 )   $ (125,940 )   $ 103,503     (82 )%
                                 

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Source: Tilray Brands, Inc.