TLRY (NASDAQ: TLRY) executives insisted on the earnings call held Tuesday that a net loss of $793.5 millions for the most recent quarter, despite the staggering amount, was not a big deal as the company continues to grow and diversify its business internationally.
Carl Merton, the CFO, noted that the loss was due to an impairment charge one-time of $700m. He attributed this to the macroeconomic situation, including “the reduced likelihood of U.S. or European-Canada regulation change in the near term.”
Irwin Simon, CEO of Tilray didn’t focus on the bad. Simon focused his attention on Tilray revenue streams which are booming. The company is diversifying its revenues by tapping into beer and spirit trades, non-alcoholic drinks and hemp-derived THC beverages. Simon explained that the moves were taken to counteract Tilray’s struggling marijuana division, which is now doing well internationally as many Canadian rivals have shut down.
Simon stated, “In just five years our team transformed Tilray into a company that provides specialty drinks, cannabis, and wellness products to consumers worldwide.” Since thousands of year, beer and cannabis has been consumed. The industries, and the consumers who support them, are not going anywhere. Tilray and these industries are here to stay.
Simon claimed that the platform of the company and the portfolio is undervalued. This was not properly reflected in its current stock, which has taken a big hit this week because of the massive quarterly loss.
Simon stated that Tilray is not finished expanding or pivoting. Simon said that Tilray still has work to do in identifying cost-cutting and operational efficiency opportunities. However, the company intends to buy more craft breweries to add to its 10 craft beer manufacturers it purchased since 2020.
Simon also said that Tilray intends to boost its cannabis production, which is already generating 137 metric tonnes of marijuana annually, in Canada. However, the company has the capability to grow an additional 100 metric ton, according to Simon. The company is hoping that this will give it a greater share of the international market, as the price margins in Europe are higher.
Irwin says that international sales have a major advantage for Tilray, as it doesn’t need to pay Canadian Excise Tax, which was about $150 Million last year. Tilray has placed some hopes in the medical cannabis market in Germany, Poland and Italy.
Simon is also keeping an eye out for possible reforms that Tilray can leverage in Canada and United States. With the shutdown of so many rivals, he said that Canada’s wholesale cannabis market has opened up a lot of opportunities. In the U.S. the hemp industry is also flourishing.
Simon stated that the demand from third parties to purchase cannabis was enormous. Simon said that there is currently a huge demand for supplies in Canada, as many of the grow facilities are either shut down or out of business.
Simon estimates that Tilray has about 1,000 points of sale in the U.S.
Simon stated that “Tilray will also be leveraging its robust nationwide beverage distribution networks across independent retailers and convenience stores as well as package stores such ABC and Total Wine who are both very enthusiastic about the category.
We’re not pleased with where we stand, but that doesn’t mean anyone has abandoned hope. “We are trying to reverse the trend on our stock,” said he.
Tilray also announced Tuesday it was lowering its revenue expectations for the coming year from $950 million to $1 billion, down to $850 millions-$900 millions.