Tilray Brands sees fourth quarter hit by massive writedowns and negative gross profit


Tilray Brands (TSX: TLRY) this morning announced its fourth quarter and fiscal year 2022 financial results. The results were highlighted by a slowdown in quarterly growth, as well as significant writedowns that resulted in a large net loss.

Revenue for the quarter was $153.3 million, marking quarter-over-quarter growth of 0.96%. During the quarter, the corporate cannabis segment fell 35% of revenue to $53.3 million, while distribution revenue fell 39% to $61.2 million. Meanwhile, alcoholic beverages increased to 15% of revenue at $22.7 million, while the rest came from the wellness segment at 11%, or $16.2 million.

Gross profit for the quarter meanwhile was negative $6.7 million.

Operating expenses for the quarter totaled $460.7 million, with the highest cost here being a $378.2 million impairment related to inventory, goodwill and other intangible assets. Commenting on the significant write-downs, the company said: “The impact was related to changes in market opportunities, resulting in a shift in our strategic priorities.”

Excluding these massive write-downs, expenses for the quarter totaled $82.4 million, compared to $59.6 million in the third quarter. Despite this, the company told a story of cost reduction synergies resulting from the recent merger with Aphria Inc, which reportedly hit $85 million, $5.0 million more than expected.

Additional savings of $20 million should now be realized as a result of this transaction, while the recent agreement with Hexo (TSX:HEXO) should generate additional savings of $80 million. Whether these savings are sufficient to achieve profitability is another question.

Overall, the company reported a net loss of $457.8 million for the three-month period, along with adjusted EBITDA of $11.5 million.

For the full fiscal year, the company reported revenue of $628.4 million, compared to $513.1 million in 2021. Gross profit was $116.8 million, while operating expenses operations totaled $727.2 million. The company posted a net loss of $434.1 million for the full year and adjusted EBITDA of $48.0 million.

In terms of balance sheet, the company ended the year with $415.9 million in cash and total current assets of $803.5 million. Total current liabilities amount to $280.3 million.

Tilray Brands last traded at $4.18 on the Toronto Stock Exchange.

Information for this briefing was found via Sedar and Hexo Corp. The author has no security or affiliation related to this organization. Not a buy or sell recommendation. Always do additional research and consult a professional before purchasing a title. The author holds no license.


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