Skip to main content

Cannabis producer Tilray Brands Inc. TLRY-T reported increased revenue in its fiscal fourth quarter but recorded a net loss of $457.8-million after taking large write-offs.

Tilray’s net revenue was US$153-million in the quarter ended May 31, an 8-per-cent increase from the same quarter last year, and slightly above what most analysts had predicted. The company reported record revenue for the fiscal year of US$628-million, up 22 per cent from last year.

Tilray posted a bottom line net loss of US$457.8-million during its fourth quarter, compared with a net income of US$33.6-million the previous year. It attributed much of the decline to a one-time write-off (also called an impairment charge), of $395-million primarily involving inventory, goodwill, and other intangible assets.

Tilray recently closed a deal to buy $155-million worth of convertible debt in cannabis producer HEXO Corp., giving it the right to acquire up to 48 per cent of the company.

“Part of the non-cash charge was in relation to inventory in regards to the HEXO deal as we look to reduce some of their products,” chief executive officer Irwin Simon said in an interview.

Mr. Simon said about US$54-million of the impairment charge came from older cannabis inventory, because it was a lower potency than Tilray’s current products, or was acquired in a previous deal.

The 2022 net loss compares with a loss of US$336-million in 2021, which the company said at the time was a result of costs it incurred in its merger last year with cannabis company Aphria Inc.

Tilray said on Thursday it has achieved US$85-million of the US$100-million in cash savings it expected to record from its merger with Aphria, and expects to save an additional US$80-million from its HEXO transaction over the next two years.

Meanwhile, Tilray said beverage alcohol sales from its U.S.-based holdings SweetWater Brewing and Breckenridge Distillery generated US$22.7-million in revenue in the fourth quarter, up 16 per cent up from last quarter.

While the company emphasized its intentions to continue its international expansion, Denise Faltischek, the company’s head of international, said on an analyst call on Thursday that Tilray is pausing deliveries of medical cannabis to distributors in Israel given the increased competition from other Canadian companies, which in recent years have flooded the market, driving down prices.

“A part of the problem is that lot of the Israeli companies have not been paying their bills. We’re not shipping unless we know we’re going to get paid,” Mr. Simon said.

Tilray also has production facilities in Europe, and is focusing on its expansion in Germany, where the company holds 20 per cent of the market share for medical cannabis. Germany plans to legalize recreational cannabis in the next two years, which would set a precedent for legalization in other European countries.

Depending on legalization timelines in Germany and the United States, Mr. Simon said the company is aiming for US$4-billion in revenue by the end of its 2024 fiscal year.

In a note to clients on Thursday, Royal Bank of Canada analyst Douglas Miehm pointed to data from cannabis intelligence firm Headset that showed Tilray’s retail market share in Alberta, B.C. and Ontario declined to 5.4 per cent from about 6.5 per cent last quarter.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.