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Tilray On The Hunt For More Acquisitions

January 10, 2023

Leamington, Ontario-based Tilray Brands continues to make gains in the U.S. beverage alcohol business from holdings like SweetWater Brewing and Breckenridge Distillery as it battles tough conditions in the Canadian cannabis market. CEO Irwin Simon told analysts that more beverage alcohol acquisitions could be on the way in the U.S., and that Tilray will be on the lookout for opportunities in the Canadian cannabis market as well.

Tilray’s cannabis business logged $50 million in net revenue for the three months ended in November. That figure amounts to a 19% dip sequentially, down from $61.5 million the prior quarter. The cannabis business accounted for 34% of the company’s overall revenue, as it was outpaced by its distribution arm’s $60.2 million in quarterly revenue, which accounted for 42%. Tilray’s beverage alcohol business brought in $21.4 million, or 15% of net revenue, and its wellness products contributed $12.7 million for 9%. Tilray’s total net revenue was $144.1 million for the quarter, a 13% sequential decline.

Despite taking a net loss of $61.6 million in the quarter, the company emphasized its position in the Canadian recreational cannabis market, where it enjoys the No.-1 position with an 8.3% market share. Innovation and potential acquisitions are on the menu for Tilray north of the border as it aims to take that share into the double digits, Simon noted. Meanwhile, Tilray achieved an adjusted EBITDA of $11.7 million for the quarter, marking the 15th consecutive quarter this metric has been positive.

“Tilray Brands’ repositioning as a global diversified portfolio of brands will drive our ability to seize top-line opportunities across geographies and business lines,” said Simon. “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. 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.”

Highlights of the quarter include new products and new partnerships. In September, Tilray’s Good Supply cannabis brand launched new high-potency products including Orange Frost Live Resin, and SweetWater Brewing unveiled its fall beer releases. Also in September, Breckenridge Distillery announced nationwide alignment and distribution with RNDC in the U.S. In October, Tilray and Charlotte’s Web inked a strategic alliance across Canada. And in November, Tilray acquired Montauk Brewing Company on Long Island, further advancing their push into beverage alcohol and the U.S. market.—Danny Sullivan

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