Tilray Posts $52.5 Million Profit Despite Retail Cannabis Decline

Tilray Brands recently saw its share of the Canadian retail cannabis market decline, but the producer said it was encouraged because the recent declines in this area had been less significant than in the past. This allowed it to post an earnings per share result for the third quarter of 9 cents per share, significantly up from its loss of US$1.03 per share in the same period last year.

Tilray Brand’s retail market share fell to 10.2% in the most recent quarter from 12.8% in the prior quarter, said Canadian business president Blair MacNeil.

He blamed the decline on Tilray Brand’s change in flower-growing strategy and product availability issues in that category, as well as the vaccine passport requirement in Quebec, which impacted sales, and the dissolution of a Tilray partnership with Marley Natural, a cannabis brand associated with musician Bob Marley.

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Tilray Maintains Leading Position

“We still maintained our leading position in Canada in terms of market share, and our leadership positions in many recreational use categories, including pre-rolled joints,” the Tilray executive said during a conference call with analysts.

“Notably, the rate of decline in February is the lowest we’ve seen in over a year – an encouraging first step, which gives us confidence that our pricing and marketing adjustments are paying off.”

MacNeil’s comments encompass Tilray Brand’s third quarter, which ended Feb. 28. This period has seen many provinces and territories still facing increased measures against COVID-19, as well as fierce competition in the cannabis market.

Opportunities Still Worth About $10 Billion

Mr. MacNeil calculates that the opportunities for Tilray in the Canadian cannabis market are worth about $10 billion and said about 54% of that market is served through legal channels, presenting a “significant revenue opportunity ahead.”

“However, the Canadian cannabis market remains crowded and oversaturated with 800 licensed producers and 3,200 retail stores,” he noted. “This has led to an oversupply of products and price compression.”

It has seen the market cut retail prices by 24.5% over the past 12 months and drop overall prices by 6.5% over the past three months, but Tilray has managed to keep margins around 40%.

In the third quarter, the Leamington, Ontario-based company posted a net income of US$52.5 million, which compared with a loss of US$258.6 million for the same period a year earlier.

Earnings per share for the third quarter were 9 cents US per share, up from a loss of US$1.03 per share in the same period last year.

Tilray Brand’s net revenue was US$151.9 million, up from US$123.9 million in the same quarter a year earlier, driven by sales of cannabis, alcoholic beverages, and personal care products.

Tilray Keeping Tabs on the United States

The company is keeping tabs on the United States, where the House of Representatives of Congress last week passed a bill that would remove cannabis from the US list of federally controlled substances.

This is the second time the House has passed the bill, which will now make its way through the Senate.

Cannabis companies have been following the US market for years and Tilray has made inroads into this market with its acquisitions of SweetWater Brewing Company and Breckenridge Distillery.

Tilray has also purchased enough convertible debt from MedMen Enterprises to secure a minority stake when legalization takes place in the United States.

“We would like to own MedMen one day, when legalized, and there are many other large operators in several states that we would like to acquire,” Tilray CEO Irwin Simon said on the conference call.

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(Featured image by Yash Lucid via Pexels)

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