Tilray lowers 2024 guidance despite pay off from its diversification strategy

Tilray Brands Inc. (Nasdaq: TLRY) (TSX: TLRY) posted robust financial results for its third quarter, which ended Feb. 29, boosted by the company’s beverage revenue, but the company still revised its 2024 guidance downward.

The company’s net revenue grew by approximately 30% to $188.3 million, versus $145.6 million in the prior year quarter. This missed Yahoo analysts’ average expectation by around $11 million.

Tilray’s expansion into the beverage-alcohol sector has proven to be a successful strategy, with the segment’s net revenue skyrocketing 165% to $54.7 million, largely due to the company’s recent acquisition of several craft brands. The cannabis and wellness segments also experienced growth, with net revenue increasing by 33% and 12%, respectively.

Despite the challenges faced in the distribution segment, Tilray managed to significantly reduce its net loss to $105 million, compared to a staggering $1.1 billion loss in the prior year quarter. The company also improved its financial liquidity position, with approximately $226 million in cash and marketable securities.

In a statement, chairman and CEO Irwin Simon said the company focused on expanding its cannabis business to complementary markets, saying it “positioned us well to navigate the current environment and to benefit from future growth opportunities.”

“Tilray Brands today represents the future of the global CPG industry leading the convergence of cannabis, beverages, and wellness,” Simon said.

The company snapping up eight beer and beverage brands from Anheuser-Busch last year handed Tilray the fifth largest position in the U.S. craft beer market. Tilray said it aims to become a top 12 U.S. beer and alcohol beverage company through a three-pronged approach focused on “regional brand growth, national brand expansion, and innovation strategy.”

Looking ahead, Tilray has updated its fiscal year 2024 guidance, targeting an adjusted EBITDA of $60 million to $63 million, down from its previous guidance of $68 million to $78 million.

Additionally, company no longer expects to generate positive adjusted free cash flow for the full fiscal year due to delays in collecting cash from various asset sales.

Morningstar recently lowered its price target for Tilray, while maintaining a four-star rating.