Tilray Brands Inc TLRY

Besides the $225 million wasted on Medmen, buying

[Keeler]

a portion of their debt, Tilray also overspent buying Hexo for $250 million.

Hexo revenue had dropped for something like 8 quarters in a row - and sat at around $18 million a quarter at acquisition.

As indicated below, Tilray's cannabis  revenue gew from $59 million to $67 million after the acquisition of Hexo - meaning not only is there no organic growth - but the failed 'growth by acquisition' resulted in a lousy $9 million GROSS sales increase.

Simple Simon paid $250 million for a CANADIAN company that would report $36 million a year?
Brilliant.

Added to that insult is the fact that Hexo's costs were unbelievably out of control - they actually reported a NEGATIVE Gross Profit (profit after direct costs to produce the goods - but before operating expense). For every $1.00 sale - it was costing Hexo $1.40 to produce the product.

So while adding $9 million in sales - Hexo also contributed to Tilray's Gross Profit dropping to 30% from 50%, the industry average. Not enough for Tilray to pay it's cannabis  operating expense.

TLRY Tilray Brands - Better than Some

Post by Trendmaker1on Mar 24, 2024 10:07am

40 Views 

Post# 35949419

1 stock that I wouldn't touch

To be fair to Tilray, I would never buy any Canadian cannabis stock. The simple reason is that the market is has too many marijuana producers, driving up supply and pushing down prices. This is why you see Tilray getting into the alcohol industry and focusing on the international cannabis markets; the growth potential in the Canadian cannabis market just isn't appealing at all.

The end result is that generating significant revenue growth becomes difficult. Consider the company's most recent results as an example. For the period ended Nov. 30, Tilray reported $67.1 million in revenue from its cannabis business. But two years earlier, its cannabis revenue during the same period was $58.8 million. Over a two-year period, Tilray's cannabis revenue only grew by 14%, and that's with the help of acquisitions.