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Tilray Brands Reports Record Financial Results, Achieves 26% Net Revenue Growth

TLRY

Record Fiscal 2024 Gross Profit

Reduced Net Convertible Debt by ~$300 Million in Fiscal 2024

Fiscal 2024 Net Revenue Reaches $789 Million, Led by Cannabis Net Revenue of $273 Million and Beverage-Alcohol Net Revenue of $202 Million

Successfully Executing on Diversified Lifestyle Business Strategy;
Tilray Cannabis, Tilray Beverages, Tilray Spirits and Tilray Wellness

NEW YORK and LEAMINGTON, Ontario, and NEÜMUNSTER, Germany, July 29, 2024 (GLOBE NEWSWIRE) -- Tilray Brands, Inc. (“Tilray”, “our”, “we” or the “Company”) (Nasdaq: TLRY; TSX: TLRY), a global lifestyle consumer packaged goods company elevating lives through moments of connection, today reported financial results for its fourth quarter and fiscal year ended May 31, 2024.

Irwin D. Simon, Chairman and Chief Executive Officer, stated, “Tilray Brands is leading the convergence of cannabis, beverages, and wellness on a global scale. In Fiscal 2024, the Company achieved remarkable growth across its businesses, with a 26% increase in net revenue over the prior year, record-breaking performance in gross profit and adjusted EBITDA, and generated positive adjusted free cash flow for the fiscal year. We have also significantly reduced our net convertible debt by ~$300 million and surpassed our cost-savings synergy target, which has strengthened our balance sheet. These results were driven by our successful execution of our diversification strategy, which we started in 2020, and the hard work of our team.”

Mr. Simon continued, “Tilray Brands also successfully completed three acquisitions - the eight iconic craft brands from Anheuser-Busch Companies, LLC., HEXO Corp., and Truss Beverage Co. These acquisitions were strategic in fortifying Tilray’s house of brands, strengthening our operations, and positioning the Company as a leader across several industries and regions. In the U.S., Tilray Beverages is the 5th1 largest craft brewer and Tilray Wellness is the leader in hemp products. In Canada, Tilray Cannabis holds the #1 recreational cannabis market share, while in Europe, it is the market leader in medical cannabis. Leading the convergence of cannabis, beverages, and wellness, Tilray Brands is poised to continue to disrupt the CPG industry globally.”

FinancialHighlights2024FiscalFourthQuarter

  • Net revenue increased 25% to $229.9 million in the fourth quarter compared to $184.2 million in the prior year quarter.
  • Gross profit was $82.4 million in the fourth quarter compared to $67.2 million in the prior year quarter. Gross margin and adjusted gross margin2 were both 36%.
  • Beverage-alcohol net revenue increased 137% to $76.7 million in the fourth quarter from $32.4 million in the prior year quarter. The increase was led by new product innovation and contributions from our Craft Acquisition brands.
    • Beverage-alcohol gross profit increased 146% to $40.8 million in the fourth quarter from $16.6 million in the prior year quarter. Adjusted beverage-alcohol gross profit increased 130% to $41.0 million from $17.8 million in the prior year quarter.
    • Beverage-alcohol gross margin increased to 53% in the fourth quarter compared to 51% in the prior year quarter and adjusted gross beverage alcohol margin2 was 53% in the fourth quarter compared to 55% in the prior year quarter.
  • Cannabis net revenue increased 12% to $71.9 million in the fourth quarter compared to $64.4 million in the prior year quarter, driven in part by the acquisitions of HEXO and Truss.
    • Cannabis gross profit and adjusted gross profit2 decreased to $28.8 million in the fourth quarter from $39.5 million in the prior year quarter.
    • Cannabis gross margin and adjusted gross margin2 were 40% in the fourth quarter compared to 61% in the prior year quarter. A substantial portion of the decrease is a result of the completion of the HEXO advisory services agreement in Q1 fiscal 2024.
  • Distribution net revenue was $65.6 million in the fourth quarter compared to $72.6 million in the prior year quarter. The decrease was driven by management’s focus on discontinuing less profitable product lines demonstrated by Distribution’s gross margin increasing to 12% in the fourth quarter compared to 9% in the prior year quarter.
  • Wellness net revenue increased 6% to $15.7 million in the fourth quarter from $14.8 million in the prior year quarter.
  • Net loss narrowed to ($15.4) million in the fourth quarter compared to net loss of ($119.8) million in the prior year quarter, almost all of which is a result of non-cash expenses. Adjusted net income2 was $35.1 million in the fourth quarter compared to a loss of ($11.8) million in the prior year quarter
  • Net loss per share narrowed to ($0.04) compared to ($0.15) in the prior year quarter. Adjusted net income (loss) per share2 was $0.04 compared to a loss of ($0.02) in the prior year quarter.
  • Adjusted EBITDA2 increased 37% to $29.5 million in the fourth quarter compared to $21.5 million in the prior year quarter.

FinancialHighlights2024FiscalYear

  • Net revenue increased 26% to $788.9 million in fiscal 2024 compared to $627.1 million in the prior fiscal year.
  • Gross profit was $223.4 million, while adjusted gross profit2 increased 14% to $235.6 million in fiscal 2024. Gross margin was 28% and adjusted gross margin2 was 30%.
  • Beverage-alcohol net revenue increased 113% to $202.1 million in fiscal 2024 from $95.1 million in the prior fiscal year.
    • Beverage-alcohol gross profit increased 91% to $88.6 million in fiscal 2024 from $46.3 million in the prior fiscal year. Adjusted beverage-alcohol gross profit2 increased to $93.2 million from $50.8 million in the prior fiscal year.
    • Beverage-alcohol gross margin was 44% in fiscal 2024 compared to 49% in the prior fiscal year and adjusted gross beverage alcohol margin2 was 46% in fiscal 2024 compared to 53% in the prior fiscal year, reflecting lower contribution margins from the acquired brands.
  • Cannabis net revenue increased 24% to $272.8 million in fiscal 2024 compared to $220.4 million in the prior fiscal year, reflecting the acquisitions of HEXO and Truss as well as growth across international markets.
    • Cannabis gross profit increased to $90.2 million in fiscal 2024 from $57.7 million in the prior fiscal year. Adjusted gross profit2 was $97.8 million compared to $112.7 million in the prior fiscal year as a result of the advisory service agreement concluding in Q1 fiscal 2024.
    • Cannabis gross margin was 33% in fiscal 2024 compared to 26% in the prior fiscal year. Adjusted cannabis gross margin2 was 36% compared to 51% in the prior fiscal year.
  • Distribution net revenue and gross margin remained consistent at ~$259 million and 11% in fiscal 2024 compared to the prior fiscal year.
  • Wellness net revenue increased 5% to $55.3 million in fiscal 2024 from $52.8 million in the prior fiscal year.
    • Wellness gross margin was 30% in fiscal 2024 compared to 29% in the prior fiscal year.
  • Net loss decreased to ($222.4) million in fiscal 2024 compared to net loss of $(1.4) billion in the prior fiscal year, almost all of which is a result of non-cash expenses. Net loss per share narrowed to $(0.33) and improved compared to a net loss of $(2.35) in the prior fiscal year.
  • Adjusted net income2 increased to $6.2 million in fiscal 2024 compared to adjusted net income2 of $0.4 million in the prior fiscal year. Adjusted net income per share2 narrowed to $0.01 compared to $0.00 in the prior fiscal year.
  • Adjusted EBITDA2 increased to $60.5 million in fiscal 2024 compared to $58.7 million in the prior fiscal year.
  • Strong financial liquidity position of ~$260.5 million, consisting of $228.3 million in cash and $32.2 million in marketable securities.
  • Reduced outstanding principal of the net convertible debt by $291.0 million compared to the previous fiscal year.
  • Net cash used in operating activities was $(30.9) million in fiscal 2024 compared to $7.9 million net cash from operating activities in the prior year.
  • Adjusted free cash flow2 of $6.6 million in fiscal 2024 compared to $19.1 million in the prior year.

LiveAudio Webcast

Tilray Brands will host a webcast to discuss these results today at 4:30 p.m. Eastern Time. Investors may join the live webcast available on the Investors section of the Company’s website at www.Tilray.com. A replay will be available and archived on the Company’s website.

About Tilray Brands

Tilray Brands, Inc. (“Tilray”) (Nasdaq: TLRY; TSX: TLRY), is a leading global lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is leading as a transformative force at the nexus of cannabis, beverage, wellness, and entertainment, elevating lives through moments of connection. Tilray’s mission is to be a leading premium lifestyle company with a house of brands and innovative products that inspire joy, wellness and create memorable experiences. Tilray’s unprecedented platform supports over 40 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and craft beverages.

For more information on how we are elevating lives through moments of connection, visit Tilray.com and follow @Tilray on all social platforms.

CautionaryStatementConcerningForward-LookingStatements

Certain statements in this press release constitute forward-looking information or forward-looking statements (together, “forward-looking statements”) under Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the “safe harbor” created by those sections and other applicable laws. Forward-looking statements can be identified by words such as “forecast,” “future,” “should,” “could,” “enable,” “potential,” “contemplate,” “believe,” “anticipate,” “estimate,” “plan,” “expect,” “intend,” “may,” “project,” “will,” “would” and the negative of these terms or similar expressions, although not all forward-looking statements contain these identifying words. Certain material factors, estimates, goals, projections or assumptions were used in drawing the conclusions contained in the forward-looking statements throughout this communication.

Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the Company’s ability to become a leading lifestyle consumer packaged goods company; the Company’s ability to become a leading beverage alcohol Company; the Company’s ability to achieve long term profitability; the Company’s ability to achieve operational scale, market share, distribution, profitability and revenue growth in particular business lines and markets; the Company’s ability to successfully achieve revenue growth, margin and profitability improvements, production and supply chain efficiencies, synergies and cost savings; the Company’s expected revenue growth, sales volume, profitability, synergies and accretion related to any of its acquisitions; expected opportunities in the U.S., including upon U.S. federal cannabis legalization or rescheduling; the Company’s anticipated investments and acquisitions, including in organic and strategic growth, partnership efforts, product offerings and other initiatives; and the Company’s ability to commercialize new and innovative products.

Many factors could cause actual results, performance or achievement to be materially different from any forward-looking statements, and other risks and uncertainties not presently known to the Company or that the Company deems immaterial could also cause actual results or events to differ materially from those expressed in the forward-looking statements contained herein. For a more detailed discussion of these risks and other factors, see the most recently filed annual information form of the Company and the Annual Report on Form 10-K (and other periodic reports filed with the SEC) of the Company made with the SEC and available on EDGAR. The forward-looking statements included in this communication are made as of the date of this communication and the Company does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws.

UseofNon-U.S.GAAPFinancialMeasures

This press release and the accompanying tables include non-GAAP financial measures, including Adjusted gross margin (consolidated and for each of our reporting segments), Adjusted gross profit (consolidated and for each of our reporting segments), Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per share , free cash flow, adjusted free cash flow, constant currency presentations of revenue and cash and marketable securities. Management believes that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the Company's operations and are useful for period-over-period comparisons of operations. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read only in connection with the Company's Consolidated Statements of Operations and Cash Flows presented in accordance with GAAP.

Certain forward-looking non-GAAP financial measures included in this press release are not reconciled to the comparable forward-looking GAAP financial measures. The Company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures but would not impact the non-GAAP measures. Such items may include litigation and related expenses, transaction costs, impairments, foreign exchange movements and other items. The unavailable information could have a significant impact on the Company's GAAP financial results.

The Company believes presenting net sales at constant currency provides useful information to investors because it provides transparency to underlying performance in the Company's consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.

Adjusted EBITDA is calculated as net income (loss) before income tax benefits, net; interest expense, net; non-operating income (expense), net; amortization; stock-based compensation; change in fair value of contingent consideration; purchase price accounting step-up; impairments; inventory valuation allowance; Other than temporary change in fair value of convertible notes receivable; facility start-up and closure costs; litigation costs; restructuring costs, transaction (income) costs and (Gain) loss on sale of capital assets – non-operating facility. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Historically, we have included lease expenses for leases that were treated differently under IFRS 16 and ASC 842 in the calculation of adjusted EBITDA, aiming to align our definition with industry peers reporting under IFRS. The decision to include these lease expenses in the Company's definition of adjusted EBITDA was based on our efforts to maintain comparability with peers. However, as the Company has continued to diversify, particularly with strategic acquisitions such as the newly acquired beverage alcohol business portfolio, this comparison is no longer relevant, accordingly, we are no longer including this adjustment. Had the Company continued to include lease expenses that were treated differently under IFRS 16 and ASC 842, the impact to adjusted EBITDA would have been $4.6 million for the year ended May 31, 2024. In comparison, under the previous reconciliation, the impact to adjusted EBITDA would have been $2.8 million and $3.1 for the years ended May 31, 2023, and May 31, 2022, respectively.

Adjusted net income (loss) is calculated as net loss attributable to stockholders of Tilray Brands, Inc., less; non-operating income (expense), net; amortization; stock-based compensation; change in fair value of contingent consideration; impairments; inventory valuation allowance; Other than temporary change in fair value of convertible notes receivable, attributable to stockholders of Tilray Brands, Inc. facility start-up and closure costs; litigation costs; restructuring costs and transaction (income) costs. A reconciliation of Adjusted net income (loss) to net loss attributable to stockholders of Tilray Brands, Inc., the most directly comparable GAAP measure, has been included below in this press release.

Adjusted net income (loss) per share is calculated as net loss attributable to stockholders of Tilray Brands, Inc., net; non-operating income (expense), net; amortization; stock-based compensation; change in fair value of contingent consideration; facility start-up and closure costs; litigation costs; restructuring costs and transaction (income) costs, divided by weighted average number of common shares outstanding. A reconciliation of Adjusted net income (loss) per share to net loss attributable to stockholders of Tilray Brands, Inc., the most directly comparable GAAP measure, has been included below in this press release. Adjusted net income (loss) per share is not calculated in accordance with GAAP and should not be considered an alternative for GAAP net income (loss) per share or as a measure of liquidity.

Adjusted gross profit (consolidated and for each of our reporting segments), is calculated as gross profit adjusted to exclude the impact of purchase price accounting valuation step-up and inventory valuation adjustments. A reconciliation of Adjusted gross profit, excluding purchase price accounting valuation step-up and inventory valuation adjustments, to gross profit, the most directly comparable GAAP measure, has been provided in the financial statement tables included above in this press release. Adjusted gross margin (consolidated and for each of our reporting segments), excluding purchase price accounting valuation step-up and inventory valuation adjustments, is calculated as revenue less cost of sales adjusted to add back amortization of inventory step-up and inventory valuation adjustments, divided by revenue. A reconciliation of Adjusted gross margin, excluding purchase price accounting valuation step-up and inventory valuation allowance, to gross margin, the most directly comparable GAAP measure, has been provided in the financial statement tables included above in this press release.

Free cash flow is comprised of two GAAP measures which are net cash flow provided by (used in) operating activities less investments in capital and intangible assets, net. A reconciliation of net cash flow provided by (used in) operating activities to free cash flow, the most directly comparable GAAP measure, has been provided in the financial statement tables included above in this press release. Adjusted free cash flow is comprised of two GAAP measures which are net cash flow provided by (used in) operating activities less investments in capital and intangible assets, net, and the exclusion of growth CAPEX from investments in capital and intangible assets, net, which excludes the amount of capital expenditures that are considered to be associated with growth of future operations rather than to maintain the existing operations of the Company, and excludes our integration costs related to HEXO and the Craft Acquisition and the cash income taxes related to Aphria Diamond to align with management’s prescribed guidance. A reconciliation of net cash flow provided by (used in) operating activities to adjusted free cash flow, the most directly comparable GAAP measure, has been provided in the financial statement tables included above in this press release.

Constant currency presentations of revenue are used to normalize the effects of foreign currency. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. Dollar are translated into U.S. Dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year. A reconciliation of prior year revenue to constant currency revenue the most directly comparable GAAP measure, has been provided in the financial statement tables included above in this press release.

Cash and marketable securities are comprised of two GAAP measures, cash and cash equivalents added to marketable securities. The Company’s management believes that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to its short-term liquidity position by combing these two GAAP metrics.

Contacts:
Media:
news@tilray.com

Investors:
Investors@tilra.com

1Circana volume sales L26W ending 7/7/24
2 Adjusted EBITDA, Adjusted gross margin, Adjusted net income, adjusted gross profit and adjusted gross margin for each of our segments, and Adjusted net income (loss) are non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measures to GAAP Measures” below for a reconciliation of these Non-GAAP Measures to our most comparable GAAP measure.

Consolidated Statements of Financial Position
May 31, May 31,
(in thousands of US dollars) 2024 2023
Assets
Current assets
Cash and cash equivalents $ 228,340 $ 206,632
Marketable securities 32,182 241,897
Accounts receivable, net 101,695 86,227
Inventory 252,087 200,551
Prepaids and other current assets 31,332 37,722
Assets held for sale 32,074
Total current assets 677,710 773,029
Capital assets 558,247 429,667
Operating lease, right-of-use assets 16,101 5,941
Intangible assets 915,469 973,785
Goodwill 2,008,884 2,008,843
Interest in equity investees 4,576
Long-term investments 7,859 7,795
Convertible notes receivable 32,000 103,401
Other assets 5,395 222
Total assets $ 4,221,665 $ 4,307,259
Liabilities
Current liabilities
Bank indebtedness $ 18,033 $ 23,381
Accounts payable and accrued liabilities 241,957 190,682
Contingent consideration 15,000 16,218
Warrant liability 3,253 1,817
Current portion of lease liabilities 5,091 2,423
Current portion of long-term debt 15,506 24,080
Current portion of convertible debentures payable 330 174,378
Total current liabilities 299,170 432,979
Long - term liabilities
Contingent consideration 10,889
Lease liabilities 60,422 7,936
Long-term debt 158,352 136,889
Convertible debentures payable 129,583 221,044
Deferred tax liabilities, net 130,870 167,364
Other liabilities 90 215
Total liabilities 778,487 977,316
Stockholders' equity
Common stock ($0.0001 par value; 1,198,000,000 common shares authorized; 831,925,373 and 656,655,455 common shares issued and outstanding, respectively) 83 66
Preferred shares ($0.0001 par value; 10,000,000 preferred shares authorized; nil and nil preferred shares issued and outstanding, respectively)
Additional paid-in capital 6,146,810 5,777,743
Accumulated other comprehensive loss (43,499 ) (46,610 )
Accumulated Deficit (2,660,488 ) (2,415,507 )
Total Tilray Brands, Inc. stockholders' equity 3,442,906 3,315,692
Non-controlling interests 272 14,251
Total stockholders' equity 3,443,178 3,329,943
Total liabilities and stockholders' equity $ 4,221,665 $ 4,307,259


Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)
For the three months
ended May 31,
Change %
Change
For the twelve months
ended May 31,
Change %
Change
(in thousands of U.S. dollars, except for per share data) 2024 2023 2024 vs. 2023 2024 2023 2024 vs. 2023
Net revenue $ 229,882 $ 184,188 $ 45,694 25% $ 788,942 $ 627,124 $ 161,818 26%
Cost of goods sold 147,532 117,025 30,507 26% 565,591 480,164 85,427 18%
Gross profit 82,350 67,163 15,187 23% 223,351 146,960 76,391 52%
Operating expenses:
General and administrative 43,589 47,774 (4,185 ) (9)% 167,358 165,159 2,199 1%
Selling 12,796 9,048 3,748 41% 37,233 34,840 2,393 7%
Amortization 19,052 21,617 (2,565 ) (12)% 84,752 93,489 (8,737 ) (9)%
Marketing and promotion 12,999 7,800 5,199 67% 41,933 30,937 10,996 36%
Research and development 394 180 214 119% 635 682 (47 ) (7)%
Change in fair value of contingent consideration 1,000 292 708 242% (15,790 ) 855 (16,645 ) (1,947)%
Impairments NM 934,000 (934,000 ) (100)%
Other than temporary change in fair value of convertible notes receivable 64,954 (64,954 ) (100)% 42,681 246,330 (203,649 ) (83)%
Litigation costs, net of recoveries (188 ) 1,465 (1,653 ) (113)% 8,251 (505 ) 8,756 (1,734)%
Restructuring costs 6,833 (1,482 ) 8,315 (561)% 15,581 9,245 6,336 69%
Transaction costs (income), net 2,401 5,495 (3,094 ) (56)% 15,462 1,613 13,849 859%
Total operating expenses 98,876 157,143 (58,267 ) (37)% 398,096 1,516,645 (1,118,549 ) (74)%
Operating loss (16,526 ) (89,980 ) 73,454 (82)% (174,745 ) (1,369,685 ) 1,194,940 (87)%
Interest expense, net (9,456 ) (5,027 ) (4,429 ) 88% (36,433 ) (13,587 ) (22,846 ) 168%
Non-operating income (expense), net (17,022 ) (16,680 ) (342 ) 2% (37,842 ) (66,909 ) 29,067 (43)%
Loss before income taxes (43,004 ) (111,687 ) 68,683 (61)% (249,020 ) (1,450,181 ) 1,201,161 (83)%
Income tax (recovery) expense (27,629 ) 8,132 (35,761 ) (440)% (26,616 ) (7,181 ) (19,435 ) 271%
Net loss $ (15,375 ) $ (119,819 ) $ 104,444 (87)% $ (222,404 ) $ (1,443,000 ) 1,220,596 (85)%
Net loss per share - basic and diluted $ (0.04 ) $ (0.15 ) $ 0.11 (73)% $ (0.33 ) $ (2.35 ) $ 2.02 (86)%


Condensed Consolidated Statements of Cash Flows
For the twelve months
Ended May 31, Change % Change
(in thousands of US dollars) 2024 2023 2024 vs. 2023
Cash provided by (used in) operating activities:
Net loss $ (222,404 ) $ (1,443,000 ) $ 1,220,596 (85)%
Adjustments for:
Deferred income tax recovery (38,872 ) (31,953 ) (6,919 ) 22%
Unrealized foreign exchange (gain) loss 3,756 17,768 (14,012 ) (79)%
Amortization 126,913 130,149 (3,236 ) (2)%
Gain on sale of capital assets (4,198 ) (48 ) (4,150 ) 8,646%
Accretion of convertible debt discount 14,459 3,848 10,611 276%
Inventory valuation write down 55,000 (55,000 ) (100)%
Impairments 934,001 (934,001 ) (100)%
Other than temporary change in fair value of convertible notes receivable 42,681 246,330 (203,649 ) (83)%
Other non-cash items 13,626 11,406 2,220 19%
Stock-based compensation 31,769 39,595 (7,826 ) (20)%
Loss on long-term investments & equity investments 4,855 2,190 2,665 122%
(Gain) loss on derivative instruments 21,172 27,365 (6,193 ) (23)%
Change in fair value of contingent consideration (15,790 ) 855 (16,645 ) (1,947)%
Change in non-cash working capital:
Accounts receivable (6,575 ) 4,168 (10,743 ) (258)%
Prepaids and other current assets 13,069 3,122 9,947 319%
Inventory (15,578 ) (12,934 ) (2,644 ) 20%
Accounts payable and accrued liabilities 212 20,044 (19,832 ) (99)%
Net cash provided by (used in) operating activities (30,905 ) 7,906 (38,811 ) (491)%
Cash provided by (used in) investing activities:
Investment in capital and intangible assets (29,249 ) (20,800 ) (8,449 ) 41%
Proceeds from disposal of capital and intangible assets 8,509 4,304 4,205 98%
Disposal (purchase) of marketable securities, net 209,715 (241,897 ) 451,612 (187)%
Business acquisitions, net of cash acquired (60,626 ) (26,718 ) (33,908 ) 127%
Net cash provided by (used in) investing activities 128,349 (285,111 ) 413,460 (145)%
Cash provided by (used in) financing activities:
Share capital issued, net of cash issuance costs 8,619 129,593 (120,974 ) (93)%
Shares effectively repurchased for employee withholding tax (1,189 ) 1,189 (100)%
Proceeds from long-term debt 32,621 1,288 31,333 2,433%
Repayment of long-term debt (22,402 ) (21,336 ) (1,066 ) 5%
Proceeds from convertible debt 21,553 145,052 (123,499 ) (85)%
Repayment of convertible debt (107,330 ) (187,394 ) 80,064 (43)%
Repayment of lease liabilities (2,900 ) (1,114 ) (1,786 ) 160%
Net increase (decrease) in bank indebtedness (5,348 ) 5,258 (10,606 ) (202)%
Net cash provided by (used in) financing activities (75,187 ) 70,158 (145,345 ) (207)%
Effect of foreign exchange on cash and cash equivalents (549 ) (2,230 ) 1,681 (75)%
Net decrease in cash and cash equivalents 21,708 (209,277 ) 230,985 (110)%
Cash and cash equivalents, beginning of period 206,632 415,909 (209,277 ) (50)%
Cash and cash equivalents, end of period $ 228,340 $ 206,632 $ 21,708 11%


Net Revenue by Operating Segment
(In thousands of U.S. dollars) For the three
months
ended
May 31, 2024
% of Total Revenue For the three
months
ended
May 31, 2023
% of Total Revenue For the
year ended
May 31, 2024
% of Total Revenue For the
year ended
May 31, 2023
% of Total Revenue
Beverage alcohol business $ 76,739 33% $ 32,404 18% $ 202,094 25% $ 95,093 15%
Cannabis business 71,919 31% 64,413 35% 272,798 35% 220,430 35%
Distribution business 65,566 29% 72,612 39% 258,740 33% 258,770 41%
Wellness business 15,658 7% 14,759 8% 55,310 7% 52,831 9%
Total net revenue $ 229,882 100% $ 184,188 100% $ 788,942 100% $ 627,124 100%
Net Revenue by Operating Segment in Constant Currency
For the
three months
ended
May 31, 2024
For the
three months
ended
May 31, 2023
For the
year ended
May 31, 2024
For the
year ended
May 31, 2023
(In thousands of U.S. dollars) as reported
in
constant
currency
% of
Total
Revenue
as reported
in
constant
currency
% of
Total
Revenue
as reported
in
constant
currency
% of
Total
Revenue
as reported
in
constant
currency
% of
Total
Revenue
Beverage alcohol business $ 76,739 33% $ 32,404 18% $ 202,094 25% $ 95,093 15%
Cannabis business 72,577 31% 64,413 35% 274,763 35% 220,430 35%
Distribution business 69,209 29% 72,612 39% 259,671 33% 258,770 41%
Wellness business 15,689 7% 14,759 8% 55,533 7% 52,831 9%
Total net revenue $ 234,214 100% $ 184,188 100% $ 792,061 100% $ 627,124 100%
Net Cannabis Revenue by Market Channel
(In thousands of U.S. dollars) For the
three months
ended
May 31, 2024
% of
Total
Revenue
For the
three months
ended
May 31, 2023
% of
Total
Revenue
For the
year ended
May 31, 2024
% of
Total
Revenue
For the
year ended
May 31, 2023
% of
Total
Revenue
Revenue from Canadian medical cannabis $ 6,418 9% $ 6,080 9% $ 25,211 9% $ 25,000 11%
Revenue from Canadian adult-use cannabis 61,496 86% 58,256 90% 266,846 98% 214,319 97%
Revenue from wholesale cannabis 12,992 18% 750 1% 25,340 9% 1,436 1%
Revenue from international cannabis 13,110 18% 15,725 24% 53,295 20% 43,559 20%
Less excise taxes (22,097 ) (31)% (16,398 ) (24)% (97,894 ) (36)% (63,884 ) (29)%
Total $ 71,919 100% $ 64,413 100% $ 272,798 100% $ 220,430 100%
Net Cannabis Revenue by Market Channel in Constant Currency
For the
three months
ended
May 31, 2024
For the
three months
ended
May 31, 2024
For the
year ended
May 31, 2024
For the
year ended
May 31, 2024
(In thousands of U.S. dollars) as
reported
in
constant
currency
% of
Total
Revenue
as
reported
in
constant
currency
% of
Total
Revenue
as
reported
in
constant
currency
% of
Total
Revenue
as
reported
in
constant
currency
% of
Total
Revenue
Revenue from Canadian medical cannabis $ 6,447 9% $ 6,080 9% $ 25,441 10% $ 25,000 11%
Revenue from Canadian adult-use cannabis 61,826 85% 58,256 90% 269,534 98% 214,319 97%
Revenue from wholesale cannabis 13,092 18% 750 1% 25,651 9% 1,436 1%
Revenue from international cannabis 13,427 19% 15,725 24% 53,036 19% 43,559 20%
Less excise taxes (22,215 ) (31)% (16,398 ) (24)% (98,899 ) (36)% (63,884 ) (29)%
Total $ 72,577 100% $ 64,413 100% $ 274,763 100% $ 220,430 100%


Other Financial Information: Gross Margin and Adjusted Gross Margin
For the three months ended May 31, 2024
(In thousands of U.S. dollars) Beverage Cannabis Distribution Wellness Total
Net revenue $ 76,739 $ 71,919 $ 65,566 $ 15,658 $ 229,882
Cost of goods sold 35,907 43,087 57,750 10,788 147,532
Gross profit 40,832 28,832 7,816 4,870 82,350
Gross margin 53 % 40 % 12 % 31 % 36 %
Adjustments:
Purchase price accounting step-up 176 176
Adjusted gross profit 41,008 28,832 7,816 4,870 82,526
Adjusted gross margin 53 % 40 % 12 % 31 % 36 %
For the three months ended May 31, 2023
(In thousands of U.S. dollars) Beverage Cannabis Distribution Wellness Total
Net revenue $ 32,404 $ 64,413 $ 72,612 $ 14,759 $ 184,188
Cost of goods sold 15,838 24,955 65,866 10,366 117,025
Gross profit 16,566 39,458 6,746 4,393 67,163
Gross margin 51 % 61 % 9 % 30 % 36 %
Adjustments:
Purchase price accounting step-up 1,259 1,259
Adjusted gross profit 17,825 39,458 6,746 4,393 68,422
Adjusted gross margin 55 % 61 % 9 % 30 % 37 %
For the twelve months ended May 31, 2024
(In thousands of U.S. dollars) Beverage Cannabis Distribution Wellness Total
Net revenue $ 202,094 $ 272,798 $ 258,740 $ 55,310 $ 788,942
Cost of goods sold 113,522 182,594 230,596 38,879 565,591
Gross profit 88,572 90,204 28,144 16,431 223,351
Gross margin 44 % 33 % 11 % 30 % 28 %
Adjustments:
Purchase price accounting step-up 4,602 7,628 12,230
Adjusted gross profit 93,174 97,832 28,144 16,431 235,581
Adjusted gross margin 46 % 36 % 11 % 30 % 30 %
For the twelve months ended May 31, 2023
(In thousands of U.S. dollars) Beverage Cannabis Distribution Wellness Total
Net revenue $ 95,093 $ 220,430 $ 258,770 $ 52,831 $ 627,124
Cost of goods sold 48,770 162,755 231,309 37,330 480,164
Gross profit 46,323 57,675 27,461 15,501 146,960
Gross margin 49 % 26 % 11 % 29 % 23 %
Adjustments:
Inventory valuation adjustments 55,000 55,000
Purchase price accounting step-up 4,482 4,482
Adjusted gross profit 50,805 112,675 27,461 15,501 206,442
Adjusted gross margin 53 % 51 % 11 % 29 % 33 %


Other Financial Information: Adjusted Earnings Before Interest, Taxes and Amortization
For the three months
ended May 31,
Change % Change For the year
ended May 31,
Change % Change
(In thousands of U.S. dollars) 2024 2023 2024 vs. 2023 2024 2023 2024 vs. 2023
Net loss $ (15,375 ) $ (119,819 ) $ 104,444 (87)% $ (222,404 ) $ (1,443,000 ) $ 1,220,596 (85)%
Income tax (recovery) expense (27,629 ) 8,132 (35,761 ) (440)% (26,616 ) (7,181 ) (19,435 ) 271%
Interest expense, net 9,456 5,027 4,429 88% 36,433 13,587 22,846 168%
Non-operating income (expense), net 17,022 16,680 342 0,002% 37,842 66,909 (29,067 ) (43)%
Amortization 31,730 28,993 2,737 9% 126,913 130,149 (3,236 ) (2)%
Stock-based compensation 7,252 9,829 (2,577 ) (26)% 31,769 39,595 (7,826 ) (20)%
Change in fair value of contingent consideration 1,000 292 708 0,242% (15,790 ) 855 (16,645 ) (1,947)%
Impairments NM 934,000 (934,000 ) (100)%
Other than temporary change in fair value of convertible notes receivable 64,954 (64,954 ) (100)% 42,681 246,330 (203,649 ) (83)%
Inventory valuation adjustments NM 55,000 (55,000 ) (100)%
(Gain) loss on sale of capital assets - non-operating facility (3,987 ) (3,987 ) NM (3,987 ) (3,987 ) NM
Purchase price accounting step-up 176 1,259 (1,083 ) (86)% 12,230 4,482 7,748 173%
Facility start-up and closure costs 800 700 100 14% 2,100 7,600 (5,500 ) (72)%
Litigation costs, net of recoveries (188 ) 1,465 (1,653 ) (113)% 8,251 (505 ) 8,756 (1734)%
Restructuring costs 6,833 (1,482 ) 8,315 (561)% 15,581 9,245 6,336 69%
Transaction costs (income), net 2,401 5,495 (3,094 ) (56)% 15,462 1,613 13,849 859%
Adjusted EBITDA $ 29,491 $ 21,525 $ 7,966 37% $ 60,465 $ 58,679 $ 1,786 3%
For the three months
ended May 31,
Change % Change For the year
ended May 31,
Change % Change
(In thousands of U.S. dollars) 2024 2023 2024 vs. 2023 2024 2023 2023 vs. 2022
Net loss attributable to stockholders of Tilray Brands, Inc. $ (31,747 ) $ (138,713 ) $ 106,966 (77)% $ (244,981 ) $ (1,452,656 ) $ 1,207,675 (83)%
Non-operating income (expense), net 17,022 16,680 342 0,002% 37,842 66,909 (29,067 ) (43)%
Amortization 31,730 28,993 2,737 9% 126,913 130,149 (3,236 ) (2)%
Stock-based compensation 7,252 9,829 (2,577 ) (26)% 31,769 39,595 (7,826 ) (20)%
Change in fair value of contingent consideration 1,000 292 708 0,242% (15,790 ) 855 (16,645 ) (1,947)%
Impairments NM 934,000 (934,000 ) (100)%
Other than temporary change in fair value of convertible notes receivable, attributable to stockholders of Tilray Brands, Inc. 64,954 (64,954 ) (100)% 29,023 208,641 (179,618 ) (86)%
Inventory valuation adjustments NM 55,000 (55,000 ) (100)%
Facility start-up and closure costs 800 700 100 14% 2,100 7,600 (5,500 ) (72)%
Litigation costs, net of recoveries (188 ) 1,465 (1,653 ) (113)% 8,251 (505 ) 8,756 (1,734)%
Restructuring costs 6,833 (1,482 ) 8,315 (561)% 15,581 9,245 6,336 69%
Transaction costs (income), net 2,401 5,495 (3,094 ) (56)% 15,462 1,613 13,849 859%
Adjusted net income (loss) $ 35,103 $ (11,787 ) $ 46,890 (398)% $ 6,170 $ 446 $ 5,724 1,283%
Adjusted net income (loss) per share - basic and diluted $ 0.04 $ (0.02 ) $ 0.06 (321)% $ 0.01 $ $ 0.01 NM
Other Financial Information: Free Cash Flow
For the three months
ended May 31,
Change % Change For the year
ended May 31,
Change % Change
(In thousands of U.S. dollars) 2024 2023 2024 vs. 2023 2024 2023 2023 vs. 2022
Net cash provided by (used in) operating activities $ 30,707 $ 43,598 $ (12,891 ) (30)% $ (30,905 ) $ 7,906 $ (38,811 ) (491)%
Less: investments in capital and intangible assets, net (2,367 ) (10,277 ) 7,910 (77)% (20,740 ) (16,496 ) (4,244 ) 26%
Free cash flow $ 28,340 $ 33,321 $ (4,981 ) (15)% $ (51,645 ) $ (8,590 ) $ (43,055 ) 501%
Add: growth CAPEX 2,596 9,850 (7,254 ) (74)% 16,243 9,850 6,393 65%
Add: cash income taxes related to Aphria Diamond 5,085 (5,085 ) (100)% 16,333 17,855 (1,522 ) (9)%
Add: integration costs related to HEXO (325 ) (325 ) NM 25,630 NM
Adjusted free cash flow $ 30,611 $ 48,256 $ (17,645 ) (37)% $ 6,561 $ 19,115 $ (12,554 ) (66)%


Other Financial Information: Key Operating Metrics
For the three months
ended, May 31,
For the year ended
May 31,
(in thousands of U.S. dollars) 2024 2023 2022 2023
Net beverage alcohol revenue $ 76,739 $ 32,404 $ 202,094 $ 95,093
Net cannabis revenue 71,919 64,413 272,798 220,430
Distribution revenue 65,566 72,612 258,740 258,770
Wellness revenue 15,658 14,759 55,310 52,831
Beverage alcohol costs 35,907 15,838 113,522 48,770
Cannabis costs 43,087 24,955 182,594 162,755
Distribution costs 57,750 65,866 230,596 231,309
Wellness costs 10,788 10,366 38,879 37,330
Adjusted gross profit (excluding PPA step-up) 82,526 68,422 235,581 206,442
Beverage alcohol adjusted gross margin (excluding PPA step-up) 53 % 55 % 46 % 53 %
Cannabis adjusted gross margin (excluding PPA step-up) 40 % 61 % 36 % 51 %
Distribution gross margin 12 % 9 % 11 % 11 %
Wellness gross margin 31 % 30 % 30 % 29 %
Adjusted EBITDA 29,491 21,525 60,465 58,679
Cash and marketable securities as at the period ended: 260,522 448,529 260,522 448,529
Working capital as at the year ended: 378,540 340,050 378,540 340,050



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