TLRY Earnings
With CA cannabis Gross margins in significant decline, cost-cutting is front and center. Irwing is known for buying and cutting, not buying and building brands. I suspect the new incremental cost synergies are not coming from the Aphria-Tilray combination but the more recent acquisitions.
TLRY reports 2Q22 revenue of $155.2M vs FactSet $170.5M, but net income net income of $5.8M vs FactSet ($38.6M) and EPS ($0.00) vs FactSet ($0.09). The sales miss an earnings beat was due to cost-cutting or said another way Irwin is not reinvesting behind the business he is buying. Cost synergies from Aphria-Tilray combination of $70M achieved on a run-rate basis to date, with actual cash-savings close to $36M. The company said it expects to reach the $80M synergy target ahead of schedule and generate an additional $20M in FY23. The company also announced a new parent name, Tilray Brands, Inc., reflecting the company's evolution from a Canadian LP to a global consumer packaged goods company.
TLRY key operating metrics:
Revenue:
- Cannabis $58.8M vs FactSet $66.6M
- Distribution $68.9M vs FactSet $69.4M
- Beverage alcohol $13.7M vs FactSet $15.4M
- Wellness $13.8M vs FactSet $16.2M
Adjusted gross margin 29.0% vs FactSet 29.9%
- Distribution 11.0%
- Cannabis 43.0%
- Beverage alcohol 57.0%
- Wellness 28.0%
Adjusted EBITDA margin 8.9% vs StreetAccount 7.4%
AXIOS Story on Mexico
Indigenous communities in Oaxaca, Mexico, are replacing corn crops with cannabis in anticipation of marijuana being legalized in the country.
Ten communities in the sierra formed the collective Oaxaca Highlands and are in the process of obtaining growing permits.
- They plan to use the plant to sell products containing CBD, dishes flavored with cannabis seed, and clothes and beer made with hemp.
- A Mexican Supreme Court decision last year eased the rules for receiving licenses to grow medicinal cannabis, which is legal.
- A national bill that would decriminalize cannabis for recreational purposes has been approved by the lower house and a Senate vote is anticipated for the legislative period that starts in February.
The Oaxacan growers say there is Indigenous vindication in growing the cannabis themselves and profiting directly.
- The Oaxaca and Guerrero highlands have for many years been exploited by drug-trafficking organizations that force local residents to tend drug crops for them and to pick opium poppy for heroin sold in the U.S.
- That created a stigma against Indigenous peoples who grew marijuana, despite records of native groups having done so for traditional and medicinal purposes since the 16th century.
- The collective hopes the permits will help to generate legal job opportunities so fewer Oaxacans will need to migrate north.
