Cannabis/Beer Company Tilray Outlines Plan To Reduce Its Beverage Portfolio, Reports Mixed Q2 Earnings

On Friday, Tilray Brands, Inc’s. TLRY second-quarter net revenue increased 9% year-over-year to $210.95 million, missing the consensus of $216.91 million.

On a constant currency basis, net revenue increased by 10%.

• Beverage alcohol net revenue increased 36% to $63 million.
• Cannabis net revenue was $66 million in the second quarter compared to $67 million in the prior year quarter.
• Distribution net revenue was $68 million in the second quarter compared to $67 million a year ago.
• Wellness net revenue increased 13% to $15 million.

Also Read: DEA Accused Of Bias In Cannabis Rescheduling Hearings: Weed Stocks Plummeted In 2024 As Process Drags On

Gross profit increased by 29% to $61 million in the second quarter compared to $47 million in the prior year quarter, with growth across all business segments. Gross margin expanded to 29% from 24% in the prior year quarter.

Adjusted gross profit increased by 20% to $63 million in the second quarter from $52 million in the prior year quarter.

Adjusted net loss per share was $(0.00) in both the second quarter and the prior year quarter compared to the consensus of $(0.04).

To streamline operations and boost profitability across its beverage brands, Tilray launched Project 420, which is expected to deliver $25 million in cost savings and synergies.

The beverage segment consists of a portfolio of over 20 beverage brands in different categories, including craft beer, spirits, and non-alcoholic options.

• As of the second quarter, Tilray achieved $17 million of the $25 million synergy plan.
• The company added that these savings are not completely offsetting our investment. As a result, Adjusted EBITDA for the three and six months was lower by $1.8 million and $3.2 million, respectively, due to SKU rationalization.
• Adjusted EBITDA in the second quarter was $9 million.
• Operating cash flow in the quarter was also lower due to these investments.
• For the fiscal year ended May 31, 2025, the cumulative impact of these initiatives is anticipated to result in a reduction of approximately $20 million in net sales, which is expected to be offset by the growth of new product innovation, including in new beverage categories and brand extensions, over the next 18 months.

Guidance: Tilray Brands reaffirmed its 2025 fiscal year guidance of net revenues of $950 million-$1 billion versus consensus of $904.85 million.

Price Action: TLRY stock is down 12.8% at $1.195 at last check Friday.

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