• Revenue growth and 16th consecutive quarter of positive Adjusted EBITDA
• Further growth planned
• Completed final agreement on HEXO purchase
Tilray makes slightly more revenue in the third quarter
On Monday evening, the cannabis company Tilray published its figures for the third quarter of the 2023 fiscal year, which ended on February 28, 2023. Tilray reported net sales of $145.6 million in the current quarter, up from $144.1 million in the previous quarter. The sales revenue increased, as the company announced, compared to the same period last year by five percent to 65.4 million US dollars. The company posted a gross loss of $11.7 million while adjusted gross profit was $44.3 million. The gross margin was minus eight percent. Adjusted gross margin, meanwhile, rose to 30 percent from 26 percent in the prior-year quarter. Adjusted EBITDA was $14 million, marking Tilray’s 16th consecutive quarter of positive Adjusted EBITDA. The company currently expects Adjusted EBITDA to be in the range of $60 million to $66 million — an increase of more than 30 percent year-over-year. Tilray cited strong financial position of $408.3 million in cash and marketable securities and reiterated expectations to deliver positive free cash flow from operating segments in fiscal 2023.
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“During the quarter, we continued to focus on our highest priorities: sustaining and growing revenue across all core markets and regions while optimizing the platform to deliver positive free cash flow readings on an accelerated timeline. We are working on on both fronts, delivering revenue growth and our 16th consecutive quarter of positive Adjusted EBITDA despite challenging market dynamics in Canada, Europe and the US.”, quoted Tilray Chairman and Chief Executive Officer Irwin D. Simon.
Final HEXO Purchase Agreement Completed
Despite the ongoing difficult conditions in the cannabis market, Tilray has maintained its leading position by market share in Canada. And the company plans to keep growing: In addition to releasing its quarterly results, Tilray announced it has entered into a definitive agreement to acquire HEXO — one of the largest licensed cannabis companies in Canada — for a total purchase price of approximately $56 million. Closing of the agreement is subject to customary and negotiated closing conditions, including HEXO shareholder approval and court approval, and is expected to close in June 2023.
The acquisition builds on the successful strategic alliance between the two companies, according to Tilray. Tilray expects to significantly strengthen its position by adding HEXO’s leading high-growth brands and “expects that the combined company will complement Tilray’s existing Canadian position with a pro forma 12.9% market share and market position #1 in all major markets and a leading share in most product categories,” according to the company’s press release.
Management confident about the future together
Commenting on the earnings release and HEXO acquisition announcement, Tilray CEO Irwin D. Simon said, “As we look forward, we are focused on being the leading and most diversified cannabis lifestyle and CPG company in the world. Our Strategy to achieve this vision is focused on pursuing targeted growth opportunities as reflected in our opportunistic acquisitions of Montauk Brewing Company and HEXO, which have made significant strides in increasing operational efficiencies and improving profitability while continuing to grow into industry-leading brands invest.” Tilray is pleased that the joint perspective is progressing and expects a seamless integration of HEXO’s business into Tilray’s platform. “At the same time, we will continue our relentless focus on cost and operational efficiencies and strengthen our industry-leading balance sheet to deliver sustainable, profitable growth and shareholder value,” said Simon.
HEXO is also confident about the takeover by Tilray. “Over the past year, HEXO has created and executed a rigorous cost reduction and balance sheet optimization plan. When we began working with Tilray last year, the value that could be realized by combining our businesses to be competitive and drive profitable growth on the strong fragmented Canadian market becomes immediately clear,” said Mark Attanasio, Chairman of HEXO. Given recent industry headwinds, HEXO’s board of directors decided that shareholders would benefit from being part of Tilray’s business and its strong plans. “With Irwin and his leadership team, we are confident that our brands will continue to grow and thrive as part of Tilray Brands,” said Attanasio.
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