Mr. Irwin Simon reports

TILRAY BRANDS REPORTS RECORD FINANCIAL RESULTS, ACHIEVES 26% NET REVENUE GROWTH

Tilray Brands Inc. has released the financial results for its fourth quarter and fiscal year ended May 31, 2024. Dollar amounts are in U.S. dollars unless otherwise noted.

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-per-cent 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 approximately $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 fifth-largest craft brewer and Tilray Wellness is the leader in hemp products. In Canada, Tilray Cannabis holds the No. 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."

Financial highlights -- 2024 fiscal fourth quarter:

• Net revenue increased 25 per cent to $229.9-million in the fourth quarter, compared with $184.2-million in the prior-year quarter.
• Gross profit was $82.4-million in the fourth quarter, compared with $67.2-million in the prior-year quarter. Gross margin and adjusted gross margin were both 36 per cent.
• Beverage-alcohol net revenue increased 137 per cent 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 the company's Craft Acquisition brands:
  • Beverage-alcohol gross profit increased 146 per cent to $40.8-million in the fourth quarter from $16.6-million in the prior-year quarter. Adjusted beverage-alcohol gross profit increased 130 per cent to $41.0-million from $17.8-million in the prior-year quarter.
  • Beverage-alcohol gross margin increased to 53 per cent in the fourth quarter, compared with 51 per cent in the prior-year quarter, and adjusted gross beverage alcohol margin was 53 per cent in the fourth quarter, compared with 55 per cent in the prior-year quarter.
• Cannabis net revenue increased 12 per cent to $71.9-million in the fourth quarter, compared with $64.4-million in the prior-year quarter, driven in part by the acquisitions of Hexo and Truss:
  • Cannabis gross profit and adjusted gross profit decreased to $28.8-million in the fourth quarter from $39.5-million in the prior-year quarter.
  • Cannabis gross margin and adjusted gross margin were 40 per cent in the fourth quarter compared with 61 per cent 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 with $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 gross margin increasing to 12 per cent in the fourth quarter, compared with 9 per cent in the prior-year quarter.
• Wellness net revenue increased 6 per cent 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 with a net loss of $119.8-million in the prior-year quarter, almost all of which is a result of non-cash expenses. Adjusted net income was $35.1-million in the fourth quarter, compared with a loss of $11.8-million in the prior-year quarter
• Net loss per share narrowed to four cents, compared with 15 cents in the prior-year quarter. Adjusted net income per share was four cents, compared with a loss of two cents in the prior-year quarter.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased 37 per cent to $29.5-million in the fourth quarter, compared with $21.5-million in the prior-year quarter.

Financial highlights -- 2024 fiscal year:

• Net revenue increased 26 per cent to $788.9-million in fiscal 2024, compared with $627.1-million in the prior fiscal year.
• Gross profit was $223.4-million, while adjusted gross profit increased 14 per cent to $235.6-million in fiscal 2024. Gross margin was 28 per cent and adjusted gross margin was 30 per cent.
• Beverage-alcohol net revenue increased 113 per cent to $202.1-million in fiscal 2024 from $95.1-million in the prior fiscal year:
  • Beverage-alcohol gross profit increased 91 per cent to $88.6-million in fiscal 2024 from $46.3-million in the prior fiscal year. Adjusted beverage-alcohol gross profit increased to $93.2-million from $50.8-million in the prior fiscal year.
  • Beverage-alcohol gross margin was 44 per cent in fiscal 2024, compared with 49 per cent in the prior fiscal year, and adjusted gross beverage alcohol margin was 46 per cent in fiscal 2024, compared with 53 per cent in the prior fiscal year, reflecting lower contribution margins from the acquired brands.
• Cannabis net revenue increased 24 per cent to $272.8-million in fiscal 2024, compared with $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 profit was $97.8-million, compared with $112.7-million in the prior fiscal year, as a result of the advisory service agreement concluding in the first quarter (Q1) of fiscal 2024.
  • Cannabis gross margin was 33 per cent in fiscal 2024, compared with 26 per cent in the prior fiscal year. Adjusted cannabis gross margin was 36 per, cent compared with 51 per cent in the prior fiscal year.
• Distribution net revenue and gross margin remained consistent at approximately $259-million and 11 per cent in fiscal 2024, compared with the prior fiscal year.
• Wellness net revenue increased 5 per cent to $55.3-million in fiscal 2024 from $52.8-million in the prior fiscal year:
  • Wellness gross margin was 30 per cent in fiscal 2024, compared with 29 per cent in the prior fiscal year.
• Net loss decreased to $222.4-million in fiscal 2024, compared with a 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 33 cents and improved compared with a net loss of $2.35 in the prior fiscal year.
• Adjusted net income increased to $6.2-million in fiscal 2024, compared with an adjusted net income of $400,000 in the prior fiscal year. Adjusted net income per share narrowed to one cent, compared with nil in the prior fiscal year.
• Adjusted EBITDA increased to $60.5-million in fiscal 2024, compared with $58.7-million in the prior fiscal year.
• Strong financial liquidity position of approximately $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 with the previous fiscal year.
• Net cash used in operating activities was $30.9-million in fiscal 2024, compared with $7.9-million of net cash from operating activities in the prior year.
• Adjusted free cash flow was $6.6-million in fiscal 2024, compared with $19.1-million in the prior year.

Live audio 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. A replay will be available and archived on the company's website.

About Tilray Brands Inc.

Tilray 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 and 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.

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