Tilray Brands Q1 Earnings Call Highlights

Key Points

• Record revenue and gross profit: Tilray’s first-quarter revenue rose 23% year over year to $257.1 million, while gross profit increased 35% to $77.5 million, supported by the BrewDog acquisition, international cannabis growth and pharmaceutical distribution.
• BrewDog drove beverage growth: Beverage revenue surged 82% to $101.5 million, and BrewDog became profitable during the quarter as Tilray cut costs and streamlined operations.
• Mixed outlook and financial priorities: Despite stronger margins, Tilray reported a $40 million net loss and lower adjusted EBITDA of $9.2 million. Management reaffirmed fiscal 2027 adjusted EBITDA guidance of $68 million to $75 million and is prioritizing debt reduction, cannabis-margin expansion and second-half growth.

Tilray Brands NASDAQ: TLRY reported record first-quarter revenue and gross profit, driven by its BrewDog acquisition, international cannabis growth and pharmaceutical distribution operations, while reaffirming fiscal 2027 adjusted EBITDA guidance of $68 million to $75 million.

Net revenue rose 23% year over year to $257.1 million, while gross profit increased 35% to $77.5 million. Consolidated gross margin expanded by about 300 basis points to 30%, CFO Carl Merton said during the company’s earnings call.

The company reported a net loss of $40 million, compared with net income of $1.5 million in the prior-year quarter. Tilray said its adjusted net loss, excluding non-cash and non-recurring items, was $3 million, including roughly $5 million of net cash interest expense. Adjusted EBITDA was $9.2 million, down from $10.2 million a year earlier.

International cannabis grows as total cannabis revenue declines

International cannabis revenue increased 21% to $16.2 million, supported by patient demand in Germany and contributions from U.K.-based patient access business Lyphe. Tilray said EMEA revenue, including medical cannabis, beverage and pharmaceutical distribution, rose more than 70% during the quarter.

Total cannabis revenue, however, declined to $56.1 million from $64.5 million a year earlier. Merton said the company prioritized profitable international opportunities over lower-return volume. Tilray also redirected approximately one metric ton of inventory, representing $1.1 million of potential Canadian revenue, to international markets.

Cannabis gross margin rose to 39% from 36%, aided by operating efficiencies, product mix improvements in Canada and greater use of the company’s Portugal facility. Those gains partly offset $8.8 million in international cannabis price compression, according to Merton.

Management said its Portugal cultivation operation has reduced operating and cultivation costs by about 40% while improving strains and potency. Tilray expects the facility to produce more than 40 metric tons of flower at full capacity during fiscal 2027. Its Aphria RX operation in Germany is operating at full capacity, the company said.

Tilray said its CC Pharma distribution business offers access to more than 16,000 pharmacies and serves as a connector between pharmaceutical distribution, medical cannabis and patient access in Europe. Distribution revenue rose 14% to $84.3 million, while segment gross margin remained 11%.

BrewDog lifts beverage revenue and margins

Beverage revenue increased 82% year over year to $101.5 million, including $55.9 million of incremental revenue from BrewDog. Beverage gross margin expanded by approximately 300 basis points to 41%.

Management said BrewDog became profitable in the first quarter after Tilray stabilized operations, reduced costs, renegotiated or avoided certain leases and moved away from unprofitable activities. The company also cited a favorable summer period for its retained bars and pubs, along with improving brand sales following new marketing campaigns.

“The budget for this year is profitability and some good profitability coming from BrewDog,” management said in response to an analyst question.

Tilray said BrewDog’s Punk IPA sales at its top six off-trade retailers were up 187% over the prior-year period in the two weeks following the rollout of its latest campaigns. BrewDog also added more than 9,000 distribution points for a new craft beer product and signed eight on-trade partnerships across entertainment, sports, pubs and hotels, according to the company.

In the U.S., Tilray said it continues to rationalize beer brands and SKUs, consolidate brewery operations and focus on priority channels, retailers and distributors. Management said the legacy U.S. craft beverage business would have posted a revenue decline excluding BrewDog because of those rationalization efforts.

The company cited Circana data for the 14 weeks ended Aug. 30 showing Tilray was the No. 2 craft vendor in Georgia and the West and No. 4 in New York state. It said SweetWater represented 12% of craft beer sales in Georgia.

Tilray also highlighted its multiyear agreement with Carlsberg Group. Beginning Jan. 1, 2027, Tilray expects to produce, market, sell and distribute Carlsberg Elephant 1664 and Kronenbourg 1664 Blanc throughout the United States. Management described the arrangement as a profit-sharing venture and said all Carlsberg products covered by the agreement would be produced in Tilray’s U.S. facilities.

Balance sheet and outlook

Tilray ended the quarter with approximately $221 million in cash, restricted cash and marketable securities. The company retired $24 million of principal during the quarter and another $12 million after the quarter ended, leaving $52 million outstanding, Merton said.

The company raised a modest amount through its at-the-market program and had $70 million of remaining availability. Merton said BrewDog did not require cash injections during the quarter and was self-financing after an initial funding period tied to its payment cycle.

Wellness revenue was relatively stable at $15.3 million. Merton said segment margin pressure reflected a one-time shortage of organic hemp seed that affected the company’s e-commerce product mix.

Looking ahead, management said it expects fiscal-year results to be more heavily weighted toward the second half because of seasonality across beverage, cannabis and distribution. The company said its priorities include expanding cannabis margins through cultivation efficiencies and international scale, integrating BrewDog, optimizing its beverage manufacturing footprint, preparing for the Carlsberg transition and reducing debt and interest costs.

“Market conditions remain mixed across several categories,” Merton said, but he added that Tilray remains focused on “disciplined execution, profitable growth, and building a stronger global platform.”

About Tilray Brands (NASDAQ:TLRY)

Tilray Brands, Inc is a global consumer packaged goods company focused on cannabis, beverage alcohol, wellness and consumer products. The company develops, produces, distributes and markets a range of cannabis products, including dried flower, pre-rolls, vapes, edibles and medical cannabis products, subject to applicable regulations in the markets it serves.

Tilray also operates beverage alcohol businesses, including craft beer, spirits and other alcoholic beverages. Its portfolio has included brands such as SweetWater Brewing Company, Montauk Brewing Company and Breckenridge Distillery.

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