What happened
Shares of Tilray Brands (TLRY +1.40%) were trading 17% higher as of 2:14 p.m. ET Wednesday after the marijuana company reported a mixed-bag quarterly report before the session opened.
For the company's fiscal 2023 fourth quarter, which ended May 31, analysts had forecast only $153.7 million in sales, but Tilray actually reported sales of $184 million. On the other hand, Wall Street only expected Tilray to lose $0.05 per share -- and it actually lost $0.15 per share.
NASDAQ: TLRY
Key Data Points
So what
Investors seem to be focusing more on the revenue story than the wider than expected loss, but even the earnings news wasn't all bad. In fiscal Q4, Tilray grew its revenues by 20% year over year, setting a record for quarterly sales and strengthening its position as the No. 1 cannabis company in Canada by market share.
The company recorded a 37% gross profit margin for the quarter, with profit margins especially strong in cannabis (61%) and alcohol (51%), while distribution margins improved to a still-low 9%. The company still lost $120 million, but this was a big improvement over last year's fiscal Q4 loss of $458 million.
Perhaps best of all, Tilray says it succeeded in generating positive operating cash flow of $44 million for the quarter, positive operating cash flow of $8 million for the year -- and positive adjusted free cash flow across all operating segments in fiscal 2023.
Now what
Now don't get too excited. Tilray still lost $1.4 billion in its fiscal 2023, and its (presumably unadjusted) free cash flow was negative $12.9 million. So Tilray is still losing money and burning cash. Nor is management promising either of these conditions will change in the new fiscal year.
Turning to guidance, Tilray said it expects to report growth in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- with no mention of positive GAAP profits -- and to continue reporting positive adjusted free cash flow. But as we saw in fiscal 2023, that doesn't mean that actual free cash flow will be positive.
Without having positive numbers for net income or free cash flow to hang a valuation on, it's still hard to say whether Tilray is correctly priced. But things do appear to be looking up for the company. Investors buying the stock on this news may be making the right call.
