Beer Marketer's Insights - Canna/Beer Player Tilray Nudges Up Q2 Revenues While Rooting Out Costs; NAs a Focus as Hiball Energy Expands in US & Overseas

Cannabis-&-beer player Tilray Brands scored record revenues in its fiscal Q2 even as it continued to rationalize sprawling beer portfolio, navigate shifting regulatory winds in US and expand its presence in NA bevs. Net revenue edged up 3% to $217.5 mil. Gross margin narrowed to 26% from 29% a year earlier. Operating loss narrowed almost by half, to $22.3 mil from $42.2 mil. Note that while we follow NY- and Ontario-based co mainly for its cannabis bevs, NA bevs like Hiball Energy and hemp activities built around acquired Manitoba Hemp co, revenue stream currently is dominated by activities like growing, medical marijuana and distribution. Among key segments, Cannabis scored 3% net revenue gain to $67.5 mil on 36% gain in international markets like Germany and 6% gain in Canadian adult-use market, offset by reduced sales to Canadian wholesale sector as co redeploys inventory to higher-margin overseas markets. Gross margin widened to 39% from 35%.Beverage segment comprised mainly of acquired craft beer marques like Sweetwater, Montauk and 10 Barrel declined 20.6% to $50.1 mil as lift from acquired Molson Coors brands cycled out and co continued with rationalization program. That program dubbed Project 420 has delivered $27 mil in annualized cost savings in first half of fiscal year, well on way to $33 mil target. Gross margin narrowed to 31% from 40%. Tilray CEO Irwin Simon reminded listeners yesterday afternoon that in just 5 years Tilray has vaulted into becoming #4 craft player in US and has had lotsa housekeeping to do integrating acquisitions.Wellness segment built around acquired Manitoba Hemp co was flat at $14.6 mil, with growth in Hiball Energy and ingredients like hemp protein and hemp oil offset by weakness in club channel. Gross margin widened to 32% from 31% "as we successfully managed input costs and enhanced operational efficiencies," CFO Carl Merton said. Tho co's bev portfolio tilts heavily to craft beer, Simon emphasized crucial role NAs like Hiball Energy and Liquid Love sparkling water will play both in US and overseas. Recently restaged Hiball will be expanding in US this year and launching in UK in fiscal Q4 this spring, "with expansion plans also underway for the Middle East and Africa." Tho recent US legislation threw a wrench into the works for intoxicating segments like D9 bevs, CEO Simon reminded that co's hemp food biz "remains fully insulated from proposed hemp THC regulation, as these products contain zero THC and are broadly distributed across mainstream retail."Like other marketers of hemp-based Delta-9 THC bevs operating in US, Tilray is not backing off in face of federal uncertainty. "We continue to offer Fizzy Jane Happy Flower hemp-derived THC beverages in 5 mg and 10 mg formats through nationwide retailer partnerships," including Total Wine, liquor and grocery outlets, per CEO. "While regulatory changes may affect HD9 products after 2026, we anticipate compliant participation under new federal laws if it happens." Simon told questioner that in lobbying for favorable outcome, he's not encountering many opponents beyond Sen Mitch McConnell and his backers. He's hopeful that feds will end up maintaining legality of D9 in exchange for sensible compromises like 5 mg or 10 mg dosage limit.Bullish on Rescheduling Move; 'Thank You, Trump' On investor call Simon betrayed no signs that he's less bullish on cannabis bev sector, given timeline industry has to try to reverse legislation and the number of jobs at stake in weakening economy. "I&#39;m not making projections, but if I could sell cannabis-infused drinks in the US tomorrow, if I look what I have a 50% share in Canada, and I multiply that from 10 times what I would have here, it&#39;s a $500 million business for us here. And someday, we&#39;re going to be able to sell drinks in the US infused with something. Whether it&#39;s CBD and cannabis in regards to President Trump's new rescheduling in regards to drinks that will get approved by the FDA for whether it&#39;s for anxiety, for pain, for sleep, etc," he said. At another point he declared: "The decision by President Trump to federally reschedule cannabis in the US represents one of the most consequential regulatory shifts the industry has seen in decades. Thank you, President Trump, if you&#39;re listening today."Interestingly, Simon threw down the gauntlet at Canadian regulators, saying they need to update their own regs or risk being left behind. "With rescheduling of cannabis in the US, now is the time for Canada to modernize its regulation and secure its position as a global cannabis leader, including excise tax reform, marketing flexibility, healthcare integration and on-premise consumption. Without modernization, Canada risks becoming an exporter of raw products while value creation, intellectual property and long-term economic growth move elsewhere . . . Prime Minister, Carney, I hope you&#39;re listening to this call." Among his asks: allowing cannabis bevs to be sold in liquor stores and on-premise. (We got assist from Yahoo transcript in writing this story.)

Canna/Beer Player Tilray Nudges Up Q2 Revenues While Rooting Out Costs; NAs a Focus as Hiball Energy Expands in US & Overseas

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