Tilray reported fourth-quarter results after the close Wednesday that beat some expectations, and the Canadian cannabis producer became the rare weed company to deliver on its profitability goals.
The results sent Tilray stock and other marijuana stocks higher after hours, after whiplashing higher and lower during the week.
The company reported after announcing plans to merge with rival Aphria and expanding in Europe. The report also follows a massive cannabis stocks rally driven by U.S. legalization hopes and, potentially, a bigger retail-investor push spurred in part by the Reddit board WallStreetBets.
Tilray Earnings
Tilray said it delivered $2.2 million in adjusted EBITDA during the quarter. In November, it projected as much, that it was "poised" to push the metric into positive territory in the fourth quarter.
EBITDA stands for earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA accounts for other financial adjustments.
When measured on a per-share basis, the company still lost money. Tilray lost two cents per share, narrower than the 14-cent per-share loss forecast by Wall Street.
Revenue came in at $56.6 million, up 20.5% from a year ago and 10% from the prior quarter. That was above Zacks estimates for $55.55 million. But they missed others.
Cannabis sales rose 46% to $41.2 million, helped by international medical sales and Canadian recreational sales. Recreational sales in Canada rose 49%. International medical sales jumped 191%.
Selling prices for Tilray's weed jumped from a year ago, amid a shift to more potent recreational products and the popularity of products like vapes and edibles. However, those prices fell from the third quarter, due to "the accelerated sales growth of cannabis flower products in the Canadian Adult-Use channel."
Hemp sales fell 18%, largely due to "a shift to private label product with a large customer and the impact of COVID-related changes to consumer shopping patterns."
Canada's legal marijuana industry faces competition from the illicit market and a a crowded space of legal operators. Tilray's market share stands at around 4%, according to estimates from Stifel. Aphria had the largest share, at a bit more than 12%.
Tilray has tried to increase sales via its Canadian recreational business and expand its medical business in Europe. It also owns Manitoba Harvest, which sells products like hemp granola and protein powders, as well as extracts with CBD.
However, Tilray has become more cautious on selling CBD in the U.S., saying the regulatory guidelines need to be clearer. Restrictions related to the coronavirus pandemic have also kept people out of retail stores that sell CBD products.
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Tilray Stock
Shares rose 9% after hours in the stock market today, after finishing 9% lower during the day. The stock jumped 19% on Tuesday.
Tilray stock has a 68 Composite Rating and a 23 EPS Rating. Shares were above their 50-day and 200-day lines, but remained volatile.
After the bell, Canopy Growth rose 1.95%. Aurora Cannabis gained 4.4%. Aphria swept 11% higher. Cronos Group rose 3.8%.
Last Tuesday, Canopy Growth reported a big quarterly loss but forecast positive adjusted EBITDA in the second half of 2022. Later in the week, Aurora reported a steeper loss than expected, as it tries to shift its focus toward more premium weed offerings.
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In recent weeks, Tilray has landed deals to supply medical cannabis in France, Portugal and the UK. It also sent its first medical cannabis products to Spain. However, it has warned that business in Europe could be shaky due to coronavirus restrictions.
And as Tilray tries to contain losses and debt, some marijuana stock analysts have wondered what Aphria stands to gain from the merger deal.
Even as marijuana stocks rose this year, analysts have said the Canadian industry's path to the full U.S. legal market, which would include CBD and THC products, is narrow.
Sweeping nationwide legalization could be years away in the U.S. Canada's marijuana industry is still losing money. Operating in the U.S. would require cultivation and production infrastructure. U.S. operators like Curaleaf and Green Thumb Industries have already built up a sizable presence in legal states.
