Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries CORRECTION--Tilray Brands Reports Third Quarter Fiscal Year 2023 Financial Results and Announces Accretive Acquisition of 100% of HEXO Corp. By: Tilray Brands, Inc. via GlobeNewswire April 10, 2023 at 18:06 PM EDT Delivered $145.6 Million in Net Revenue and 16th Consecutive Quarter of Positive Adjusted EBITDA Maintained #1 Cannabis Market Share Position in Canada, the Largest Federally Legal Cannabis Market in the World; With HEXO Transaction, Poised to Substantially Increase Canadian Revenue Medical Cannabis Leader in Europe Achieved Key Efficiency Milestones on Accelerated Path to Positive Cash Flow, Company Reiterates Cash Flow Guidance LEAMINGTON, Ontario and NEW YORK, April 10, 2023 (GLOBE NEWSWIRE) -- In a release issued under the same headline earlier today by Tilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), please note that the first table, the Consolidated Statement of Financial Positions was missing the entry for “Contingent consideration” under “Long-term liabilities.” In addition, the table “Other Financial Information: Adjusted Earnings Before Interest, Taxes and Amortization” was missing the entry “Inventory valuation adjustment.” The corrected release follows: Tilray Brands, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY; TSX: TLRY), a leading global cannabis-lifestyle and consumer packaged goods company inspiring and empowering the worldwide community to live their very best life, today reported financial results for the third fiscal quarter ended February 28, 2023. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated. Tilray also announces today that it entered into a definitive agreement to acquire HEXO Corp. (NASDAQ: HEXO; TSX: HEXO) for an aggregate purchase price of approximately US$56 million, to be satisfied through the issuance of 0.4352 of Tilray Common Stock for each outstanding HEXO share. The acquisition, which is structured as an arrangement under applicable Canadian laws (the “Arrangement”), builds on the successful strategic alliance between the two companies and positions Tilray for continued strong growth and market leadership in Canada, the largest federally legal cannabis market in the world. The completion of the Arrangement is subject to customary and negotiated closing conditions, including HEXO shareholder approval and court approval, and is expected to close in June 2023. Further information about the HEXO transaction is included in an investor presentation available on the investor section of Tilray.com and in our Current Report on Form 8-K filed today. Financial Highlights Net revenue increased to $145.6 million compared to $144.1 million in the prior quarter. On a constant currency basis, net revenue was $154.2 million in the third quarter of 2023, up 2% from the prior year quarter.Distribution revenue increased 5% to $65.4 million, from the prior year quarter. On a constant currency basis, distribution revenue increased 12% to $70.1 million.Gross Profit (Loss) was ($11.7) million, while adjusted gross profit was $44.3 million. Gross margin was negative 8%, while adjusted gross margin rose to 30% from 26% in the year-ago quarter.Adjusted cannabis gross profit increased to $22.2 million from $18.0 million in the prior year quarter, while adjusted gross margin percentage increased to 47% from 33%.Achieved $22 million in annualized run-rate savings (and $12 million in actual cost savings) as part of $30 million cost optimization plan announced in Q4 of 2022; total annualized cash cost-savings since the closing of the Tilray-Aphria transaction reached $122 million.Adjusted EBITDA of $14.0 million, marking 16th consecutive quarter of positive adjusted EBITDA. Currently expecting Adjusted EBITDA in the range of $60 to $66 million, a greater than 30% increase from the prior year.Strong financial position with $408.3 million in cash and marketable securities.Reiterated expectation to deliver positive free cash flow from operating segments in fiscal 2023.Recorded non-cash $1.1 billion net asset reduction resulting from higher interest rates and a decline in market capitalization. This non-cash net asset reduction has no impact on the Company’s compliance with debt covenants, its cash flows or available liquidity. Irwin D. Simon, Tilray Brands’ Chairman and Chief Executive Officer, stated, “During the quarter, we continued to focus on our highest priorities: sustaining and growing the top-line across core markets and geographies while optimizing the platform to achieve positive free cash flow on an accelerated timeline. We are executing on both fronts and delivered revenue growth despite challenging market dynamics across Canada, Europe, and the U.S, as well as our 16th consecutive quarter of positive adjusted EBITDA.” Mr. Simon continued, “Looking ahead, we are focused on being the leading, most diversified cannabis lifestyle and CPG company in the world. Our strategy to deliver on this vision is centered on pursuing targeted growth opportunities, as reflected in our opportunistic acquisitions of both Montauk Brewing Company and HEXO, which has made significant strides in driving operating efficiency and improving profitability while continuing to invest in industry-leading brands. We are incredibly excited about our combined prospects moving forward with HEXO and expect a seamless integration of HEXO’s business into our efficient, built-to-last platform. At the same time, we will continue our relentless focus on cost and operational efficiencies and strengthening our industry-leading balance sheet to deliver sustained, profitable growth and shareholder value.” Mark Attanasio, Chairman of HEXO, said, “Over the past year, HEXO established and has been executing on a rigorous cost-cutting and balance sheet optimization plan. As we began working with Tilray last year, the value that could be achieved through the combination of our businesses in order to compete and drive profitable growth in the highly fragmented Canadian market was immediately clear. With the recent headwinds in the cannabis industry, our Board determined that HEXO shareholders would benefit from being part of Tilray’s diversified business and from the strong plan in place they have to reinforce their industry leadership, continue to strengthen the top and bottom lines, and to drive value creation. With Irwin and his leadership team, we are confident that our brands will continue to grow and thrive as part of Tilray Brands.” Operating Highlights Leadership in Global Cannabis Operations, Brands, and Market Share: In Canada, despite ongoing challenging cannabis market conditions, quarter over quarter, Tilray maintained its #1 cannabis market share position. With the addition of HEXO’s leading high-growth brands, the Company expects to significantly bolster its position supported by low-cost operations and complimentary distribution across all Canadian geographies. The combined company is expected to strengthen Tilray’s existing Canadian position with 12.9% pro-forma market share and #1 market position across all major markets and a leading share across most product categories. This includes anticipated pro-forma net sales of approximately US$215M and the leading low-cost operations with distribution across all Canadian geographies.Capitalizing on the unrivaled platform provided by its cultivation and distribution operations across Portugal and Germany and the leadership team’s depth of commercial and regulatory expertise, Tilray is focused on growing its leading market share in medical cannabis in the countries in which it distributes today and achieving early-mover advantage in new countries as cannabis legalization continues to proliferate across Europe. Maximizing the High-Growth Potential of U.S. CPG and Craft-Beverage Portfolio: In the third quarter, Tilray made substantial strides across its five craft-beverage brands including leaders SweetWater Brewing Company, Breckenridge Distillery, and Montauk Brewing Company, and its wellness brand Manitoba Harvest. By expanding recognition and distribution, Tilray will be well positioned to immediately leverage these brands to drive significant additional revenue in adult-use cannabis, pending federal legalization. Strategic Growth Actions April 2023 – Tilray Medical Expands Footprint in Europe and Broadens Distribution Across the Czech RepublicApril 2023 – SweetWater Brewing Company Expands Across 44 States with Nevada LaunchApril 2023 - Manitoba Harvest Expands Whole Foods Market DistributionApril 2023 - Breckenridge Distillery Wins Big at Whisky Magazine’s 2023 World Whiskies AwardsMarch 2023 - Alpine Beer Opens Taproom at Petco Park Stadium in San DiegoMarch 2023 - Breckenridge Distillery Establishes March 31st as National Après DayMarch 2023 - Montauk Brewing Expands Distribution Across the NortheastMarch 2023 - Tilray Brands Stockholders Approve Charter Amendment to Enhance Corporate Governance and Support Strategic Growth PlanMarch 2023 - SweetWater Brewing Company Brings Back Popular Triple Tail Tropical India Pale AleMarch 2023 - SweetWater Brewing Company Introduces New West Coast Style India Pale AleMarch 2023 - Potently Canadian Cannabis Brand, CANACA, Introduces New Collection of Terpene Rich Products Across CanadaFebruary 2023 - Good Supply Cannabis Brand Launches Canada’s Strongest Infused Pre-RollsFebruary 2023 - Breckenridge Distillery Strikes Gold at 2023 World Whiskies AwardsFebruary 2023 - Good Supply Cannabis Brand Launches New Product LineupFebruary 2023 - SweetWater Announces 420 Fest 2023 Lineup and VenueFebruary 2023 - Breckenridge Distillery Launches Limited-Edition Sexy Motor Oil Whiskey for Valentine’s DayFebruary 2023 - SweetWater Brewing Company Introduces New Crisp Lager to Year-Round LineupJanuary 2023 - Alpine Beer Launches INFINITE HAZE Hazy IPAJanuary 2023 - Solei Cannabis Brand Introduces New Approach to Wellness with New Product Lineup and Brand RefreshJanuary 2023 - SweetWater Brewing Company Celebrates 26 Years of Brewing with Throwback Beers, Jam Bands Live Conference Call and Audio WebcastTilray Brands will host a webcast to discuss these results today at 5:00 p.m. ET. Investors may join the live webcast available on the Investors section of the Company’s website at www.tilray.com. The webcast will also be archived after the call concludes. About Tilray BrandsTilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), is a leading global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is changing people's lives for the better – one person at a time. Tilray Brands delivers on this mission by inspiring and empowering the worldwide community to live their very best life, enhanced by moments of connection and wellbeing. Patients and consumers trust Tilray Brands to be the most responsible, trusted and market leading cannabis consumer products company in the world with a portfolio of innovative, high-quality and beloved brands that address the needs of the consumers, customers and patients we serve. A pioneer in cannabis research, cultivation, and distribution, Tilray Brands’ unprecedented production platform supports over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and craft beverages. For more information on Tilray Brands, visit www.Tilray.com and follow @Tilray Cautionary Statement Concerning Forward-Looking Statements Certain statements in this press release constitute forward-looking information or forward-looking statements (together, “forward-looking statements”) under Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the “safe harbor” created by those sections and other applicable laws. Forward-looking statements can be identified by words such as “forecast,” “future,” “should,” “could,” “enable,” “potential,” “contemplate,” “believe,” “anticipate,” “estimate,” “plan,” “expect,” “intend,” “may,” “project,” “will,” “would” and the negative of these terms or similar expressions, although not all forward-looking statements contain these identifying words. Certain material factors, estimates, goals, projections or assumptions were used in drawing the conclusions contained in the forward-looking statements throughout this communication. Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the Company’s ability to become the world's leading cannabis-focused consumer branded company; the Company’s ability to generate its targeted amount of Adjusted EBITDA for the fiscal year ending May 31, 2023; the Company’s expectation to be free-cash flow positive in its operating business units; the Company’s ability to achieve long term profitability; the Company’s ability to achieve operational scale, market share, distribution, profitability and revenue growth in particular business lines and markets; the Company’s ability to successfully complete the acquisition of HEXO; the Company’s ability to successfully achieve revenue growth, production and supply chain efficiencies, synergies and cost savings, including with respect to the HEXO acquisition; expansion of medical and recreational sales legalization across the global cannabis industry, including in Europe; and the Company’s anticipated investments and acquisitions, including in organic and strategic growth, partnership efforts, product offerings and other initiatives. Many factors could cause actual results, performance or achievement to be materially different from any forward-looking statements, and other risks and uncertainties not presently known to the Company or that the Company deems immaterial could also cause actual results or events to differ materially from those expressed in the forward-looking statements contained herein. For a more detailed discussion of these risks and other factors, see the most recently filed annual information form of the Company and the Annual Report on Form 10-K (and other periodic reports filed with the SEC) of the Company made with the SEC and available on EDGAR. The forward-looking statements included in this communication are made as of the date of this communication and the Company does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws. Use of Non-U.S. GAAP Financial MeasuresThis press release and the accompanying tables include non-GAAP financial measures, including adjusted gross margin, Adjusted gross profit, Adjusted EBITDA, Adjusted net income and free cash flow. Management believes that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the Company's operations and are useful for period-over-period comparisons of operations. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read only in connection with the Company's Consolidated Statements of Operations and Cash Flows presented in accordance with GAAP. Certain forward-looking non-GAAP financial measures included in this press release are not reconciled to the comparable forward-looking GAAP financial measures. The Company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures but would not impact the non-GAAP measures. Such items may include litigation and related expenses, transaction costs, impairments, foreign exchange movements and other items. The unavailable information could have a significant impact on the Company's GAAP financial results. The Company believes presenting net sales at constant currency provides useful information to investors because it provides transparency to underlying performance in the Company's consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year. Adjusted EBITDA is calculated as net income (loss) before income tax expense (recovery); interest expense, net; non-operating income (expense), net; amortization; stock-based compensation; change in fair value of contingent consideration; impairments; purchase price accounting step-up; facility start-up and closure costs; lease expense; litigation (recovery) costs; restructuring costs; and transaction (income) costs. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted gross profit, is calculated as gross profit adjusted to exclude the impact of inventory valuation adjustment and purchase price accounting valuation step-up. A reconciliation of Adjusted gross profit, excluding inventory valuation adjustments and purchase price accounting valuation step-up, to gross profit, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted gross margin, excluding inventory valuation adjustments and purchase price accounting valuation step-up, is calculated as revenue less cost of sales adjusted to add back inventory valuation adjustments and amortization of inventory step-up, divided by revenue. A reconciliation of Adjusted gross margin, excluding inventory valuation adjustments and purchase price accounting valuation step-up, to gross margin, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted net income is calculated as net (loss) income plus (minus) non-operating income (expense), net, change in fair value of contingent consideration, impairments; inventory write down, litigation (recovery) costs, restructuring costs, and transaction (income) costs. A reconciliation of Adjusted net income, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Free cash flow is comprised of two GAAP measures deducted from each other which are net cash flow provided by (used in) operating activities less investments in capital and intangible assets. A reconciliation of net cash flow provided by (used in) operating activities to free cash flow, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. For further information: Media: Berrin Noorata, news@tilray.com Investors: Raphael Gross, +1-203-682-8253, Raphael.Gross@icrinc.com Consolidated Statements of Financial Position February 28, May 31,(in thousands of US dollars) 2023 2022 Assets Current assets Cash and cash equivalents $164,997 $415,909 Marketable Securities 243,286 - Accounts receivable, net 78,342 95,279 Inventory 202,800 245,529 Prepaids and other current assets 69,087 46,786 Total current assets 758,512 803,503 Capital assets 425,263 587,499 Right-of-use assets 6,492 12,996 Intangible assets 994,325 1,277,875 Goodwill 2,005,701 2,641,305 Interest in equity investees 4,638 4,952 Long-term investments 7,620 10,050 Convertible notes receivable 168,356 111,200 Other assets 4,993 314 Total assets $4,375,900 $5,449,694 Liabilities Current liabilities Bank indebtedness $18,125 $18,123 Accounts payable and accrued liabilities 163,422 157,431 Contingent consideration 16,219 16,007 Warrant liability 7,414 14,255 Current portion of lease liabilities 2,528 6,703 Current portion of long-term debt 77,892 67,823 Current portion of convertible debentures payable 184,082 - Total current liabilities 469,682 280,342 Long - term liabilities Contingent consideration 10,596 - Lease liabilities 8,598 11,329 Long-term debt 89,419 117,879 Convertible debentures payable 223,087 401,949 Deferred tax liabilities 164,412 196,638 Other liabilities 3,335 191 Total liabilities 969,129 1,008,328 Commitments and contingencies (refer to Note 17) Stockholders' equity Common stock ($0.0001 par value; 980,000,000 shares authorized; 617,857,031 and 532,674,887 shares issued and outstanding, respectively) 62 53 Series A Preferred Stock ($0.0001 par value; 10,000,000 shares authorized; 120,000 and nil shares issued and outstanding, respectively) - - Additional paid-in capital 5,723,342 5,382,367 Accumulated other comprehensive loss (42,948) (20,764)Accumulated Deficit (2,276,794) (962,851)Total Tilray Brands, Inc. stockholders' equity 3,403,662 4,398,805 Non-controlling interests 3,109 42,561 Total stockholders' equity 3,406,771 4,441,366 Total liabilities and stockholders' equity $4,375,900 $5,449,694 Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change (in thousands of U.S. dollars, except for per share data) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022 Net revenue $145,589 $151,871 $(6,282) (4)% $442,936 $475,047 $(32,111) (7)% Cost of goods sold 157,288 112,042 45,246 40% 363,139 351,497 11,642 3% Gross profit (loss) (11,699) 39,829 (51,528) (129)% 79,797 123,550 (43,753) (35)% Operating expenses: General and administrative 38,999 38,445 554 1% 117,385 121,401 (4,016) (3)% Selling 6,452 8,641 (2,189) (25)% 25,792 25,283 509 2% Amortization 23,518 24,590 (1,072) (4)% 71,872 84,345 (12,473) (15)% Marketing and promotion 7,354 7,578 (224) (3)% 23,137 20,163 2,974 15% Research and development 171 164 7 4% 502 1,464 (962) (66)% Change in fair value of contingent consideration 352 (30,747) 31,099 (101)% 563 (29,065) 29,628 (102)% Impairments 1,115,376 — 1,115,376 NM 1,115,376 — 1,115,376 NM Litigation (recovery) costs (5,230) 4,215 (9,445) (224)% (1,970) 6,489 (8,459) (130)% Restructuring costs 2,663 — 2,663 0% 10,727 795 9,932 1249% Transaction (income) costs 5,382 5,023 359 7% (3,882) 35,653 (39,535) (111)% Total operating expenses 1,195,037 57,909 1,137,128 1964% 1,359,502 266,528 1,092,974 410% Operating loss (1,206,736) (18,080) (1,188,656) 6574% (1,279,705) (142,978) (1,136,727) 795% Interest expense, net (1,040) (2,312) 1,272 (55)% (8,560) (22,422) 13,862 (62)% Non-operating income (expense), net 1,213 71,037 (69,824) (98)% (50,229) 186,329 (236,558) (127)% (Loss) income before income taxes (1,206,563) 50,645 (1,257,208) (2,482)% (1,338,494) 20,929 (1,359,423) (6,495)% Income taxes (benefit) expense (10,811) (1,830) (8,981) 491% (15,313) (2,739) (12,574) 459% Net (loss) income $(1,195,752) $52,475 $(1,248,227) (2,379)% (1,323,181) 23,668 (1,346,849) (5,691)% Net loss per share - basic and diluted $(1.90) $0.09 $(1.99) (2,214)% $(2.20) $0.00 $(2.20) (77,239)% Condensed Consolidated Statements of Cash Flows For the nine months ended February 28, Change % Change (in thousands of US dollars) 2023 2022 2023 vs. 2022 Cash used in operating activities: Net (loss) income $(1,323,181) $23,668 $(1,346,849) (5691)% Adjustments for: Deferred income tax recovery (29,537) (17,296) (12,241) 71% Unrealized foreign exchange loss 13,711 1,699 12,012 707% Amortization 101,156 113,824 (12,668) (11)% Loss (gain) on sale of capital assets (2) (631) 629 (100)% Inventory valuation write down 55,000 12,000 43,000 358% Impairments 1,115,376 - 1,115,376 0% Other non-cash items 12,933 962 11,971 1244% Stock-based compensation 29,766 27,025 2,741 10% Loss (gain) on long-term investments & equity investments 2,843 (2,401) 5,244 (218)% Loss (gain) on derivative instruments 13,534 (210,653) 224,187 (106)% Change in fair value of contingent consideration 563 (29,065) 29,628 (102)% Change in non-cash working capital: Accounts receivable 18,053 (458) 18,511 (4042)% Prepaids and other current assets (32,680) (953) (31,727) 3329% Inventory (11,808) (16,512) 4,704 (28)% Accounts payable and accrued liabilities (1,419) (57,947) 56,528 (98)% Net cash used in operating activities (35,692) (156,738) 121,046 (77)% Cash used in investing activities: Investment in capital and intangible assets (8,394) (28,470) 20,076 (71)% Proceeds from disposal of capital and intangible assets 2,175 11,526 (9,351) (81)% Purchase of marketable securities, net (243,186) - (243,186) 0% Net cash paid for business acquisition (28,122) 326 (28,448) (8726)% Net cash used in investing activities (277,527) (16,618) (260,909) 1570% Cash provided by (used in) financing activities: Share capital issued, net of cash issuance costs 129,593 — 129,593 0% Shares effectively repurchased for employee withholding tax (1,189) (3,149) 1,960 (62)% Proceeds from long-term debt 1,288 — 1,288 0% Repayment of long-term debt and convertible debt (64,658) (34,570) (30,088) 87% Repayment of lease liabilities (1,114) (4,672) 3,558 (76)% Net increase in bank indebtedness 2 8,779 (8,777) (100)% Net cash provided by (used in) financing activities 63,922 (33,612) 97,534 (290)% Effect of foreign exchange on cash and cash equivalents (1,615) (2,284) 669 (29)% Net decrease in cash and cash equivalents (250,912) (209,252) (41,660) 20% Cash and cash equivalents, beginning of period 415,909 488,466 (72,557) (15)% Cash and cash equivalents, end of period $164,997 $279,214 $(114,217) (41)% Other Financial Information: Key Operating Metrics For the three months For the nine months ended February 28, ended February 28,(in thousands of U.S. dollars) 2023 2022 2023 2022 Net cannabis revenue $47,549 $55,045 $156,017 $184,269 Distribution revenue 65,385 62,532 186,158 198,587 Net beverage alcohol revenue 20,640 19,597 62,689 48,765 Wellness revenue 12,015 14,697 38,072 43,426 Cannabis costs 77,604 37,042 137,800 122,492 Beverage alcohol costs 10,663 8,091 32,932 20,674 Distribution costs 57,964 57,566 165,443 178,093 Wellness costs 8,299 9,343 26,964 30,238 Adjusted gross profit (excluding PPA step-up and inventory valuation adjustments) (1) 44,310 39,829 138,020 135,550 Cannabis adjusted gross margin (excluding inventory valuation adjustments) (1) 47% 33% 47% 40%Beverage alcohol adjusted gross margin (excluding PPA step-up) (1) 53% 59% 53% 58%Distribution gross margin 11% 8% 11% 10%Wellness gross margin 31% 36% 29% 30%Adjusted EBITDA (1) 14,015 10,086 39,254 36,543 Cash and cash equivalents and marketable securities 408,283 279,214 408,283 279,214 Working capital 288,830 413,358 288,830 413,358 Net Revenue by Operating Segment For the three months % of Total Revenue For the three months % of Total Revenue For the nine months % of Total Revenue For the nine months % of Total Revenue (In thousands of U.S. dollars) February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Cannabis business $47,549 33% $55,045 36% $156,017 35% $184,269 39% Distribution business 65,385 45% 62,532 41% 186,158 42% 198,587 42% Beverage alcohol business 20,640 14% 19,597 13% 62,689 14% 48,765 10% Wellness business 12,015 8% 14,697 10% 38,072 9% 43,426 9% Total net revenue $145,589 100% $151,871 100% $442,936 100% $475,047 100% Net Revenue by Operating Segment in Constant Currency For the three months For the three months For the nine months For the nine months February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 (In thousands of U.S. dollars) as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue Cannabis business $51,007 33% $55,045 36% $164,746 34% $184,269 39% Distribution business 70,144 45% 62,532 41% 211,676 44% 198,587 42% Beverage alcohol business 20,640 14% 19,597 13% 62,689 13% 48,765 10% Wellness business 12,385 8% 14,697 10% 39,144 8% 43,426 9% Total net revenue $154,176 100% $151,871 100% $478,255 99% $475,047 100% Net Cannabis Revenue by Market Channel For the three months % of Total Revenue For the three months % of Total Revenue For the nine months % of Total Revenue For the nine months % of Total Revenue (In thousands of U.S. dollars) February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Revenue from Canadian medical cannabis products $6,035 13% $7,050 13% $18,920 12% $23,353 13% Revenue from Canadian adult-use cannabis products 45,318 96% 43,504 79% 156,063 100% 162,632 87% Revenue from wholesale cannabis products 58 0% 2,804 5% 686 0% 6,763 4% Revenue from international cannabis products 9,707 20% 15,820 29% 27,834 18% 39,792 22% Less excise taxes (13,569) -29% (14,133) -26% (47,486) -30% (48,271) -26% Total $47,549 100% $55,045 100% $156,017 100% $184,269 100% Net Cannabis Revenue by Market Channel in Constant Currency For the three months For the three months For the nine months For the nine months February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 (In thousands of U.S. dollars) as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue Revenue from Canadian medical cannabis products $6,442 13% $7,050 13% $20,093 12% $23,353 13% Revenue from Canadian adult-use cannabis products 48,721 96% 43,504 79% 162,777 99% 162,632 87% Revenue from wholesale cannabis products 62 0% 2,804 5% 726 0% 6,763 4% Revenue from international cannabis products 10,269 20% 15,820 29% 31,627 19% 39,792 22% Less excise taxes (14,487) -28% (14,133) -26% (50,477) -31% (48,271) -26% Total $51,007 100% $55,045 100% $164,746 100% $184,269 100% Other Financial Information: Gross Margin and Adjusted Gross Margin For the three months ended February 28, 2023(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $47,549 $20,640 $65,385 $12,015 $145,589 Cost of goods sold 80,362 10,663 57,964 8,299 157,288 Gross profit (32,813) 9,977 7,421 3,716 (11,699)Gross margin -69% 48% 11% 31% -8% Adjustments: Inventory valuation adjustments 55,000 - - - 55,000 Purchase price accounting step-up - 1,009 - - 1,009 Adjusted gross profit 22,187 10,986 7,421 3,716 44,310 Adjusted gross margin 47% 53% 11% 31% 30% For the three months ended February 28, 2022(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $55,045 $19,597 $62,532 $14,697 $151,871 Cost of goods sold 37,042 8,091 57,566 9,343 112,042 Gross profit 18,003 11,506 4,966 5,354 39,829 Gross margin 33% 59% 8% 36% 26% For the nine months ended February 28, 2023(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $156,017 $62,689 $186,158 $38,072 $442,936 Cost of goods sold 137,800 32,932 165,443 26,964 363,139 Gross profit 18,217 29,757 20,715 11,108 79,797 Gross margin 12% 47% 11% 29% 18% Adjustments: Inventory valuation adjustments 55,000 - - - 55,000 Purchase price accounting step-up - 3,223 - - 3,223 Adjusted gross profit 73,217 32,980 20,715 11,108 138,020 Adjusted gross margin 47% 53% 11% 29% 31% For the nine months ended February 28, 2022(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $184,269 $48,765 $198,587 $43,426 $475,047 Cost of goods sold 122,492 20,674 178,093 30,238 351,497 Gross profit 61,777 28,091 20,494 13,188 123,550 Gross margin 34% 58% 10% 30% 26% Adjustments: Inventory valuation adjustments 12,000 - - - 12,000 Adjusted gross profit 73,777 28,091 20,494 13,188 135,550 Adjusted gross margin 40% 58% 10% 30% 29% Other Financial Information: Adjusted Earnings Before Interest, Taxes and Amortization For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change(In thousands of U.S. dollars) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022Net (loss) income $(1,195,752) $52,475 $(1,248,227) (2,379)% $(1,323,181) $23,668 $(1,346,849) (5,691)%Income taxes (benefit) expense (10,811) (1,830) (8,981) 491% (15,313) (2,739) (12,574) 459%Interest expense, net 1,040 2,312 (1,272) (55)% 8,560 22,422 (13,862) (62)%Non-operating income (expense), net (1,213) (71,037) 69,824 (98)% 50,229 (186,329) 236,558 (127)%Amortization 33,769 37,020 (3,251) (9)% 101,156 113,824 (12,668) (11)%Stock-based compensation 9,630 9,355 275 3% 29,766 27,025 2,741 10%Change in fair value of contingent consideration 352 (30,747) 31,099 (101)% 563 (29,065) 29,628 (102)%Impairments 1,115,376 - 1,115,376 NM 1,115,376 - 1,115,376 NMInventory valuation adjustments 55,000 - 55,000 NM 55,000 12,000 43,000 358%Purchase price accounting step-up 1,009 - 1,009 NM 3,223 - 3,223 NMFacility start-up and closure costs 2,100 2,500 (400) (16)% 6,900 10,400 (3,500) (34)%Lease expense 700 800 (100) (13)% 2,100 2,400 (300) (13)%Litigation (recovery) costs (5,230) 4,215 (9,445) (224)% (1,970) 6,489 (8,459) (130)%Restructuring costs 2,663 - 2,663 NM 10,727 795 9,932 1249%Transaction (income) costs 5,382 5,023 359 7% (3,882) 35,653 (39,535) (111)%Adjusted EBITDA $14,015 $10,086 $3,929 39% $39,254 $36,543 $2,711 7% Other Financial Information: Adjusted Net Loss For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change(In thousands of U.S. dollars) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022Net (loss) income $(1,195,752) $52,475 $(1,248,227) (2,379)% $(1,323,181) $23,668 $(1,346,849) (5,691)%Non-operating income (expense), net (1,213) (71,037) 69,824 (98)% 50,229 (186,329) 236,558 (127)%Change in fair value of contingent consideration 352 (30,747) 31,099 (101)% 563 (29,065) 29,628 (102)%Impairments 1,115,376 - 1,115,376 NM 1,115,376 - 1,115,376 NMInventory valuation adjustments 55,000 - 55,000 NM 55,000 12,000 43,000 358%Litigation (recovery) costs (5,230) 4,215 (9,445) (224)% (1,970) 6,489 (8,459) (130)%Restructuring costs 2,663 - 2,663 NM 10,727 795 9,932 1249%Transaction (income) costs 5,382 5,023 359 7% (3,882) 35,653 (39,535) (111)%Adjusted net loss $(23,422) $(40,071) $16,649 (42)% $(97,138) $(136,789) $39,651 (29)%Adjusted net loss per share - basic and diluted $(0.04) $(0.08) $0.04 (54)% $(0.16) $(0.29) $0.13 (44)% Other Financial Information: Free Cash Flow For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change(In thousands of U.S. dollars) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022Net cash used in operating activities $(18,632) $(46,390) $27,758 (60)% $(35,692) $(156,738) $121,046 (77)%Less: investments in capital and intangible assets, net (842) (1,352) 510 (38)% (6,219) (16,944) 10,725 (63)%Free cash flow $(19,474) $(47,742) $28,268 (59)% $(41,911) $(173,682) $131,771 (76)% Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
CORRECTION--Tilray Brands Reports Third Quarter Fiscal Year 2023 Financial Results and Announces Accretive Acquisition of 100% of HEXO Corp. By: Tilray Brands, Inc. via GlobeNewswire April 10, 2023 at 18:06 PM EDT Delivered $145.6 Million in Net Revenue and 16th Consecutive Quarter of Positive Adjusted EBITDA Maintained #1 Cannabis Market Share Position in Canada, the Largest Federally Legal Cannabis Market in the World; With HEXO Transaction, Poised to Substantially Increase Canadian Revenue Medical Cannabis Leader in Europe Achieved Key Efficiency Milestones on Accelerated Path to Positive Cash Flow, Company Reiterates Cash Flow Guidance LEAMINGTON, Ontario and NEW YORK, April 10, 2023 (GLOBE NEWSWIRE) -- In a release issued under the same headline earlier today by Tilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), please note that the first table, the Consolidated Statement of Financial Positions was missing the entry for “Contingent consideration” under “Long-term liabilities.” In addition, the table “Other Financial Information: Adjusted Earnings Before Interest, Taxes and Amortization” was missing the entry “Inventory valuation adjustment.” The corrected release follows: Tilray Brands, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY; TSX: TLRY), a leading global cannabis-lifestyle and consumer packaged goods company inspiring and empowering the worldwide community to live their very best life, today reported financial results for the third fiscal quarter ended February 28, 2023. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated. Tilray also announces today that it entered into a definitive agreement to acquire HEXO Corp. (NASDAQ: HEXO; TSX: HEXO) for an aggregate purchase price of approximately US$56 million, to be satisfied through the issuance of 0.4352 of Tilray Common Stock for each outstanding HEXO share. The acquisition, which is structured as an arrangement under applicable Canadian laws (the “Arrangement”), builds on the successful strategic alliance between the two companies and positions Tilray for continued strong growth and market leadership in Canada, the largest federally legal cannabis market in the world. The completion of the Arrangement is subject to customary and negotiated closing conditions, including HEXO shareholder approval and court approval, and is expected to close in June 2023. Further information about the HEXO transaction is included in an investor presentation available on the investor section of Tilray.com and in our Current Report on Form 8-K filed today. Financial Highlights Net revenue increased to $145.6 million compared to $144.1 million in the prior quarter. On a constant currency basis, net revenue was $154.2 million in the third quarter of 2023, up 2% from the prior year quarter.Distribution revenue increased 5% to $65.4 million, from the prior year quarter. On a constant currency basis, distribution revenue increased 12% to $70.1 million.Gross Profit (Loss) was ($11.7) million, while adjusted gross profit was $44.3 million. Gross margin was negative 8%, while adjusted gross margin rose to 30% from 26% in the year-ago quarter.Adjusted cannabis gross profit increased to $22.2 million from $18.0 million in the prior year quarter, while adjusted gross margin percentage increased to 47% from 33%.Achieved $22 million in annualized run-rate savings (and $12 million in actual cost savings) as part of $30 million cost optimization plan announced in Q4 of 2022; total annualized cash cost-savings since the closing of the Tilray-Aphria transaction reached $122 million.Adjusted EBITDA of $14.0 million, marking 16th consecutive quarter of positive adjusted EBITDA. Currently expecting Adjusted EBITDA in the range of $60 to $66 million, a greater than 30% increase from the prior year.Strong financial position with $408.3 million in cash and marketable securities.Reiterated expectation to deliver positive free cash flow from operating segments in fiscal 2023.Recorded non-cash $1.1 billion net asset reduction resulting from higher interest rates and a decline in market capitalization. This non-cash net asset reduction has no impact on the Company’s compliance with debt covenants, its cash flows or available liquidity. Irwin D. Simon, Tilray Brands’ Chairman and Chief Executive Officer, stated, “During the quarter, we continued to focus on our highest priorities: sustaining and growing the top-line across core markets and geographies while optimizing the platform to achieve positive free cash flow on an accelerated timeline. We are executing on both fronts and delivered revenue growth despite challenging market dynamics across Canada, Europe, and the U.S, as well as our 16th consecutive quarter of positive adjusted EBITDA.” Mr. Simon continued, “Looking ahead, we are focused on being the leading, most diversified cannabis lifestyle and CPG company in the world. Our strategy to deliver on this vision is centered on pursuing targeted growth opportunities, as reflected in our opportunistic acquisitions of both Montauk Brewing Company and HEXO, which has made significant strides in driving operating efficiency and improving profitability while continuing to invest in industry-leading brands. We are incredibly excited about our combined prospects moving forward with HEXO and expect a seamless integration of HEXO’s business into our efficient, built-to-last platform. At the same time, we will continue our relentless focus on cost and operational efficiencies and strengthening our industry-leading balance sheet to deliver sustained, profitable growth and shareholder value.” Mark Attanasio, Chairman of HEXO, said, “Over the past year, HEXO established and has been executing on a rigorous cost-cutting and balance sheet optimization plan. As we began working with Tilray last year, the value that could be achieved through the combination of our businesses in order to compete and drive profitable growth in the highly fragmented Canadian market was immediately clear. With the recent headwinds in the cannabis industry, our Board determined that HEXO shareholders would benefit from being part of Tilray’s diversified business and from the strong plan in place they have to reinforce their industry leadership, continue to strengthen the top and bottom lines, and to drive value creation. With Irwin and his leadership team, we are confident that our brands will continue to grow and thrive as part of Tilray Brands.” Operating Highlights Leadership in Global Cannabis Operations, Brands, and Market Share: In Canada, despite ongoing challenging cannabis market conditions, quarter over quarter, Tilray maintained its #1 cannabis market share position. With the addition of HEXO’s leading high-growth brands, the Company expects to significantly bolster its position supported by low-cost operations and complimentary distribution across all Canadian geographies. The combined company is expected to strengthen Tilray’s existing Canadian position with 12.9% pro-forma market share and #1 market position across all major markets and a leading share across most product categories. This includes anticipated pro-forma net sales of approximately US$215M and the leading low-cost operations with distribution across all Canadian geographies.Capitalizing on the unrivaled platform provided by its cultivation and distribution operations across Portugal and Germany and the leadership team’s depth of commercial and regulatory expertise, Tilray is focused on growing its leading market share in medical cannabis in the countries in which it distributes today and achieving early-mover advantage in new countries as cannabis legalization continues to proliferate across Europe. Maximizing the High-Growth Potential of U.S. CPG and Craft-Beverage Portfolio: In the third quarter, Tilray made substantial strides across its five craft-beverage brands including leaders SweetWater Brewing Company, Breckenridge Distillery, and Montauk Brewing Company, and its wellness brand Manitoba Harvest. By expanding recognition and distribution, Tilray will be well positioned to immediately leverage these brands to drive significant additional revenue in adult-use cannabis, pending federal legalization. Strategic Growth Actions April 2023 – Tilray Medical Expands Footprint in Europe and Broadens Distribution Across the Czech RepublicApril 2023 – SweetWater Brewing Company Expands Across 44 States with Nevada LaunchApril 2023 - Manitoba Harvest Expands Whole Foods Market DistributionApril 2023 - Breckenridge Distillery Wins Big at Whisky Magazine’s 2023 World Whiskies AwardsMarch 2023 - Alpine Beer Opens Taproom at Petco Park Stadium in San DiegoMarch 2023 - Breckenridge Distillery Establishes March 31st as National Après DayMarch 2023 - Montauk Brewing Expands Distribution Across the NortheastMarch 2023 - Tilray Brands Stockholders Approve Charter Amendment to Enhance Corporate Governance and Support Strategic Growth PlanMarch 2023 - SweetWater Brewing Company Brings Back Popular Triple Tail Tropical India Pale AleMarch 2023 - SweetWater Brewing Company Introduces New West Coast Style India Pale AleMarch 2023 - Potently Canadian Cannabis Brand, CANACA, Introduces New Collection of Terpene Rich Products Across CanadaFebruary 2023 - Good Supply Cannabis Brand Launches Canada’s Strongest Infused Pre-RollsFebruary 2023 - Breckenridge Distillery Strikes Gold at 2023 World Whiskies AwardsFebruary 2023 - Good Supply Cannabis Brand Launches New Product LineupFebruary 2023 - SweetWater Announces 420 Fest 2023 Lineup and VenueFebruary 2023 - Breckenridge Distillery Launches Limited-Edition Sexy Motor Oil Whiskey for Valentine’s DayFebruary 2023 - SweetWater Brewing Company Introduces New Crisp Lager to Year-Round LineupJanuary 2023 - Alpine Beer Launches INFINITE HAZE Hazy IPAJanuary 2023 - Solei Cannabis Brand Introduces New Approach to Wellness with New Product Lineup and Brand RefreshJanuary 2023 - SweetWater Brewing Company Celebrates 26 Years of Brewing with Throwback Beers, Jam Bands Live Conference Call and Audio WebcastTilray Brands will host a webcast to discuss these results today at 5:00 p.m. ET. Investors may join the live webcast available on the Investors section of the Company’s website at www.tilray.com. The webcast will also be archived after the call concludes. About Tilray BrandsTilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), is a leading global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is changing people's lives for the better – one person at a time. Tilray Brands delivers on this mission by inspiring and empowering the worldwide community to live their very best life, enhanced by moments of connection and wellbeing. Patients and consumers trust Tilray Brands to be the most responsible, trusted and market leading cannabis consumer products company in the world with a portfolio of innovative, high-quality and beloved brands that address the needs of the consumers, customers and patients we serve. A pioneer in cannabis research, cultivation, and distribution, Tilray Brands’ unprecedented production platform supports over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and craft beverages. For more information on Tilray Brands, visit www.Tilray.com and follow @Tilray Cautionary Statement Concerning Forward-Looking Statements Certain statements in this press release constitute forward-looking information or forward-looking statements (together, “forward-looking statements”) under Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the “safe harbor” created by those sections and other applicable laws. Forward-looking statements can be identified by words such as “forecast,” “future,” “should,” “could,” “enable,” “potential,” “contemplate,” “believe,” “anticipate,” “estimate,” “plan,” “expect,” “intend,” “may,” “project,” “will,” “would” and the negative of these terms or similar expressions, although not all forward-looking statements contain these identifying words. Certain material factors, estimates, goals, projections or assumptions were used in drawing the conclusions contained in the forward-looking statements throughout this communication. Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the Company’s ability to become the world's leading cannabis-focused consumer branded company; the Company’s ability to generate its targeted amount of Adjusted EBITDA for the fiscal year ending May 31, 2023; the Company’s expectation to be free-cash flow positive in its operating business units; the Company’s ability to achieve long term profitability; the Company’s ability to achieve operational scale, market share, distribution, profitability and revenue growth in particular business lines and markets; the Company’s ability to successfully complete the acquisition of HEXO; the Company’s ability to successfully achieve revenue growth, production and supply chain efficiencies, synergies and cost savings, including with respect to the HEXO acquisition; expansion of medical and recreational sales legalization across the global cannabis industry, including in Europe; and the Company’s anticipated investments and acquisitions, including in organic and strategic growth, partnership efforts, product offerings and other initiatives. Many factors could cause actual results, performance or achievement to be materially different from any forward-looking statements, and other risks and uncertainties not presently known to the Company or that the Company deems immaterial could also cause actual results or events to differ materially from those expressed in the forward-looking statements contained herein. For a more detailed discussion of these risks and other factors, see the most recently filed annual information form of the Company and the Annual Report on Form 10-K (and other periodic reports filed with the SEC) of the Company made with the SEC and available on EDGAR. The forward-looking statements included in this communication are made as of the date of this communication and the Company does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws. Use of Non-U.S. GAAP Financial MeasuresThis press release and the accompanying tables include non-GAAP financial measures, including adjusted gross margin, Adjusted gross profit, Adjusted EBITDA, Adjusted net income and free cash flow. Management believes that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the Company's operations and are useful for period-over-period comparisons of operations. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read only in connection with the Company's Consolidated Statements of Operations and Cash Flows presented in accordance with GAAP. Certain forward-looking non-GAAP financial measures included in this press release are not reconciled to the comparable forward-looking GAAP financial measures. The Company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures but would not impact the non-GAAP measures. Such items may include litigation and related expenses, transaction costs, impairments, foreign exchange movements and other items. The unavailable information could have a significant impact on the Company's GAAP financial results. The Company believes presenting net sales at constant currency provides useful information to investors because it provides transparency to underlying performance in the Company's consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year. Adjusted EBITDA is calculated as net income (loss) before income tax expense (recovery); interest expense, net; non-operating income (expense), net; amortization; stock-based compensation; change in fair value of contingent consideration; impairments; purchase price accounting step-up; facility start-up and closure costs; lease expense; litigation (recovery) costs; restructuring costs; and transaction (income) costs. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted gross profit, is calculated as gross profit adjusted to exclude the impact of inventory valuation adjustment and purchase price accounting valuation step-up. A reconciliation of Adjusted gross profit, excluding inventory valuation adjustments and purchase price accounting valuation step-up, to gross profit, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted gross margin, excluding inventory valuation adjustments and purchase price accounting valuation step-up, is calculated as revenue less cost of sales adjusted to add back inventory valuation adjustments and amortization of inventory step-up, divided by revenue. A reconciliation of Adjusted gross margin, excluding inventory valuation adjustments and purchase price accounting valuation step-up, to gross margin, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted net income is calculated as net (loss) income plus (minus) non-operating income (expense), net, change in fair value of contingent consideration, impairments; inventory write down, litigation (recovery) costs, restructuring costs, and transaction (income) costs. A reconciliation of Adjusted net income, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Free cash flow is comprised of two GAAP measures deducted from each other which are net cash flow provided by (used in) operating activities less investments in capital and intangible assets. A reconciliation of net cash flow provided by (used in) operating activities to free cash flow, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. For further information: Media: Berrin Noorata, news@tilray.com Investors: Raphael Gross, +1-203-682-8253, Raphael.Gross@icrinc.com Consolidated Statements of Financial Position February 28, May 31,(in thousands of US dollars) 2023 2022 Assets Current assets Cash and cash equivalents $164,997 $415,909 Marketable Securities 243,286 - Accounts receivable, net 78,342 95,279 Inventory 202,800 245,529 Prepaids and other current assets 69,087 46,786 Total current assets 758,512 803,503 Capital assets 425,263 587,499 Right-of-use assets 6,492 12,996 Intangible assets 994,325 1,277,875 Goodwill 2,005,701 2,641,305 Interest in equity investees 4,638 4,952 Long-term investments 7,620 10,050 Convertible notes receivable 168,356 111,200 Other assets 4,993 314 Total assets $4,375,900 $5,449,694 Liabilities Current liabilities Bank indebtedness $18,125 $18,123 Accounts payable and accrued liabilities 163,422 157,431 Contingent consideration 16,219 16,007 Warrant liability 7,414 14,255 Current portion of lease liabilities 2,528 6,703 Current portion of long-term debt 77,892 67,823 Current portion of convertible debentures payable 184,082 - Total current liabilities 469,682 280,342 Long - term liabilities Contingent consideration 10,596 - Lease liabilities 8,598 11,329 Long-term debt 89,419 117,879 Convertible debentures payable 223,087 401,949 Deferred tax liabilities 164,412 196,638 Other liabilities 3,335 191 Total liabilities 969,129 1,008,328 Commitments and contingencies (refer to Note 17) Stockholders' equity Common stock ($0.0001 par value; 980,000,000 shares authorized; 617,857,031 and 532,674,887 shares issued and outstanding, respectively) 62 53 Series A Preferred Stock ($0.0001 par value; 10,000,000 shares authorized; 120,000 and nil shares issued and outstanding, respectively) - - Additional paid-in capital 5,723,342 5,382,367 Accumulated other comprehensive loss (42,948) (20,764)Accumulated Deficit (2,276,794) (962,851)Total Tilray Brands, Inc. stockholders' equity 3,403,662 4,398,805 Non-controlling interests 3,109 42,561 Total stockholders' equity 3,406,771 4,441,366 Total liabilities and stockholders' equity $4,375,900 $5,449,694 Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change (in thousands of U.S. dollars, except for per share data) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022 Net revenue $145,589 $151,871 $(6,282) (4)% $442,936 $475,047 $(32,111) (7)% Cost of goods sold 157,288 112,042 45,246 40% 363,139 351,497 11,642 3% Gross profit (loss) (11,699) 39,829 (51,528) (129)% 79,797 123,550 (43,753) (35)% Operating expenses: General and administrative 38,999 38,445 554 1% 117,385 121,401 (4,016) (3)% Selling 6,452 8,641 (2,189) (25)% 25,792 25,283 509 2% Amortization 23,518 24,590 (1,072) (4)% 71,872 84,345 (12,473) (15)% Marketing and promotion 7,354 7,578 (224) (3)% 23,137 20,163 2,974 15% Research and development 171 164 7 4% 502 1,464 (962) (66)% Change in fair value of contingent consideration 352 (30,747) 31,099 (101)% 563 (29,065) 29,628 (102)% Impairments 1,115,376 — 1,115,376 NM 1,115,376 — 1,115,376 NM Litigation (recovery) costs (5,230) 4,215 (9,445) (224)% (1,970) 6,489 (8,459) (130)% Restructuring costs 2,663 — 2,663 0% 10,727 795 9,932 1249% Transaction (income) costs 5,382 5,023 359 7% (3,882) 35,653 (39,535) (111)% Total operating expenses 1,195,037 57,909 1,137,128 1964% 1,359,502 266,528 1,092,974 410% Operating loss (1,206,736) (18,080) (1,188,656) 6574% (1,279,705) (142,978) (1,136,727) 795% Interest expense, net (1,040) (2,312) 1,272 (55)% (8,560) (22,422) 13,862 (62)% Non-operating income (expense), net 1,213 71,037 (69,824) (98)% (50,229) 186,329 (236,558) (127)% (Loss) income before income taxes (1,206,563) 50,645 (1,257,208) (2,482)% (1,338,494) 20,929 (1,359,423) (6,495)% Income taxes (benefit) expense (10,811) (1,830) (8,981) 491% (15,313) (2,739) (12,574) 459% Net (loss) income $(1,195,752) $52,475 $(1,248,227) (2,379)% (1,323,181) 23,668 (1,346,849) (5,691)% Net loss per share - basic and diluted $(1.90) $0.09 $(1.99) (2,214)% $(2.20) $0.00 $(2.20) (77,239)% Condensed Consolidated Statements of Cash Flows For the nine months ended February 28, Change % Change (in thousands of US dollars) 2023 2022 2023 vs. 2022 Cash used in operating activities: Net (loss) income $(1,323,181) $23,668 $(1,346,849) (5691)% Adjustments for: Deferred income tax recovery (29,537) (17,296) (12,241) 71% Unrealized foreign exchange loss 13,711 1,699 12,012 707% Amortization 101,156 113,824 (12,668) (11)% Loss (gain) on sale of capital assets (2) (631) 629 (100)% Inventory valuation write down 55,000 12,000 43,000 358% Impairments 1,115,376 - 1,115,376 0% Other non-cash items 12,933 962 11,971 1244% Stock-based compensation 29,766 27,025 2,741 10% Loss (gain) on long-term investments & equity investments 2,843 (2,401) 5,244 (218)% Loss (gain) on derivative instruments 13,534 (210,653) 224,187 (106)% Change in fair value of contingent consideration 563 (29,065) 29,628 (102)% Change in non-cash working capital: Accounts receivable 18,053 (458) 18,511 (4042)% Prepaids and other current assets (32,680) (953) (31,727) 3329% Inventory (11,808) (16,512) 4,704 (28)% Accounts payable and accrued liabilities (1,419) (57,947) 56,528 (98)% Net cash used in operating activities (35,692) (156,738) 121,046 (77)% Cash used in investing activities: Investment in capital and intangible assets (8,394) (28,470) 20,076 (71)% Proceeds from disposal of capital and intangible assets 2,175 11,526 (9,351) (81)% Purchase of marketable securities, net (243,186) - (243,186) 0% Net cash paid for business acquisition (28,122) 326 (28,448) (8726)% Net cash used in investing activities (277,527) (16,618) (260,909) 1570% Cash provided by (used in) financing activities: Share capital issued, net of cash issuance costs 129,593 — 129,593 0% Shares effectively repurchased for employee withholding tax (1,189) (3,149) 1,960 (62)% Proceeds from long-term debt 1,288 — 1,288 0% Repayment of long-term debt and convertible debt (64,658) (34,570) (30,088) 87% Repayment of lease liabilities (1,114) (4,672) 3,558 (76)% Net increase in bank indebtedness 2 8,779 (8,777) (100)% Net cash provided by (used in) financing activities 63,922 (33,612) 97,534 (290)% Effect of foreign exchange on cash and cash equivalents (1,615) (2,284) 669 (29)% Net decrease in cash and cash equivalents (250,912) (209,252) (41,660) 20% Cash and cash equivalents, beginning of period 415,909 488,466 (72,557) (15)% Cash and cash equivalents, end of period $164,997 $279,214 $(114,217) (41)% Other Financial Information: Key Operating Metrics For the three months For the nine months ended February 28, ended February 28,(in thousands of U.S. dollars) 2023 2022 2023 2022 Net cannabis revenue $47,549 $55,045 $156,017 $184,269 Distribution revenue 65,385 62,532 186,158 198,587 Net beverage alcohol revenue 20,640 19,597 62,689 48,765 Wellness revenue 12,015 14,697 38,072 43,426 Cannabis costs 77,604 37,042 137,800 122,492 Beverage alcohol costs 10,663 8,091 32,932 20,674 Distribution costs 57,964 57,566 165,443 178,093 Wellness costs 8,299 9,343 26,964 30,238 Adjusted gross profit (excluding PPA step-up and inventory valuation adjustments) (1) 44,310 39,829 138,020 135,550 Cannabis adjusted gross margin (excluding inventory valuation adjustments) (1) 47% 33% 47% 40%Beverage alcohol adjusted gross margin (excluding PPA step-up) (1) 53% 59% 53% 58%Distribution gross margin 11% 8% 11% 10%Wellness gross margin 31% 36% 29% 30%Adjusted EBITDA (1) 14,015 10,086 39,254 36,543 Cash and cash equivalents and marketable securities 408,283 279,214 408,283 279,214 Working capital 288,830 413,358 288,830 413,358 Net Revenue by Operating Segment For the three months % of Total Revenue For the three months % of Total Revenue For the nine months % of Total Revenue For the nine months % of Total Revenue (In thousands of U.S. dollars) February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Cannabis business $47,549 33% $55,045 36% $156,017 35% $184,269 39% Distribution business 65,385 45% 62,532 41% 186,158 42% 198,587 42% Beverage alcohol business 20,640 14% 19,597 13% 62,689 14% 48,765 10% Wellness business 12,015 8% 14,697 10% 38,072 9% 43,426 9% Total net revenue $145,589 100% $151,871 100% $442,936 100% $475,047 100% Net Revenue by Operating Segment in Constant Currency For the three months For the three months For the nine months For the nine months February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 (In thousands of U.S. dollars) as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue Cannabis business $51,007 33% $55,045 36% $164,746 34% $184,269 39% Distribution business 70,144 45% 62,532 41% 211,676 44% 198,587 42% Beverage alcohol business 20,640 14% 19,597 13% 62,689 13% 48,765 10% Wellness business 12,385 8% 14,697 10% 39,144 8% 43,426 9% Total net revenue $154,176 100% $151,871 100% $478,255 99% $475,047 100% Net Cannabis Revenue by Market Channel For the three months % of Total Revenue For the three months % of Total Revenue For the nine months % of Total Revenue For the nine months % of Total Revenue (In thousands of U.S. dollars) February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Revenue from Canadian medical cannabis products $6,035 13% $7,050 13% $18,920 12% $23,353 13% Revenue from Canadian adult-use cannabis products 45,318 96% 43,504 79% 156,063 100% 162,632 87% Revenue from wholesale cannabis products 58 0% 2,804 5% 686 0% 6,763 4% Revenue from international cannabis products 9,707 20% 15,820 29% 27,834 18% 39,792 22% Less excise taxes (13,569) -29% (14,133) -26% (47,486) -30% (48,271) -26% Total $47,549 100% $55,045 100% $156,017 100% $184,269 100% Net Cannabis Revenue by Market Channel in Constant Currency For the three months For the three months For the nine months For the nine months February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 (In thousands of U.S. dollars) as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue Revenue from Canadian medical cannabis products $6,442 13% $7,050 13% $20,093 12% $23,353 13% Revenue from Canadian adult-use cannabis products 48,721 96% 43,504 79% 162,777 99% 162,632 87% Revenue from wholesale cannabis products 62 0% 2,804 5% 726 0% 6,763 4% Revenue from international cannabis products 10,269 20% 15,820 29% 31,627 19% 39,792 22% Less excise taxes (14,487) -28% (14,133) -26% (50,477) -31% (48,271) -26% Total $51,007 100% $55,045 100% $164,746 100% $184,269 100% Other Financial Information: Gross Margin and Adjusted Gross Margin For the three months ended February 28, 2023(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $47,549 $20,640 $65,385 $12,015 $145,589 Cost of goods sold 80,362 10,663 57,964 8,299 157,288 Gross profit (32,813) 9,977 7,421 3,716 (11,699)Gross margin -69% 48% 11% 31% -8% Adjustments: Inventory valuation adjustments 55,000 - - - 55,000 Purchase price accounting step-up - 1,009 - - 1,009 Adjusted gross profit 22,187 10,986 7,421 3,716 44,310 Adjusted gross margin 47% 53% 11% 31% 30% For the three months ended February 28, 2022(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $55,045 $19,597 $62,532 $14,697 $151,871 Cost of goods sold 37,042 8,091 57,566 9,343 112,042 Gross profit 18,003 11,506 4,966 5,354 39,829 Gross margin 33% 59% 8% 36% 26% For the nine months ended February 28, 2023(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $156,017 $62,689 $186,158 $38,072 $442,936 Cost of goods sold 137,800 32,932 165,443 26,964 363,139 Gross profit 18,217 29,757 20,715 11,108 79,797 Gross margin 12% 47% 11% 29% 18% Adjustments: Inventory valuation adjustments 55,000 - - - 55,000 Purchase price accounting step-up - 3,223 - - 3,223 Adjusted gross profit 73,217 32,980 20,715 11,108 138,020 Adjusted gross margin 47% 53% 11% 29% 31% For the nine months ended February 28, 2022(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $184,269 $48,765 $198,587 $43,426 $475,047 Cost of goods sold 122,492 20,674 178,093 30,238 351,497 Gross profit 61,777 28,091 20,494 13,188 123,550 Gross margin 34% 58% 10% 30% 26% Adjustments: Inventory valuation adjustments 12,000 - - - 12,000 Adjusted gross profit 73,777 28,091 20,494 13,188 135,550 Adjusted gross margin 40% 58% 10% 30% 29% Other Financial Information: Adjusted Earnings Before Interest, Taxes and Amortization For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change(In thousands of U.S. dollars) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022Net (loss) income $(1,195,752) $52,475 $(1,248,227) (2,379)% $(1,323,181) $23,668 $(1,346,849) (5,691)%Income taxes (benefit) expense (10,811) (1,830) (8,981) 491% (15,313) (2,739) (12,574) 459%Interest expense, net 1,040 2,312 (1,272) (55)% 8,560 22,422 (13,862) (62)%Non-operating income (expense), net (1,213) (71,037) 69,824 (98)% 50,229 (186,329) 236,558 (127)%Amortization 33,769 37,020 (3,251) (9)% 101,156 113,824 (12,668) (11)%Stock-based compensation 9,630 9,355 275 3% 29,766 27,025 2,741 10%Change in fair value of contingent consideration 352 (30,747) 31,099 (101)% 563 (29,065) 29,628 (102)%Impairments 1,115,376 - 1,115,376 NM 1,115,376 - 1,115,376 NMInventory valuation adjustments 55,000 - 55,000 NM 55,000 12,000 43,000 358%Purchase price accounting step-up 1,009 - 1,009 NM 3,223 - 3,223 NMFacility start-up and closure costs 2,100 2,500 (400) (16)% 6,900 10,400 (3,500) (34)%Lease expense 700 800 (100) (13)% 2,100 2,400 (300) (13)%Litigation (recovery) costs (5,230) 4,215 (9,445) (224)% (1,970) 6,489 (8,459) (130)%Restructuring costs 2,663 - 2,663 NM 10,727 795 9,932 1249%Transaction (income) costs 5,382 5,023 359 7% (3,882) 35,653 (39,535) (111)%Adjusted EBITDA $14,015 $10,086 $3,929 39% $39,254 $36,543 $2,711 7% Other Financial Information: Adjusted Net Loss For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change(In thousands of U.S. dollars) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022Net (loss) income $(1,195,752) $52,475 $(1,248,227) (2,379)% $(1,323,181) $23,668 $(1,346,849) (5,691)%Non-operating income (expense), net (1,213) (71,037) 69,824 (98)% 50,229 (186,329) 236,558 (127)%Change in fair value of contingent consideration 352 (30,747) 31,099 (101)% 563 (29,065) 29,628 (102)%Impairments 1,115,376 - 1,115,376 NM 1,115,376 - 1,115,376 NMInventory valuation adjustments 55,000 - 55,000 NM 55,000 12,000 43,000 358%Litigation (recovery) costs (5,230) 4,215 (9,445) (224)% (1,970) 6,489 (8,459) (130)%Restructuring costs 2,663 - 2,663 NM 10,727 795 9,932 1249%Transaction (income) costs 5,382 5,023 359 7% (3,882) 35,653 (39,535) (111)%Adjusted net loss $(23,422) $(40,071) $16,649 (42)% $(97,138) $(136,789) $39,651 (29)%Adjusted net loss per share - basic and diluted $(0.04) $(0.08) $0.04 (54)% $(0.16) $(0.29) $0.13 (44)% Other Financial Information: Free Cash Flow For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change(In thousands of U.S. dollars) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022Net cash used in operating activities $(18,632) $(46,390) $27,758 (60)% $(35,692) $(156,738) $121,046 (77)%Less: investments in capital and intangible assets, net (842) (1,352) 510 (38)% (6,219) (16,944) 10,725 (63)%Free cash flow $(19,474) $(47,742) $28,268 (59)% $(41,911) $(173,682) $131,771 (76)%
Delivered $145.6 Million in Net Revenue and 16th Consecutive Quarter of Positive Adjusted EBITDA Maintained #1 Cannabis Market Share Position in Canada, the Largest Federally Legal Cannabis Market in the World; With HEXO Transaction, Poised to Substantially Increase Canadian Revenue Medical Cannabis Leader in Europe Achieved Key Efficiency Milestones on Accelerated Path to Positive Cash Flow, Company Reiterates Cash Flow Guidance LEAMINGTON, Ontario and NEW YORK, April 10, 2023 (GLOBE NEWSWIRE) -- In a release issued under the same headline earlier today by Tilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), please note that the first table, the Consolidated Statement of Financial Positions was missing the entry for “Contingent consideration” under “Long-term liabilities.” In addition, the table “Other Financial Information: Adjusted Earnings Before Interest, Taxes and Amortization” was missing the entry “Inventory valuation adjustment.” The corrected release follows: Tilray Brands, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY; TSX: TLRY), a leading global cannabis-lifestyle and consumer packaged goods company inspiring and empowering the worldwide community to live their very best life, today reported financial results for the third fiscal quarter ended February 28, 2023. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated. Tilray also announces today that it entered into a definitive agreement to acquire HEXO Corp. (NASDAQ: HEXO; TSX: HEXO) for an aggregate purchase price of approximately US$56 million, to be satisfied through the issuance of 0.4352 of Tilray Common Stock for each outstanding HEXO share. The acquisition, which is structured as an arrangement under applicable Canadian laws (the “Arrangement”), builds on the successful strategic alliance between the two companies and positions Tilray for continued strong growth and market leadership in Canada, the largest federally legal cannabis market in the world. The completion of the Arrangement is subject to customary and negotiated closing conditions, including HEXO shareholder approval and court approval, and is expected to close in June 2023. Further information about the HEXO transaction is included in an investor presentation available on the investor section of Tilray.com and in our Current Report on Form 8-K filed today. Financial Highlights Net revenue increased to $145.6 million compared to $144.1 million in the prior quarter. On a constant currency basis, net revenue was $154.2 million in the third quarter of 2023, up 2% from the prior year quarter.Distribution revenue increased 5% to $65.4 million, from the prior year quarter. On a constant currency basis, distribution revenue increased 12% to $70.1 million.Gross Profit (Loss) was ($11.7) million, while adjusted gross profit was $44.3 million. Gross margin was negative 8%, while adjusted gross margin rose to 30% from 26% in the year-ago quarter.Adjusted cannabis gross profit increased to $22.2 million from $18.0 million in the prior year quarter, while adjusted gross margin percentage increased to 47% from 33%.Achieved $22 million in annualized run-rate savings (and $12 million in actual cost savings) as part of $30 million cost optimization plan announced in Q4 of 2022; total annualized cash cost-savings since the closing of the Tilray-Aphria transaction reached $122 million.Adjusted EBITDA of $14.0 million, marking 16th consecutive quarter of positive adjusted EBITDA. Currently expecting Adjusted EBITDA in the range of $60 to $66 million, a greater than 30% increase from the prior year.Strong financial position with $408.3 million in cash and marketable securities.Reiterated expectation to deliver positive free cash flow from operating segments in fiscal 2023.Recorded non-cash $1.1 billion net asset reduction resulting from higher interest rates and a decline in market capitalization. This non-cash net asset reduction has no impact on the Company’s compliance with debt covenants, its cash flows or available liquidity. Irwin D. Simon, Tilray Brands’ Chairman and Chief Executive Officer, stated, “During the quarter, we continued to focus on our highest priorities: sustaining and growing the top-line across core markets and geographies while optimizing the platform to achieve positive free cash flow on an accelerated timeline. We are executing on both fronts and delivered revenue growth despite challenging market dynamics across Canada, Europe, and the U.S, as well as our 16th consecutive quarter of positive adjusted EBITDA.” Mr. Simon continued, “Looking ahead, we are focused on being the leading, most diversified cannabis lifestyle and CPG company in the world. Our strategy to deliver on this vision is centered on pursuing targeted growth opportunities, as reflected in our opportunistic acquisitions of both Montauk Brewing Company and HEXO, which has made significant strides in driving operating efficiency and improving profitability while continuing to invest in industry-leading brands. We are incredibly excited about our combined prospects moving forward with HEXO and expect a seamless integration of HEXO’s business into our efficient, built-to-last platform. At the same time, we will continue our relentless focus on cost and operational efficiencies and strengthening our industry-leading balance sheet to deliver sustained, profitable growth and shareholder value.” Mark Attanasio, Chairman of HEXO, said, “Over the past year, HEXO established and has been executing on a rigorous cost-cutting and balance sheet optimization plan. As we began working with Tilray last year, the value that could be achieved through the combination of our businesses in order to compete and drive profitable growth in the highly fragmented Canadian market was immediately clear. With the recent headwinds in the cannabis industry, our Board determined that HEXO shareholders would benefit from being part of Tilray’s diversified business and from the strong plan in place they have to reinforce their industry leadership, continue to strengthen the top and bottom lines, and to drive value creation. With Irwin and his leadership team, we are confident that our brands will continue to grow and thrive as part of Tilray Brands.” Operating Highlights Leadership in Global Cannabis Operations, Brands, and Market Share: In Canada, despite ongoing challenging cannabis market conditions, quarter over quarter, Tilray maintained its #1 cannabis market share position. With the addition of HEXO’s leading high-growth brands, the Company expects to significantly bolster its position supported by low-cost operations and complimentary distribution across all Canadian geographies. The combined company is expected to strengthen Tilray’s existing Canadian position with 12.9% pro-forma market share and #1 market position across all major markets and a leading share across most product categories. This includes anticipated pro-forma net sales of approximately US$215M and the leading low-cost operations with distribution across all Canadian geographies.Capitalizing on the unrivaled platform provided by its cultivation and distribution operations across Portugal and Germany and the leadership team’s depth of commercial and regulatory expertise, Tilray is focused on growing its leading market share in medical cannabis in the countries in which it distributes today and achieving early-mover advantage in new countries as cannabis legalization continues to proliferate across Europe. Maximizing the High-Growth Potential of U.S. CPG and Craft-Beverage Portfolio: In the third quarter, Tilray made substantial strides across its five craft-beverage brands including leaders SweetWater Brewing Company, Breckenridge Distillery, and Montauk Brewing Company, and its wellness brand Manitoba Harvest. By expanding recognition and distribution, Tilray will be well positioned to immediately leverage these brands to drive significant additional revenue in adult-use cannabis, pending federal legalization. Strategic Growth Actions April 2023 – Tilray Medical Expands Footprint in Europe and Broadens Distribution Across the Czech RepublicApril 2023 – SweetWater Brewing Company Expands Across 44 States with Nevada LaunchApril 2023 - Manitoba Harvest Expands Whole Foods Market DistributionApril 2023 - Breckenridge Distillery Wins Big at Whisky Magazine’s 2023 World Whiskies AwardsMarch 2023 - Alpine Beer Opens Taproom at Petco Park Stadium in San DiegoMarch 2023 - Breckenridge Distillery Establishes March 31st as National Après DayMarch 2023 - Montauk Brewing Expands Distribution Across the NortheastMarch 2023 - Tilray Brands Stockholders Approve Charter Amendment to Enhance Corporate Governance and Support Strategic Growth PlanMarch 2023 - SweetWater Brewing Company Brings Back Popular Triple Tail Tropical India Pale AleMarch 2023 - SweetWater Brewing Company Introduces New West Coast Style India Pale AleMarch 2023 - Potently Canadian Cannabis Brand, CANACA, Introduces New Collection of Terpene Rich Products Across CanadaFebruary 2023 - Good Supply Cannabis Brand Launches Canada’s Strongest Infused Pre-RollsFebruary 2023 - Breckenridge Distillery Strikes Gold at 2023 World Whiskies AwardsFebruary 2023 - Good Supply Cannabis Brand Launches New Product LineupFebruary 2023 - SweetWater Announces 420 Fest 2023 Lineup and VenueFebruary 2023 - Breckenridge Distillery Launches Limited-Edition Sexy Motor Oil Whiskey for Valentine’s DayFebruary 2023 - SweetWater Brewing Company Introduces New Crisp Lager to Year-Round LineupJanuary 2023 - Alpine Beer Launches INFINITE HAZE Hazy IPAJanuary 2023 - Solei Cannabis Brand Introduces New Approach to Wellness with New Product Lineup and Brand RefreshJanuary 2023 - SweetWater Brewing Company Celebrates 26 Years of Brewing with Throwback Beers, Jam Bands Live Conference Call and Audio WebcastTilray Brands will host a webcast to discuss these results today at 5:00 p.m. ET. Investors may join the live webcast available on the Investors section of the Company’s website at www.tilray.com. The webcast will also be archived after the call concludes. About Tilray BrandsTilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), is a leading global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is changing people's lives for the better – one person at a time. Tilray Brands delivers on this mission by inspiring and empowering the worldwide community to live their very best life, enhanced by moments of connection and wellbeing. Patients and consumers trust Tilray Brands to be the most responsible, trusted and market leading cannabis consumer products company in the world with a portfolio of innovative, high-quality and beloved brands that address the needs of the consumers, customers and patients we serve. A pioneer in cannabis research, cultivation, and distribution, Tilray Brands’ unprecedented production platform supports over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and craft beverages. For more information on Tilray Brands, visit www.Tilray.com and follow @Tilray Cautionary Statement Concerning Forward-Looking Statements Certain statements in this press release constitute forward-looking information or forward-looking statements (together, “forward-looking statements”) under Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the “safe harbor” created by those sections and other applicable laws. Forward-looking statements can be identified by words such as “forecast,” “future,” “should,” “could,” “enable,” “potential,” “contemplate,” “believe,” “anticipate,” “estimate,” “plan,” “expect,” “intend,” “may,” “project,” “will,” “would” and the negative of these terms or similar expressions, although not all forward-looking statements contain these identifying words. Certain material factors, estimates, goals, projections or assumptions were used in drawing the conclusions contained in the forward-looking statements throughout this communication. Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the Company’s ability to become the world's leading cannabis-focused consumer branded company; the Company’s ability to generate its targeted amount of Adjusted EBITDA for the fiscal year ending May 31, 2023; the Company’s expectation to be free-cash flow positive in its operating business units; the Company’s ability to achieve long term profitability; the Company’s ability to achieve operational scale, market share, distribution, profitability and revenue growth in particular business lines and markets; the Company’s ability to successfully complete the acquisition of HEXO; the Company’s ability to successfully achieve revenue growth, production and supply chain efficiencies, synergies and cost savings, including with respect to the HEXO acquisition; expansion of medical and recreational sales legalization across the global cannabis industry, including in Europe; and the Company’s anticipated investments and acquisitions, including in organic and strategic growth, partnership efforts, product offerings and other initiatives. Many factors could cause actual results, performance or achievement to be materially different from any forward-looking statements, and other risks and uncertainties not presently known to the Company or that the Company deems immaterial could also cause actual results or events to differ materially from those expressed in the forward-looking statements contained herein. For a more detailed discussion of these risks and other factors, see the most recently filed annual information form of the Company and the Annual Report on Form 10-K (and other periodic reports filed with the SEC) of the Company made with the SEC and available on EDGAR. The forward-looking statements included in this communication are made as of the date of this communication and the Company does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws. Use of Non-U.S. GAAP Financial MeasuresThis press release and the accompanying tables include non-GAAP financial measures, including adjusted gross margin, Adjusted gross profit, Adjusted EBITDA, Adjusted net income and free cash flow. Management believes that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the Company's operations and are useful for period-over-period comparisons of operations. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read only in connection with the Company's Consolidated Statements of Operations and Cash Flows presented in accordance with GAAP. Certain forward-looking non-GAAP financial measures included in this press release are not reconciled to the comparable forward-looking GAAP financial measures. The Company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures but would not impact the non-GAAP measures. Such items may include litigation and related expenses, transaction costs, impairments, foreign exchange movements and other items. The unavailable information could have a significant impact on the Company's GAAP financial results. The Company believes presenting net sales at constant currency provides useful information to investors because it provides transparency to underlying performance in the Company's consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year. Adjusted EBITDA is calculated as net income (loss) before income tax expense (recovery); interest expense, net; non-operating income (expense), net; amortization; stock-based compensation; change in fair value of contingent consideration; impairments; purchase price accounting step-up; facility start-up and closure costs; lease expense; litigation (recovery) costs; restructuring costs; and transaction (income) costs. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted gross profit, is calculated as gross profit adjusted to exclude the impact of inventory valuation adjustment and purchase price accounting valuation step-up. A reconciliation of Adjusted gross profit, excluding inventory valuation adjustments and purchase price accounting valuation step-up, to gross profit, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted gross margin, excluding inventory valuation adjustments and purchase price accounting valuation step-up, is calculated as revenue less cost of sales adjusted to add back inventory valuation adjustments and amortization of inventory step-up, divided by revenue. A reconciliation of Adjusted gross margin, excluding inventory valuation adjustments and purchase price accounting valuation step-up, to gross margin, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Adjusted net income is calculated as net (loss) income plus (minus) non-operating income (expense), net, change in fair value of contingent consideration, impairments; inventory write down, litigation (recovery) costs, restructuring costs, and transaction (income) costs. A reconciliation of Adjusted net income, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Free cash flow is comprised of two GAAP measures deducted from each other which are net cash flow provided by (used in) operating activities less investments in capital and intangible assets. A reconciliation of net cash flow provided by (used in) operating activities to free cash flow, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. For further information: Media: Berrin Noorata, news@tilray.com Investors: Raphael Gross, +1-203-682-8253, Raphael.Gross@icrinc.com Consolidated Statements of Financial Position February 28, May 31,(in thousands of US dollars) 2023 2022 Assets Current assets Cash and cash equivalents $164,997 $415,909 Marketable Securities 243,286 - Accounts receivable, net 78,342 95,279 Inventory 202,800 245,529 Prepaids and other current assets 69,087 46,786 Total current assets 758,512 803,503 Capital assets 425,263 587,499 Right-of-use assets 6,492 12,996 Intangible assets 994,325 1,277,875 Goodwill 2,005,701 2,641,305 Interest in equity investees 4,638 4,952 Long-term investments 7,620 10,050 Convertible notes receivable 168,356 111,200 Other assets 4,993 314 Total assets $4,375,900 $5,449,694 Liabilities Current liabilities Bank indebtedness $18,125 $18,123 Accounts payable and accrued liabilities 163,422 157,431 Contingent consideration 16,219 16,007 Warrant liability 7,414 14,255 Current portion of lease liabilities 2,528 6,703 Current portion of long-term debt 77,892 67,823 Current portion of convertible debentures payable 184,082 - Total current liabilities 469,682 280,342 Long - term liabilities Contingent consideration 10,596 - Lease liabilities 8,598 11,329 Long-term debt 89,419 117,879 Convertible debentures payable 223,087 401,949 Deferred tax liabilities 164,412 196,638 Other liabilities 3,335 191 Total liabilities 969,129 1,008,328 Commitments and contingencies (refer to Note 17) Stockholders' equity Common stock ($0.0001 par value; 980,000,000 shares authorized; 617,857,031 and 532,674,887 shares issued and outstanding, respectively) 62 53 Series A Preferred Stock ($0.0001 par value; 10,000,000 shares authorized; 120,000 and nil shares issued and outstanding, respectively) - - Additional paid-in capital 5,723,342 5,382,367 Accumulated other comprehensive loss (42,948) (20,764)Accumulated Deficit (2,276,794) (962,851)Total Tilray Brands, Inc. stockholders' equity 3,403,662 4,398,805 Non-controlling interests 3,109 42,561 Total stockholders' equity 3,406,771 4,441,366 Total liabilities and stockholders' equity $4,375,900 $5,449,694 Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change (in thousands of U.S. dollars, except for per share data) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022 Net revenue $145,589 $151,871 $(6,282) (4)% $442,936 $475,047 $(32,111) (7)% Cost of goods sold 157,288 112,042 45,246 40% 363,139 351,497 11,642 3% Gross profit (loss) (11,699) 39,829 (51,528) (129)% 79,797 123,550 (43,753) (35)% Operating expenses: General and administrative 38,999 38,445 554 1% 117,385 121,401 (4,016) (3)% Selling 6,452 8,641 (2,189) (25)% 25,792 25,283 509 2% Amortization 23,518 24,590 (1,072) (4)% 71,872 84,345 (12,473) (15)% Marketing and promotion 7,354 7,578 (224) (3)% 23,137 20,163 2,974 15% Research and development 171 164 7 4% 502 1,464 (962) (66)% Change in fair value of contingent consideration 352 (30,747) 31,099 (101)% 563 (29,065) 29,628 (102)% Impairments 1,115,376 — 1,115,376 NM 1,115,376 — 1,115,376 NM Litigation (recovery) costs (5,230) 4,215 (9,445) (224)% (1,970) 6,489 (8,459) (130)% Restructuring costs 2,663 — 2,663 0% 10,727 795 9,932 1249% Transaction (income) costs 5,382 5,023 359 7% (3,882) 35,653 (39,535) (111)% Total operating expenses 1,195,037 57,909 1,137,128 1964% 1,359,502 266,528 1,092,974 410% Operating loss (1,206,736) (18,080) (1,188,656) 6574% (1,279,705) (142,978) (1,136,727) 795% Interest expense, net (1,040) (2,312) 1,272 (55)% (8,560) (22,422) 13,862 (62)% Non-operating income (expense), net 1,213 71,037 (69,824) (98)% (50,229) 186,329 (236,558) (127)% (Loss) income before income taxes (1,206,563) 50,645 (1,257,208) (2,482)% (1,338,494) 20,929 (1,359,423) (6,495)% Income taxes (benefit) expense (10,811) (1,830) (8,981) 491% (15,313) (2,739) (12,574) 459% Net (loss) income $(1,195,752) $52,475 $(1,248,227) (2,379)% (1,323,181) 23,668 (1,346,849) (5,691)% Net loss per share - basic and diluted $(1.90) $0.09 $(1.99) (2,214)% $(2.20) $0.00 $(2.20) (77,239)% Condensed Consolidated Statements of Cash Flows For the nine months ended February 28, Change % Change (in thousands of US dollars) 2023 2022 2023 vs. 2022 Cash used in operating activities: Net (loss) income $(1,323,181) $23,668 $(1,346,849) (5691)% Adjustments for: Deferred income tax recovery (29,537) (17,296) (12,241) 71% Unrealized foreign exchange loss 13,711 1,699 12,012 707% Amortization 101,156 113,824 (12,668) (11)% Loss (gain) on sale of capital assets (2) (631) 629 (100)% Inventory valuation write down 55,000 12,000 43,000 358% Impairments 1,115,376 - 1,115,376 0% Other non-cash items 12,933 962 11,971 1244% Stock-based compensation 29,766 27,025 2,741 10% Loss (gain) on long-term investments & equity investments 2,843 (2,401) 5,244 (218)% Loss (gain) on derivative instruments 13,534 (210,653) 224,187 (106)% Change in fair value of contingent consideration 563 (29,065) 29,628 (102)% Change in non-cash working capital: Accounts receivable 18,053 (458) 18,511 (4042)% Prepaids and other current assets (32,680) (953) (31,727) 3329% Inventory (11,808) (16,512) 4,704 (28)% Accounts payable and accrued liabilities (1,419) (57,947) 56,528 (98)% Net cash used in operating activities (35,692) (156,738) 121,046 (77)% Cash used in investing activities: Investment in capital and intangible assets (8,394) (28,470) 20,076 (71)% Proceeds from disposal of capital and intangible assets 2,175 11,526 (9,351) (81)% Purchase of marketable securities, net (243,186) - (243,186) 0% Net cash paid for business acquisition (28,122) 326 (28,448) (8726)% Net cash used in investing activities (277,527) (16,618) (260,909) 1570% Cash provided by (used in) financing activities: Share capital issued, net of cash issuance costs 129,593 — 129,593 0% Shares effectively repurchased for employee withholding tax (1,189) (3,149) 1,960 (62)% Proceeds from long-term debt 1,288 — 1,288 0% Repayment of long-term debt and convertible debt (64,658) (34,570) (30,088) 87% Repayment of lease liabilities (1,114) (4,672) 3,558 (76)% Net increase in bank indebtedness 2 8,779 (8,777) (100)% Net cash provided by (used in) financing activities 63,922 (33,612) 97,534 (290)% Effect of foreign exchange on cash and cash equivalents (1,615) (2,284) 669 (29)% Net decrease in cash and cash equivalents (250,912) (209,252) (41,660) 20% Cash and cash equivalents, beginning of period 415,909 488,466 (72,557) (15)% Cash and cash equivalents, end of period $164,997 $279,214 $(114,217) (41)% Other Financial Information: Key Operating Metrics For the three months For the nine months ended February 28, ended February 28,(in thousands of U.S. dollars) 2023 2022 2023 2022 Net cannabis revenue $47,549 $55,045 $156,017 $184,269 Distribution revenue 65,385 62,532 186,158 198,587 Net beverage alcohol revenue 20,640 19,597 62,689 48,765 Wellness revenue 12,015 14,697 38,072 43,426 Cannabis costs 77,604 37,042 137,800 122,492 Beverage alcohol costs 10,663 8,091 32,932 20,674 Distribution costs 57,964 57,566 165,443 178,093 Wellness costs 8,299 9,343 26,964 30,238 Adjusted gross profit (excluding PPA step-up and inventory valuation adjustments) (1) 44,310 39,829 138,020 135,550 Cannabis adjusted gross margin (excluding inventory valuation adjustments) (1) 47% 33% 47% 40%Beverage alcohol adjusted gross margin (excluding PPA step-up) (1) 53% 59% 53% 58%Distribution gross margin 11% 8% 11% 10%Wellness gross margin 31% 36% 29% 30%Adjusted EBITDA (1) 14,015 10,086 39,254 36,543 Cash and cash equivalents and marketable securities 408,283 279,214 408,283 279,214 Working capital 288,830 413,358 288,830 413,358 Net Revenue by Operating Segment For the three months % of Total Revenue For the three months % of Total Revenue For the nine months % of Total Revenue For the nine months % of Total Revenue (In thousands of U.S. dollars) February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Cannabis business $47,549 33% $55,045 36% $156,017 35% $184,269 39% Distribution business 65,385 45% 62,532 41% 186,158 42% 198,587 42% Beverage alcohol business 20,640 14% 19,597 13% 62,689 14% 48,765 10% Wellness business 12,015 8% 14,697 10% 38,072 9% 43,426 9% Total net revenue $145,589 100% $151,871 100% $442,936 100% $475,047 100% Net Revenue by Operating Segment in Constant Currency For the three months For the three months For the nine months For the nine months February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 (In thousands of U.S. dollars) as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue Cannabis business $51,007 33% $55,045 36% $164,746 34% $184,269 39% Distribution business 70,144 45% 62,532 41% 211,676 44% 198,587 42% Beverage alcohol business 20,640 14% 19,597 13% 62,689 13% 48,765 10% Wellness business 12,385 8% 14,697 10% 39,144 8% 43,426 9% Total net revenue $154,176 100% $151,871 100% $478,255 99% $475,047 100% Net Cannabis Revenue by Market Channel For the three months % of Total Revenue For the three months % of Total Revenue For the nine months % of Total Revenue For the nine months % of Total Revenue (In thousands of U.S. dollars) February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Revenue from Canadian medical cannabis products $6,035 13% $7,050 13% $18,920 12% $23,353 13% Revenue from Canadian adult-use cannabis products 45,318 96% 43,504 79% 156,063 100% 162,632 87% Revenue from wholesale cannabis products 58 0% 2,804 5% 686 0% 6,763 4% Revenue from international cannabis products 9,707 20% 15,820 29% 27,834 18% 39,792 22% Less excise taxes (13,569) -29% (14,133) -26% (47,486) -30% (48,271) -26% Total $47,549 100% $55,045 100% $156,017 100% $184,269 100% Net Cannabis Revenue by Market Channel in Constant Currency For the three months For the three months For the nine months For the nine months February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 (In thousands of U.S. dollars) as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue as reported in constant currency % of Total Revenue Revenue from Canadian medical cannabis products $6,442 13% $7,050 13% $20,093 12% $23,353 13% Revenue from Canadian adult-use cannabis products 48,721 96% 43,504 79% 162,777 99% 162,632 87% Revenue from wholesale cannabis products 62 0% 2,804 5% 726 0% 6,763 4% Revenue from international cannabis products 10,269 20% 15,820 29% 31,627 19% 39,792 22% Less excise taxes (14,487) -28% (14,133) -26% (50,477) -31% (48,271) -26% Total $51,007 100% $55,045 100% $164,746 100% $184,269 100% Other Financial Information: Gross Margin and Adjusted Gross Margin For the three months ended February 28, 2023(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $47,549 $20,640 $65,385 $12,015 $145,589 Cost of goods sold 80,362 10,663 57,964 8,299 157,288 Gross profit (32,813) 9,977 7,421 3,716 (11,699)Gross margin -69% 48% 11% 31% -8% Adjustments: Inventory valuation adjustments 55,000 - - - 55,000 Purchase price accounting step-up - 1,009 - - 1,009 Adjusted gross profit 22,187 10,986 7,421 3,716 44,310 Adjusted gross margin 47% 53% 11% 31% 30% For the three months ended February 28, 2022(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $55,045 $19,597 $62,532 $14,697 $151,871 Cost of goods sold 37,042 8,091 57,566 9,343 112,042 Gross profit 18,003 11,506 4,966 5,354 39,829 Gross margin 33% 59% 8% 36% 26% For the nine months ended February 28, 2023(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $156,017 $62,689 $186,158 $38,072 $442,936 Cost of goods sold 137,800 32,932 165,443 26,964 363,139 Gross profit 18,217 29,757 20,715 11,108 79,797 Gross margin 12% 47% 11% 29% 18% Adjustments: Inventory valuation adjustments 55,000 - - - 55,000 Purchase price accounting step-up - 3,223 - - 3,223 Adjusted gross profit 73,217 32,980 20,715 11,108 138,020 Adjusted gross margin 47% 53% 11% 29% 31% For the nine months ended February 28, 2022(In thousands of U.S. dollars) Cannabis Beverage Distribution Wellness TotalNet revenue $184,269 $48,765 $198,587 $43,426 $475,047 Cost of goods sold 122,492 20,674 178,093 30,238 351,497 Gross profit 61,777 28,091 20,494 13,188 123,550 Gross margin 34% 58% 10% 30% 26% Adjustments: Inventory valuation adjustments 12,000 - - - 12,000 Adjusted gross profit 73,777 28,091 20,494 13,188 135,550 Adjusted gross margin 40% 58% 10% 30% 29% Other Financial Information: Adjusted Earnings Before Interest, Taxes and Amortization For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change(In thousands of U.S. dollars) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022Net (loss) income $(1,195,752) $52,475 $(1,248,227) (2,379)% $(1,323,181) $23,668 $(1,346,849) (5,691)%Income taxes (benefit) expense (10,811) (1,830) (8,981) 491% (15,313) (2,739) (12,574) 459%Interest expense, net 1,040 2,312 (1,272) (55)% 8,560 22,422 (13,862) (62)%Non-operating income (expense), net (1,213) (71,037) 69,824 (98)% 50,229 (186,329) 236,558 (127)%Amortization 33,769 37,020 (3,251) (9)% 101,156 113,824 (12,668) (11)%Stock-based compensation 9,630 9,355 275 3% 29,766 27,025 2,741 10%Change in fair value of contingent consideration 352 (30,747) 31,099 (101)% 563 (29,065) 29,628 (102)%Impairments 1,115,376 - 1,115,376 NM 1,115,376 - 1,115,376 NMInventory valuation adjustments 55,000 - 55,000 NM 55,000 12,000 43,000 358%Purchase price accounting step-up 1,009 - 1,009 NM 3,223 - 3,223 NMFacility start-up and closure costs 2,100 2,500 (400) (16)% 6,900 10,400 (3,500) (34)%Lease expense 700 800 (100) (13)% 2,100 2,400 (300) (13)%Litigation (recovery) costs (5,230) 4,215 (9,445) (224)% (1,970) 6,489 (8,459) (130)%Restructuring costs 2,663 - 2,663 NM 10,727 795 9,932 1249%Transaction (income) costs 5,382 5,023 359 7% (3,882) 35,653 (39,535) (111)%Adjusted EBITDA $14,015 $10,086 $3,929 39% $39,254 $36,543 $2,711 7% Other Financial Information: Adjusted Net Loss For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change(In thousands of U.S. dollars) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022Net (loss) income $(1,195,752) $52,475 $(1,248,227) (2,379)% $(1,323,181) $23,668 $(1,346,849) (5,691)%Non-operating income (expense), net (1,213) (71,037) 69,824 (98)% 50,229 (186,329) 236,558 (127)%Change in fair value of contingent consideration 352 (30,747) 31,099 (101)% 563 (29,065) 29,628 (102)%Impairments 1,115,376 - 1,115,376 NM 1,115,376 - 1,115,376 NMInventory valuation adjustments 55,000 - 55,000 NM 55,000 12,000 43,000 358%Litigation (recovery) costs (5,230) 4,215 (9,445) (224)% (1,970) 6,489 (8,459) (130)%Restructuring costs 2,663 - 2,663 NM 10,727 795 9,932 1249%Transaction (income) costs 5,382 5,023 359 7% (3,882) 35,653 (39,535) (111)%Adjusted net loss $(23,422) $(40,071) $16,649 (42)% $(97,138) $(136,789) $39,651 (29)%Adjusted net loss per share - basic and diluted $(0.04) $(0.08) $0.04 (54)% $(0.16) $(0.29) $0.13 (44)% Other Financial Information: Free Cash Flow For the three months For the nine months ended February 28, Change % Change ended February 28, Change % Change(In thousands of U.S. dollars) 2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022Net cash used in operating activities $(18,632) $(46,390) $27,758 (60)% $(35,692) $(156,738) $121,046 (77)%Less: investments in capital and intangible assets, net (842) (1,352) 510 (38)% (6,219) (16,944) 10,725 (63)%Free cash flow $(19,474) $(47,742) $28,268 (59)% $(41,911) $(173,682) $131,771 (76)%