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Tilray Inc TLRY

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Morningstar’s Analysis

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Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Tilray’s First Full Quarter Post Merger Understates Full Margin Potential; Shares Undervalued

Analyst Note

| Kristoffer Inton |

The combination of legacy Aphria and legacy Tilray closed in early May, less than a month before its fiscal year end. As such, the first quarter of Tilray’s fiscal year 2022, which ended in August, represented its full first quarter as a combined company. Revenue growth was decent considering adult-use dispensaries largely reopened to the public from pandemic measures during the quarter, reaching $168 million compared with $142 million in the preceding quarter. Gross margin of 30% and adjusted EBITDA margin of 8% looked good, especially compared with fellow Canadian producers who’ve yet to reach positive EBITDA. Still, we expect further adjusted EBITDA margin expansion to be roughly 20% by 2031.

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Company Profile

Business Description

Tilray is a Canadian producer that cultivates and sells medical and recreational cannabis. In 2021, legacy Aphria acquired legacy Tilray in a reverse merger and renamed itself Tilray. The bulk of its sales are in Canada and in the international medical cannabis export market. U.S. exposure consists of CBD products through Manitoba Harvest and beer through SweetWater.

Contact
655 Madison Avenue, Suite 1900
New York, NY, 10065
T +1 844 845-7291
Sector Healthcare
Industry Drug Manufacturers - Specialty & Generic
Most Recent Earnings Aug 31, 2021
Fiscal Year End May 31, 2022
Stock Type Speculative Growth
Employees 2,100