(Bloomberg) — The shares of Tilray Inc. rose most in more than five months as investors rewarded the cannabis company for profits even amid challenges posed by Canada’s Covid-19 restrictions.
Net income was $33.6 million for the fiscal fourth quarter ended May 31, compared to a loss of $84.3 million for the same period last year, while earnings before interest, taxes, depreciation and amortization nearly quadrupled to $12 .3 million. The company said in a statement on Wednesday. It was the company’s first quarterly report since its combination with Aphria Inc.
Executives expect to experience some of Canada’s worst lockdowns before the current quarter ends on August 31, though the virus remains unpredictable. As hundreds of pharmacies closed due to Covid, more people were buying cannabis online, where regulations severely limit companies’ ability to market and consumers opt for low prices over specific brands, Tilray’s CEO said during a conference call.
“Given the challenges of ongoing lockdowns in Canada due to Covid-19, we had a strong quarter,” Irwin Simon said in a telephone interview. He also stressed that the company’s cash position — $488.5 million — may allow Tilray to pursue acquisitions of other cannabis companies that could help it enter the US market if the US decides to federally legalize marijuana.
Tilray rose 24%, the most since Feb. 16, to $15.71 at 11:34 a.m. in New York; shares were up 54% this year through Tuesday.
What Bloomberg Intelligence says
“This quarter’s performance, the first since the reverse acquisition of Tilray by Aphria in May, underlines the diversity of the combined businesses. The resilience of the net revenues generated by the cannabis and alcoholic beverages segments was positive in the face of persistent pressures on consumers from Covid-19 lockdowns and restrictions.
–Kenneth Shea, Tobacco and Beverage Industry Analyst BI Click here to read the survey.
Free cash flow also grew in a quarter that analysts had warned would be messy due to the Aphria deal, which formed a new behemoth in the industry. Tilray said it has already benefited from $35 million in cost synergies from that combination and remains on track to deliver originally projected cost savings of $80 million over the next 16 months.
Aside from the company’s core cannabis business, Simon said plans to roll out new alcoholic beverages through Aphria’s acquisition of Sweetwater Brewing Co. went well. Aside from beer, the company also makes hard seltzers and will expand into canned spirits and wine-based beverages, he said.
(Fifth paragraph stock updates, analyst commentary.)
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