TLRY Stock: Tilray Stuck in Neutral Until Cash Flow Turns Positive


Source: Ralf Liebhold /

Tilray (NASDAQ:TLRY) announced on April 6 that its quarterly results ending on February 28 had finally returned its net profit to profitability. That’s good news for the #1 cannabis company in market share in Canada. But it also has bad news, hidden in the details that could continue to hurt TLRY’s stock.

Tilray therefore merged with Aphria last year and claims to have now “achieved $76 million in cost synergies to date”. This led to a 23% increase in revenue for the quarter. The big news is that the company has now posted a net profit of $52.5 million for the quarter. In fact, it achieved a net income margin of 34.6% for the quarter. It’s pretty good, isn’t it?

The answer is maybe. The problem is that Tilray is still burning money. It wasn’t in the exploitative headlines that the company put forward. In fact, it is buried in the cash flow statement which is only visible on page 4 of the 10-Q filing with the Securities and Exchange Commission. This shows that for the nine months ending February 28, there was negative operating cash flow of $156.7 million. After deducting an additional $28.47 million in capital expenditures, total cash outflows exceeded $185 million.

If we compare this with the six-month cash flow statement, it shows that the cash burn was $134.20 million (i.e. $110.3 million cash flow from operations plus $23.9 million). Thus, for the third quarter, the actual cash burn was negative $50.96 million.

So how can a company report a positive net profit of $52.5 million while spending almost $51 million? The answer is – always follow the money. Who cares about GAAP or non-GAAP net income figures if cash comes out?

This is why the TLRY stock continues to decline and will likely continue to decline. Since the beginning of the year, it is down 15.63%. Unless the company can find a way to be cash flow positive and do so in a big way, don’t expect TLRY shares to rise significantly from here.

After all, isn’t cannabis supposed to be a cash cow? Certainly, it is in the illegal market. Why is it not on the legal market? I don’t understand why it’s so hard. Unless there is a clear path to huge cash flow, value investors are likely to stay away.

As of the date of publication, Mark Hake did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to publishing guidelines.


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