Tilray's surprising profit attracts investor interest

Shares of Tilray (NASDAQ:) (TSX:) gained 13.5% yesterday following news that the cannabis grower posted a surprising second-quarter profit for the newly minted largest cannabis producer in the world, measured by sales.

The company reported net profit of $6 million, a huge improvement from a loss of $89 million in the same period last year. Although revenues grew 20% to US$155 million, they fell short of the average projected estimates of US$170.5 million. The reported profit for the three-month period ended November 30 is due in part to the savings that accrued from Tilray's merger with Aphria. The savings actually came in at about $20 million above the $80 million sent prior to the earnings report.

small increase in medicinal cannabis and international sales.

CEO Irwin Simon said:

“The aggregate of our achievements, prospects and global platform make Tilray Brands' opportunity as compelling as ever, driven by our success as a cannabis and lifestyle powerhouse (consumer packaged goods) and our relentless focus on delivering of shareholder value. "

Tilray and Aphria were officially merged in May 2021.

Tilray shares have lost about 43% in the past year.

Possible 'settlement phase'

The first page of what could well be the final chapter in the story of the downward spiral of Canadian cannabis producer CannTrust Holdings (OTC:) (TSX:) was written last week, when it was plagued by scandal. company issued a statement amending its Compromise, Arrangement and Reorganization Plan. changes in the board of directors, was an admission that the company is short of cash reserves – very briefly.

In part the statement read:

“Despite the significant progress the CannTrust Group has made in this proceeding, including successfully obtaining the reintroduction of its licenses from Health Canada, restructuring its operations, resuming manufacturing and processing operations, achieving Major settlements and the development, approval and sanction of the CCAA Plan have faced challenges for the Canadian cannabis industry in general and the CannTrust Group in particular. As a result, the CannTrust Group does not have sufficient liquidity to operate in the short term.”

The recognition of a liquidity shortfall has prompted the company, as it states, to "develop an orderly winding-down plan to maximize the value of its assets". year now. In April 2020, it was delisted from the New York Stock Exchange, followed by delisting from the Toronto Stock Exchange in May 2020 after cultivation licenses were suspended after the company was caught growing weed in an unlicensed space in its cultivation facilities in Ontario.

Although the licenses were restored, the situation caused legal problems with investors. And, according to the company's statement last week, class action lawsuits filed by investors have led CannTrust to set aside $50 million in a class-action settlement trust and $2.7 million in a separate trust associated with creditor protection actions.

Former members of the company's board of directors are also still accused of investigating growing cannabis in unlicensed areas.

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