TLRY - Earnings call 4 2023 | Tilray Brands, Inc.

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Operator

Hello, and thank you for joining today's conference call to discuss Tilray Brands, Inc.'s Financial Results for the Fiscal Year 2023 and Fourth Quarter Ended May 31, 2023. [Operator Instructions] It's now my pleasure to turn the call over to Ms. Noorata. Please go ahead.

Berrin Noorata

Good morning, everyone. has have on our the that the website can tilray.com information should which press Tilray useful during you the provide non-GAAP at available with financial will is Investors and to today's now, call, access SEDAR. Please investors. be earnings to release, Brands SEC we By and filed referring note various been for Section that of measures

a considered of The presentation not information for in presented isolation information this accordance as contains earnings a GAAP. be the However, reconciliation non-GAAP intended in or most the with of prepared is to comparable substitute release with in financial the GAAP. each to accordance measure measure financial press

during forward-looking U.S. call Simon. are described and Tilray such now, response like your forward-looking and Actual fiscal provide results of question-and-answer XXXX leadership may financial incorrect. the involve Irwin a uncertainties, of with review Denise team. senior our Chairman and us Blair will of and remarks In begin our of Gilmore, Officer, associated MacNeil, prove could on Officer will business. And will will International; based known these includes uncertainties release, guidance Chief Merton, earnings CEO, President, I'd the joining and and our be Chairman addition, Canada; differ Executive text for segment Irwin with and we Officer the Simon, Ty Carl Brands' and for those over Head questions. These and our turn who and Chief Financial to statements opening are Tilray President remarks; to Chief and year. Also be annual the risks many to statements. Today, materially beliefs in statements Faltischek, Strategy which Beer current to forward-looking our press in making expectations from statements. our risks and unknown in members key hear from you The numerous issue

Irwin Simon

of XXXX We call and year in minimal Brands' Cannabis the revenue results. When million Tilray was Canadian annual financial you you, Berrin, singularly a team the joining everyone. joined good and our with morning, $XX fiscal in cash. approximately Aphria Thank Aphria XXXX, first appreciate presentation today for LP I

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consolidation synergies sales oils, LP. From perspective, in $X cost ahead pre-tax excess XX also a now Canadian and of we corporate operation in I and cannabis Tilray's and and cultivation, paid Canadian of challenges approximately fiscal income was segments. increased tax and evolution second the now merits Canadian month, share In $XX eliminating the contribute cannabis share XX.X categories. In are Cannabis share XXXX, of market into infrastructure. our CANACA market. in of Tilray doing comprised of product Canadian July. Revenue in substantial mix. billion Quebec. Tilray coming is business on CANACA the X annualized joined concentrates, these line and XXX is to facilities was hold led and to our with Canadian industry the our adult-use from impact market HEXO. continue market our in stage to Turning by with especially sales and take the revenue brought lead in XX% the products including with of pre-rolls an cannabis our duplication HEXO X,XXX of acquisition of stabilize. due taxes segment over adult-use continues million XX% Quebec laser accretive need position closing in product Aphria, we brands new opportunities to to its in vapes, June of approximately I of this retail their million extraction SG&A, stores logistics, packaging, addition strengthen into the the market and the control. Again, cannabis to Supply, X, operating increased of business in the Canadian our in arrangement, the million impacting Canada, compression their tax to HEXO favorable has with brands Tilray total and repeating, has the of the price on flower, of consolidation operations Canada. the assets, leader $XX roughly all which our of innovation which in and and of Today, additional to set leading realize business so, of needed by LPs, Good focused and increase Good across management XXXX. in in leading are across We performances to with this we Darts, but #X the our by the optimizing and month million market drive X,XXX by basis vegetables confident, $XXX cannabis majority launch fruit the remains synergies In HEXO, sales. before, excise bottom category burden utilizing XX% tax continue challenge and profitable fiscal before The added line. I've largest the of and #X coming product is management off next negative many. of cannabis Canada Tilray new and cannabis to within our adult-use for the product first quarter our rightsizing imbalance prioritized in legacy government company, cultivation, Tilray, XX%, Canadian XXX every partially bps Tilray's with over our far spent quality and of will course, #X face this our CAD which innovation the and innovation launch teams said and greenhouse to And next of our We these Canadian province the segment, of cannabis offset the the on to in quarters. Last million corporate team was we the our cannabis Supply remain Canada. In in plant CAD inefficiencies, too market. We've new kind impact expect an top Canada, Top realization it leading repurposing costs, #X MONSTERS on

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prescribed be a our planning medical a that to larger as and proposed proposes narcotic Germany, thereby through adult-use not to for cannabis we medical may we're a be opening patient pathway around to While prescription, the legislation note in legalization population. accessibility business declassified

at using in platform this same medical We to medicines Pharma distribution Tilray distribution And are the sell expand cannabis Germany. using medical help to our and relationships traditional throughout time, company our business Europe.

turning beverage alcohol portfolio. to CPG our Now and

federally we have today cannabis the not Company, are near alcohol the in we award value all whiskey. adult-use long-term for the Brewing growth long-term strong beverage business brands markets businesses, Breckenridge wellness Flash of consist to Montauk engage the Distillery, which optimizing U.S. future. Tilray let will are touch Company, and beverage, of if remained craft me Beer Brewing significant illegal While strategy, SweetWater and segment that the the in plant U.S. In integral that participation our are brands, reiterate cannabis existing our meantime, which world's U.S. is performances Alpine solid awarded delivering Company, Company, and winning spirits growing the in potential Brewing highly and alcohol blended and includes Green brands brands best

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brand alcohol We infrastructure we're are by confident, quickly a towards that. beverage leveraging can working and be national it our national

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and U.S. with Finally, nearly bourbon annually. sales to contract its brand spirits growth states the leader. awarded aligned It the XX% craft XX and category distilleries continues Breckenridge distribution our Distillery a firmly is Breckenridge most momentum. one guaranteeing of established as nationally a position including build Distillery all is Today, RNDC, distributed in

the and broad when backed marketing of brands and distribution and cannabis-infused Our comes can opportunities existing can the products, which creation CPG through by for set be leveraged networks. wellness time their related beverage be also alcohol cannabis brands

segment. Turning now to our wellness

than hemp in and channels U.S., including has strong market the greater natural XX% hemp with and of the in Manitoba a seed business Our share ] has [ share branded Canadian market presence XX%. nearly MULO

Wellness with Tilray fiscal business XXXX. deliver free being Our continues EBITDA, of positive to our strongest flow quarter cash QX

and low-carb strategy plant-based, role in pipeline, key interest of consumers. and of given optimization innovation the Whole CBD with and relevance clear sheet the delivering needs Carl? opportunities of the on maximizing and channels and detail. including in part wellness Our the meet in remain of across beverages turn to recent Carl ever by growth expansion including important they the Markets greater our strength. I the our the strategic growth businesses we like strong And over diets. by consumer play products, maintaining our provided that, demographics. A and now to increasing in demonstrating U.S. discuss in diversified wellness we're Happy hemp priorities, launch keto Flower the excited our platform hemp revenue, near an long-term, the balance Walmart, will our consumer with products can Distribution an steadfast Gen call Foods drivers and that including Z and Millennial financials remains

Carl Merton

that pleased end of target cash the $XX adjusted million. respect reporting With adjusted $XX of free million for low to you, we positive million year. adjusted out reporting year. exceeded our Thank our to report with exceeded And flow, to laid $X.X our $XX.X of range flow, we the targets exceeded million, target fiscal cash to free I both the we of am that Irwin. respect guidance for financial we EBITDA,

cash by accomplishments strengthens same of are At free million. controllable. to our in expenses on the year improved $XX we the we and and the adjusted importantly, our a cash reconciliation year a U.S. our both flow fiscal non-GAAP a million to fiscal free press flow control generated accordance More earnings shortly. But with earlier, remarks. are will along in by financial reference adjusted will the and quarter, flow results hard to as and sheet, as results almost explain under GAAP basis, And I our Berrin testament we reminder, in our GAAP during work which determination with cash identified $XXX first, These measures throughout dollars non-GAAP this the our results operating time, GAAP and managing team U.S. over presented a adjusted to discussion. our our our contains release reported mentioned of balance

Before our as May, notes on of of million refinancing The into annual convertible to maturities XXXX strengthened meaningful are which extended refinance briefly under October Recall, of investments on and balance late Aphria for rate favorable those million that want acquisitions, $XXX due our X, performances, just I XX, convertible of had we quarterly $XXX on due reviewing $XXX XXXX, XXXX. than maturity strategic lower Tilray notes reserving the of XXXX, and a X.X%. extended out we sought refinancing we and cash, and using in February to our under million a sheet, June interest X, which debt. portion just in notes. Rather locked of our did our discuss further fixed a convertible

for not money did raise pay-off previous this Importantly, do we to purposes capital losses. working to or

that financial institutional company the and long notes the of institutional plan strength and team as management from in strategic investors the our the heard common the investors in that we the stock of will purchased invested with they percentage well the they of have sheet. Those net currently now as company our only in investors in themes were in, our cannabis the confidence our convertible the leading results, are the consistent we world was balance stock. because our presence the the shares would that industry assuming history same in notes of of they One have into increase the institutional convert

Net $XXX.X Let revenue fourth me million year at year before was the compared reviewing to full nearly in prior for briefly greater fiscal highlights million. even XXXX the $XXX.X at detail. for quarter discuss the

year-over-year constant currency, $XXX under X% in on also this in revenue revenue just compression million grew on or $XX revenue over constant X% Inclusive XX% a constant However, of cannabis X% or positive net all By currency of net to basis. to wellness which of currency fell million. X% in due basis. representative Canada down was price year-over-year virtually a reduction segment, EBITDA. And

just because and to a Breckenridge billion Net even. Net loss the on However, an improved is margin review XX%. By to to margin increased loss from to in from in as year. the XXXX basis the XX% annual and gross quarter. prior million SweetWater, contributions a for million the $XX.X share million for at margin adjusted increased in fiscal our the of distribution for revenue operate fiscal adjusted tied expanded Montauk million Gross XX% perspective, year. due year. Adjusted XX% wellness year adjusted from margin gross $XXX profit prior a $X.XX prior basis than $XXX lower up for our adjusted the from mix, margin $X.X for basically From XXXX which margin compared XXX the company, in the compared $XXX gross prior our year impairment over was in in loss gross was beverage previous $XXX XX% to product EBITDA $X.XX to while acquisitions, gross discussed gross HEXO the improved net loss to was year. alcohol And year constant per record was million, flat, goodwill our $XX margin prior increased million beverage segment, year. but XX%. due Adjusted revenue million arrangement, XX% to fell and $XXX.X prior in profit alcohol XX% points currency improved cannabis increased gross margin distribution to from year adjusted the adjusted to favorable rose

have We positive EBITDA now generated years. adjusted consecutive X in

reported gross to quarter. when gross rose part prior net year $XXX.X for XX% million and On basis, gains in up QX and was QX currency last prior margin allocated year. Net margin improved of XX% record loss $XX.X net almost overhead $XX.X XX, $XX.X a of QX by from actual XX% prior the million per just to year summer, the Operating basis, million operating that amount million year share, excludes last The profit which run free cash cash of from $X.XX rose a negative year. Adjusted to or perspective, May rate of million just result a quarter, doubled saving of was or arrangement. Recall, XXXX quarter. a million of revenue Through we loss loss in our capital reduction million working during million to Turning through of current part cost of and the $XX.X net direct on basis, achieved flow, XX% a requirements. From now $XX.X million for of year in from and a $XX.X implementation efficiencies represented offsetting flow adjusted last the loss optimization prior improvement CapEx. million by $XX synergy net from the in and quarter. Profit contributions was cash $XX.X numerous we amount million prior $XXX.X QX to was the in X% which $XX under a million year quarter. million in cash million cannabis were is growth our year in XX% working million, million quarter. Gross per margin QX reported in the our of increased year revenue due of of result a record realized million an cash year savings to have a and free while from cost $XX.X a an improvement we of loss programs, from of in loss flow a profit our production, announced the annualized This million the under $XX.X ago. gross in $XXX.X margin adjusted EBITDA the to including an to from HEXO $XX.X was prior management share the a constant quarter. to negative flow QX $XX.X year, improved free quarter. XX% $XXX million compared of compared QX, $XX.X $XXX to flow This was $XX.X capital. Adjusted of gross free the $X.XX On cost compares plan. $XX for we programs million adjusted million intentionally reducing from net prior for

free flow capital cash on course, Of used fiscal full is that to basis. Note expected provided fluctuate or for quarter-by-quarter positive year, a by the in working changes adjusted cash was $X.X costs million, almost demonstrate representing certainly and all balance an the our from better metrics units. across XXXX. have year to $XXX These million revenue fiscal the we improvement business steps taken

cannabis Canadian our $X.X adult-use taxes Excise wholesale. significant to million revenue, totaled business million million our a so from to $XXX.X in million medical clearly in and million, Turning of revenue, impact international $XX segments. $XX.X Gross are revenue, they cannabis comprised in revenue. was revenue $XX.X Canadian cannabis gross

almost to the addition adds burden the CAD to And XXX substantial million. increase of paid this taxes expect to approximately tax corporate and to we CAD year, cannabis to with Canadian in full HEXO, the excise the XXX the government. industry This For challenges million today. facing

in loss facilities million U.S. to to prior importantly, impacts margin increased profit in More was net using a cannabis on decrease as of losses. Price licensed from the offset by year impact continued to Canada compression, foreign compared not profit while quarter, the margin XX% gross was is $X.X CC de year a gross $XX.X Pharma was marked million have the in improvement would financing to a million Tilray facto the our million $X.X dollar prior and in through the and euro. On exchange the XX.X% basis, taxes government margin was year a the million $XX.X cannabis when one negative to a for due pays producers prior revenue few that to XX% a prior of revenue quarter. The from revenue million cannabis $XX.X and $XX.X manage in gross quarter. as gross predominantly slowing, the have XX.X% million million $XX.X XX% euro XX% well cannabis million the the to million the of it's X% actually was basis, quarter. compared million margin of despite negative distribution XX.X% cannabis in to HEXO profit revenue representing million increased the price optimizations the resulted the a results. Cannabis increased for ago arrangement. an prior and to in continue from decrease in and currency dollar derived and compression the decline while a to X% quarter, distribution in by net year $X.X $XX.X relative million gross of $XX.X year The of strengthening profit constant negative was as in the year prior Adjusted related constant our $XXX,XXX Adjusted related increased increased quarter, On from mostly the revenue. Distribution to $X.X gross increased to cost period. $XX.X from quarter. was $X XX% gross as requirements. Distribution currency the variance XX.X% increase Canadian additional arm. QX demand utilization year

our period. Similar result utilized. as change While X% reiterate We to year gross medical revenue in from profits focus increased to mix we prior the a increasing reprocessing the without on still and in sales business margin the fully the year-over-year line. were product positive adjusted nearly distribution facility our decision drive even is X% expectation higher QX, to increases including that margin our can higher the device exit of

year million year and $XX.X segment, November, from innovation $XX.X extensive alcohol beverage million quarter. year of was to in prior XX% beverage California. Beverage SweetWater acceptance alcohol was margin and gross to the million compared $XX.X generated million traction XX% Turning to $XX.X alcohol XX.X% compared the Montauk $XX.X last gross profit and due the alcohol delta Brewery QX quarter. quarter distribution, Flash with the renewed acquisition beverage revenue, was for in of profit net The prior prior Adjusted was gross building in to from $XX.X increased million. Alpine and million our in positive up our brands and our Green we product contributions

gross slightly lower slight of Montauk the margin than that year is a was period. completed down at result SweetWater. a operates the not in XX% XX%, prior in acquisition was prior comparison year While decline margin and The margin adjusted from the

X.X% million decreased on warehouse million million due across revenue year. that from with to quarter year led locations prior QX of in decreases margin seed year. Wellness in relatively non-branded gross to inventory a segment ingredients was higher XX%, pullback $X million, input to $XX.X of higher in reduction in line last sales $X.X versus at margin The quarter prior and America dilutive countered $XX.X top in as levels the from customer remained decrease the pricing. wellness at from down consistent XX% Finally, revenue the gross costs profit and the North was a we impacts

was capital $XXX up and million sits Our $XXX.X the cash balance was in marketable million, securities today approximately and of $XXX.X ago as working million. at and May million $XXX.X XX from year period,

XX, growth year-over-year. year Adjusted Let's now $XX May of is to a XXXX, million which ends fiscal XX% for $XX on expected discuss our million, representing guidance approximately to be EBITDA XXXX.

We projecting fiscal for have income delivered from and XXXX. the cost we HEXO taxes higher Diamond. To operations, conclude, XXXX also bar Aphria year fiscal our we the for to the positive our for pay set are cash at free flow even on integrate year adjusted guidance cash year and excluding

Afterwards, our questions shareholders from the and few question? through remarks lines we for our additional In addition minimize conclude analysts. meaningful platform. Operator, take drive first flow. With will that, a we I the improve Say optimize industry and continuing open be free structure, our balance leading what's to our will the projecting growth, our covering to from CapEx, prepared cash cost sheet, will questions

Operator

TD Our Vivien is today Cowen. Azer coming first from question from

Vivien Azer

So the congratulations on strong print.

generation seen For price us we can just segment, X you that adult-use exceeded quarters, expectations best cannabis which top line the is segment, with deflation across quite out. Maybe called guys the have see. start you nice to nearly every in revenue despite

guys to kind strong the one, Number overall to housekeeping can you the impact would improvement segment? for the in of And you there X, last deflation out then seeing articulate just are mix positive any please. calls, standpoint, the that of guys of one. gross contributed a question, from in couple of the shift quarterly the that part X called the be price number whether quantify able are you variances business, earnings terms that a So margin you in overall

Irwin Simon

And to what to that jump is, operation our in genetics. news million the cannabis Vivien, have $XX behind sitting regards I'll comes really off it. and knowing regards I throughout to and I'm Blair compression runs said consumers MacNeil for growing But our fiscal about next of Canadian us and the in products, genetics, recreational. line good new We've that we've part is of top their we feel the some hit bottom potency, the who prices price stabilized. XXXX come definitely that in I line. us what's great here think In introduced have out and right

consumers improved today. We've so more our I educated cannabis are think much distribution. really about

with the what's to butt got think too, Tilray come our the Brands. want Blair, with. of we street educated to out you that some commend I important the I to getting about our on them is working innovation and that. boots team our add tenders for

Blair MacNeil

Yes.

Supply, me and we've us. come grown the in CANACA is, terms CANACA you'll and dominate thing say, With of really growth for margins has presence. shift higher mainstream one that on Vivien, into know mix value flower RIFF, the our Good right we see we segment. Let your mainstream RIFF

for driving tremendous sales future. XXX pipeline now. In XX% our built we've is products had our new from really, had innovation. and right really innovation the So got QX, launch fiscal come in We our we of a 'XX P&L

about very shipments And continue very, we're in path our that that strength. forward. early to optimistic QX the indicate we'll see So,

Carl Merton

cannabis other much the year. thing business, take Vivien, been our done especially from we to have side, important the of is how able our costs out throughout And and that's

So we HEXO we those costs and to we June. don't be the of out next to full get year. And coming year on closed in even clear, enjoy have just a

and We incredible in flower, to HEXO. offset Blair on there a here is there's actually with edibles. lot Redecan, and some do think numbers So there with and pre-rolls of HEXO opportunities, oils with no is his the team declines has some to

combined about there's lot in you've showing LPs recent impressive. is still sitting and just And there's of we're of still heard come and But very with share. Tilray, say, excited today the XX some illicit there, It's a still lot next Blair me have still sitting of most competitor we new out challenge seeing. Listen, to just a on with. what out share almost deal retailers, a So there as one there's double is. numbers market we're me is what our here

Operator

Our Instructions] question Carter next Stifel. [Operator Andrew is from from coming

W. Andrew Carter

So wanted the about ask $XX.X to adjusted base million. here, EBITDA

of out you've an HEXO $XX EBITDA strip flow, down go a be of of number like got, course, will the to million. that you on kind fees wash cash you which adjusted If

So year's I'm $XX $XX getting to million. next growth at million

And on in alcohol improvements? us is of there, also of And incremental So expecting change be base? in X leaning a Canadian EBITDA, a positive much you in Could there kind profit of things synergies those contribution. HEXO, how a i.e., kind beverage Are it projected the couple give left? M&A are you any you year big step profit numbers? kind will are reminder of of

Carl Merton

we M&A is We've clear that been approximately for in HEXO have Andrew, off, of drive yes, into through $XX the that's, projected obviously, we're year EBITDA to the going synergies arrangement there With mean, million to statements first numbers. I were adjusted transaction. respect those next and the it. very HEXO. current HEXO just to year's going no that see

significant can of a as we going said, everybody where quarter that drive take amount we'll already that has put comes in in of those at think understand the last HEXO's results continue to rate thinking innovation to we're and within is end, portfolio. the I cannabis. X run better, reported numbers bit kind little together Blair But have a

significant million a continue results results cost still we the particularly on drive have and will Cannabis portfolio, flow to We cost through quarters achieve business this the beer the to of in then income relates last in coming that future and to it drove the through as division. And innovation on amount alcohol approximately actually $X quarter beverage come. synergies, optimization Canadian target the from to $XX year have million statement left to

Irwin Simon

jump organization, flowers. our we heard pre-rolls I into think growth just me and opportunities into Redecan, the the marketing in for think big second a we've can brand. you integrated there's our the Andrew, important as with HEXO with say Already the We on a marketing sales really is, let do thing here, me and sales lot our organization. this

Blair where a Gatineau, our synergies in and today taking has and sitting in succeeded this, month owning call costs Quebec we've half already fact, and the we've from. or and we're of And eliminated, out business. of we're our of confirmed Matter hit doing this savings first

achieve So seeing We see we're also in the have market. not we're owning tremendous the did that. in in yes, market that chop with and with in what of the there's what and thing that, kind opportunities. has we're Canada market. like a some it, the out Quebec HEXO But Quebec growth big with And is to Quebec what of west seeing surprised we lot in what and operating second HEXO company. is Quebec, biggest opportunities EBITDA. grown wood the HEXO to and HEXO of with the HEXO

year and into this good with Aphria combination old Tilray the of So, going we feel HEXO brands. a

Operator

next question from is coming Bennett from Your Owen Jefferies.

Owen Bennett

wanted Vivien's to all Canadian Hope question adult-use. around well. follow-up And just on I

well #X going to flower, oils, So pre-rolls #X. very the goal segments. assuming in be where you're concentrates, will I'm all across be

specific terms So investment those what where if I know the doing you I mean, want trends strong, improve need And you're to in to segments? of anything segments, in I less and think the out was categories there. other just also to wondering you're you you improve share try call vape do in in to other

Irwin Simon

Blair?

Blair MacNeil

Yes, I'll take that. Owen, question. Thanks, great

to the is our we've very, you recent see have But to other Watermelon. we've board done some you gone hemp our both is X very milk numbers there. I we've added and They've our how potencies hardware, one overall, great well. across our vapes, had pieces the Bomb increased upgraded tremendously. vape and Rocket We've would think market. looked at most One change in meaningful if innovations

they worked in category. team, our extraction hard to So shout that out big, big

over that's where we've while, last As little the a you share. know, lost category

vape. I'm in innovation our abilities and So, our on very confident pipeline

your the on still XX% between do that certain pre-roll, there's market. around of all categories being in terms categories, question #X depending In vape, XX% and flower

and those edibles, and think and long-term margin a about other first, categories, edibles at do that beverages, we time. we we as what to recruitment add strong some be about And would in they categories our I from smaller want the say beverages see and categories. think in about So of business how categories, to standpoint think I those margin being

scale presence So, we'll categories. about but think really we there, think we'll those thoughtfully in a have I up when always

Operator

is today Partners. coming Alliance Global from from question Grey Aaron Next

Aaron Grey

want turn to bit Germany. a I to

and cannabis your before the up the medical growth. on mentioned of narcotics more thoughts the market from removal physician market opening adoption of patient You list, in medical terms

U.S. legalization slowing we've So I of X the adult-use states there? that seen just on of the to offset know on Canada and Phase looking thoughts potentially of want at X the Germany impact in of opportunities adult-use potential your like And how potentially an terms medical medical growth. Phase market, having also and in to with you're other legalization then

Denise Faltischek

Aaron, it's Denise.

question. So good

last if at talking Germany, ready calls, us adult-use were and heard we were getting the looked for about we few we when it. you think I

a medical you mentioned, I sort as as narcotic, a in the But point, think we talks this which and of as mentioned, general we delay legislation cannabis you've newest the believe our see to removal at legalization. a of presents about in cannabis great draft any adult-use opportunity business.

well medical that are we've that regulators very trusted perspective within from by patients, Germany. sense doctors, situated a are in cannabis great We got brands the

of one facility -- have Germany. X are We within only that the

within good have relationships we very so, And country.

we And our to in grow continue we have. way so look medical our that brands brands, the will medical at we as

how purely we And from and more at with looking at focused going pharmaceutical are but of it's perspective, flower quality approach very and tremendously. It on what We medical, We're looking so the prescription like are we it where the driven It's flower, market. perspective, that do calling a patient health more patient a base the driven from we're looking of driven, this will looking be at more it focus a like also different people the focused way. as basically wellness are interact on at doctors and side medically wellness be state. not pharmacies where is condition. very wellness on in to much a seeing and side, we'll

Coast, We will tuned. we different cetera. did actually be at so where we And stay going brands market Australia launched et looking Broken this in just to this quarter

Irwin Simon

think most important is, thing the I we're there.

there facilities have and Germany. We already in Portugal both

with We CC distribution Pharma. Tilray Pharma, a have

is there it ultimately medical, there think I said, to think again, there. get but there working for doesn't but big look with the We have route second the a that German streets. that consumers listen, infrastructure we we're We're in in we're happen. if is recreational. a market legalization the And think, world as like to disappointed, But on we use through government a way opportunities selling medical ways. And disappointed many I different recreational

Operator

Next from question today Bernstein. is Sarwat from coming Nadine

Nadine Sarwat

and hitting that base compression it that guidance, just seeing the commentary the put adjusted then, HEXO. would excluding or reported sense what coming any a called EBITDA growth organic the you that stabilized Just the that had of out guidance is stabilization, to addition from actually point reducing floor? we you just offer had basis, It expect been price around the so I'm be today. And versus on you business on on just it core an glad numbers of Is that. seeing you some get can to could you fully good a back

Carl Merton

would of off growth the over So current our already then minor rest in directly million year the existing synergies decrease said, run think answered And by next EBITDA EBITDA. from last the their the Nadine, HEXO coming being we're and their about rate and of That from is date. business. EBITDA Andrew on we've as basically asked the year reporting how that involves course targeting had HEXO within existing in a the driven adjusted $XX coming year. from I evolve I question next

Irwin Simon

to turn cannabis. Blair for the on I'll it question

Blair MacNeil

some pretty are stabilized. of growth, where SKU still to compression will compression other Yes, categories the directly under at And tied you've skewed not relatively Price look I certainly you you that it's the price to say, on would is categories. large some had relative saturation. latest if the side, they by see category of

and I flower are but see pre-roll, like definitely some flattening compression. see, categories where to there I So some other out continue areas you'll in of think it aspects and

Irwin Simon

But pricing we're with think has The gone that's in important. I also going some to pricing. just that. government seeing be the stabilize different ahead there putting And to -- government Ontario

we're stops the LPs away, to compression ultimately -- out there. out cannibalization lot that and price a think see see of go So as the I going and there, we also

I always one million I So, cannabis think industries again, see industry inflation this near we the seen it's that. I haven't saw think nowhere but some, is compression. I not have the not is $XX think year, will I But only of price we that said, that the

Operator

Next is coming Tamy question today Chen from Capital Markets. from BMO

Tamy Chen

is, bit had and months? for like their phenomenon think a the going question been around results. we saw really testing potency your sounded THC industry on which that other competitors this from on what cherry picking It one your over just My inflation accelerated the of is. one I'm out perspective recently commentary of call in recent sort of really labeling, time this of apparently phenomenon, last kind I wondering of

Blair MacNeil

very When have not narrow your communication a there is that regulatory the new this about think live -- we From you can is you Blair. brands. it's in, around Tamy, a Hi phenomenon. environment that

a sitting ways of year forget cultivation at people that. the that. goes gone flower, And looking think flower looking ago, I over improve still. to they're THC think qualities has XX%, -- anything up. And always at the mid-XXs what of improve all to is the so greenhouses They're potency the aren't back now ways with the the along commercialized And yield THC recognized, been has I was leading to and

regulatory any see XX can environment, of there, need would what the see continue where be we THC. with the talk So, it's know to But we we so relaxation don't market. months. other an beyond it we in some area consistent different It's be been attributes to to what we about the is to than like we last that ultimately, need

Operator

Kang today from Canaccord coming from Genuity. Yewon is question Next

Yewon Kang

Kang Yewon revenues. for to is This I on Bottomley. distribution Pharma to just wanted come Matt question the Aaron's CC back about

was quarter XX%. sequentially the it For up

sequential guess, should could you legalization part takes given X this its this on that the their medical we I Germany anticipate to recreational going is grow looking puts as comment drove top from within increase. And of or line expand their So program Pillar forward, plan? to that quarter

Denise Faltischek

This is Denise.

revenue the we I So, separately that of in way distribution is actually track -- terms we from think separate it report cannabis.

service even P&L, dealing revenue track though segment distribution may cannabis, our So distribution other medical in we cannabis segment. to with customer and CC quality and logistics management our involved the run Pharma pertaining medical in revenue the and within cannabis aspects be

revenue. did We are very revenue, distribution distribution line increase though not in focused even a you on growing top see large

We have distribution in and the made tremendous in of terms pharmaceutical of procurement improvements team traditional products.

because the gross margin mix improvements, line higher long as growth as is products. well you're -- seeing been and that focusing And as so the top as the we've margin that on

Our focus are pharmaceutical strategic in with longer not line to area. top on necessarily generation Pharma term goals to respect traditional the Tilray

bigger more within projecting a next We line, growth role our our distribution cannabis around play of -- will Pharma the PL, it much CAGRs. But of in customer we're the terms Whereas side, but the a the in Tilray and will we're will continue a over continue where see XX% quality to management, on platform. X pharmacy, play the in medical single-digit focused top grow the service to that's more of role you to lower will couple CAGR years.

Operator

Next from CIBC. question Zamparo John is from coming

John Zamparo

integration. post-acquisition. My question is sales the historically meaningfully fallen pretty acquired on have And of HEXO and brands

from the have HEXO's to only brands some about business the deal, rationalize some in brands? you what basis you levels can categories Are brands? to say since plans those since closed the new helpful. sales place So sustain you've retail there Do I months know Any about would in for of the you pre-acquisition. want HEXO but month a selling of to it's there on been coming SKUs color be can additional owned ensure or acquired either or I from wonder you you that talk a sales wholesalers. And you

Irwin Simon

John. Thank you,

So turn think I'm going to have second. to rationalization, SKU rationalization. over in with have any Blair you But I it product acquisition you like a

year, business, of where I the And think incredible was HEXO. didn't business of there's acquisitions, there that really a And there's growth. was there lots throughout have in called important flower incredible organization a has what's HEXO company within pre-roll out that needed. the Redecan the lot sales challenges

in decline has June X, G&D a been I Quebec X, group, sales. But on got tell took now rose. has and there ] yes, So, our this our of group selling we you, June team [ out over at would closed

So, will have especially it and it, little both the take up tremendous all brand we but opportunity time some we see a with Blair? some clean on the readies. margin we'll are these with over and SKUs. lower of to oils flower, pre-rolls Redecan But

Blair MacNeil

I processes is, is seeing commercial for style cigarette indexed as would fulfillment shipments, say flower there. order the they're just flower cost the more their us so I around in side. would the crazy, the look, in business, improved so think we some the not in where today. better and rebuilt I the is of what some Redecan business. We've mainstream talked sounds around logistics, it call, see supply But acquisitions upped about you're the to in and better marketplace. I seen already pioneer. And see business plan as under Tilray, tremendous demand on the know then the of as a said, industry Irwin our absorb we've And past, we their backend, as opportunity the conditions the we've completely. earlier leader and on distribution made tremendous a the around We've mainstream seen quite pre-roll opportunity of ready given their we savings, category, our Yes, on work on in done our say, stable HEXO you've that backend

don't record M&As. declines have track So, previous see I that of maybe in the the think happened you'll

going to that to quickly, what to you're business see the us on very think marketplace. I build start going stabilize in we're it and

Irwin Simon

industry. strongest Redecan. and in And brand our with second we've in brands from Supply and cannabis the Good X scratch Supply, I are the And it's cannabis biggest industry, the Redecan, mean, acquisitions, Good a built today within

strong at million are, sales. what, one X at cannabis. And it's really first So million, ever the and -- of combined between $XXX acquired Good times retail retail, between billion of we've or retail such the $X.X them brand Supply sales a Redecan combined within $XXX at

there. opportunities big some for looking we're So,

Operator

coming Sandler. Next Michael from question from is Piper Lavery

Michael Lavery

breakdown could you little -- of a where as guess, think if growing a touch your of revenue. and just lens maybe priorities capital And wondering has starting -- segment at biggest level, The cannabis the been is of bit you course, was point. through beverage on typically focus a I Just fastest the the distribution Tilray allocation, But to higher maybe as of alcohol. some are? looking company,

Just your driving talking where equally? what about you love vegetable the guess prioritization each level children or buckets? leader, is of think of You're help in into pushing understand most, the help the the -- ship about us of cultivation. I between the just all terms what maybe of the do or you're kind spending focusing us

Irwin Simon

So a I Number kids them them all number X days. X distinct have most love here, X all most most we lot equal businesses one, is, I have days, days.

I think we've and invested business back in positioning $X Canadian ownership cannabis our second prior you earlier my on you at Okay? for over and me heard if us, say billion. and step and remarks, you but investment, a look not here our our

X So, today regards in we of million feet square to greenhouses. have assets

allocation efficient not vegetables, not at them. capital and into use to have here. repurpose them We capital looking in those we anything, if more we're we regards how in those business. more we're our major on how allocation to our And cost out, or more major We're businesses. growing To and processing looking at can ultimately become cannabis repurpose take here much looking

to because again, yes, some near our and what will be lot but our So, about spirits that's businesses talked been already our beer our and of leadership, growth Jersey growing and only not there -- York, invested. In we're a Ty's is SweetWater And sitting businesses, our spent, regards Montauk New growing now at that right was what's Connecticut. we with It's beer move Breckenridge. acquiring great XX%, now happening into with see business New XX%. as the we're CapEx, under spirits capital fastest in nowhere with on to

continue the regards people of in to We into segment Europe, boarding So invest see that in a the through countries opportunity world. today we'll recreational business. In medical that and yes, XXX cannabis. to XX million Europe, see we medical sell spring no tremendous

the beer So regards that through spirits again, or drive where cannabis our but margins X/X the distribution business cannabis, you business it's today, our cannabis look and near a to what it's heard vehicle margins, distribution nowhere that's medical the it's Denise distribution. Listen, has you before. it's a medical X/X our at and to if business, the has, spirits X/X a and in say great our

will We use business. cannabis to drive medical that our

it's So have upon cannabis could brands, legalization. again, in Montauk, we SweetWater, all Breckenridge, are upon be think, diversified whether brands U.S. great a we company day the legalization, we together. And one these businesses come

in growing where spend lot and will is markets today a these are for the our of amount of So, of of thing every allocate, us. a growth. part because nicely are we accordingly, And grow important, there growth are but all to is there the one they and ability big markets they nice a in we will tremendous

Operator

Capital coming from Gomes Next Markets. from question Frederico is today ATB

Frederico Yokota Gomes

can to point aggressive to about you share you adult market My advantage pricing the you share over you specific you would consolidates? of of now, maybe think other Right nationally, significantly be levers have at the Canada. maybe leader. in competitors have Do just you some are share, year use where the near talking goal are facing? And need pricing of so more now and you're taking in is question the market your have terms we on any segment share gain the growing a or term on environment, gain to this just that here to XX% for as pull the difficulties

Blair MacNeil

the to in for have Thanks I question. each target do terms at think of continue of would we in But about to we the I the how obviously, mind. to want we grow. categories. don't our I we think that. to of grow, a continue goals, segments, want and each we When look say

don't flower, you side, And a so, in talked what with have about on mainstream. I earlier huge think presence we if Redecan about the

Coast the side, have side. We have premium the at value Broken Good at we Supply

area an where to presence. continue is think continue to build mainstream our we So grow we and

pricing. our forward. The the So we all moving I there's think side, of think for a and our don't us really runway point, definitely category from it's think environment. in growth we're level we categories. at optimizing are point it's about Irwin's of that and building away the the where that price to I strategies some I now segment of could stabilized, revenue do at think, far our lot don't and think compression to

at the even capacity the the XX months there's been look a lot you industry If in last of out. pulled over capacity

price optimizing see an opportunity I So thinking happens, to I do for our standpoint. that think revenue the stabilize from going do the compression. industry about to is about us once think inventory And versus

Irwin Simon

you, Thank everybody.

you that for Tilray. question has our I much call. think today. very our Thank for much for interest you joining in last very your Thank

XX just in regards our with, facilities like Board in shareholders operating lot say the the our lot being members, I to the team world. serve And as members interest and and all that thank world, proud patients, a I'm lot work with there. And today have you we countries. spirits Before to in our in interest cannabis the distribution of management conclude, my of And I'd medical employees, of team, important X,XXX I around consumers, a over out business. our to to XX the and a world, beer our interest

the tough my do our will We I a with lot and some want million to great in where we've a the And we some XXXX approaching, I us go We've I that's we've the billion in -- I company. tough what's in I there. Tilray earlier important done. in as as adaptability. questions a lot And at There's think on a and know remarks, to lot craft there's demonstrated an a here today within we operated world. size. we some are today. And had tough excellent There's regards which really has are coming to we're of execution categories, doing company some and XXXX, can But and do times, back said $X markets, strong diversified to XXXX business. happening. And team with sit within exciting that late boy, skills we've we cannabis lot built listen things what get business. lot $XX beer

Craft will change and will that is industry. beer We become cool cooler.

in that And doing just in that tremendous. we're so SweetWater and to of winnings Breckenridge is the and some of stuff Montauk, far had some we've stuff done our and we've the regards bourbon that a the of being some #X,

resonate because Gen X, And today the balance is market $XXX of ability that, have today, sheet, cool cash cetera. With with to in to have and having and brands there. acquisitions, our the let ability invest close our invest brands, so tremendous Our our brands, business, Gen the which sitting is consumers brands our and important can Millennials, cash to et we our are about million we opportunities to have know where king. in out Z, ability

where will couple in our Canada leader that you acquisition continuously last today opportunities we there. are at our at the we look cannabis if where regards some and done years, to acquisitions great of the being medical Over accretive the in in and to on world. And that Europe look we've cannabis are leader world, regards

and and not is, world the cannabis, something to cannabis, with are medical thing to happen. But when whether dependent whether whether think we Act, the in it's regards recreational happen something legalization, expect legalized Just will it's today we cannabis legalization. really upon Tilray, Bank it's SAFE look

a diversified are company. We

we countries flow, growth. at cash categories. have world. around the our in diversified We different in We're have We're XX business

things. So, we some have exciting

with I'd products some us. importantly, rest to more summer. joining Enjoy thank So out for Thank that, like enjoy there. of everybody you. the great your And

Operator

does conclude webcast. today's and That teleconference Thank you.

your may wonderful thank for you line day. time disconnect your You today. a and We at this have participation

Tilray Brands (TLRY) 26 Jul 232023 Q4 Earnings call transcript