TLRY - Earnings call transcript Q4 2024

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Operator

Hello, and thank you for joining today's conference call to discuss Tilray Brands' Financial Results for the Fourth Quarter and Fiscal Year 2024 ended May 31, 2024. [Operator Instructions] I'll now turn the call over to Ms. Berrin Noorata, Tilray Brands' Chief Corporate Affairs and Communications Officer. Thank you.

You may now begin.

Berrin Noorata

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

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

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

Irwin Simon

you, and good everyone, and afternoon, for thank Berrin, you today. Thank joining us

XXXX global businesses. reflect of I'd was leading to categories. our of Since cannabis, industry we've have in wellness $XX approach business products to fiscal beverages growing diving lives disrupted organic by LP to we new strategic XXXX, and our results, taken like and into the cash a of a Through evolution company, our is revenue Canadian Brands cannabis-focused footprint reserves. in combination minimal moment our only take of global the and then, conversion moments Tilray the Before acquisitions with CPG a diversifying expanding into million operations Tilray markets a Brands. Aphria a is strategic and Back on elevating spearheading lifestyle growth, adjacent Today, connection. through and

and businesses Europe, countries consumer lifestyle in We Australia are XX America, in North wellness more brands. operating cannabis, America adult-use across with X and beverages, XX connected spirits, medical than Latin products

dedicated XX is that time providing high EBITDA million, of $XXX million, are net incredibly As record of internally, products that the and adjusted record to flow. annual is of free cash our Tilray excited We a to year our Brands, a in We're and income made XX% XX% business continue adjusted results quality net significant a net growth global revenue with for us date. we to our XXXX we've growth of to million, innovation $X.X record million adjusted consumers. allowing products our of marked diversified short a of the financial best profit driving building products. ahead. Fiscal businesses years achieved best the and revenue achieving for $XX.X positive gross testament collective $XXX of integrated our adjusted of company, vertically approximately ensuring service have produce This the facilities in progress success in the our to possible proud accomplishments

our We our X.XXx. also net net by balance ratio debt-to-EBITDA million, $XXX by to reducing reducing significantly sheet debt strengthened convertible approximately our

saving by our $XX the adjusted We flow $X generated revised adjusted approximately synergy of EBITDA million target our year. cost guidance XX%, but also free only savings delivering also annual cash for exceeded we million of Additionally, met for not

record of line. businesses, despite challenges tax in in fiscal approximately equate financial approximately we the approximately price nearly rates operating million million year, faced Canada Our of to regulatory directly in insurance results $XXX absorbing which higher million $XXX achieved were together fees paying our million $XX paying cannabis bottom cannabis $X and our in because excise hit the compression that and

to navigating results these success while ability to testament and to ensure tirelessly worked record deliver team dedication of who a businesses. resilience our have is challenges the Our financial our of the

fiscal financial our well we past expect benefited acquisitions expand business. Redecan June Over which will to expect benefit year, our acquired and have XXXX, our continue we will significantly which to results future. In into cannabis strategic -- we the HEXO the continue

our fortified at XX.X% August increased market beverage share acquisition a XXX% in the we share beverage a In X addition as category brands from we the Redecan oils #X and a and category brand share mainstream sales market edge have Canada Tilray cannabis and we categories product player This the including straight in growth the beverage beer and in of Beverages, XX% capsules Truss and with in group fiscal internationally. XX% hubs. growing iconic acquired to flower cannabis Canadian Since in then, productions player XXXX, the end adult-use related form ABI, raise beverage XXXX. In breweries brand across by broadened adult-use along oils, multiple top with with cannabis. year the business of The capsules. Today, is pre-rolled XXXX, our and XX% September and our portfolio in capability market market. market category in has increase Tilray's Our year-over-year share Canada. THC acquired opportunities in leadership category factors, combined in such pre-rolls, the and the to further strengthened an in

U.S., of the X.X% share with in market. the craft As we're fifth a craft beer now result, a largest brewer the

beverage acquisitions best these results. legacy resulted Our and ready-to-drink combination craft fiscal ciders our year growing now portfolio The of beers, businesses includes in beverages. and cocktail, spirits, nonalcoholic our the

in It Let's now overhaul, of our by Cannabis, culmination was operation and quarter deeper the segments. beverages year during XXXX. transformative the facility the increased integration, in of in million, highest XX% and Canada, Canadian cannabis Tilray X quarter dive fiscal marked a year business extensive each our of of our at revenue the completion Truss utilization. $XX.X net In revenue into it cannabis. significant marked improvements our resulting HEXO global

competitor. consistently at cannabis the almost have of the by Canadian past lead share the for the -- XXX years. industry to continue We market next for top the bps industry over And X

provinces more From perspective, Alberta In Canadian cannabis reaching combined, metric XX% volume, a #X and approximately and the we've which Ontario XXX Columbia, include of population, British XX% over shipped also led secondary and was Tilray Tilray Quebec in Canadian tons. regional in markets. across all Kgs,

on open And consumers sales Canadian to grew unit cannabis products. Our in from fiscal million revenue launch attribute fiscal we this over ability adult-use capitalized have by net approximately being our SKUs. In of to approximately unique innovate new XXX% is came of trying products. XX launching almost XXX our units. to a successful new sales XXXX, XX% Cannabis new testament a which to new XXXX, innovation, and

net play and XMG, our significant a to will brands will continue Broken our role we bartenders. innovation based consumers products our such to anticipate Coast, exciting and on Good be Looking next year, sales, feedback driving Supply ahead launching Mollo in that as Redecan, new from

by was brand and the in demand. could transitioned to aim Truss Animal beverage product Ontario, Redecan #X Space 'XX, -- packaging pack integrate labor and selling drinks HEXO fiscal transitioned footprint and and per to the the expect Age performing into operational top facility cultivation exceeding and launch and flower in of pushing synergies Churro. Our initial delivering flower. In increasing our almost share to facility, RNTZ despite by In logistics London gross our our gram Nanaimo, XXg supply by target $XX strategic genetics: and mix. are sold respectively. be cannabis in to these million all to We XX% $XX.X with segment, improving the Cake; yields acquisition will In sell our for Space fiscal Purple infrastructure today. We by and cannabis production our sales all flower Coast XXXX, and our London, facilities the significant brand our These plan popular million XX Leamington, We Cake to by limited RNTZ; our genetics and X.Xg #X rightsize the our the of made margins. we X our became types, XX% Ontario, facility, and portfolio steps B.C. wish XX%. availability. and in XX% Canada doubled cost we per lowering our lowering the we cannabis continue into beverages #X in our the In Animal successfully mainstream their Ontario cost of HEXO 'XX, Redecan genetic Broken I XX within balance unit we XXg U.S. genetics and Age centralized expand above utilization phenomenal. XX%. them

at an additional also drive We facility annual of during on paused our growing basis. $X.X year Cayuga million the the will savings that

cost over grow we expect as transitioned the Quebec facility, the consumers. of to needs Quebec smaller portion contribute improving the marketability cultivation the we the to of a our the facilities large in $X facility annually and Finally, we of value cannabis for continue offset million and our facility vegetables, of want portions to meet which the to

markets entirely designed cost world initiatives leading initiatives to our package manufacture the to ship were significantly All in are growth consumer these come. and years the operational brands leverageable market. These and of and to to for lower cannabis around of

early and fact, learnings in 'XX, in fiscal our significant cultivation shared Europe. genetics teams we In in with

Europe. revenue cannabis. year-over-year net million international Turning our #X leader We grew the market to medical in and across $XX to approximately remained XX% cannabis by

the seen Germany, and several a during market, a nonnarcotic, to annual medium expanding growth we Germany. Since increased have positioning current Tilray's X, Poland, in Our became the growth we're Act billion incremental New XX% provides majority Australia our competitive approximately cannabis sales, increase driven U.K., positioned we in in believe in effect, fiscal in best with by to be that cannabis sales unique medical $X is and declassified Germany, of into already term. went advantages. expected a Germany opportunity effective market we projected April which Act Zealand. In Cannabis in Germany, the believe the us XXXX On the the to capture which Cannabis in the was

RX was market license a Germany coupled cannabis a allowing approved supply and XX its which this, capacity to Germany represent consistently U.S. to medical the to the on in RX reliable network, medical under its liberalize a global cannabis the reimbursement that declassifying increases and long the is Tilray also with strain by market the The medical medical its could cultivate, cannabis, critical the a drug grow to Germany both cultivation and Europe from us Our premium of produce, Germany the high to allowing million with our a integration, opportunity cannabis, now its throughout a first the by We utilize combined being Tilray the for Pharma impact believe Tilray Tilray and of facilities our is potential previously to regulations, with far-reaching commercial in provides medical $XX quality production in distribution of distribution in maximize a receive of President facility over Xx. allows increasing Aphria term. medical cultivation will Portugal, total XXX approved opportunity German steps can twice license a in taken have source market. to cannabis population billion growing vertical nonnarcotic the strains. We policy quality portfolio brand significantly believe Europe. X expanding base our new fully and as that also alone people, while European genetics the distribute with cannabis. Aphria

in products insights cannabis promising Turning to we international medical in in the our our Broken operations Europe. leveraged have cannabis access feedback Broken year, now to and to we in Canada Medical received This fiscal through Australia. now from and came launched patients strains facility in cultivation from Australia in launch cannabis another market. Coast Canada. Australia our response Coast This

on in fiscal during but with network nearly Pharma. CC was in periods. higher-margin Germany, CC our fiscal business at our change Pharma on we flat $XXX of sales XXXX, cannabis briefly distribution represents in Pharma through XXXX Now gross but margin and at its which our as medical held both in fluctuate focus pharmacies, Tilray million, mixes XX,XXX business both product may revenue periods. XX% future

Moving we over the the sales brewery [ and team a fifth hubs brew and sales on country. with manufacturing operate distributors, distillery In craft ] Beverages. to largest and the restaurant XX marketing U.S., facilities by XXX Tilray X X across

growth craft In the on Tilray an in half, $XXX last innovation, the brand and the pub Our distribution Ice generated our Montauk Beer we're and focus by distribution have brand our in half fiscal the strategy Tilray Top well over New competitors XX of growing ramp progress basis market our [indiscernible] since is around. now Pub Pub now took months, new portfolio beverage Across remains a having top increased point brand is success extremely brand our the largest we Shock in the XX%, million line increase increased distribution brands, approach points X,XXX only craft Coast to the the due have $XXX points top brand turning improvement. driving in York, brand, Northwest. and Shock XXX market scale, multi-outlet. on XX% declines distributors brands family beverage expanding extension. volume beer XXXX. and the in focused its family we its year. Tilray ensuring the consumer just we'll #X access. XX on growing Tilray in iconic the XX have product's innovations made in done with million Pacific on basis West #X reach with Northwest have of In states. Since On excellence Barrel's up. Georgia, SweetWater to total Top we with segment, Both capitalizing points, Pacific remains distribution the XXth basis year-to-date XXXX, annualized of as quickly extension Barrel's by over shown we basis, in X XXX #X growing supplier cut remarkable the acquired Metro significant

we momentum As outstanding with Shock since a finished building and excited a work Top to quarter acquired X and result, team's to commitment on the year-over-year a our ahead. for in driving delivering Top to brand, results. this continue Shock growth We're hard the years XX.X% testament growth

As dominant ready-to-drink our before, we craft these brands portfolio innovation beverage to bring vision alcohol with of spirits categories, business we back non-alc focus and win as far our further we energy and beers, by continue into is have as and new to to become categories. beyond occasions a our and our growth local mentioned into brand including flavored cocktails, expand drinks our current water, hearts malt beyond leading reach leveraging more beloved beverages, other

Runner's nonalcoholic beverage and have launched and growth sales We the the to new facilities, the marketing manufacturing Tilray's in distribution infrastructure drive businesses. In segment, the we Brewing brand, company. a High

Coast their flavor beer Golden, Wheat love with runners Brewer not brand currently and Pacific of across beverages distributors, XXX expansion and and casual high just with those Southeast. of regional supplier key these jewels is and elite XXXX a took Chocolate also are the beer community Brewmaster Raspberry their in without Flash this the great Brewing craft and of of I'm awards Tilray won Tilray U.S. several High outstanding IPA. in Colorado in achievements. the Barrel be choice Hazy and and recognized a for world-class and Cup. team was XX to XX for over the There runners, Craft proud beer honors Northeast, their Northwest, follow. In athletes. Wheat, Brewing renovation craft celebrated brewing. seeks who to now With For buzz, Beer for markets honors April, leading Runner's World brews: regions Barrel Conference Green we at beverage beer awards Dark X incredibly X home West the social

With when after back acquisition Colorado beloved for acquisition these comparing its [indiscernible] and structure, brought of have brands. beverage efficiencies, cost past in the increased Tilray X craft Florida, including our operational we Oregon, the Arizona we to such market optimized made craft X and states, of markets each of Washington, few has as growth. years, brand beer key share have our retail, and our total we share over

our our integration craft these brands SweetWater legacy through X get businesses. complete gross by margin process, expect we of other margin shared As we to the and

HiBall leverage beverage distribution also our We to beverages Amazon we where relaunched energy drinks can and on plan network. strategically and markets, launch hemp-derived in Jersey, Delta-X selected new Texas New existing including

Spirits, formulations look are sharing strength, on a lightly rod we're awarded its soon. With in more now path Best and operational exciting to development brands. In the become of beverage Tilray accolades for developing is actively rejuvenating produces strategy Whiskey We American X winning updates craft also to into highly-coveted impact. Delta-X the a of to years Our U.S., as industry, in awards Breckenridge gin vodka. to our to Tilray maximum a hemp-derived on ensure Bourbon, facility row target forward one continues and Breckenridge addition growth these in complete, win and the facility most is the this distillers launch

Happy revenue to discuss branded saw CBD-infused In our drinks. hemp. leading Wellness X, energy the impressive hemp is a let's of focused brand Harvest, mainly in hemp people's through beverages business flower, and our increase by Tilray HiBall Finally, quarter with $XX.X X% power share Tilray lives businesses growth Tilray our market XX% products, with improving over million. Wellness in Wellness represented Manitoba on

million, XX% gross from business year. growth, last at generated in to X% bringing For XX% XXXX, with the $XX.X margins fiscal stable improvements

channels. both in positions with Tilray and U.S. the strengthened past both its natural year, market increasing leading over Canada in conventional and the Wellness consumption share the

where premium to a mission lifestyle As to brands, inspire that products expanded discuss house experience. a to joy, are in we call of over acquisitions create I'll has turn detail. completed company Tilray be today, has Carl? Carl numerous memorable to and leading now With and with our to financial results that, transformed greater wellness get brands the innovative our evolved

Carl Merton

reported I'll in our to with moving adjusted on Throughout press both to encourage brief our U.S. results and we measures. contained we present you financials non-GAAP GAAP under of And within reconciliation for and of with annual GAAP in a accordance review that we Thank Note with discussion, GAAP before of you, our to overview Irwin. in-depth are non-GAAP results our a XXXX fiscal begin dollars. our referring review results. the more U.S. the QX. corresponding release

for our X% alcohol generated we net our inclusive $XXX.X to brands, XX% rose by the of revenue to grew ratios at and a of Net cannabis our last in we is the margin year year, beverage with to their remainder XX% HEXO, to to by our variance fiscal of revenue $XXX.X $XXX.X the XX% through wellness. beverage XXXX margins By due of for $XXX.X compared stated, beverage year-over-year the converge due from XX% increased fiscal impact full gross lower million, wellness prior associated distribution a prior brands. By anticipate new XX%, $X.X lowered The adjusted year. our million initially to alcohol compression and these as business, Canada, adjusted XX% acquired year rose This Cannabis alcohol XX% margin XX% of year. a business alcohol, revenue points prior which, Beverage outcome. capacity by acquisition XXX year brands, acquired Gross beverage from craft revenue year-over-year, in excess cannabis, alcohol XX% progress the is XX% the business, to business. increased margin Beverage as reimbursement prior another nearly gross by XX% distribution we XX% our largely attributed and a beverage XX% million alcohol, prior was fiscal that the our generated service no recently wellness EBITDA. Distribution HEXO and which basis compared the $XXX profit was compared in gross declined optimizing by XX% alcohol costs. revenue flat, to of wellness increased margin brands. Further, and compares the to represented new compared XXXX the XX% Truss XX% of gross reduction in result enhancing. in Gross are cannabis, a to X% of was year. Adjusted was XXX%, was net from the year acquisitions, which to to million $XXX.X price million, the craft with X% in the million beverage business spirits XX% the due craft in while was offset brands. revenue distribution the process and profit This in million. XX%. revenue XX% net temporary primarily for segment, to $X.X removal the increased XX% at was the volume contributions to around perspective, segment year record margin From record to net from all advisory million Irwin by and segment, commitment reflecting the XX% prior with

for and through the production context, April primarily strong acquired more the XX%, gross agreement to the adjusted seasonally business, of alcohol, was gross beverage XX% up of begin ours, we April is demonstrate newly for Irwin earlier, focus in our Adjusted in QX brands compared our an to facilities beer sales. and volume major primarily portion as should margin greater in craft margins to our gross of related improvements beverage result XXXX. improvement in the fiscal prior of of May distributor meet said a The spirits and business as flowing XX%. and legacy the to March of year a ramped with was business we as For margin

the production acquired the exited end their co-manufacturing with year, agreements integrated our fiscal of brands production of the As facilities our into Top. of of related successfully exception and we Shop all

to legacy integration, products the starting adjusted new next XX% the of was only which production margin margins gross HEXO contributed we XX% gross the in result primarily year products year, million and between a gross $XX.X agreement, due services compared prior XX% advisory to craft of gross to in in no quarter. Cannabis compared prior of the was the will margin separate XX%, the compared current year. termination profit this the to and $X.X As longer million

$X.X we prior the noncash in prior impairment year. higher-margin a sales product XX% $X.XX adjusted current gross in driven mix fiscal $XXX.X will percentage adjusted or to adjusted reporting on the current in million wholesale $X.X a $XX.X focus wellness the for coming $XX.X million loss gross as per $XX.X per compounded the also the to or the up definition, in year. year the in year's share prior year. at have market, while latter in of And compared reporting compared of year's Under We prior it in mix margin billion in in X% was the $X.X held year. From reported we $XX.X the EBITDA from the income million the future up adjusted optimization. as or to share prior and sales to to of by periods. a price perspective, Under was further XXXX prior adjusted to million with by costs steady margin change $X.XX with million we XXXX in would improved from share sales fiscal per million, record an XX%, EBITDA shortly. Distribution per XX%, explain material tied improved year at slightly expected higher the adult-use or compression although experienced I goodwill million detail to $X.XX Canadian are improve net compared with $X.XX overhead in Net share definition, lower changes

operations cash consecutive year. generated year, million used XXXX. generated in a positive we in years. cash for of reaching cash of have considering as was we not million $X.X by goal had We was flow $XX.X fiscal we $X.X positive compared the that positive now X Adjusted would adjusted our in free EBITDA flow outcome million Cash free very last that the to operations communicated which believe quarter for view we achieve flow did just prior

a While proved we of a leaving very by X.XXx. strong we $XX.X approximately net had our debt million expected anticipated. year, to $XXX convertible past be this than our almost debt and Over reduced had decreasing it stronger with net to us million, QX, we debt-to-EBITDA still ratio

net decrease intention million, capital our to our will enhance structure in our our The flow. financial and expense cash continue reduction is which annual $XX.X and debt to income interest directly Our lowering flexibility. flows free convertible our by optimize indebtedness, net

XX% The now QX Let's performance. million, quarterly compared by of $XXX.X million adjacency representing of rose quarter $XX.X our review year $XXX.X really into business our prior came to to net play revenue QX. million the total almost model growth. diversification our during through

year. In XX% cannabis For alcohol in QX beverage to of rose segment revenue to fiscal our and revenue during the million. million. to first Net XX% wellness revenue only compared previous decreased in to period, XX% to X% size exceeded prior XX% $XX.X rose total year revenues the $XX.X finally, net XXX% cannabis distribution alcohol QX, $XX.X $XX.X the rose time, to our beverage the segment QX representing of our revenue compared mix million, million,

We to excise has resolve this, paid as allowed as we'll mentioned, it as the by industry. The until price unfair of excise $XXX a Still, of the in the budget and is are did has government not taxes fixed issue revenue taxes spike continue so tax it of cannabis maintain our in during view current as last percentage Canadian since taxes result year, changed. more disappointed year we long-term and to price Irwin has the reform cannabis future that every of over cannabis inherently the structure million XX% than Canadian legalization. last as that viability even is do their of essential a declined to

excise forcing our operating profit CRA revenue are LPs, year on primarily exit on needed restructuring to the potentially the competitors, savings This of higher of Canadian the basis, synergies free run We cost from operations plan We in wholesale compared down million flow representing amounted HEXO crack revised financially rationalization. level to from we $X.XX savings $XX.X tax prior fee, in asserting net LP represented to revenue, compared $XX.X an not the million is improvement quarter, are last actual million $X.XX pressures $XX excluding due as was excise on industry into year. QX, the QX that a is targeted to in cash of resulted year and beginning XX% higher prior tax excise million the quarter, from year. encouraged annualized the $XX.X million XX%, with taxes $XX.X million in per cannabis, in adjusted year of to to between to year quarter. same of $XX.X quarter. to when year. Gross the decreased XX% in in significantly function and with in at quarter, flow. our per share variance cash is XX% $X.XX in compared year, products Operating the a to share to in taxed, of during cannabis incurred $XX.X without this that loss was compression which share while new EBITDA. On that a in change in changes compared current prior synergy less $XX.X million million cash Adjusted $XX.X in $XX.X basis, prior prior the flow year market the quarter. $XX.X last prior EBITDA calculated XX% complete and gross mix, per million $XX.X points reduction along quarter. recall cost in which margin flow cash a integration prior in during of the to in was $X.XX higher exceeded and HX cannabis the delinquent million a Most Canadian advisory Adjusted we reductions, in million But quarter revenue flow quarterly strong share Canadian in amounted consistent fees million versus net HEXO's the million quarter by up to adjusted wholesale record $XX.X basis, achieving rate loss the million adjusted Gross was operations. Adjusted a which savings, compared basis compared $XX.X the remained for to million, our margin the a an year quarter. related compared to HEXO price loss sales improved which XXX prior gross was prior year. Net $XXX.X On on of in the EPS decrease year which of was the costs net the operating $XX $XX.X advisory adult-use cash of quarter. year our to consistent per a an income million, million a included

$XX.X year brands, alcohol profit Turning and million historically gross to from segments. now summer, The the across increased which craft contributions the in busy increased up innovations prior to profit compared $XX.X million million adjusted part compared $XX.X spring million. to a our from to reset. Beverage last strong to business launched positive purchased the million million, season; a is and which XXX% X new alcohol the were leading quarter. Beverage $XX.X $XX was to beer was business revenue to gross delta up fall; of $XX.X as due portfolio the

taxes, to a margin the adjusted $XX year HEXO million, related revenue, gross which from million excluding organic million variances medical the XX% wholesale million year excise to Canadian quarter medical the is acquisition we of the and was quarter. year. $XX its compression. market to revenue unexperienced terminated X%, grew experiencing being advisory cannabis in Gross the XX% interesting the category $XX phenomenon positive increased previously The services of the revenue. Net and despite increase HEXO prior that the by cannabis in While Canadian $XX.X $XX.X Truss. from which million from adult-use period. growth, revenue excludes HEXO million combined of with million third was the alcohol increased million Wholesale ago arrangement last Canadian the $X.X in from in contributions cannabis impacted international the elimination in representing took quarter. million cannabis was related The the cannabis advantage in cannabis from of from and gross revenue advisory totaling from fee, an currently to strategic revenue, million Canadian revenue, competition revenue Offsetting adult-use decreased due place. Revenue in to $XX.X to compared $XX.X revenue, was XX% in net margin comprised in $XX.X increase $X.X price that XX% and industry cannabis year acquisition, XX% previous beverage of prior increased

and industry turn, industry the supply excess resulted become resulting in ]. [ in a of dissipating. much increase pricing As significant has product the previous This, this the advantageous market in wholesale lower portion significant the new to securing in models, wholesale our move is difficult, inventory disappeared pricing have appears in increasing as With industry as took in business levels, has quarter, in backdrop, production revenue. levels the Xx in advantage in to inventory in we of the asset-light many more capacity categories. Against some previous

X% to new to product short wholesale expected to do million not $XX.X asset-light the the we from compared be the is to term, Canadian level International LPs related of wholesale While was in norm. opportunities remain revenues this quarterly gross was million revenue quarter by cannabis the $X.X year in million quarter, quarter. million, in focus Wellness from increased XX% driven million margin. Wellness gross in profit $X.X Distribution was year to the $X.X in million margin year to Tilray Pharma rose from quarter from to profit million X% distribution prior while XX%. gross increased quarter. million million prior $XX.X the up to Distribution countries. Cannabis the $X.X demand was in and prior net XX% to cannabis year differences and prior various gross markets $XX.X to the year in margin in compared revenue $XX.X XX% prior $XX.X in increased prior to margin $XX.X due $XX.X prior XX% international grew predominantly quarter. revenue million year million through in million compared year profit the of to the derived on from decreased timing $XX.X quarter, to and gross shipments anticipate gross the to our compared

of costs inherited transaction the acquisition brands, of both and XXXX marketable repayment million, as of as settling of and cash assumed the [indiscernible], related well was from acquisitions of cash Our price part the in HEXO, Fiscal legacy purchase settlements. down the including May the balance variance segments. the ago major the our liabilities as and craft $XXX.X period. The as we in million securities beverage Tilray cannabis year was majority to from unpaid was litigation by of $XXX.X exit XX tax alcohol a the and the excise year marked

increases these enjoyed significant acquisitions infrastructure. existing progress made we those from acquisitions, revenue to addition In we also into our integrating in

in For the largely cannabis with segment, the available integration largest pieces plan. is assets remaining this redundant complete integration our for sale,

the beverage integration. still For the segment, there work is done on to be alcohol

for As have produced their agreements I except now Shock exited brands and in being Top said our previously, are all co-manufacturing facilities.

our our Our activities, footprints bring of integrating ensure production back low-cost and to utilizations, brands with are integration the producer alcohol consolidated across above the production take all advantage up we all fine craft work to maximizing largest our will and in U.S. pricing to margins their continue as fully purchasing XX%. commensurate tweaking decisions related beverage all status fifth

$X to mid-single net million of following to pleased revenues between $XXX growth. billion anticipate provide are guidance for fiscal XXXX. with organic and we Finally, be digits the We

and the first now Operator, analysts. our the me lines what's open for remarks our Let covering prepared conclude question? questions from

Operator

question [Operator from from is coming Robert TD Our Instructions] first Moskow Cowen.

Robert Moskow

new guidance. I of believe I'm to kind the story. you normally give EBITDA

for was me the decision whether fiscal tell you 'XX? can what EBITDA So -- regarding guidance

Irwin Simon

growing I get company, I growth analyst, outlaid flow, flow. but it revenue, rest out. the goals number and I think, free something you're margins, No think around pretty things our other sales the in company why. And our a but and and and to starts through it's but sales think anything think And on -- I Robert, a our figure where runs EBITDA based I starts are think why. growth I back cash to happen, cash P&L., think can we all the number is I a organic the from as think as smart reason that's we've as

Robert Moskow

Okay.

give You decided forward? not and that range going provide you've used now to to it

Irwin Simon

give sales, the growth our I give where organic our -- we expectations think it's margin is. we give we on and

P&L. usually through rest the can I flow the think

Robert Moskow

give of integrating towards you kind step-by-step Can improve, little to your what us on needs the next ABI Okay. how margins next? will for happen XX status gross months and -- like a brands the

Irwin Simon

number grow Well, brands it one, again. I starts starting to these with think

results number lot what innovation that and getting XX was put some the We a far there, of is Top, from we some Shock one. that. innovation so showed And examples the happening what there out with we've some with was that's and great of so of happening -- out seen Barrel,

our facility our what in products are before, manufacturing today heard own I we look made said our at As facilities. of and XX%

that doing some was into more our and manufacturing facilities. more how of of do and ABI bring that So more our we of -- manufacturing

ABI, big where so opportunities grow and So we're international how are grow distributors that our at the business, we today, we could high gross you the standpoint? for internationally. these big maximum is where And more XXX our business big focus. them And week all that the thing. Also, is big prior a with do distributors so Our excellent that at So do legacy margin these Number focus. That's it and out looking the we with and thing. some that them? come was two low looking we some strategic and bought and we are? how there margins, where a planning our And our meetings look at get at more Last that's number some purchasing back SweetWater is where margins is in opportunities efficiencies some the came along distributors one. there. of so distributors was have if XXs, production at XXs, more consolidation some there's

organic grow where X.X is million went gross selling get regards acquisition a XX acquisition giving first beer not to in And going lot there year. all. And lot that's margin, drops few a points We're that's that beer few dollars million, growth out cases. our the dropping the is points, can can to growing we plus if And growth the we're on mid-single in next beer, talk we here. the Carl about you our line gross category margins cases when sell of guidance to a XX on do to to there's bottom good of million big money thing bottom by to If the a of heard high growth, at you line. pretty

there So we can there's take lot of costs that a out.

Operator

Next from Andrew question Stifel. is coming from Carter

W. Andrew Carter

of to to ] you X, EBITDA want came (sic) in kind at [ about X.X X.X, this back X margin year. the thinking Just EBITDA get of kind

expand EBITDA $XXX Could margin then million. for think about should you into I'll tie next you of just all one incrementals? here? putting $XXX to Does -- million -- incremental kind question. the I'll growth directionally? from anything year how And Your in this Just we

outlook the about anything you I free cash know CapEx, flow from that? think How don't And free capital goes, flow give gave working could should you we that year? here? cash if as grow far else should the As this

Irwin Simon

just it over -- too. turn So and to Carl, I'll

$XX integrated gross taken cost million, we first savings And all, the when taken of there's pretty margin, in in you EBITDA looks. on over say costs low that said we a to regards acquired to They heard and of HEXO. the you the out margin lot were on on before we've was $XX out. me million before, it have not HEXO business, Just heard I these where what as regards businesses,

bottom get add on a to we your more Andrew, that, a to margin. as So and drops organic today, that margins $X as we lot gave between line those as that plus to goes sales that EBITDA acquisition company and guidance growth, the growth $XXX are line top million billion there into

I come I heard what back listen, And my in you script. and said

going -- there to excise some expect relief be happening. We not in not taxes would that it's regards

IT, years legacy with has for over much regards in the to cost last of that been compression, tax higher cost million So which license our digesting well million, just price over higher at cost $XXX our paying much few because $XXX have we business, of some over excise and $XXX million. we're and between cannabis of insurance

organic we're a So lot we're Carl? but these also of business, taking that. getting P&L, and costs growth lot within to digesting a cost out of our we're offset of our of lot a

Carl Merton

over million we be year $XX range. CapEx, for spent about will on this in year right little million We a next a on Just $XX spent CapEx. CapEx before. that year

capital the next we grow to capital, see at the As we're don't it today working from year. the over relates where to working need

Irwin Simon

We and that, million between on $X.X CapEx spent other just conversion over some sell we We SweetWater to in it -- our facilities. CapEx and there. Masson in we spent -- regards some other on So of spent facility. our

efficient pretty -- CapEx we So lot of with expand. got facilities and a that, could pretty some that

year. So next we year into going of CapEx don't spend a -- into this expect to lot

W. Andrew Carter

price just guess this one EBITDA the to headwind mentioned million kind I year compression. more question the from on of you -- $XX

headwind whatever able margin to cannabis excise If mentioned kind it your this -- or point, the a the would had pricing. is want where -- you And to would be the to less from like growth? EBITDA of as it? call year tax straight-line you accretive Is therefore, from to to accretive pricing you are next perspective, at innovation, gross rev pricing innovation you

Irwin Simon

XX%, to still you're there's a excise tax you're excise this no tax, clear be excise XX%, on to down the call, paying $X relief paying hate amount tell keep is I a on to XX%, gram. you, tax. where If coming just prices everybody fixed So

matter a as going fact, tax excise of of up. percentage, percentage a As keeps our as a sale

cost drops of compression about of your that just just So your years $XXX-plus couple to line. would our been If has remember, million. the price over that last never bottom happened, ultimately that goods,

you and said being heard with not forcing able regards pay to we them tax in what other after LPs Canadian to So government away. good. feel the them in going excise Carl that, And

we anything, that and do. looking them. we flattened can for one, unique some we're And increase to the Tilray new out innovation good prices some that pricing you we're is out. And the what of basically price higher coming with asked feel get can to has if now number So hopefully, question get

the price Andrew. last So we're over to near couple years, not we hopefully, going compression have anywhere of the seen see

Carl Merton

million were quarter, any in to see that until I QX. a Just mean year. the fourth $X about we did at up quarter. some We not on the give through cadence looking compression price

Operator

next coming Aaron Partners. from question from Global Our Instructions] Alliance Grey [Operator is

Aaron Grey

talk a you believe since to want the I me, for since XX% I X. there. question a Germany about law mentioned changed increase first April So bit

and anything you that scripts, talked buybacks from So will quarter? before maybe it bottlenecks the to I overall further the have within then some Portugal even for could. know clarify, wanted And your provide? you're than relative But increases, faster commentary domestically keeping specifically are growing own can you seeing just of just increase terms was change? are market you in it production Or the market about the see you seeing as any you in well. that today

you're market So in terms evolve overall seeing sense there? just the how your of

Irwin Simon

question. can I Denise you. Thank let for that

Denise Faltischek

Thanks, Irwin. Thanks for the question.

weeks. One the prescriptions, fact, increased in are import them to have, becoming medical permit basically the we with our of Germany. We've in is, permits question what regulations. in first growth, of hearing question growth the seen reflects we terms the seeing we're X your May some patients, X the second, of fact, is then XX, terms in of new been reporting the from end given number into seeing on bottlenecks the that adoption weeks import from permits, demand QX and terms that the on number marketplace, the this export increasing the in is And in April of German fiscal basically overwhelmed given going as of of timing government terms XX% terms increasing a So cannabis challenges of like year your of of in in X we're potential and the

The in to very other the given of thing cannabis. prescriptions the ability is seeing fill we're quickly also terms that

are short see. both more are I those the And So think we two bottlenecks that term.

supply As sort then and of and of import more resources Germany more in from we government those. aspects fulfillment against of as the to fact, start both level out prescription when chain

I temporary in of terms do see measures on So growth. restrictions them as

Aaron Grey

then line quick this again hemp-derived the And call. Great. second beverages you on me, mentioned Okay. that just one on for delta

are complete. Formulations

you You the and mentioned Jersey some states. state two by New Texas state. mentioned I believe as of

your then of desired with with increase, hemp-derived commentary you're desire participate is beverages. Have existing So states on their larger to terms the distributors, ability of seen how you especially be for right any to in able and you'd an smaller the guys some these having someone, conversations believe sell into? just player how the And both like many beverages. you alcohol which now you with

seeing many within how Delta-X going current the for you build markets beverages? to are demand the you're overall you how And think into the So environment?

Irwin Simon

products. number us put that. you today we lot that and to With looking is I be wouldn't it, we THC-infused it say in sell distributors states I in and if doing. year. one, because that a value have We're as of have looking, on away heard mention you markets THC will are a we anything me how beverages we that beer me at, business our There product the want out sell that, tell reached this are you produce and we right dollar we're heard before, seen sales can't the the is ever but It us Canada for U.S. where a do well So could could they in and if can't our large-sized the would

and have So have we developed. we'll markets or do right. in online do been There's markets out look we product away. has the can at the do can legally, do it do it it we we we about that right We we rolling X do feel it and that that markets. the -- would some products X

can do don't We product We ultimately formulations. ahead our and products are what plans do have go the there once but have go markets. we know ready have have the out get formulations. we the the to We which we today, and

Operator

today Bennett Jefferies. Owen is coming next Our question from from

Owen Bennett

questions I And had beverages. just of couple a on

obviously, HiBall? on to what I focus about but in was as the And first wondering a planning think attractive thinking on you successful drinks, additional brands you how Or one, you're also first category? you well? The launch energy to That's to just need that are one. the do very very competitive. category, be be will

Irwin Simon

our beyond to that I brands asking what our you're beverages, up, is cross within think -- what beverage broken and and business. well, little focus a beverages, what again, was the So

Owen Bennett

on And think or no, the sorry, very yes, beyond competitive you it to hear, things successful we're what passive maybe the No, just HiBall? specifically. high you additional in be whether very attractive, that didn't be brands we energy need

Irwin Simon

Okay.

Okay. one. I got

about Sorry that.

discontinued from consumers. so HiBall of you, I consumers lots Owen, the requests on product. when many So my to career, tell in had requests got never I've I've got ABI for

a there very, results product. water product marketplace Love. out HiBall on in the Liquid big that. good and So some tested will come We We with be focus results our with very a on called high

a glass you the beer, nonalcoholic non-alc. the and not and beers, in to sure if Our difference I who know even you a regular ultimately, beer was I'm put that between know that

So sparkling we some flavors. beers. in some Drinks great water with with drinks still and with -- come Energy We've come up Liquid Love open non-alc out multiple

in with things. of stuff we've some Barrels, with out some that the new our But the the Top to put And the consumers continue from Montauk, forth out innovation that some the our the Shock and strong. far, to distributors the of can exciting flavors we some of of now demand that that so push in been we XX have some gone regards SweetWater, we'll has of or

tremendous some returning brands we see where were in the to growth acquired, of declining. So growth they that we

Owen Bennett

Okay.

just can ] then international? well to one planning sell And on as [ you so get follow-up fair. you this on Aaron's THC e-commerce by findings. Are Sounds quick question

Carl Merton

you cup talking sounds it into you're Can the like [ like a Sorry, repeat just question? ].

Irwin Simon

on think the Delta-X. question was I

Owen Bennett

up Are sell to as Yes. e-commerce well? planning by you

Irwin Simon

in sell before, that I is something everybody but it can sell will on in it to and distributors we we're going Delta-X, and that said e-commerce, will markets it's it can sell retail we into beer we take Yes. retail it. Like focus that in that agreement on, through

retailers great And product. our that so far, we've are and interested a this response from distributors in had

Operator

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

Frederico Yokota Gomes

Just Germany. on a follow-up

seeing the can demand mentioned to Given Is demand enough you side? are terms just as you're serve market any there pricing, you that what sort comment there? in And supply there seeing on there, you the of grows? that increased on increase product of

Denise Faltischek

does product what no as Yes, our this not market, competitors product feel into only product comes the soon as not It also other -- Basically, all but selling is into in its the problem. market terms supply, not if of only it hearing terms essence, in saturated at on market. seems from to in seeing be as point. we're the so of at

I mostly market. And I the that, And whole growing faster so market more extract into mean say is medical supply in is the there's on at on whereas growing a the think essence, still a flower. definitely The patient-led slower at for whole additional flower room when market cannabis I side pace, of pace.

we at more, see and segmented see enter approach I so the And is into start will in market value products premium terms mainstream you'll a probably products. looking what And of to will market. market look there's in through to terms participate in of think, of the that in segmentation proliferation parts product And all more the as various segment come quality. we different

So we're pretty excited about it.

Frederico Yokota Gomes

bit that organic any provided of you just guidance. your organic for of color responsible segments? is And maybe just more there your on in then segment be you will question Is specific terms second most growth? that Could my a expect growth

Irwin Simon

growth that a If And our coming Pharma. that growth mid-single is. of business. distribution flow. growth just at and our looking businesses, from what big growth beer growth cannabis we're just the our -- looking growth year. and last really that's smaller we're wellness on and from Pharma wellness, no number, in anything, -- looking business, CC there's beverage out growth we're our of big we're medical regards our CC growth business double-digit no our our there Low for where in coming business our organic both But same of to is organic cash growth kind a looking part But margin in it's to

Operator

turn I'd to We any or reached session. closing question-and-answer to our the floor Irwin the end for over of back like further comments.

Irwin Simon

thank today $XX $XXX lot Well, We XXXX, anything is on been joining at we've of have billion. we've million happening this good day. you, I Listen, there guidance and everybody, a $X that a to report million without out us year, this had in back to we record the between sales. summer look And business And if for stuff. U.S.

insurance last anything the what's kept S. And lot asking the guidance in a that If the the X the in could change and the deal ways. made excited to changed because had in issues happen about a IT happened of even this more in team Germany selling in the we happening we that U.S., change in higher U.S. and dreams to regard So sure is had to but terms in overcome the includes ourselves, could U. the We're more tax years, with dramatically. We've regards in everybody Canada. other regards over to things rescheduling cannabis in Tilray. with in infused and of U.S., excise costs with protecting within higher in that's to costs in happening U.S., anything me, what's deal this something in of We've opportunities the U.S.

using sit is So to $XXX cash something last year as our leverage, X.Xx of debt we're proud one with is million and of today and the subordinate look pay our be just today to that as very very, leverage. between flow And we able of. equity companies things

something company on focused built alcohol, that's So is over course. which exciting, a pretty lifestyle cannibalizing years, of X cannabis, that's we last the have

business, there's growth growth growth there's of craft a lot in there's and the the We a think We beer exciting real beverage a crack think in we think business. and have business. in the We business our a beer of of wellness spirits lot lot business.

positioned I think supply just the Europe is can and we're whole the facility market supply time, the of we government. for Germany well German could first where only we in and with one two before beginning, now facilities, the

to a regards to to We have with that, within countries lot And grow facility facility with going incredible working of lot you're see be a grow. Canadian Europe. an in our opportunities. that's going other There's in of

sleep, is thing genetics becoming of the in is quality, patients, And epilepsy to anxiety, today genetics You heard is an talk and us and millennials. about pain, just cancer genetics. me not the and generation other cannabis our the looking bank regards things. educated Z cannabis the what that's and for Gen more It's older at for treating the potency, and genetics the user consumer looking for today using. The more about cannabis in they're and at

and So a or a cannabis about a not get as lot Tilray as reasons we it's continue relaxation a into for business people what is plans, is and our medical through into, growing talk as I'm go look at of we within to just exciting that U.S. times, product together as at product we what we identified sure bringing opportunity a this that evolve lifestyle, company. And to relaxation. strategic going or a as expand brands. for we other is will to us on, the the categories And should happen lifestyle we've an in what's Tilray to for what lifestyle look product bring

As XX% XX brands over you our -- company, as within said is before, we produce that I over XXXX, said of this and products. since

really employees, very work dedicated team. are lucky this X,XXX over that dedicated have and to with We

focused Board your great of a and to on With that, enjoy least, I of our want very for you. products. summer. every have much governance And ESG, governance. We on being patient one rest the and great with Thank us. not thank loyal us good our for last enjoy that focused being but out of you shareholders joining Thank is there shareholder

Operator

today's That you. teleconference. conclude does Thank

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

Tilray Brands (TLRY) 29 Jul 242024 Q4 Earnings call transcript