Q4 2024 Tilray Brands Inc Earnings Call

Operator: Hello and thank you for joining today's conference call to discuss Tilray Brand's financial results for the fourth quarter and fiscal year 2024, ended May 31st, 2024. All lines have been placed on mute to prevent any background noise.

Operator: Hello, and thank you for joining today's conference call to discuss Tilray Brand's financial results for the fourth quarter in fiscal year 2024 and on May 31st, 2024. All lines have been placed on mute to prevent any background noise.

Speaker Change: Hello and thank you for joining today's conference call to discuss Tilray Brand's financial results for the fourth quarter and fiscal year 2024 ended May 31st, 2024. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session for analysts and investment firms conducted via audio. I'll now turn the call over to Ms. Berrin Noorata, Tilray Brand's Chief Corporate Affairs and Communications Officer. Thank you. You may now begin.

Operator: After this, speaker's remarks will be a question and intercession for analysts and investment firms conducted via audio.

Speaker Change: After the speaker's remarks, there will be a question and answer session for analysts and investment firms conducted via audio. I'll now turn the call over to Ms. Berrin Noorata, Tilray Brand's Chief Corporate Affairs and Communications Officer. Thank you.

Berrin Noorata: 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: Thank you, operator, and good afternoon, everyone. By now, you should have access to the earnings press release, which is available on the Investors section of the Tilray Brands website at Tilray.com and has been filed with the SEC in Cedar. Please note that during today's call, we will be referring to various non-GAAP financial measures that can provide useful information for investors. However, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. The earnings press release contains a reconciliation of each non-GAAP financial measure to the most comparable measure prepared in accordance with GAAP.

Berrin Noorata: Thank you, Operator, and good afternoon, everyone. By now, you should have access to the earnings press release, which is available in the Investors section of the Tilray Brand website at tilray.com and has been filed with the SEC and CDAR. Please note that during today's call, we will be referring to various non-GAAP financial measures that can provide useful information for investors. However, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

Berrin Noorata: Thank you operator and good afternoon everyone. By now you should have access to the earnings press release which is available on the investors section with the Tilray brand website at tilray.com and has been filed with the SEC and CDAR.

Speaker Change: Please note that during today's call, we will be referring to various non-GAAP financial measures that can provide useful information for investors.

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

Berrin Noorata: The earnings press release contains a reconciliation of each non-GAAP financial measure to the most comparable measure prepared in accordance with GAAP. In addition, we will be making numerous forward-looking statements during our remarks and in response to your questions. These statements are based on our current expectations and beliefs and involve known and unknown risks and uncertainties, which may prove to be incorrect.

Berrin Noorata: In addition, we will be making numerous forward-looking statements during our remarks and in response to your questions. These statements are based on our current expectations and beliefs and involve known and unknown risks and uncertainty, which may prove to be incorrect. Actual results could differ materially from those described in the forward-looking statement. The text in our earnings press release includes many of the risks and uncertainties associated with such forward-looking statements.

Speaker Change: In addition, we will be making numerous forward-looking statements during our remarks and in response to your questions. These statements are based on our current expectations and beliefs and involve known and unknown risks and uncertainties, which may prove to be incorrect.

Speaker Change: Actual results could differ materially from those described in the forward-looking statement. The text in our earnings press release includes many of the risks and uncertainties associated with such forward-looking statements.

Berrin Noorata: Actual results could differ materially from those described in the forward-looking statements. The text in our earnings press release includes many of the risks and uncertainties associated with such forward-looking statements. Today, we will be hearing from key members of our senior leadership team, beginning with Irwin D. Simon, Chairman and Chief Executive Officer, who will provide opening remarks and commentary, followed by Carl Merton, Chief Financial Officer, who will review our financial results for fiscal year 2024 and fourth quarter.

Berrin Noorata: Today, we will be hearing from key members of our senior leadership team, beginning with Erwin D. Simon, Chairman and Chief Executive Officer, who will provide opening remarks and commentaries, followed by Carl Martin, Chief Financial Officer, who will review our financial results for fiscal year 2024 and fourth quarter.

Speaker Change: Today we will be hearing from key members of our senior leadership team, beginning with Irwin B. Simon, Chairman and Chief Executive Officer.

Speaker Change: who will provide opening remarks and commentary, followed by Carl Merton, Chief Financial Officer, who will review our financial results for fiscal year 2024 and fourth quarter.

Berrin Noorata: Also joining us for the question and answer segment for Demise BalticTech, Chief Strategy Officer, and Head of International, who are McNeil, President of Tilbury, Canada, and Todd Gilmore, President of Tilbury, Beverly Disney with America.

Speaker Change: Also joining us for the question and answer segment are Denise Faltischek, Chief Strategy Officer and Head of International, Blair MacNeil, President of Tilray Canada, and Ty Gilmore, President of Tilray Beverages North America. And now, I'd like to turn the call over to Tilray Brands Chairman and CEO , Irwin V. Simon.

Berrin Noorata: Also joining us for the question and answer segment are Denise Faltischek, Chief Strategy Officer and Head of International, Blair MacNeil, President of Tilray Canada, and Ty Gilmore, President of Tilray Beverages North America. Now, I'd like to turn the call over to Tilray Brands Chairman and CEO, Irwin D. Simon. Thank you, Berrin, and good afternoon, everyone.

Erwin Simon: And now, I'd like to turn the call over to Tilbury Brand's chairman and CEO, Erwin D. Simon.

Erwin Simon: Thank you, Barron, and good afternoon, everyone, and thank you for joining us today. Before diving into our fiscal 2024 results, I'd like to take a moment to reflect on the evolution of Tilbury Brands. Back in 2019, a trio of the cannabis focus Canadian LP with only $50 million in revenue and minimal cash reserves. Since then, we've taken a strategic approach to diversifying our operations and growing our global businesses. Through a combination of organic growth, strategic acquisitions, we have disrupted the CPG industry by expanding our footprint into new markets and adjacent business categories. Today, Tilbury Brand is a leading global lifestyle company, spearheading the conversion of cannabis, beverages, and wellness products and is elevating lives through moments of connection.

Irwin David Simon: And thank you for joining us today. Before diving into our fiscal 2024 results, I'd like to take a moment to reflect on the evolution of Tilray Grant. Back in 2019, APRIA was a cannabis-focused Canadian LP with only $50 million in revenue and minimal cash reserves. Since then, we've taken a strategic approach to diversifying our operations and growing our global business. Through a combination of organic growth and strategic acquisitions, we have disrupted the CPG industry by expanding our footprint into new markets and adjacent business categories. Today, Tilray Brand is a leading global lifestyle company, spearheading the transformation of cannabis, beverages, and wellness products, and is elevating lives through moments of connection.

Speaker Change: Thank you, Berrin, and good afternoon, everyone, and thank you for joining us today. Before diving into our fiscal 2024 results, I'd like to take a moment to reflect on the evolution of Tilray Brands.

Speaker Change: Back in 2019, APRIA was a cannabis-focused Canadian LP with only $50 million in revenue and minimal cash reserves. Since then, we've taken a strategic approach to diversifying our operations and growing our global businesses.

Speaker Change: Through a combination of organic growth, strategic acquisitions, we have disrupted the CPG industry by expanding our footprint into new markets and adjacent business categories.

Speaker Change: Today, Tilray Brand is a leading global lifestyle company spearheading the conversion of cannabis, beverages and wellness products and is elevating lives through moments of connection.

Erwin Simon: We're operating in more than 20 countries across North America, Europe, Australia, and Latin America, with five businesses in medical, adult-use cannabis, beverages, spirits, wellness products, and 44 consumer-connected lifestyle brands. As a vertically integrated company, we have 20 facilities that serve as our collective businesses, allowing us to produce approximately 90% of our products internally, ensuring the high quality of our products. This is a testament to our success in building a diversified global business that is dedicated to providing the best possible products for our consumers. The progress we've made in the short time and are excited to continue driving innovation growth in the years ahead.

Irwin David Simon: We operate in more than 20 countries across North America, Europe, Australia, and Latin America, with five businesses in medical and adult-use cannabis, beverages, spirits, wellness products, and 44 consumer-connected lifestyle brands. As a vertically integrated company, we have 20 facilities that service our collective businesses, allowing us to produce approximately 90% of our products internally, ensuring the high quality of our products. This is testament to our success in building a diversified global business that is dedicated to providing the best possible products for our consumers.

Speaker Change: We are operating in more than 20 countries across North America, Europe , Australia, and Latin America, with five businesses in medical, adult-use cannabis, beverages, spirits, wellness products, and 44 consumer-connected lifestyle brands.

Speaker Change: As a vertically integrated company, we have 20 facilities that service our collective businesses.

Speaker Change: allowing us to produce approximately 90% of our products internally, ensuring the high quality of our products.

Speaker Change: This is a testament to our success in building a diversified global business that is dedicated to providing the best possible products for our consumers.

Irwin David Simon: We're incredibly proud of the progress we've made in this short time and are excited to continue driving innovation and growth in the years ahead. Fiscal 2024 marked a year of significant accomplishments for Tilray Brands, achieving our best financial results to date. We achieved 26% net revenue growth with annual record net revenue of $789 million, record adjusted gross profit of $236 million, record adjusted EBITDA of $60.5 million, adjusted net income of $6.2 million, and positive adjusted free cash flow.

Speaker Change: We're incredibly proud of the progress we've made in this short time and are excited to continue driving innovation and growth in the years ahead. Fiscal 2024 marked a year of significant accomplishments for Tilray Brands.

Erwin Simon: Fiscal 2024 marked a year of significant accomplishments for Tilray Brands, achieving our best financial results to date. We achieved 26% net revenue growth with annual record net revenue of $789 million. Record adjusted gross profit of $236 million. Record adjusted EBITDA of $60.5 million, adjusted net income of $6.2 million, and positive adjusted free cash flow. We also strengthen our balance sheet by significantly reducing our net convertible debt by approximately $300 million, reducing our net debt EBITDA ratio to $1.73. We also see that our cost saving synergy target by 31%, delivering $35 million of savings. Additionally, not only did we meet our revised annual guidance for adjusted EBITDA, but we also generated adjusted free cash flow of approximately $7 million for the year.

Speaker Change: Achieving our best financial results to date.

Speaker Change: We achieved 26% net revenue growth.

Speaker Change: with annual record net revenue of $789 million.

Speaker Change: Record adjusted gross profit of $236 million.

Speaker Change: Record Adjusted EBITDA of $60.5 million, Adjusted Net Income of $6.2 million, and Positive Adjusted Free Cash Flow.

Irwin David Simon: We also strengthened our balance sheet by significantly reducing our net convertible debt by approximately $300 million, reducing our net debt EBITDA ratio to 1.73. We also seeded our cost-saving synergy target by 31%, delivering $35 million of savings.

Speaker Change: We also strengthened our balance sheet by significantly reducing our net convertible debt by approximately $300 million, reducing our net debt EBIT dollar ratio to 1.73.

Speaker Change: We also see that our cost savings synergy target by 31%, delivering $35 million of savings.

Irwin David Simon: Additionally, not only did we meet our revised annual guidance for Adjusted EVA DUT but we also generated Adjusted Free Cash Flow of approximately $7 million for the year. Our record financial results were achieved despite the challenges we faced in the fiscal year, absorbing approximately $10 million in cannabis price compression, paying approximately $100 million in excise tax and regulatory fees in Canada, and paying higher operating insurance rates of nearly $7 million because of our cannabis businesses, which together equate to approximately $120 million that directly hit our bottom line.

Speaker Change: Additionally, not only we met our revised annual guidance for Adjusted EVA DUT, but also generated Adjusted Free Cash Flow of approximately $7 million for the year.

Erwin Simon: Our record financial results were achieved despite the challenges we faced in the fiscal year, absorbing approximately $10 million in cannabis price compression, paying approximately $100 million in excise packs and regulatory fees in Canada, and paying higher operating insurance rates of nearly $7 million because of our cannabis businesses. Which together equate to approximately $120 million that directly hit our bottom line. Our ability to deliver record financial results while navigating these challenges is a testament to the resilience and dedication of our team, who have worked tirelessly to ensure the success of our businesses.

Speaker Change: Our record financial results were achieved despite the challenges we faced in the fiscal year, absorbing approximately $10 million in cannabis price compression.

Speaker Change: paying approximately $100 million in excise tax and regulatory fees in Canada, and paying higher operating insurance rates of nearly $7 million because of our cannabis businesses.

Speaker Change: which together equate to approximately $120 million that directly hit our bottom line.

Irwin David Simon: Our ability to deliver record financial results while navigating these challenges is a testament to the resilience and dedication of our team, who have worked tirelessly to ensure the success of our businesses. Over the past fiscal year, our strategic acquisitions have significantly benefited our financial results, which we expect will continue to benefit us well into the future. In June 2023, we acquired Hexo and Reticant to expand our cannabis business, our production, and capability, and our grand growth and opportunities in Canada and internationally.

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

Erwin Simon: Over the past fiscal year, our strategic acquisitions have significantly benefited our financial results. Which we respect will continue to which we expect will continue to benefit well into the future. In June 2023, we acquired Hexal and Reticant to expand our cannabis business, our productions in capability and grant growth in opportunities in Canada and internationally. Since then, we have broadened to raise cannabis product portfolio across multiple form factors, including an 85% year-over-year increase in need streamed flower sales in adult use cannabis. The addition of reticant brand has further strengthened our categories such as pre-rolls, oils, capsules.

Speaker Change: Over the past fiscal year, our strategic acquisitions have significantly benefited our financial results, which we expect will continue to benefit us well into the future.

Speaker Change: In June 2023, we acquired Hexo and Retican to expand our cannabis business, our productions and capability, and grand growth and opportunities in Canada and internationally.

Irwin David Simon: Since then, we have broadened Tilray's cannabis product portfolio across multiple form factors, including an 85% year-over-year increase in mainstream flower sales in adult-use cannabis. The addition of Retican bran has further strengthened our category, including pre-rolls, oils, and capsules.

Speaker Change: Since then, we have broadened Tilray's cannabis product portfolio across multiple form factors, including an 85% year-over-year increase in mainstream flower sales in adult-use cannabis.

Speaker Change: The addition of retican bran has further strengthened our category such as pre-rolls, oils, capsules.

Irwin David Simon: Today, Tilray is the number one player in the straight edge pre-roll category with a 46% market share and a top player in the oils and capsules category combined with a 21.5% market share in the adult use business in Canada. In August 2023, we acquired Trust Beverages, fortifying Tilray's leadership in the Canadian cannabis beverage market. This acquisition increased our market share in the beverage category by 400%, growing our market share in the THC beverage category to 41% at the end of fiscal year 2024.

Erwin Simon: Today, Tilray is the number one player in the straight-edge pre-roll category with a 46% market share and a top player in the oils and capsules category combined with a 21.5% market share in the adult use business in Canada. In August 2023, we acquired Trust Beverages, fortified Tilray's leadership in the Canadian cannabis beverage market. This acquisition increased our market share in the beverage category by 400%, growing our market share in the THC beverage category to 41% at the end of this year, 2024. In September 2023, we acquired eight iconic beer and beverage brands from ABI, along with related breweries and group ups.

Speaker Change: Today, Tilray is the number one player in the straight edge pre-roll category with a 46% market share and a top player in the oils and capsules category combined with a 21.5% market share in the adult use business in Canada.

Speaker Change: In August 2023, we acquired Trust Beverages, fortifying Tilray's leadership in the Canadian cannabis beverage market. This acquisition increased our market share in the beverage category by 400%.

Speaker Change: Growing our market share in the THC beverage category to 41% at the end of fiscal year 2024.

Irwin David Simon: In September 2023, we acquired eight iconic beer and beverage brands from ABI, along with related breweries and brew pubs. As a result, we're now the fifth largest craft brewer in the U.S., with a 4.5% share of the craft beer market. Our growing beverage portfolio now includes craft beers, spirits, ready-to-drink cocktails, ciders, and non-alcoholic beverages.

Speaker Change: In September 2023, we acquired eight iconic beer and beverage brands from ABI, along with related breweries and brew pubs. As a result, we're now the fifth largest craft brewery in the U.S., with a 4.5% share of the craft beer market.

Erwin Simon: As a result, we're now the fifth largest craft brewer in the US, but a 4.5% share of the craft beer market. Our growing beverage portfolio now includes craft beers, spirits, ready to drink cocktails, ciders, and non-alcoholic beverages.

Speaker Change: Our growing beverage portfolio now includes craft beers, spirits, ready-to-drink cocktail, ciders, and non-alcoholic beverages.

Erwin Simon: The combination of our legacy businesses and these acquisitions resulted in our best fiscal year results.

Irwin David Simon: The combination of our legacy businesses and these acquisitions resulted in our best fiscal year results. Let's now dive deeper into each of our business segments. Global cannabis net revenue increased by 24% during Fiscal 2024. In Canada, our quarter 4 marked the culmination of a transformative year for Canadian cannabis. It was the highest revenue quarter of the year at $58.8 million, and it marked the completion of our HEXO and Trust Beverages integration, a significant operation overhaul resulting in extensive improvements in our facility utilization.

Speaker Change: The combination of our legacy businesses and these acquisitions resulted in our best fiscal year results. Let's now dive deeper into each of our business segments.

Erwin Simon: Let's now dive deeper into each of our business segments. Tilray Cannabis, global cannabis net revenue increased by 24% during fiscal 2024. In Canada, our quarter four marked the culmination of a transformative year in Canadian cannabis. It was the highest revenue quarter of the year at 58.8 million, and it marked the completion of our hexal and trust beverages integration, a significant operation overall resulting in extensive improvements in facility utilization. We continue to lead Canadian cannabis market share by almost 200 dips over the next competitive and have consistently at the industry for the top of the industry for the past three years.

Speaker Change: Tilray Canada's global net revenue increased by 24% during fiscal 2024.

Irwin David Simon: We continue to lead the Canadian cannabis market share by almost 200 bips over the next competitor and have consistently been at the top of the industry for the past three years. From a regional perspective, Tilray was number one across British Columbia, Alberta, and Ontario and Quebec provinces combined, which include over 80 percent of the Canadian population.

Speaker Change: In Canada.

Speaker Change: Our quarter four marked the culmination of transformative year in Canadian cannabis.

Speaker Change: It was the highest revenue quarter of the year at $58.8 million, and it marked the completion of our HECSO and Trust Beverages integration, a significant operation overhaul, resulting in extensive improvements in our facility utilization.

Speaker Change: We continue to lead Canadian cannabis market share by almost 200 bips over the next competitor and have consistently been at the top of the industry for the past three years.

Erwin Simon: From a regional perspective, Tilray was number one across British Columbia, Alberta, and Ontario, and Quebec provinces combined, which include over 80% of the Canadian population, and we've also led in all secondary markets. In Canadian cannabis volume, Tilray shipped approximately 60% more in cages, reaching 140 metric tons. Our unit sales grew approximately 130% to almost 35 million units. In fiscal 2024, approximately 27% of our Canadian adult-use cannabis net sales revenue came from new innovation, which is a testament to our successful ability to innovate and launch new products. Cannabis consumers have a unique attribute of being open to trying new products.

Speaker Change: From a regional perspective, Tilray was number one across British Columbia, Alberta, and Ontario, and Quebec provinces combined, which include over 80% of the Canadian population. And we've also led in all secondary markets.

Irwin David Simon: And we've also led in all secondary markets. In Canadian cannabis volume, Tilray shipped approximately 60% more kgs, reaching 140 metric tons. Our unit sales grew approximately 130% to almost 35 million units. In fiscal 2024, approximately 27% of our Canadian adult use cannabis net sales revenue came from new innovation, which is a testament to our successful ability to innovate and launch new products. Cannabis consumers have a unique attribute of being open to trying new products, and in fiscal 2024, we capitalized on this by launching over 150 new skews.

Speaker Change: In Canadian cannabis volume, Tilray shipped approximately 60% more in kgs, reaching 140 metric tons. Our unit sales grew approximately 130% to almost 35 million units.

Speaker Change: In fiscal 2024, approximately 27% of our Canadian adult-use cannabis net sales revenue came from new innovation, which is a testament to our successful ability to innovate and launch new products.

Speaker Change: Cannabis consumers have a unique attribute of being open to trying new products, and in Fiscal 2024, we capitalized on this by launching over 150 new skews.

Erwin Simon: And in fiscal 2024, we capitalized on this by launching over 150 new students. Looking ahead the next year, we anticipate that innovation will continue to play a significant role in driving our net sales. Brands such as Broken Coast, Redacam, XMG, Molo and Good Supply will be launching exciting new products based on feedback from our consumers and our but tenders. Our strategic acquisition of Hexone Redacam aimed to integrate through sales plan into our infrastructure and expand our brand portfolio and product mix. In fiscal 24, we almost double the Reddican flower share with a launch of three popular genetics: Animal Rons, Space Age Cake, and Purple Turro.

Irwin David Simon: Looking ahead to next year, we anticipate that innovation will continue to play a significant role in driving our net sales. Brands such as Broken Coast, Reticam, XMG, Molo, and Good Supply will be launching exciting new products based on feedback from our consumers and our bartenders. Our strategic acquisition of Hexone Redican aims to integrate their sales plan into our infrastructure and expand our brand portfolio and product mix. In fiscal 24, we almost doubled the retail flower share with the launch of three popular genetics, Animal Runts, Space Age Cake, and Purple Churro. In Ontario, Animal Runts became the number one and number three selling genetic for 14G and 3.5G paxites, respectively. Spice Age Cake was number eight in the 14G flower segment, despite limited availability.

Speaker Change: Looking ahead to next year, we anticipate that innovation will continue to play a significant role in driving our net sales. Brands such as Broken Coast, Redicam,

Speaker Change: XMG, Molo, and Good Supply will be launching exciting new products based on feedback from our consumers and our bartenders.

Speaker Change: Our strategic acquisition of Hexone Redican aimed to integrate their sales plan into our infrastructure and expand our brand portfolio and product mix.

Speaker Change: In fiscal 24, we almost doubled the reticant flower share with the launch of three popular genetics.

Speaker Change: Animal Runs, Space Age Cake, and Purple Churro. In Ontario, Animal Runs became the number one and number three selling genetics for 14G and 3.5G paxites, respectively.

Erwin Simon: In Ontario, Animal Rons became the number one and number three selling genetic for 14 G and three and a half G pack size, respectively. Space Age Cake was number eight in the 14 G flower segment, despite limited availability. In fiscal 25, we expect these genetics will continue to be within the top 10 for forming genetics in the mainstream flower. In 2024, we made significant steps to right size our operational footprint in Canada to balance applying demand. We sold the trust facility and transitioned all our cannabis beverage production to our London, Ontario drinks facility, pushing the London facility's utilization above 70% and improving our cannabis gross margins.

Speaker Change: SpiceAge cake was number 8 in the 14G flour segment, despite limited availability. In Fisco 25, we expect these genetics will continue to be within the top 10 performing genetics in the mainstream flour.

Irwin David Simon: In fiscal 25, we expect these genetics will continue to be within the top ten performing genetics in the mainstream flower. In 2024, we made significant steps to right-size our operational footprint in Canada to balance supply and demand. We sold the Trust facility and transitioned all our cannabis beverage production to our London Ontario Drinks facility, pushing the London facility's utilization above 70% and improving our cannabis gross margins. These cannabis beverages are phenomenal. I wish we could sell them in the U.S. today.

Speaker Change: In 2024, we made significant steps to right-size our operational footprint in Canada to balance supply and demand. We sold the Trust facility and transitioned all our cannabis beverage production to our London Ontario Drinks facility.

Speaker Change: pushing the London facilities utilization above 70% and improving our cannabis gross margins. These cannabis beverages are phenomenal. I wish we could sell them in the U.S. today.

Erwin Simon: These cannabis beverages are phenomenal. I wish we could tell them in the U.S. today. We centralize all our Hexal brand package and logistics into limited Ontario, lowering our labor costs for unit by 35% and delivering $35.4 million in synergies and exceeding our initial target of $27 million by 31%. We successfully transition our growth and cost cultivation toward an animal BC facility, increasing yields by 30% and lowering our cost for grant by 50%. We also pause the O.K.R. growing during the year at a Cayuga facility that will drive additional savings of $4.5 million on a manual basis.

Irwin David Simon: We centralized all our HEXO brand packaging and logistics into Leamington, Ontario, lowering our labor costs per unit by 35% and delivering $35.4 million in synergies and exceeding our initial target of $27 million by 31%. We successfully transitioned our Broken Coast cultivation to our Nanaimo, BC facility, increasing yields by 30% and lowering our cost per gram by 15%. We also paused outdoor growing during the year at our Cayuga facility, which will drive additional savings of $4.5 million on an annual basis.

Speaker Change: We centralized all our HEXO brand packaging and logistics into Leamington, Ontario, lowering our labor costs per unit by 35% and delivering $35.4 million in synergies and exceeding our initial target of $27 million by 31%.

Speaker Change: We successfully transitioned our Broken Coast cultivation to our Nanaimo BC facility, increasing yields by 30% and lowering our cost per gram by 15%.

Speaker Change: We also pause the outdoor growing during the year at our Cayuga facility that will drive additional savings of $4.5 million on an annual basis.

Irwin David Simon: Finally, we will transition a large portion of our Quebec cultivation facilities and vegetables, which we expect to contribute over $5 million annually to offset the cost of the facility, improving the marketability and the value of the facility, and continue to grow cannabis in smaller portions of the facility to meet the needs of our Quebec consumers. All of these initiatives are designed to significantly lower the cost of growth to manufacture, package, and ship our leading cannabis brands to market. These consumer and operational initiatives are entirely scalable in markets around the world for years to come. In fact, early in Fiscal 25, we shared significant learnings in cultivation and genetics with our teams in Europe.

Erwin Simon: Finally, we transition a large portion of our Quebec cultivation facilities and vegetables, which we expect to contribute over $5 million annually to offset the cost of the facility, improving the marketability and the value of the facility and continue to grow cannabis in smaller portions of the facility to meet the needs we want for our Quebec consumers. All of these initiatives were designed to significantly lower the cost of growth to manufacture and package and ship our leading cannabis brands to market. These consumer and operational initiatives are entirely leverageable in markets around the world for years to come.

Speaker Change: Finally, we transition a large portion of our Quebec cultivation facilities into vegetables.

Speaker Change: which we expect to contribute over $5 million annually to offset the cost of the facility, improving the marketability and the value of the facility, and continue to grow cannabis in smaller portions of the facility to meet the needs we want for our Quebec consumers.

Speaker Change: All of these initiatives were designed to significantly lower the cost of growth to manufacture and package and ship our leading cannabis brands to market.

Speaker Change: These consumer and operational initiatives are entirely leverageable in markets around the world for years to come. In fact, early in Fiscal 25, we shared significant learnings in cultivation and genetics with our teams in Europe .

Erwin Simon: In fact, early in fiscal 25, we shared significant learnings in cultivation and genetics with our teams in Europe.

Erwin Simon: Turning to our international cannabis, we grew net revenue by 22% year over year to approximately $53 million and remain the number one market leader in medical cannabis across Europe. Our annual growth during the fiscal 2024 was driven by free sales in Germany, Poland, the U.K., Australia, and New Zealand. In Germany, we believe we're best positioned to capture a majority of the expected incremental growth in the cannabis medical market, which is projected to be approximately $3 billion in the median term. On April 1st, the Cannabis Act became effective in Germany, which declassified cannabis to a non-narcotic, expanding fill raise market opportunity in Germany.

Irwin David Simon: Turning to our international cannabis business, we grew net revenue by 22% year over year to approximately $53 million and remain the number one market leader in medical cannabis across Europe. Our annual growth during the fiscal 2024 was driven by increased sales in Germany, Poland, the UK, Australia, and New Zealand. In Germany, we believe we're best positioned to capture a majority of the expected incremental growth in the cannabis medical market, which is projected to be approximately $3 billion in the medium term. On April 1st, the Cannabis Act became effective in Germany, which declassified cannabis as a non-narcotic, expanding Tilray's market opportunity in Germany.

Speaker Change: Turning to our international cannabis, we grew net revenue by 22% year-over-year to approximately $53 million and remain the number one market leader in medical cannabis across Europe .

Speaker Change: Our annual growth during the fiscal 2024 was driven by increased sales in Germany, Poland, the UK, Australia, and New Zealand.

Speaker Change: In Germany, we believe we're best positioned to capture a majority of the expected incremental growth in the cannabis medical market, which is projected to be approximately $3 billion in the medium term.

Speaker Change: On April 1st, the Cannabis Act became effective in Germany, which declassified cannabis to a non-narcotic, expanding Tilray's market opportunity in Germany. Since the Cannabis Act went into effect, we have already seen a 65% increase in sales.

Erwin Simon: Since the Cannabis Act went into effect, we have already seen a 65% increase in sales. Hills. And we believe that our current positioning in Germany provides us with several unique competitive advantages. Our cultivation facilities in Germany and Portugal, combined with our Tilray Farm and Medical Distribution Network, provides Tilray a critical, vertical integration, allowing us to consistently supply the market with high quality and a reliable source of medical cannabis. A free Rx was a first facility in Germany to receive both its Canada's cultivation license and commercial distribution license for medical cannabis under the new regulations allowing Tilray to cultivate, produce, distribute premium quality medical cannabis, increasing its production by five times.

Irwin David Simon: Since the Cannabis Act went into effect, we have already seen a 65% increase in sales, and we believe that our current position in Germany provides us with several unique competitive advantages. Our cultivation facilities in Germany and Portugal, combined with our Tilray Pharma Medical Distribution Network, provides Tilray with a critical vertical integration, allowing us to consistently supply the market with high-quality and a reliable source of medical candidates. Free Rx was the first facility in Germany to receive both its cannabis cultivation license and commercial distribution license for medical cannabis under the new regulations, allowing Tilray to cultivate, produce, and distribute premium quality medical cannabis, increasing its production Aphria Rx can now fully utilize and maximize its growing capacity while also expanding its genetics to a total of 31 approved strains from the previously approved three.

Speaker Change: And we believe that our current position in Germany provides us with several unique competitive advantages.

Speaker Change: Our cultivation facilities in Germany and Portugal, combined with our Tilray Pharma medical distribution network, provides Tilray with a critical vertical integration.

Speaker Change: allowing us to consistently supply the market with high quality and a reliable source of medical cannabis.

Speaker Change: A free Rx was the first facility in Germany to receive both its cannabis cultivation license and commercial distribution license for medical cannabis under the new regulations.

Speaker Change: allowing Tilray to cultivate, produce, distribute premium quality medical cannabis, increasing its production by five times.

Erwin Simon: A free Rx can now fully utilize and maximize its growing capacity while also expanding its genetics to a total of 31 approved strains from the previously approved three strains. We believe that this couple with the steps being taken by Germany to liberalize the reimbursement of medical cannabis significantly increases the opportunity in the German market. We believe that Germans declassifying cannabis as a non-narcotic will also have a far-reaching impact on the drug policy throughout Europe. The European opportunity could represent a potential $45 billion medical market alone over the long term. And our President in Europe allows Tilray to grow our global brand, our global brand portfolio to a base of 700 million people, which is twice the population of the US.

Speaker Change: Aphria RX can now fully utilize and maximize its growing capacity while also expanding its genetics to a total of 31 approved strains from the previously approved three strains.

Irwin David Simon: We believe that this, coupled with the steps being taken by Germany to liberalize the reimbursement of medical cannabis, significantly increases the opportunity in the German market. We believe that Germans declassifying cannabis as a non-narcotic will also have a far-reaching impact on drug policy throughout Europe. The European opportunity could represent a potential $45 billion medical market alone over the long term, and our presence in Europe allows Tilray to grow our global brand portfolio to a base of 700 million people, which is twice the population in the U.S. Turning to another promising international market, this fiscal year, we launched Broken Coast medical cannabis products in Australia. Medical cannabis patients in Australia now have access to Broken Coast's renowned cannabis strains cultivated from our facility in Canada.

Speaker Change: We believe that this, coupled with the steps being taken by Germany to liberalize the reimbursement of medical cannabis, significantly increases the opportunity in the German market.

Speaker Change: We believe that Germans declassifying cannabis as a non-narcotic will also have a far-reaching impact on the drug policy throughout Europe .

Speaker Change: The European opportunity could represent a potential $45 billion medical market alone over the long term. And our presence in Europe allows Tilray to grow our global brand portfolio to a base of 700 million people.

Erwin Simon: Turning to another promising international market this fiscal year, we launched broken post-medical cannabis products in Australia, medical cannabis patients in Australia. Now have access to broken grocery now, cannabis strains, cultivation from our facility in Canada. This launch came in response to the feedback we received in Australia and leveraged our insights from our operations in Canada and Europe.

Speaker Change: which is twice the population of the U.S.

Speaker Change: Turning to another promising international market, this fiscal year we launched Broken Coast Medical...

Speaker Change: Canada's products in Australia.

Speaker Change: Medical cannabis patients in Australia now have access to Broken Coast renowned cannabis strains cultivation from our facility in Canada. This launch came in response to the feedback we've received in Australia and leveraged our insights from our operations in Canada and Europe .

Irwin David Simon: This launch came in response to the feedback we've received in Australia and leveraged our insights from our operations in Canada and Europe. Now, briefly, on our CC Pharma, Tilray Pharma distribution business in Germany, which represents our medical cannabis business through its network of 13,000 pharmacies. CC Pharma revenue was nearly flat at $259 million both in fiscal 2024 and fiscal 2023, but our gross margin held at 11% during both periods, but may fluctuate with a change in product mixes as we focus on higher-margin sales in future periods. Moving on to Tilray Beverages.

Erwin Simon: Now briefly on our CC Farma, Tilray Farma distribution business in Germany, which represents our medical cannabis business through its network of 13,000 pharmacies. CC Farma revenue was nearly flat at $259 million, both in fiscal 2024 and fiscal 2023. But our gross margin held at 11% during both periods, but may fluctuate with change in product mixes as we focus on higher margin sales in future periods.

Speaker Change: Now briefly on our CC Pharma, Tilray Pharma distribution business in Germany, which represents our medical cannabis business through its network of 13,000 pharmacies.

Speaker Change: CC Pharma revenue was nearly flat at $259 million both in fiscal 2024 and fiscal 2023, but our gross margin held at 11% during both periods.

Erwin Simon: Moving on to Tilray's averages. In the US, we operate the fifth largest craft brewery by sales, with six manufacturing facilities, over 500 distributors, 11 brew crops, and one distillery restaurant, and a sales and marketing theme across the country. Our Tilray's average strategy focus on growing our portfolio by chronic craft brands, ensuring the product's excellent and innovation, driving scale, expanding distribution to increase market reach and consumer access. In our beverage segment, we generated $200 million in fiscal 2024. On an annualized basis, we'll quickly approach $300 million as we ramp up. Across our growing brands, Sweetwater remains the number one brand family in Georgia, Mopi outlet.

Irwin David Simon: In the U.S., we operate the fifth-largest craft brewery by sales, with six manufacturing facilities, over 500 distributors, 11 brew pubs, and one distillery restaurant, and a sales and marketing team across the country. Our Tilray Beverage strategy focuses on growing our portfolio of iconic craft brands, ensuring the product's excellence and innovation, driving scale, and expanding distribution to increase market reach and consumer access. In our beverage segment, we generated $200 million in fiscal 2024. On an annualized basis, we'll quickly approach $300 million as we ramp up. Across our growing brands, Sweetwater remains the number one brand family in Georgia, multi-outlet.

Speaker Change: Moving on to Tilray Beverages, in the U.S. we operate the 5th largest craft brewery.

Speaker Change: by sales, with six manufacturing facilities, over 500 distributors, 11 brew pubs, and one distillery restaurant, and a sales and marketing team across the country.

Speaker Change: Our Tilray beverage strategy focused on growing our portfolio of iconic craft brands, ensuring the product's excellence and innovation, driving scale, expanding distribution to increase market reach and consumer access.

Speaker Change: In our beverage segment, we generated $200 million in fiscal 2024. On an annualized basis, we'll quickly approach

Speaker Change: $300 million as we ramp up.

Speaker Change: Across our growing brands, Sweetwater remains the number one brand family in Georgia, Mopi Outlet. Montauk remains the number one brand family in Metro New York, having increased its distribution by 570 basis points over last year.

Erwin Simon: Montacque remains the number one brand family in Metro, New York, having increased its distribution by 500 to 70 basis points over the last year. Tilray is now the number one craft supplier year-to-date in the Pacific Northwest. Ten barrels volume growth increased by 640 basis points since Tilray took over the brand. And we're capitalizing the success of Ten Barrel's pub beer brand extension with pub ice pop-sur-vesal line extensions. Both innovations have done extremely well in the market, with 4,200 new distribution points. Growing 18% pub beer is now the 11th largest brand on the West Coast, with only half the distribution of top competitors due to its focus on the Pacific North's West States.

Irwin David Simon: Montauk remains the number one brand family in Metro New York, having increased its distribution by 570 basis points over last year. Tilray is now the number one craft supplier year-to-date in the Pacific Northwest. Ten Barrel's volume growth increased by 640 basis points since Tilray took over the brand, and we're capitalizing on the success of Ten Barrel's Pub Beer brand extension with Pub Ice and Pub Cerveza line extensions. Both innovations have done extremely well in the market with 4,200 new distribution points.

Speaker Change: Tilray is now the number one craft supplier year-to-date in the Pacific Northwest. 10 barrels volume growth increased by 640 basis points since Tilray took over the brand. And we're capitalizing on the success of 10 barrels pub beer brand extension with pub ice, pub cerveza line extensions.

Speaker Change: Both innovations have done extremely well in the market with 4,200 new distribution points.

Irwin David Simon: Growing 18%, Pub Beer is now the 11th largest brand on the West Coast with only half the distribution of top competitors due to its focus on the Pacific Northwest. Since Tilray acquired Shock Top in 2023, we have made significant progress in turning the brand around. In just eight months, we have cut total Shock Top declines in half, and our top 10 distributors have shown a remarkable 35% basis point improvement. As a result, Shock Top finished 4-4 with 13.5% growth year-over-year since we acquired the brand, a testament to our team's hard work and a commitment to delivering outstanding results. We're excited to continue building on this momentum and driving growth for Shock Top in the years ahead. But, as we have mentioned before, our vision is far beyond our current reach.

Speaker Change: Growing 18% Pub Beer is now the 11th largest brand on the West Coast with only half the distribution of top competitors due to its focus on the Pacific Northwest states.

Erwin Simon: Since Tilray acquired Shock Top in 2023, we have made significant progress in turning the brand around. In just eight months, we have cut total Shock Top declines in half. And our top 10 distributors have shown a remarkable 35% basis point improvement. As a result, Shock Top finished 4 or 4 with 13.5% growth year-over-year since we acquired the brand. A testament to our team's hard work and a commitment to delivering outstanding results. We're excited to continue building on this momentum and driving growth for Shock Top in the years ahead.

Speaker Change: Since Tilray acquired Shock Top in 2023, we have made significant progress in turning the brand around. In just eight months.

Speaker Change: We have cut total shock optic lines in half.

Speaker Change: And our top 10 distributors have shown a remarkable 35% basis points improvement.

Speaker Change: As a result, Shock Top finished 4-4 with 13.5% growth year-over-year since we acquired the brand. A testament to our team's hard work and a commitment to delivering outstanding results.

Speaker Change: We're excited to continue building on this momentum and driving growth for Shock Top in the years ahead.

Erwin Simon: As we had mentioned before, our vision is far beyond our current reach. As we continue our focus to become a dominant leading beverage business, by leveraging our portfolio of the love local craft brand to win more hearts and occasions and bring these brands, factor growth with innovation to new categories, including our non-alcohol, flavored malt beverages, ready to drink cocktails, spirits and beyond alcohol. As we expand further into water, energy drinks, and other categories, we have the manufacturing facilities, the distribution, and the sales and marketing infrastructure to drive growth until raise beverage businesses.

Speaker Change: As we have mentioned before, our vision is far beyond our current reach. As we continue our focus to become a dominant, leading beverage business,

Irwin David Simon: As we continue our focus to become a dominant leading beverage business by leveraging our portfolio of beloved local craft brands to win more hearts and occasions and bring these brands back to growth with innovation into new categories, including our non-alcoholic beers, flavored malt beverages, ready-to-drink cocktails, spirits, and beyond alcohol, as we expand further into water, energy drinks, and other categories. We have the manufacturing facilities, the distribution, and the sales and marketing infrastructure to drive growth in Tilray's beverage businesses.

Speaker Change: By leveraging our portfolio of beloved local craft brands to win more hearts and occasions and bring these brands back to growth with innovation into new categories.

Speaker Change: including our non-alcoholic beers, flavored malt beverages, ready-to-drink cocktails, spirits, and beyond alcohol as we expand further into water, energy drinks, and other categories.

Speaker Change: We have the manufacturing facilities, the distribution, and the sales and marketing infrastructure to drive growth in Tilray's beverage businesses.

Erwin Simon: In the non-alcoholic segment, we launched a new brand, Rutgers High Brewing Company. They're those who love a great beer flavor without the buzz. This brand seeks to be the beer choice of runners and their community of social and casual runners, not just elite athletes. They're currently three brews: Rutgers High Golden, wheat, raspberry wheat, and dark chocolate, with several expansion markets to follow.

Irwin David Simon: In the non-alcoholic segment, we launched a new brand, Runner's High Brewing Company. For those who love a great beer flavor without the buzz, this brand seeks to be the beer of choice of runners and their community of social and casual runners, not just elite athletes.

Speaker Change: In the non-alcoholic segment, we launched a new brand, Runner's High Brewing Company. For those who love a great beer flavor without the buzz, this brand seeks to be the beer of choice of runners and their community of social and casual runners, not just elite athletes.

Irwin David Simon: There are currently three brews, Runner's High Golden, wheat, raspberry wheat, and dark chocolate, with several expansion markets to follow. In April, we celebrated high honors and awards at the 2024 Craft Brewer Conference and the World Beer Cup. Ken Barrow Brewing won four craft beer awards, and Ken Barrow Brewmaster was recognized for innovation in craft brewing. Three Flash Brewing also took home honors for the world-class Hazy West Coast IPA.

Speaker Change: There are currently three brews, Runner's High Golden, Wheat, Raspberry Wheat, and Dark Chocolate, with several expansion markets to follow.

Erwin Simon: In April, we celebrated high honors in awards of the 2024 Craft Brewers Conference and the World Beer Cup. Ten Barrel Brewing won four craft beer awards, and Ten Barrel brew master was recognized for innovation in craft brewing. Three Flash Brewing also took the home honor for the World Class Hapy West Coast IPA. I'm incredibly proud of Therese Beverage's team for these outstanding achievements. With over 500 beer and beverage distributors, Therese is now a leading supplier, key regions across the US, with regional jewels in the Northeast, Pacific Northwest, Colorado, and Southeast. Herb D.I. shipness or retail, Therese is increased this market share of total craft beer in seven states, including key markets such as Oregon, Washington, Florida, Colorado, and Arizona, when comparing share and after the acquisition of our eight craft brands.

Speaker Change: In April , we celebrated high honors and awards at the 2024 Craft Brewer Conference and the World Beer Cup.

Speaker Change: Ten Barrel Brewing won four craft beer awards, and Ten Barrel Brewmaster was recognized for innovation in craft brewing. Three Flash Brewing also took the home honors for their world-class Hazy West Coast IPA. I'm incredibly proud of Tilray Beverages' team for these outstanding achievements.

Irwin David Simon: I'm incredibly proud of Tilray Beverages' team for these outstanding achievements. With over 500 beer and beverage distributors, Tilray is now a leading supplier in key regions across the U.S., with regional jewels in the Northeast, Pacific Northwest, Colorado, and Southeast. Per VI Shipments for Retail, Tilray has increased its market share of total craft beer in seven states, including key markets such as Oregon, Washington, Florida, Colorado, and Arizona, when comparing shares and after the acquisition of our eight craft brands.

Speaker Change: With over 500 beer and beverage distributors, Tilray is now a leading supplier in key regions across the U.S. with regional jewels in Northeast, Pacific Northwest, Colorado, and Southeast.

Speaker Change: Per VI Shipments for Retail, Tilray has increased its market share of total craft beer in seven states, including key markets such as Oregon, Washington, Florida, Colorado, and Arizona when comparing share and after the acquisition of our eight craft brands.

Erwin Simon: With each beverage acquisition, we have made over the past few years, we have optimized our cost structure, operational efficiencies, and we brought these back to our beloved brand of growth. As we compete our integration process, we expect to get the margins of these eight craft brands through a gross margin shared by Sweet Water and our other legacy businesses. We also relaunch high-volved energy dreams on Amazon and plan to launch new hemp-derived delta nine beverages strategically and selected markets, including Texas and New Jersey, where we can leverage our existing beverage distribution network. Our hemp derived delta nine form relations are complete, and we're actively developing a target launch strategy to ensure maximum impact.

Irwin David Simon: With each beverage acquisition we have made over the past few years, we have optimized their cost structure, operational efficiencies, and we have brought these back to our beloved brand of growth. As we complete our integration process, we expect to get the margin of these eight craft brands to a gross margin shared by Sweetwater and our other legacy businesses. We also relaunched High Vault Energy Drinks on Amazon and plan to launch new hemp-derived Delta 9 beverages strategically in selected markets, including Texas and New Jersey, where we can leverage our existing beverage distribution network. Our hemp-derived Delta 9 formulations are complete, and we're actively developing a target launch strategy to ensure maximum impact.

Speaker Change: With each beverage acquisition we have made over the past few years, we've optimized their cost structure, operational efficiencies, and we've brought these back

Speaker Change: to our beloved brands of growth. As we compete...

Speaker Change: Our integration process, we expect to get the margin of these eight craft brands through gross margins shared by Sweetwater and our other legacy businesses.

Speaker Change: We also relaunched High Vault Energy Drinks on Amazon and plan to launch new hemp-derived Delta 9 beverages.

Speaker Change: strategically in selected markets including Texas and New Jersey where we can leverage our existing beverage distribution network. Our hammock-derived Delta 9 formulations are complete and we're actively developing a target launch strategy to ensure maximum impact.

Erwin Simon: We look forward to sharing more updates on this exciting development soon. With our operational strength, Therese is on a path to become a lightning rod for the beverage industry, rejuvenating growth into these brands.

Speaker Change: We look forward to sharing more updates on this exciting development soon.

Irwin David Simon: We look forward to sharing more updates on this exciting development soon. With their operational strength, Tilray is on a path to become a lightning rod for the beverage industry, rejuvenating growth into these brands. In its spirit, Breckenridge Distillery continues to win accolades as the best American whiskey two years in a row and now is one of the most awarded craft distilleries in the U.S.

Speaker Change: With their operational strength, Tilray is on a path to become a lightning rod for the beverage industry, rejuvenating growth into these brands.

Erwin Simon: In Therese spirit, Wreck and Rich's facility continues to win accolades as the best American whiskey two years a role. And that was one of the most awarded craft facilities in the US. In addition to its awards and winning bourbon, Wreck and Rich's facility also produces highly coveted gin and vodka.

Speaker Change: In Tilray's spirit, Breckenridge Distillery continues to win accolades as the best American whiskey two years in a row, and now is one of the most awarded craft distilleries in the U.S. In addition to its awards in winning bourbon, Breckenridge Distillery also produces

Irwin David Simon: In addition to its awards for winning bourbon, Breckenridge Distillery also produces highly coveted gin and vodka. Finally, let's discuss our Tilray wellness businesses' focus on improving people's lives through the power of hemp. Tilray Wellness is represented mainly by Manitoba Harvest, our leading hemp brand with over a 53% market share in branded hemp products, hoppy flower, CBD infused beverages, and highball energy drinks. In quarter four, our Tilray Wellness business saw impressive growth with a 6% increase in revenue to $15.7 million.

Erwin Simon: Finally, let's discuss our Therese wellness business's focus on improving people's lives to the power of hemp. Tilray Wellness is represented mainly by Manitoba Harvest, our leading hemp brand with over a 53% market share in branded hemp products, Hoppy Flower, CBD-infused beverages, and high-ball energy drinks. In quarter-four, our Tilray Wellness Business site impressive growth with a 6% increase in revenue to 15.7 million for fiscal 2024 or the business-generated 5% growth for you in 55.3 million with stable improvements to growth margins of 30% and 29% last year. Tilray Wellness strengthens leading market share positions in both the US and Canada over the past year, with consumption increasing both in the natural and defensive channels.

Speaker Change: Finally, let's discuss our Tilray Wellness businesses' focus on improving people's lives through the power of hemp.

Speaker Change: Tilray Wellness is represented mainly by Manitoba Harvest, our leading hemp brand, with over a 53% market share in branded hemp products, hoppy flower, CBD-infused beverages.

Speaker Change: and Highball Energy Drinks.

Speaker Change: In Q4, our Tilray Wellness business saw impressive growth with a 6% increase in revenue to $15.7 million. For Fiscal 2024, the business generated 5% growth, bringing in $55.3 million, with stable improvements to gross margins of 30% from 29% last year.

Irwin David Simon: For fiscal 2024, the business generated 5% growth bringing in $55.3 million with stable improvements to gross margins of 30% from 29% last year. Tilray Wellness strengthened its leading market share positions in both the U.S. and Canada over the past year, with consumption increasing both in natural and conventional cannabis. As Tilray Brands has transformed, expanded, and completed numerous acquisitions to get to where we are today, our mission has evolved to be a leading premium lifestyle company with a house of brands and innovative products that inspire joy, wellness, and create memorable experiences. With that, I'll now turn the call over to Carl to discuss our financial results in greater detail. Carl.

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

Erwin Simon: As Tilray Brand has transformed, expanded, and completed numerous acquisitions to get to where we are today.

Speaker Change: As Tilray Brands has transformed, expanded, and completed numerous acquisitions.

Erwin Simon: Our mission has evolved to be a leading, premium lifestyle company with a house of brands, innovative products that inspire joy, wellness, and create memorable experience.

Speaker Change: To get to where we are today, our mission has evolved to be a leading premium lifestyle company with a house of brand, innovative products that inspire joy, wellness, and create memorable experience.

Carl Martin: With that, I'll now turn the call over to Carl to discuss our financial results in greater detail. Carl, thank you, Aaron. I'll begin with a brief overview of our annual results for fiscal 2024 before moving on to a more in-depth review of Q4. Notice that we present our financials in accordance with US GAAP and in US dollars. Throughout our discussion, we'll read referring to both GAP and non-GAP adjusted results, and we encourage you to review the reconciliation contained within our press release of our reported results under GAP with the corresponding non-GAP measures. Net revenue for fiscal 2024 grew 26% to $788.9 million, compared to the prior year at $627.1 million, which is, or when stated, was a record outcome.

Speaker Change: With that, I'll now turn the call over to Carl to discuss our financial results in greater detail. Carl?

Carl A. Merton: Thank you, Irwin. I'll begin with a brief overview of our annual results for fiscal 2024. Before moving on to a more in-depth review of Q4, note that we present our financials in accordance with U.S. GAAP and in U.S. dollars. Throughout our discussion, we will be referring to both GAAP and non-GAAP-adjusted results, and we encourage you to review the reconciliation contained within our press release of our reported results under GAAP with the corresponding non-GAAP measures.

Carl A. Merton: Thank you, Irwin. I'll begin with a brief overview of our annual results for fiscal 2024.

Carl A. Merton: before moving on to a more in-depth review of Q4.

Carl A. Merton: Note that we present our financials in accordance with U.S. GAAP and in U.S. dollars. Throughout our discussion, we will be referring to both GAAP and non-GAAP adjusted results, and we encourage you to review the reconciliation contained within our press release of our reported results under GAAP with the corresponding non-GAAP measures.

Carl A. Merton: Net revenue for fiscal 2024 grew 26% to $788.9 million, compared to the prior year at $627.1 million, which, as Irwin stated, was a record outcome. By segment, beverage alcohol revenue increased 113%, largely attributed to the acquired brand. Cannabis net revenue rose 24% year-over-year, inclusive of $9.8 million due to price compression in Canada, of which nearly all represented a reduction in EBITDA; distribution net revenue was flat, and wellness net revenue rose 5% for the year. From a segment perspective, 25% of our net revenue was generated by our beverage alcohol business.

Carl A. Merton: Net revenue for fiscal 2024 grew 26% to $788.9 million, compared to the prior year at $627.1 million, which as Irwin stated, was a record outcome.

Carl Martin: By segment, beverage alcohol revenue increased 113%, largely attributed to the acquired brands. Cannabis net revenue rose 24% year over year, inclusive of $9.8 million due to price compression in Canada, of which nearly all represented a reduction in even that. Distribution net revenue was flat, and wellness net revenue rose 5% for the year. From a segment perspective, 25% of our net revenue was generated by our beverage alcohol business. 35% was generated by our cannabis business. 33% by our distribution business, and 7% by our wellness business. This compares to 15% beverage alcohol, 35% cannabis, 41% distribution, and 9% wellness not fiscal year.

Irwin: By segment, beverage alcohol revenue increased 113%, largely attributed to the acquired brands.

Irwin: Cannabis net revenue rose 24% year over year, inclusive of $9.8 million due to price compression in Canada, of which nearly all represented a reduction in EBITDA.

Irwin: Distribution net revenue was flat, and wellness net revenue rose 5% for the year.

Irwin: From a segment perspective, 25% of our net revenue was generated by our beverage alcohol business.

Carl A. Merton: 35% was generated by our cannabis business, 33% by our distribution business, and 7% by our wellness business. This compares to 15% beverage alcohol, 35% cannabis, 41% distribution, and 9% wellness last fiscal year. The year-over-year variance is due to our acquisition of HEXO, the new Kraft brands, and the remainder of the Trushed beverage brand.

Irwin: Thirty-five percent was generated by our cannabis business.

Irwin: 33% by our distribution business and 7% by our wellness business.

Irwin: This compares to 15% beverage alcohol, 35% cannabis, 41% distribution, and 9% wellness last fiscal year. The year-over-year variance is due to our acquisition of HEXO, the new craft brands, and the remainder of the trust beverage brands.

Carl Martin: The year-over-year variance is due to our acquisition of HECSO, the new craft brands, and the remainder of the trust beverage brands. Further, as we progress through a full year with the new beverage alcohol brands, we anticipate these ratios to converge around 30% beverage alcohol, 30% cannabis, 30% distribution, and 10% wellness. Gross profit for fiscal 2024 increased 52% to $223.4 million, another record, compared to the prior year at $147 million. Gross margin increased 28% from 23% in the prior year. Adjusted Gross Profit increased 14% to $235.6 million from $206.4 million in the prior year. Well, adjusted gross margin declined by 300 basis points to 30%.

Carl A. Merton: Further, as we progress through a full year with the new beverage alcohol brands, we anticipate these ratios to converge around 30% beverage alcohol, 30% cannabis, 30% distribution, and 10% wellness. Gross profit for fiscal 2024 increased 52% to $223.4 million, another record, compared to the prior year at $147 million. Crowe's margin increased 28% from 23% in the prior year.

Irwin: Further, as we progress through a full year with the new beverage alcohol brands, we anticipate these ratios to converge around 30% beverage alcohol, 30% cannabis, 30% distribution, and 10% wellness.

Irwin: Gross profit for fiscal 2024 increased 52% to $223.4 million, on another record, compared to the prior year at $147 million.

Irwin: Gross Margin increased 28% from 23% in the prior year.

Carl A. Merton: Adjusted gross profit increased 14% to $235.6 million from $206.4 million in the prior year, while adjusted gross margin declined by 300 basis points to 30%, primarily reflecting the removal of the HEXO Advisory Service revenue in the prior year, with their initially lowered margins, and the impact of the recently acquired Kraft brand. By segment, beverage alcohol gross margin was 44% compared to 49% in the prior year due to lower margin contributions from the craft acquisitions, which is the result of temporary excess capacity that we are in the process of optimizing and enhancing.

Irwin: Adjusted Gross Profit increased 14% to $235.6 million from $206.4 million in the prior year, while Adjusted Gross Margin declined by 300 basis points to 30%, primarily reflecting the

Carl Martin: Primarily reflecting the removal of the actual advisory service revenue in the prior year with their initially lowered margins and the impact from the recently acquired craft brands. By segment, beverage alcohol gross margin was 44% compared to 49% in the prior year due to the lower margin contributions from the craft acquisitions, which is the result of temporary excess capacity that we are in the process of optimizing and enhancing. beverage alcohol adjusted Gross Margin was 46% compared to 53%. This was offset by a $2.5 million volume commitment reimbursement in our spirits business with no associated costs. For greater context, adjusted gross margin for our legacy beverage business was 58% compared to the prior year of 53.

Irwin: The removal of the HEXO Advisory Service revenue in the prior year, with their initially lowered margins, and the impact from the recently acquired Kraft Brands.

Speaker Change: By segment, beverage alcohol gross margin was 44% compared to 49% in the prior year, due to lower margin contributions from the craft acquisitions, which is the result of temporary excess capacity that we are in the process of optimizing and enhancing.

Carl A. Merton: The beverage alcohol adjusted gross margin was 46% compared to 53%. This was offset by a $2.5 million volume commitment reimbursement in our spirits business with no associated costs. For greater context, adjusted gross margin for our legacy beverage business was 58% compared to the prior year of 53, primarily as a result of an agreement with the distributor related to our spirits business and more volume flowing through the facilities as we ramped up production in March and April to meet seasonally strong April and May sales. Adjusted gross margin for the newly acquired Kraft Brands was 33%.

Speaker Change: Average alcohol adjusted gross margin was 46%, compared to 53%. This was offset by a $2.5 million volume commitment reimbursement in our spirits business, with no associated costs.

Speaker Change: For greater context, adjusted gross margin for our legacy beverage business was 58% compared to the prior year of 53.

Carl Martin: Primarily has a result of an agreement with the distributor related to our spirits business and more volume flowing through the facilities as we ramped up production in March and April to meet seasonally strong April and May sales. Adjusted Gross Margin for the new required craft brands was 33%. The improvement of Gross Margin's in beverage alcohol, primarily in the beer portion of our business, as I mentioned earlier, is a major focus of ours, and we should begin to demonstrate improvements in Q1 of fiscal 2025. As in the end of our fiscal year, we successfully integrated production of all the required brands into our production facilities and exited their related co-manufacturing agreements with the exception of Shock Top.

Speaker Change: primarily as a result of an agreement with the distributor related to our spirits business and more volume flowing through the facilities as we ramped up production in March and April to meet seasonally strong April and May sales.

Speaker Change: Adjusted gross margin for the newly acquired Kraft Brands was 33%.

Carl A. Merton: The improvement of gross margins in beverage alcohol, primarily in the beer portion of our business, as Irwin said earlier, is a major focus of ours, and we should begin to demonstrate improvements in Q1 of fiscal 2025. As of the end of our fiscal year, we successfully integrated production of all the acquired brands into our production facilities and exited their related co-manufacturing agreements, with the exception of ShotKot. As a result of this production integration, we will no longer separate the growth margins between legacy products and new craft products starting next quarter.

Speaker Change: The improvement of gross margins in beverage alcohol, primarily in the beer portion of our business, as Irwin said earlier, is a major focus of ours, and we should begin to demonstrate improvements in Q1 of fiscal 2025.

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

Carl Martin: As a result of this production integration, we will no longer separate the Gross Margin between legacy products and the new craft products starting next quarter. Cannabis gross margin was 33% compared to 26% in the prior year, and adjusted gross margin was 36% compared to 51%, primarily due to the determination of the HACCIL Advisory Services Agreement, which contributed only $1.5 million of gross profit in the current year compared to $40.4 million in the prior year. We also experienced a change in sales mix, with a higher percentage of sales coming from wholesale, compounded by the price compression in the Canadian adult use market, as I will explain in further detail shortly.

Speaker Change: As a result of this production integration, we will no longer separate the gross margins between legacy products and the new craft products starting next quarter.

Carl A. Merton: Cannabis gross margin was 33% compared to 26% in the prior year. Adjusted gross margin was 36% compared to 51%, primarily due to the termination of the HECFL advisory services agreement, which contributed only $1.5 million of gross profit in the current year, compared to $40.4 million in the prior year.

Speaker Change: Cannabis gross margin was 33% compared to 26% in the prior year.

Speaker Change: An adjusted gross margin was 36% compared to 51%.

Speaker Change: primarily due to the termination of the HECSO Advisory Services Agreement, which contributed only $1.5 million of gross profit in the current year, compared to $40.4 million in the prior year.

Carl A. Merton: We also experienced a change in sales mix, with a higher percentage of sales coming from wholesale, compounded by price compression in the Canadian adult use market, as I will explain in further detail shortly. Distribution gross margin health study at 11%, although it was expected to improve with changes in product mix as we focus on higher-margin sales in future periods, and wellness-adjusted gross margin was up slightly at 30% compared to 29% driven by lower material costs and overhead optimization. Net loss for fiscal 2024 improved to $222.4 million, or $0.33 per share, compared to $1.4 billion in the prior year, or $2.35 per share, with the latter tied to non-cash goodwill impairment in the prior year.

Speaker Change: We also experienced a change in sales mix, with a higher percentage of sales coming from wholesale, compounded by the price compression in the Canadian adult use market, as I will explain in further detail shortly.

Carl Martin: Distribution Gross Margin helped study at 11%, although it was expected to improve with changes in product mix as we focus on higher margin sales in future periods. As well as adjusting, Gross Margin was up slightly at 30%, compared to 29%, driven by lower material cost and overhead optimization. Net loss for fiscal 2024 improved to $222.4 million or $0.33 cents per share, compared to $1.4 billion in the prior year or $2.35 per share, with the latter tied to non-cash goodwill impairment in the prior year. From an adjusted perspective, we are reporting adjusted net income of $6.1 million or $1 cents per share, compared to $0.4 million or $0 cents per share in the prior year.

Speaker Change: Distribution Gross Margin Health Study at 11%, although it is expected to improve with changes in product mix as we focus on higher margin sales in future periods.

Speaker Change: And wellness adjusted gross margin was up slightly at 30% compared to 29% driven by lower material costs and overhead optimization.

Speaker Change: Net loss for fiscal 2024 improved to $222.4 million, or $0.33 per share, compared to $1.4 billion in the prior year, or $2.35 per share, with the latter tied to non-cash goodwill impairment in the prior year.

Carl A. Merton: From an adjusted perspective, we are reporting adjusted net income of $6.1 million, or one cent per share, compared to $0.4 million, or zero cents per share, in the prior year. Using the current year's adjusted EBITDA definition, fiscal 2024 improved to a record $60.5 million, up 3% from $58.7 million in the prior year. Under the prior year's definition, we would have reported adjusted EBITDA of $65.1 million in the current year, while reporting $61.5 million in the prior year. We have now generated positive adjusted EBITDA for five consecutive years. Cash flow used in operations was $30.9 million, compared to $7.9 million of cash generated by operations in the prior year.

Speaker Change: From an adjusted perspective, we are reporting adjusted net income of $6.1 million, or one cent per share, compared to $0.4 million, or zero cents per share, in the prior year.

Carl Martin: Under the current year's adjusted EBITDA definition, fiscal 2024 improved through a record $60.5 million, up 3% from $58.7 million in the prior year. Under the prior year's definition, we would have reported adjusted EBITDA of $65.1 million in the current year, while reporting $61.5 million in the prior year. We have now generated positive adjusted EBITDA for five consecutive years. Cash flow used in operations was $30.9 million, compared to $7.9 million of cash generated by operations in the prior year. Adjusted free cash flow was $6.6 million per year, which we view as a very positive outcome, considering that just last quarter we had communicated that we did not believe we would achieve our goal of reaching positive free cash flow in fiscal 2024.

Speaker Change: Under the current year's adjusted EBITDA definition, fiscal 2024 improved to a record $60.5 million, up 3% from $58.7 million in the prior year.

Speaker Change: Under the prior year's definition, we would have reported adjusted EBITDA of $65.1 million in the current year, while reporting $61.5 million in the prior year.

Speaker Change: We have now generated positive adjusted EBITDA for five consecutive years.

Speaker Change: Cash flow used in operations was $30.9 million, compared to $7.9 million of cash generated by operations in the prior year.

Carl A. Merton: Adjusted free cash flow was $6.6 million for the year, which we view as a very positive outcome, considering that just last quarter we had communicated that we did not believe we would achieve our goal of reaching positive free cash flow in fiscal 2024. However, what we had still expected was some very strong Q4. It proved to be stronger than we had anticipated.

Speaker Change: Adjusted free cash flow was $6.6 million for the year, which we view as a very positive outcome considering that just last quarter we had communicated that we did not believe we would achieve our goal of reaching positive free cash flow in fiscal 2024.

Carl Martin: But we had still expected a very strong Q4 that proved to be stronger than we had anticipated. Over this past year, we reduced our convertible debt by almost $300 million, decreasing our net debt to approximately $61.3 million and leaving us with a net debt to EBITDA ratio of $1.73. Our intention is to continue lowering our indebtedness, optimize our capital structure, and enhance our financial flexibility. The net connection in our convertible debt will decrease our annual interest expense by $14.4 million, which flows directly to net income and free cash flow.

Speaker Change: But we had still expected a very strong Q4. It proved to be stronger than we had anticipated.

Carl A. Merton: Over this past year, we reduced our convertible debt by almost $300 million, decreasing our net debt to approximately $61.3 million and leaving us with a net debt-to-EBITDA ratio of 1.73. Our intention is to continue lowering our indebtedness, optimize our capital structure, and enhance our financial flexibility. The net reduction in our convertible debt will decrease our annual interest expense by $14.4 million, which flows directly to net income and free cash flow.

Speaker Change: Over this past year, we reduced our convertible debt by almost $300 million, decreasing our net debt to approximately $61.3 million and leaving us with a net debt-to-EBITDA ratio of 1.73.

Speaker Change: Our intention is to continue lowering our indebtedness, optimize our capital structure, and enhance our financial flexibility.

Speaker Change: The net reduction in our convertible debt will decrease our annual interest expense by $14.4 million, which flows directly to net income and free cash flow.

Carl Martin: Let's now review our quarterly performance. Q4 total net revenue rose by $45.7 million to $229.9 million, compared to the prior year quarter of $184.2 million. Representing almost 25% growth. The diversification of our business through our JCC model really came into play during Q2. For the first time, our beverage alcohol segment exceeded the size of our cannabis segment in Q4, representing 33% of our total revenue mix, compared to only 18% in Q4 during the previous fiscal year. In Q4, compared to the prior year period, net beverage alcohol revenue rose 137% to $76.7 million. Net cannabis revenue rose 12% to $71.9 million, distribution revenue decreased 10% to $65.6 million, and finally, wellness revenue rose 6% to $15.7 million.

Carl A. Merton: Let's now review our quarterly performance. Q4 total net revenue rose by $45.7 million to $229.9 million compared to the prior year quarter of $184.2 million, representing almost 25% growth. The diversification of our business through our adjacency model really came into play during Q2. For the first time, our beverage alcohol segment exceeded the size of our cannabis segment in Q4, representing 33% of our total revenue mix, compared to only 18% in Q4 during the previous fiscal year.

Speaker Change: Let's now review our quarterly performance.

Speaker Change: Q4 total net revenue rose by $45.7 million to $229.9 million compared to the prior year quarter of $184.2 million, representing almost 25% growth.

Speaker Change: The diversification of our business through our adjacency model really came into play during Q2.

Speaker Change: For the first time, our beverage alcohol segment exceeded the size of our cannabis segment in Q4, representing 33% of our total revenue mix, compared to only 18% in Q4 during the previous fiscal year.

Carl A. Merton: In Q4, compared to the prior year period, net beverage alcohol revenues rose 137% to $76.7 million, and net cannabis revenues rose 12% to $71.9 million. Distribution revenue decreased 10% to $65.6 million, and finally, wellness revenue rose 6% to $15.7 million. We are disappointed that the Canadian government did not resolve the issue of cannabis excise taxes during their last budget and maintain our view that reform is essential to the long-term viability of the Canadian cannabis industry.

Speaker Change: In Q4, compared to the prior year period, net beverage alcohol revenues rose 137% to $76.7 million.

Speaker Change: Net cannabis revenue rose 12% to $71.9 million.

Speaker Change: Distribution revenue decreased 10% to $65.6 million and finally wellness revenue rose 6% to $15.7 million.

Carl Martin: We are disappointed that the Canadian government did not resolve the issue of cannabis excise taxes during their last budget, and maintain our view that reform is essential to the long-term viability of the Canadian cannabis industry. The current fixed price tax structure is inherently unfair, as it has allowed taxes as a percentage of revenue, despite even as the price of cannabis has declined by more than 50% since legalization. Still, as Irwin mentioned, as a result of this, we paid over $100 million in excise taxes last year and will continue to do so every year in the future, until it has changed.

Speaker Change: We are disappointed that the Canadian government did not resolve the issue of cannabis excise taxes during their last budget, and maintain our view that reform is essential to long-term viability of the Canadian cannabis industry.

Carl A. Merton: The current fixed price tax structure is inherently unfair as it has allowed taxes as a percentage of revenue to spike even as the price of cannabis has declined by more than 50% since legalization. Still, as Irwin mentioned, as a result of this, we paid over $100 million in excise taxes last year and will continue to do so every year in the future until it is changed. We are encouraged that CRA is beginning to crack down on delinquent LPs, asserting cash flow pressures on our less financially strong competitors, potentially forcing an industry-needed LP rationalization.

Speaker Change: The current fixed price tax structure is inherently unfair as it has allowed taxes as a percentage of revenue to spike even as the price of cannabis has declined by more than 50% since legalization.

Speaker Change: Still, as Irwin mentioned, as a result of this, we paid over $100 million in excise taxes last year, and we'll continue to do so every year in the future, until it is changed.

Carl Martin: We are encouraged that CRA is beginning to crack down on delinquent LPs, asserting cash flow pressures on our less financially strong competitors, potentially forcing an industry-needed LP rationalization. We incurred 22.1 million Canadian cannabis excise taxes during Q4, which are a reduction to revenue compared to 16.4 million last year. But due to a change in our revenue mix, the higher excite tax products and without the advisory fee, which is not taxed, excite tax amounted to 33% of gross Canadian cannabis revenue, excluding wholesale in Q4 compared to 25% in the same border last year. Gross profit was $82.4 million compared to $67.2 million in the prior year quarter.

Speaker Change: We are encouraged that CRA is beginning to crack down on delinquent LPs, asserting cash flow pressures on our less financially strong competitors, potentially forcing an industry-needed LP rationalization.

Carl A. Merton: We incurred $22.1 million in Canadian cannabis excise taxes during Q4, which is a reduction in revenue, compared to $16.4 million last year, but due to a change in our revenue mix, the higher excise tax products and without the advisory fee, which is not taxed, excise tax amounted to 33% of gross Canadian cannabis revenue, excluding wholesale, in Q4, compared to 25% in the same quarter last year. Gross profit was $82.4 million, compared to $67.2 million in the prior year quarter.

Speaker Change: We incurred $22.1 million in Canadian cannabis excise taxes during Q4, which are a reduction to revenue, compared to $16.4 million last year. But due to a change in our revenue mix to higher excise tax products, and without the advisory fee, which is not taxed,

Speaker Change: Excise tax amounted to 33% of gross Canadian cannabis revenue, excluding wholesale in Q4, compared to 25% in the same quarter last year.

Speaker Change: Gross profit was $82.4 million compared to $67.2 million in the prior year quarter.

Carl Martin: Gross margin remained consistent at 36%, while adjusted gross margin decreased 100 basis points, the 36% compared to the prior year quarter. Most of the variants was related to cannabis, which included significantly higher axle advisory fees in the prior year, along with higher sales from wholesale and price compression in the Canadian adult use market in the current year. Net loss improved to $15.4 million compared to a net loss of $119.8 million in the prior year quarter. On a per share basis, this amounted to a net loss of $0.4 per share versus $0.15 per share in the prior year quarter.

Carl A. Merton: Gross margin remained consistent at 36%, while adjusted gross margin decreased 100 basis points to 36% compared to the prior year quarter. Most of the variance was related to cannabis, which included significantly higher EXO advisory fees in the prior year, along with higher sales from wholesale and price compression in the Canadian adult use market in the current year. The net loss improved to $15.4 million compared to a net loss of $119.8 million in the prior year quarter. On a per share basis, this amounted to a net loss of $0.04 per share versus $0.15 per share in the prior year quarter.

Speaker Change: Gross Margin remained consistent at 36%, while Adjusted Gross Margin decreased 100 basis points to 36% compared to the prior year quarter.

Speaker Change: Most of the variance was related to cannabis, which included significantly higher exo-advisory fees in the prior year, along with higher sales from wholesale and price compression in the Canadian adult use market in the current year.

Speaker Change: Net loss improved to $15.4 million compared to a net loss of $119.8 million in the prior year quarter. On a per share basis, this amounted to a net loss of $0.04 per share versus $0.15 per share in the prior year quarter.

Carl Martin: Our adjusted net income from the quarter was $35.1 million, which, when calculated on a per share basis, resulted in an adjusted EPS of $0.4 for the quarter. A sixth sense improvement from the prior year quarter. Adjusted EBITDA was $29.5 million, up 37% from $21.5 million in the prior year quarter, representing a new record level of quarterly adjusted EBITDA. On synergies and cost reductions, recall that our revised Hexal synergy plan targeted between 30 and 35 million savings. We exceeded that by achieving $35.4 million of savings on an annualized run rate basis, on which $26.2 million represented actual cost savings during the year.

Carl A. Merton: Adjusted net income in the quarter was $35.1 million, which when calculated on a per share basis, resulted in an adjusted EPS of $0.04 for the quarter, a $0.06 improvement from the prior year quarter. Adjusted EBITDA was $29.5 million, up 37% from $21.5 million in the prior year quarter, representing a new record level of quarterly adjusted EBITDA. On synergies and cost reductions, recall that our revised HEXO Synergy Plan targets between $30 and $35 million in savings.

Speaker Change: Adjusted net income in the quarter was $35.1 million, which when calculated on a per share basis resulted in an adjusted EPS of $0.04 for the quarter, a $0.06 improvement from the prior year quarter.

Speaker Change: Adjusted EBITDA was $29.5 million, up 37% from $21.5 million in the prior year quarter, representing a new record level of quarterly adjusted EBITDA.

Speaker Change: On synergies and cost reductions, recall that our revised HEXO Synergy Plan targeted between $30 and $35 million in savings.

Carl A. Merton: We exceeded that by achieving $35.4 million of savings on an annualized run rate basis, of which $26.2 million represented actual cost savings during the year. Operating cash flow was $30.7 million compared to $43.6 million in the prior year quarter. This decrease in operating cash flow is primarily a function of restructuring and hexohexacosts as we complete the integration of HEXO's operations into our operations. Adjusted free cash flow was $30.6 million, compared to $48.3 million in the prior year quarter, consistent with the changes in operating cash flow.

Speaker Change: We exceeded that by achieving $35.4 million of savings on an annualized run rate basis, of which $26.2 million represented actual cost savings during the year.

Carl Martin: Operating cash flow was $30.7 million compared to $43.6 million in the prior year quarter. This decrease in operating cash flow was primarily a function of restructuring and Hexal Hexacross as we complete the integration of Hexal operations into our operations. Adjusted free cash flow was $30.6 million compared to $48.3 million in the prior year quarter, consistent with the changes in operating cash flow. Turning now to our four business segments, beverage alcohol revenue was $76.7 million, up 137% from $32.4 million in the prior year quarter. The positive delta was due to contributions from the craft brands, which were purchased last fall, a strong beer business leading up to the summer, which is a historically busy season, and new innovations across the portfolio launched as part of this spring reset.

Speaker Change: Operating cash flow was $30.7 million compared to $43.6 million in the prior year quarter.

Speaker Change: This decrease in operating cash flow is primarily a function of restructuring and Hexo Exit Costs as we complete the integration of Hexo's operations into our operations.

Speaker Change: Adjusted free cash flow was $30.6 million compared to $48.3 million in the prior year quarter, consistent with the changes in operating cash flow.

Carl A. Merton: Turning now to our four business segments, beverage alcohol revenue was $76.7 million, up 137% from $32.4 million in the prior year quarter. The positive delta was due to contributions from the Kraft Brands, which were purchased last fall, a strong beer business leading up to the summer, which is a historically busy season, and new innovations across the portfolio launched as part of the spring reset. Beverage alcohol gross profit increased to $40.8 million, compared to $16.6 million. And adjusted gross profit increased to $41 million, compared to $17.8 million.

Speaker Change: Turning now to our four business segments, beverage alcohol revenue was $76.7 million, up 137% from $32.4 million in the prior year quarter.

Speaker Change: The positive delta was due to contributions from the Kraft Brands, which were purchased last fall, a strong beer business leading up to the summer, which is a historically busy season, and new innovations across the portfolio launched as part of the spring reset.

Carl Martin: River Jalcohol Gross Profit increased to $40.8 million compared to $16.6 million, and adjusted gross profit increased to $41 million compared to $17.8 million. While River Jalcohol Gross margin increased to 53% compared to 51%, and adjusted gross margin decreased to 53% from 55% in the prior year quarter. Gross cannabis revenue of $94 million was comprised of $61.5 million in Canadian adult youth revenue, $13.1 million in international cannabis revenue, $6.4 million in Canadian medical cannabis revenue, and $13 million in wholesale revenue. Net cannabis revenue, which excludes 22.1 million in excise taxes, with 71.9 million representing a 12% increase from the year-ago period.

Speaker Change: Beverage alcohol gross profit increased to $40.8 million compared to $16.6 million, and adjusted gross profit increased to $41 million compared to $17.8 million.

Carl A. Merton: While beverage alcohol gross margin increased to 53% compared to 51%, an adjusted gross margin decreased to 53% from 55% in the prior year quarter, gross cannabis revenue of $94 million was comprised of $61.5 million in Canadian adult use revenue, $13.1 million in international cannabis revenue, $6.4 million in Canadian medical cannabis revenue, and $13 million in wholesale revenue. Net cannabis revenue, which excludes $22.1 million in excise taxes, was $71.9 million, representing a 12% increase from the year-ago period. The positive variance is related to increased organic growth, excluding the HEXO advisory, combined with contributions from the acquisition of Haxel & Trust.

Speaker Change: While beverage alcohol gross margin increased to 53% compared to 51%, an adjusted gross margin decreased to 53% from 55% in the prior year quarter.

Speaker Change: Gross cannabis revenue of $94 million was comprised of $61.5 million in Canadian adult use revenue, $13.1 million in international cannabis revenue.

Speaker Change: $6.4 million in Canadian medical cannabis revenue and $13 million in wholesale revenue.

Speaker Change: Net cannabis revenue, which excludes $22.1 million in excise taxes, was $71.9 million, representing a 12% increase from the year-ago period.

Carl Martin: The positive variance is related to increased organic growth, excluding the Hexal advisory fee, combining with contributions from the acquisition of Tax Loan Trust. Offsetting the increase in that cannabis revenue was the elimination of advisory services revenue, totaling $16.1 million from the prior year quarter due to the Hexal acquisition, which terminated the previous strategic arrangement that was in place. Revenue from Canadian medical cannabis grew 6% despite the category being impacted by competitions from the adult youth market and its related price compression. Wholesale revenue increased to $13 million from $0.8 million last year. The Canadian cannabis industry is currently experiencing an interesting previously unexperienced phenomenal that we took advantage of in the prior quarter.

Speaker Change: The positive variance is related to increased organic growth, excluding the HECSO advisory fee.

Carl A. Merton: Offsetting the increase in net cannabis revenue was the elimination of advisory services revenue, totaling $16.1 million from the prior year quarter due to the Haxel acquisition, which terminated the previous strategic arrangement that was in place. Revenue from Canadian medical cannabis grew 6%, despite the category being impacted by competition from the adult use market and its related price compression. Wholesale revenue increased to $13 million from $0.8 million last year.

Speaker Change: Combined with contributions from the Acquisition of Hexen and Trust.

Speaker Change: Offsetting the increase in net cannabis revenue was the elimination of advisory services revenue, totaling $16.1 million from the prior year quarter due to the HECSO acquisition, which terminated the previous strategic arrangement that was in place.

Speaker Change: Revenue from Canadian medical cannabis grew 6% despite the category being impacted by competition from the adult use market and its related price compression.

Speaker Change: Wholesale revenue increased to $13 million from $0.8 million last year.

Carl A. Merton: The Canadian cannabis industry is currently experiencing an interesting, previously unexperienced phenomenon that we took advantage of in the current quarter. As many in the industry moved to asset-light business models, a significant portion of previous production capacity in the industry has disappeared. This, in turn, has resulted in previous excess inventory levels in the industry disappearing.

Speaker Change: The Canadian cannabis industry is currently experiencing an interesting, previously unexperienced phenomenon that we took advantage of in the current quarter.

Carl Martin: As many in the industry move to asset life business models, a significant portion of previous production capacity in the industry has disappeared. This, in turn, has resulted in previous excess inventory levels in the industry dissipating. With lower inventory levels, securing supply appears to have become more difficult, and pricing in the wholesale market is increasing as much as 5X in some product categories. Against this new backdrop, we took advantage of advantageous pricing in the quarter, resulting in the significant increase in our wholesale revenue. While opportunities related to wholesale product demand from asset-like Canadian health eases expected to remain in the short term, we do not anticipate this level of quarterly wholesale revenues to be the new norm.

Speaker Change: As many in the industry move to asset-light business models, a significant portion of previous production capacity in the industry has disappeared.

Speaker Change: This, in turn, has resulted in previous excess inventory levels in the industry dissipating.

Carl A. Merton: With lower inventory levels, securing supply appears to have become more difficult, and pricing in the wholesale market is increasing, as much as 5x in some product categories. Against this new backdrop, we took advantage of advantageous pricing in the quarter, resulting in a significant increase in our wholesale revenue. While opportunities related to wholesale product demand from asset-light Canadian LPs are expected to remain in the short term, we do not anticipate this level of quarterly wholesale revenues to be the new norm.

Speaker Change: With lower inventory levels, securing supply appears to have become more difficult and pricing in the wholesale market is increasing, as much as 5x in some product categories.

Speaker Change: Against this new backdrop, we took advantage of advantageous pricing in the quarter, resulting in a significant increase in our wholesale revenue.

Speaker Change: While opportunities related to wholesale product demand from asset-light Canadian LPs is expected to remain in the short term, we do not anticipate this level of quarterly wholesale revenues to be the new norm.

Carl Martin: International cannabis net revenue was 13.1 million in the quarter compared to 15.7 million in the prior year due to timing differences of shipments in the international markets to various countries. Cannabis growth profit was 28.8 million and cannabis growth margin was 40 percent compared to 39.5 million and 61 percent in the prior year quarter. Distribution revenue derived predominantly to Roy Farma decreased to 65.6 million from 72.6 million in the prior year quarter. Distribution's growth profit increased to 7.8 million compared to 6.7 million in the prior year quarter. While distribution growth margin increased to 12 percent from 9 percent in the prior year quarter, driven by our increased focus on margin.

Carl A. Merton: International cannabis net revenue was $13.1 million in the quarter compared to $15.7 million in the prior year due to timing differences of shipments in the international markets to various countries. Cannabis gross profit was $28.8 million, and cannabis gross margin was 40% compared to $39.5 million and 61% in the prior year quarter. Distribution revenue derived predominantly from Tilray Pharma decreased to $65.6 million from $72.6 million in the prior year quarter.

Speaker Change: International cannabis net revenue was $13.1 million in the quarter compared to $15.7 million in the prior year due to timing differences of shipments in the international markets to various countries.

Speaker Change: Cannabis gross profit was $28.8 million and cannabis gross margin was 40% compared to $39.5 million and 61% in the prior year quarter.

Speaker Change: Distribution revenue derived predominantly through Tilray Pharma decreased to $65.6 million from $72.6 million in the prior year quarter.

Carl A. Merton: Distribution gross profit increased to $7.8 million compared to $6.7 million in the prior year quarter, while distribution gross margin increased to 12% from 9% in the prior year quarter, driven by our increased focus on margin. Wellness revenue grew 6% to $15.7 million from $14.8 million in the prior year quarter. Wellness gross profit was $4.9 million, up from $4.4 million in the prior year quarter, and gross margin rose to 31% compared to 30%. Our cash and marketable securities balance as of May 31st was $260.5 million, down from $448.5 million in the year-ago period.

Speaker Change: Distribution gross profit increased to $7.8 million compared to $6.7 million in the prior year quarter, while distribution gross margin increased to 12% from 9% in the prior year quarter, driven by our increased focus on margin.

Carl Martin: Wellness revenue grew 6% to $15.7 million from $14.8 million in the prior year quarter. Wellness gross profit was $4.9 million from $4.4 million in the prior year quarter, and gross margin rose to 31% compared to 30%. Our cash and marketable securities balance as of May 31st was $260.5 million, down from $448.5 million in the year-ago period. The majority of the variance was related to the repayment of the total rate 23s. The cash purchase price of our acquisition of the craft friends and settling assumed liabilities and exit costs from HECSA, including the unpaid excise tax we inherited as part of the transaction, as well as legacy litigation settlements.

Speaker Change: Wellness revenue grew 6% to $15.7 million from $14.8 million in the prior year quarter.

Speaker Change: Wellness gross profit was $4.9 million, up from $4.4 million in the prior year quarter, and gross margin rose to 31% compared to 30%.

Speaker Change: Our cash and marketable securities balance as of May 31st was $260.5 million, down from $448.5 million in the a year ago period.

Carl A. Merton: The majority of the variance was related to the repayment of the Tilray-23s, the cash purchase price of our acquisition of the Kraft brands, and settling assumed liabilities and EXA costs from HEXA, including the unpaid excise tax we inherited as part of this transaction, as well as the Legacy Litigation Settlement. Fiscal 2024 was a year marked by major acquisitions in both the beverage alcohol and cannabis segments. In addition to the revenue increases we enjoyed from these acquisitions, we also made significant progress in integrating those acquisitions into our existing infrastructure.

Speaker Change: The majority of the variance was related to the repayment of the Tilray 23s, the cash purchase price of our acquisition of the Kraft Brands, and settling assumed liabilities and exit costs from HEXA, including the unpaid excise tax we inherited as part of this transaction.

Carl Martin: Fiscal 2024 was a year marked by major acquisitions in both the beverage alcohol and cannabis segments. In addition to revenue increases we enjoyed from these acquisitions, we also made significant progress in integrating those acquisitions into our existing infrastructure. For the cannabis segment, this integration is largely complete, with redundant assets available for sale. The largest pieces remain in our integration plan. For the beverage alcohol segment, there is still work to be done on the integration. As I said previously, all brands except for Shop Top have exited their co-manufacturing agreements and are now being produced in our facilities.

Carl A. Merton: For the cannabis segment, this integration is largely complete, with redundant assets available for sale, the largest pieces remaining in our integration plan. For the beverage-alcohol segment, there is still work to be done on the integration. As I said previously, all brands except for ShopTop have exited their co-manufacturing agreements and are now being produced in our facilities.

Speaker Change: as well as Legacy Litigation Settlements.

Speaker Change: Fiscal 2024 was a year marked by major acquisitions in both the beverage alcohol and cannabis segments.

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

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

Speaker Change: For the beverage alcohol segment, there is still work to be done on the integration. As I said previously, all brands except for ShopTop have exited their co-manufacturing agreements and are now being produced in our facilities.

Carl Martin: Our integration work will continue to ensure we are maximizing low cost production footprints and their related legalizations, fully integrating purchasing decisions across all brands to take advantage of pricing commensurate with our status as the fifth largest craft producer in the U.S. and fine tweaking all our production activities. All to bring our consolidated beverage alcohol margins back up above 40 percent.

Carl A. Merton: Our integration work will continue to ensure we are maximizing low-cost production footprints and their related utilizations, fully integrating purchasing decisions across all brands to take advantage of pricing commensurate with our status as the fifth largest craft producer in the US, and fine-tuning all our production activities. All to bring our consolidated beverage alcohol margins back up above 40%. Finally, we are pleased to provide the following guidance for fiscal 2025.

Speaker Change: Our integration work will continue to ensure we are maximizing low-cost production footprints and their related utilizations.

Speaker Change: Fully integrating purchasing decisions across all brands to take advantage of pricing commensurate with our status as the fifth largest craft producer in the U.S. and fine-tweaking all our production activities.

Speaker Change: All to bring our consolidated beverage alcohol margins back up above 40%.

Carl Martin: Finally, we are pleased to provide the following guidance for fiscal 2025. We anticipate net revenues to be between $950 million and $1 billion, with mid single digits of organic growth.

Speaker Change: Finally, we are pleased to provide the following guidance for fiscal 2025.

Speaker Change: We anticipate net revenues to be between $950 million and $1 billion, with mid-single digits of organic growth.

Carl Martin: Let me now conclude our prepared remarks and open the lines for questions from our covering analysts.

Carl A. Merton: We anticipate net revenues to be between $950 million and $1 billion, with mid single digits of organic growth. Let me now conclude our prepared remarks and open the lines for questions from our covering analysts. Operator, what's the first question?

Speaker Change: Let me now conclude our prepared remarks and open the lines for questions from our covering analysts.

Operator: Operator, what's the first question? Thank you. Without be conducting your question and answer session, if you'd like to be placing the question cue, please press star one on your telephone keypad. You may press star two if you'd like to be with your question from the queue. Once again, that star one to be placed in the question cue.

Operator: Thank you. We will now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad.

Speaker Change: Operator, what's the first question?

Speaker Change: Thank you. We will now be conducting a question and answer session. If you'd like to be placed into the question queue, please press star 1 on your telephone keypad. You may press star 2 if you'd like to remove your question from the queue.

Robert Moskow: You may press star 2 if you'd like to remove your... Once again, that's star one to be placed in the question... Our first question is coming from Robert Moskow from TD Calendar. Hi, thanks for the question. I believe you normally give EBITDA guidance, which is kind of new to the story. So can you tell me whether, What was the decision regarding EPADA guidance for fiscal 25? I think, you know, from a sales and as a growth company, Um, you know, it's based around revenue, but, you know.

Robert Moskow: Our first question is coming from Robert Moscow from Katie Cowan. Your line is now live. Hi, thanks for the question. I believe you normally give EBITDAG guidance. I'm kind of new to the story, so can you tell me whether what was the decision regarding EBITDAG guidance for fiscal 25? I don't think you know from anything drove it. I think sales and as a growth company, you know it's based around revenue. But you know our cash flow or free cash flow, and I think as we outlaid where our Fulls are to get to margins, I think.

Speaker Change: Once again, that's Star 1 to be placed into question Q.

Speaker Change: Our first question is coming from Robert Moskow from TD Cowell, and your line is now live.

Speaker Change: Hi, thanks for the question. I believe you normally give EBITDA guidance.

Robert Moscow: I'm kind of new to the story, so can you tell me whether, what was the decision regarding EBIDTA guidance for fiscal 25?

Speaker Change: I think, you know, from an anything drill, but I think sales and as a growth company.

Speaker Change: You know, it's based around revenue, but, you know, our cash flow, our free cash flow, and I think as we've outlaid where our

Robert Moskow: Our cash flow, our free cash flow, and I think as we've outlaid where our goals are to get to margins. I think Robert, you're a pretty smart analyst. I think EBITDA is something you can figure out, and I think as a growing company, and things happen, but I think it all starts with the sales number. And all of this starts with the organic growth number, and the rest runs back through the P&L. That's why. There is no other reason why.

Carl Martin: Robert, you're pretty smart analyst. I think he but does something, you know, you can figure out. And I think as a growing company and things happen, I think it all starts in the sales number, and it all starts on your organic growth number and the rest runs back through the P&M. That's why. No other reason why. But you used to give it, and now you've decided not to provide that range in the going forward. You know, I think it's, we give the sales, we give our organic growth, and we give expectations on where a margin is.

Robert Moscow: goals are to get to margins I think Robert you're pretty smart analyst I think EBITDA is something you know you can figure out and I think as a growing company and things happen but I think it all starts in the sales number and all starts on the organic growth number and the rest runs back through the P&L that's why

Irwin David Simon: But you used to give it, and now you've decided to... not provide that range going forward. You know, I think it's we give the sales we give our organic growth. And we have expectations on where our margin is. I think, you know, the rest can usually flow through the P&L. Okay, can you give us a little kind of step-by-step status for the next 12 months towards integrating your ABI brands and how the gross margins will improve? What needs to happen next?

Speaker Change: No other reason why.

Robert Moscow: But you used to give it and now you've decided to not provide that range going forward?

Speaker Change: You know, I think it's, we give the sales, we give our organic growth, and we give expectations on where our margin is, I think, you know, the rest can usually flow through the P&L.

Carl Martin: I think the rest can usually fall through the P&M.

Erwin Simon: Okay, can you give us a little kind of step-by-step status on for the next 12 months, towards integrating your ABI brand and how the gross margins will improve? Like, what do you have in next? Well, I think number one starts with these brands starting to grow again. And some of the examples we showed is what was happening in Shakaq, what was happening with some of the, you know, Ken Barrel. So that's number one. We put a lot of innovation out there, and getting that innovation out there, and we've seen two great results so far from that.

Speaker Change: Okay, can you give us a little kind of step-by-step status on for the next 12 months towards integrating your ABI brands and how the gross margins will improve?

Irwin David Simon: Well, I think number one, it starts with these brands starting to grow again, and some of the examples we showed were what was happening with Shotcock, what was happening with some of the, you know, 10 barrels, so that's number one. We put a lot of innovation out there and got that innovation out there, and we've seen some great results so far from that. You know, as we look today at our manufacturing facility, this is what I said before, 90 percent of our products are made in our own facilities.

Speaker Change: Like what needs to happen next?

Speaker Change: Well, I think, number one, it starts with...

Speaker Change: [inaudible]

Speaker Change: And we've seen some great results so far from that. You know, as we look today at our manufacturing facilities, this is what I said before, 90% of our products are made in our own facilities.

Erwin Simon: You know, as we look today at our manufacturing facility, and very well I said before, 90% of our products are made in their own facilities. So, you know, ABI was doing some of our manufacturing, and how do we bring more and more of that manufacturing in our facilities? You know, our prior gross margin at Sweetwater was in the high 40s, low 50s. So how do we get some more efficiency that are purchasing at some of the production standpoint? So that is number one. Number two is we have 500 distributors out there, and some excellent distributors that came along with the ABI; some excellent distributors.

Irwin David Simon: So, you know, ABI was doing some of our manufacturing, and how do we bring more and more of that manufacturing into our facilities? You know, our prior gross margin at Sweetwater was in the high 40s, low 50s, so how do we get some more efficiencies at a purchasing and some of the production standpoint? So that is number one.

Speaker Change: So, you know...

Speaker Change: ABI was doing some of our manufacturing and how do we bring more and more of that manufacturing into our facilities.

Speaker Change: You know, our prior gross margin...

Speaker Change: [inaudible]

Speaker Change: Sweetwater was in the high 40s, low 50s.

Speaker Change: So how do we get some more efficiencies out of purchasing at some of the production standpoint?

Irwin David Simon: Number two is we have 500 distributors out there and some excellent distributors that came along with the ABI. Are there some consolidation opportunities there? And all these distributors are looking for more and more business, so how do we grow with them? So that is the big thing. Also, we're looking at some international opportunities where we can grow our business internationally. So that's the big thing, and you come back and look at it today, where these margins were when we bought them, and where our legacy margins are, and that is a big focus.

Speaker Change: So that is number one. Number two.

Speaker Change: is we have 500 distributors out there and some excellent distributors that came along with the AVI, some excellent distributors.

Erwin Simon: There's some consolidation opportunities there, and all these distributors are looking for more and more business. So how do we grow with them? So that is the big thing. Also, you know, we're looking at some international opportunities where we can grow our business internationally. So that's the big thing, and you can back and look at it today. Where are these margins? Where are we bought them? And where are the legacy, you know, margins are. And then that is a big focus. You know, last week was our strategic planning meetings, and that's our big focus. You know, if you can grow our gross margins by a few points, that's a lot of dollars dropping to the bottom line.

Speaker Change: Is there some consolidation opportunities there and all these distributors are looking for more and more business, so how do we grow with them?

Speaker Change: So, that is the big thing. Also, you know, we're looking at some international opportunities where we can grow our business internationally.

Speaker Change: So that's the big thing, and you come back and look at it today, where these margins were when we bought them, and where our legacy margins are, and that is a big focus.

Irwin David Simon: You know, last week was our strategic planning meetings, and that's our big focus. You know, if you can grow our gross margins by a few points, that's a lot of dollars dropping to the bottom line. And, you know, you heard Carl talk about giving guidance in regards to, you know, high to mid-single digit organic growth plus acquisition growth. That's pretty good growth out there where a beer category is not growing at all. And if we can get a few points on the gross margin, there's a lot of money that drops to the bottom line. Thank you very much.

Speaker Change: You know, last week was our strategic planning meetings, and that's our big focus. You know, if you can grow our gross margins by a few points...

Erwin Simon: And, you know, you heard Carl talk about giving guidance in regards to, you know, high to mid-single, you know, organic growth plus the acquisition growth. That's pretty good growth out there where a beard category is not growing at all, and if we can get a few points on the gross margin, there's a lot of money that drops to the bottom line. Thank you. Thank you very much.

Speaker Change: That's a lot of dollars dropping to the bottom line and you know you heard Carl talk about giving guidance

Carl A. Merton: In regards to, you know, high to mid-single, you know, organic growth plus the acquisition growth, that's pretty good growth out there where beer category's not growing at all. And if we can get a few points on the gross margin, there's a lot of money that drops to the bottom line here.

Erwin Simon: And the big thing is, you know, when we went on to the first acquisition of beer, we were selling two and a half million cases. You know, we're at a sell, you know, 12, 13 million cases of beer, you know, next year. So there's a lot there of cost that we can take out. Thank you.

Speaker Change: Okay, thank you very much.

Irwin David Simon: You know, we're going to sell, you know, 12, 13 million cases of beer next year. So there's a lot there of cost that we can take out. Thank you. Thank you. Thank you. The next question is coming from Andrew Carter from Stiefel. Your line is now open.

Andrew Carter: Next question is coming from Andrew Carter from Steve for Your Life is No Less. Hey, thanks. I just want to get back to the EBITDA kind of thinking about you came in at a seven, eight kind of EBITDA margin this year. Your growth for next year kind of put you in incremental 162 to 200. Could you actually think about incrementals? Does the EBITDA margin expand from here? Just any kind of anything directly? And then I'll just tie this all into one question as far as the free cash flow outlook goes. I don't know if you gave KAPEX.

Speaker Change: Thank you.

Speaker Change: Thank you. Thank you. Next question is coming from Andrew Carter from Steeple. Your line is now live.

Andrew Carter: Hey, thanks. I just want to get back to the EBITDA, kind of thinking about you came in at a 7.8 EBITDA margin this year, and your growth for next year kind of putting you in incremental 162 to 200. How should we think about incrementals? Does the EBITDA margin expand from here? Just anything directionally, and then I'll tie this all into one question.

Andrew Carter: Hey, thanks. I just want to get back to the EBITDA, kind of thinking about you came in at a 7.8 EBITDA margin this year, your growth for next year kind of putting you in incremental 162 to 200. How should we think about incrementals? Does the EBITDA margin expand from here? Just anything directionally, and then I'll tie this all into one question. As far as the free cash flow outlook goes,

Irwin David Simon: As far as the free cash flow outlook goes, I don't know if you gave capital expenditure. Could you give that? How should we think about working capital this year and anything else that should the free cash flow grow from here? Thanks. So just, and I'll turn it over to Carl too, you know, just on the down margin. First of all, you know, as you heard me say before, when we acquired these businesses, you know, it was pretty low in regards to where the gross margin was.

Carl Martin: Could you give that how should we think about working capital this this year in anything else that should the free cash flow grow from here? Thanks.

Speaker Change: I don't know if you gave CapEx. Could you give that? How should we think about working capital this year and anything else that should the free cash flow grow from here? Thanks.

Carl Martin: So just I know I'll turn over to you know, just for the EBITDA margin first of all, you know, as you heard me say before, you know, when we acquired these businesses, you know, it was pretty low in regards to where the gross margin was. They were not integrated, and there's a lot of costs that we have taken out, and you heard what I said before on the exo business; we've taken out over $31.32 million in regards to cost savings on exo. So today at the company and as we gave sales guidance between 952 billion dollars.

Speaker Change: So just, and I'll turn it over to Carl, too, you know, just on the EBITDA margin, first of all, you know,

Carl A. Merton: As you heard me say before...

Carl A. Merton: You know, when we acquire these businesses...

Carl A. Merton: You know, it was pretty low in regards to where the gross margin was.

Irwin David Simon: They were not integrated, and there are a lot of costs that we have taken out. And you heard what I said before about the HECSO business; we've taken out over $31-$32 million in regards to cost savings on HECSO. So today as a company, and as we gave sales guidance between $950-$1 billion, and as we, you know, add on to that top line organic growth plus acquisition growth, you know, get those margins a lot more that enter the top line, that drops to the bottom line there, it goes into your EBITDA margin. And listen, I come back, and you heard what I said in my script. You know, we expect that there would be some relief in regards to excise tax. It's not going to happen.

Carl A. Merton: They were not integrated and there's a lot of costs that we have taken out. And you heard what I said before on the HECSO business, we've taken out over $31, $32 million in regards to cost savings on HECSO.

Carl A. Merton: So, today, as a company, and as we gave sales guidance, between $950 to a billion dollars.

Erwin Simon: And as we, you know, add on for that top line, organic growth plus acquisition growth. So, you know, get those margins a lot more that enter the top that drops of a bottom line there that goes into your EBITDA margin. And listen, I come back and you heard what I said in my script. So we expected there would be some relief in regards to excise tax is not going. It's not, it's not happening. So between excise tax at a hundred million dollars. I am paying much higher cost for insurance because of our cannabis business and much higher costs in regards to some of our legacy license that we have with IT.

Carl A. Merton: And as we, you know, add on to that top line organic growth plus acquisition growth, you know, get those margins a lot more that enter the top, that drops to the bottom line there that goes into your EBITDA margin. And listen, I come back and you heard what I said in my script.

Carl A. Merton: You know, we expect that there would be some relief in regards to excise taxes not going, it's not happening.

Irwin David Simon: It's not happening. So between excise tax at $100 million, paying much higher costs for insurance because of our cannabis business, and much higher costs in regards to some of our legacy licenses that we have with IT, you know, we're digesting well over $100 million just in cost and price compression, which over the last few years has been over $200 million. So we're digesting a lot of these costs within our P&L, but we're taking a lot of costs out of our business, and we're also getting a lot of organic growth, you know, to offset that. Carl?

Carl A. Merton: So, between excise tax at $100 million, paying much higher costs for insurance because of our cannabis business.

Carl A. Merton: and much higher costs in regards to some of our legacy license

Erwin Simon: You know, we're digesting well over a hundred million dollars just of costs and price compression, which over the last few years has been over two hundred million dollars. So we're digesting a lot of these costs within our P and L. But we're taking a lot of costs that are business, and we're also getting a lot of organic growth, you know, to offset that.

Carl A. Merton: You know, we're digesting well over $100 million just of cost and price compression, which over the last few years has been over $200 million.

Carl A. Merton: So we're digesting a lot of these costs.

Carl A. Merton: within our P&L.

Carl A. Merton: But we're taking a lot of costs out of our business, and we're also getting a lot of organic growth, you know, to offset that. Carl?

Carl Martin: Carl, just on capex, we spent about 30 million dollars this year on capex. We spent a little over 20 million dollars a year before capex. Connection will be right in that in that range as it relates to working capital. We don't see the need to grow the working capital from where we're at today over the next year. So, and just on that, we spent, you know, between capex. You know, we spent it on, based on conversion there, we fell over six and a half million dollars in regards to our sleep water facility. We said some other capex and some of our other facilities.

Carl A. Merton: Just on CapEx, we spent about $30 million this year on CapEx. We spent a little over $20 million a year before CapEx for next year. We'll be right in that range as it relates to working capital. We don't see the need to grow working capital from where we're at today over the next... So, and just on that, we spent, you know, between CapEx. You know, we spent it on Maison, in the conversion there. We spent over six and a half million dollars in regards to our Sweetwater facility. We spent some other capital expenditure in some of our other facilities.

Carl A. Merton: Just on CapEx, we spent about $30 million this year on CapEx. We spent a little over $20 million a year before CapEx for next year. We'll be right in that range.

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

Carl A. Merton: So, and just on that, we spent, you know, between CapEx...

Carl A. Merton: You know, we spent it on Maison, in conversion there, we spent over six and a half million dollars in regards to our Sweetwater facility. We spent some other capex and some other facilities.

Carl Martin: So, you know, with that, we got some pretty efficient facilities and pretty, you know, a lot of capex that could expand. So, we don't expect to spend a lot of capex going into next year into this.

Irwin David Simon: You know, with that, we got some pretty efficient facilities and pretty, you know, a lot of CapEx expanded, so we don't expect to spend a lot of CapEx going into next year or this year. I guess just one more question on kind of the $10 million headwind to EBITDA this year from price compression. If you had to kind of like straight-line pricing at this point, where would the headwind be to EBITDA next year from pricing?

Carl A. Merton: You know, with that, we got some pretty efficient facilities and pretty, you know, a lot of CapEx expanded. So we don't expect to spend a lot of CapEx going into next year, into this year.

Erwin Simon: I guess just one more question on kind of the, you mentioned the $10 million headwind to EBITDA this year from price compression. If you had to kind of like straight line pricing at this point, would the headwind be EBITDA next year from pricing? And as you mentioned, the innovation, are you able to, is the innovation accretive from a pricing perspective, therefore less excise tax or gross margin accretive, whatever you want to call it? Is it accretive to your cannabis growth? Thanks. So, I hate to tell you, there's no relief on excise tax, and just to be clear to everybody on this fall, excise tax is a fixed amount, or you're paying a dollar a gram.

Speaker Change: I guess just one more question on the $10 million headwind to EBITDA this year from price compression.

Speaker Change: If you had to kind of like straight-line pricing at this point...

Speaker Change: Where would the headwind be to EBITDA next year from pricing? And as you mentioned the innovation, are you able to, is the innovation accretive from a pricing perspective, therefore less excise tax or gross margin accretive, whatever you want to call it? Is it accretive to your cannabis growth? Thanks.

Irwin David Simon: And as you mentioned the innovation, are you able to, is the innovation accretive from a pricing perspective, therefore less excise tax or gross margin accretive, whatever you want to call it? Is it accretive to your cannabis growth? Thanks. I hate to tell you.

Irwin David Simon: There's no relief on excise tax, and just to be clear to everybody on this call, excise tax is a fixed amount where you're paying a dollar a gram. If the prices keep coming down 20, 30, 40 percent, you're still paying excise tax. So, as a matter of fact, there's a percentage of our excise tax... And the percentage of sales keeps going up. So just remember, our price compression over the last couple of years has been about $200 million.

Speaker Change: [inaudible]

Speaker Change: I hate to tell you guys.

Speaker Change: There's no relief on excise tax, and just to be clear to everybody on this call,

Erwin Simon: If the prices keep coming down 20, 30%, you're still paying excise tax, so a matter of fact, as a percentage, our excise tax is a percentage to sale; it keeps going up. So just remember, our price compression over the last couple of years has been about $200 plus million. If that never happened, that would just ultimately cost you goods; that drops to your bottom line. So, with that, we feel good, and you heard what Carl said in regards to other LPs not being able to pay excise tax, and the Canadian government going after them and forcing them away.

Speaker Change: Excise tax is a fixed amount, where you're paying a dollar a gram. If the prices keep coming down 20, 30, 40 percent, you're still paying excise tax. As a matter of fact, as a percentage, our excise tax...

Speaker Change: And the percentage of sales keeps going up. So just remember, our price compression over the last couple of years has been about $200 plus million. If that never happened, that would just ultimately cost the goods. That drops to your bottom line.

Irwin David Simon: If that never happened, that would just ultimately lower your cost of goods, which drops your bottom line. So with that, we feel good. And you heard what Carl said in regards to other LPs not being able to pay excise tax and the Canadian government going after them and forcing them away.

Speaker Change: So, with that, we feel good.

Speaker Change: And you heard what Carl said in regards to, you know, other LPs not being able to pay excise tax and the Canadian government going after them and forcing them away. So number one, we feel good that pricing now, you know, basically

Irwin David Simon: So number one, we feel good that pricing now, you know, basically has flattened out. And if anything, we're looking to get some price increases. And the question you asked, some of the new innovation that we're coming out with is unique to what Tilray can do, and hopefully, we can get higher prices for them. So hopefully, we're not going to see anywhere near the price compression we have seen over the last couple of years, Andrew. Thanks. I'll pass it on.

Erwin Simon: So, number one, we feel good that pricing now, you know, basically has flattened out, and if anything, we're looking to get some price increase. And the question asked, some of the new innovation that we're coming out with, is you need to what Tillray can do, and hopefully we can get higher prices forth. So, hopefully, we're not going to see any near the price compression we have seen over the last couple of years, Andrew.

Carl A. Merton: has flattened out, and if anything, we're looking to get some price increase. And the question you ask, some of the new innovation that we're coming out with is unique to what Tilray can do.

Speaker Change: And hopefully we can get higher prices for them. So, hopefully, we're not going to see anywhere near the price compression we have seen over the last couple of years, Andrew.

Andrew Carter: Thanks, I'll pass it on. Just to give some, just to give some gains on that for the year, we were looking at about $3 million a quarter, up until the fourth quarter, and we did not see any price compression in kids' work. Thank you.

Carl A. Merton: Just to give you some idea of that for the year, we were looking at about $3 million a quarter up until the fourth quarter, and we did not see any price compression. Thank you. As a reminder, that's star number one to be placed in the question... Our next question is coming from Aaron Grey from Alliance Global Partners, Alliance Alliance. Hi, good evening, and thank you for the question. So, first question for me: I want to talk a bit about Germany since the law changed there.

Andrew Carter: Thanks, I'll pass it on. Just to give some taste on that through the year, we were looking at about $3 million a quarter up until the fourth quarter and we did not see any price compression in Q4.

Operator: As a reminder, that star 1 to be placed in the question queue.

Aaron Gray: Our next question is coming from Aaron Gray from Alliance Global Partners; your line is live. Hi, good evening, and thanks for the question. So, first question from me, one talk a bit about Germany, since the law changed there. I believe you mentioned a 65% increase since April 1st. So, I just want to clarify: was that specifically for increase on the quarter, or were you see it today relative before the change? And then just any further commentary you can provide, and I talked about your own production increases 5X domestically, and you have Portugal as well, but anything you're seeing overall within the market in terms of scripts, are you seeing some bottlenecks that are maybe keeping the market from growing even faster than it could, so just your overall sense in terms of how you're seeing the market evolve there.

Speaker Change: Thank you. As a reminder, that's star one to be placed in the question queue. Our next question is coming from Aaron Grey from Alliance Global Partners. Your line is now live.

Aaron Thomas Grey: I believe you mentioned a 65% increase since April 1st, so I just wanted to clarify, was that specifically for increases in the quarter or where you see it today relative before the change? And then just any further commentary you can provide, I know you talked about your own production increases, 5X domestically, and you have Portugal as well, but anything you're seeing overall within the market in terms of scripts, are you seeing some bottlenecks that are maybe keeping the market from growing even faster than it could? So just your overall sense in terms of how you're seeing the market evolve. Thank you. I'm going to let Denise answer that question.

Aaron Thomas Grey: Good evening and thank you for the question.

Aaron Thomas Grey: So first question for me, I want to talk a little bit about Germany since the law changed there. I believe you mentioned a 65% increase since April 1st.

Aaron Thomas Grey: I just wanted to clarify, was that specifically for increases on the quarter or where you see it today relative before the change? And then just any further commentary you can provide, and I know you talked about your own production increases, 5X domestically, and you have Portugal as well, but anything you're seeing overall within the market in terms of scripts, are you seeing some bottlenecks that are maybe, you know, keeping the market from growing even faster than it could? So just your overall sense in terms of how you're seeing the market evolve there. Thank you.

Carl Martin: Thank you. I'm going to let the defense of that question. Thank you. And thanks for the question.

Denise Menikheim Faltischek: Thanks, Irwin, and thanks for the question. So in terms of your first question, in terms of the 65% growth, given that we're reporting the end of the fiscal year as of May 31st, this is a number that reflects basically our Q4 growth since the April 1st adoption of the new regulations. And then second, in terms of your question about what bottlenecks and potential challenges we're seeing in the marketplace, one of the things we are seeing is that the German government is becoming overwhelmed with the import and export permits, the import permits into Germany.

Carl Martin: So, in terms of your first question, in terms of the 55% growth, I'm given that we're recording the end of the fiscal year as of May 31st. This is a number that reflects basically our choice from the April 1st adoption of the new regulations. And then second, in terms of their question, in terms of what bottlenecks and potential challenges are seeing in the marketplace, one of the we are seeing is, in fact, the German government becomes overwhelmed with the import and export premise, the import premise into Germany. We've been hearing, basically, given some of the increased demand on medical cannabis, in terms of increase in patients, increase in mental description.

Denise: Thank you. I'm going to let Denise answer that question. Thanks, Irwin, and thanks for the question. So in terms of your first question, in terms of the 65% growth, given that we're reporting the end of the fiscal year as of May 31st, this is a number that reflects basically our Q4 growth from the April 1st adoption of the new regulations.

Speaker Change: And then second, in terms of like their question in terms of what bottlenecks and potential challenges we're seeing in the marketplace,

Speaker Change: One of the things we are seeing is, in fact, the German government becoming overwhelmed with the import and export permits.

Denise Menikheim Faltischek: We've been hearing basically given some of the increased demand for medical cannabis in terms of increasing patients, increasing numbers of prescriptions, we have, in fact, seen the permit timing go from two weeks to six weeks. The other thing that we're seeing also is in terms of the ability to fill prescriptions very quickly given the increased demand. So those are the two bottlenecks that we see. And I think both are more short-term as, in fact, both sort of aspects of the supply chain, one is the import permits from the German government, and then fulfillment of prescriptions start to level out as more and more resources are put against them.

Speaker Change: The Import Permit into Germany. We've been hearing basically, given some of the

Speaker Change: increased demand on medical cannabis in terms of increasing patients, increasing number of prescriptions. We have, in fact, seen the permit timing going from two weeks to six weeks.

Carl Martin: We have, in fact, seen the permit time going from 2 weeks to 6 weeks. The other thing that we're seeing also is in terms of the ability to fill prescription very quickly, given the increased demand for those of the two bottlenecks that we see.

Speaker Change: The other thing that we're seeing also is in terms of the ability to fill prescriptions very quickly, given the in-sith command. So those are the two bottlenecks that we see, and I think both are more short-term, as in fact,

Erwin Simon: And I see both on more short term, as in fact, you know, both for that aspect of the supply chain, one of the import premise in the German government and then for some of the description start to level out as more and more resources that could, again, so I do see the next number of measures in terms of the restrictions on growth. Okay, great. Thank you very much for that color there. And the second quick one for me, just on the hemp-derived delta nine beverages, they mentioned again on this call. Formulations are complete. You mentioned some; you need to do it state by state.

Speaker Change: Both sort of aspects of the supply chain, when we import from the German government, and then fulfillment of prescriptions start to level out as more and more resources are put against those. So I do see them as temporary measures in terms of restrictions on growth.

Denise Menikheim Faltischek: So I do see them as temporary measures in terms of restrictions on growth. Okay, great, thank you very much for that overview there. And then, second quick one for me, just on the hemp-derived Delta-9 beverages that you mentioned again on this call. Formulations are complete. You mentioned some, you're gonna do it state by state. I believe you mentioned Texas and New Jersey as two of the states.

Speaker Change: Okay, great. Thank you very much for that cover there. And the second quick one for me just on the hemp-derived Delta 9 beverages that you mentioned again on this call. Formulations are complete. You mentioned some, you're going to do it state by state. I believe you mentioned Texas and New Jersey as two of the states. So just any commentary of how many states you believe right now you'd be able to, you know, sell into. And then how the conversations you're having with some of your distributors, both larger and smaller, in terms of the desire for these hemp-derived beverages. Have you seen the desire, you know, increase especially their ability to participate with someone which is an existing player like you guys with alcohol beverages? So how are you seeing the overall demand for these Delta 9 beverages and how many markets you think you're going to build into within the current environment? Thanks.

Erwin Simon: I believe you mentioned Texas and New Jersey as two of the states. So just any commentary of how many states you believe right now you'd be able to, you know, sell into and then how the conversations you're having with some of your distributors, both larger and smaller, in terms of the desire for these hemp-derived beverages. Have you seen the desire, you know, increase, especially their ability to participate with someone, which is an existing player like you guys with alcohol beverages. So how have you seen the overall demand for these delta nine beverages, and how many markets do you think you're going to build into within the current environment?

Irwin David Simon: So just any commentary on how many states you believe right now you'd be able to sell into, and then the conversations you're having with some of your distributors, both larger and smaller, in terms of the desire for these hemp-derived beverages. Have you seen the desire increase, especially their ability to participate with someone which is an existing player like you guys with the alcohol beverages? So how are you seeing the overall demand for these Delta-9 beverages and how many markets do you think you're gonna be able to enter within the current environment?

Erwin Simon: Thanks.

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

Irwin David Simon: So number one, you heard me say before, and I wouldn't put a dollar value on it, but if we could sell our THC beverages that we produce in Canada and the U.S., it would be a large-sized business for us if we could ever do that. With that, we can't, as we can't sell anything, you know, that are THC-infused products. You know, we're looking, and you heard me mention the states we're looking at, and I will tell you that here.

Speaker Change: So number one, you heard me say before, and I wouldn't put a dollar value on it, but if we could sell our THC

Speaker Change: beverages that we produce in Canada today in the U.S. It would be a large-size business for us if we could ever do that.

Speaker Change: With that, we can't, as we can't sell anything, you know, that are PHC infused products.

Speaker Change: You know, we're looking, and you heard me mention the states we're looking at, and I will say this here.

Irwin David Simon: There are a lot of our beer distributors that have reached out to us and want the product right away because they have seen in markets where it is, how well the sales are doing. So, you know, we'll look at rolling it out online in some markets, and the markets where we feel that we can do it, and we can do it legally, we can do it right, there are about three or four markets that we would do right away.

Speaker Change: There is a lot of our beer distributors that have reached out to us.

Speaker Change: and want the product right away.

Speaker Change: because they have seen in markets where it is, how well the sales are doing.

Owen Bennett: So, you know, we'll look at rolling it out online in some markets, and the markets we feel that we can do it and we can do it legally. We will do right away. We do have the product that has been developed. We have the formulations. We don't have products out there today, but we do have the formulations. We do have the product ultimately ready to go once we can, you know, get the go-ahead and we know what our plans are in which markets. Okay, great. Thanks to the colonel. I'll jump back into the queue. Thank you.

Speaker Change: So, you know, we'll look at rolling it out online in some markets.

Speaker Change: And the markets we feel that we can do it, and we can do it legally, we can do it right, there's about three or four markets that we would do right away.

Irwin David Simon: We do have the product that has been developed. We have the formulations; we don't have products, you know, out there today, but we do have the formulations, and we do have the product, ultimately ready to go once we can, you know, get to go ahead and we know what our plans are and which markets we're going to be in. Thanks for the call, and I'll jump back into the queue.

Speaker Change: We do have the product that has been developed.

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

Speaker Change: Okay, great. Thanks for the call and I'll jump back into the queue.

Owen Michael Bennett: Our next question today is coming from Owen Bennett from Jeffries. Your line is now live. Afternoon guys, hope you're all well.

Owen Bennett: Our next question today is coming from Owen Bennett from Jeffries, your life. There's no life. Afternoon guys, so far. Well, I've just had a couple of questions on beverages. The first one on energy drinks, obviously a very attractive path to grieve, but also very competitive. I just wondered how you're thinking about what you think you need to do to be successful in that category. Will the focus be on high ball, or are you planning to launch additional brands as well as the first one? So, I think, and again, to cross a little broken up, will the focuses be on our beverages?

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question today is coming from Owen Bennett from Jeffries. Your line is now live.

Owen Michael Bennett: I just had a couple of questions on beverages. The first one was on energy drinks, obviously a very attractive category but also very competitive. I was just wondering what you think you need to do to be successful in that category and will the focus be on highball, or are you planning to launch additional brands as well? So I think, and again, to cross a little, broken up.

Owen Michael Bennett: Afternoon guys, hope all well. I just had a couple of questions on beverages. The first one...

Owen Michael Bennett: On energy drinks, obviously a very attractive category, but also very competitive. I was just wondering how you're thinking about what you think you need to do to be successful in that category. And will the focus be on highball, or are you planning to launch additional brands as well, as the first one? Thanks.

Speaker Change: So I think, and again to cross a little broken up, will the focuses be on our beverages? Was that what you're asking? What beverages, what brands within our beverage business?

Owen Michael Bennett: Will the focus be on our beverages? Was that what you're asking? And what beverages, what brands within our beverage business? No, no, sorry, Irwin, you didn't hear me.

Erwin Simon: Was that what you're asking, and what beverages, what brands within our beverage business? No, no, sorry, we didn't hear maybe on the energy drinks specifically. The energy is very attractive. Yeah, very attractive, but very competitive. What you think you need to be successful in that category. Will it just be high ball or additional problems beyond high ball? Okay, okay, okay, I got to. I'm sorry about that. So, you know, oh, and I got to tell you, in my career, I've got lots of requests for consumers. I've never had so many requests for consumers on high ball when ABI, you know, discontinued the product.

Owen Michael Bennett: We're going on the energy thing specifically, and... on the energy thing? Yeah, very attractive, but very competitive. What do you think you need to be successful in that part of the group? And will it just be highball or additional brands beyond highball? Oh, okay, okay, okay. I got that, Owen. Sorry about that.

Speaker Change: No, no, sorry, Owen, you didn't hear me. We're on energy drinks specifically.

Speaker Change: are very attractive, but very competitive. What do you think you need to be successful in that possibly? And will it just be highball or additional brands beyond highball?

Speaker Change: Okay, okay, okay, I got that one. Sorry about that. So, you know, Owen, I got to tell you, in my career, I've got lots of requests from consumers.

Irwin David Simon: So, you know, Owen, I got to tell you, in my career, I've got lots of requests from consumers. I've never had so many requests from consumers for highball when ABI, you know, discontinued the product. So there will be a big, you know, focus on our highball product. We will come out with a water product called Liquid Love, and we will test it in the marketplace. It's a very, very high result and good results on that. Our non-alcoholic beers, if I were to put them in a glass, and even you who know beer, ultimately, I'm not sure you'll know the difference between that, a regular beer and a non-alcoholic beer.

Owen Michael Bennett: I've never had so many requests for consumers on Highball when ABI, you know, discontinued the product, so there will be a big...

Erwin Simon: So, there will be a big, you know, focus on our high ball product. We come out with a water product called Liquid Love. We tested the marketplace with some very, very high, you know, results and good results on that. Our non-alcoholic beers, if I was to put that in a glass and even you, who know beer, ultimately, I'm not sure you'll know the difference between that, a regular beer and a non-out. So, we've, you know, with some good energy drinks, we've come out with some great non-out beers. We've come out with some water drinks with liquid love, both in sparkling and still in multiple flavors.

Owen Michael Bennett: You know focus on our highball product We come out with a water product called liquid love and we test it in the marketplace with some very very high

Owen Michael Bennett: You know, results and good results on that.

Owen Michael Bennett: Our non-alcoholic beers, if I was to put...

Owen Michael Bennett: That, in a glass, and even you, who, no fear, ultimately, I'm not sure you'll know the difference between that.

Irwin David Simon: So we've come out with some good energy drinks. We've come out with some great non-alcoholic beers. We've come out with some water drinks with Liquid Love, both in sparkling and still forms in multiple flavors.

Owen Michael Bennett: [inaudible]

Irwin David Simon: And so far, you know, the demand from our distributors and that from our consumers has been strong. You know, but we'll continue to push out the innovation that we have put forth in regards to some of the stuff that we've come out with Montauk, some of the Sweetwater, some of the 10 Barrel, some of the new flavors that we've come out with Shock Top are some of the exciting things. So we see tremendous growth and tremendous growth in some of the brands that we acquire, you know, returning to growth where they were declining. Okay, thanks Irwin.

Erwin Simon: And so far, you know, the demand from our distributors and that, and our consumers has been strong. You know, but we'll continue to push out the innovation that we have put forth in regards to some of the stuff that we can know with contact, some of the sweet water, some of the 10 barrels, some of the new flavors that we've come out with, Shock Top, are some of the exciting things. So we see tremendous growth and tremendous growth in some of the brands that we have acquired.

Owen Michael Bennett: And so far, you know, the demand from our distributors and our consumers has been strong. You know, but we'll continue to push out the innovation that we have put forth.

Owen Michael Bennett: In regards to some of the stuff that we've come out with, Montauk, some of the Sweetwater, some of the Ten Barrel, some of the new flavors that we've come out with, Shock Top, are some of the exciting things. So, we see tremendous growth, and tremendous growth in some of the brands that we acquire.

Erwin Simon: You know, returning to growth where they were declined. Okay, I'm sure when I'm just one quick follow-up on Aaron's question on MTH here, you're planning to sell this by e-commerce as well. You can get that read from the national. So sorry, oh, and it sounds like you're talking into like a clock. Can you just repeat the question? I think your question was on Delta 9? Yeah, are you planning to sell that by e-commerce as well? Yeah, yeah, you know, like I said before on Delta 9, it's something that we're gonna, you know, focus on, and we will sell it in e-commerce, but we will sell it into retail through beer distributors that everybody has some agreement that can take it and in retail markets that we can sell it.

Owen Michael Bennett: You know, returning to growth where they were declining.

Owen Michael Bennett: And then just one quick follow-up on Aaron's question about MTHC. Are you planning to sell this via e-commerce as well so you can get these brands national? So, sorry, Owen, it sounds like you're talking into a clock. Can you just repeat the question? I think the question was about Delta 9.

Aaron Thomas Grey: Thanks Irwin and just one quick follow up on Aaron's question on MTHC, are you planning to sell this via e-commerce as well so you can get these brands national?

Speaker Change: So, sorry, Owen, it sounds like you're talking into like a cup. Can you just repeat the question? I think the question was on Delta 9.

Owen Michael Bennett: Yeah, are you planning to sell that via e-commerce as well? Yeah, yeah, like I said before, on Delta 9, it's something that we're gonna, you know, focus on, and we will sell it via e-commerce, but we will sell it at retail through beer distributors that everybody's in agreement can take it, and in retail markets where we can sell it. And so far, we've had a great response from our distributors and retailers that are interested in this product. Great, thanks guys. Apologies for the bad line. No, no, no problem.

Speaker Change: Yeah, are you planning to sell that via e-commerce as well? Yeah. Yeah. You know, like I said before, on Delta 9, it's something that we're going to...

Speaker Change: You know, focus on, and we will sell it in e-commerce, but we will sell it into retail through beer distributors that everybody is in agreement that can take it, and in retail markets that we can sell it.

Owen Bennett: And so far, we've had a great response from our distributors and retailers that are interested in this problem. Great, thumbs up guys, apologies for the bad line. No, no, no problem. Thank you, Owen. Thank you.

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

Speaker Change: Great, thanks guys. Apologies for the bad line.

Owen Michael Bennett: Thank you, Owen. Thank you. The next question is coming from Frederico Gomes from ATB Capital Markets in Rwanda. Hi, thanks for the question. Just a follow-up on Germany, you know, given the increased demand that you mentioned there, just comment on what, in terms of pricing, are you seeing any sort of increase there? No problem.

Speaker Change: No, no, no problem. Thank you, Owen.

Carl Martin: Next question is coming from Frederico Gomes from ATB Capital Market for the last time. Hi, thanks for the question. Just to follow up on Germany, you know, mentioned there. You just comment on what you're seeing on the supply side. You know, is there enough product there to serve that market, you know, as demand grows? And in terms of pricing, are you seeing any sort of increase there? Thanks. No problem. Basically, what we're seeing in terms of supply. So, in essence, product seems to be selling as soon as it comes into the market. Not only it's what I'm hearing now in our products, but also in terms of products from other competitors in the market, it does not feel as if the market is saturated at all at this point.

Speaker Change: Thank you. Next question is coming from Frederico Gomes from ATB Capital Markets. Your line is now live.

Frederico Yokota Choucair Gomes: Hi, thanks for the question. Just a follow-up on Germany, you know, given the increased demand that you mentioned there.

Frederico Yokota Choucair Gomes: Just comment on what you're seeing on the supply side, you know, is there enough product there to serve that market, you know, as demand grows and in terms of pricing, are you seeing any sort of increase there? Thanks.

Frederico Yokota Choucair Gomes: Basically, what we're seeing in terms of supply, so in essence, products seem to be selling as soon as they come into the market, not only our product but also in terms of products from other competitors into the market. It does not feel as if the market is saturated at all at this point. And so, in essence, I think there's still definitely room for additional supply of medical cannabis into the market. And when I say that, I mean mostly whole flour.

Speaker Change: No problem. Basically what we're seeing in terms of supply, so...

Speaker Change: Good afternoon.

Speaker Change: products seem to be selling as soon as it comes into the market, not only, it's what I'm hearing not only on our product, but also in terms of products from other competitors into the market. It does not feel as if the market is saturated at all at this point. And so, in essence, I think there's still a

Carl Martin: And so, in essence, I think there's still definitely room for additional supply on medical standards into the market. And when I say that, I mean mostly on whole flour. The extract market is growing at a slower pace, whereas the patient led whole flour side of the market is growing at more a faster pace. And so what we see is the market will probably enter into a segmented approach in terms of looking at cleaning the, you've changed the product and value product. And you'll start to see more of these segmentations come through the market as there's more proliferation in terms of product quality.

Speaker Change: Definitely room for additional supply on medical cannabis into the market. And when I say that, I mean mostly on whole flower.

Denise Menikheim Faltischek: The extract market is growing at a slower pace, whereas the patient-led whole flour side of the market is growing at a faster pace. And so what we see is the market will probably enter into a segmented approach in terms of looking at premiums, mainstream products, and value products. And you'll start to see more segmentation come through the market as there is more proliferation in terms of product quality, and we will look to participate in all the various different parts of that segmented market. So we're pretty excited about it. Thanks for that.

Speaker Change: The extract market is growing at a slower pace, whereas the...

Speaker Change: patient-led whole flour side of the market is growing at more of a faster pace, and so

Speaker Change: What we see is the market will probably enter into a segmented approach in terms of looking at premiums, mainstream products, and value products. And you'll start to see more, I think, segmentation come through the market as there's more proliferation in terms of product quality.

Carl Martin: And we will look to participate in all the various different parts of that segment in March. It's more pretty excited about it. Thanks for that.

Speaker Change: And we will look to participate in all the various different parts of that segmented market. We're pretty excited about it.

Frederico Yokota Choucair Gomes: And then my second question is just on your organic growth guidance, maybe provide a bit more color in terms of your segments. Is there any specific segment that you expect will be responsible for most of that organic growth? And just in that organic growth number, a big part of our business, there's no organic growth that we're kind of looking for in our CC pharma. If anything, what we're looking for there is, you know, margin growth and cash flow. But, you know, it's just a smaller business in regards to our wellness growth. You know, we're looking for the same growth as last year.

Carl Martin: And then my second question is just on your organic growth guidance. Could you just maybe rub out a bit more call when it turns off your segments? Is there any specific segment that you expect will be responsible for most of that organic growth? Thanks. It just did my organic growth number of these parts of our business. There's no organic growth that we're counting looking from in our CC farm or anything. What we're looking at is margin growth and cash growth. But it's just a smaller business in regards to our wellness growth. We're looking for the same growth last year.

Speaker Change: Thanks for that. And then my second question, just on your organic growth guidance, could you just maybe provide a bit more color in terms of your segments? Is there any specific segment that you expect will be responsible for most of that organic growth? Thanks.

Speaker Change: and just in that organic growth number a big part of our business there's no organic growth that we're kind of looking from in our CC farm of anything what we're looking there is

Speaker Change: you know, margin growth.

Speaker Change: and Cash Flow, but, you know.

Speaker Change: It's just a smaller business in regards to our wellness growth.

Irwin David Simon: But, you know, we're looking at double-digit growth coming out of both our cannabis and our beer business, our beverage businesses. And that's where the big growth is, you know, low to mid single vote on wellness, no growth really coming from, you know, our CC pharma, our medical distribution business. Thank you very much.

Carl Martin: But we're looking at double-digit growth coming out of both our cannabis and our beer business, our beverage businesses. And that's where the big growth is. You know, low to mid-single vote on wellness. No growth really coming from, you know, our CC farm, our, you know, many of the distribution business. Thank you very much. Thank you.

Speaker Change: We're looking for sustained growth last year, but we're looking at double-digit growth.

Speaker Change: Coming out of both our cannabis and our beer business, our beverage businesses, and that's where the big growth is, you know, low to mid single dose on wellness, no growth really coming from, you know, our CC Pharma, our, you know, medical distribution business.

Speaker Change: Thank you very much.

Operator: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Irwin for any further closing remarks. Well, thank you everybody for joining us on this Summer Day.

Speaker Change: Thank you.

Speaker Change: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Irwin for any further closing comments.

Irwin David Simon: Listen, we've had a lot of good stuff to report today. You know, record sales. And if I look back on 2019 as being a $50 million business, and this year, you know, we have guidance out there between $950 million and $1 billion. And that is without anything happening in the U.S. So none of this guidance includes anything in regards to rescheduling in the U.S., or anything that happened in the U.S. And, you know, over the last five years, everybody kept asking me, what's happening in the U.S., what's happening in the U.S.? A lot of things would change within Tilray.

Speaker Change: Well, thank you everybody for joining us on this.

Speaker Change: Summer Day. Listen, we've had a lot of good stuff to report today. You know, record sales.

Erwin Simon: We reached out to our question, and we have guided out there between $9.50 to $1 billion. And that is without anything happening in the U.S. So, in terms of this guidance, it includes anything in regards to rescheduling the U.S., anything that happened in the U.S., and over the last five years, everybody kept asking me, what's happening in the U.S., what's happening in the U.S.? A lot of things would change within the Gilray. If something happened in the U.S., we're excited about the opportunities in Germany in regards to even, you know, the change in selling more and more accused dreams in the U.S.

Speaker Change: And if I look back to 2019, that being a $50 million business, and this year, you know, we have guides out there between $950 to a billion dollars.

Speaker Change: And that is without anything happening in the U.S., so none of this guidance includes anything in regards to rescheduling in the U.S., anything that happened in the U.S.

Speaker Change: And, you know, over the last five years, everybody kept asking me what's happening in the U.S., what's happening in the U.S.

Irwin David Simon: If something happens in the U.S., we're excited about the opportunities in Germany in regards to even, you know, the change in selling more and more infused drinks in the U.S. could change dramatically. We've had to deal with, you know, the higher excise tax in Canada. We've had to deal with higher costs because of cannabis, you know, issues in regards to insurance and IT costs and protecting ourselves. But this is a team that's made sure we can overcome that in other ways.

Speaker Change: A lot of things would change within Tilray if something happened in the U.S. We're excited about the opportunities in Germany in regards to even, you know, the change in selling more and more infused drinks in the U.S. could change dramatically.

Erwin Simon: could change dramatically. We've had to deal with, you know, the higher excise tax in Canada; we've had to deal with higher costs because of cannabis, you know, issues in regards to insurance and IT costs and protecting ourselves. But this is a team that's made sure we can overcome that in other ways. So one of the things as companies look today is leverage. And as we sit today with 1.7 times leverage and that we're able to pay $300 million off, you know, of our subordinate debt last year between our cash, our cash flow, and just, you know, using equity is something to be very, very proud of.

Speaker Change: We've had to deal with, you know, the higher excise tax in Canada. We've had to deal with higher costs because of cannabis.

Speaker Change: You know, issues in regards to insurance and IT costs and protecting yourself, but this is a team that's made sure we can overcome that in other ways. You know, one of the things, as companies look today, is leverage.

Irwin David Simon: You know, one of the things companies look at today is leverage. And as we sit today with 1.7 times leverage and that we're able to pay $300 million off of our subordinate debt last year, between our cash, our cash flow, and just, you know, using equity is something to be very, very proud of. So over the last five years, you know, we have built something that's pretty exciting, a lifestyle company that's focused on cannabis, which is cannibalizing alcohol, of course.

Speaker Change: And as we sit today with 1.7 times leverage.

Speaker Change: [inaudible]

Speaker Change: [inaudible]

Speaker Change: And just, you know, using equity is something to be very, very proud of.

Erwin Simon: So over the last five years, you know, we have built something that's pretty exciting, a lifestyle company that's focused on cannabis, which is capitalizing out the hall of course. We have a real exciting, you know, craft beer business, and we think there's a lot of growth in the craft beer business. We think there's a lot of growth in the beverage business. We think there's a lot of growth in the spirits business and our wellness business. You know, I think Europe is just beginning, and we're well positioned with two facilities: one in Germany, and now for the first time, we can supply the whole market of the Germany facility, where before we only could supply the German government.

Speaker Change: So, over the last five years...

Speaker Change: You know, we have built something that's pretty exciting, a lifestyle company that's focused on cannabis, which is cannibalizing alcohol, of course.

Irwin David Simon: We have a real exciting, you know, craft beer business, and we think there's a lot of growth in the craft beer business. We think there's a lot of growth in the beverage business. We think there's a lot of growth in the spirits business and in our wellness business. You know, I think Europe is just beginning, and we're well positioned with two facilities, one in Germany, and now, for the first time, we can supply the whole market for the German facility, where before we only could supply the German government.

Speaker Change: We have a real exciting craft beer business, and we think there's a lot of growth in the craft beer business. We think there's a lot of growth in the beverage business.

Speaker Change: We think there's a lot of growth in the spirits business.

Speaker Change: and our wellness business.

Speaker Change: You know, I think Europe is just beginning, and we're well-positioned with two facilities—one in Germany and now, for the first time, we can supply the whole market of the German facility, where before we only could supply the German government. We have an incredible facility that's working with our Canadian facility in regards to growth.

Irwin David Simon: We have an incredible facility that's working with our Canadian facility in regards to growth. And, you know, with that, you're going to see a lot of opportunities where there are going to be growth in a lot of other countries within Europe.

Erwin Simon: We have an incredible facility that's working with our Canadian facility in regards to growth. And you know, with that, you're going to see a lot of opportunities where there's going to be growing a lot of other countries within Europe. You heard me talk about genetics and genetics in regards to us looking at our genetics and bank of genetics and equality. The thing is, the cannabis user today is becoming more and more educated about the potency of genetics and what they're using. The cannabis consumer today is just not the Gen Z and Millennials. It's an older generation that's looking at cannabis for paid for sleep, for anxiety, cancer patients, in treating epilepsy and other things.

Speaker Change: And, you know, with that, you're going to see a lot of opportunities where there's going to be growth in a lot of other countries within Europe . You heard me talk about genetics.

Irwin David Simon: You heard me talk about genetics and regard to us looking at our genetics and bank of genetics and equality. The thing is, the cannabis user today is becoming more and more educated about the potency, the genetics, and what they're using. The cannabis consumer today is not just Gen Z and millennials. It's an older generation that's looking at cannabis for pain, for sleep, for anxiety, cancer patients, in treating epilepsy, and other things. So cannabis is just not, you know, a relaxation or a product to get high on.

Speaker Change: in regards to us looking at our genetics and bank of genetics and equality. The thing is, the cannabis user today is becoming more and more educated about the potency of the genetics.

Speaker Change: and what they're using. The cannabis consumer today is just not the Gen Z and millennials.

Speaker Change: It's an older generation that's looking at cannabis for pain, for sleep, for anxiety, cancer patients, in treating epilepsy and other things.

Erwin Simon: So cannabis is just not, you know, a relaxation or a product to get client. It's a product for a lot of medical reasons; it's a product for a lot of relaxation. And as we talk about bringing people together for, you know, an exciting time. Til Ray will continue to evolve.

Irwin David Simon: It's a product for a lot of medical reasons. It's a product for a lot of relaxation. And as we talk about bringing people together through these exciting times, Tilray will continue to evolve into a lifestyle company. And as we look at growing this business, and I'm sure what's going to happen in the US, as we look at other categories and what we should expand into, as we go through our strategic plans, we've identified what that lifestyle is, what that lifestyle, you know, opportunity for us to bring within the Tilray brands.

Speaker Change: Cannabis is just not, you know, a relaxation or a product to get high on, it's a product for a lot of medical reasons, it's a product for a lot of relaxation, and as we talk about bringing people together through, you know, in exciting times. Tilray will continue to evolve.

Erwin Simon: to a lifestyle company and as we look at growing this business and not sure what's going to happen in the US as we look at other categories and what we should expand into as we go through a strategic plan, we've identified what is that lifestyle, what is that lifestyle, you know, opportunity for us to bring within the Tilray brand. As I said before, over 40 brands within this company, and that is since 2019, we produce over 90% of our products. We have over 2,500 dedicated employees that are really dedicated and very lucky to work with this team.

Speaker Change: into a lifestyle company and as we look at growing this business and I'm sure what's going to happen in the U.S.

Speaker Change: As we look at other categories and what we should expand into as we go through our strategic plans, we've identified what is that lifestyle, what is that lifestyle, you know,

Speaker Change: opportunity for us to bring within the Tilray brands. As you said, as I said before, over 40 brands within this company and that is since 2019. We produce over 90% of our products. We have over 2,500 dedicated employees.

Irwin David Simon: As you said, as I said before, over 40 brands within this company, and that is since 2019. We produce over 90% of our products. We have over 2,500 dedicated employees that are really dedicated and very lucky to work with this team. We have a great board of governance that is focused on our ESG, focused on good governance.

Erwin Simon: We have a great board of governance that is focused on our ESG, focused on good governance, and last but not least, I want to thank every shareholder out there for being loyal shareholders and being patient with us.

Speaker Change: that are really dedicated and very lucky to work with this team. We have a great board of governance that is focused on our ESG, focused on good governance. And last but not least, I want to thank every shareholder out there for being loyal shareholders and being patient with us.

Irwin David Simon: And last but not least, I want to thank every shareholder out there for being loyal shareholders and being patient with us. With that, enjoy the rest of your summer. Thank you very much for joining us and enjoying one of our great products. Thank you. Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day.

Operator: With that, enjoy the rest of your summer. Thank you very much for joining us and enjoy one of our great products. Thank you.

Speaker Change: With that, enjoy the rest of your summer. Thank you very much for joining us and enjoy one of our great products. Thank you.

Operator: Do conclude today's telecom for to me. Just connect your line after this time and have a wonderful day. We thank you for your participation.

Speaker Change: Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.