Q3 2026 Tilray Inc Earnings Call

April 1, 2026

Speaker #1: Thank you for joining today's conference call to discuss Tilray Brands' financial results for the third quarter of fiscal year 2026, ended February 28, 2026.

Speaker #1: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session for analysts conducted via audio.

Speaker #1: I'll now turn the call over to Ms. Berrin Noorata, Tilray Brands' Chief Communications and Corporate Affairs Officer. Thank you. You may now begin.

Speaker #2: Thank you, Operator, and good morning, everyone. By now, you should have access to the earnings press release, which is available from the Investors' section of the Tilray Brands website at tilray.com and has been filed with the SEC and OSB.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: These statements are based on our current expectations and beliefs and involve known and unknown risks and uncertainties, which may prove to be incorrect. Actual results could differ materially from those described in these forward-looking statements.

Speaker #2: 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 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 the third quarter of fiscal year 2026.

Speaker #2: And now, I'd like to turn the call over to Tilray Brands Chairman and CEO, Irwin Simon.

Speaker #3: Thank you, Berrin, and good morning, everyone. It's been an exciting year at Tilray Brands. We delivered a record quarter with continued international expansion across our platforms.

Speaker #3: I also want to briefly highlight our BrewDog acquisition. You have good news. You go to the tallest building in Sremen, and don't wait. This transaction positions Tilray at approximately $1.2 billion global revenue company on an annualized basis and meaningfully strengthens our long-term growth profile.

Speaker #3: I've done over 100 acquisitions in my life, and I've never received more calls, congratulations, and a brand with more awareness on a global basis.

Speaker #3: Which helps Tilray to be at the forefront around the world. Since 2019, we have transformed the company from a Canadian cannabis business with approximately $50 million in revenue to a global lifestyle consumer products company approaching over $1 billion in revenue on an annualized basis, providing the strength and effectiveness of our strategy and our execution going forward.

Speaker #3: We are building a diversified global platform grounded in a long-term vision of bringing people together through meaningful connection, with a strong team and clear priorities.

Speaker #3: We remain confident in our path forward. Today, Tilray leads its global platform as the number one cannabis company in Canada by revenue, the fourth largest craft grower in the U.S., a global leader in medical cannabis, and a wellness leader in North America.

Speaker #3: And now, with BrewDog, the number one craft grower in the UK, transforming this business has not been easy. We operate in highly regulated environments globally, face cannabis regulatory reform in the US, and navigate constraints across international markets.

Speaker #3: At the same time, we've strengthened our global brand portfolio, scaled and optimized our cultivation capabilities, and our brewing capabilities. We've built a $500 million beverage platform within a long-established category, and established a meaningful wellness strategy.

Speaker #3: This global progress reflects both the pace of our execution, as well as the strength of our strategic foundation and the teams that we have in place.

Speaker #3: Yes, there have been challenges along the way, particularly with integration, and there will continue to be challenges. This takes time. But today, we see the pieces coming together in a way that few businesses can replicate, and we're building something truly differentiated.

Speaker #3: And our Q3 results reflect this. In the third quarter, and consecutively from Q2 to Q3, we delivered record results with net revenue reaching $207 million, reflecting 11% organic growth year over year, and gross profit increasing to $55 million, up 6% from the prior year.

Speaker #3: Despite ongoing industry and macroeconomic headwinds, we also maintained a strong financial position, ending the quarter with $265 million in cash, restricted cash, and market growth securities, and approximately $3.5 million in net cash, providing the flexibility to invest in growth while maintaining financial discipline.

Speaker #3: Our Q3 results reinforce the momentum we outlined last quarter—improving fundamentals, sharper execution, and increasing leverage from our diversified global platform. Turning first to our cannabis business, we delivered strong results this quarter across our global platform, with continuous momentum in both Canada and our international markets.

Speaker #3: As the regulatory environment evolves, particularly in the US, we're well-positioned with scale, infrastructure, and experience to expand this business globally. We've built this platform deliberately, and we're ready to execute when opportunities develop.

Speaker #3: Q3 was the largest quarter ever for international cannabis growth. We generated $24.1 million in net sales with 73% year-over-year growth and 20% substantial growth.

Speaker #3: This was driven by exceptional sales volume growth. Medical cannabis flower volume was up 100% year over year, and medical cannabis oil volume was up 90% year over year.

Speaker #3: Tilray holds the top position by a significant margin in the medical cannabis oil category across leading international medical markets, while we leverage our expertise and reputation in the doctor-led distribution channels.

Speaker #3: Germany, our largest international market, grew 43% year over year and is an important achievement for our international team. As they continue to navigate evolving regulatory frameworks and significant price compression across global markets, globally, we overcame $7 million in price pressure that flows directly to the bottom line.

Speaker #3: Turning to our medical distribution business in Europe, I'm extremely proud to say that CC Pharma was recognized as one of the top 100 innovators.

Speaker #3: Leaders and trusted partners in the European pharmaceutical market, congratulations to the team on a great accomplishment for continuing to drive our business forward. Our Tilray Pharma business grew 35% year over year to $82 million.

Speaker #3: Making it our highest ever third quarter for sales and profitability. The increase in distribution revenue in the period was driven by portfolio optimization, mixed positive market trends, and increased medical device sales.

Speaker #3: Our recently announced partnership with Alliance Healthcare further strengthens our leadership in Germany, expanding our reach to more than 16,000 pharmacies, up from 13,000 previously.

Speaker #3: In addition, we entered into a partnership with Smartway, a leading UK-based pharmaceutical distribution company, to expand the availability of our pharmaceutical products across the United Kingdom.

Speaker #3: Together, these partnerships speak to the strength of Tilray Pharma as a valuable strategic asset within our global medical cannabis platform. Looking ahead, our distribution business is laser-focused and driving future operational efficiencies via automation, centralized sourcing, and harmonized packaging and labeling that set us up with critical integration for our cannabis business.

Speaker #3: Turning to Canada, our Canadian cannabis business continues to deliver strong results. We reinforced our position as Canada's leading cannabis company by revenue on a trailing 12-month basis, and our adult-use medical grew 8% year over year to almost $40 million of net revenue.

Speaker #3: This performance speaks to the strength of our portfolio and the resilience of our commercial execution, and the team that we have in place today.

Speaker #3: From a market share perspective, Tilray became the number one market share position in cannabis-derived flower, pre-rolls, beverages, oils, and chocolate edibles. Importantly, this leadership reflects the strength of our tiered brand strategy in dried flower. Tilray is the only licensed producer with three brands in the top 10.

Speaker #3: In pre-rolls, we hold two of the top three brands, and in beverages, we deliver the top two brands in the market during Q3.

Speaker #3: This approach diversifies our reliance across brands and facilities, while allowing us to serve the steep consumer segment with clearly differentiated offerings. From a brand portfolio perspective, Broken Coast delivered its strongest quarter in the past two fiscal years, growing 16% year over year.

Speaker #3: We also continue to innovate with our core categories, launching Good Supply, Where's My Bike, and Blueberry Donuts cannabis strains during the quarter. Both of which finished the quarter among the top 10 dried flower SKUs in British Columbia, and we plan to scale them nationally and introduce additional genetics in Q4 and into fiscal 2027.

Speaker #3: Finally, we also introduced a new brand, Portal, featuring vapes and infused pre-rolls late in the quarter. While still early, we're beginning the national rollout. We expect Portal to build upon our momentum and drive meaningful growth in these key categories going forward.

Speaker #3: And we're also making clear progress in high-growth, price-sensitive categories. Such as vapes—Q3 marked our strongest vape quarter in the past two fiscal years, reestablishing Tilray as a top 10 player in the category. Importantly, this performance reflects our disciplined approach to revenue generation. We intentionally scaled back our vape volume until we achieved the right cost structure and returned the category to profitability.

Speaker #3: After seven years of federal cannabis legalization in Canada, we are modernizing the store. We built a strong foundation of Canadian cannabis, and we're now advancing to the next phase—transforming our cultivation platform through AI-driven growing systems.

Speaker #3: Next-generation genetics and improved yields are a plus for our operations. We're executing a comprehensive end-to-end upgrade of our cultivation capabilities, and while this transition is still underway, we're already seeing progress as we move toward more consistent, higher quality, and more efficient production.

Speaker #3: This evolution is designed to enhance margins, strengthen product quality, and position us ahead of the curve as the industry continues to mature. In the US, we continue to monitor the rescheduling of medical cannabis and are actively engaged with legislators and regulators.

Speaker #3: We're also evaluating our participation in the Senate for Medicare and Medicaid Innovation Pilot Programs. Tilray is well-positioned to contribute to the pilot program with its proven track record of offering at scale in a highly regulated medical cannabis market globally.

Speaker #3: Moving to our beverage business, this quarter and shortly after the quarter end, we successfully executed against our key strategic priority to expand our global beverage platform through a strategic licensing partnership with Carlsberg and the targeted acquisition of BrewDog, strengthening our portfolio, improving utilization, and advancing our global growth strategy.

Speaker #3: We are honored and proud to begin our partnership with Carlsberg, one of the world's leading brewers, starting in January of 2027. Through this partnership, we'll produce, market, and distribute a portfolio of leading Carlsberg brands across the US.

Speaker #3: Leveraging our brewing network, commercial capabilities, and our national distribution footprint, we expect this to drive immediate scale; accretive to revenue, support increased volumes, expand shelf presence, and provide a more favorable product base.

Speaker #3: Following the Carlsberg announcement and post-quarter close, we acquired craft beer icon BrewDog, creating an approximately $500 million global craft beverage platform on a pro forma basis.

Speaker #3: We acquired BrewDog's global IP, Strategic Brewing, and BrewPulse assets across the UK, Ireland, Australia, and the US—creating immediate scale, strengthening our infrastructure, and broadening our international reach.

Speaker #3: This positions us to extend our reach into previously untapped markets, such as the Middle East and Asia-Pacific, and take our U.S. brands globally by strengthening their portfolio with a highly recognized craft brand.

Speaker #3: We acquired the platform for approximately £40 million, which reflects a fraction of its replacement cost. This strategic acquisition has significantly accelerated the implementation of our global strategy by several years.

Speaker #3: Now, turning to the results of our beverage business, we're making disciplined progress on the integration of our beverage acquisitions, while staying focused on the work still ahead to generate growth and profitability.

Speaker #3: As expected, beverage net revenue of $43 million in Q3 was impacted by margin-focused actions as well as industry-wide softness. These margin-focused initiatives are deliberate and necessary to reset the business for profitable long-term growth.

Operator: Thank you for joining today's conference call to discuss Tilray Brands' financial results for Q3 of fiscal year 2026 ended 28 February 2026. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session for analysts conducted via audio. I'll now turn the call over to Ms. Berrin Noorata, Tilray Brands' Chief of Communications and Corporate Affairs Officer. Thank you. You may now begin.

Speaker #3: What's important is that the underlying fundamentals are improving. With Project 420, we rationalized the portfolio, removing non-strategic SKUs to improve velocity, margin, and execution.

Speaker #3: We continue to focus on cost discipline. Delivered over $6.2 million in annualized savings during the quarter. Completing our target synergy program of $33 million, enabling us to achieve approximately 32% gross margin.

Berrin Noorata: Thank you, operator, and good morning, everyone. By now, you should have access to the earnings press release, which is available on the investor section of the Tilray Brands website at tilray.com and has been filed with the SEC and OSC. 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. In addition, we will be making numerous forward-looking statements during our remarks and in response to your questions.

Speaker #3: Despite significant input costs and headwinds, without these decisive actions taken, margin would have been more significantly impacted. Operationally, we're building a more focused, higher-performing portfolio.

Speaker #3: We're prioritizing fewer, bigger, better innovations aligned with consumer demand. Products like Publix are expanding distribution, and our ready-to-drink cocktails on the West Coast are delivering margin-accretive growth.

Speaker #3: We're also starting to see sequential improvement across our core brands, including Sweetwater, DocTop, Blue Point, Revolver, and Modoc. Looking ahead, we expect continual momentum, improving fundamentals, and a stronger path to growth.

Berrin Noorata: These statements are based on our current expectations and beliefs and involve known and unknown risks and uncertainties, which may prove to be incorrect. Actual results could differ materially from these described in those 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 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 Q3 of fiscal year 2026. Now I'd like to turn the call over to Tilray Brands Chairman and CEO, Irwin Simon.

Speaker #3: Within the spirits category, in Q3 we focused on enhancing our commercial plan. Wholesale depletions were 160 basis points above the national spirits trends. Demonstrating strong consumer demand and awareness, our ongoing efforts remain focused on expanding product distribution to additional states and beyond.

Speaker #3: Regarding our U.S. hemp-derived THC beverage business, we continue to offer Fizzy Gin, Happy Flower hemp-derived THC beverages in 5-milligram and 10-milligram formats through nationwide retail partnerships, including major wine, liquor, and grocery outlets across the country.

Speaker #3: While federal regulatory changes may affect HGV9 products after November 2026, we continue to stay engaged with legislators and regulators who are closely monitoring developments in Washington.

Irwin Simon: Thank you, Berrin Noorata, and good morning, everyone. It's been an exciting year at Tilray Brands. We delivered a record quarter with continued international expansion across our platforms. I also wanna briefly highlight our BrewDog acquisition. When you have good news, you go to the tallest building and scream it, and don't wait. This transaction positions Tilray at approximately $1.2 billion global revenue company on an annualized basis and meaningfully strengthens our long-term growth profile. I've done over 100 acquisitions in my life and I've never received more calls, congratulations, and a brand with more awareness on a global basis, which helps Tilray to be at the forefront around the world.

Speaker #3: Turning to Wellness, net revenue increased by 16% to $16.4 million in the quarter. Driven by our focus on value-added innovation across Supersedes, better-for-you breakfasts and Snackies, and continued momentum in the Highball energy drink.

Speaker #3: We'll continue to focus on distribution expansion, as well as our department promotional improvements, while continuing to strengthen the profitability profile of the wellness business. With that, I will now turn it over to Carl.

Speaker #3: Carl, thank you, Berrin. Before I begin, please note that we present our financials in accordance with US GAAP and in US dollars. Throughout our discussions, we will be referring to both GAAP and non-GAAP adjusted results, and we encourage you to review the reconciliation contained within the press release of our reported results under GAAP.

Irwin Simon: Since 2019, we have transformed the company from a Canadian cannabis business with approximately $50 million in revenue to a global lifestyle consumer products company approaching over $1 billion in revenue on an annualized basis, providing the strength and effectiveness of our strategy and our execution going forward. We are building a diversified global platform grounded in a long-term vision of bringing people together through meaningful connection. With a strong team and clear priorities, we remain confident in our path forward. Today, Tilray leads its global platform as the number 1 cannabis company in Canada by revenue, the fourth largest craft brewer in the US, a global leader in medical cannabis, and a wellness leader in North America. Now with BrewDog, the number 1 craft brewer in the UK. Transforming this business has not been easy.

Speaker #3: With the corresponding non-CAP measures. This quarter, we achieved record third-quarter revenue and strong year-over-year improvements in gross profit and adjusted EBITDA. And we are reaffirming our adjusted EBITDA guidance for fiscal 2026.

Speaker #3: Net revenue was a third-quarter record of $206.7 million, an 11% increase year over year. Revenue growth was across multiple businesses. Cannabis net revenue increased 19% year over year to $64.8 million during the quarter.

Speaker #3: Driven by strong growth in gross international cannabis revenue of 73%, and 8% in net Canadian adult use and medical cannabis. The exceptional revenue performance of our international cannabis business solidifies our point from the last conference call that Q4 2025 and Q2 and Q3 of this year's performance are more indicative of what investor expectations should be going forward.

Irwin Simon: We operate in highly regulated environments globally, face cannabis regulatory reform in the US, and navigate constraints across international markets. At the same time, we've strengthened our global brand portfolio, scaled and optimized our cultivation capabilities and our brewing capabilities, built a half a billion dollar beverage platform within a long-established category, and established a meaningful wellness strategy. This level of progress reflects both the pace of our execution and the strength of our strategic foundation, and the teams that we have in place. Yes, there have been challenges along the way, particularly with integration, and there will continue to be challenges. This takes time, but today we see the pieces coming together in the way that few businesses can replicate, and we're building something truly differentiated. Our Q3 results reflect this.

Speaker #3: Growth in international cannabis accelerated based on an enhanced supply chain, increased patient adoption in certain markets, and our targeted expansion into emerging markets. This quarter, we continue to strategically reallocate supply from the Canadian wholesale market to higher-margin international markets, and we'll maintain this approach as those markets continue to scale.

Speaker #3: Year-to-date, we allocated approximately six metric tons of product from Canada's international markets, which continues to supplement our ever-increasing cultivation in Canada. Distribution net revenue increased 35% to $83 million, based on a focus on higher-velocity and margin SKUs.

Speaker #3: And positive impacts from foreign exchange rates. We expect distribution to continue to be a strong contributor as it complements and scales alongside our international business.

Irwin Simon: In Q3 and consecutively from Q2 to Q3, we delivered record results with net revenue reaching $207 million, reflecting 11% organic growth year-over-year and gross profit increasing to $55 million, up 6% from the prior year, despite ongoing industry and macroeconomic headwinds. We also maintained a strong financial position, ending the quarter with $265 million in cash, restricted cash, and marketable securities, and approximately $3.5 million in net cash, providing the flexibility to invest in growth while maintaining financial discipline. Our Q3 results reinforce the momentum we outlined last quarter, improving fundamentals, sharper execution, and increasing leverage from our diversified global platform. Turning first to our cannabis business. We delivered strong results this quarter across our global platform with continuous momentum in both Canada and our international markets.

Speaker #3: Beverage net revenue for the quarter was $42.6 million, compared to $55.9 million in the prior year. However, the results do not fully reflect the operational progress we have made in the segment.

Speaker #3: During the quarter, we successfully completed project 420, closing and delivering $33 million in annualized cost savings, which improved the underlying cost structure of the business.

Speaker #3: Those cost savings are not always visible in our margin results, as they've been largely offset by almost $2.9 million in higher aluminum costs year-to-date, and lower overhead utilization rates.

Speaker #3: Getting our cost structure right in beverage has been, and will continue to be, a key focus area for us. Looking ahead, Carlsberg represents a compelling opportunity for us through a partnership with one of the largest global brewers.

Speaker #3: The relationship enables us to improve overhead utilization without deploying capital to acquire a brand, while creating meaningful operational leverage. It also provides multiple avenues to strengthen the platform, including increased scale with key global raw material suppliers, and the ability to collaborate and learn from one another on innovation and best practices to support long-term growth.

Irwin Simon: As the regulatory environment evolves, particularly in the US, we're well-positioned with scaled infrastructure and experience to expand this business globally. We've built this platform deliberately, and we're ready to execute as opportunities develop. Q3 was the largest quarter ever for international cannabis growth. We generated $24.1 million in net sales, with 73% year-over-year growth and 20% sequential growth. This was driven by exceptional sales volume growth. Medical cannabis flower volume was up 100% year over year, and medical cannabis oil volume was up 90% year over year. Tilray holds top position by a significant margin in the medical cannabis oil category across leading international medical markets, while we leverage our expertise and reputation in the doctor-led distribution channels.

Speaker #3: BrewDog represents an equally compelling opportunity to strengthen our beverage business in the future, but for different reasons, as it is more about an international opportunity.

Speaker #3: The BrewDog transaction was unique because it represented a chance for the business to start with a clean piece of paper and hand-select the best and most important elements of a strong business that was placed in administration for reasons other than its core business.

Speaker #3: After this transaction, Tilray strengthens BrewDog. BrewDog strengthens Tilray. Lastly, wellness net revenue in the quarter was $16.4 million, growing 16% year over year, based on our focus on high-value innovations, the continued strength of Highball, and growth in the ingredient sales channel.

Speaker #3: In terms of contribution, cannabis accounted for 31% of revenue, beverage revenue was 21%, distribution was 40%, and wellness was 8%. Moving on to profitability, we achieved a record third-quarter gross profit of $55 million.

Irwin Simon: Germany, our largest international market, grew 43% year over year, an important achievement for our international team as they continue to navigate evolving regulatory framework and significant price compression across global markets. Notably, we overcame $7 million in price pressure that flows directly to the bottom line. Turning to our medical distribution business in Europe. I'm extremely proud to say that CC Pharma was recognized as one of the top 100 innovators, leaders, and trusted partners in the European pharmaceutical market. Congratulations to the team on a great accomplishment for continuously driving our business forward. Our Tilray Pharma business grew 35% year over year to $83 million, making it our highest ever Q3 for sales and profitability. The increase in distribution revenue in the period was driven by portfolio optimization, mix, positive market trends, and increased medical device sales.

Speaker #3: A 6% year-over-year increase. Gross margin was 27%, compared to 28% last year. By segment, cannabis gross margin was 40% for the quarter, compared to 41% year over year, and remained largely flat, primarily due to price compression in international markets.

Speaker #3: This reduced international cannabis revenue by approximately $7 million, despite higher gram equivalents sold. Distribution gross margin increased to 12% this quarter, compared to 9% year over year, due to favorable changes in product mix and increases in average selling price during the quarter.

Speaker #3: Beverage gross margin was 32% this quarter, compared to 36% in the prior year quarter. This change was a function of lower overhead absorption rates and higher input costs, including the previously discussed aluminum costs.

Irwin Simon: Our recently announced partnership with Alliance Healthcare further strengthens our leadership in Germany, expanding our reach to more than 16,000 pharmacies, up from 13,000 previously. In addition, we entered into a partnership with Smartway, a leading UK-based pharmaceutical distribution company, to expand the availability of our pharmaceutical products across the United Kingdom. Together, these partnerships speak to the strength of Tilray Pharma as a valuable strategic asset within our global medical cannabis platform. Looking ahead, our distribution business is laser-focused on driving future operational efficiencies via automation, centralized sourcing, harmonized packaging, and labeling that sets us up with vertical integration for our cannabis business. Turning to Canada, our Canadian cannabis business continues to deliver strong results.

Speaker #3: Wellness gross margin increased to 33% during the quarter, from 32% year over year, as strategic price increases largely offset the unfavorable change in sales mix.

Speaker #3: Net loss was $25.2 million, a $768.3 million improvement compared to a $793.5 million loss year over year. Or a net loss per share of 24 cents, compared to a net loss per share of $8.60.

Speaker #3: The improvement in both net loss and net loss per share is primarily driven by the one-time non-cash impairment we reported in the prior year quarter.

Speaker #3: Adjusted net income and adjusted net income per share both excluded the non-cash impacts of amortization, stock-based compensation, impairments, and non-recurring charges. Improved $5.3 million year over year, to $2.4 million.

Speaker #3: And $0.02 per share, compared to an adjusted net loss of $2.9 million and an adjusted net loss per share of $0.03. Our adjusted cash operating income for the quarter was $4.1 million.

Irwin Simon: We reinforced our position as Canada's leading cannabis company by revenue on a trailing twelve-month basis, and our adult-use medical grew 8% year over year to almost $40 million of net revenue. This performance speaks to the strength of our portfolio and the resilience of our commercial execution and the team that we have in place today. From a market share perspective, Tilray maintained the number one market share position in cannabis dried flower, pre-rolls, beverages, oils, and chocolate edibles. Importantly, this leadership reflects the strength of our tiered brand strategy. In dried flower, Tilray is the only licensed producer with three brands in the top 10. In pre-rolls, we hold two of the top three brands. In beverages, we deliver the top two brands in the market during Q3.

Speaker #3: Compared to a loss of $3.1 million last year. Adjusted EBITDA for the quarter increased 19% to $10.7 million, compared to $9 million last year, reflecting continued execution against our strategic plan, particularly from our international cannabis business.

Speaker #3: Cash flow used in operations was $21.9 million, compared to $5.8 million last year. The increase in cash used in operations was largely related to inventory ahead of our seasonally stronger fourth quarter, and accounts receivable for our growing international cannabis business.

Speaker #3: Excluding the impact of working capital, cash generated from operations was $3.4 million, compared to cash used in operations of $9.3 million in the prior year.

Speaker #3: We ended the quarter with cash, restricted cash, and marketable securities of $264.8 million, and a net cash position of $3.5 million, which improved $40.2 million from a net position year over year.

Irwin Simon: This approach diversifies our reliance across brands and facilities while allowing us to serve distinct consumer segments with clearly differentiated offerings. From a brand portfolio perspective, Broken Coast delivered its strongest quarter in the past two fiscal years, growing 16% year over year. We also continue to innovate with our core categories, launching Good Supply, Where's My Bike, and Blueberry Donuts cannabis strains during the quarter, both of which finished the quarter among the top 10 dried flower SKUs in British Columbia. We plan to scale them nationally and introduce additional genetics in Q4 and into fiscal 2027. Finally, we also introduced a new brand, Portal, featuring vapes, infused pre-rolls, late in the quarter. While still early, we're beginning the national rollout. We expect the launch of Portal to build upon our momentum and drive meaningful growth in these key categories going forward.

Speaker #3: As we have recently demonstrated, our strong liquidity position has enabled us to act decisively in a dynamic environment and provide continuing flexibilities to pursue strategic opportunities.

Speaker #3: We remain focused on managing and strengthening our balance sheet throughout the remainder of the year and beyond. Lastly, we are reaffirming our fiscal 2026 adjusted EBITDA guidance of $62 to $72 million.

Speaker #3: Operator, we can now open the call for Q&A.

Speaker #2: Thank you. We'll now be conducting a question-and-answer session. If you'd like to ask a question at this time, please start one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue.

Speaker #2: You may press two if you'd like to draw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys.

Speaker #2: For one moment, please withhold questions. Thank you, and the first question is from the line of Camille Rajawala with Jefferies. Please repeat your question.

Irwin Simon: We're also making clear progress in high-growth, price-sensitive categories, such as vapes. Q3 marked our strongest vape quarter in the past two fiscal years, reestablishing Tilray as a top 10 player in the category. Importantly, this performance reflects our disciplined approach to revenue generation. We intentionally scaled back our vapes volume until we achieved the right cost structure and returned the category to profitability. After seven years of federal cannabis legalization in Canada, we are modernizing the store. We built a strong foundation on Canadian cannabis, and we're now advancing to the next phase, transforming our cultivation platform through AI-driven growing systems, next-generation genetics, and improved yields across our operations. We're executing a comprehensive end-to-end upgrade of our cultivation capabilities. While this transition is still underway, we're already seeing progress as we move towards more consistent, higher quality, and more efficient production.

Speaker #3: Good morning. Operator, I don't think anybody's answering that. You guys hear me now? Yep, great. One of the first things we ask about is supporting the international business, and the context of cannabis looks like it's also stabilizing, so you have a lot of growth and great margins in one.

Speaker #3: But on the other hand, you've got stabilization in younger markets, so how do you manage the balance between those two?

Speaker #4: We know what's allowed in. You broke up the last piece. The cannibalization?

Speaker #3: Not cannibalization, but just managing the balance between supporting your international business and stabilization in Canada.

Speaker #4: So in your talk to cannabis right now, of course, right?

Speaker #3: Yeah, cannabis. I'm sorry. This is about cannabis.

Speaker #4: Yeah, yeah. Yeah, okay. I think the big thing is, number one, we are bringing on, or based on, growth facility in Gatineau, which increases our—we're going from 137 metric tons of growth to almost 200 metric tons of growth, and also we're bringing on outdoor growth in Ty Gilmore.

Irwin Simon: This evolution is designed to enhance margins, strengthen product quality, and position us ahead of the curve as the industry continues to mature. In the US, we continue to monitor the rescheduling of medical cannabis and are actively engaged with legislators and regulators. We're also evaluating our participation in the Center for Medicare and Medicaid Innovation pilot programs. Tilray is well-positioned to contribute to the pilot program with its proven track record of operating at a scale in a highly regulated medical cannabis globally. Moving to our beverage business, this quarter and shortly after the quarter end, we successfully executed against our key strategic priority to expand our global beverage platform through a strategic licensing partnership with Carlsberg and the targeted acquisition of BrewDog, strengthening our portfolio, improving utilization, and advancing our global growth strategy.

Speaker #4: So, number one, we now have plenty of growth. And this has been a tougher year on yields, and that's sort of what you heard me say.

Speaker #4: As we're overhauling things, modernizing things, we're seeing better yields in the Canadian market. On the other hand, the good news is our plant in the facility in Portugal and our Germany facility is probably producing some of the best yields and some of the best flowers that we've ever had.

Speaker #4: So, number one, the most important thing is we have plenty of supply to supply the European market. The other thing, and we're seeing price compression, as I talked about, with the growth that we're having with yields, we'll be able to support that.

Speaker #4: And I think the most important thing in Europe is, this year, consistent supply. We do not have consistent supply—number one. Number two, one of the things in Europe, you have to wait for permits.

Irwin Simon: We are honored and proud to begin our partnership with Carlsberg, one of the world's leading brewers, starting in January 2027. Through this partnership, we'll produce, market, and distribute a portfolio of leading Carlsberg brands across the US, leveraging our brewing network, commercial capabilities, and our national distribution footprint. We expect this to drive immediate scale, accretive to revenue, supported by increased volumes, expand shelf presence, and a more favorable product mix. Following the Carlsberg announcement and post quarter close, we acquired craft beer icon BrewDog, creating approximately $500 million global craft beverage platform on a pro forma basis. We acquired BrewDog's global IP, strategic brewery, and brewpub assets across the UK, Ireland, Australia, and the US, creating immediate scale, strengthening our infrastructure, and broadening our international reach.

Speaker #4: And that has slowed down beginning our sales out there, which is a real big improvement in the Portuguese government. I want to thank them.

Speaker #4: They've modernized this now, where sometimes it would take a month. Now, you can see three days now. So being able to get product to our customers is something very important.

Speaker #4: And then with that, we have perfected our grow and our yields that will help our markets continuously, and deal with the price compression. And I think the important thing is, from a Tilray standpoint, with our Tilray products, with our innovation, with our brands, the big opportunity for us is we've got consistent product.

Speaker #4: We're going to get the volumes. And how do we deal with price compression? If price compression consistently happens, we have supply. I think we have more supply than anybody there.

Speaker #4: So it's something that we're aware of. We dealt with it in Canada. We've had $250 million of price compression over five years in Canada and dealt with that.

Speaker #4: So, not that I want to see that in Europe, but it's something we can deal with either now having supply, now having good yields, now having good growth there to do it both in Canada and Europe.

Irwin Simon: This positions us to extend our reach into previously untapped markets such as the Middle East, Asia Pacific, and take our US brands globally while strengthening our portfolio with a highly recognized craft brand. We acquired this platform for approximately GBP 40 million, which reflects a fraction of its replacement cost. This strategic acquisition has significantly accelerated the implementation of our global strategy by several years. Now turning to the results of our beverage business. We're making disciplined progress on the integration of our beverage acquisitions while staying focused on the work still ahead to generate growth and profitability. As expected, beverage net revenue of $43 million in Q3 was impacted by margin-focused actions as well as industry-wide softness. These margins-focused initiatives are deliberate and necessary to reset the business for profitable long-term growth. What's important is that the underlying fundamentals are improving.

Speaker #4: And there's no one else out there that has the supply that we have, both from the Canadian market today and the European market.

Speaker #3: Got it. Thank you. And on project 420, I guess it's coming sort of towards the end or at completion. Is there a new project, or is it more ongoing business as usual as we look forward from a productivity standpoint?

Speaker #4: This is a good question. I mean, there is absolutely a project ongoing. We never just say, "Okay, we made $33.5 million cost savings. Stop." Now with Blue Dog and Mix, and bring that together.

Speaker #4: So, internationally and domestically in regards to buying hops, cans, labels, etc. And it's definitely something we can find out. And remember, we've gone from a $200-plus million beer business almost to a half a billion in size.

Speaker #4: So from sales, that's going to help us. And as we look at rationalization, consistency on our plants, we look at rationalization on distributors—just, how do we bring all the organizations together?

Irwin Simon: Through Project 420, we rationalize the portfolio, removing non-strategic SKUs to improve velocity, margin, and execution. We continue to focus on cost discipline, delivered over $6.2 million in annualized savings during the quarter, completing our target synergy program of $33 million, enabling us to achieve approximately 32% gross margins despite significant input costs and headwinds. Without these decisive actions taken, margin would have been more significantly impacted. Operationally, we're building a more focused, higher-performing portfolio. We're prioritizing fewer, bigger, better innovations aligned with consumer demand. Products like Pub Light are expanding distribution, and our ready-to-drink cocktails on the West Coast are delivering margin-accretive growth. We're also starting to see sequential improvement across our core brands, including SweetWater, Shock Top, Blue Point, Revolver, and Montauk. Looking ahead, we expect continued momentum, improving fundamentals, and a stronger path to growth.

Speaker #4: Definitely, there will be additional cost savings available to us.

Speaker #3: Okay, got it. Thank you.

Speaker #4: Thank you.

Speaker #2: Our next question is from the line of Rob Moscow with TD Street. Please receive three questions.

Speaker #3: Hey, good morning. This is Victor Miles for Rob Moscow. Thanks for taking the questions. So I just want to ask about international first. International grew 70%.

Speaker #3: Germany grew 43%. What drove this delta? Was it shipment timing or permit delays that from the previous quarter that were fixed this quarter? And in terms of kind of looking at growth going forward, is that 43% growth rate for Germany, is that kind of a good run rate to use in looking at growth for the segment?

Speaker #4: So, number one, there were some products that did not get shipped in the second quarter because of permits. But there are products that did not get shipped in the third quarter because of permits.

Irwin Simon: Within the spirits category, in Q3, we focused on enhancing our commercial plan. Wholesale depletions were 160 basis points above the national spirits trends, demonstrating strong consumer demand and awareness. Our ongoing efforts remain focused on expanding product distribution to additional states and beyond. Regarding our US hemp-derived THC beverage business, we continue to offer Fizzy Jane, Happy Flower hemp-derived THC beverages in 5-milligram and 10-milligram formats through nationwide retail partnerships, including major wine, liquor, and grocery outlets across the country. While federal regulatory changes may affect HDD9 products after November 2026, we continue to stay engaged with legislators and regulators. We're closely monitoring the development in Washington. Turning to wellness, net revenue increased by 16% to $16.4 million in the quarter, driven by our focus on value-added innovation across super seeds, better-for-you breakfast, and snacking, and continued momentum in the HiBall Energy.

Speaker #4: So it eats out. In regards to what was the growth, the growth was based on us having supply and demand. And I'm not sure again, we have a big fourth quarter.

Speaker #4: What is the true run rate there? And the big thing is what I said before. What the market is realizing, what patients and what doctors are realizing, is to say, 'We will have supply.'

Speaker #4: We will have good flower. We'll have lots of innovation. We'll have good oils. And again, we will be price and competitive. So, what is the right growth number?

Speaker #4: I'm not ready to give that yet. But again, there's a big opportunity for us in the international markets—not only in Germany and Poland, the UK, and other markets; additionally, other markets.

Speaker #4: So we're looking at what will happen in Spain, what will happen in France. And so we're really excited. The other thing that we have there with our CC Fund Tiller Farm and some of the stuff that we're doing in the UK, as being vertically integrated, as we sell through our distributor.

Speaker #4: And sell directly through our distributor, through the drug stores. It helps us that way. We're a grower. We've got a brand. And then we have the third part of it, where we have, from a vertically integrated integration, the distribution going to the drug store.

Irwin Simon: We'll continue to focus on distribution expansion, broader assortment, and promotional improvements while continuing to strengthen the profitability profile of wellness business. With that, I will now turn that over to Carl. Carl?

Speaker #4: So, that helps us tremendously, too.

Speaker #2: Got it. Thanks for the clarification. And then my second question is on the beverage segment. So in terms of just rising a little bit in the costs from the Midwest premium related to the tariffs and then additional supply shocks from the Iran conflict, can you offer any color in terms of how hedged you are on your aluminum exposure, and what's the benefit in terms of scale that adding closer to the US portfolio gives toward managing the cost impact?

Carl Merton: Thank you, Irwin. Before I begin, please note that we present our financials in accordance with US GAAP and in US dollars. Throughout our discussions, we will be referring to both GAAP and non-GAAP adjusted results, and we encourage you to review the reconciliation contained within the press release of our reported results under GAAP with the corresponding non-GAAP measures. This quarter, we achieved record Q3 revenue and strong year-over-year improvements in gross profit and adjusted EBITDA, and we are reaffirming our adjusted EBITDA guidance for fiscal 2026. Net revenue was a Q3 record of $206.7 million, an 11% increase year over year. Revenue growth was across multiple businesses.

Speaker #4: So, number, I'm going to let Carl go with the hedge in a second because we are hedging on some things. But listen, adding Carlberg in there with a good-sized business, adding Blue Dog in there, and then being able to buy on global contracts is going to be very, very helpful for us.

Speaker #4: Right now, a lot of our hops for Blue Dog internationally come from Washington State. But we right now, as we put this together and listen, having Carlsberg as one of the largest growers in the world and possibly tied into their contract.

Carl Merton: Cannabis net revenue increased 19% year over year to $64.8 million during the quarter, driven by strong growth in gross international cannabis revenue of 73% and 8% in net Canadian adult-use and medical cannabis. The exceptional revenue performance of our international cannabis business solidifies our point from the last conference call that Q4 2025 and Q2 and Q3 of this year's performance are more indicative of what investor expectations should be going forward. Growth in international cannabis accelerated based on an enhanced supply chain, increased patient adoption in certain markets, and our targeted expansion into emerging markets.

Speaker #4: And we still have leftover, whether they're hops or not, from our API side. So there's lots of opportunities, from a scale, to be buying hops and cans.

Speaker #4: And that's the big one to watch out for, is as aluminum prices have gone up, the growth will hedge us. Listen, the big watch-out there is what happens with fuel.

Speaker #4: And from a standpoint there, is the unknown. But Carl, from where we're hedged out, is to talk about that?

Speaker #3: Yeah, I mean, you answered most of it, but just specifically on the hedge for aluminum, we're clearly hedging 65% to 75% of our buy on a month-to-month basis.

Carl Merton: This quarter, we continued to strategically reallocate supply from the Canadian wholesale market to higher-margin international markets and will maintain this approach as those markets continue to scale. Year-to-date, we allocated approximately 6 metric tons of product from Canada to international markets, which continues to supplement our ever-increasing cultivation in Canada. Distribution net revenue increased 35% to $83 million based on a focus on higher velocity and margin SKUs and positive impacts from foreign exchange rates. We expect distribution to continue to be a strong contributor as it complements and scales alongside our international business. Beverage net revenue for the quarter was $42.6 million compared to $55.9 million in the prior year. However, the results do not fully reflect the operational progress we have made in the segment.

Speaker #3: And we're hedging a year out.

Speaker #2: Got it. Thank you for that color. And just one last question, if I can. In terms of just the distribution gains from the shelf resets that typically happen in the spring, how are those conversations going?

Speaker #2: How is that tracking? Any color you can share there?

Speaker #4: So, going well, I will say this here. We gained and we lost. And I think part of it is here. Where does craft beer category lose some space out there?

Speaker #4: But I think the big thing is this here. Where we didn't, when we bought the Molson's piece—prior to that, when we bought the ABI piece—from a timing standpoint, we lost a lot of SKUs where we had no influence in what part of it.

Speaker #4: So again, it goes against us. Now, we've gained a lot of distribution. And the big thing is, they're just going to gain distribution when they get the product sale.

Carl Merton: During the quarter, we successfully completed Project 420, closing and delivering $33 million in annualized cost savings, which improved the underlying cost structure of the business. Those cost savings are not always visible in our margin results, as they've been largely offset by almost $2.9 million in higher aluminum costs year to date and lower overhead utilization rates. Getting our cost structure right in beverage has been and will continue to be a key focus area for us. Looking ahead, Carlsberg represents a compelling opportunity for us through a partnership with one of the largest global brewers. The relationship enables us to improve overhead utilization without deploying capital to acquire a brand while creating meaningful operational leverage.

Speaker #4: So, plus, plus, we'll probably lose more, but again, it's okay because it was SKUs that were not part of us at the time.

Speaker #4: And the new SKUs, the new products, the new innovation is what we're excited about and what we've gained. And we had some big digs at Walmart.

Speaker #4: We had some big digs at Kroger, Albertsons, and some other ones across Stop & Shop across the board. So all in all, we're happy with what we got.

Speaker #4: And listen, I'd rather the stats get smaller and us be a bigger player in a smaller set than just have a big set out there.

Speaker #4: So, there's a lot of resetting happening within the craft beer industry in regards to the size and the food storage data out there.

Speaker #3: Just to supplement that a little, when we talked about the acquisitions, it was more about the timing of the acquisition, because we bought the brands after the initial discussions on spring resets that had already happened.

Carl Merton: It also provides multiple avenues to strengthen the platform, including increased scale with key global raw material suppliers and the ability to collaborate and learn from one another on innovation and best practices to support long-term growth. BrewDog represents an equally compelling opportunity to strengthen our beverage business in the future, but for different reasons, as it is more about an international opportunity. The BrewDog transaction was unique because it represented a chance for the business to start with a clean piece of paper and hand select the best and most important elements of a strong business that was placed in administration for reasons other than its core business. After this transaction, Tilray strengthens BrewDog strengthens Tilray.

Speaker #4: And we were not the ones in presenting those spring resets. But now, whether it's Molson's, the ABI, and that's where we'll be next year in January as we take on Carlsberg, we'll be out there presenting in February, January, February.

Speaker #4: The next spring sets for Carlsberg.

Speaker #2: Got it. Thanks, Paul, for the color. I'll jump into the queue. All right, next question. It's in the line of Bill Kirk with Roth Capital Partners.

Speaker #2: Please state your question.

Speaker #5: Hey, good morning, everybody. I want to spend a little time on the improvements at Tilray Pharma. Carl, you mentioned a focus on the highest-velocity SKUs.

Carl Merton: Lastly, wellness net revenue in the quarter was $16.4 million, growing 16% year over year based on our focus on high-value innovations, a continued strength of Highball, and growth in the ingredient sales channel. In terms of contribution, cannabis accounted for 31% of revenue, beverage revenue was 21%, distribution was 40%, and wellness was 8%. Moving on to profitability, we achieved a record Q3 gross profit of $55 million, a 6% year over year increase. Gross margin was 27% compared to 28% last year. By segment, cannabis gross margin was 40% for the quarter compared to 41% year over year and remained largely flat, primarily due to price compression in international markets, which reduced international cannabis revenue by approximately $7 million despite higher gram equivalents sold.

Speaker #5: So what SKUs or product types are those that are leading the way? And then, maybe more importantly, how can you—or how are you—leveraging this improved CC pharma for your cannabis business in Germany?

Speaker #4: So I’m going to arrive here on the call. I’m going to let you jump in here, because you’re the one managing this. I think there are three things here.

Speaker #4: Number one, it’s the buying guys are doing over there. Number two, our assortment. And number three, as we’ve now looked to sell our products in Italy and we sell our products in the UK.

Speaker #4: For us, if you want to go to the specifics of what the products are that we really see increase in sales, I mean.

Speaker #2: There is a group of products. We have about 2,800 SKUs. So what we have done is basically identified SKUs which have higher velocity to go.

Speaker #2: So, there is a bunch of about 50 top SKUs which are, right now, working where there is high velocity, which we focus on.

Speaker #2: Not just on velocity, but also on the gross margin. So these are the two criteria for us to look at in terms of the growth.

Carl Merton: Distribution gross margin increased to 12% this quarter compared to 9% year over year due to favorable changes in product mix and increases in average selling price during the quarter. Beverage gross margin was 32% this quarter compared to 36% in the prior year quarter. This change was a function of lower overhead absorption rates and higher input costs, including the previously discussed aluminum costs. Wellness gross margin increased to 33% during the quarter from 32% year over year as strategic price increases largely offset an unfavorable change in sales mix.

Speaker #2: And then we are adding the medical cannabis portfolio. I mean, the medical cannabis portfolio is helping us to grow both in margin as well as in revenue. Per unit, revenue is much higher.

Speaker #2: And margins are better. So these are the two big things in terms of the selling side of the business. And of course, on distribution, we are now—there are new alliances which are coming forward.

Speaker #2: We are now actually increasing our distribution across the pharmacy channel, which helps us to go not just per unit, but also in the depth of distribution.

Speaker #2: And the width of coverage of pharmacy. So, this is really on the sell side. But more importantly, also on the buy side, I think now purchasing is becoming much more robust in terms of timely decisions.

Carl Merton: Net loss was $25.2 million, a $768.3 million improvement compared to a $793.5 million loss year over year, or a net loss per share of $0.24 compared to a net loss per share of $8.69. The improvement in both net loss and net loss per share is primarily driven by the one-time non-cash impairment we reported in the prior year quarter. Adjusted net income and adjusted net income per share, which both exclude the non-cash impacts of amortization, stock-based compensation, impairments, and non-recurring charges, improved $5.3 million year over year to $2.4 million and $0.02 per share compared to an adjusted net loss of $2.9 million and adjusted net loss per share of $0.03.

Speaker #2: We've implemented automation in our purchasing system, which predicts the pricing patterns, and then it helps us to make decisions quicker. So, I mean, these are a few things which in the pharmacy distribution are helping us to grow.

Speaker #2: And then, of course, on the operations side, a lot of our business—we are also looking at in-house packaging to out-house packaging. And whichever way is working for us, there's a big team which is working to make sure that there is consistency in supply from the operators, both in-house and out-house.

Speaker #2: And that's also helping us to improve the margins.

Speaker #4: When we bought CC Pharma, that was a big part of it, with, again, it was bought during the free of time, was for a tender and was either to sell the pharmacies.

Speaker #4: That was not really happening, number one. Now, there were challenges with getting different medicines, as we’re buying all different types of medicines. But as Robin said, we’re focused on the core medicines with higher margins.

Carl Merton: Our adjusted cash operating income for the quarter was $4.1 million compared to a loss of $3.1 million last year. Adjusted EBITDA for the quarter increased 19% to $10.7 million compared to $9 million last year, reflecting continued execution against our strategic plan, particularly from our international cannabis business. Cash flow used in operations was $21.9 million compared to $5.8 million last year. The increase in cash used in operations was largely related to inventory ahead of our seasonally stronger Q4 and accounts receivable for our growing international cannabis business. Excluding the impacts of working capital, cash generated from operations was $3.4 million compared to cash used in operations of $9.3 million in the prior year.

Speaker #4: And we've done a lot of automation at CC Pharma. The other thing is what's happened. We've gone from servicing 613,000 drugs to now the 16,000 drug stores.

Speaker #4: We've expanded the number of drug stores in Germany. The other major thing is, as we expand out CC Pharma into Italy and to the UK, it's a bigger platform that we'll be selling through.

Speaker #4: Not the highest margins, but again, as volume grows, there’s a lot more contribution. And as we put a lot more cannabis through, it’s much higher margin.

Speaker #4: You're going to see the margin grow dramatically.

Speaker #2: Awesome. Thank you for the detailed answers. A second question: Irwin, in the opening comments, you talked about now being at a run rate of $1.2 billion in revenue.

Carl Merton: We ended the quarter with cash, restricted cash, and marketable securities of $264.8 million, and a net cash position of $3.5 million, which improved $40.2 million from a net debt position year over year. As we have recently demonstrated, our strong liquidity position has enabled us to act decisively in a dynamic environment and provides continuing flexibility to pursue strategic opportunities. We remain focused on managing and strengthening our balance sheet throughout the remainder of the year and beyond. Lastly, we are reaffirming our fiscal 2026 adjusted EBITDA guidance of $62 to 72 million. Operator, we can now open the call for Q&A.

Speaker #2: The last 12 months, I think it's something like $850 million. So, is the bridge between the two— is that mostly revenue from acquired BrewDog assets?

Speaker #2: And I ask because you didn't take all the assets. So, how much of the BrewDog revenue that they released in their annual reports is generated by the assets that you took on and now have?

Speaker #2: And how much of their annual revenue was tied to assets that you didn't—

Speaker #1: Page .

Speaker #2: So let's say between 225 to 250 is what we take . Okay . And again , we took all the UK , Ireland , Scotland , distribution through retail .

Speaker #2: We've taken it through on-premise, and we've taken 16 Group in the UK, Ireland, and Scotland. We've taken the brewpubs in Australia.

Operator: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question at this time, please press star one from your telephone keypad, and a confirmation tone indicates your line is in the question queue. You may press star two if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. The first question is from the line of Kaumil Gajrawala with Jefferies. Please proceed with your questions.

Speaker #2: We've taken a distribution in Australia , we've taken three brewpubs ourselves and our two pubs ourselves , and there's three franchises . There's 18 or there's 15 other franchises out there today around the world that we sell them to , and we get some type of royalty Regards to the US , we've taken the distribution , the manufacturing in the US , taken them .

Speaker #2: Las Vegas , Columbus , Saint , Albany , and Cincinnati is the group Cleveland . Cleveland . I'm sorry . And the airport in Columbus , that's what we take in there .

Kaumil Gajrawala: Morning. Sir.

Irwin Simon: Oh, you're breaking up again. I'm sorry about that. You guys hear me now?

Irwin Simon: Oh, you're breaking up again.

Speaker #2: So it's somewhere between $200 million and $550 million to $250 million in sales that we've taken. Regards to the other piece, Bill, it's all coming from growth.

Kaumil Gajrawala: I'm sorry about that. You guys hear me now?

Irwin Simon: Yeah.

Kaumil Gajrawala: Yep. Great. I wanted to first maybe ask about the, you know, supporting the international business in the context of, Canada looks like it's also stabilizing. You have a lot of growth and great margins in one, but on the other hand, you've got stabilization in your bigger markets. How are you managing the balance between those two?

Speaker #2: And that's where it's going to come from. And don't forget, you saw from a standpoint there what we've gone through, and SKU rationalization in regards to our beer business.

Speaker #2: If you take what we're done this year , what was skew rationalization ? What was the your rationalization ? And what was product rationalization ?

Speaker #2: I mean , quite a bit of sales to our , you know , came out of our business

Irwin Simon: Now what was the slide? As you hear, you broke up the last piece, the cannibalization.

Speaker #3: Thank you. That's exactly what I was looking for. Thank you.

Kaumil Gajrawala: Not cannibalization, but just managing the balance between supporting your international business and what looks like stabilization in Canada.

Speaker #2: Thank you .

Speaker #4: Our next question comes from the line of Aaron Grey with Alliance Global Partners. Please repeat your question.

Speaker #5: Hi . Good morning and thank you for the questions First question for me . I just wanted to dig a little more in terms of hemp So in terms of your outlook potentially for for changes to come before the ban on any products this morning .

Irwin Simon: You're talking cannabis right now for us, right?

Kaumil Gajrawala: Yeah, cannabis. I'm sorry. This is about cannabis. Yeah.

Irwin Simon: Yeah. Okay. Listen, I think the big thing is, number one, we are bringing on our Masson-Angers grow facility in Gatineau, which increases our... You know, we're going from 137 metric tons of grow to almost 200 metric tons of grow, and also we're bringing on outdoor grow in Cayuga. Number one, we now have plenty of grow. You know, this has been a tougher year on yields and that, and that's sort of what you heard me say, as we're overhauling things and modernizing things on better yields in the Canadian market. On the other hand, the good news is our Cantanhede facility in Portugal and our Germany facility is probably producing at some of the best yields and some of the best flowers that we ever had. Number...

Speaker #5: 0.4 percent THC coming to fruition in November. And then taking that into context, you know, how you're looking at the CMS program.

Speaker #5: You mentioned potentially looking to enter into . So how are you looking at potential opportunity there , particularly if there is a restriction on THC products and how appealing that program will be for patient , you know , adoption or rejection .

Speaker #5: And anytime you think about that longer-term opportunity there, thanks.

Speaker #2: Number one , let me go back to HD nine and how we're looking at that We're looking at it three ways . Number one , it gets extended .

Speaker #2: And stays as is. Number two, there is, you know, some type of new legislation that comes out that regulates it.

Speaker #2: Either three , 4 or 5mg and which would be great . And that way we can sell it or , you know , the ban in November of 2026 happened and it completely stops I listen , I think it's going to be 1 or 2 .

Irwin Simon: You know, the most important thing is we have plenty of supply to supply the European market. The other thing, as we're seeing price compression, which I talked about, with the grow that we're having with the yields, you know, we'll be able to support that. I think the most important thing in Europe is this here, consistent supply. We've not had consistent supply, number one. Number two, you know, one of the things in Europe, you have to wait for permits, and that has slowed down in getting our sales out there. We've seen a real big improvement in the Portuguese government. I want to thank them. They've modernized this now, where sometimes it would take a month. You know, you can see three days now. Being able to get product, you know, to our customers is something very important.

Speaker #2: That will be my opinion . You know , in regards to , you know , our CBD drinks and Medicare and that within the US .

Speaker #2: Listen , we have we have the dreams . We're prepared for that . Now It's just making sure that as we talk to the FDA and we talk to them , that how we go about it and how we do it .

Speaker #2: So we're able to do it . We have the products to do it . It's just making sure the right approvals . And you know , we have a team that is working on this within the US You know , regulations and what happened here .

Speaker #2: So stay tuned for that

Irwin Simon: With that, we have perfected our grow and our yields that will help our margins continuously, and deal with the price compression. I think the important thing is from a Tilray standpoint, with our Tilray products, with our innovation, with our brands, you know, the big opportunity for us is if we got consistent product, we're gonna get the volumes. How do we deal with price compression? If price compression consistently happens, you know, we have supply, and I think we have more supply than anybody there. It's something that we're aware of. Hey, we dealt with it in Canada. We've had $250 million of price compression, you know, over five years in Canada, and we dealt with that.

Speaker #5: Okay , great . Appreciate that color . Second question for me , just want to go back . In terms of alcohol . Gross margin and the outlook .

Speaker #5: I know you mentioned in terms of how you guys are hedging , you know , some of the aluminum , but just taking a step back and there's been some lumpiness .

Speaker #5: You guys now have product for 20. Now completed. So how should we think about that margin for the segment going forward for Q?

Speaker #5: I mean, obviously it would be higher just given the higher sales flow-through, but just on a full-year basis, how best to think about the gross margin there?

Speaker #5: Thanks

Speaker #2: So and I , you know , if you look at where we are right now , I think this represents a bottom We we have done a significant amount of work and will continue to work to manage costs and to , and to keep costs at a reasonable level versus where our volume is , as we said on the call , got some headwinds with with aluminum costs .

Irwin Simon: not that I want to see that in Europe, but it's something we can deal with either, you know, having supply, now having good yields, now having good grow over there to do it both in Canada and Europe. There's no one else out there that has the supply that we have, both from the Canadian market today and the European market.

Speaker #2: And there's potential for headwinds with fuel surcharges and things like that, that we're going to keep a close eye on. But the key is really in the overhead utilization rates.

Kaumil Gajrawala: Got it. Thank you. On Project 420, you noted, I guess it's coming sort of towards the end or at completion. Is there a new project or is it sort of more ongoing business as usual as we look forward from a productivity standpoint?

Speaker #2: And as as we've adjusted to that , we continue to make adjustments going forward . We'll see . We'll see that start to come up over time .

Speaker #2: And and right now we think this is this is the bottom of the trough . Aaron . I think there's again , you remember , we in the beer business in late 2020 , the Sweetwater in the acquisitions of the three brands in the West Coast and monarch and then the Abi piece is and the pieces , you know , we had one time had 11 manufacturing facilities .

Irwin Simon: That's a good question. I mean, there is absolutely projects ongoing. We never just say, "Okay, we made our $33 to 35 million of cost savings. Stop." Now with BrewDog in the mix and bringing that together both, you know, internationally and domestically in regards to buying hops, cans, labels, etc. You know, it's definitely something as we combine now. Just remember, we've gone from, you know, a 200+ million dollar beer business almost to a half a billion dollar in our own size. From scale, that's gonna help us. As we look at, you know, rationalization, you know, continuously on our plants. We look at rationalization on distributors. We just said, how do we bring, you know, all the organizations together? There'll definitely be additional cost savings available to us.

Speaker #2: And since then , now with Carlsberg coming on with , you know , the rescaling of the beer business and the skew rationalization , it has been the easiest road for us .

Speaker #2: But nothing dissimilar then was that was cannabis, in regards to as we opened up these growth facilities, and we had to go deal with it.

Speaker #2: But now we got time . You know , we we now have the right sets in place . We have the , you know , new products in place , you know , we had some new products out there that do as well as we thought .

Speaker #2: So as Carl said , now with the purchasing power between international , between green Carlsberg on with us . You know , we feel good about moving forward where we've done a lot of the overhauling .

Kaumil Gajrawala: Okay, got it. Thank you.

Irwin Simon: Thank you.

Operator: Our next question is from the line of Robert Moskow with TD Securities. Please proceed with your questions.

Vivien Azer: Hey, good morning. This is Vivien Azer on for Robert Moskow. Thanks for taking the questions. I just wanna ask about international first. International, you know, grew 73%. In Germany grew 43%. What drove this delta? Was it shipment timing or permit delays that from the previous quarter that you know were fixed this quarter? In terms of kind of looking at growth going forward, is that 43% growth rate for Germany, is that kind of a good run rate to use in looking at growth for the segment?

Speaker #2: We're now down to seven manufacturing facilities even get smaller . You know , in regards to that , in regards to , you know , the facility Ohio , which is a beautiful facility .

Speaker #2: And what are we moving there from HDI? If that, you know, is a product that's able to stay within the portfolio?

Speaker #2: You know , we have a great energy , recalled high ball that's growing leaps and bounds . Some of the other non out products that we have are there today that we will move into our facilities .

Speaker #2: And as we introduce a lot of, you know, seltzers and some of the other drinks that we're doing, we'll look to bring most of that in-house, and we will have capacity as we have a great plan to grow Carlsberg.

Irwin Simon: Number one, there was some, you know, products that did not get shipped in Q2 because of permits, but there's products that did not get shipped in Q3 because of permits. You know, it equals out. In regards to, you know, what was the growth, the growth was based on us having supply and demand. You know, not sure. Again, we have a big Q4. What is the true run rate there? The big thing is just what I said before, what the market is realizing, what patients and what doctors are realizing is here we will have supply, we will have good flower, we'll have lots of innovation, we'll have some good oils, and again, we will be price competitive. You know, what is the right growth number?

Speaker #2: We think the growth opportunities that Carlsberg is tremendous of what we can do with that brand . So again , it's we've only been at this five years where most craft is have been there a long , long , long time .

Speaker #2: And , you know , we've had some pain , but we've managed through it . And I think we've really got it in a good place now from a scale standpoint , you know , I don't I could be wrong .

Speaker #2: I think we’ll combine with BrewDog and what we’re doing today. You know, it’s almost 18 million cases of beer that we’re selling.

Speaker #2: That's between you know , the worldwide . So we're buying lots of cans . We're buying lots of hops . We're buying lots of ingredients here .

Speaker #2: And yes , some of it is across the water . We're buying lots of kegs . But how do we utilize that ? We're just not a little craft brewery anymore from a standpoint .

Irwin Simon: I'm not ready to give that yet. Again, there's big opportunities for us in the international markets, not only in Germany, Poland, the UK and other markets. It's additionally other markets that we're looking at to open up and what will happen in Spain, what will happen in France. You know, we're really excited. The other thing that we have there with our CC Pharma, Tilray Pharma, and some of the stuff that we're doing in the UK, you know, as being vertically integrated, as we sell through our distributor and sell directly through our distributor into these drugstores, you know, it helps us that way. We're a grower. We've got the brand, and then we have, you know, the third part of it is where we have from a vertical integration, the distribution going through the drugstore.

Speaker #2: There

Speaker #5: Okay, great. Thanks for that color back into the Q.

Speaker #2: Thanks .

Speaker #4: Our next question is from the line of Pablo with Sonic Associates. Please proceed with your questions.

Speaker #6: Yes. Good morning, everyone, and on the very strong international growth, and also very nice to see the share count being stable quarter on quarter.

Speaker #6: Look, I have three questions on Germany specifically, and I'll try to keep it brief. The first question: I want to get your take in terms of the advantage of being vertically integrated versus the main distributors out there.

Speaker #6: I mean , for a while we saw that the distributors were growing faster . We saw consolidation could lift by 420 . High tide by remix , and more recently , but now with prices , some of the distributors are being squeezed out and they don't seem to have very stable supply chain .

Irwin Simon: That helps us tremendously too.

Vivien Azer: Got it. Thanks for the color. My second question is on the beverage segment. In terms of just, you know, rising aluminum costs from, you know, the Midwest premium, related to, you know, the tariffs and then additional, you know, supply shocks from the Iran conflict, can you offer any color in terms of how hedged you are on your aluminum exposure and you know, what's the benefit in terms of kind of scale that, you know, adding Carlsberg into the US portfolio gives towards managing, you know, that cost impact?

Speaker #6: I'm just trying to understand if you can remind people of the advantages in Germany, especially when the market is evolving or being vertically integrated versus the distributor model.

Speaker #6: The second question is that it would help if you can expand on your route to market, like how many people do you have on the ground?

Speaker #6: How many people are visiting doctors ? You know , how many people are , what are the efforts in terms of reaching out to patients , given all the restrictions ?

Speaker #6: But just if you can give more color on your route to market in Germany . And the third is related to all of this , I could make the argument playing devil's advocate that Pharmacy reach does not matter too much , right ?

Speaker #6: That all these numbers we hear about CC Pharma and Alliance now are not so relevant when the doctors and the patients are making decisions, and the 80/20 rule applies at night, right?

Irwin Simon: I'm gonna let Carl talk about the hedge in a second because we, you know, we are hedged on some things. But listen, adding Carlsberg in there with a good sized business, adding, you know, BrewDog in there and then being able to buy on global contracts is gonna be very, very helpful for us. You know, right now a lot of our hops, you know, for BrewDog internationally come from, you know, Washington State. But we right now as we put this together and listen, having Carlsberg who is one of the largest, you know, brewers in the world and possibly buying into their contract and, you know, we still have leftover, whether they're hops or not from our ABI stuff.

Speaker #6: We know that maybe 50 pharmacies, especially online, account for the bulk of sales, and only one of seven pharmacies sells medical cannabis.

Speaker #6: So why does pharmacy reach matter in the short term ? And in the long term ? I know there's a lot there , but there are some questions on international would help if you can cover .

Speaker #6: Thank you .

Speaker #2: I hope I can remember all three. Okay. It's number one. To your point, and I stressed this before, from a growth standpoint of having our facility and that up and going the way it is today.

Irwin Simon: There's lots of opportunities from a scale to be buying, you know, hops and cans, and that's the big one to watch out for, as aluminum prices have gone up with Carl about their hedges. Listen, the big watch out there is what, you know, what happens with fuel, you know, and from a standpoint there is the unknown. Carl, from your hedge though, do you wanna just talk about that?

Speaker #2: And growing some of the best cannabis that has ever has, and having the permits to get out of Portugal into Germany is a major, major advantage to us.

Speaker #2: And this has helped us in order to get the sales . And again , as we are getting yield and flower to become that low cost , that low cost seller in there in the marketplace and deal with price compression .

Speaker #2: Number two, you heard me talk about now as we bring on our facility in Gatineau, Quebec, that is a GMP facility.

Carl Merton: Yeah, I mean, you answered most of it, but just specifically on the hedge for aluminum, we're currently hedging 65% to 75% of our buy on a month-on-month basis, and we're hedging it a year out.

Speaker #2: And that from a supply standpoint . And I got to tell you . Originally we were going to sell that and thank God we didn't , because from electricity costs , from labor costs , that is an excellent facility .

Vivien Azer: Got it. Thank you for that color. Just one last question, if I can. In terms of just the distribution gains, you know, from the shelf resets that typically happen in the spring, you know, how are those conversations going? How is that tracking? Any color you can share there?

Speaker #2: And it's an excellent facility for us to have . And supply the international market . And that's what it will do because it's GMP , because it's a lower cost facility and our German facility , which , you know , originally we were selling 2 to 3 metric tons out of there .

Irwin Simon: Going well. I will say this here, we gained and we lost. I think part of it is here, you know, where the craft beer category lost some space out there. I think the big thing is here where we didn't. When we bought the Molson piece and prior to that when we bought the ABI piece, you know, from a trade standpoint, you know, we lost a lot of SKUs where we had no influence and no part of it. Again, it goes against us. Now, you know, we've gained a lot of distribution. The big thing is this year, just 'cause we gained distribution, we gotta make sure the products sell.

Speaker #2: And righteousness. And the team has done a great job of getting that up into additional metric tons. And before that, we were only allowed to sell into the German government there.

Speaker #2: So your point , you know , Pablo . Yes , we have supply . Yes , we can be that lowest cost producer .

Speaker #2: And yes, the big thing is we can be consistent in regards to the customers that we're selling to. I'm going to let Rajneesh talk about what we have on the ground there and the infrastructure in a minute.

Speaker #2: We're just going to the pharmacies . You know , you may not agree that having a vertical integration . So number one , you know , having CC Pharma , the big part of CC Pharma , today's business is not the cannabis business , but there's three things .

Irwin Simon: You know, we probably lost more, but again, it's okay because it was SKUs that were not part of us at the time. The new SKUs, the new products, the new innovation is what we're excited about and where we gained. We had some big gains at Walmart. We had some big gains at Kroger, Albertsons, and some other ones across Stop & Shop, across the board. All in all, you know, we're happy with what we got. Listen, I'd rather the set get smaller and us be a bigger player in a smaller set than, you know, just to have a big set out there. There's a lot of resetting happening within the craft beer industry in regards to the size and what retailers get out there.

Speaker #2: CC Pharma does. It has 16,000 pharmacies. And a lot of these pharmacies are buying medical cannabis. So now they have the ability at the end to sell.

Speaker #2: It has the ability to go to pharmacies . Number one . Number two , there's a lot they can do in regards to online and selling online through CC .

Speaker #2: And that's something that we're working on and again , as we look at expanding our product lines in Germany , whether it's apes , whether it is pre-rolls , CC Pharma has medical licensing and application that they can do these things for .

Speaker #2: And we're looking at numerous things with DC Pharma . So today , having it , it's , you know , it is very important for us , you know , it has a tremendous network too , with other , you know , CC pharma type of distributors that we can sell products to them to .

Carl Merton: Just to supplement that a little. When Irwin talked about the acquisitions, it was more about the timing of the acquisitions because we bought those brands after the initial discussions on spring resets had already happened.

Speaker #2: So CC Pharma has a relevance to us, and it's a big relative relevance for us in the cannabis growth market. No one else really has a CC firm today.

Irwin Simon: We were not the ones presenting the spring resets. Now, whether it's the Molson Coors or the ABI, and that's sort of where we'll be next year in January, as we take on Carlsberg, we'll be out there presenting in February, January, February for the next, you know, spring sets for Carlsberg.

Speaker #2: Raj, just in regards to your sales organization on the ground, go ahead.

Speaker #6: Yeah . So two .

Speaker #7: Things here. So, there is a price commission in Germany which is kind of changing the route to market. And the route to market is becoming more integrated.

Vivien Azer: Got it. Thanks, Pablo, for the color. I'll jump back into the queue.

Speaker #7: The distributor is now getting squeezed out because of the margins, etc. So I think we don't see it now, but we do see it going forward.

Irwin Simon: Thank you.

Operator: Our next question is in the line of Bill Kirk with ROTH Capital Partners. Please proceed with your question.

Speaker #7: That the route to market will become more direct to pharmacies and through the channel of prescriptions , through doctors , etc. . So CC Pharma and our medical team , there is presently working along with the prescribers and also in the pharmacies to work and build this integrated supply chain to reach the patients .

Bill Kirk: Hey, good morning, everybody. I wanna spend a little time on the improvements at Tilray Pharma. Carl, you mentioned a focus on the highest velocity SKUs. What SKUs or product types are those that are leading the way? And then maybe more importantly, how can you or how are you leveraging this improved CC Pharma for your cannabis business in Germany?

Speaker #7: So that's number one. Number two, to your question of what's the feet on street, we have today two teams which work on the street.

Speaker #7: One is the one which works with the prescribers. This is a team of about 20-plus people who are medical representatives and medical advisors who work on with the prescribers.

Irwin Simon: I'm gonna Rajnish, since you're on the call, I'm gonna let you jump in here 'cause you're the one managing this. I think there's three things here. Number one is the buying that our guys are doing over there. Number two is our assortment. Number three, as we now look to sell our products into Italy and, you know, we sell our products into UK. Rajnish, do you wanna go into the specifics of what the products are that we've really seen the increase in sales?

Speaker #7: And then we have a team, CC Pharma, which is also about seven to eight people who are basically telecoil service people who continuously work with pharmacies to make sure that the prescriptions which reach there and the stocks are available for them.

Speaker #7: So there is a twin approach . They're both the pharmacy and the prescriber level at the ground in Germany . And as we go and see this forward , I think and these are signs which we see in the market today that the route to market is going more direct than through the distribution .

Irwin Simon: I mean, there is a group of products within this. We have about 2,800 SKUs. What we have done is basically identified SKUs which have higher velocity to go. There is a bunch of about 50 top SKUs, which are right now working where there is a high velocity, which we focus on, not just on velocity, but also on the gross margins. These are the two criteria for us to look at in terms of the growth. Then we are adding the medical cannabis portfolio. I mean, the medical cannabis portfolio is helping us to grow both in margins as well as in revenue, because per unit revenue is much higher and margins are better. These are the two big things in terms of the selling side of the business.

Rajnish Ohri: I mean, there is a group of products within this. We have about 2,800 SKUs. What we have done is basically identified SKUs which have higher velocity to go. There is a bunch of about 50 top SKUs, which are right now working where there is a high velocity, which we focus on, not just on velocity, but also on the gross margins. These are the two criteria for us to look at in terms of the growth. Then we are adding the medical cannabis portfolio. I mean, the medical cannabis portfolio is helping us to grow both in margins as well as in revenue, because per unit revenue is much higher and margins are better. These are the two big things in terms of the selling side of the business.

Speaker #7: So with CC Pharma and our medical team , I think this change we are seeing and also see data coming to us , which is telling us that the pharmacy sales are improving , still small , but improving compared to what the distribution sales have been .

Speaker #7: Thank you .

Speaker #2: Probably know not not only that , what we have internationally today , I mean , basically we have marketing teams . We have R&D teams , we have quality teams , we have research that's working on our different cannabis strains and genetics over there .

Irwin Simon: Of course, on distribution, we are now with our new alliances which are coming forward. We are now actually increasing our distribution across the pharmacy channel, which helps us to grow not just per unit, but also in the depth of distribution and the width of coverage of pharmacy. This is really on the seller side, but more importantly also on the buy side. I think we are now our purchasing is becoming much more robust in terms of the timely decisions. We've implemented automation in our purchasing system, which predicts the pricing patterns, and then it helps us to take decisions quicker. I mean, these are a few things which in the pharmacy distribution is helping us to grow.

Rajnish Ohri: Of course, on distribution, we are now with our new alliances which are coming forward. We are now actually increasing our distribution across the pharmacy channel, which helps us to grow not just per unit, but also in the depth of distribution and the width of coverage of pharmacy. This is really on the seller side, but more importantly also on the buy side. I think we are now our purchasing is becoming much more robust in terms of the timely decisions. We've implemented automation in our purchasing system, which predicts the pricing patterns, and then it helps us to take decisions quicker. I mean, these are a few things which in the pharmacy distribution is helping us to grow.

Speaker #2: For from a medical standpoint , that when doctors prescribe for pain , for anxiety , for cancer , we can support it . So again , what we're not is just somebody selling into the marketplace .

Speaker #2: I mean , as Raj said , we have a big infrastructure in Canton , Portugal . We have in Germany . And then we have a team to support it in London .

Speaker #2: In regards to the marketing team—and there's a whole supply team—and the good news is we have moved a lot of our Canadian colleagues over there to help us with this growth.

Speaker #2: We're going to have

Speaker #6: Go ahead, that's a great color. Can I ask one more quickly? You mentioned you're keeping an eye on the CMS program in the US for a full spectrum CBD.

Irwin Simon: Of course, on the operation side, a lot of our business, we are also looking at in-house packaging to out-house packaging. Whichever way is working for us, there's a big team which is working to make sure that there is a consistency in supply from the operators, both in-house and out-house, and that's also helping us to improve the margins.

Rajnish Ohri: Of course, on the operation side, a lot of our business, we are also looking at in-house packaging to out-house packaging. Whichever way is working for us, there's a big team which is working to make sure that there is a consistency in supply from the operators, both in-house and out-house, and that's also helping us to improve the margins.

Speaker #6: Does that mean that you should be considering or looking at buying a US CBD brand?

Speaker #2: So we have an A brand today called Happy Flower . Okay . We produce CBD products internationally , so we have formulations , have products , you know , just got to fit to what the US standards are and regs are here , but listen , I've always liked if it made sense to buy something that gives you a foothold in there , but like anything , we have the ability .

Irwin Simon: You know, when we bought CC Pharma, that was a big part of it. Again, it was bought during the Aphria time for a tender and was needed to sell the pharmacies. That was not really happening, number one. There was challenges with getting different, you know, medicines as we're buying all different types of medicines. But as Rajen said, we're focused on the core medicines with the higher margins. You know, we've done a lot of automation at CC Pharma. The other thing is what's happened. We've gone from servicing 16,000 drugstores now to 16,000 drugstores. So we've expanded the amount of drugstores in Germany. You know, the other major thing is as we expand out CC Pharma into Italy and into the UK, it's a bigger platform that we'll be selling through.

Speaker #2: Today, to do our own with CBD products.

Speaker #6: That's good. Thank you.

Speaker #2: Thank you .

Speaker #4: Our next question is from the line of Kendrick Ty with Canaccord Genuity. Please proceed with your questions.

Speaker #8: Thank you, and good morning. The majority of my questions have been asked—just a couple of quick follow-ups with respect to the beverage segment.

Speaker #8: I called out trough margins in the quarter. Is that including or excluding the BrewDog integration? Just trying to get a handle on, you know, whether that's a trough.

Irwin Simon: Not the highest margins, but again, as the volume grows, there's a lot more contribution. As we put a lot more cannabis through it with much higher margins, you're gonna see the margins grow there dramatically.

Speaker #8: On legacy or through on go-forward, and how we should think about that evolution of the margins.

Speaker #2: BrewDog—from these margins, BrewDog was acquired March 2nd. So there's nothing in here in regards to BrewDog, and there's nothing in here in regards to convert from a standpoint.

Bill Kirk: Okay. Awesome. Thank you for those detailed answers. A second question. Irwin, in the opening comments, you know, you talked about now being a run rate of $1.2 billion in revenue. You know, the last twelve months, I think it's something like $850 million. So, is the bridge between the two mostly the revenue from acquired BrewDog assets? And I ask because you didn't take all the assets. So, how much of the BrewDog revenue that they've released in their annual reports is generated by the assets that you took on and now have? And how much of their annual revenue was tied to assets that you didn't take?

Speaker #2: And again from a procurement , from sales , from an infrastructure , from a manufacturing , you know , again , I'm not going to , you know , come out there with numbers , but I would think there would be upside just putting volume .

Speaker #8: Great . You . And that was that was just to the question was on that evolution from here forward with Karl Berger and BrewDog .

Speaker #8: But I can I can leave it there . Just follow up with respect to the brewpub and that footprint , just with how consumer trends and consumption patterns have changed , how are you thinking about that footprint going forward ?

Irwin Simon: Let's say between $225 to 250 is what we've taken. Okay? Again, we took, you know, all the UK, Ireland, Scotland distribution. Through retail, we've taken it through on-premise, and we've taken 16 brewpubs in UK, Ireland, and Scotland. We've taken the brewpubs in Australia, we've taken the distribution in Australia. We've taken two brewpubs ourselves, and there's 3 franchises. There's 15 other franchises out there today around the world that we sell them beer to, and we get some type of royalty. In regards to the US, we've taken the distribution, the manufacturing in the US, and we've taken with them, Las Vegas, Columbus, St. Albans, and, Cincinnati is with...

Speaker #8: And is it becoming more important to you as a sort of a strategic buffer on the consumption side? Any color around the BrewDog?

Speaker #8: Sorry, around the brewpub footprint would be useful.

Speaker #2: Listen , good question . It's something today within Tilray , we have 18 of our own group hubs here in the US . So again , it's it's something we understand in regards to the UK .

Speaker #2: You know , Ireland , Scotland and the other markets . I'm big on brew pubs to look at them from a marketing tool and to build our brand over there to bring , people together .

Speaker #2: And that's a whole thing on longevity today, to bring people together, and a big part I plan to spend a lot of time looking at our brewpubs in regards to what we got to do to interact with our customers that come there.

Speaker #2: How do we serve them ? Food and good value ? I've also talked about whether it's , you know , Guinness or other or other beers of how we bring other beers into their because they don't want BrewDog , we want them to come to our brew pubs , at least to enjoy our food , enjoy the environment , and maybe we convince them to , you know , have BrewDog , you know , is that going to be a big part of our growth as part of our strategic plan to open up another hundred of those ?

Bill Kirk: Cleveland.

Irwin Simon: Cleveland. I'm sorry, the airport in Columbus. That's what we've taken there. There's somewhere between $225 million and $250 million in sales that we have taken. In regards to the other piece, Bill, it's all coming from growth. That's where it's gonna come from. Don't forget, you saw from a standpoint there, what we've gone through in SKU rationalization in regards to our beer business. If you take, you know, what we're down this year and what was SKU rationalization, what was distributor rationalization, and what was product rationalization, I mean, quite a bit of the sales come out of our, you know, come out of our business.

Speaker #2: No, it's a big part of those to look to upgrade them, to put more TVs, more interactive types of communications in regards to getting more and more of our consumers to that.

Speaker #2: And something yet, is there an opportunity for us to franchise more and more BrewDogs? Where we did not take them and make them franchisees?

Bill Kirk: Thank you. That was exactly what I was looking for. Thank you.

Speaker #2: Absolutely , yes . So there's some exciting things here as we look to grow , you know , from a franchise model , as we look to increase the sales with the one we own .

Irwin Simon: Thank you.

Operator: Our next question is coming from the line of Aaron Grey with Alliance Global Partners. Please proceed with your question.

Speaker #2: And where do we license the brand today in airports ? And that's something that we're looking at too , because there's , you know , with airports , they license brand name like the royalty and sell product .

Aaron Grey: Hi, good morning, and thank you for the questions. First question from me, I just wanna dig a little bit more in terms of hemp. Just want to talk in terms of your outlook potentially for changes to come before the ban on any products with more than 0.4% THC come to fruition in November. Then taking that into context, you know, how you're looking at the CMS program. You mentioned potentially looking to enter into that. How are you looking at the potential opportunity there, particularly if there is a restriction on THC products, and how appealing that program will be for patient adoption or rejection? Just how you think about that longer term opportunity there. Thanks.

Speaker #2: So that's how we're looking, you know, at these points.

Speaker #8: Great. Thanks. I'll be back. Thank you.

Speaker #2: Thank you .

Speaker #4: Thank you. At this time, I'll turn the floor back to management for closing remarks.

Speaker #2: Well, thank you, everybody. Number one for fools. And our numbers are not an April Fool's joke. So that's the good news.

Speaker #2: Okay . Our numbers are some real strong numbers out there . Congratulations to the team on the growth . And you know , not one of these , you know , businesses .

Irwin Simon: Listen, number one, let me go back to Delta-9 and how we're looking at that. We're looking at it 3 ways. Number one, it gets extended and stays as is. Number two, there is, you know, some type of new legislation that comes out that regulates it either 3, 4, or 5 milligrams, and which would be great, and that way we can sell it. Or, you know, the ban in November 2026 happens, and it completely stops. Listen, I think it's gonna be 1 or 2. That will be my opinion. You know, in regards to, you know, our CBD drinks into Medicare and that within the US, listen, we have Happy Flower. We have the drinks. We're prepared for that now.

Speaker #2: Nothing has been easy out there in regards to what we deal with the regulatory standpoint , what we deal you know , in regards to pricing , in regards to tariffs and just looking at the consumer today and again , you know , if you stop and look at Tilray from 2019 to hitting over that billion dollar mark with the acquisition of BrewDog , it's a very exciting time for us .

Speaker #2: And with regards to where we're going in 2027, and with two months left in our quarter in 2026, you know, there's a lot to be proud of here.

Speaker #2: And as I heard me talk about the big overhaul that we're going to do in the Canadian market in regards to our genetics, in regards to our strains, in regards to using AI to help us there, in regards to how we modernize those facilities and take lots of costs.

Irwin Simon: It's just making sure that as we talk to the FDA and we talk to them that how do we go about it and how we do it. We're able to do it. We have the products to do it. It's just making sure the right approvals and, you know, we have a team that is working on this within the US, you know, regulations and what could happen here. Stay tuned for that.

Speaker #2: And Blair and the team have done a tremendous job in doing that. And again, as you come back and think about what we have in growth today and how we converted these facilities to be much more economical and dealt with the challenges of the cost of utilities in Ontario.

Aaron Grey: Okay, great. Appreciate that color, Irwin. Second question for me. I just wanna go back in terms of alcohol gross margin and the outlook. Carl, I know you mentioned in terms of how you guys are hedging some of the aluminum, but just taking a step back, there's been some lumpiness. You guys now have Project 420 completed. So how should we think about that margin for the segment going forward? Q4, I imagine, will obviously be higher just given the higher sales flow through, but just on a full year basis, how best to think about the gross margin there. Thanks.

Speaker #2: So, again, we've accomplished a lot in the Canadian market, and it's the only market where recreational cannabis is legal in the world.

Speaker #2: And at the same time , dealing with growing our medical market . And , you know , introducing more and more patients and consumers to the product in regards to us , again , you know , I like to see some better results coming out of our business .

Speaker #2: But on the other hand , as you bring everything together , since late 2020 and we're here where we are today , I see some good light at the end of the tunnel here of what we're building here , and being the largest craft brewery out there , and the fourth largest , you know , craft beer business , there's been a lot of changes in the craft beer business , but a lot of changes in the business .

Carl Merton: Aaron, good question. You know, if you look at where we are right now, I think this represents the bottom. We have done a significant amount of work and will continue to do work to manage costs and to keep costs at a reasonable level versus where our volume is. As we said on the call, we've got some headwinds with aluminum costs, and there's potential for headwinds with fuel surcharges and things like that that we're gonna keep a close eye on. But the key is really in the overhead utilization rates. As we've adjusted to that, and we continue to make adjustments going forward, like we'll see that start to come up over time. And right now we think this is the bottom of the trough.

Speaker #2: And one thing I can tell you is I really feel we got the footprint right . We got the model right , and now we got the product right because we , you know , we brought up a lot of SKUs .

Speaker #2: We have over 80 brands . We have over 900 distributors . We've had multiple people , multiple contracts out there that we had to deal with , whether it's buying kegs , cans or hops , etc.

Speaker #2: . So as we bring all that together in regards to our business . You heard me talk about our our depletions on Breckenridge being up , you know , we've dealt with lots of distributor trends transition out there with our NDC .

Irwin Simon: Aaron, I think there's, again, you know, remember we get in the beer business in late 2020 with SweetWater and the acquisitions of the three brands in the West Coast and Montauk and then the ABI pieces, and the Molson pieces. You know, we at one time had 10, 11 manufacturing facilities. Since then, now with Carlsberg coming on, with, you know, the rescaling of the beer business and the SKU rationalization, it hasn't been the easiest road for us, but nothing was similar to that as was cannabis in regards to as we opened up these growth facilities, and we had to go deal with it. Now we've got time. You know, we now have the right assets in place. We have the right, you know, new products in place.

Speaker #2: Now being acquired by Reyes, which is good news for us. And that's something that we will consolidate into the new distribution system.

Speaker #2: In regards to some other changes in the market , something we're going to do , but I'm really happy about and seeing our Breckenridge is some of the new stuff that we're really coming out with in regards to our our tequilas , our drinks with our mountain shot is a moonshot .

Speaker #2: Some of our drinks and some of our products are there, but it's great to see some of the stabilization that's going to happen in regards to the distribution business.

Speaker #2: Listen, this industry is a difficult industry with the free tier system, and you can have the greatest products. It's the distribution that you need in regards to international.

Irwin Simon: You know, we've had some new products out there that didn't do as well as we thought. As Carl said, now with the purchasing power between BrewDog International, between bringing Carlsberg on with us, you know, we feel good about moving forward where we've done a lot of the overhauling. We're now down to seven manufacturing facilities. We might even get smaller, you know, in regards to that. In regards to, you know, the facility in Columbus, Ohio, which is a beautiful facility. What do we move in there from Delta-9 if that, you know, is a product that's able to stay within the portfolio. You know, we have a great energy drink called HiBall that is growing in leaps and bounds. Some of the other non-alc products that we have out there today that we will move into our facilities.

Speaker #2: Again, Rajnish and team have done some great things in regards to international peace and growth, and dealing with the regulated market. In regards to medical cannabis, dealing with permits.

Speaker #2: When you ship out of the country and permits when you ship into the country again , what we've had to do to get our Canton facility up to the yields and up to the growth that we've done in Canada , up to being able to supply consistent product to the marketplace and back to Pablo's point for that's something that Tilray now is going to be known for , because if you think about it , look where our volumes are today and look where they were a year ago and how we doubled in the quarter .

Speaker #2: So a lot to be , you know , proud of there . And again , there's a lot more that we're going to do in those marketplace .

Speaker #2: We had to overcome Germany being only sold into the German government, which we're losing money, and almost doubling the amount of production coming out of that facility.

Irwin Simon: As we introduce a lot of, you know, vodka seltzers and some of the other drinks that we're doing, we'll look to bring most of that in-house. We will have capacity as we have a great plan to grow Carlsberg. We think the growth opportunity for Carlsberg is tremendous on what we can do with that brand. We've only been at this five years, where most craft brewers have been out there a long, long, long time. You know, we've had some pain, but we've managed through it, and I think we've really got it in a good place now from a scale standpoint. You know, I could be wrong. I think we'll combine with BrewDog and what we're doing today. You know, it's almost 18 million cases of beer that we'll be selling.

Speaker #2: And now , you know , we're running probably a 50 , 60% capacity , and we have tremendous opportunities to grow more and more .

Speaker #2: And market really , you know , the highlight is where we've come with CC Pharma , where we are at two , 3% margins and closer to five , 6% margins now .

Speaker #2: And really see the opportunity , you know , in that business and see opportunities from an integration standpoint . And even seeing it grow throughout the rest of Europe and lastly , you know , not well , our wellness business in regards to Manitoba harvest and the growth with business and the growth in regards to the beverage businesses that are in that business , you , you know , listen , we'll see what happens in regards to Delta nine .

Irwin Simon: That's between, you know, the worldwide. We're buying lots of cans, we're buying lots of hops, we're buying lots of ingredients here. Yes, some of it is across the water. We're buying lots of kegs. How do we utilize that? We're just not a little craft brewer anymore, from a standpoint there.

Speaker #2: I think, as you heard me say, there are three options out there. Either 1 or 2 will happen. I'll be disappointed if it's 3.

Speaker #2: But again, we're out there in full force selling, you know, our products today that we have in the marketplace and sticking with it, and out there lobbying the governments to really take a hard look at that.

Speaker #2: So last but not least , you know , on March 2nd , you know , I just sort of want to step back one second in regards to Carlsberg , as we announced our partnership with Carlsberg .

Aaron Grey: Okay, great. Thanks for that color. I'll go and jump back in the queue.

Irwin Simon: Thanks.

Operator: Our next question is from the line of Pablo Zuanic with Zuanic & Associates. Please proceed with your questions.

Speaker #2: And it's something I'm very proud of because I grew up in Carlsberg. It's a worldwide brand. It's one of the largest breweries out there.

Pablo Zuanic: Yes, good morning, everyone, and congratulations on the very strong international growth, and also very nice to see the share count being stable quarter-on-quarter. Look, I have three questions on Germany specifically, and I'll try to keep it brief. The first question I want to get your take in terms of the advantage of being vertically integrated versus the many distributors out there. I mean, for a while, we saw that the distributors were growing faster. We saw consolidation, Curaleaf by Four 20 Pharma, High Tide by Remexian more recently. But now with lowered prices, some of the distributors are being squeezed out, and they don't seem to have a very stable supply chain. I'm just trying to understand if you can remind people of the advantages in Germany, especially the way the market is evolving of being vertically integrated versus the distributor model.

Speaker #2: What a class organization to be associated with. I spent lots of time with the Carlsberg team, and it's tremendous what we can learn from Carlsberg.

Speaker #2: And , you know what ? We have the ability to tap into there . You know , knowledge base , tap into their new products , tap into their marketing things .

Speaker #2: And I always say when I grow up , I like to just to be like Carlsberg or something that we aspire to . And having that in the US and the US being the biggest beer market in the world , Carlsberg is looking for some big things for us .

Speaker #2: And I promise we're not going to let them down . Last but not least , in regards to BrewDog . Listen , I looked at BrewDog numerous times .

Speaker #2: You know, throughout the years and acquisition, I congratulate the founders for what they did in regards to building this brand and what they did in regards to opening up these beautiful brew pubs.

Pablo Zuanic: The second question is that it would help if you can expand on your route to market. Like, how many people do you have on the ground? How many people are visiting doctors? You know, what are the efforts in terms of reaching out to patients, given all the restrictions? But just if you can give more color on your route to market in Germany. The third, which is related to all of this, I could make the argument, playing devil's advocate, that pharmacy reach does not matter too much, right? That all these numbers that we hear about CC Pharma and Alliance Healthcare now are not so relevant when the doctors and the patients are making the decision and the 90 and the 80/20 rule applies, right?

Speaker #2: You know , around the world today . And since 2015 . And , you know , basically ten , 11 years , what they've built , you know , unfortunately , not everything goes as planned .

Speaker #2: And when it had the opportunity to participate in the administration to buy this, without being able to due diligence the way we could, but we knew of the brand.

Speaker #2: But being able to enter data rooms and ended up buying this, you know, a little over £40 million, is something that I'm excited about.

Speaker #2: But I always say, it's not what you bought it for, it's what you do with it. And with that, there's a lot to do.

Pablo Zuanic: We know that maybe 50 pharmacies, especially online, account for the bulk of sales and only 1 of 7 pharmacies sell medical cannabis. Why does pharmacy reach matter in the short term and in the long term? I know there's a lot there, but there are 3 questions on international that would help if you can cover. Thank you.

Speaker #2: And this changes a lot within Tilray in regards to our beverage business , our worldwide known approach is , you heard me say in my comments that I've done lots of acquisitions , whether it's paid or here , and I've never had so many reach outs about the brand .

Irwin Simon: I would like to remember all three, okay. In number one, to your point, and I stressed this before, from a growth standpoint of having, you know, our Cantanhede facility and that up and growing the way it is today and growing some of the best cannabis that it ever has, and having the permits to get out of Portugal into Germany is a major advantage to us. This is what helped us in the quarter to get the sales. Again, as we're getting yields and flower to become that low cost, that low-cost seller in there in the marketplace and deal with price compression.

Speaker #2: BrewDog and excitement that is . So we're pretty excited . It's just a month , month that we've owned the business . When we get their hands around this , one of the big things this business as it was going through and administration was in the midst of either being shut down or sold in pieces or sold as a whole , like us .

Speaker #2: So it's almost like we're starting this back up again and getting it back up to capacity, getting the factories back up, making sure we have SOPs where suppliers didn't get paid, and the rents and suppliers that we've got to do that.

Speaker #2: There were employees that had their resume on the streets that didn't know if they were going to have a job or not.

Irwin Simon: Number two, you heard me talk about now as we bring on our facility in Gatineau, Québec, that is a GMP facility and that from a supply standpoint, and I got to tell you, because originally we were going to sell that, and thank God we didn't, because from electricity costs, from labor costs, that is an excellent facility and it's an excellent facility for us to have and supply the international market. That's what it'll do because it's GMP, because it's a lower cost facility. Our German facility, which, you know, originally we were selling 2 to 3 metric tons out of there. Raj and the team has done a great job of getting that up into additional metric tons when before that we were only allowed to sell into the German government there.

Speaker #2: And that's something that that we got to make sure . So stabilization , as I keep saying , is the key to this here .

Speaker #2: And with that, we will have in place strategic plans to grow the business in the UK. Ireland will have a great landing place for Australia in Europe, markets.

Speaker #2: We'll have plans in place for franchise, and what we will do with our current group ups, and what we're going to do in the US.

Speaker #2: So, there's a lot of exciting things with BrewDog that we can do, and will do, and remember, there's a lot of heavy lifting there, and how do we integrate it with our business.

Speaker #2: So with that , some exciting things happen at Tilray . Let me tell you , as I always say , there's two by fours as every day .

Speaker #2: And that's something we live by . And how do we deal with it ? I want to thank everybody for getting on our call today and listening to us happy Passover , happy Easter , everybody , and you , enjoy some good beer out there .

Irwin Simon: To your point, you know, Pablo, yes, we have supply. Yes, we can be that lowest cost producer. Yes, the big thing is we can be consistent in regards to, you know, the customers that we're selling to. I'm gonna let Raj at least talk about what we have on the ground there and the infrastructure in a minute, but just going to the pharmacies, you know, you made a really good point about having vertical integration. Number one, you know, having CC Pharma, the big part of CC Pharma today's business is not the cannabis business. There's three things CC Pharma does. It has 16,000 pharmacies, and a lot of these pharmacies, Pablo, are buying medical cannabis. Now they have the ability, and at the end, to sell. It has the ability to go to pharmacies, number one.

Speaker #2: Enjoy some of our good cannabis and March Madness . Hey , when you're watching March Madness , this weekend , make sure you have one of our great beers .

Speaker #2: You know that we produce out there. Thank you very much for listening to us today.

Irwin Simon: Number two, there's a lot they can do in regards to online and selling online through CC Pharma, and that is something that we're working on. Again, as we look at expanding our product lines in Germany, whether it is base, whether it is pre-rolls, CC Pharma has medical license, you know, and an application that they can do these things for. We're looking at numerous things with CC Pharma. Today, having it is, you know, it is very important for us. You know, it has a tremendous network too, with other, you know, CC Pharma types of distributors that we can sell products through them too. CC Pharma has a relevance to us, and it's a big relevance for us in the cannabis growth market, where no one else really has a CC Pharma today.

Irwin Simon: Rajnish, in regards to your sales organization on the ground. Go ahead.

Irwin Simon: Yeah. Two things here, Irwin Simon. There is a price compression in Germany, which is kind of changing the route to market, and the route to market is becoming more integrated. The distributor is now getting squeezed out because of the margins, et cetera. I think we don't see it now, but we do see it going forward, that the route to market will become more direct to pharmacies and through the channels of prescriptions through doctors, et cetera. CC Pharma and our medical team there is presently working along with the prescribers and also in the pharmacies to work and build this integrated supply chain to reach the patients. That's number one. Number two, to your question of what's the feet on street, we have today two teams which work on the street.

Rajnish Ohri: Yeah. Two things here, Irwin Simon. There is a price compression in Germany, which is kind of changing the route to market, and the route to market is becoming more integrated. The distributor is now getting squeezed out because of the margins, et cetera. I think we don't see it now, but we do see it going forward, that the route to market will become more direct to pharmacies and through the channels of prescriptions through doctors, et cetera. CC Pharma and our medical team there is presently working along with the prescribers and also in the pharmacies to work and build this integrated supply chain to reach the patients. That's number one. Number two, to your question of what's the feet on street, we have today two teams which work on the street.

Irwin Simon: One is the one which work with the prescribers. This is a team of about 20+ people who are medical representatives and medical advisors who work on with the prescribers. Then we have a team with CC Pharma, which is also about 7 to 8 people who are basically telecall services people who continuously to work with pharmacies to make sure that the prescriptions which reach there and the stocks are available for them. So there is a twin approach there, both at the pharmacy and at the prescriber level, at the ground in Germany. As we go and see this forward, I think, and these are signs which we see in the market today, that the route to market is going more direct than through the distribution.

Rajnish Ohri: One is the one which work with the prescribers. This is a team of about 20+ people who are medical representatives and medical advisors who work on with the prescribers. Then we have a team with CC Pharma, which is also about 7 to 8 people who are basically telecall services people who continuously to work with pharmacies to make sure that the prescriptions which reach there and the stocks are available for them. So there is a twin approach there, both at the pharmacy and at the prescriber level, at the ground in Germany. As we go and see this forward, I think, and these are signs which we see in the market today, that the route to market is going more direct than through the distribution.

Irwin Simon: With CC Pharma and our Tilray Medical team, I think this change we are seeing and we also see data coming to us, which is telling us that the pharmacy sales are improving. Still small, but improving compared to what the distribution sales have been.

Rajnish Ohri: With CC Pharma and our Tilray Medical team, I think this change we are seeing and we also see data coming to us, which is telling us that the pharmacy sales are improving. Still small, but improving compared to what the distribution sales have been.

Irwin Simon: Thank you, Pablo. Pablo, not only that, what we have internationally today, I mean, basically we have marketing teams, we have R&D teams, we have quality teams. We have research that's working on, you know, our different cannabis strains and genetics over there for, you know, from a medical standpoint, that when doctors prescribe for pain, for anxiety, for cancer, you know, we can go and support it. Again, what we're not is just somebody selling into the marketplace. I mean, as Rajnish said, we have a big infrastructure in Canada and Portugal, we have in Germany, and then we have a team to support it in London, in regard to a marketing team, and there's a whole supply team. The good news is we have, you know, moved a lot of our Canadian colleagues over there to help us with this growth.

Irwin Simon: You were gonna ask something else, go ahead, Pablo.

Pablo Zuanic: Can I ask? I mean, that's very color. Can I ask just one more quickly? You mentioned-

Irwin Simon: Yeah.

Irwin Simon: You're keeping an eye on the CMS program in the US for the full spectrum CBD. Does that mean that you would be considering or looking at buying a US CBD brand?

Irwin Simon: We have a brand today called Happy Flower, okay? We produce CBD products internationally. We have formulations, we have products. You know, it just gotta fit to what the US standards are and the regs are here. But listen, I've always liked if it made sense to buy something that gives you a foothold in there. But like anything, we have the ability today to do our own with CBD products.

Pablo Zuanic: That's good. Thank you.

Irwin Simon: Thank you.

Operator: Our next question is from the line of Tamy Chen with Canaccord Genuity. Please proceed with your questions.

Tamy Chen: Thank you, and good morning. The majority of my questions have been asked, so just a couple of quick follow-ups. With respect to the beverage segment, you called out trough margins in quarter. Is that including or excluding the BrewDog integration? Just trying to get a handle on, you know, whether that's trough on legacy or trough on go forward and how we should think about that evolution of the margins.

Irwin Simon: No. BrewDog. From these margins, BrewDog was acquired 2 March, so there's nothing in here in regards to BrewDog, and there's nothing in here in regards to Carlsberg from a margin standpoint. Again, from a procurement, from a sales, from an infrastructure, from a manufacturing, you know, again, I'm not gonna, you know, come out there with numbers, but I would think there would be upside just putting volume.

Tamy Chen: Great. Thank you. That was the gist of the question, just on that evolution from here forward with Carlsberg and BrewDog, but I can leave it there. Just follow up with respect to the brewpubs and that footprint. Just with how consumer trends and consumption patterns have changed, how are you thinking about that footprint going forward? Is it becoming more important to you as a sort of a strategic buffer on the consumption side? Any color around the brewpub footprint would be useful.

Irwin Simon: Listen, good question. You know, it's something today within Tilray, we have 18 of our own brewpubs here in the US. So again, it is something we understand. In regards to the UK, you know, Ireland, Scotland, and the other markets, listen, I am big on brewpubs to look at them from a marketing tool and to build our brand out there, to bring, you know, people together. That's the whole thing on longevity today, to bring people together. A big part, and I plan to spend a lot of time looking at our brewpubs in regards to what we got to do to interact with our customers that come there. How do we serve them with food and good value?

Irwin Simon: I've also talked about whether it's, you know, Carlsberg, Guinness or our other beers and how we bring other beers into there. Because if they don't want BrewDog, we want them to come to our brewpubs at least to enjoy our food, enjoy the environment, and maybe we convince them to, you know, have BrewDog. You know, is that gonna be a big part of our growth? Is it part of our strategic plan to open up another 100 of those? No. Is a big part of those to look to upgrade them, to put more TVs, more interactive types of communications in regards to getting more and more of our consumers to that and to something? Yes. Is there a opportunity for us to franchise more and more BrewDogs where we did not take them and make them franchisees? Absolutely, yes.

Irwin Simon: There's some exciting things here as we look to grow, you know, from a franchise model, as we look to increase the sales with the ones we own. Where do we license the brand today in airports. That's something that we're looking at too, because there's, you know, with airports today, you license your brand name, you collect a royalty, and you sell product. That's how we're looking, you know, at these brewpubs.

Tamy Chen: Great. Thanks for that insight. I'll get back in queue.

Irwin Simon: Thank you.

Operator: Thank you. At this time, I'll turn the floor back to management for closing remarks.

Irwin Simon: Well, thank you everybody. Number one, it's April Fools, and our numbers are not a April Fools joke, so that's the good news, okay? Our numbers are some real strong numbers out there, and congratulations to the team on the growth. You know, not one of these, you know, businesses, nothing has been easy out there in regards to what we deal from a regulatory standpoint, what we deal, you know, in regards to pricing in regards to tariffs and just dealing with looking at the consumer today. You know, you stop and look at Tilray from 2019 to hitting over that billion-dollar mark with the acquisition of BrewDog is a very exciting time for us.

Irwin Simon: In regards to where we're going in 2027 and with two months left in our quarter of 2026, you know, there's a lot to be proud of here. As you heard me talk about the big overhaul that we're gonna do in the Canadian market in regards to our genetics, in regards to our strains, in regards to using AI to help us there, in regards to how we modernize those facilities to take out, you know, lots of cost. Blair and the team have done a tremendous job in doing that. Again, as you come back and think about what we have in growth today and how we converted these facilities to, you know, much more economical and dealt with the challenges of the cost of utilities in Ontario.

Irwin Simon: Again, we've accomplished a lot in the Canadian market, in the only market where recreational cannabis is legal in the world, and at the same time dealing with and growing our medical market and, you know, introducing more and more patients and consumers to the product. In regards to US, listen, again, you know, I'd like to see some better results coming out of our beverage business. On the other hand, as you bring everything together since late 2020 and we're here where we are today, I see some good light at the end of the tunnel here of what we're building here and being the fourth largest craft brewer out there and the fourth largest, you know, craft beer business. There's been a lot of changes in the craft beer business. There's been a lot of changes in the beer business.

Irwin Simon: One thing I can tell you is I really feel we got the footprint right, we got the model right, and now we got the products right, because we, you know, we brought up a lot of SKUs. We have over 18 brands. We have over 900 distributors. We've had multiple people, multiple contracts out there that we had to deal with, whether it's buying kegs, cans, oats, hops, et cetera. As we bring all that together. In regards to our spirits business, you heard me talk about our depletions on Breckenridge being up. You know, we dealt with lots of distributor transition out there with RNDC now being acquired by Reyes, which is good news for us, and it's something that we will consolidate into the new Reyes distribution system.

Irwin Simon: You know, in regards to some other changes in the market, it's something we're going to do. What I'm really happy about in seeing our Breckenridge is some of the new stuff that we're really coming out with. In regards to our tequilas, our drinks with Moonshot, our Mountain Shot, it is a moonshot. Some of our non-alc drinks, and some of our products there. It's great to see some of the stabilization that's gonna happen in regards to the distribution business. Listen, this industry is a difficult industry with a three-tier system, and you can have the greatest products, but it's the distribution that you need.

Irwin Simon: In regards to international, again, Rajnish and team have done some great things in regards to the international business and the growth, and dealing with a regulated market in regards to medical cannabis, dealing with permits when you ship out of the country or permits when you ship into the country. Again, what we've had to do to get our Cantanhede facility up to the yields and up to the growth that we've done in Canada and up to being able to supply consistent product to the marketplace, and back to Pablo's, you know, point before, that's something that Tilray now is going to be known for. Because if you think about it, look where our volumes are today and look where they were a year ago and how we've doubled, you know, in the quarter. A lot to be, you know, proud of there.

Irwin Simon: Again, there's a lot more that we're going to do in those marketplaces. We had to overcome Germany being only sold into the German government, which we're losing money, and almost doubling the amount of production coming out of that facility. Now, you know, we're running Cantanhede probably at 50-60% capacity, and we have tremendous opportunities to grow more and more in our Cantanhede market. Really, you know, the highlight is where we've come with CC Pharma, where we are at 2-3% margins and closer to 5-6% margins now. Really see the opportunity in, you know, in that business and see opportunities from an integration standpoint and even seeing it grow throughout the rest of Europe.

Irwin Simon: Well, our wellness business in regards to Manitoba Harvest and the growth within that business and the growth in regards to some of the beverage businesses that's in that business. You know, listen, we'll see what happens in regards to Delta-9. I think as you heard me say, there's three options out there. Either one or two will happen. I'll be disappointed if it's three. Again, we're out there in full force selling, you know, our products today that we have in the marketplace and sticking with it and out there lobbying the governments to really take a hard look at that.

Irwin Simon: Last but not least, you know, on 2 March, you know, I just sort of want to step back one second in regards to Carlsberg, as we announced our partnership with Carlsberg, and it's something I'm very proud of because I grew up on Carlsberg. It's a worldwide brand. It's one of the largest brewers out there. What a class organization to be associated with. I spent lots of time with the Carlsberg team, and it's tremendous what we can learn from Carlsberg. You know, what we have the ability to tap into their, you know, knowledge base, tap into their new products, tap into their marketing things. I always say this here, when I grow up, I'd like just to be like Carlsberg.

Irwin Simon: It's something that we aspire to, and having that for the US, and the US being the biggest beer market, you know, in the world, Carlsberg is looking for some big things for us, and I promise we're not gonna let them down. Last but not least, in regards to BrewDog. Listen, I looked at BrewDog numerous times, you know, throughout the years in acquisition. I congratulate the founders for what they did in regards to building this brand and what they did in regards to opening up these beautiful brewpubs, you know, around the world today. Since 2015, you know, basically 10, 11 years what they've built. You know, unfortunately, not everything goes as planned.

Irwin Simon: Tilray, when it had the opportunity to participate in the administration to buy this without being able to do due diligence the way we could, but we knew of the brand, without being able to go into data rooms and ending up buying this, you know, at a little over GBP 40 million is something that I'm excited about. I always say it's not what you bought it for, it's what you do with it. With that, there's a lot to do. This changes a lot within Tilray in regards to our beverage business, our worldwide knowing of who Tilray is. You heard me say in my comments that, you know, I've done lots of acquisitions, whether it's at A or here, and I've never had so many reach outs about the brand BrewDog and the excitement that is. We're pretty excited.

Irwin Simon: It's just a month that we own the business. We're in the midst of getting our hands around this. One of the big things, this business, as it was going through and in administration, was in the midst of either being shut down or sold in pieces or sold as a whole like us. It's almost like we're starting this back up again and getting it back up to capacity, getting the factories back up, making sure we have hops, where suppliers didn't get paid, and there were random suppliers that we got to do that. There were employees that had their résumés on the street that didn't know if they were gonna have a job or not, and that's something that we gotta make sure. Stabilization, as I keep saying, is the key to this year.

Irwin Simon: With that, we will have in place great strategic plans to grow the business in, you know, UK, Ireland. We'll have great plans in place for Australia. In European markets, we'll have plans in place for France. What we will do with our current brewpubs, and what we're gonna do in the US. There's a lot of exciting things with BrewDog that we can do and will do. Remember, there's a lot of heavy lifting there in how do we integrate it within our business. With that, some exciting things happen at Tilray. Let me tell you, as I always say, there's two by fours that hit you in the head every day, and that's something we live by, and how do we deal with it? I wanna thank everybody for getting on our call today and listening to us.

Irwin Simon: Happy Passover. Happy Easter to everybody. You know, enjoy some good beer out there. Enjoy some of our good cannabis. To March Madness, hey, when you're watching March Madness this weekend, make sure you have, you know, one of our great beers, you know, that we produce out there. Thank you very much for listening to us today.

Operator: This will conclude today's conference. You disconnect your lines at this time. Thank you for your participation. Have a wonderful day.

Q3 2026 Tilray Inc Earnings Call

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