Tilray Brands, Inc.

Good morning, everyone. Thank you for joining us to discuss Tilray Inc.' 's financial results for the 2021 fiscal year and fourth quarter ended May 31st, 2021. Joining me on today's call are Erwin Simon, Chairman and Chief Executive Officer, Carl Merton, Chief Financial Officer, and Barron Narada, Chief Corporate Affairs Officer. 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 and investment firms conducted via audio and participating retail shareholders conducted through the Say Technologies platform. Question submission and upvoting through the Say Technologies platform concluded yesterday, and the company will read aloud and answer the top questions. Ms. Narada, you may begin the conference.

Thank you and good morning. By now, everyone should have access to the earnings release available on the investor section of Tilray's website at tilray.com and filed with the Securities and Exchange Commission on Form 8-K. On today's call, we will also refer to various non-GAAP financial measures which 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. Today's earnings press release contains a reconciliation of each non-GAAP financial measure to the most comparable measure prepared in accordance with GAAP. Also, please remember that during this call, we may make forward-looking statements. 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. Please note the text in our earnings press release issued today for discussions on the risks and uncertainties associated with such forward-looking statements. And now I'd like to turn the call over to Tilray's Chairman and CEO, Erwin Simon.

Thank you very much, Barron, and good morning, everyone. We appreciate you joining us for our inaugural call as New Tilray. Today, we will reiterate and reaffirm the strategic and financial benefits of our recent business combination and acquisition, detail the business-level strategies and roadmap to ensure we realize the vision of that combination, outline the progress we have made to date, and, of course, discuss our fiscal fourth quarter 2021 results, which consist of 13 weeks of pre-merger AFRIA and four weeks of post-merger legacy Tilray. The world's largest cannabis company, when we announced the new Tilray in December of last year, we were optimistic that the strategic operational market opportunities in front of us had potential to create the world's leading cannabis-focused consumer branded company. This was our bet, backed by strong trends towards cannabis legalization in our three key markets, Canada, international, and the U.S. A management team with a track record of building and sustaining value in the consumer packaged good wellness space. well-defined, organic, acquisitive, and partnerships based on growth strategy that together with full legalization in the U.S., we believe we will take us to a plan of $4 billion of revenue by 2024. I want to be clear at the outset. Our conviction in both the opportunities, just as importantly as our ability to execute on that opportunity, has never been stronger. The last six months have affirmed the sheer size of global opportunities ahead of us. Just as importantly, the effectiveness of a committed and passionate group of team members in building the leading consumer packaged good business in the cannabis industry. Beyond what we have achieved over the last six months, our perseverance during COVID crisis itself lends further validation to the fact that this team knows how to pivot, execute, and get results. Consider at the highest level, and we lost well over $100 million in revenue as a result of retail store closures and COVID general impact, and yet we immediately implemented cost-saving measures, ultimately helping us build EBITDA to more than $40 million in 2021. We managed our facilities extremely well, helping ensure they remained open throughout the last 18 months. We acquired Sweetwater, announced the closure of the Tilray-Afria combination, and made meaningful progress on the integration, as I will discuss in more detail. We closed on a new bank financing of $100 million term debt and $20 million of credit, and ended the fiscal year with more than $488 million in cash and cash equivalents versus $360 million last year. So throughout today's presentation, consider these achievements during fiscal 21, a year of unprecedented change and disruption. Highlight the strengths of our new leadership team and should instill confidence in the road ahead as we accelerate integration of Tilray and Afria amid increasingly favorable market conditions. The thesis behind Tilray-Afria business combination and sweet water acquisition is that the combination of cannabis with a CPG and health and wellness company is a winner. Prior to Afria, and my team here with me today at Tilray, We built a great CPG business in natural organics, healthy foods, personal care products, beverage, alcohol, and other industries. And the playbook here is essentially the same. It's all about building iconic, sought-after brands backed by product excellence and variety of educating consumers about our brands, our stringent quality standards, and benefits of cannabis products to encourage trial, foster loyalty, and having the scale distribution necessary to get them into consumers' hands and grow market share. To put it simply, Tilray is the only cannabis company with that scale and resources to get it done. Our business planning and integration are built around five key competitive differentiators. The industry's broadest geographic footprint and operational scale, leadership positions in Canada with a complete portfolio of product offerings and carefully curated brands, tremendous international growth opportunities, and a meaningful U.S. consumer packaged goods platform to be immediately leveraged for cannabis products upon legalization, and with both companies coming together, substantial synergies. Geographic footprint and operational scale. I'll start with item one. Geographic footprint and scale. This is clear and distinct competitive advantage as Tilray now possesses the geographic footprint and operational scale to merge as a consolidator in the cannabis market. This effort is backed by a strong, flexible balance sheet, robust cash balances, and access to capital. These attributes provide us with the ability to accelerate organic growth, build EBITDA, and free cash flow, and look at other partnerships and acquisitive opportunities that could ultimately complement our product line as legalization accelerates. Regardless of the industry, but especially in a nascent, rapidly growing industry like cannabis, these attributes should deliver long-term, sustainable value for shareholders. Strengthening leadership position in Canada. In Canada, we plan to grow and strengthen our position as the number one Canadian LP in total sales on a consolidated basis. This is a foundation that will be so essential to getting us from our current combined retail market share in Canada of 16% to our goal of 30% share by fiscal year 2024. New products that are trusted by consumers that have real brand equity In fact, putting the two complementary portfolios of Afria and Legacy Tilray together has enabled us to strengthen both brands. Afria has historically been strong in flour, pre-rolls, 2.0 products, and began making inroads on vapes, while Legacy Tilray has several high-powered potency flour strains that fit nicely into our portfolio. in addition to being stronger overall in edibles and beverages. Strategic partnerships with provincial boards and retail partners. We have strong relationship with the provincial boards across the country and retailer partners. We will continue to create merchandising and education platforms for bartenders and consumers to drive brand loyalty to our portfolio. Both of these strategies will drive absolute growth in the Canadian market. Additional store openings. To this point, there are currently over 2,000 stores in Canada. We believe growing the market demand could warrant as many as 3,000 by the end of calendar year 2022. Of course, this retail performance will likely improve and commensurate with lifting the COVID restrictions, which have, of course, materially impacted retail efforts since the spring of 2020. Our Canadian business will benefit further from the fact that we're already the low-cost producer with the state-of-art cultivation, processing, manufacturing facilities. But this did not happen by accident. In fact, from the beginning, we were careful about how we created cost structures within the organization. and now we are accelerating our work on pulling additional costs out of the structure so that we can gain further efficiencies and increase our margins. While legacy Tilray was generally asset light, Apria had invested heavily in brands with great brand equity. We view our ability to now leverage product capabilities and footprints with an asset light model as a strong combination. Based on OCS sales data, Tilray continues to be the number one market share in Ontario. Further, the consolidation of Tilray also has the number one market share now in Quebec. Innovation will also be a hallmark across our brands and across all segments in Canada. From a cannabis 2.0 standpoint, this will be within concentrates, edibles, and drinks. While for Canadian medical, our focus is centered on the large and growing demand for new high-quality cannabis products that promote health, wellness, and well-being. For example, we recently launched Symbios, which complements our existing medical brand portfolio of all medical Afria, Broken Coast, and Tilray products. This new brand was developed to provide a broader spectrum of formats and unique cannabinoid ratios at a better price point. In addition, it allows medical patients a full comprehensive assortment of products, including flour, oils, and pre-rolls for their health wellness regimen. We also introduce high-potency medical topicals under the AFRIA brand designated to target inflammatory joint disease by regulating tissue inflammation when applied topically to the skin. Also, we consolidate facilities within Canada and moved a lot of Tilray's production into our Leamington facility. We'll continue to focus on improving product potency and quality to meet the market demand. As you know, Canada currently restricts how cannabis brands can be marketed to consumers. While product safety is certain to our paramount, it is also crucial that to communicate and educate consumers about the products and benefits of cannabis. During the pandemic, as people were not able to go into stores in Ontario and had to deal with in-store capacity limits in Alberta and British Columbia, we kept our focus on driving brand awareness, work with the different control board and retailers to use social media and other e-commerce platform to help those that ordered online or picked up at curbside. And as noted a moment ago, until just recently in mid-June, there were over 800-plus stores in Ontario alone that had never opened their doors to customers because of COVID or could only do curbside delivery. This has now begun to change, and many stores have since opened across these provinces in June, although that, of course, did not help our May ending fiscal quarter sales. And so for the past six months, When customers were looking for product, they were searching online. Most of the websites are organized by price. In other words, price mattered more than marketing. However, as consumers now can resume and interact with bud tenders, when impulse purchase can occur inside the store, we're confident customers will shift away from price-based cannabis purchases and brands will matter. and more environmentally characterized by pent-up demand. Finally, we intend to be effective, innovative advertisers in the truest sense of that term. Educating our consumers about the quality and safety of our products is essential, and advertising is a critical medium in that effort. We have therefore been working with the appropriate authorities to allow more effective forms of advertising, similar to other regulated industries, and we have a marketing strategy that is ready to go. Accelerating our international growth. Our international growth strategy leverages our two strong medical cannabis brands and our large distribution network in Germany and NDN European Union GMP supply chain. Again, these attributes are unique to Tilray, and taken together, they're expected to increase our access and availability to high-quality consistent medical cannabis for all European patients. The European Union, where we already have a very meaningful presence, represents a powerful growth market and could be a billion-dollar business for us from a medical standpoint alone. We'll also be ready for legalization from adult use when the time comes. Our presence in the EU allows us to grow our brands on a global basis with 600 million people. That is nearly twice the size of the US, with Germany possessing the greatest potential at twice the population of Canada. We already have a low-cost production facility in Portugal that provides us with tariff-free access to the EU. We also have a state-of-the-art EU GMP certified cultivation and production facility in Germany and a subsidiary in CC Pharma, which is a medical distribution business to 13,000 pharmacies. And while our fiscal fourth quarter results in Europe were negatively impacted by the lockdown in Germany, similar to Canada, it is now reopening and we're confident our business momentum will return. Among the many benefits of our business combination is the ability to have CC Pharma distribute our product drone in Portugal to Germany, and in doing so, move up the value chain with the consumer as part of that transaction. To be clear, revenue synergies are not part of the overall $80 million in synergies that we've already articulated. Those were only on the cost side. This transaction is taking place and will positively impact the tail end of our fiscal first quarter, but had no flow through in recent quarters. Another key factor in our plans for Europe is that the EU generally is more medically and pharmaceutically focused than Canada and the US, which results in nearly a three times difference in purchase reimbursement. And so we've expanded to those markets that are more focused on reimbursement and have reimbursement models. We think consumption increase on per capita basis as well. Early this month, our wholly owned German subsidiary, Afria Rx, completed the first successful harvest of its EU GMP certified medical cannabis cultivated in Germany for distribution to German pharmacies. This represents an important milestone in granting access to high quality, trustworthy medical cannabis to patients and healthcare professionals in Germany. And despite the challenges of a global pandemic, we remain on track as the first licensed producer to cultivate medical cannabis in Germany. Moreover, we think that our ongoing domestic harvest and production will play an indispensable role in ensuring that patients' needs are met with products of the highest quality medical cannabis, while at the same time, reducing dependence on imported supply. Other European markets where we are expanding our platform are Poland, Italy, the UK, France, the Netherlands, and Israel. These countries and other parts of the continent are likely to see full legalization before the US. Finally, in South America, there'll be greater legalization from a medical standpoint. We already have a foothold into Argentina, Colombia, where we see some opportunities. We've also shipped some CBD oils into China and should see opportunities eventually India, where THC is already used in a lot of different medicines. Enhance US consumer packaged good presence and infrastructure. Here in the US, we have a strong consumer packaged good presence and infrastructure with two strategic pillars. Sweetwater, the 11th largest craft brewer in the nation, and leading lifestyle brand. With around 4,000 on-premise and off-premise points and the sales across 27 states, and Manitoba Harvest, a pioneer in branded hemp, CBD, and wellness products, with access to 17,000 stores in North America. Today, they are $100 million plus businesses and quite profitable with enormous potential for growth. In the event of U.S. federal legalization, which received a high-profile boost from Senator Schumer's recently proposed legislation, we can foresee within the next 24 months, Tilray will be ideally positioned to compete in the cannabis market by leveraging these strong brands and their distribution systems to parlay into THC drinks, CBD drinks, CBD foods, and related adjacencies. With Sweetwater, we're expanding our product line of leading craft beers and other beverages to build greater brand awareness for our cannabis brands through cross-collaboration and brand extension opportunities. We introduced Hazy, a juicy and refreshing IPA, and Oasis, which is a vodka-seltzer mix. Both are doing well already. And just last month, Sweetwater partnered with Broken Coast to launch Sweetwater US distribution of Broken Coast BC Lager which is also a milestone event as Tilray's first Canadian cannabis brand and introduction into the US. We intend to follow this up over time by introducing other great Canadian cannabis brands to the US and doing so will connect us with consumers and other mainstream brands in our portfolio. We're also currently working opportunities for Sweetwater with CBD tequila mixes, wine spitzer mixes, wine in a can, etc., while increasing Sweetwater's distribution in the near term to an additional three states. Let me also say that during the quarter itself, Sweetwater, like a lot of other craft breweries, had below-plan on-premise sales, as many restaurants and bars were closed for operating full capacity. although we did pick up a lot of retail business as consumers bought or expanded their line of products. As business conditions have improved since the end of the quarter, on-premise sales have rebounded and are up 40% year over year. Turning now to Manitoba Harvest, this is a great business, and we're now fine-tuning strategic planning and expanding opportunities, including looking at strategic partnership opportunities and acquisitions that complement our adjacencies to the cannabis world as we position ourselves for federal legalization. Substantial synergies. As we have said, we plan to deliver approximately $80 million of annual pre-tax cost synergies within 18 months of the business combination. When we first announced the transaction, we said 24 months, but I've since moved that up. Key areas of opportunity are within cultivation, production, cannabis products purchasing, sales, marketing, and corporate expenses. There's already been a lot of hard work done by our great team over several months, which will a lot more go towards achieving these synergies and getting the two entities fully integrated. So far, we have already achieved $35 million in synergies. So we're a little bit ahead of our internal plan, but still moving things along so that we can continuously drive positive cash flow within the new till rate. Notably, as I said this before, the US $80 million are cost synergies and do not reflect any possible revenue synergies that we know are also within our reach. In conclusion, I know that I've covered a lot of ground today, but hopefully have also expressed my enthusiasm and excitement for what lies ahead for the new Tilray. Carl will now review our financial results, but first, I want to remind and encourage our shareholders of record to read our proxy and vote online or by telephone on the authorized shares proposal and governance proposals. For all the reasons I've detailed this morning, we need your help to ensure Tilray grows and to ensure that you are able to participate in our success in a meaningful, constructive manner. As a reminder, the first proposal would authorize additional shares of common stock so that we can move quickly to accelerate our growth through potential acquisition and financing opportunities. However, approval does not mean the authorized shares will be immediately issued, only that these shares would be available, if needed, in pursuit of these important corporate initiatives to drive shareholder value. And second, our other proposals are intended to expand the rights of our shareholders to take into consideration the views held by the investment community on important matters of governance. These proposals require shareholder approval on several amendments to our organizational documents. If you have any questions or need any assistance in voting your shares, please contact Moro Sodali at 833-497-7395, toll free in the US and Canada, or 203-658-9400. I know that I speak for our entire management team and our board of directors when I say that we are working every day to take full advantage of all the opportunities that we have at Tilray to enhance long-term shareholder value and deep appreciation of your support. With that, I will now turn the call over to Carl. Carl?