Tilray Brands, Inc.

Hello, and thank you for joining today's conference call to discuss Tilray Brands, Inc.' 's financial results for the fiscal year 2023 and fourth quarter ended May 31st, 2023. 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 via the Say Technologies platform. Questions submitted and uploaded through the SAIT Technologies platform has already concluded, and the company will read aloud and answer to top questions. It's now my pleasure to turn the call over to Ms. Narita. Please go ahead.

Good morning, everyone. By now, you should have access to our 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 CDAR. Please note that during today's call, we will be referring to various non-GAAP financial measures that can provide useful information for investors. However, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. The earnings press release contains a reconciliation of each non-GAAP financial measure to the most comparable measure prepared in accordance with GAAP. In addition, we will be making numerous forward-looking statements during our remarks and in response to your questions. These statements are based on our current expectations and beliefs and involve known and unknown risks and uncertainties, which may prove to be incorrect. Actual results could differ materially from those described in these forward-looking statements. The text in our earnings press release includes many of the risks and uncertainties associated with such forward-looking statements. Today, you will hear from key members of our senior leadership team. Erwin Simon, Chairman and Chief Executive Officer, who will begin with opening remarks, and Carl Merton, Chief Financial Officer, who will provide a financial review and issue our annual guidance for the 2024 fiscal year. Also joining us for the question and answer segment are Denise Baltuchek, Chief Strategy Officer and Head of International, Blair McNeil, President, Tilray Canada, and Ty Gilmore, President of our U.S. Beer Business. And now I'd like to turn the call over to Tilray Brands Chairman and CEO, Erwin Simon.

Thank you, Barron, and good morning, everyone. We appreciate you joining our call today for the presentation of Tilray Brands' 2023 Fiscal Year Financial Results. When I first joined the AFRIA team in 2018, AFRIA was singularly a Canadian cannabis LP with approximately $50 million in annual revenue and minimal cash. Now close to $630 million in revenue and almost $500 million in cash and marketable securities. Boy, have we come a long way. Today, Tilray Brands is one of the most diversified global cannabis lifestyle and CPG companies with four distinct and complementary business segments. Cannabis, including medical and adult use, beverage alcohol, wellness, and medical distribution. Not a bad place to be. I'm very proud of what this team has been able to accomplish in just four years. Tilray's diversification is purposeful, strategic adaptation to current market realities, given the continued delays in U.S. federal cannabis legalization, and more recently, delays in adult use legalization in Germany. Tilray is not building its entire business model around the eventual promise of legalization, but rather unlike others in our sector, we are diversifying beyond cannabis by building a strong, balanced portfolio consisting of successful, profitable, stand-alone beverage, alcohol, and wellness brands in the U.S., along with a strategic distribution business in Europe, each with high growth opportunities in their own right. Legalization will happen one day, but we're not waiting for it. We're not dependent upon it. If and when federal cannabis legalization does happen, we are ready to dominate as a leading global CPG company with the resources, infrastructure, and operations, the distribution of brands, sales and marketing know-how to lead the revolution of cannabis CPG in the mainstream world. Hilray Brands' portfolio today reflects the successful integration of key strategic acquisitions that have enabled us to both grow our top line and deliver substantial cost savings through these synergies. Today, across our core business segments, Tilray is one of the leading and strongest cannabis LPs with approximately $660 million in annual revenue on a constant currency basis. The most profitable LP with approximately $61 million in adjusted EBITDA. the cannabis market leader in Canada and the largest federally legal cannabis market in the world with approximately 13% cannabis market share, including Hexo Brands. The market leader in medical cannabis across Europe with leading market share in Germany, Poland, and Luxembourg. A leader in the hemp food industry with a 51% branded market share with Manitoba Harvest. And last but not least, a leader in the craft beverage alcohol industry, with a growing leadership position in the U.S. craft beer industry as the ninth largest craft brewer by sales volume. Our vision is to inspire and empower the worldwide community to live their very best lives, enhanced by moments of connection and well-being, and we have not wavered. nor has our overarching objective to deliver sustainable long-term shareholder value and growth. We remain wholly committed to delivering for our shareholders tangible progress against our key performance goals by focusing on our core business fundamentals, which are maximizing revenue growth and profitability, realizing the benefits of optimized asset utilizations, and cost management to ensure that we maintain a low cost, high efficient cost structure. And number three, of course, continuing to strengthen our industry leading balance sheet and cash position. Case in point, in quarter four, Tilray reported record financial results and delivered on projections of positive adjusted free cash flow and EBITDA guidance with Q4 net revenue of $184 million and 93% growth in positive adjusted EBITDA of $22 million. Our total revenue for the year ended May 31, 2023, on a constant currency basis rose 6% to $668 million in the prior year. Adjusted gross profit grew 11% to $206 million, and adjusted gross margin improved to 33% from 30% in the prior year. We generated $61 million in adjusted EBITDA, 28% or 13 million higher than last year, and within our annual guided range. On top of these results, we have maintained a strong foundation with almost $500 million in cash and marketable securities today. Turning now to our business segments. Cannabis was our second largest segment by revenue and comprised of 35% of our total mix. In Canada, within our cannabis segment, Tilray remains the market share leader with approximately 13% share in the month of June and July. Revenue from Canadian adult use cannabis increased due to new product innovation and performances. and the favorable impact of the HECSO arrangement, which was partially offset by the negative impact of price compression and challenges in the province of Quebec. Tilray has paid approximately $120 million in Canadian excise tax and corporate income tax to the Canadian government in fiscal 2023, and we expect this to increase to $150 million Canadian with the addition of HECSO. The imbalanced tax burden is an added challenge we continue to face in the Canadian cannabis industry, with the majority of these taxes coming off top-line sales and, of course, impacting the bottom line. I have said this before, but at Merit's repeating roughly 1,000 LPs, 3,700 retail stores are far too many. We need consolidation for the Canadian market to stabilize. We remain confident. this consolidation and rightsizing will continue to take hold over the coming quarters. Last month, we set the stage to drive the next evolution of Canadian cannabis by closing on our accretive acquisition of HEXO, which has strengthened our position across Canada. In doing so, we brought its leading cannabis brands into our operations and increased Tilray's number one leading cannabis market share to 13%, 577 pips ahead of their next LP. From a product category perspective, Tilray continues to lead cannabis sales in every market across Canada. Tilray now is number one in flour, oils, concentrates, number two in pre-rolls, and number four in vapes in the top ten of all categories. In fiscal 23, Tilray's Canadian cannabis product innovation contributed 26.2 million Canadian to our adult use sales. In quarter four, new product innovation was 42% of our business, led by our market-leading adult use brands, Good Supply, with the launch of Good Supply Monsters and Kanika with the launch of Kanika Darts, the first two of their kind of products in the Canadian cannabis market. We've also prioritized the realization of additional operating cost synergies in access to $22 million on an annualized pre-tax basis of our $30 million plan in Canada, eliminating duplication in corporate costs, SG&A, and realizing substantial synergies in cultivation, packaging, logistics, extraction, and quality control. Again, before I joined the company, the legacy of Freya Tilray Hexo management teams spent over $1 billion on greenhouse and infrastructure. Today, our management team and I are laser focused on optimizing our operation and efficiencies, utilizing and repurposing these facilities into profitable business and assets, including our new opportunities with fruit and vegetables cultivation, which is needed in Canada and especially in the Quebec market. Moving forward, we'll continue to strengthen our Canadian position with extensive commercialization rigor while capturing substantial value from HEXO's portfolio and our combined scale. We expect our newly expanded portfolio of Canadian cannabis brands to hit approximately $650 million at retail, with our biggest brands, Good Supply and Redikant leading the charge with approximately $430 million at retail combined. In international cannabis in fiscal 2023, we turned our business around. We changed and upgraded our international management teams across key markets, we improved our profitability and positive cash flow, expanded distribution within established international markets and added countries like Italy, Poland, Czech Republic, which offset our decision not to sell within Israel. As we look to fiscal 2024, our international cannabis business, we're focused on solidifying our leadership position and growing market share in medical cannabis industry in the countries which we participate in today, as well achieving early mover advantage in new countries as medical legalization continues to take hold. We are very well positioned to do this based on three core strengths. Our high quality medical cannabis brands, which are trusted by patients, healthcare professionals, and government officials around the world. Our best in class cultivation facilities in Portugal and Germany, as well as leveraging our Canadian cannabis facilities. And last but not least, our medical distribution network, led by our integrated CC Pharma and medical cannabis teams, with a relationship across 13,000 pharmacies in Germany. Based on these trends to date, we've built momentum in Poland and more recently received market authorization from Italy's Ministry of Health to distribute three new medical cannabis compounds through our wholly owned subsidiary, FL Group. FL Group is one of the only five companies in Italy that can import and distribute medical cannabis. We also forged a strategic partnership to market and educate over 11,000 pharmacies across Italy, on the benefits of medical cannabis and expand our footprint across the Czech Republic through a new export and distribution partnership. Beyond that, the strong platform we've built in our medical cannabis coupled with our knowledge of stemming from our adult use market leadership in Canada and our deep CPG expertise of our leadership team positions us well to capture the adult use opportunity as it materializes in Germany and elsewhere. And in the event that only in country cultivation is allowed in Germany, we are one of the three companies that actually have a facility here today. So we're well situated and have the optimal flexibility to pivot in response to any change in pending regulation. From a bottom line perspective in Europe, we are laser focused on optimizing our platform working to remove approximately $8 million of costs from our business, of which we've already completed over $6 million. In fiscal year 2023, CC Pharma, which will be rebranded to Tilray Pharma, our medical distribution platform for traditional, branded, and generic pharmaceuticals, as well as medical cannabis, grew 10% in constant currency and generated $285 million in revenue. representing 43% of our top line and expanded its gross profit margin to 11% from 9% compared to previous years as we prioritize high margin sales. We see this as a major platform to expand into distribution of cannabis and wellness products throughout Europe. Tilray Pharma provides the benefit of an established pharmaceutical relationship and differentiate it through customers centric services and drive still higher profit margins through the ongoing positive change in its product assortment. While we're not planning our business around adult use legalization in Germany, we note the proposed legislation proposes for medical cannabis to be declassified as a narcotic. and may be prescribed through a medical prescription, thereby opening the pathway to accessibility to a larger patient population. We are using our Tilray Pharma distribution platform and relationships to help expand our medical cannabis business throughout Europe, and at the same time, using this medical distribution company to sell traditional medicines in Germany. Now, turning to our beverage, alcohol, and CPG portfolio, while participation in adult-use cannabis markets are integral to our long-term strategy, let me reiterate that we will not engage business that touched the plant if cannabis remains federally illegal in the U.S. In the meantime, we are optimizing the value of our existing U.S. businesses, which consist of craft beverage companies alcohol brands, and wellness brands, all which are delivering solid performances today and have the potential for significant growth in the near and long-term future. Tilray's growing U.S. beverage alcohol segment includes strong award-winning brands, Sweetwater Brewing Company, Montauk Brewing Company, Alpine Beer Company, Green Flash Brewing Company, Breckenridge Distillery, and the highly-awarded Spirits brands and world's best blended whiskey. For fiscal year 2023, beverage alcohol grew 33% to $95.1 million for the year. Sweetwater saw revenue gains driven by partnerships with key distributors, United Distributors, Eagle Rock Distribution, Reyes Beverage Group, the largest beer distributor in the U.S., Creativity is a hallmark of our beverage alcohol brands, resulting in a steady stream of product launches that drive ongoing attention and excitement for our brands. In the last few months, Sweetwater released a line of ready-to-drink mixed cocktails in a can, a red, white, and blue American lager, and a Colorado orange citrus ale, exclusively in the Colorado market. Since our acquisition of Montauk Brewing, We've expanded Montauk's distribution by approximately 42%, with the brand now available in over 7,500 retail locations across New York, New Jersey, and most recently, Connecticut and Rhode Island. We are confident it can be a national brand by leveraging our national beverage alcohol infrastructure, and we're working quickly towards that. Our U.S. beer business also launched Good Supply Beer, a new light beer and premium lager brewed brand for easy drinking at a refreshing price. Good Supply Beer is available year-round in a 16-ounce can across Georgia, Connecticut, and New York, with added distribution rolling out this summer. Finally, our bourbon spirits brand Breckenridge Distillery continues to build momentum, It is one of the most awarded craft distilleries in the U.S. and firmly established its position as a category leader. Today, Breckenridge Distillery is distributed in all 50 states and aligned nationally with RNDC, including a distribution contract guaranteeing nearly 30% sales growth annually. Our beverage, alcohol, and wellness brands can also be leveraged for cannabis-related opportunities when the time comes through the creation of broad-set, cannabis-infused CPG brands and products, which can be backed by their existing distribution and marketing networks. Turning now to our wellness segment, our Manitoba hemp business has greater than 50% market share with a branded hemp seed in the U.S., including strong presence in the MULO and natural channels, and has Canadian market share of nearly 80%. Our Tilray wellness business continues to deliver positive EBITDA, free cash flow, with Q4 being our strongest quarter of fiscal 23. Our wellness platform remains an important part of our U.S. strategy, with our clear growth drivers in the near and long term. including an ever-increasing consumer interest in hemp products, given the key role they can play in plant-based, low-carb, and keto diets. Distribution expansion, including Whole Foods markets and Walmart, demonstrating the relevance of hemp products across the channels and consumer demographics. a strong innovation pipeline, including the recent launch of CBD wellness beverages like Happy Flower that meet the needs of Gen Z and millennial consumers. And with that, we're excited by the opportunities provided by our diversified businesses, and we remain steadfast in delivering on our strategic priorities, maximizing revenue and growth optimization and maintaining our balance sheet strength. I will now turn the call over to Carl to discuss the financials in greater detail. Carl.