Tilray Brands, Inc.

Thank you for joining today's conference call to discuss Tilray Brand's financial results for the fourth quarter and fiscal year 2025, ended May 31st, 2025. 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. I will now turn the call over to Ms. Barron Norado, Tilray Brand's Chief Corporate Affairs and Communications Officer. Thank you. You may now begin.

Thank you, Operator, and good afternoon, everyone. By now, you should have access to the earnings press release, which is available on the Investors section of the Tilray Brands website at tilray.com and has been filed with 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 those forward-looking statements. The test 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 Erwin Simon, Chairman and Chief Executive Officer, who will provide opening remarks and commentary, followed by Carl Martin, Chief Financial Officer, who will review our financial results for the fourth quarter and fiscal year 2025. Also joining us for the question and answer segment are Denise Falcicek, Chief Strategy Officer and Head of M&A, Blair McNeil, President of Tilray Canada, Rajneesh Ori, Managing Director, International, and Prince Pinnacat, Chief Growth Officer of Tilray Beverages. And now I'd like to turn the call over to Tilray Brands Chairman and CEO, Erwin Simon.

Thank you, Barron, and good afternoon, everyone, and thank you for joining us today. In fiscal 2025, we continue to execute on our long-term strategy of solidifying our global leadership in cannabis and expanding our beverage and wellness business with new innovations, strategic bolt-on acquisitions, and geographic expansion. We're in categories that are emerging quickly, like cannabis, as well as categories that have been around for years. but are evolving and changing like our beer and spirits and businesses. As we bring our businesses together, we are creating a unique and scalable global platform while remaining laser-focused on profitability and cash flow. Our strategy is paying off, and I want to start by highlighting three key points. We reached a record revenue of $22.4 million in the international cannabis business in Q4 of 71% year over year. Total cannabis gross margin increased by 400 basis points and reached a 44% in Q4 and cannabis gross margin increased by 700 basis points in the fiscal year. And in Q4, we also achieved our second highest ever quarterly consolidated adjusted EBITDA of almost $28 million. In terms of full year consolidated fiscal financial metrics, in fiscal 25, Tilray achieved record annual revenue of $821 million, a 4% increase year over year on a constant currency basis, and $834 million, a 6% increase year over year. During the fiscal year, we implemented strategic initiatives aimed at enhancing business operations by improving margin and our profitability. However, these decisions impacted our revenue by $35 million. If we eliminated these one-time impacts of these strategic decisions and currency fluctuations, revenue would have been approximately $870 million for a 10% growth year over year. Importantly, Tilray delivered its highest gross profit to date at $241 million, an 8% increase year over year. All this was achieved while maintaining a strong balance sheet. With approximately $256 million in cash, reducing our debt by approximately $100 million to date and improving our net debt to EBITDA ratio to 0.3 times from a 1.7 last year. We aim to continue strengthening our balance sheet through further strategic debt restructuring in our fiscal year 2026. Over the past five years, Tilray has experienced significant growth through both organic expansion and strategic acquisitions and geographic expansion. We generated revenues from over 21 countries and operated a portfolio of over 40 brands in four diversified business units. As Carl is going to explain in further detail, We booked a non-cash impairment this quarter. To offer some color, in 2021, when we completed the reverse takeover at Tilray, where there was lots of excitement in the market regarding the acquisition and the potential for U.S. cannabis legalization, the growth in our share price reflected that enthusiasm at the time at the deal closing. Since then, U.S. regulatory changes have not advanced the way we'd hoped, which has impacted our share price and in turn our market cap. From an accounting standpoint, that meant we need to recognize a non-cash impairment charge this quarter. Let me be very clear. Despite recording this non-cash accounting charge, it does not change how we feel about the future of our business today, including the intrinsic value of our tangible assets, our liquidity, and, of course, our brand equity. We remain incredibly optimistic, and we believe we have the right long-term strategy to deliver for our shareholders. We have transformed Tilray Brands into a company generating nearly $1 billion in annual revenue, establishing ourselves as a leading global cannabis business outside the United States, the fourth largest craft beer producer in the US, and a dominant force in the global market for high protein hemp foods, snacks, and wellness drinks. Our progress is rooted in deep understanding of product, Innovation involving consumer needs, shaping offerings, not only reflect but anticipate it, how people choose to eat, drink, relax, and address their health and well-being. In fiscal 2025, we led the Canadian cannabis market with over $185 million in revenue. We operated a leading international medical cannabis business outside North America, generating almost $65 million in annual cannabis revenue. totally to be approximately a quarter of a billion dollars in cannabis sales worldwide, and over $270 million in medical pharma distribution revenue. Our U.S. beverage division generated approximately $240 million in sales, and our wellness division, which continues to dominate the hemp industry with nearly 60% branded market share in the U.S. and 80% in Canada, contributing $60 million in revenue. Now let's look at our performance by divisions. Beginning with our international cannabis business, as a result of our industry-leading international infrastructure, international cannabis revenue grew in Q4 was up 71% year-over-year. And excluding Australia, European cannabis revenue increased organically 112% in Q4 compared to the prior year's quarter. In fiscal year 2025, our international cannabis business revenue grew approximately 20% year-over-year. This top-line improvement is evidence that our growth in our international markets is accelerating and will continue, particularly in Germany, where we maintained our number one leadership position in the reimbursed market and increased our sales in self-pay market. Tilray is well-positioned to expand its market share across Europe, supported by vertically integrated operations, EU GMP cultivation facilities in Portugal and Germany, and a comprehensive sales and distribution infrastructure. Let me take a moment to spotlight our progress in Germany, where in Q4, we achieved revenue growth of 134% over the prior year quarter and 54% revenue growth in fiscal year 2025 when compared with the prior fiscal year. Our wholly owned subsidiary, Afria RX, remains at the forefront as one of the just three licensed cultivators of medical cannabis. This license positions us to better serve patients' needs and expand access to the highest quality cannabis products across broader markets. It also serves as a significant competitive advantage as we are not required to procure, import, and export permits to sell and distribute Afria RX products in Germany. In addition to increasing our revenue in existing markets, we're also laser-focused on entering and expanding developing markets. In June, our wholly owned subsidiary, FL Group, received from the Ministry of Health an extension to its license to import and distribute three medical cannabis flowers, which are cultivated and produced in our EU GMP-certified facility in Portugal. Moving on to our pharmaceutical distribution segment in Europe, CC Pharma continues to be a consistent performer and a key enabler of our international cannabis performance. It continues to serve as a competitive differentiator as it allows us to provide excellent service to our customers throughout our order fulfillment and quick delivery to our customers. The infrastructure we have in place positions us for success as regulations continue to change across Europe. As we look ahead, our experiences, portfolio, and infrastructure keeps us exceptionally well positioned to lead our scale of medical cannabis business, not only across Europe, but every market that regulation evolves. I am confident that our team, our vision, and our execution will continue to drive Tilray's growth and our ability to deliver value for medical cannabis patients worldwide. Turning to our cannabis operations in Canada, after six years, we're seeing stabilization within the Canadian cannabis market, alongside new growth opportunities. With continued consolidation on both the producer and retail sides, we are starting to see signs of industry normalizations and balancing inventories. The Canadian cannabis sector continues to evolve at a rapid pace with a goal of combating the illegal market and putting safe products in the hands of our consumers to meet their needs and wants. Tilray continues to lead revenues as the largest cannabis business in Canada, which remains the largest federally legal cannabis market. In fiscal year 2025, our Canadian cannabis revenue totaled $186 million and $191 million on a constant currency basis. Excluding the impact of strategic decisions made to enhance margin performance, revenue would have reached $206 million when excluding currency fluctuations. In Q4, Tilray maintained a 9.3% market share in the adult recreational segment distinguishing itself as the only top five licensed producer to do this. We maintain the number one position in THC beverages, chocolate, edibles, oils, and capsules combined, and non-infused pre-rolls. We also held a top 10 position in all other categories. In the cannabis flower category, We regained the number one market share in Q4, and as a result of strong innovation and launches under the Reddick Cannon Broken Coast brand, Tilray operates as a vertically integrated company, manufacturing 90% of its products internally to maintain high standards of quality and reliability. Operationally, we remain laser focused on cost optimization through labor balancing, production improvements, and contract steamlining. As a result, we continue to improve our cost per unit. On the cultivation side, we have the most flexible footprint in the global cannabis industry, which we have strategically optimized to maximize efficiency. With a facility footprint of approximately 5 million square feet, our value chain and business processes are recognized as an industry-leading business. In fiscal 2025, we put the building blocks in place to transition cultivation from 150 metric tons to over 200 metric tons as a result of increase in volume demand in Canada and internationally. We have the capacity for continuous growth. We are confident in the industry outlook and the strength of our brands. Our product portfolio serves as a wide range of consumer segments, offering options that appeal to various taste profiles. We sharpen our product mix to focus on higher margin SKUs, which has had a direct impact in improving gross margins across the board. The strategic shift is yielding in real benefits. We're generating more profits per gram while aligning with consumers' preferences for quality and consistency. Those that follow the high-fired data may have already noticed our double-digit percent gains in revenue per gram in flour. We have great products and major new innovations coming up that will hit every market in Canada in the next three quarters. Globally, the cannabis industry continues to evolve. Until Ray has the cultivation and manufacturing agility at the right cost to compete in the market commercially, both in Canada and around the world, and hopefully one day in the US. And with the recent appointment of the new administrator, the USDA, we anticipate he will play a significant role in potential rescheduling of cannabis in the United States, which should open up new opportunities for Tilray in the US market. Also in the Canadian market, the future holds significant promise as regulatory reform to bring about pivotal changes, including medical cannabis available one day through pharmacies, enhanced enforcement to reduce the ELISA market, authorization for cannabis beverages to be sold outside dispensaries, reformation of excise pack policy, and last but not least, broad accessibility of CBD products and beverages. Turning to our beverage business, fiscal 2025 was a total year of transition and rebuilding for our beverage business. which includes beer and spirits highlighted by the acquisition of four craft brands from Molson Coors to expand our portfolio, and the continued integration of several other beer brands. We launched Project 420 to integrate operations and optimize process and revitalize brands, resulting in $24 million worldwide. in annualized savings towards a $33 million goal, which we will continue to work on. By working closely with our distributors in various markets, we streamlined our portfolio to eliminate a duplicate and slower growth products and concentrate our brands in the region where they have the most strength. The strategic initiatives impacted revenue to date by approximately $20 million and an adjusted EBITDA of $6 million. We expect the offset to come in future quarters. These efforts also led to 100 basis point improvement in beverage gross profit for the year. So while we grew our beverage business 19% in fiscal 2025, like the rest of the beer industry, our business was impacted by software consumer demand. We attribute this to lower demand and short-term influences, and broader category-related challenges, including adverse weather, integration process, and delayed innovation. In Q4, the beverage segment reported net revenue of $65.6 million. Q4 traditionally represents the peak sales period for this business. However, this year outcomes diversions from previous projections. The beer business was primarily affected by skew rationalization initiatives and generally softer consumer demand, observed across the sector due to the factors I just mentioned. Following our acquisition from ABI, we encountered unexpected distribution headwinds at retail due to missed reset windows that occurred prior to the closing of the acquisition. We also saw a shift on premise dynamics, and while we introduced new products, not all met our expectations. Additionally, Although our SKU rationalization made strategic sense, there's a natural time lag before higher-performing SKUs could replace those phased out. Now with substantially relativized brands, a refreshed innovation pipeline, SKU rationalization behind us, we are well-positioned to recapture revenue and secure more points of distribution in the up-and-coming resets. During the quarter, we implemented several measures, including leadership changes, restructuring of the sales and marketing teams, and the launch of targeted initiatives to design and reinforce what our beer portfolio is and what it can be. Our beer operations are now under the directions of Tilray's Chief Growth Officer, Prince Pickup. We are confident that our prompt and strategic corrective actions, which yield improved gross margins year over year, position us for favorably success in fiscal year 2026. Today, Tilray Beverages operates more than 20 beverage brands, including 15 American craft beer brands across eight network manufacturing facilities and 18 brew pubs. In the spirits category, Breckenridge Distillery has proven its strength in the bourbon sector, experienced higher depletions compared to others in declining market. It also made a significant progress in the vodka and gin markets, complemented by its world-class restaurant and retail operations that provide an immersive brand experience. We've introduced several world-class innovations, including Mock One, our new line of non-alcoholic spirits, and Melton Shot, which aims to disrupt the shot occasion and Casa Breck in the tequila space. Our national distributor for spirits, RNDC, had experienced several changes within the fiscal year. As we have, we maintain and are committed to working in major markets while also working with other distributors in the California and the additional markets. Regarding our non-alcoholic beverage portfolio, Runner's Eye, our new non-alcohol beer brand, which we launched in fiscal 2025, is now recognized as a top 15 brand and ranks as the fourth fastest growing non-alcohol beer in the Southeast, now sold across 4,500 distribution points. In the fiscal year within three months, Tilray launched hemp-derived THC beverage, sales and expanded the distribution of those drinks to over 1,300 distribution points across 13 states, as well as through online and direct-to-consumer channels. Leveraging our established national beverage distribution network, which spans independent retailers, convenience stores, and package stores, including multi-state retailers such as Total Wine and ABC. We see this category evolving continuously and expect it to be a significant part of our growth in 2026. Unlike other newcomers to the sector, we have an edge with our established beer network. Looking ahead to 2026, we see strong opportunities and anticipate increased demand for beer. Beer is not going away. With continued consolidation of the craft beer industry, and excess of smaller craft brewers and consumer demand continuing, we see opportunities within this business where we have several new exciting innovation plans and are committed to driving Tilray's beverage growth under our new leadership. Our Tilray Wellness business delivered strong financial results in 2025 as consumers continue to seek out better-for-you functional foods and beverages made with clean ingredients. Tilray Wellness had the portfolio of products that meet their needs. Tilray Wellness net revenue was over $60 million in fiscal 2025, representing a 9% growth year-over-year and 11% growth on a constant currency basis. This growth was driven by continued expansion of our Manitoba Harvest hemp hearts and alongside our new super seed innovation, including snacks, breakfast items, and smoothie blends. Tilray Wellness successfully relaunched High Ball Energy on Amazon and at retail at Whole Foods markets in the fiscal year and experienced a 68% growth. High Ball Energy is a brand of functional, better-for-you energy drinks known for being a premium alternative to traditional energy drinks. It's formulated with clean ingredients and has zero calories, zero sugar, no artificial sweetener, and packed with vitamin D and tastes great. In addition to delivering strong top-line growth, Tilray Wellness expanded its margins to 32% in fiscal 2025, up from 30% in 2024. driven by favorable sales mix and productivity savings generated in our manufacturing facilities. Tilbury will look to expand its wellness segment in fiscal 2026, both in wellness and functional foods and beverages. We'll continue to diversify and expand the Manitoba harvest portfolio in the North American area in better for you in high protein categories and begin to bring the brand into new international markets. We see the success of Hibol as a validation that Tilray Wellness has the right infrastructure and experience to build and acquire more broad-based wellness beverage portfolio. In terms of our management team, we have strengthened our leadership by appointing Rajnish Ori as a Managed Director of International. Based in London and Dubai, Rajnish will drive growth across international markets in medical cannabis beverages and wellness. And in regions like Asia, the Middle East, India, and Turkey, we will focus on strategic opportunities in non-alcoholic beer and hemp-based food products. I am confident that with Rajneesh's leadership and deep industry experience, Kilroy is strongly positioned to accelerate our international growth and capitalize on emerging opportunities. His innovative mindset and strategic approach perfectly align with our vision for global expansion. I look forward to working closely with Rajneesh. I'll close this with fiscal 25 was a big year for Tilray across the board. It would not have been possible without the tireless work and dedication of our employees around the world. And I want to thank each and every one of you. We built a unique business at the forefront of the beverage, cannabis and wellness industries on a global scale. And guess what? We're just getting started. With that, I will now turn the call over to Carl to discuss our financials in greater detail. Carl, are you ready?

Thank you, Erwin. Please note that we present our financials in accordance with U.S. GAAP and in U.S. dollars. Throughout our discussion, we will be referring to both GAAP and non-GAAP-adjusted results, and we encourage you to review the reconciliation contained within our press release of our reported results under GAAP with the corresponding non-GAAP measures. Focusing on our fiscal year results first, net revenue for fiscal 2025 grew by 4%, reaching a record $821.3 million or $833.7 million on a constant currency basis. This growth was primarily driven by a 71% increase in international revenue during the fourth quarter. While this figure represents an improvement over the prior year's $788.9 million, It is below the lower end of our revised guidance of $850 million. This was mainly due to reduced beverage volumes and delayed export permits, which led to lower than expected international revenue in the fourth quarter. Typically, our beverage business sees its highest revenue in Q4, but this year's results did not meet expectations. As Erwin mentioned, we took corrective actions to improve future performance in our beverage business. In response to challenging and evolving market conditions, we took decisive action. Our results reflect an approximate $35 million revenue impact from deliberate strategic decisions. This includes a $15 million reduction in cannabis revenue due to our decision to scale back in the vape and infused pre-roll categories, which at the time were margin dilutive. Additionally, there was a $20 million impact associated with our beer SKU rationalization initiative, aimed at enhancing the long-term performance of our beverage portfolio. Had these actions not been taken, and excluding the effects of currency fluctuations, our revenue would have been approximately $870 million for the year. These were necessary steps to position the business for sustainable, profitable growth. Although international cannabis saw strong Q4 growth, cannabis net revenue decreased 9% year over year, largely due to our focus on maintaining and growing gross margin and a higher average selling price. Specifically, in Canada, vapes and infused pre-rolls experienced a high degree of price compression, which led to a $15 million reduction in our revenue as we instead focused on maintaining and growing margin. Additionally, we redirected inventories to international cannabis markets to capitalize on higher margins abroad only to have a portion of those inventories trapped due to unexpected regulatory challenges in obtaining export permits. The resulting impact of this strategic decision caused a temporary decline in gross adult use cannabis revenue, international cannabis revenue, and cannabis revenue overall until their eventual sale. It should be noted that we have expanded our cultivation footprint for fiscal 26 to be able to satisfy the growing demand in both Canadian and international cannabis markets in the coming year. Beverage revenue increased 19% year over year, primarily driven by acquisitions. The increase in sales from acquisitions were offset by the skew rationalization implemented in connection with Project 420, which resulted in a reduction of revenue of $20 million for the year ended May 31st, 2025, and an overall softness in consumer demand for craft beer. Wellness net revenue increased 9% for the year. The increase in revenue was primarily attributable to our strategic focus on continued innovations, including the relaunch of highball energy and organic growth within our branded hemp food business related to higher consumption. Distribution net revenue increased 5%, primarily as a result of a change in product mix. From a revenue contribution perspective, 30% of our net revenue was generated by our cannabis business, 29% was generated by our beverage business, 8% by our wellness business, and 33% by our distribution business. This compares to 35% in cannabis, 25% in beverage, 7% in wellness, and 33% in distribution last fiscal year. We expect to see continued growth in contribution from our higher margin segments in future periods. Gross profit for fiscal 2025 increased 8% to $240.6 million compared to the prior year at 223.4 million. Also representing our highest level ever. Gross margin increased 100 basis points to 29% from 28% in the prior year. Turning to our gross margin by segment, cannabis gross margin increased to 40% from 33% in the prior year which was driven by our increased international cannabis revenue as a proportion of total cannabis revenue, given its higher margin, as well as a continued focus on maintaining a higher average selling price and favorable product mix to improve gross margins in Canada, despite lower sales in the Canadian adult use market. The average gross margin was 39% compared to 44% in the prior year. The decrease in gross margin is primarily a result of the decrease in demand in the fourth quarter and its resultant impact on overhead absorption, as well as the lower margin contribution from our recently acquired brands from Wilson Coors. Wellness gross margin increased to 32% from 30% in the prior year. This increase was driven by strong operational efficiencies. lower input costs, and the culmination of a change in sales mix towards higher margin product offerings, including highball energy drinks. Distribution gross margin remains steady at 11% and consistent with the prior year, despite shortages in key pharmaceutical product lines in the third quarter, as well as price reductions. Net loss for fiscal 2025 increased to $2.2 billion, or $2.46 per share, compared to a loss of approximately $220 million in the prior year or $0.33 per share. From an adjusted perspective, we are reporting adjusted net income of $9 million or $0.01 per share compared to $6.2 million or $0.01 per share in the prior year, an approximate 45% increase. Our net loss was principally driven by non-cash impairment charges of approximately $2 billion in the fiscal year comprised of almost $700 million in the third quarter and almost $1.4 billion in the fourth quarter. The non-cash impairment charges during the fourth quarter include $661.3 million of depreciable intangibles, $186.6 million of indefinite live intangibles, and $549 million of goodwill. Our consecutive non-cash impairment charges are the result of a combination of factors including a sustained decline in the company's market capitalization from February 28 to May 31, stemming from the uncertainty around certain changes in U.S. global economic policy, slower than anticipated progress in global cannabis regulatory change, and a change in the non-discretionary inputs in the company's discount rate in the latest quarter. The impairments represent numerical calculations based solely on accounting rules related to impairment calculations and do not reflect our views on our business. We continue to have full confidence in the intrinsic value of these assets and these non-cash charges do not reflect any change in our long-term strategy for the business. Further, approximately 1.1 of the $1.4 billion impairment relates to intangible assets acquired as part of the Tilray business combination in 2021. Under U.S. GAAP accounting rules, the over 50% increase in the value of a free of shares from the date of announcement of the transaction until the transaction closed became part of the accounting purchase price, even though both companies had made the decision to transact at the consideration to be given on the date of announcement. We believe that increase was caused almost entirely by temporary increased expectations of cannabis legalization in the U.S., as a result of the blue wave in the u.s senate by elections in january 2020 this january 2021 this run-up in our stock price created a purchase price of 3.2 billion or an almost 1.1 billion dollar increase in the purchase price versus if the transaction had occurred on the date of announcement after recording the impacts of the impairment We anticipate that our net income will improve by approximately $70 million next year as a result of no longer recording amortization on the impaired intangibles. Adjusted EBITDA for fiscal 2025 was $55 million compared to $60.5 million in the prior year. For the year ended May 31st, 2025, our skew in geographic rationalization resulted in a reduction in net sales of approximately $20 million and an adjusted EBITDA impact of $6 million. We believe this temporary reduction will be offset by the growth of our new product innovation, including new beverage categories and future brand extensions. Cash flow used in operations in fiscal 2025 was $94.6 million compared to $30.9 million in the prior year. Adjusted free cash flow was negative 114.2 million as compared with 6.6 million in the prior year period. The 114.2 million includes approximately $63 million of working capital increases, $20 million in capex, net of growth capex, and approximately 31 million of cash losses from operating the businesses. The cash losses from operating the businesses primarily relate to non-recurring restructuring, litigation, and transaction costs, as well as the investments in the beverage business as we rebuild the craft brands purchased from ABI and Molson Courts. The CAPEX spends includes approximately $7 million on sports sponsorships, reflecting the full multi-year cost of the license agreements, and $6 million in CAPEX in the beverage segment as we invested in infrastructure at key facilities to increase production. The working capital increase relates to increases in accounts receivable late in the year in our international cannabis and beverage segments. Increases in inventory related to the trap permit inventory in Portugal. Inventory in the wellness segment to manage tariff risks and to reflect the increased demand on certain products, including Hibol. Over the past fiscal year, we reduced our convertible debt outstanding by 67.8 million dollars. and reduced it by a further $5 million shortly after year end. Our intention is to continue lowering our indebtedness, optimize our capital structure, and enhance our financial flexibility. The net reduction in our convertible debt will decrease our annual interest expense by over $4 million, which flows directly to net income and free cash flow. Switching to our quarterly performance, Q4 total net revenue was $224.5 million, compared to $229.9 million in the prior year quarter, with the softness in the beer business offsetting a 71% increase year over year in international cannabis revenue. In Q4, net cannabis revenue was $67.8 million. Net beverage revenue was $65.6 million, but would have been over $71.6 million if we had not made the strategic decisions previously discussed. Wellness revenue was increased to $17 million, And finally, distribution revenue increased to 74.1 million. Gross profit was 67.6 million compared to 82.4 million in the prior year quarter. Gross margin was 30% compared to 36 in the prior year quarter. Most of the variance was related to the decreased demand in the beverage revenue in the quarter, impacting the overhead absorption combined with investments in the acquired brands. As I previously mentioned, In the fourth quarter, we reported a $1.4 billion non-cash impairment related to the decrease in our share price at May 31st. The perception of the reduced likelihood of U.S. and or cannabis regulatory changes in the short term and an increase in the non-discretionary inputs in our discount rates utilized in the accounting exercise that is impairment. As a result of this non-cash impairment, we're reporting a net loss of $1.3 billion compared to a net loss of 15.4 million in the prior year quarter. On a per share basis, this amounted to a net loss of $1.30 per share, compared to 4 cents per share in the prior year quarter. The non-cash impairment charge had no impact on the company's tangible assets, compliance with debt covenants, its cash flows, or available liquidity. Adjusted net income was $20.2 million, compared to 35.1 million in the prior year period. On a per share basis, this resulted in an adjusted EPS of two cents as compared to four cents in the prior year period. Adjusted EBITDA was 27.6 million compared to 29.5 million in the prior year quarter. Again, the decline in adjusted EBITDA is a result of our skew and geographic rationalization efforts. Operating cash flow was negative $12.8 million compared to $30.7 million in the prior year quarter. The decrease in operating cash flow was primarily a function of investments in our beverage segment, combined with investments in working capital associated with demand for our products. Adjusted free cash flow was negative $12.9 million compared to $30.6 million in the prior year quarter, consistent with the changes in operating cash flow. Moving to our four business segments, Gross cannabis revenue of $89.2 million was comprised of $58.4 million in Canadian adult use revenue, up from $49.3 million in Q3. $22.4 million in international cannabis revenue, up from $13.9 million in Q3, or 60%. $6.2 million in Canadian medical cannabis revenue, and $2.2 million in wholesale revenue. Net cannabis revenue, which excludes $21.4 million in excise taxes, was $67.8 million, down from $71.9 million in the prior year quarter. Again, we want to highlight international revenues would have been even higher if not for delays in export permits. The year-over-year decline in cannabis revenue was primarily driven by focusing on margin accretive SKUs, which resulted in a temporary drag on revenue. As mentioned, we paused vape and infused pre-well categories to focus on improving profitability, but are expecting to be able to participate more in this growing category in fiscal year 26, given the improvements in our cost structure. As a result of our efforts, cannabis gross profit increased to $29.6 million, and cannabis gross margin increased to 44%, compared to $28.8 million and 40% in the prior year quarter. Beverage revenue was $65.6 million compared to $76.7 million in the prior year quarter. Beverage gross profit was $25 million compared to $40.8 million. This underperformance was principally due to unusually weak consumer demand in the fourth quarter. The fourth quarter is typically our highest revenue quarter. However, this year, it did not meet our expectations. While our fourth quarter revenue in beverage did not meet our expectations, our late Q4 launch of new innovations have been stronger than the prior year. Innovation PODs are up over 14% from the prior year. Revenue from innovation is up 50%, and velocity is up over 30%. More specifically, when compared to last year's lead innovation in the southeast, which was gummies, this year's innovation, Sweetwater Daytrip IPA, is the number one new craft brand in the southeast, and the number seven new craft brand in all of the U.S., despite only being available in eight states. Further, we are extremely encouraged by the initial orders of Breckenridge's new innovation, Mountain Shot, an occasion-centric bourbon and malt-based shot with its own unique packaging. Well, this revenue grew 9% to $17 million from $15.7 million in the prior year quarter. The increase was driven by our strategic focus on targeted advertising campaigns aligned with emerging trends in favor of healthier lifestyles. Coupled with our continuous innovation efforts, wellness gross profit increased to $5.6 million, up from $4.9 million in the prior year quarter, and gross margin rose to 33% compared to 31%. Distribution revenue increased derived predominantly through Toray Pharma, increased to $74.1 million from $65.6 million in the prior year quarter. Distribution gross profit was $7.4 million compared to $7.8 million in the prior year quarter, and distribution gross margin was 10% compared to 12% in the prior year quarter. Our cash and marketable securities balance as of May 31st was $256 million. During the year and through to today, we continue to strengthen our balance sheet, net repaying $22.9 million in our long-term debt and bank-addedness, and repurchasing $67.8 in outstanding convertible notes. After taking into consideration these actions, we reduced our net debt position to approximately $19 million. which when combined with our trailing 12 months adjusted EBITDA puts our net debt to adjusted EBITDA leverage ratio at approximately 0.3 times and should lead to approximately 4.2 million in net interest expense savings next fiscal year. Fiscal year 2025 was a year marked by the strengthening in both Canadian and international cannabis businesses. The continued steady improvement of our wellness business and headwinds in the beverage business, with the latter a key area of focus under new leadership. Across each of our businesses, we employed a relentless focus on our strategy. We increased gross profit in each of our businesses year over year and increased total margin by 100 basis points, albeit with beverages increase tied to acquisitions. As Arun mentioned, there is a significant opportunity for Tilray in international markets. and the work that we are doing now to improve profitability and streamline our operations will position us well to capture the global opportunity. Finally, we are pleased to provide the following guidance for fiscal 2026. We anticipate adjusted EBITDA between $62 and $72 million. Let me now conclude our prepared remarks and open the lines for questions.

Thank you.

We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove 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. Our first question is from Kumil Gajewala with Jefferies.

Hey, guys. Good evening. I guess a couple of questions. First, on, you know, timing of the importing rights and some of the delays, where are we now? Do you have a line of sight on, you know, if they come through, when they come through, and sort of what contribution they're going to have?

So absolutely have a line of sight. And, you know, there was some issues from a legal standpoint in Portugal. And, you know, I'm in the midst of working with the Portuguese government and our legal people there to get means. But right now we're seeing, you know, that lightening up and we're able to start shipping product. The other issue we had was in Spain. in regards to shipping some of our products to Spain and getting permits. So I feel good about that. I feel we'll see, you know, the pickup within our first and second quarter. So I feel good, you know, that's mostly behind us now. But, you know, for the fourth quarter, There was, you know, approximately $8-plus million that we just could not get permits, and when we ship product out of Portugal, we need a Portuguese permit to ship it, and we weren't getting it. But the government is now working with us both in Portugal and Spain, and we see that primary behind us. Denise, Rajneesh, do you agree?

Yes. Okay, great. And then you mentioned Canada sort of. Hitting equilibrium, maybe price pressure is starting to abate. Can you just give us some more color on exactly what you're seeing and maybe how you expect it to play out over the course of the year?

Well, I think a couple of things happen in Canada. Number one, it's six years into legalization. And I think there's more and more retail stores opening up. I think the consumer now is now, you know, skewed to going to Canada stores and not buying from the illicit market. And some of the great innovation that's coming out, before it was predominantly flour, where 80% of the market was flour. Now, whether it's pre-rolls, infused pre-rolls, vapes, drinks, and edibles. I also, you know, see there's consolidation at retail, more and more stores. The Quebec market, which is controlled by the government there, You know, it has about 110 stores today. More and more stores will open up in Quebec. So with that, I'm really seeing, you know, the market. You're seeing consumers now, you know, enjoying more and more cannabis products. You see it cannibalizing, you know, some of the beer and the spirits industry up there. Also, originally there was probably between 1,800 and 2,000 licenses that were given out. You're seeing either consolidation or some of these licenses just folding up. So, you know, you saw my prepared marks. I see there's some light potentially to lightening up on some of these excise tax. I see a national stamp, which means you don't have from shipping to each province. I see potentially seeing drinks sold not only in cannabis stores, but potentially in restaurants and maybe, you know, on-premise. And I also see the potential, whether it's CBD products or other products, sold in drugstores. So I'm really seeing a change in the whole regulatory piece in regards to cannabis in Canada. And after five, six years, it's something that I'm excited to see because, as you've heard me complain about, in the Canadian market, we pay over $135-plus million just in excise tax. And as price compression happened, and over the five years, we've probably – price compression probably cost us about $250-plus million. So I'm seeing that. And that's why, you know, we're taking our grow-up from 130 metric tons up to 150 metric tons because of demand. And the team has done a great job in regards to some of the innovation that's come up.

Got it. Thank you. Our next question is from Rob Musco with TV Securities.

Hi. This is Victor on for Rob, and thanks for taking the question. So, a couple of things. The growth in the international 4Q was nice to see, but, you know, how should we view the growth next year, understanding that, you know, the timing is, it's kind of lumpy, you know, around timing and shipments? And did I hear you correctly that you said 6 million in sales was from trapped shipments in Portugal? So that should be recognized as one, right?

So it's 8 million, not 6. and it was trapped shipments and you should see that you know predominantly in q1 and also we'll start to see maybe there's a little q2 but you know we we see tremendous just like i've talked about the canadian market as the market continues to evolve and change um and to demand for medical cannabis You know, in Germany, you saw, you know, you saw growth there. But, you know, in regards to Poland, UK, the Czech Republic just now announced You know, Turkey, you know, we're working on some stuff, you know, in India. We think there's some strong opportunities back in Australia and we're looking at some things in New Zealand. What's that? In Italy, we just, as we, you know, three licenses or three different cultivars that we just got in Italy. You know, and again, as you go back and look, Tilray, from a share standpoint, Our 5%, 6% share of the market was a smaller share, but we provided a lot of other companies with products. So we see some big, big opportunities. And I will tell you, without giving guidance, there's some pretty big numbers built into our plans for Europe for next year for us. And, you know, that we haven't even ultimately, and that is just based on flour. You know, there's stuff we're doing to see if we can sell pre-rolls there in regards from the medical standpoint. You've got to remember, everything sold in Europe has to be prescribed by doctors. and is sold from a medical standpoint. So we have some pretty big plans of how to get to, you know, a good growth number. And the great thing about Europe is we're not paying anywhere near the excise tax, and you see what our margins are in our European markets.

Okay, that's helpful. And then just to follow up, I noticed that you mentioned that the cost savings initiative you know, Project 420 is expected to be completed by fiscal 3Q26. Can you walk through just some of the different things that still need to be done for that program?

So, number one, you know, we started off with 10, You know, manufacturing facilities, we're now down to seven. So as we consolidate manufacturing facilities, as we consolidate at warehouses, we went through a skew rationalization where we took $20 million of skews out and hit us by $6 million. as we looked at replacing them with faster-moving SKUs and some new SKUs. We're also going through some distributor consolidation. We have 800, 900 distributors out there. And from the standpoint of freight, as we brought organizations together, whether it was from the original Molson's organization or the ABI organization, in regards to one sales force and marketing force, We also, as we look at our 18 brew pubs that are out there, how we can make them more efficient from a labor standpoint. We also consolidate a procurement agreement with Cisco in buying our food. So there's multiple things we put in place. We've really looked at our inventories. We really looked at buying our hops. So there's numerous costs that we've taken out of here. The other thing is, as you heard me say before, talked about timing as we did these acquisitions in regards to the categories being set. In May and June, as we were in front of the buyers, we lost distribution, we lost space. And now that we're in front of these buyers, we're getting a lot of that back. We also did not have the growth and the emphasis could be – on convenience stores where convenience stores is one of the biggest sellers of beer out there. So, you know, last year was a lot of resets. A lot of things happened, but there's some great plans in place of how to get a lot of this volume back, how to take a lot of costs out of these businesses. And don't forget, we've been doing this since 2020 in the beer industry. Now we're the fourth largest craft brewery. And similar, there's a lot of the smaller craft brewers that have gone out of business. There's a lot of opportunities. And consumers are looking for new, unique, you know, beer products out there, whether it's the non-alcoholic, whether it's the light beers, whether it's some of the flavored stuff we're doing, whether it's some of the stuff we look to do with protein. So we're pretty excited about our beer business. You know, you heard me talk about consolidating distributor networks. We have a Molson distributor network. We have an ABI distributor network.

So, we have to look at some things there. Got it. Thanks for the call. Thank you. Our next question is from Aaron Gray with Alliance Global Partners.

Good evening. Thank you for the questions. So, first, for the 2026 EBITDA Guide, could you maybe offer some color in terms of, you know, how best to think about some of the key drivers there, you know, even if not specific? How much of that's going to be driven by sales growth and some SG&A leverage or gross market expansion versus cost cuts? And then also, if it's fair to think about the seasonality to be similar to what we've seen in past years in terms of being somewhat similar with a strong 4Q.

Thank you. In terms of seasonality, yes, we continue to expect to see a stronger Q4 than Qs 1, 2, and 3, primarily related to the seasonality of our beverages, but also a little bit of seasonality inside of the cannabis business. With respect to the increases in the guide, I think bigger portions of it are expected from our international business. We see some improvements happening inside of our Canadian business. and beverage as well, along with wellness. Wellness, I think you're going to see that driven by some of the new categories and new innovations that they're getting into. On the beverage side, you're going to see some of it related to revenue, but you're also going to see pieces related to Project 420, the cost savings flow through. Remember, a lot of those savings were achieved in 25, but the cash flow impact of them takes longer to work its way through the income statement. Carl, I'm sorry.

We've done lots of acquisitions. and as we get close to that billion dollar revenue it's called scale so number one it's a much bigger company um there's more gross margin that will contribute but just as you look at our businesses as i said before on their cannabis business you know we're starting to hit strides and when you go you know from metric tons of the increase from metric tons of a grow our costs are absolutely going to come down as you come back with our beer businesses as we put you know the multiple acquisitions together and from a scalable standpoint and today you know we have you know close to 250 million dollar you know beverage business so i think what we've shown and this year was a challenging year in our beverage beer business as we put the avi acquisition together the molson's acquisitions and you know sweetwater montauk but as we take costs out as we get efficiencies, as we consolidate facilities. And the good news is 90% of our products today, maybe a little more, come from our own facilities. So we control the growth. We can control the cost. You know, we're not necessarily affected by tariffs out there other than maybe buying cans. So again, after five, six years, as maturation comes into place, I feel good about the top line growth. We feel good about the top line growth. We feel good about the scalability. And one of the things we've always had to deal with is to build up this corporation from a public company standpoint. You know, there's an infrastructure to put in place, whether it's insurance, whether it's public accounting, whether it's legal, that we have to fund. And as we have a bigger business, you know, we can support the overheads to make sure that we have the right processes in place to build, you know, Tilray Beyond and then some. And, again, we as a company today sell in 21 different countries around the world. We're dealing with, you know, multiple currencies. So there's a lot within here, but it's all starting to come together.

That's really helpful, Carl, there. Thank you. A second quick one for me. I know you guys seem, you know, pretty constructive and optimistic on international growth opportunities, and good to see that in the fourth quarter. But just if we could dive a little bit into Germany. Could you talk a little bit maybe about the dynamics of supply-demand equilibrium, where we are at, and any potential impacts you might have on pricing there? I know there's been a lot of, you know, operators in Canada and otherwise kind of allocating more of the product to international markets like Germany because of the higher margins. So just want to get some color on that. And then any concerns there potentially with the new government in Germany potentially disrupting the current medical market there? Thank you.

Hi, it's Denise. Thanks for the question. So in terms of growth in Germany, what we see is, you know, Erwin talked about enhancing supply chain. So we ramped up our volumes in Canton Yard, basically increasing our production about two and a half times what it was in fiscal year 2025. We also have been sourcing from our Canadian facilities, and Erwin talked about the fact that we're increasing our supply chain there. And then as well, we have a Freya RX. which is in-country producing high-quality cannabis from cultivars that we've transferred from Canada. And one of the great things about 3RX is already in Germany. So supply chain and getting that right, having the right product in market. You talked about the price compression. Yes, we are seeing price compression, but that is why we are so focused on our cost. And one of the things we spent a lot of time in 2025, and it shows in our margins, is the fact that we have taken our costs down tremendously. And as Erwin mentioned, as we continuously ramp up, those costs will come down even further. So we're prepared for price compression.

And you've got to remember, we have built the international business almost from scratch. You know, when we acquired the Tilray business, I think it was probably $10 million in size. And, you know, we acquired that during COVID and couldn't even get to visit it. So, again, we're building out, you know, we have one of the largest growth facilities in Canton yet. And now with the German facility, so we have access to growth. And back to your earlier question is, you know, shipping product from Canada, which we can do, which is much, much higher margin. It's probably 10 times the contribution margin when it's coming from Canada, you know, to the international. So, again, you know, our hope and wish is more and more markets open up. You know, I'd be excited to see, you know, India, which Rajesh is quite familiar with, you know, markets there opening and there's some things we're seeing there. I'm excited about some stuff in Turkey, you know, the Czech Republic. I think Italy is going to be a big market. I think UK has some big opportunities. And then the continuously expand, you know, span upon Poland and Germany. And just, again, with Europe, you know, we think there's tremendous opportunities for our, you know, our hemp business there, our high-protein, and which we've talked about is going into the Middle East with our non-alcoholic drinks and where we stand with our beverage business. So the infrastructure is there to do it. The growth facilities are there to do it. And the investment over the last four or five years is there. And, you know, we have quite a bit of the know-how of how to go about it.

That's also detailed there. Appreciate that. I'll go and jump back to the queue.

Thank you.

Our next question is from Pablo Zuonic with Zuonic and Associates.

Thank you. Good afternoon, everyone. Irwin, you made mention of rescheduling in the U.S. with the new DEA head. Can you explain to us how would Tilray benefit directly from rescheduling given that you do not have U.S. cannabis operations right now. Thank you.

So, you know, again, we could quickly enter that market with our medical business, Pablo. As you know, we sell quite a bit of medical cannabis in Canada, and we have a big, you know, international. So, from a standpoint of of that we could ultimately do something from the medical cannabis. But from a rescheduling, Pablo, I think the big thing is get the uncertainty out of the way here, okay? And from a rescheduling, it would allow institutional investors to come into the market. It would allow, in regards to retail banking, you know, come into the market. So it's just not about the sales. And ultimately, does it open up the opportunity to sell our, you know, cannabis drinks or our beverage business, our hemp business? So, again, there's not a direct one that I could point to. But I'll tell you what, there's a lot of things that it would do for Tilray. of rescheduling if that happens within the U.S. markets. And I think if one thing happens with rescheduling, I think there is a great possibility do they move to legalizing, you know, from a medical cannabis standpoint. And there's always would be the opportunities to buy something, you know, Pablo, if that happened. Because right now, we cannot do anything with cannabis in the U.S.

Right. That's good, Cora. Thank you. Just one on beverages. I guess the big picture question for me in beverages is how much is under your control and how much is just the industry, right? So we can make adjustments on a pro forma basis of what the decline might have been in the fourth quarter versus last year. But whatever the numbers are, there seems to be a steep decline, right? And I'm trying to understand how much of that was like own bowls versus – you know, just industry challenges. I mean, own goals you can fix, you have new leadership, industry challenges are tougher, right? So, I don't know if you can start to quantify, but if you can just walk us through that in a way.

So, I would come back and say, listen, the industry from a craft beer industry, It's down 4% or 5%. I think you see, you know, from a craft business, when there's a lot of small players out there, there's a lot of them going away. There's a lot of, you know, consolidation. So number one, there's still a big beer business out there. And the craft beer business is a good size. And we're number four. So, you know, and we only got into this business in late 2020. And then you had two years of COVID. In regards to our decline this year, you know, we're up. And most of that is coming from acquisitions. But some of that was, you know, self-inflicted with just having, you know, us making some mistakes. Some of that was, as you heard me say, timing in regards to authorizations and not getting, you know, the placements at supermarket. And some of that was just bringing all this organization together with acquisitions. And some of it was that's why there's leadership change, and that's why, you know, a lot of things happen in place. But, again, I will say it. The beverage business as a whole is one of the biggest categories out there. And what I aim Tilray to be is not just a beer business, it's a beverage business. And you see some of the valuations out there in regards to what's happening with energy drinks. And Highball is one example. You know, when we acquired it, it was zero. And this year, the opportunity for growth. I think there is tremendous opportunity in the Delta 9 industry. business for us. I think there's opportunities in regards to the non-alpha industry for us, whether it's in the U.S., whether it's in other countries in the Middle East. And I think there's still lots of opportunities, you know, in the cocktail business and the seltzer drinks. And again, beer will not go away. And I think the opportunity is going to be as we all take share away from some of the smaller craft beer businesses. And if you look at some of the craft beer businesses, Pablo, you know, Boston Beer Growth is not coming from their beer business. It's coming from their Sun Cruisers and some of their other drinks. So, you know, again, we're not a one-trick pony out there, and we're focused on the category in many different ways. But... You know, we're big into Delta 9. We're big into energy drinks. We're going to be bigger into Not Now. We're going to be bigger into seltzer drinks. We're going to be bigger into lighter beers. And we'll stay within the craft beer industry. The other thing is some of the unique stuff that we're coming out with in our spirits business. and some great different drinks that were coming out with some of the non-alcoholic drinks. So I think we've got some good things, you know, set up within our industry, and it's going to depend on leadership timing, innovation here from a standpoint.

Thank you. Thank you. Our next question is from Frederico Gomez with ATB Capital Markets.

Hi, good evening. Thanks for taking my questions. First question, just on the beverage and wellness expansion that you mentioned, international, Europe, and Asia. Could you talk more about that? Which category are you most excited about in regards to that potential expansion? What could be the timing of that, and would that happen organically or through M&A?

So, number one, timing is now. Rajneesh, who's sitting in this room with me, who is based today in Dubai and London, knows that market well and has built businesses in those markets. That is immediately that we're focused on that. We have a team that's focused on it immediately, and we're talking to both manufacturers and distributors. If there is an acquisition, we would look at it. The other thing we're interested in talking to is, you know, with – President Trump talking about all his tariffs and you have a lot of import beers coming in and imports coming in from Europe. You know, there's potentially we're talking to people today that want to manufacture their products in the U.S. and we have capacity to do that on import products. And vice versa, as we look at, you know, potential acquisitions and bringing, whether it's Montauk and some of our brands, into the international market. So that is imminent right now. The other thing is we think, you know, everybody today is into protein. And it's all you hear about protein, protein, protein. And there's a lot of protein within hemp and our hemp food products and our seeds. So there's discussions in looking to bring that into, you know, into the Middle East. You know, rice is a big business, you know, in the Middle East, and what are we doing in regards to, you know, supplementing the rice business with some of our head business. So that is a big, big focus for us, you know, as we speak.

Perfect. Thank you. And then just a second question on your cultivation expansion in Canada. How far along are you in ramping that and how should we think about, you know, where that product expansion is going to in terms of exports or stay in Canada? Thanks.

So, some of it, I think it's what, about two and a half, three metric tons will go internationally. And Blair is on the phone here. But the majority of that will stay within Canada. And the interesting thing is, and you, you know, see, excuse me, our revenue down on cannabis in Canada. And that was mostly us deciding not to sell wholesale. But the majority of that now is going into some of our new products, whether it's infused pre-rolls or pre-rolls. Some of our oils are big products, but the majority of that is going into the Canadian market. And that is expanding our, you know, outdoor grow in Cayuga, and that is expanding, you know, our Maison facility today, which we acquired from HEXO. So that's where that grow will come from. And I don't think anybody has anywhere near 5 million square feet within our grow facilities within the Canadian market. And there's, you know, continuously requests from us to buy cannabis from us because, you know, as oversupply happened in the Canadian market, a lot of these facilities have closed and have sold off. So there is demand for us to be a third-party supplier, but that's not what we're interested in. We're interested in supplying our own facilities, and that's why we've had to increase our growth capabilities in the Canadian market.

Thank you very much. Thank you. Our next question is from Bill Kirk with Roth Capital Partners.

Yeah, this is Nick on for Bill. Thanks for taking the question. First one for me, just wanted to expand on Germany and the potential changes coming over there. It looks like some of the proposed legislation could potentially inhibit the telemedicine opportunity, so I guess just a couple questions there. What do you expect to come of these proposals, and is there anything you can kind of do to prepare for a potentially different selling environment over there? Thank you.

Hi. So in terms of there has been a proposed legislation, but this is simply a proposed legislation. What we at Tilbright, we take very seriously is patient safety and, of course, looking at how do we continue to service our patients in the right way. And the legislation definitely was a bit of a surprise, and we're taking it very seriously along with our industry group. There's a long way between here and actually looking at what ultimately could be a change in legislation. And through our industry group, we're taking this very seriously. We are putting forward various proposals in terms of how to address it. And when they talk about the removal of telemedicine and the mail order, we do have to remind government that, in fact, the MedCAM-G rule was put in place because They wanted to look after patient safety, patient health, and provide accessibility to patients. And the current legislation accomplishes all of those things. And we believe that by pushing through changes in telemedicine, and mill water, essentially you're just going to push the patient into the black market. And that is exactly what the German government doesn't want to do. So we believe that there is plenty of room here and a path forward to negotiate and look at really what is the right thing for German patients and the right thing for industry. We also need to remind the government that many companies have invested very heavily in these new reforms that were put forth, And in essence, by kind of taking a step back, it would really persuade investors in other industries, not just medical cannabis, but other industries, well, why would I invest in Germany if I can't rely on basically legislation that moves forward? So we are very much, very much, very actively going after this and working with our government relations groups to come out with the right outcome.

And I think, as Denise said, it's a long way away. from anything being effective there, and it's something that was put out there. It's not anything that's a proposal. It's not any legislation, so it's a long way of anything happening. And I think, you know, everybody is out there doing something about it. And personally, I think, you know, the government put it out there to test it. And I think there will be a lot of pushback on it. So, you know, I would not sit here and say, I don't worry about it. Absolutely, we'll be focused on it. But, you know, it's not something that's happening imminently.

No, that makes sense. I appreciate that color. Second one for me, just on the U.S. landscape, we've seen discussions kind of picking up here and some more news flow from outside kind of the traditional echo chamber. My question is, are you becoming kind of incrementally more bullish on the U.S. reform opportunity, or are you still kind of in wait-and-see mode? Just how are you evaluating kind of the uptick in news flow around U.S. cannabis just over the last month or so?

Listen, I think some, as I said before, I think, you know, President Trump is about, you know, how we enhance business and what can we do. And as they look, you know, right now, tariffs have sort of taken the time on all of this here. But, you know, the new appointment in regards to rescheduling, I think, is a good step in the right direction. I feel good that, you know, something will happen. But the big thing is, you know, Tilray is so well diversified, it will be a big, you know, lift for Tilray if it does. But if it doesn't, you know, we have a lot of you know, opportunities out there, and we got a lot of things happening. But I think we're hearing more and more, you know, about changes coming in regards to regulatory of cannabis in the U.S. But I've been there before, so, you know.

Right. I appreciate the comment.

But I think we're dealing with a different government today that's interested in business and interested, you know, how to bring more and more jobs and how to get rid of an illicit market.

Understood. I appreciate the call. Thank you very much.

I think that is our last question. So I want to thank everybody for joining us on this, you know, last or second last or third last day of July. You know, we got a lot happening at Tilbury. And as we brought this company together over the last five to six years, as you can see, we are a very well diversified business. We have a strong balance sheet. We have over 40 brands. We have multiple beverage facilities. We have a distillery. We have within 5 million square feet of grow in Canada. We have two great grow facilities in Europe. We have Great facilities that are producing our Wellness products of Manitoba harvest. And with that, you know, it's interesting because what holds back our stock price today is very much focused on the U.S. and legalization in the U.S. But looking at our growth in regards to being close to a billion dollars, yes, if U.S. cannabis was legalized, you know, as I looked at it four years ago, I expected it to happen, and I thought we'd be a lot different. But as I've always come back and said, if I could sell – cannabis drinks throughout the U.S. today, the sales opportunity that would be. If I could sell drinks in Canada, just in restaurants, the opportunity that would be. If I could sell medical cannabis in a legalized market in Canada, how big that would be. If I could sell, you know, pre-rolls from a medical standpoint in Europe, where that would be. We're new within the beer business and the opportunities there. You know, the spirits business, there will be more consolidation. You've seen some of the things with the bigger spirits companies. And in regards to international and imports, I think there's an opportunity for Tilray to play a role in that. And I think with our balance sheet, how strong it is, and our free cash flow, I think there's continuous opportunities for us in regards to future acquisitions, and that's something that we'll be focused on. And last but not least, geographic expansion. I've been part of growth in the Middle East. I've been part of growth in India. I've been part of growth in Europe. And with Rajneesh joining the team and rounding that out and us opening an office in London and looking to grow in the Middle East, We're well positioned. Last but not least, we have a team in place that over the last years has been here building that. And I must say, I'm very lucky to get to work with my team. And I want to thank each and every one for what they contribute. So, you know, I'm glad fiscal 2025 is behind us. It was not one of our easiest years. But there's no years out there that are easy. I think we have a lot of good strategic plans that we just went through. our board meetings and strategic plans for 2026 and a recap of 2025. And I must say, I'm excited about some of the things in front of us. And I will tell you, there'll be some of the great things that will happen. There will be some challenges, but I never want us to be flatlined because that's not a good place in life to ever be, is to be a flatline in place. And I expect growth on the top line, expect growth in the margin, expect growth in EBITDA. And I expect, you know, free cash flows coming from our businesses to offset that. So enjoy the rest of your summer. Be safe out there. On a nice warm day like this here, it's great to enjoy a great cold beer. Thank you very much.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.