Tilray Brands, Inc.

Thank you for joining today's conference call to discuss Tilray Brands' financial results for the fourth quarter and fiscal year 2026, ended May 31, 2026. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session for analysts conducted via audio. I will now turn the call over to Ms. Berrin Noorata, Tilray Brands' Chief Communications and Corporate Affairs 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 investor section of Tilbury Brands' website at tilbury.com and has been filed with the SEC and OFC. 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 text in our earnings press release includes many of the risks and uncertainties associated with such forward-looking statements. Today, we will be hearing from key members of our senior leadership team, beginning with Irwin Simon, Chairman and Chief Executive Officer, who will provide opening remarks and commentary. Followed by Carl Merton, Chief Financial Officer, we'll review our financial results for the fourth quarter and fiscal year 2026. And now I'd like to turn the call over to Tilray Brands Chairman and CEO, Irwin Simon.

Thank you, Berrin. And good afternoon, everyone. And thank you for joining us today. Fiscal 2026 proves something important and exciting. Tilray Brands is more than the company many people think it is. Tilray is a diversified global consumer products and pharmaceutical distribution company with leadership positions across cannabis, beverage, hospitality, and wellness. We are no longer defined by one category, one market, or one regulatory outcome. We have transformed Tilray into a company with multiple cash generating businesses, positive cash flow from operations excluding working capital, and significant runway for future growth. There is no other company with the scale, diversification, global infrastructure, or interconnected business segments across cannabis, beverage, hospitality, and wellness that Tilray has built brand by brand. Since I took the helm in 2019, when Afria was singularly focused a $50 million revenue company, we have pursued disciplined acquisitions and thoughtfully invested in assets, infrastructures, and capabilities that define Tilray today. And we've done it with financial discipline. We ended fiscal 2026 with approximately $235 million in cash and marketable securities. Net debt, essentially a break even, and nearly $700 million of operating assets. Those aren't just numbers on a balance sheet. They represent real brands, real facilities, real infrastructure, real operating capabilities that are generating cash today and creating long-term value for shareholders. The result is a scale global operating platforms with leadership positions across multiple high growth consumer categories. Tilray Brands is the largest cannabis cultivator with over 6 million square feet of cultivation capacity around the world. The revenue leader in Canadian cannabis, a leading medical cannabis company across Europe, with the largest share of the German medical cannabis oil market, a top 100 global beverage company, the number one craft supplier and fourth largest beer supplier at grocery in the UK, and the fourth largest craft brewer in the United States and a global leader in hemp foods and wellness. Hilray Brands now spans in more than 20 countries with more than 40 brands. supported by 22 production facilities, 37 pubs, 16 franchise pubs, and three hotels with approximately 93% of our products are made in-house across our vertically integrated operation facilities. The market doesn't value companies like SpaceX, Amazon, or Tesla solely on what they've earned in a single quarter. It recognizes the long-term value of the infrastructure, the capabilities, and platforms We have built Tilray and that same long-term mindset, investing in business and brands that generate returns in cash today while creating a much larger platform and strengthening our competitive position for the future. What makes Tilray different is not simply the breadth of what we own, but the way our businesses work together. Cannabis, beverage, hospitality, and wellness. each create distinct opportunities, but together they give us consumer reach, brand building power, operating leverage, and multiple pathways to growth that a few companies can replicate today. That interconnected model gives us flexibility that single category companies do not have. We can allocate capital where we see the strongest return, bring brands into new channels, use our hospitality footprint, to create direct consumer engagement and adapt as markets evolve. That is how we intend to keep building sustainable long-term shareholder value across categories, geographies, and consumer occasions. We continue to believe that medical cannabis is the future of medicine and remains one of the world's most compelling long-term opportunities and Tilray is uniquely positioned to lead its future. As medical cannabis becomes increasingly integrated into patient care, we have the genetics, cultivation expertise, pharmaceutical manufacturing capabilities, clinical relationships, bodies of research and evidence, and international infrastructure to meet patients' needs and scale with demand. We also see a future where emerging therapeutic areas including peptides, psilocybin for mental health become part of the broader conversation around next-generation patron care. In the U.S., cannabis markets, we continue to see encouraging regulatory momentum, including federal cannabis rescheduling. But our long-term growth strategy has never depended on a single regulatory event or one country. As a global leader in medical cannabis today, when the U.S. medical cannabis regulatory framework is in place, Hill Ray Medical is established and ready with the playbook. Capabilities and Optionality to meaningfully expand our medical cannabis platform across the U.S. when the opportunity opens. Tilray Opportunity is global. We're already building leaderships in marketplaces outside the U.S. where medical cannabis, pharmaceutical distribution, consumer health and wellness are expanding the fastest. Beer is the most consumed beverage alcohol in the world. making it one of the most resilient and enduring customer categories. AI is not replacing beer. Our acquisition of BrewDog added a globally recognized brand, a scale hospitality platform, and significant international growth potential. We have looked at acquiring BrewDog at different valuations over time and ultimately acquired the business strategically out of the administration at an incredible price. Today we believe we have a jewel in our business that has accelerated our global beverage expansion, together creating an approximately $500 million beverage platform and accelerating the growth of our brands globally. Together with cannabis, beverages, and wellness portfolios, Tilray's diversified consumer product strategy is positioned to capitalize on evolving consumer preferences while expanding profitability, strengthening cash flow, and creating long-term shareholder value. Our strategy is working. Our financial results prove it. Fiscal 2026 was a milestone year for Tilray. We delivered record revenue of over $915 million on an annualized pro forma basis. Tilray is now approximately a $1.2 billion global revenue company. We also achieved record adjusted EBITDA of $61.1 million or $63.4 million, excluding the temporary impact of fuel surcharges. These results demonstrated the underlying strength and the exhilarating momentum of our global businesses. At the same time, we continue investing in the future of our business through our acquisition of BrewDog. Since acquiring BrewDog for approximately $54 million, We have further invested nearly $50 million of additional working capital to support the business. Importantly, we made these investments from a position of strength. Even as we invest in BrewDog and the future of our business, we ended the fiscal year with approximately $235 million in cash and marketable securities and a significantly strengthened balance sheet. Positive cash flow from operations excluding working capital improved to approximately $18 million. An increase of over $50 million year over year. We reduced our debt by approximately $60 million as of this filing, lowering our net debt to less than $1 million at year end, a 95% improvement year over year. We've increased gross profit by 8% to $260 million and grew our adjusted EBITDA 11%, demonstrating discipline, cost control, and execution across our businesses. These results validate the strategy we have been executing against, which is building a diversified global consumer products and pharmaceutical distribution company with multiple engines for profitable growth. We are generating stronger cash flow, allocating capital with discipline, investing behind our highest returned opportunities and building a more resilient business designed to create sustainable long-term shareholder value. Now, turning to our business segments, beginning with Canadian cannabis. In fiscal 2026, Tilray reinforced its position as Canada's largest cannabis company by revenue. Adult-use cannabis revenue grew 5% year over year, driven by continued demand for ready-to-consume formats. We drove growth, improved profitability, strengthened our brand and product portfolio, and positioned the business for continued growth. Our strategies align with how the Canadian cannabis market is evolving. During the fourth quarter, pre-rolls grew 38%, edibles grew 39%, vapes grew 28%, and the THC beverage business grew 6%, increasing our exposure to Canada's fastest growing product categories. Canada is one of the most competitive cannabis markets in the world, and Tilray continues to lead with the number one market share in pre-rolls. the number one THC beverage, number one in oils, and number one in chocolate edibles, and continue to hold leading positions across every other major product category. Cannabis flower premiumization also remained a strength with Broken Coast, delivering its strongest fourth quarter in two years, growing 10% year over year. Looking ahead, our priorities are clear. Accelerated growth in vapes, infused pre-rolls, Rebuild Momentum and Flower, expand our medical platform through HelloMD, and continue to optimize our cultivation and production network. Turning to our international, international is one of Tilray's greatest competitive advantages and one of our most compelling long-term growth opportunities. Over the past year, we established international is one of Tilray's strongest growth engines. On a pro forma basis, our international operation now represents approximately $700 million of revenue. During fiscal 2026, we strengthened every part of our European business, from medical cannabis, pharmaceutical distribution, to beverage and hospitality, while delivering record international revenue, quarter after quarter since Q2, despite regulatory complexity, pricing pressure, and evolving market dynamics. We strengthened our cultivation and manufacturing capabilities across Portugal and Germany. Portugal, which supplies approximately 85% of our international medical cannabis business, reached approximately 80% utilization during the fiscal year. And now with ample opportunities to expand, we have a clear path to operate our Portugal facility at full capacity. In Germany, our Freya RX cultivation facility is fully utilized. and our new ARX brand has launched successfully with strong early patients response. Our execution delivered strong results. Medical cannabis revenue grew 34% to approximately 85 million despite permit delays, regulatory complexity and approximately $21 million in price compression. Germany and the UK each grew 25%. Poland grew 73%. Italy grew 53%. Driven by expanded distribution, innovation, and higher volumes. Medical cannabis flower grew 87% and Tilray remains Germany's leading provider of medical cannabis oils with a 45% market share. CC Pharma continues to be a significant competitive advantage. Through one of Germany's leading pharmaceutical distributors, we reached approximately 16,000 pharmacies and major wholesalers. Fiscal 2026 revenue grew 21% to $327 million, strengthening both our pharmaceutical business and our medical cannabis leadership. Life completes our vertically integrated UK medical cannabis business by connecting cultivation, manufacturing, clinical care, dispensing, and pharmacy services. It gives Tilray direct patient access, stronger demand visibility, and greater participation across the patient journey. Together, our cultivation assets, CC Pharma, Life, Hillary Medical, have created one of Europe's most comprehensive medical cannabis and pharmaceutical distribution business. As we continue to scale, we also are improving profitability. Since the beginning of fiscal 2025, we've reduced our cost per unit by more than 30%, demonstrating the operating leverage We continue to unlock across the business. Turning to our beverage business, in fiscal 2026, beverage revenue was 6% to $254 million, which includes the acquisition of BrewDog in Q4. Hillray, in the last five years, has strategically built one of the most scalable global beverage platforms in the industry. And today, we are our top 100 beverage companies. with the brand's brewing capability, hospitality footprint, and commercial infrastructure to drive profitable growth around the world. Importantly, as we did not build this through transformational capital spending, we built it through strategic acquisition, operational integration, and brand investment, creating a scalable global beverage business positioned to deliver increasing returns time over time. BrewDog is the cornerstone of that strategy and one of the strongest examples of disciplined capital allocation. We acquired an over $200 million annual revenue business for approximately $54 million with globally recognized brand, scaled hospitality network, and significantly international growth potential. In just a few months, we have stabilized operations, improved product availability, accelerated innovation, and begun unlocking synergies across our global beverage platform. BrewDog has significantly expanded our reach across the United Kingdom, Australia and other international growth markets, while also becoming the gateway for introducing Tilray's American craft portfolio internationally. During fiscal 2026, we launched 23 American craft beers and non-alcoholic beverages from nine Tilray brands into the UK. demonstrating how quickly our global commercial infrastructure can scale brands into new markets and have sold out each of these shipments in the UK in less than two weeks. Our pubs are far more than hospitality assets. They're powerful consumer engagement platforms that strengthens our brands, deepens consumer loyalty, generates valuable consumer insights, and creates experience that most beverage companies simply cannot replicate. The World Cup demonstrates the power of that model. Throughout the tournament, including every England match, our 1,800-capacity flagship BrewDog Waterloo pub sold out, showcasing the strength of our hospitality platform and the demand for our brand. Across the six-week tournament, our brew pub has generated approximately 412,000 pounds of incremental revenue above budget. welcomed more than 28,000 pre-booked guests and generated approximately 123,000 pounds in ticket revenue. Our two strongest trading days generated 218,000 pounds and 188,000 pounds in revenue respectively. We're continuing to build upon this momentum. Our brands also performed exceptionally well. We sold approximately 1.3 million pounds of BrewDog beer during the tournament. Led by Lost Lager, White Tilray's American craft beer brands accounted for 58% of all guest beer sales, with Shock Top emerging as the strongest performing American craft beer brand. While we also launched our 1 million pound bar tab campaign, one of the largest consumer activations in our company history, turning fan excitement into a global brand moment across our pubs and digital channels. Together, These activations generated more than 600 million organic creators and generated media impressions, extending the reach of our brand well beyond our pulse. This is the power of Tilray Beverage and Hospitality Strategy. We just don't own a great brand. We own places where consumers experience them and can come together. That gives us a direct connection to consumers, building loyalty, drives traffic across our venues and creates opportunities that traditional beverage companies simply cannot replicate. In the United States, Tilray has built one of the country's leading craft brewing platforms as the fourth largest craft brewer. We combine iconic regional brands and national brewing and commercial capabilities in growing hospitality network and strengthen our brand and deepens consumers' engagement. While the integration and optimization of acquired brands from Molson and ABI has taken longer than expected, particularly in beer category facing broader headwinds, we continue to see significant strategic value in the platform we've built. Our distributor network, retail customer relationship, on-premise presence, manufacturing capabilities, and brand portfolio provides the infrastructure to support our beverage business today. while creating meaningful optionality if the THC beverages are permitted at scale in the future. Our exclusive long-term U.S. partnership with Carlsberg, the world's fourth largest brewer, is a powerful endorsement of that platform. Beginning January 1, 2027, Hillary will brew, market, sell Carlsberg, Carlsberg Elephant 1664, and Cronenberg 1664 Blanc across the U.S. Carlsberg partnered with Tilray because of our brewing scale, operation excellence and national commercial capabilities. Innovation remains a competitive advantage. During the year, we expanded our portfolio with Publite, Shock Top High Voltage, Sweetwater Big Trip, Popsicle Hard and a new 10 barrel RTD, extending the trusted brands into faster growing beverage occasions through discipline, innovation, and strategic partnerships. Breckenridge Distillery also continued to build momentum by expanding innovation, strengthening distribution through Southern Glazers Network into New York and California. Today, Tillray has built one of the most scalable and diversified global beverage platforms in the industry across craft beer, spirits, ready to drink, energy beverages, hospitality. We're improving asset utilization Expanding margins driving profitable growth. While federal hemp-derived THC beverages regulations are still pending in the U.S., Tilray Beverage Platforms is ready to dominate the opportunity with the brands, products, manufacturing, and distribution already in place at scale to win coast-to-coast. Beverage is becoming one of Tilray's most important growth engines, and we believe we're still in the early stages of unlocking full potential of this business. Wellness is another important engine within Tilray's diversified global business. Positioned at the intersection of better-for-you foods, functional nutrition, and everyday wellness, this business continues to benefit from the changing consumer preferences and growing global demand for better-for-you products that leverage health and wellness trends. In fiscal 2026, wellness net revenue was 9% to $66 million. Driven by a continued demand for clean ingredients, functional foods, and everyday wellness products, we see significant opportunities to accelerate that momentum through innovation, expanded distribution, and continued brand investment. As we broaden our international footprint, we're targeting high-growth markets across India, the Middle East, Asia, where a rising consumer demand for health, Nutrition, and Wellness Presents Meaningful Long-Term Opportunities. We're also seeing strong momentum with Highball Energy, which has more than tripled since we acquired the brand. Together, these initiatives position our wellness business to become an increasingly important contributor to Tilray's long-term profitability and global expansion. Before I close, I want to expand a moment on capital allocation and the company we built. Every capital allocation decision we have made been guided by one objective, maximizing long-term shareholder value. We have invested with discipline, focused on opportunities that strengthen our operating performance, expand our commercial reach and improve our ability to generate durable cash flow over time. We continue to believe the market is not fully recognized in the value of what we've built. When you look at the strength of our balance sheet, the quality of our assets, the scale of our business, and the diversification of our global platform, we believe our stock price does not reflect the value of the global enterprise we have built. As we look forward, the focus is execution, converting the assets, brands, and capabilities we have built into stronger margins, higher cash flow, and sustainable, profitable growth. Cisco 2026. demonstrated that our strategy is delivering results, and we believe the opportunity ahead remains significant. Looking ahead, AI will become another growth driver for Tilray across our businesses. AI and data-driven technologies are helping us build a smarter, faster, and more efficient company from improving genetics, cultivation, yields, quality, and cannabis to optimization demands. Planning, Production, Inventory Management, and Commercial Execution across our beverages, our wellness business, pharmaceutical distribution, and hospitality business. AI is strengthening every part of our operations. We believe AI will enhance productivity, improve margins, and accelerate our innovation.