Picture supply: The Motley Idiot.
Date
Thursday, October 9, 2025 at 8:30 a.m. ET
Name contributors
Chairman and Chief Government Officer — Irwin Simon
Chief Monetary Officer — Carl Merton
President, Tilray Canada — Blair MacNeil
Chief Digital Officer — Lloyd Breath
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Dangers
Carl Merton acknowledged, “Gross margin was 27% as in comparison with 30% final yr. This decline was pushed by decrease margins in our beverage and hashish companies.”
Merton additionally famous, hashish gross margin was 36%, down from 40% within the prior yr on account of the next mixture of gross sales in decrease margin classes akin to infused pre-rolls and vapes.
Merton stated, “Beverage gross margin was 38% in comparison with 41% final yr. The lower in gross margin is as a result of inclusion of craft acquisition gross sales, which have typically been decrease margin.”
Takeaways
Internet income — $210 million in internet income, a 5% year-over-year improve and a Q1 document pushed by double-digit development in Canadian adult-use and worldwide hashish gross sales.
Internet revenue — $1.5 million or 0¢ per share, in comparison with a internet lack of $34.7 million or damaging 4¢ per share within the prior yr interval.
Gross margin — 27% versus 30% in fiscal Q1 2025, primarily resulting from decrease margins within the beverage and hashish segments.
Adjusted EBITDA — $10.2 million, versus $9.3 million in fiscal Q1 2025, reaffirming adjusted EBITDA steering of $62 million–$72 million for fiscal 2026.
Hashish income — $64.5 million, up 5% year-over-year, with 12% development in adult-use gross income and 10% worldwide development, offset by declines in wholesale and better excise taxes.
Canadian hashish income — $51 million, up 4% year-over-year; market share hole to main licensed producer narrowed by 53 foundation factors, primary place achieved in a number of product classes.
Worldwide hashish income — $13.4 million, up 10% year-over-year, regardless of allow delays in Portugal; administration goals to triple the medical hashish distribution footprint in Germany in fiscal 2026.
Distribution income — $74 million, up 9% year-over-year, fueled by a stronger euro and expanded attain via CC Pharma’s entry to over 13,000 German drugstores.
Beverage income — $55.7 million resulting from ongoing SKU rationalization below Undertaking 420.
Wellness income — $15.2 million, a 3% year-over-year improve in comparison with fiscal Q1 2025, pushed by innovation in vitality and vitamin product launches at key retailers.
Money place — $265 million in money, plus $1 million in digital belongings, following a $22.5 million fairness increase below the ATM program and $5 million convertible word trade.
Debt discount — Excellent debt diminished by $7.7 million, ending with a internet debt place of $3.9 million and a internet debt to adjusted EBITDA ratio of 0.07 occasions.
Working money circulate — Money circulate utilized in operations improved to damaging $1.3 million, almost a $35 million constructive change in money circulate utilized in operations from final yr’s damaging $35.3 million.
Undertaking 420 financial savings — By way of Undertaking 420, $25 million in annual financial savings have been realized, transferring nearer to the $33 million goal.
Phase income combine — Hashish 31%, Beverage 27%, Wellness 7%, and Distribution 35% of internet income, displaying a shift from 28% beverage and 34% distribution contribution in fiscal This fall 2025.
Digital asset technique — Lloyd Breath confirmed the corporate’s funding in Bitcoin, with plans to allow Bitcoin funds for merchandise later in 2025, and assessing use of Ethereum and Solana.
Abstract
Tilray (TLRY 23.55%) delivered its highest-ever Q1 internet income of $210 million and returned to internet profitability, aided by disciplined price administration, phase diversification, and a strong steadiness sheet. Gross margin contraction was explicitly attributed to decrease segment-level margins, with strategic actions underway to enhance future profitability. Administration outlined detailed progress on worldwide enlargement, regulatory engagement, and innovation throughout hashish, beverage, and wellness, highlighting the scalability and integration potential of current investments.
CEO Irwin Simon highlighted the corporate’s return to full Nasdaq compliance and lively share buying and selling, stating, “within the months of August and September, Tilray traded properly over 1 billion shares every month.”
Progress in resolving Portuguese allow delays was reported, with administration noting elevated current approvals, which can catalyze deferred European hashish income within the coming quarters.
Simon confirmed the European subsidiary FL Group obtained Italy’s first license for medical hashish flower distribution and has partnered with Molteni to increase affected person entry and schooling.
The corporate’s aggressive SKU rationalization and facility consolidation within the beverage phase, together with the closure of three amenities, displays an ongoing drive to reinforce effectivity and margins.
Simon described new product launches and expanded retailer partnerships, together with the introduction of 10-milligram Delta-9 THC beverage codecs and co-branded beer with athletics and shopper manufacturers.
Administration reaffirmed intention to take part in potential U.S. medical hashish rescheduling, emphasizing readiness to leverage present infrastructure or pursue acquisitions if alternatives emerge.
Funding in Bitcoin and plans to just accept cryptocurrency funds align with evolving shopper fee preferences, signaling an adaptive digital technique past hashish and drinks.
Business glossary
Undertaking 420: Tilray’s beverage phase integration and cost-reduction venture centered on SKU rationalization, operational consolidation, and effectivity beneficial properties.
CC Pharma: Tilray’s German pharmaceutical distribution subsidiary, enabling entry to over 13,000 drugstores and integration with medical hashish provide chains in Europe.
SKU rationalization: Deliberate discount of product traces to optimize stock, streamline operations, and enhance profitability, significantly cited within the beverage phase.
ATM program: At-the-market providing program permitting the corporate to lift fairness capital opportunistically in public markets.
Full Convention Name Transcript
Irwin Simon, Chairman and Chief Government Officer, who will present opening remarks and commentary, adopted by Carl Merton, Chief Monetary Officer, who will evaluate our monetary outcomes for 2026. And now, I want to flip the decision over to Tilray Manufacturers, Inc.’s Chairman and CEO, Irwin Simon.
Irwin Simon: Thanks, Berrin, and good morning, everybody, and thanks for being right here for our Q1 outcomes. 2026 was a testomony to the numerous momentum Tilray Manufacturers, Inc. has constructed throughout our companies through the years. I’m proud to report that our strategic focus is constant to strengthen our profitability, our steadiness sheet, and leveraging our world platform to drive innovation in hashish, beverage, and wellness, and proceed to ship stable outcomes for our shareholders. I wish to lengthen my honest gratitude to our shareholders for his or her ongoing assist and perception in Tilray Manufacturers, Inc.’s imaginative and prescient. It’s encouraging to see our inventory regain energy this quarter and return to full Nasdaq compliance.
Notably, within the months of August and September, Tilray Manufacturers, Inc. traded properly over 1 billion shares every month, highlighting the great curiosity in our firm. Not numerous corporations have a billion shares buying and selling on a month-to-month foundation. We sincerely thank our shareholders for his or her continued confidence in us and their dedication to investing in our firm. Your perception in our long-term imaginative and prescient is what drives us ahead. Now go on the market and purchase a few of our merchandise. Notably, through the quarter, we achieved internet revenue of $1.5 million and earnings per share of zero, highlighting our dedication to sustainable development and operational effectivity.
We achieved income development throughout all our enterprise segments except the beverage phase, which remained flat due to deliberate selections to optimize our craft beer SKU portfolio below Undertaking 420. Total, complete income elevated by 5% yr over yr to a Q1 document internet income of $210 million, fueled by double-digit development in our Canadian adult-use and our worldwide hashish enterprise, which delivered 12% and 10% development, respectively. We additionally proceed to strengthen our steadiness sheet by decreasing our excellent debt by $7.7 million this quarter, bringing our internet debt to EBITDA ratio to 0.7 occasions money due and our money equal to $265 million.
Our outcomes are underpinned by our deep understanding of product innovation and evolving shopper preferences. This experience permits us to form modern choices and never solely meet present demand however anticipate future wants, retaining Tilray Manufacturers, Inc. on the forefront of the hashish, beverage, and wellness markets. Immediately, Tilray Manufacturers, Inc. owns and operates greater than 40 distinctive manufacturers in over 20 nations, and we’re the predominant world hashish chief trusted by sufferers, medical professionals, and governments in over 20 nations and the primary Canadian hashish producer by income.
The fourth largest craft beer producer in the US and a market chief in branded hemp merchandise throughout North America, with our portfolio of high-protein hemp snacks and better-for-you merchandise holding almost a 60% market share and now a frontrunner within the new thrilling hemp-derived Delta-9 THC drinks throughout the US. We’ve constructed a diversified world platform that could be a chief in each business by which we compete. Let me briefly evaluate every enterprise. Our hashish enterprise, as I stated, grew 5% yr over yr to $65 million.
Globally, the hashish business continues to evolve, and Tilray Manufacturers, Inc. has the cultivation and manufacturing agility on the proper price to compete and lead in any industrial markets around the globe. Latest developments within the US have strengthened our optimism across the rescheduling of medical hashish, as we have now seen in different nations around the globe. We imagine rescheduling would improve affected person entry, enhance the standard of affected person care, promote scientific analysis, and assist a accountable regulatory framework.
The medical hashish business within the US is at the moment estimated to be at the very least a $10 billion market, which might create a possible alternative for Tilray Manufacturers, Inc. to seize at the very least a 3% to five% market share, representing a major $300 million to $500 million enterprise alternative. We’ve recognized a number of pathways to take part within the US medical hashish business, positioning ourselves to benefit from this substantial development potential when it occurs. In Q1, our Canadian hashish enterprise delivered robust outcomes. Tilray Manufacturers, Inc. bolstered its place as Canada’s largest authorized hashish firm by income, with Q1 income up 4% yr over yr to $51 million. Within the adult-use channel, Tilray Manufacturers, Inc. was a top-five licensed producer.
We grew market share, closing the hole to the primary LP in market share by 53 foundation factors. We held the primary place in key classes akin to pre-rolls, drinks, oils, chocolate edibles, and by the tip of the quarter, we additionally reached the primary spot in flower whereas sustaining our prime 10 positions throughout all classes. Congratulations to Blair MacNeil and his crew. We imagine our intensive scale represents a major aggressive benefit inside the Canadian market, the place we handle roughly 5 million sq. ft of cultivation house and at the moment keep 210 metric tons of hashish in manufacturing, with extra capability available. This positions us to successfully meet future demand.
Moreover, Tilray Manufacturers, Inc. is well-prepared to produce each European and US markets as regulatory frameworks develop in these markets and proceed to increase. In Canada, we additionally foresee substantial potential as regulatory reforms could result in transformative developments akin to increasing hashish in healthcare, unlocking new alternatives via proposed hashish well being merchandise and broader insurance coverage protection, making medical hashish extra accessible to sufferers. On-premise consumption for THC drinks, which I imagine is massive, a rollout of on-site consumption to drive accountable use and create a vibrant experimental hashish beverage market.
And, after all, regulatory modernization, which we have now been speaking about, updating the outdated insurance policies that prohibit competitiveness and paving the best way for innovation and development within the Canadian hashish business. Turning to our worldwide enterprise, our worldwide hashish income grew 10% yr over yr to $13.4 million. That is with not with the ability to receive permits in Portugal to permit us to ship round the remainder of the nations. We stay uniquely positioned to achieve market share as world shopper preferences and rules evolve. In Germany, we proceed to increase our industrial medical hashish portfolio and are actively leveraging our Tilray Medical and CC Pharma distribution community throughout pharmacies all through the nation to drive additional development.
Wanting forward, we anticipate to extend our medical hashish distribution footprint by threefold in fiscal 2026, considerably enhancing our attain and impression inside the German pharmaceutical market. We’ve that entry via CC Pharma. In Italy, our Italian subsidiary FL Group obtained the primary license from the Italian Ministry of Well being to distribute medical hashish flower for therapeutic use. We additionally partnered with Molteni, a number one Italian pharmaceutical firm, to increase entry to medical hashish extracts and supply focused schooling via their nationwide community of medical and scientific professionals. We proceed to increase our rising capabilities in each Portugal and Germany, strengthening our EU GMP licensed cultivation infrastructure to satisfy evolving world demand.
At the moment, we produce 21 metric tons of medical hashish flower in Europe and have the capability to considerably improve the quantity as demand continues to develop. Our expanded rising operations not solely assist our management in established markets but additionally place us to quickly reply to regulatory environments opening throughout Europe and past. European hashish reform continues to progress, and we’re excited to witness essential developments just like the European Union Canapo venture and Spain’s current approval of medical hashish. Tilray Manufacturers, Inc. is proud to already be concerned in medical hashish analysis in Spain via a partnership with the College of Madrid, supporting developments in affected person care and accountable rules throughout Europe. Now on to our distribution.
Our European medical distribution enterprise, CC Pharma, continues to develop with income growing 9% yr over yr to $74 million. The phase stays a major driver of our European hashish operations, and our infrastructure supplies a strategic benefit that permits us to seize elevated market share as each the regulatory setting and business panorama evolve throughout Europe. As I stated earlier than, we have now entry to over 13,000 drugstores inside the German market. We stay assured in our world enlargement technique with Tilray Manufacturers, Inc. well-positioned to drive worldwide development and leverage rising alternatives throughout hashish, beverage, and our wellness enterprise.
Worldwide beverage, which is a brand new enterprise for us, constructing on our worldwide footprint, our infrastructure, and our development technique, we might be accelerating the enlargement of our nonalcoholic drinks portfolio throughout a number of worldwide markets. We anticipate our manufacturers, Excessive Balm, Liquid Love, and Runner’s Excessive, to achieve traction with shopper alternatives. We constructed a devoted crew centered solely on servicing our worldwide prospects. This specialised crew will be certain that our portfolio of main craft manufacturers is tailor-made to the style and expectations of our world shoppers whereas additionally supporting our long-term development in high-potential markets worldwide.
By leveraging our established distribution networks and brand-building experience, we’re well-positioned to seize development alternatives on this fast-emerging class and ship thrilling new merchandise to the worldwide markets, and the demand for them is excessive. Notably, we have now already secured a distribution accomplice within the UK for Excessive Vol, guaranteeing fast market entry and powerful assist for the model on this key area. Moreover, on the beer facet, we acknowledge the rising demand for American craft beers within the worldwide market. To additional capitalize on this momentum, we’re actively exploring all alternatives to develop this enterprise, together with worldwide manufacturing alternatives and potential acquisitions, to increase our attain and higher serve our world prospects.
In our US beverage enterprise, we proceed to make progress in opposition to our beer integration, optimizing our technique and our Undertaking 420. We see long-term potential for the beverage class primarily based on the diversification of our choices and the superior merchandise we produce. We’ve improved operations, leveraged acquired manufacturers, and supported constructive efficiency. Notably, many of those manufacturers Tilray Manufacturers, Inc. acquired have been beforehand in decline and are actually displaying promising outcomes with more healthy development tendencies and improved general efficiency as we transfer to regain gross sales authorizations at retail that have been misplaced. This turnaround underscores the success of our centered technique and our dedication to revitalizing and rising our beverage beer portfolio.
By way of Undertaking 420, we have now realized $25 million in annual financial savings, transferring nearer to our purpose of $33 million. We’ve continued to work carefully with our distributors to focus on selling robust manufacturers in every of our markets. Within the quarter, we skilled development throughout key manufacturers and areas. Shocktop, the corporate’s third-largest model, was among the many fastest-growing craft manufacturers with notable will increase in each greenback gross sales and market share. Pushed partially by the profitable launch of its selection pack, it has grown to be the quantity eight hottest new craft beer nationally. Developments proceed to enhance for Shocktop, with a 30-point greenback pattern enchancment since Tilray Manufacturers, Inc. acquired the model in 2023.
Within the Southeast, Shocktop excelled with a 49% bounce in greenback gross sales, and Sweetwater Day Journey IPA stood out as one of many prime new gadgets within the area. Within the Northeast, Montauk maintained its main place in Metro New York and gained market share nationally with continued demand for its WaveChaser IPA. Breckenridge Brewery led craft share beneficial properties in Colorado, with its prime Avalanche seasonal and Juice Drop manufacturers posting double-digit development. And final however not least, Redhook outperformed regional craft beer manufacturers, propelled by Huge Valor Imperial IPA’s robust volumes and velocity beneficial properties. Whereas 10 Barrel Pub Beer 18 packs dominated craft gross sales in Oregon, accounting for five% of all craft volumes.
We additionally expanded our partnerships, together with co-branded craft beer with the Oregon Geese, excellent for school soccer season, and a brand new partnership with Auntie Anne’s for the launch of Shocktop Twisted Pretzel Wheat Beer. You’ve got to attempt it. It’s nice. We’re making beer enjoyable once more. These partnerships and co-branding alternatives provide important runway for us to widen our markets. Within the spirits class, which has been robust, we have now launched a number of world-class improvements, together with Mach One, our new line of nonalcoholic spirits, and Cozzabrek within the tequila house.
We’ve additionally launched Mountain Store, a novel beverage mix with maitake mushrooms out there in pouches, which is a novel packaging format to reinforce the shot expertise and seize the free spirit essence of the Rocky Mountains simply in time for ski season. We additionally kicked off our fifth-year partnership with the Denver Broncos with a brand new line of spirits, together with restricted editions Broncos Honey Whiskey and Broncos Orange Creamsicle ready-to-drink cocktail.
Within the nonalcoholic class, we’re proud that our nonalcoholic beer model, Runner’s Excessive, which we solely launched in fiscal 2025, is now acknowledged as one of many prime 15 manufacturers in nonalcoholic beer and ranks because the fourth fastest-growing nonalcoholic beer in a sizzling class within the Southeast, promoting throughout 4,500 distribution factors. Following the success of our hemp-derived Delta-9 THC drinks, we have now expanded the Fizzy Jane and Completely satisfied Flower product traces to incorporate 10-milligram codecs, complementing the present 5-milligram choices, and the shoppers need these merchandise.
The modern Delta-9 class leverages our craft beer infrastructure and distribution networks, enabling us to ship high-quality merchandise to shoppers throughout 14 states, whether or not they’re new to the class or looking for an enhanced expertise. We’ve established partnerships with retailers nationwide for our Delta-9 manufacturers and now provide distribution to outstanding wine and liquor retailers akin to Complete Wine & Extra, ABC Effective Wine & Spirits. As well as, in Q1, we noticed additional development in regional grocery chain channels, together with ShopRite, Stew Leonard’s, and Winn-Dixie. We proceed constructing on this constructive trajectory as we transfer into Q2 and the remainder of the yr.
Immediately, our beverage enterprise operates greater than 20 manufacturers, together with 15 American craft beer manufacturers throughout seven community manufacturing amenities and 16 brewpubs. We’re well-diversified throughout craft beer, spirits, nonalcoholic, and now Delta-9, and vitality drinks. We all know that there’s loads of alternative for development within the beverage class. We’ve the correct management, and we’re pursuing the correct development technique. I’m tremendously excited in regards to the future and the alternatives within the giant beverage class. Final however not least, now turning to our wellness enterprise, which is close to and expensive to my coronary heart. Our wellness enterprise had a robust quarter, rising revenues to over $15 million.
We proceed to increase our wellness portfolio with many launches of recent choices, new crackers, new hemp portfolios, and different merchandise which might be out there at Entire Meals and different retailers. We are actually in over 17,000 retailers throughout the US. These choices are additionally launched on Amazon and lots of different on-line retailers. I’m extremely assured in Tilray Manufacturers, Inc.’s outlook for the rest of 2026 and past, with regulatory environments in our business poised for significant evolution. I totally anticipate constructive change forward, and I’m sure in our skill to adapt swiftly and strategically.
Our confirmed method, strong product portfolio, and distinctive crew place us to grab each single alternative, particularly in wellness, the place we see important expansive alternatives, and we’re dedicated to unlocking new prospects via steady innovation, portfolio enlargement, and goal investments, together with the alternatives when strategic acquisitions occur. Whereas we have now made appreciable progress, we acknowledge we have now not but reached our full potential, and we’re removed from it within the wellness house. That’s the similar with our hashish enterprise and our beverage enterprise. There’s plenty of room and many white house for us. With that, I’ll now flip the decision over to Carl Merton for an in-depth have a look at our financials. Carl?
Carl Merton: Thanks, Irwin. Please word that we current our financials in accordance with U.S. GAAP and in U.S. {Dollars}. All through our discussions, we might be referring to each GAAP and non-GAAP adjusted outcomes, and we encourage you to evaluate the reconciliation contained inside the press launch of our reported outcomes below GAAP with the corresponding non-GAAP measures. Now our outcomes. We’re reporting document first-quarter internet income, internet revenue, and a considerably improved adjusted free money circulate for the interval. Additional, we’re reaffirming our 2026 steering for adjusted EBITDA. Internet income for the primary quarter was a document $210 million, a 5% improve yr over yr.
This development was pushed primarily by elevated hashish gross sales in each Canada and our worldwide markets and elevated income in our distribution phase. Hashish income elevated 5% yr over yr to $64.5 million, pushed by 12% development of adult-use gross income and 10% development in worldwide hashish. Larger excise taxes and declines in wholesale hashish offset these double-digit outcomes. We see materials potential for the worldwide phase and anticipate continued development as soon as we obtain a number of permits which might be at the moment backlogged in just a few European nations. Beverage income reached $55.7 million, pushed by innovation and impacted by continued SKU rationalization. We superior Undertaking 420 and built-in acquired manufacturers.
Though craft manufacturers and spirits face challenges, new merchandise contributed 2% to Q1 income, supporting our perception within the beverage class’s long-term development. Wellness income elevated 3% yr over yr to $15.2 million due to our strategic give attention to continued improvements with Excessive Vol Vitality, our pure vitality drink, high-protein tremendous seeds, and better-for-you breakfast and snacking, together with the launch of two new choices from Manitoba Harvest at Entire Meals. Distribution income elevated 9% yr over yr to $74 million within the quarter, primarily on account of the stronger euro.
From a contribution perspective, 31% of internet income was generated by our hashish enterprise, 27% was generated by our beverage enterprise, 7% was generated by our wellness enterprise, and 35% was generated by our distribution enterprise. This compares to contributions of roughly 31% for hashish, 28% for beverage, 7% for wellness, and 34% for distribution within the final fiscal quarter. As our worldwide hashish enterprise continues to increase, we anticipate to see greater contributions from our hashish phase over the rest of the yr. Gross revenue for the quarter was $57.5 million in comparison with $59.7 million within the prior yr interval. Gross margin was 27% as in comparison with 30% final yr.
This decline was pushed by decrease margins in our beverage and hashish companies. gross margin by phase, hashish gross margin was 36%, in comparison with 40% final yr on account of the next mixture of gross sales in decrease margin classes akin to infused pre-rolls and vapes, the place we reentered some beforehand margin-prohibitive classes. We imagine the decline this quarter is short-term, and the actions we have now taken to drive profitability and enhance margins might be efficient in the long run. Beverage gross margin was 38% in comparison with 41% final yr. The lower in gross margin is as a result of inclusion of craft acquisition gross sales, which have typically been decrease margin.
Wellness gross margin was flat yr over yr at 32%. Distribution gross margin was 11% in comparison with 12% final yr, primarily based on adjustments in product combine. Internet revenue was $1.5 million or 0¢ per share in comparison with a internet lack of $34.7 million or damaging 4¢ per share within the prior yr interval. Adjusted internet revenue improved to $3.9 million or $0.00 per share in comparison with an adjusted internet lack of $6 million or damaging 1¢ per share within the prior yr. Enhancements in each metrics have been a operate of diminished SG&A prices, together with amortization. Adjusted EBITDA for the quarter was $10.2 million in comparison with $9.3 million final yr.
Money circulate utilized in operations improved considerably to damaging $1.3 million for the quarter, from damaging $35.3 million final yr, representing a constructive change of virtually $35 million. We proceed to strengthen our steadiness sheet this quarter by way of debt and money positions. Through the quarter, we raised $22.5 million below our ATM program, primarily after our inventory elevated to over $1 per share. Additional, we exchanged $5 million of our convertible notes for fairness early within the quarter, as we already mentioned throughout our final earnings name.
Through the quarter, we diminished our excellent debt by $7.7 million, bringing our internet debt place right down to $3.9 million and our internet debt to trailing twelve months adjusted EBITDA ratio to 0.07 occasions, all whereas ending the quarter with $265 million in money plus one other $1 million in digital belongings. These stronger debt and money positions present Tilray Manufacturers, Inc. with higher flexibility for strategic alternatives. We intend to proceed decreasing our debt and additional strengthen our steadiness sheet because the yr progresses. As already mentioned, our confidence in our enterprise, our technique, and our crew has by no means been greater, and we’re happy to reaffirm our 2026 steering, anticipating adjusted EBITDA between $62 million and $72 million.
We will now open the road for Q&A.
Operator: Thanks. Press 1 in your phone keypad. A affirmation tone will sound. You might press 2 if you want to take away your query from the queue. For contributors utilizing speaker tools, it could be essential to select up your handset earlier than urgent the star keys. We ask you every hold to at least one query and one follow-up. Thanks. Our first query comes from the road of Aaron Thomas Gray with Alliance International Companions. Please proceed along with your query.
Aaron Thomas Gray: Good morning, and thanks very a lot for the questions right here right now. First query for me, I simply wish to discuss a little bit bit about worldwide development alternatives within the close to time period. You provided some commentary in your ready remarks. I simply wish to be sure I used to be understanding them accurately. So initially, simply additional understanding by way of the place we stand right now by way of the impacts on a number of the allow delays that you’ve been having. After which some commentary you offered by way of the expansion particularly, I believe you might be referring to medical hashish being up thrice in fiscal yr 2026 and talks about leveraging CC Pharma probably.
Simply wish to be sure I used to be understanding that accurately. Had been there some issues that you just wish to leverage CC Pharma enterprise that you weren’t, you understand, traditionally? So simply any extra commentary on that will be useful. Thanks.
Irwin Simon: Nice. So a few your questions. Primary, with regard to permits, we spent numerous time with the Portuguese authorities. We’ve spent numerous time with Portugal. We’re lastly seeing permits coming via. I be ok with that. The following massive subject that we run into is the quota in Germany and simply Germany opening up and growing extra imports into the German market. We predict in the end that may occur. However it isn’t enterprise going away. It simply could shift from the second quarter into the third quarter as the brand new quotas transfer into place in 2026.
So with that, I really feel we have now made numerous headway into the Portuguese allow scenario, and we received extra permits within the final two weeks than we most likely received within the final two months or so. With regard to a few issues, the demand in Europe is there. And with that, it’s the availability and the develop. And with the brand new crew, and now we moved a number of the Canadian crew into worldwide. We glance to develop in our facility right now, and Portugal is operating about 50%. We’ve the chance to double that at 40 metric tons, and that’s one thing we’re engaged on.
The opposite factor is to actually improve our development to most likely six or eight metric tons in our German facility. And likewise the place the chance is with regard to bringing product EU GMP product in from the Canadian market. With regard to Germany, what I’ve stated and what I used to be working via, CC Pharma, once we acquired it, it was an enormous a part of our license, and it was one thing that there was a chance. And what we’re seeing is a few nice enlargement with CC Pharma. CC Pharma delivers to 13,000 drugstores right now, and that’s common medicines.
And the nice factor is we’re additionally seeing some good worth will increase and a few good alternatives on the CC Pharma distribution enterprise. However extra importantly, as we combine these companies, whether or not it’s on the gross sales facet and the distribution facet, we see CC Pharma being vertically built-in and distributing our medical hashish to much more of those drugstores within the German market, and that could be a massive alternative for us.
Aaron Thomas Gray: Thanks for that, Irwin. That’s useful colour there. Second query for me, simply by way of rescheduling alternatives within the US. You provided some commentary speaking about seeing various completely different avenues that you just guys are evaluating. Simply curious. May you present some colour there if issues have been to open up and hashish was rescheduled to Schedule 3, do you are feeling like you have already got the infrastructure inside the current enterprise to have the ability to seize a number of the alternative organically, or do you are feeling like some issues would possibly should be accomplished, you understand, vis-a-vis acquisition to seize on that chance?
I do know there’s a lot in flux by way of how that might really look in a Schedule 3 state of affairs, however simply any commentary on that will be significantly appreciated. Thanks.
Irwin Simon: Nicely, hear. As I stated earlier than, we have now 5 million sq. ft. We’ve right now over 200 plus million metric tons of hashish develop in Canada. We’ve a terrific Canadian medical infrastructure in Canada already servicing the Canadian market. The Canadian market is 40 million folks, so we service clinics up there. We’ve a gaggle with an infrastructure that sells to the Canadian market right now. Speaking about Europe, you understand, as we glance to promote and the target is to promote near $100 million of medical hashish in Europe, which is all medical hashish. And there may be loads of analysis that we’re doing over there for nervousness, for sleep, for most cancers, for epilepsy.
So taking that know-how and transferring it to the US is one thing that’s available. And final however not least, if there was a chance to accomplice with a pharma firm or there was a chance for us to purchase, we’d be prepared and keen and ready to try this as we have now the steadiness sheet probably, you understand, as we have now the steadiness sheet to try this. So whether or not it’s taking our present business, our present folks, our present know-how, our present development, our present analysis, our present genetics for drugs, or partnering with a pharma firm, or shopping for one thing is one thing we’re open and able to do.
Aaron Thomas Gray: Nice. Thanks for that colour there, Irwin. I’ll bounce again into the queue.
Irwin Simon: Thanks. Thanks. Our subsequent query comes from the road of Invoice Kirk with Roth Capital Companions. Please proceed along with your query.
Invoice Kirk: Hey. Good morning, everybody. On the steadiness sheet, I see the $1 million in digital belongings. I suppose, have been these investments you made, or was it crypto that got here in from buyer funds? After which taking a step again on the subject, I suppose, which cash, tokens, currencies do you favor? And what are your money allocation plans to the technique given your money technology and your fairness issuance historical past?
Irwin Simon: So that’s the acquisition of Bitcoin that we acquired three, 4 months in the past. And with that, I’m going to let Lloyd Breath, proper, simply take you thru a few of our methods that we’re from Bitcoin right now as we see relevance with our present buyers, our present customers, who’re additionally, you understand, Bitcoin customers, and we see alternatives as I’ve stated in earlier conferences and former releases, that we see alternatives with Bitcoin in buying our merchandise and buying our beer merchandise, and we see alternatives with our present buyers. Lloyd?
Lloyd: Hello, everybody. Good morning. Yeah, we really invested in Bitcoin, and we’re additionally another belongings akin to Ethereum and Solana. One of many issues a part of our technique that’s core is enabling our web sites in order that we are able to really settle for Bitcoin. So that’s going to be a part of our technique later this yr. Moreover, we’re some funding alternatives from a advertising and marketing perspective, in addition to tokenizing probably some inventory.
Irwin Simon: And, you understand, with that, I simply wish to be sure, hear. We see the alternatives. We see the synergies with our merchandise, with our buyers, and we aren’t changing into that crypto firm on the market. However we see great synergies as we increase Tilray Manufacturers, Inc. into, you understand, many new markets and lots of alternatives from that. And we’re working with numerous companions on the market and ensuring we have now the correct folks that perceive crypto and learn how to do it.
Invoice Kirk: Thanks. And going again to Germany, Europe, I suppose, when you’re servicing these markets, how a lot of the product is grown right now in Portugal? How a lot is coming out of your Damaged Coast GMP facility in Canada? And the way a lot that finally ends up being offered in Germany and Europe is coming from a non-GMP facility of yours in Canada? After which the larger query, what are the dangers that Germany adjustments the best way they deal with product conversion or product coming from Portugal?
Irwin Simon: So hear. Primary, nearly all of our product right now that’s offered in Europe is coming from our amenities in Europe. Okay? And when product does come from Canada, it goes into Portugal. It then goes to an EU GMP licensed facility. So every part offered there may be EU GMP licensed. Okay? With that, once more, there are many prospects. We do have a good-sized German facility that may develop hashish. We’re one of many few, if not the one, within the EU that Germany wouldn’t permit European merchandise to be shipped into, you understand, the German market. So, you understand, that in the end is one thing we’re repeatedly speaking to the German authorities about.
And in the event that they did that, there may be not sufficient develop within the German market right now to have the ability to provide the market. So it’s one thing that will be very tough if the German authorities change the market change the best way merchandise come into Germany.
Invoice Kirk: Thanks for that.
Irwin Simon: Okay. Thanks.
Operator: Our subsequent query comes from the road of Robert Moskow with TD Cowen.
Victor: Hello, good morning, guys. That is Victor on for Robert Moskow. Two questions for me, please. First, are you able to give us a state of the union for the Canadian adult-use market? Curious in your ideas on market maturity and your pricing energy within the context of the ten% development you noticed this quarter? How a lot of that perhaps was like quantity versus worth?
Irwin Simon: So and Blair, do you Blair, you might be on the road. Really feel Blair MacNeil or head of our Canadian market. Blair, do you wish to bounce in and take that, and I can add to it?
Blair MacNeil: Yeah. Completely. Thanks, Irwin. Yeah. So within the quarter, we noticed general market pricing down 1.3%, and quantity was up 6.5%. For us, our pricing was really up two, and our quantity was forward of the market. So it was a very robust quarter for us each on the pricing facet and on the amount facet. As you noticed, we have been the one LP within the prime 5 to develop share within the quarter. So very, very robust outcomes. By way of market maturity, what I might inform you is within the present regulatory setting, sure. You realize, quantity has slowed by way of development charges. However nonetheless very wholesome development charges available in the market.
And I believe what you will notice is over the following few quarters is that and Irwin form of referenced this, is that you will notice the regulatory setting enhance, and I believe you will notice development proceed to go. Total, family penetration on hashish in Canada remains to be at a really low quantity. So we see great runway for development in Canada inside the regulatory framework.
Irwin Simon: And hear. I believe and I’ll simply bounce on that for a second. The Canadian market was the primary. And, you understand, as we go into our sixth yr, with that, once more, from a regulatory standpoint, and what are we nonetheless sitting with? We’re nonetheless sitting with the excessive excise tax. We’re nonetheless sitting with plenty of regulation. We’ve been via worth compression. We’ve been via COVID. We’ve been via a bootleg market. We’ve been via over 1,800 LPs which might be on the market. Loads of them have gone away. Loads of develop amenities.
And, we have now gone via educating the Canadian shopper on the advantages of hashish and the legality of hashish with out, if truth be told, with the ability to promote. And we have now constructed our good provide right now, Blair, which is at retail a few $250 million model, proper? And from that, that’s what we have now constructed over the past, you understand, 5, six years. We’ve over 5 million sq. ft of develop. We’ve the most important develop facility in Canada with 237 metric tons and perhaps much more. So you understand, the Canadian market has been a terrific pivotal level for us. Now what we hope for is on excise tax, there are some concessions.
We hope that Canadian provincial governments permit us to promote our drinks into different shops like eating places that need assistance or, you understand, impartial retailers or liquor shops. We’re on the lookout for adjustments with regard to the place medical hashish is offered, the place it’s offered immediately in via drugstores. And that will change loads, you understand, for our Canadian market. So, we glance now for some massive alternatives coming to the Canadian market. After which, you understand, Blair and his crew have actually put us in a great house there to actually transfer past and a great function with regard to our merchandise.
Victor: Acquired it. After which my second query is, so beverage gross margin was about 50 bps lighter than form of we anticipated. Are you able to remind us of your plan on enhancing profitability in that phase? And likewise, the place are you on that path, that Undertaking 420 path, and what nonetheless must be accomplished?
Irwin Simon: In order you noticed, we have now taken $25 million of price out, and there may be extra to go. We’ve gone via, and I believe, SKU rationalization, you understand, $20 million of SKU rationalization, and there may be extra to go. We’ve closed three amenities to date. So come again, you understand, in acquisitions, we have now acquired near 12, we have now closed 12 manufacturers. We, you understand, have closed, we had 10 amenities. We’ve had 18 brewpubs. And, additionally, we have now over 900 plus distributors on the market.
So bringing this all collectively below, you understand, one administration, one infrastructure, and, you understand, we’re seeing progress, however there may be numerous wooden to cut there but to get these margins to the place we have to do. And whether or not it’s the procurement of cans, the procurement of hops, and one of many largest issues, you heard me point out, you understand, in my remarks, you understand, numerous these manufacturers, as we have been shopping for them and selections have been made by the earlier house owners, we have been delisted in numerous retailers on the market. So with that, you noticed main declines in these companies. And we missed the home windows of getting these merchandise within the shops.
Now these home windows have opened up, and getting these merchandise now relisted in these retailers is one thing that we have now been doing. And that’s the reason, you understand, whether or not it’s Shocktop, whether or not it’s Redhook, whether or not it’s a few of our different manufacturers, you might be seeing the expansion there. And that’s what’s going to occur, you understand, to get our gross margins up right here. And hear. Allow us to all face it. The beer class just isn’t one of many best classes on the market proper now. And, you understand, we’re combating via it each on the expansion facet, innovation facet. I’ve stated it from the start, how do I make beer enjoyable once more?
And that’s one thing we try to do. Alongside the best way, earn a living with it too.
Victor: Acquired it. Thanks, guys.
Operator: Thanks. Girls and gents, our last query comes from the road of Frederico Gomes with ATB Capital Markets. Please proceed along with your query.
Frederico Gomes: Hello, morning. Thanks for taking my questions. First query, simply serious about the problems in Portugal. I’m curious how do you see that by way of managing future dangers by way of your worldwide technique, you understand, whether or not you’re taking steps to diversify your provide chain there and the way would you go about doing that? Thanks.
Irwin Simon: So primary, you understand, we received 1,000,000 and a half sq. foot facility in Portugal. We aren’t choosing up and transferring it. Okay? I imply, over a pair $100 million are constructed, and it’s a state-of-the-art facility. So I’m in Portugal. I’ve received to remain there. I’ve received to determine learn how to work inside these confinements. And I have to inform you, I’ve had some nice conferences with two ministers in Portugal, on the highest ranges. And they’re very open. In Portugal, you understand, there’s a new authorities in Portugal, and so they need enterprise. They are not looking for us leaving.
They wish to construct upon our enterprise there, and so they have been very, very supportive of working with us. And since my conferences, with our folks, we have now seen plenty of adjustments that we have now been getting our permits. So I really feel good. Then again, hear. We do have a facility in Germany, nowhere close to what we have now in Portugal. We do have the power to ship from Canada, and, you understand, the place we’d ship it immediately into the UK and immediately into different markets to make sure EU GMP. So we have now choices. However at first, we’re removed from giving up on the Portuguese market.
Frederico Gomes: Thanks for that. And one other query right here. Simply on Germany, may you discuss in regards to the proposed change there in laws by way of prescriptions and the way the market works? How do you assume that might impression that market? And, you understand, whether or not you assume that draft that’s going there could also be authorized or not as is, otherwise you anticipate adjustments to that draft by way of timing as properly, when do you assume, you understand, the market there may change by way of the laws? Thanks.
Irwin Simon: Pay attention. We’re supportive of change. However, once more, you understand, I don’t wish to go on the market and speculate till I do know what the change is. Okay? And I believe to date, the excellent news is what we’re seeing is a steady demand, and on-line prescription has not been one of many largest, you understand, drivers right here. So if there may be change, I believe sufferers will discover different methods to go on the market and buy hashish. And, you understand, it’s fascinating as a result of Germany has robust impartial drug chains on the market. There isn’t a, you understand, CVSs. There isn’t a Walgreens. You realize, people are allowed to personal, like, six drugstores. They’re all impartial.
So like I stated, there are a number of shops on the market. It’s not on-line. So I see even when it did change that you just can’t purchase it on-line, there are nonetheless the shops to go to on the market. And I want to see a number of the adjustments, plenty of adjustments that we repeatedly speak about that didn’t. And we, with our foyer teams, are on the market working with the German authorities on what’s the proper factor for the sufferers. As a result of this right here is essential too. The distinction in medical hashish is like drugs. If you happen to didn’t give sufferers entry to get drugs, that could be a drawback.
If you happen to couldn’t get your drugs, and didn’t have entry, a affected person that’s sick or depending on it, that is a matter. So that is being offered as drugs from a medical standpoint, not from a leisure. If you don’t get your hashish from a leisure standpoint, that might not be as a problem. However you aren’t getting your drugs, and the federal government has to take that, you understand, into view when they’re deciding what they’ll do right here.
Frederico Gomes: Thanks very a lot.
Irwin Simon: Nice. Let me simply say this right here. I do know numerous have joined now. Sadly, not us. There was a technical drawback with our supplier. And those who have been on-line didn’t hear my feedback. Sorry about that, guys. You missed some nice feedback and Carl’s feedback. Okay? If you wish to hear me once more say it, you possibly can go surfing and hear, and I encourage you to try this as a result of there may be some actually good info that each Carl and I delivered right now. And I apologize. And the service, they’ll hear from us, and, undoubtedly disillusioned. I do know you heard music, so we had much more to say than the music.
However please, it has been recorded. It’s on-line. And you’re going to get each little bit of it. And for some motive, there is a matter, let Berrin know, and we’ll be sure you get it. I’m actually sorry about that. Regarding the analyst questions, I believe you heard most of these. It is possible for you to to get these, the analysts that have been right here. You realize, have been in a position to hear Carl in our remarks. So I apologize profusely for that. With that, thanks very a lot on your time right now. I hope a few of it was not wasted by not listening to our feedback, however now you’ll have to go surfing and hearken to it.
It is just Q1 in 2026. You realize, considered one of our smaller quarters. There’s a lot to do. And as you possibly can see, we have now numerous good issues in place. And belief me, there have been occasions, like, you have a look at and kind of say, you understand, what the heck are we doing right here? Whenever you have a look at your inventory worth, you have a look at various things. However this crew, in over 5 years, actually have introduced loads collectively right here. In rebuilding a Canadian hashish enterprise principally from scratch. Constructing amenities, constructing manufacturers, constructing merchandise, constructing completely different strains, genetics, new innovation, and a number of the new innovation that’s popping out of there.
Constructing infrastructure and gross sales and advertising and marketing groups, once more, going via worth compression, going via COVID, going via, you understand, the illicit market as considered one of your largest rivals on the market, and I actually wish to commend the Canadian crew and what they’ve been in a position to do. With regard to our worldwide hashish enterprise, similar factor. It has come collectively principally with the acquisition of Tilray Manufacturers, Inc. And it’s, you understand, actually a enterprise that I see great alternatives. And we now are getting requests, you understand, in several nations, whether or not India, Center East, and locations like that with regard to medical hashish and the alternatives there.
And there are numerous nations, and there are numerous completely different, you understand, nations on the market which might be realizing the advantages of that. And likewise realizing the advantages of medical hashish versus medicines in price of medication and that on the market right now. And what the advantages might be. So I see massive alternatives for us right now. You realize, Rajnish Ohri has joined us as now head of Europe. And is bringing the groups collectively. And we have now accomplished loads with our Canadian groups to combine these companies to get synergies and financial savings to get numerous the know-how. As a result of one of many issues hashish is agriculture. It’s rising. It’s yields.
It’s the measurement of the flower. It’s the efficiency. And that’s one thing that’s essential on the market. And this isn’t an business that’s it’s an business that has unfold across the illicit market for a lot of, a few years, however it isn’t an business that has been round from a legalized market. It’s not industries which were round from a develop, from a analysis and growth that’s all coming collectively. And nations are realizing the alternatives and what they’re doing, you understand, not permitting their residents and sufferers to have the ability to purchase these merchandise.
The opposite factor they’re realizing is there are tax {dollars} that they’re lacking, and if tax {dollars} are being offered via a bootleg market. With regard to rescheduling, President Trump, together with his completely different tweets and his completely different feedback, I believe, realizes that one thing has to occur right here in rescheduling. Final week together with his tweet or two weeks in the past with regard to CBD. You realize, with regard to senior residents, and I can’t inform you how many individuals inform me in utilizing CBD and THC merchandise.
You realize, with regard to ache and nervousness and that and the advantages for what we’re seeing right now on our Delta-9 merchandise and being offered in restricted states and the demand for it once more, what Blair has seen within the Canadian market with constructing, you understand, a 40 plus million greenback enterprise and right now simply being offered inside, you understand, hashish shops. And, once more, at costs that aren’t the most cost effective costs on the market. So we see great alternative within the beverage enterprise. With regard to our beverage enterprise, it’s work, you understand, it’s work we have now received to do. And, we received into it in 2020 with the acquisition of Sweetwater.
You realize, acquired Montauk, acquired different manufacturers and the companies from ABI. Then the enterprise in Molson’s. We received some nice manufacturers. However bringing all of it collectively is numerous work. Bringing the amenities collectively, getting the associated fee out, getting the margins out, getting the correct amenities. And that’s one thing that, you understand, Tilray Manufacturers, Inc. is doing and the crew is doing out of Atlanta to convey all this collectively. And as I stated earlier than, not a simple enterprise right now with adjustments taking place, however we might be within the beverage enterprise, not simply the beer enterprise. And with that, there are numerous fascinating merchandise we’re engaged on.
With regard to our spirits enterprise, the crew is working with our distributor, RNDC, and we have now actually put a plan in place with RNDC to be in our main markets. Sure, the bourbon class is a harder class right now than it was, however Breckenridge bourbon is a superb tasting product on the market, and there may be nice demand in sure markets on the similar time. Our vodka has nice demand and our gin and a few of our new merchandise that we have now come out with are actually, actually good merchandise. And a number of the first time are innovation. And final however not least, you hear me speak about our wellness enterprise. What Jared and crew have accomplished on wellness.
We acquired this, it was a damaging EBITDA about $56 million, and we have now turned it round to right now. And as any individual that has been a part of the wellness class since 1992, 1993 and see the expansion, it’s all we speak about, the wellness, wellness, and meals. With regard to, you understand, the Trump administration and taking colorings out of meals right now, greater protein, protein, protein, protein, and a number of the highest protein is in hemp meals as a result of it’s a plant that’s grown. So we’re in numerous completely different classes. We’re in numerous distinctive locations.
You have a look at our steadiness sheet with regard to our debt to fairness, it’s in a terrific place. We ended the quarter with $260 million of money. So there are numerous good issues taking place. However there may be numerous work to do. I actually wish to thank our crew that actually makes this occur and rolls up our sleeves. Though there are 2,500 workers around the globe right here, not loads for lots we have now received to get accomplished. So with that, I wish to thank all people for listening. Please return and relisten to our feedback. There are numerous good feedback that got here out of right now.
Thanks to our shareholders on your assist. And get on the market and vote as we have now our AGM arising. With that, have a terrific Thursday, and look ahead to talking to you within the New Yr with our Q2 outcomes. Thanks.
Operator: Thanks. This concludes right now’s convention name. You might disconnect your traces at the moment. Thanks on your participation.
