Tilray Brands, Inc. Q1 FY2025 earnings call

• Tilray Brands has evolved into a global company with operations in over 20 countries and five continents, having 44 consumer-connected lifestyle brands and 20 vertically integrated facilities.
• In Q1, net revenue reached $200 million, a 13% year-over-year growth. Gross profit increased by 35% and gross margin rose by over 500 basis points.
• Beverage division had net revenue of $56 million in Q1, up 132% year-over-year. Launched Tilray Alternative Beverages focused on hemp-derived Delta 9, THC branded and other products.
• Cannabis business focused on margin improvement, with Canada leading in market share, and International business seeing growth in Germany, where medical flower sales increased 50% and medical cannabis extracts 22% since the Cannabis Act took effect.
• Wellness business, represented mainly by Manitoba Harvest, had 11% net revenue growth in Q1, with a 300 basis point increase in gross margin.

Beverage alcohol net revenue was $56 million in Q1, up 132% year-over-year, accounting for 28% of net revenue. Cannabis net revenue was $61.2 million, down 13% from the prior year quarter, making up 31% of net revenue. Distribution net revenue was flat, representing 34% of net revenue. Wellness net revenue was $14.8 million, up 11% year-over-year, contributing 7% to net revenue.

• The fiscal year 2025 revenue guidance is $950 million to $1 billion.
• The guidance has not been updated to include the recent acquisition of the brands from Molson Coors.

• Forward-looking statements involve known and unknown risks and uncertainties which may cause actual results to differ materially from those in the statements.
• Risks include price compression in the Canadian market, variability in receiving import and export permits in International markets, and regulatory differences in various regions affecting business operations.

Q: Kaumil Gajrawala asked about how volumes are trending in the Canadian adult-use market A: Irwin Simon and Blair MacNeil responded discussing volume trends, price compression, and inventory management in the Canadian adult-use market Q: Aaron Grey inquired about Hemp-Derived THC beverages distribution and impact of farm bill A: Irwin Simon answered that Delta-9 THC beverages will be sold at brick-and-mortar and through beer distributors, and discussed the impact of the farm bill on distribution Q: Matt Bottomley asked about M&A opportunities in the Wellness segment A: Irwin Simon stated that there are medical opportunities in the Wellness segment and they are focused on medical cannabis growth Q: Bill Kirk asked about International revenue and M&A in Wellness A: Irwin Simon and Denise Faltischek responded discussing International revenue growth, market entry and exit, and M&A focus in Wellness Q: Michael Lavery asked about Delta-9 beverages brands and beer production integration A: Irwin Simon answered about the differentiation of Delta-9 beverage brands and plans for beer production integration Q: Pablo Zuanic asked about U.S. plan touching assets and German market competitive advantage A: Irwin Simon and Denise Faltischek responded discussing U.S. asset plans and Tilray's competitive advantage in the German market Q: Robert Moskow asked about beverage business performance A: Irwin Simon explained that beverage business performance was affected by timing of product distribution, SKU rationalization, and brand rationalization