Tilray Brands, Inc. Q2 FY2025 earnings call

• Tilray has experienced significant growth over 5 years, operating in over 20 countries with 40+ consumer-connected lifestyle brands and 20 vertically integrated facilities. - In Q2, net revenue grew 9% year over year to $211 million, gross profit increased 29%, and gross margin improved. - Beverage business: Merged beer and spirit operations, implemented Project 420 to achieve $25M in cost savings (already $17M realized), generates 30% of global revenue. - Cannabis business: Led Canadian cannabis market by revenue, regained number one in flower category, had 45% market share in THC beverages. - International business: Grew 25% year over year with new product launches in Europe. - Wellness business: Grew 13% in Q2, led hemp industry with high branded market share.

Beverage business: Net revenue was $63.1 million in Q2, accounting for 30% of Tilray's global revenue. It grew 36% year over year. Cannabis business: Net revenue was $65.7 million, making up 31% of global revenue. Tilray remains the leader in the Canadian cannabis market by revenue. Distribution business: Net revenue was $67.6 million, 32% of global revenue. Wellness business: Net revenue was $14.6 million, 7% of global revenue, with Tilray Wellness leading the hemp industry with 56% branded market share in the US and nearly 80% in Canada.

• Reaffirmed guidance for fiscal 2025: Anticipates net revenues to be between $950 million and $1 billion.

• Regulatory uncertainties related to cannabis and hemp legislation. - Potential impact of excise taxes on profitability, especially in the Canadian cannabis market. - Competition in various segments that could affect market share.

Q: Regarding SKU rationalization, when will it be complete?

A: Not complete by end of fiscal year, majority by end of current year with some continuing into 2026.

Q: How did average sales timing issues resolve?

A: Integrated ABI businesses better, saw growth in brands like Shock Top, Montauk, etc.

Q: Impact of farm bill delay on Delta-9 beverages?

A: No significant change, see big opportunity with existing distribution and demand from retailers/distributors.

Q: Cannabis beverages in Canada?

A: 45% market share, $25-30M business, but limited to cannabis stores currently with potential growth if sold in broader channels.

Q: US medical cannabis legalization opportunity?

A: Potential $250M opportunity with 2%-3% market share, confident in ability to capitalize with medical expertise and product innovation.

Q: International business visibility?

A: Focus on sustainable profitable growth, strong base in Germany's medical extract business, building presence in other European markets.

Q: Delta-9 beverages market approach?

A: See bigger opportunity in brick and mortar with strong retailer/distributor interest, also exploring DTC.

Q: US rec cannabis beachheads?

A: Focused on current businesses, ready to enter medical cannabis market quickly if legalized, but current focus on Delta-9 drinks and wellness.

Q: Delta-9 beverage traction and SKU rationalization impact on guidance?

A: Traction in big states like Texas, Florida, Georgia; SKU rationalization involves replacing slow-moving SKUs with new products to offset impacts.