Tilray Brands, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Executed on long-term strategy to solidify global leadership in cannabis and expand beverage/wellness business.
• Record revenue of $22.4 million in international cannabis in Q4, up 71% YOY; total cannabis gross margin increased 400 basis points to 44% in Q4.
• Fiscal 2025 record annual revenue of $821 million, 4% growth YOY (6% on constant currency); highest gross profit to date at $241 million, 8% YOY growth.
• Booked noncash impairment charge due to U.S. regulatory changes and market cap decline, but remains optimistic about long-term strategy.
• Progress in Canada: led Canadian cannabis market with $186 million revenue in fiscal 2025, regained #1 market share in cannabis flower category in Q4.
• International cannabis: revenue grew ~20% YOY in fiscal 2025, with 71% YOY growth in Q4; well-positioned to expand in Europe.
• Beverage business: transition and rebuilding, with $24 million annualized savings from Project 420, but impacted by softer consumer demand; expect improvement in fiscal 2026.
• Wellness business: net revenue over $60 million in fiscal 2025, up 9% YOY; expanded margins to 32% in fiscal 2025.
• Appointed Rajnish Ohri as Managing Director of International to drive international growth.

Segment Performance

• Cannabis: In Q4, international cannabis revenue was $22.4 million, up 71% year-over-year. Fiscal 2025 international cannabis revenue grew ~20% year-over-year. Canadian cannabis revenue in fiscal 2025 totaled $186 million. Cannabis contributed 30% to net revenue.
• Beverage: Fiscal 2025 beverage revenue was $240 million, up 19% year-over-year. Q4 beverage net revenue was $65.6 million. Beverage contributed 29% to net revenue.
• Wellness: Fiscal 2025 wellness net revenue was over $60 million, up 9% year-over-year. Wellness contributed 8% to net revenue.
• Distribution: Fiscal 2025 distribution net revenue was ~$270 million, up 5% year-over-year. Distribution contributed 33% to net revenue.

Guidance

• Anticipates adjusted EBITDA for fiscal 2026 to be between $62 million and $72 million.

Risks

• Noncash impairment charges due to sustained decline in market capitalization, slower-than-anticipated global cannabis regulatory change, and changes in discount rate inputs.
• Uncertainty in U.S. cannabis legalization impacting market expectations.
• Challenges in the beverage business including softer consumer demand, SKU rationalization impacts, and distribution headwinds.

Question and Answer

• Q: Kaumil Gajrawala with Jefferies asked about timing of importing rights and trapped shipments.

A: Irwin Simon said there was lightening up with Portuguese and Spanish governments, with trapped shipments expected to be recognized in Q1 and Q2.

• Q: Victor with TD Securities asked about international growth and trapped shipments.

A: Irwin Simon mentioned $8 million in trapped shipments in Portugal, expected in Q1 and Q2, and strong opportunities in Europe.

• Q: Aaron Grey with Alliance Global Partners asked about 2026 EBITDA guide and seasonality.

A: Carl Merton said seasonality expected with stronger Q4, and growth from international, Canadian, beverage, and wellness businesses; Irwin Simon added scale and cost reductions will drive growth.

• Q: Pablo Zuanic with Zuanic & Associates asked about U.S. rescheduling benefit.

A: Irwin Simon said rescheduling would open opportunities for institutional investment, retail banking, and potential market entry for medical cannabis.

• Q: Frederico Gomes with ATB Capital Markets asked about beverage and wellness expansion.

A: Irwin Simon said expansion is imminent, with focus on protein, non-alc drinks, and potential M&A; Frederico also asked about Canada cultivation expansion, answered by Irwin Simon about majority staying in Canada and expansion plans.

• Q: Nick with ROTH Capital Partners asked about Germany legislation and U.S. reform.

A: Denise Faltischek said proposed legislation in Germany was a proposal with room for negotiation; Irwin Simon said U.S. reform news flow was positive, with expectation of changes.