Tilray Brands Q3 FY2026 Earnings Call - Record quarter as international cannabis surges and BrewDog deal lifts run-rate toward $1.2B

Operator: Thank you for joining today’s conference call to discuss Tilray Brands’ financial results for the third quarter of fiscal year 2026 ended February 28, 2026. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there’ll be a question and answer session for analysts conducted via audio. I’ll now turn the call over to Ms. Berrin Noorata, Tilray Brands’ Chief Corporate Affairs and Communications Officer. Thank you. You may now begin.

Berrin Noorata, Chief Corporate Affairs and Communications Officer, Tilray Brands: Thank you, operator, and good morning, everyone. By now, you should have access to the earnings press release, which is available on the investor section of the Tilray Brands website at tilray.com and has been filed with the SEC and OSC. 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, who will review our financial results for the third quarter of fiscal year 2026. Now I’d like to turn the call over to Tilray Brands Chairman and CEO, Irwin Simon.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Thank you, Berrin, and good morning, everyone. It’s been an exciting year at Tilray Brands. We delivered a record quarter with continued international expansion across our platforms. I also wanna briefly highlight our BrewDog acquisition. When you have good news, you go to the tallest building and scream it, and don’t wait. This transaction positioned Tilray at approximately $1.2 billion global revenue company on an annualized basis and meaningfully strengthens our long-term growth profile. I’ve done over 100 acquisitions in my life, and I’ve never received more calls, congratulations, and a brand with more awareness on a global basis, which helps Tilray to be at the forefront around the world.

Since 2019, we have transformed the company from a Canadian cannabis business with approximately $50 million in revenue to a global lifestyle consumer products company approaching over $1 billion in revenue on an annualized basis, providing the strength and effectiveness of our strategy and our execution going forward. We are building a diversified global platform grounded in a long-term vision of bringing people together through meaningful connection. With a strong team and clear priorities, we remain confident in our path forward. Today, Tilray leads its global platform as the No. 1 cannabis company in Canada by revenue, the fourth-largest craft brewer in the U.S., a global leader in medical cannabis, and a wellness leader in North America. Now with BrewDog, the No. 1 craft brewer in the U.K. Transforming this business has not been easy.

We operate in highly regulated environments globally, face cannabis regulatory reform in the U.S., and navigate constraints across international markets. At the same time, we’ve strengthened our global brand portfolio, scaled and optimized our cultivation capabilities and our brewing capabilities, built a half a billion-dollar beverage platform within a long-established category, and established a meaningful wellness strategy. This level of progress reflects both the pace of our execution and the strength of our strategic foundation and the teams that we have in place. Yes, there have been challenges along the way, particularly with integration, and there will continue to be challenges. This takes time. Today, we see the pieces coming together the way that few businesses can replicate, and we’re building something truly differentiated. Our Q3 results reflect this.

In the third quarter and consecutively from Q2 to Q3, we delivered record results with net revenue reaching $207 million, reflecting 11% organic growth year-over-year, and gross profit increasing to $55 million, up 6% from the prior year, despite ongoing industry and macroeconomic headwinds. We also maintained a strong financial position, ending the quarter with $265 million in cash, restricted cash, and marketable securities, and approximately $3.5 million in net cash, providing the flexibility to invest in growth while maintaining financial discipline. Our Q3 results reinforce the momentum we outlined last quarter, improving fundamentals, sharper execution, and increasing leverage from our diversified global platform. Turning first to our cannabis business, we delivered strong results this quarter across our global platform with continuous momentum in both Canada and our international markets.

As the regulatory environment evolves, particularly in the U.S., we’re well-positioned with scaled infrastructure and experience to expand this business globally. We’ve built this platform deliberately, and we’re ready to execute as opportunities develop. Q3 was the largest quarter ever for international cannabis growth. We generated $24.1 million in net sales with 73% year-over-year growth and 20% sequential growth. This was driven by exceptional sales volume growth. Medical cannabis flower volume was up 100% year-over-year, and medical cannabis oil volume was up 90% year-over-year. Tilray holds top position by a significant margin in the medical cannabis oil category across leading international medical markets, while we leverage our expertise and reputation in the doctor-led distribution channels.

Germany, our largest international market, grew 43% year-over-year, an important achievement for our international team as they continue to navigate evolving regulatory framework and significant price compression across global markets. Notably, we overcame $7 million in price pressure that flows directly to the bottom line. Turning to our medical distribution business in Europe, I’m extremely proud to say that CC Pharma was recognized as one of the top 100 innovators, leaders, and trusted partners in the European pharmaceutical market. Congratulations to the team on a great accomplishments for continuously driving our business forward. Our Tilray Pharma business grew 35% year-over-year to $83 million, making it our highest ever third quarter for sales and profitability. The increase in distribution revenue in the period was driven by portfolio optimization, mix, positive market trends, and increased medical device sales.

Our recently announced partnership with Alliance Healthcare further strengthens our leadership in Germany, expanding our reach to more than 16,000 pharmacies, up from 13,000 previously. In addition, we entered into a partnership with Smartway, a leading U.K.-based pharmaceutical distribution company, to expand the availability of our pharmaceutical products across the United Kingdom. Together, these partnerships speak to the strength of Tilray Pharma as a valuable strategic asset within our global medical cannabis platform. Looking ahead, our distribution business is laser-focused in driving future operational efficiencies via automation, centralized sourcing, harmonized packaging, and label that sets us up with vertical integration for our cannabis business. Turning to Canada, our Canadian cannabis business continues to deliver strong results.

We reinforced our position as Canada’s leading cannabis company by revenue on a trailing twelve-month basis, and our adult use medical grew 8% year-over-year to almost $40 million of net revenue. This performance speaks to the strength of our portfolio and the resilience of our commercial execution and the team that we have in place today. From a market share perspective, Tilray maintained the number one market share position in cannabis dried flower, pre-rolls, beverages, oils, and chocolate edibles. Importantly, this leadership reflects the strength of our tiered brand strategy. In dried flower, Tilray is the only licensed producer with 3 brands in the top 10. In pre-rolls, we hold 2 of the top 3 brands, and in beverages, we deliver the top 2 brands in the market during quarter 3.

This approach diversifies our reliance across brands and facilities while allowing us to serve distinct consumer segments with clearly differentiated offerings. From a brand portfolio perspective, Broken Coast delivered its strongest quarter in the past two fiscal years, growing 16% year-over-year. We also continue to innovate with our core categories, launching Good Supply, Where’s My Bike, and Blueberry Donuts cannabis strains during the quarter, both of which finished the quarter among the top 10 dried flower SKUs in British Columbia, and we plan to scale them nationally and introduce additional genetics in Q4 and into fiscal 2027. Finally, we also introduced a new brand, Portal, featuring vapes, infused pre-rolls late in the quarter. While still early, we’re beginning the national rollout. We expect the launch of Portal to build upon our momentum and drive meaningful growth in these key categories going forward.

We’re also making clear progress in high-growth, price-sensitive categories, such as vapes. Quarter three marked our strongest vape quarter in the past two fiscal years, reestablishing Tilray as a top ten player in the category. Importantly, this performance reflects our disciplined approach to revenue generation. We intentionally scaled back our vape volume until we achieved the right cost structure and returned the category to profitability. After seven years of federal cannabis legalization in Canada, we are modernizing the store. We’ve built a strong foundation on Canadian cannabis, and we’re now advancing to the next phase, transforming our cultivation platform through AI-driven growing systems, next-generation genetics, and improved yields across our operations. We’re executing a comprehensive end-to-end upgrade of our cultivation capabilities. While this transition is still underway, we’re already seeing progress as we move towards more consistent, higher quality, and more efficient production.

This evolution is designed to enhance margins, strengthen product quality, and position us ahead of the curve as the industry continues to mature. In the U.S., we continue to monitor the rescheduling of medical cannabis and are actively engaged with legislators and regulators. We’re also evaluating our participation in the Center for Medicare and Medicaid Innovation pilot programs. Tilray is well-positioned to contribute to the pilot program with its proven track record of operating at a scale in a highly regulated medical cannabis globally. Moving to our beverage business, this quarter and shortly after the quarter end, we successfully executed against our key strategic priority to expand our global beverage platform through a strategic licensing partnership with Carlsberg and the targeted acquisition of BrewDog, strengthening our portfolio, improving utilization, and advancing our global growth strategy.

We are honored and proud to begin our partnership with Carlsberg, one of the world’s leading brewers, starting in January 2027. Through this partnership, we’ll produce, market, and distribute a portfolio of leading Carlsberg brands across the U.S., leveraging our brewing network, commercial capabilities, and our national distribution footprint. We expect this to drive immediate scale, accretive to revenue, supported by increased volumes, expand shelf presence, and a more favorable product base. Following the Carlsberg announcement in post-quarter close, we acquired craft beer icon BrewDog, creating approximately $500 million global craft beverage platform on a pro forma basis. We acquired BrewDog’s global IP, strategic brewing, and brew pub assets across the U.K., Ireland, Australia, and the U.S., creating immediate scale, strengthening our infrastructure, and broadening our international reach.

This positions us to extend our reach into previously untapped markets such as the Middle East, Asia Pacific, and take our U.S. brands globally while strengthening our portfolio with a highly recognized craft brand. We acquired this platform for approximately GBP 40 million, which reflects a fraction of its replacement cost. This strategic acquisition has significantly accelerated the implementation of our global strategy by several years. Now turning to the results of our beverage business. We’re making disciplined progress on the integration of our beverage acquisitions while staying focused on the work still ahead to generate growth and profitability. As expected, beverage net revenue of $43 million in Q3 was impacted by margin-focused actions as well as industry-wide softness. These margin-focused initiatives are deliberate and necessary to reset the business for profitable long-term growth. What’s important is that the underlying fundamentals are improving.

Through Project Four Twenty, we rationalize the portfolio, removing non-strategic SKUs to improve velocity, margin, and execution. We continue to focus on cost discipline, delivered over $6.2 million in annualized savings during the quarter, completing our target synergy program of $33 million, enabling us to achieve approximately 32% gross margins despite significant input costs and headwinds. Without these decisive actions taken, margin would have been more significantly impacted. Operationally, we’re building a more focused, higher-performing portfolio. We’re prioritizing fewer, bigger, better innovations aligned with consumer demand. Products like Pub Light are expanding distribution, and our ready-to-drink cocktails on the West Coast are delivering margin accretive growth. We’re also starting to see sequential improvement across our core brands, including SweetWater, Shock Top, Blue Point, Revolver, and Montauk. Looking ahead, we expect continued momentum, improving fundamentals, and a stronger path to growth.

Within the spirits category, in Q3, we focused on enhancing our commercial plan. Wholesale depletions were 160 basis points above the national spirits trends, demonstrating strong consumer demand and awareness. Our ongoing efforts remain focused on expanding product distribution to additional states and beyond. Regarding our U.S. hemp-derived THC beverage business, we continue to offer Fizzy Jane, Happy Flower hemp-derived THC beverages in 5-milligram and 10-milligram formats through nationwide retail partnerships, including major wine, liquor, and grocery outlets across the country. While federal regulatory changes may affect HDD9 products after November 2026, we continue to stay engaged with legislators and regulators. We’re closely monitoring the development in Washington.

Turning to wellness, net revenue increased by 16% to $16.4 million in the quarter, driven by our focus on value-added innovation across Superseed, better-for-you breakfast and snacking, and continued momentum in the HiBall Energy. We’ll continue to focus on distribution expansion, broader assortment, promotional improvements, while continuing to strengthen the profitability profile of wellness business. With that, I will now turn that over to Carl. Carl?

Carl Merton, Chief Financial Officer, Tilray Brands: Thank you, Irwin. Before I begin, please note that we present our financials in accordance with U.S. GAAP and in U.S. dollars. Throughout our discussions, we will be referring to both GAAP and non-GAAP adjusted results, and we encourage you to review the reconciliation contained within the press release of our reported results under GAAP with the corresponding non-GAAP measures. This quarter, we achieved record third quarter revenue and strong year-over-year improvements in gross profit and adjusted EBITDA, and we are reaffirming our adjusted EBITDA guidance for fiscal 2026. Net revenue was a third quarter record of $206.7 million, an 11% increase year-over-year. Revenue growth was across multiple businesses.

Cannabis net revenue increased 19% year-over-year to $64.8 million during the quarter, driven by strong growth in gross international cannabis revenue of 73% and 8% in net Canadian adult-use and medical cannabis. The exceptional revenue performance of our international cannabis business solidifies our point from the last conference call that Q4 2025 and Q2 and Q3 of this year’s performance are more indicative of what investor expectations should be going forward. Growth in international cannabis accelerated based on an enhanced supply chain, increased patient adoption in certain markets, and our targeted expansion into emerging markets. This quarter, we continue to strategically reallocate supply from the Canadian wholesale market to higher-margin international markets and will maintain this approach as those markets continue to scale.

Year to date, we allocated approximately 6 metric tons of product from Canada to international markets, which continues to supplement our ever-increasing cultivation in Canada. Distribution net revenue increased 35% to $83 million based on a focus on higher velocity and margin SKUs and positive impacts from foreign exchange rates. We expect distribution to continue to be a strong contributor as it complements and scales alongside our international business. Beverage net revenue for the quarter was $42.6 million compared to $55.9 million in the prior year. However, the results do not fully reflect the operational progress we have made in the segment. During the quarter, we successfully completed Project Four Twenty, closing and delivering $33 million in annualized cost savings, which improved the underlying cost structure of the business.

Those cost savings are not always visible in our margin results, as they’ve been largely offset by almost $2.9 million in higher aluminum costs year to date and lower overhead utilization rates. Getting our cost structure right in beverage has been and will continue to be a key focus area for us. Looking ahead, Carlsberg represents a compelling opportunity for us through a partnership with one of the largest global brewers. The relationship enables us to improve overhead utilization without deploying capital to acquire a brand while creating meaningful operational leverage. It also provides multiple avenues to strengthen the platform, including increased scale with key global raw material suppliers and the ability to collaborate and learn from one another on innovation and best practices to support long-term growth.

BrewDog represents an equally compelling opportunity to strengthen our beverage business in the future, but for different reasons, as it is more about an international opportunity. The BrewDog transaction was unique because it represented a chance for the business to start with a clean piece of paper and hand select the best and most important elements of a strong business that was placed in administration for reasons other than its core business. After this transaction, Tilray strengthens BrewDog strengthens Tilray. Lastly, wellness net revenue in the quarter was $16.4 million, growing 16% year-over-year based on our focus on high-value innovations, a continued strength of HiBall, and growth in the ingredient sales channel. In terms of contribution, cannabis accounted for 31% of revenue. Beverage revenue was 21%, distribution was 40%, and wellness was 8%. Moving on to profitability.

We achieved a record third quarter gross profit of $55 million, a 6% year-over-year increase. Gross margin was 27% compared to 28% last year. By segment, cannabis gross margin was 40% for the quarter compared to 41% year-over-year and remained largely flat, primarily due to price compression in international markets, which reduced international cannabis revenue by approximately $7 million despite higher gram equivalents sold. Distribution gross margin increased to 12% this quarter compared to 9% year-over-year due to favorable changes in product mix and increases in average selling price during the quarter. Beverage gross margin was 32% this quarter compared to 36% in the prior year quarter. This change was a function of lower overhead absorption rates and higher input costs, including the previously discussed aluminum costs.

Wellness gross margin increased to 33% during the quarter from 32% year-over-year as strategic price increases largely offset an unfavorable change in sales mix. Net loss was $25.2 million, a $768.3 million improvement compared to a $793.5 million loss year-over-year, or a net loss per share of $0.24 compared to a net loss per share of $8.69. The improvement in both net loss and net loss per share is primarily driven by the one-time non-cash impairment we reported in the prior year quarter.

Adjusted net income and adjusted net income per share, which both exclude the non-cash impacts of amortization, stock-based compensation, impairments, and non-recurring charges, improved by $5.3 million year-over-year to $2.4 million and $0.02 per share, compared to an adjusted net loss of $2.9 million and an adjusted net loss per share of $0.03. Our adjusted cash operating income for the quarter was $4.1 million, compared to a loss of $3.1 million last year. Adjusted EBITDA for the quarter increased 19% to $10.7 million, compared to $9 million last year, reflecting continued execution against our strategic plan, particularly from our international cannabis business. Cash flow used in operations was $21.9 million, compared to $5.8 million last year.

The increase in cash used in operations was largely related to inventory ahead of our seasonally stronger fourth quarter and accounts receivable for our growing international cannabis business. Excluding the impacts of working capital, cash generated from operations was $3.4 million, compared to cash used in operations of $9.3 million in the prior year. We ended the quarter with cash, restricted cash and marketable securities of $264.8 million and a net cash position of $3.5 million, which improved $40.2 million from a net debt position year-over-year. As we have recently demonstrated, our strong liquidity position has enabled us to act decisively in a dynamic environment and provides continuing flexibility to pursue strategic opportunities. We remain focused on managing and strengthening our balance sheet throughout the remainder of the year and beyond.

Lastly, we are reaffirming our fiscal 2026 adjusted EBITDA guidance of $62 million-$72 million. Operator, we can now open the call for Q&A.

Kaumil Gajrawala, Analyst, Jefferies: Thank you. We’ll now be conducting a question and answer session. If you’d like to ask a question at this time, please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you’d like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. The first question is from the line of Kaumil Gajrawala with Jefferies. Please proceed with your questions.

Carl Merton, Chief Financial Officer, Tilray Brands: Morning.

Kaumil Gajrawala, Analyst, Jefferies: Sorry about that. You guys hear me now?

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Yeah.

Kaumil Gajrawala, Analyst, Jefferies: Yep. Great. I wanted to first maybe ask about the, you know, supporting the international business in the context of, Canada looks like it’s also stabilizing. You have a lot of growth and great margins in one. On the other hand, you’ve got stabilization in your bigger markets. How are you managing the balance between those two?

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Now what was the slide? You broke up the last piece, the cannibalization.

Kaumil Gajrawala, Analyst, Jefferies: Not cannibalization, but just managing the balance between supporting your international business and what looks like stabilization in Canada.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: you’re talking cannabis right now for us, right?

Kaumil Gajrawala, Analyst, Jefferies: Yeah, cannabis. I’m sorry. This is about cannabis.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Listen, I think the big thing is, number one, we are bringing on our Maison grow facility in Gatineau, which increases our—you know, we’re going from 137 metric tons of grow to almost 200 metric tons of grow. Also we’re bringing on outdoor grow in Cayuga. Number one, we now have plenty of grow. You know, this has been a tougher year on yields and that, and that’s sort of what you heard me say, as we’re overhauling things and modernizing things on better yields in the Canadian market. On the other hand, the good news is our Cantanhede facility in Portugal and our Germany facility is probably producing at some of the best yields and some of the best flower that we ever had.

Carl Merton, Chief Financial Officer, Tilray Brands: You know, the most important thing is we have plenty of supply to supply the European market. The other thing, as we’re seeing price compression, which I talked about, with the growth that we’re having with the yields, you know, we’ll be able to support that. I think the most important thing in Europe is this here, consistent supply. We’ve not had consistent supply, number one. Number two, you know, one of the things in Europe, you have to wait for permits, and that has slowed down to getting our sales out there. We’ve seen a real big improvement in the Portuguese government. I want to thank them. They’ve modernized this now, where it was sometimes it would take a month. You know, you can see three days now.

Being able to get product, you know, to our customers is something very important. With that, we have perfected our grow and our yields that will help our margins continuously, and deal with the price compression. I think the important thing is from a Tilray standpoint, with our Tilray products, with our innovation, with our brands, you know, the big opportunity for us is if we got consistent product.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: We’re gonna get the volumes. How do we deal with price compression? If price compression consistently happens, you know, we have supply, and I think we have more supply than anybody there. It’s something that we’re aware of. Hey, we dealt with it in Canada. We’ve had $250 million of price compression, you know, over 5 years in Canada, and we dealt with that. Not that I wanna see that in Europe, but it’s something we can deal with either, you know, having supply, you know, having good yields, you know, having good growth over there to do it both in Canada and Europe. There’s no one else out there that has the supply that we have, both from the Canadian market today and the European market.

Kaumil Gajrawala, Analyst, Jefferies: Got it. Thank you. On Project 420, you know, I guess it’s coming sort of towards the end or at completion. Is there a new project or is it sort of more ongoing business as usual as we look forward from a productivity standpoint?

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: This is a good question. I mean, there is absolutely project ongoing. We never just say, "Okay, we made our $33-$35 million of cost savings. Stop." Now with BrewDog in the mix and bringing that together, both, you know, internationally and domestically in regards to buying hops, cans, labels, et cetera, and, you know, it’s definitely something as we combine now. Just remember, we’ve gone from, you know, a 200+ million dollar beer business almost to a half a billion dollar in our own size. From scale, that’s gonna help us. As we look at, you know, rationalization, you know, continuously on our plants, we look at rationalization on distributors. We just said, "How do we bring, you know, all the organizations together?" There’ll definitely be additional cost savings available to us.

Kaumil Gajrawala, Analyst, Jefferies: Okay, got it. Thank you.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Thank you.

Operator: Our next question is from the line of Robert Moskow with TD Cowen. Please proceed with your question.

Berrin Noorata, Chief Corporate Affairs and Communications Officer, Tilray Brands0: Hey, good morning. This is Xin Ma on for Robert Moskow. Thanks for taking the questions. So I just want to ask about international first. International, you know, grew 73%. Versus Germany grew 43%. What drove this delta? Was it shipment timing or permit delays that from the previous quarter that you know were fixed this quarter? In terms of kind of looking at growth going forwards, is that 43% growth rate for Germany kind of a good run rate to use in looking at growth for the segment?

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Number one, there was some, you know, products that did not get shipped in the second quarter ’cause of permits, but there’s products that did not get shipped in the third quarter ’cause of permits. You know, it equals out. In regards to, you know, what was the growth, the growth was based on us having supply and demand. I, you know, I’m not sure. Again, we have a big fourth quarter. What is the true run rate there? The big thing is just what I said before, what the market is realizing, what patients and what doctors are realizing is that we will have supply, we will have good flower, we’ll have lots of innovation, we’ll have some good oils. Again, we will be price competitive. You know, what is the right growth number?

I’m not ready to give that yet. Again, there’s big opportunities for us in the international markets, not only in Germany and Poland, the U.K. and other markets. It’s additionally other markets that we’re looking at to open up and what will happen in Spain, what will happen in France. You know, we’re really excited. The other thing that we have there with our CC Pharma, Tilray Pharma, and some of the stuff that we’re doing in the U.K., you know, as being vertically integrated, as we sell through our distributor and sell directly through our distributor into these drugstores, you know, it helps us that way. We’re a grower, we’ve got the brand, and then we have, you know, the third part of it is where we have, from a vertical integration, the distribution going through the drugstore. That helps us tremendously too.

Berrin Noorata, Chief Corporate Affairs and Communications Officer, Tilray Brands0: Got it. Thanks for the color. My second question is on the beverage segment. In terms of just, you know, rising aluminum costs from, you know, the Midwest premium, related to, you know, the tariffs and then additional, you know, supply shocks from the Iran conflict, can you offer any color in terms of how hedged you are on your aluminum exposure? And, you know, what’s the benefit in terms of kind of scale that, you know, adding Carlsberg into the U.S. portfolio gives towards managing, you know, that cost impact?

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: I’m gonna let Carl talk about the hedge in a second because we, you know, we are hedged on some things. Listen, adding Carlsberg in there with a good sized business, adding, you know, BrewDog in there and then being able to buy on global contracts is gonna be very, very helpful for us. You know, right now, a lot of our hops, you know, for BrewDog internationally come from, you know, Washington State. We right now, as we put this together, listen, having Carlsberg, who is one of the largest, you know, brewers in the world, and possibly tying into their contract and, you know, we still have leftover, whether there’s hops or not from our ABI spot.

There’s lots of opportunities from a scale to be buying, you know, hops and cans, and that’s the big one to watch out for, is as aluminum prices have gone up with Carl about their hedges. Listen, the big watch out there is what, you know, what happens with fuel, you know, and from a standpoint there is the unknown. Carl, from your hedge side, do you want to just talk a little about it?

Carl Merton, Chief Financial Officer, Tilray Brands: Yeah. I mean, you answered most of it, but just specifically on the hedge for aluminum, we’re currently hedging 65%-75% of our buy on a month-to-month basis, and we’re hedging it a year out.

Rajnish Ohri, Senior Executive (International Operations/Tilray Pharma), Tilray Brands: Got it. Thank you for that color. And just one last question, if I can. In terms of just the distribution gains, you know, from the shelf resets that typically happen in the spring, you know, how are those conversations going? How is that tracking? Any color you can share there?

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Going well. I will say this here, we gained and we lost. I think part of it is here, you know, where the craft beer category lost some space out there. You know, I think the big thing is here, where we didn’t when we bought the Molson’s piece and prior to that when we bought the ABI piece, you know, from a timing standpoint, you know, we lost a lot of SKUs where we had no influence and no part of it. So again, it goes against us. Now, you know, we’ve gained a lot of distribution. The big thing is this here, just ’cause we gained distribution, I make sure the products sell.

You know, plus, we probably lost more, but again, it’s okay because it was SKUs that were not part of us at the time. The new SKUs, the new products, the new innovation is what we’re excited about and where we gained. We had some big gains at Walmart. We had some big gains at Kroger, Albertsons, and some other ones across Stop & Shop, across the board. All in all, you know, we’re happy with what we got. Listen, I’d rather the set get smaller and us be a bigger player in a smaller set than, you know, just to have a big set out there. There’s a lot of resetting happening within the craft beer industry in regards to the size and what retailers did out there.

Carl Merton, Chief Financial Officer, Tilray Brands: Just to supplement that a little when Irwin Simon talked about the acquisitions, it was more about the timing of the acquisitions because we bought those brands after the initial discussions on spring resets had already happened.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: We were not the ones in presenting those spring resets. Now whether it’s the Molsons or the ABI, and that’s sort of where we’ll be next year in January as we take on Carlsberg, we’ll be out there presenting in February, January, February for the next, you know, spring sets for Carlsberg.

Berrin Noorata, Chief Corporate Affairs and Communications Officer, Tilray Brands0: Got it. Thanks, well, for the color. I’ll jump back into the queue.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Thank you.

Operator: Our next question is in the line of Bill Kirk with ROTH Capital Partners. Please proceed with your question.

Bill Kirk, Analyst, ROTH Capital Partners: Hey, good morning, everybody. I want to spend a little time on the improvements at Tilray Pharma. Carl, you mentioned a focus on the highest velocity SKUs. What SKUs or product types are those that are leading the way? Maybe more importantly, how can you or how are you leveraging this improved CC Pharma for your cannabis business in Germany?

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: I’m gonna Rajnish, since you’re on the call, I’m gonna let you jump in here ’cause you’re the one managing this. I think there’s three things here. Number one is the buying that our guys are doing over there. Number two is our assortment. And number three, as we now look to sell our products into Italy and, you know, we sell our products into U.K. Rajnish, do you want to go into the specifics of what the products are that we’ve really seen the increase in sales?

Rajnish Ohri, Senior Executive (International Operations/Tilray Pharma), Tilray Brands: I mean, there is a group of products. I mean, we have about 2,800 SKUs. What we have done is basically identified SKUs which have higher velocity to go. There is a bunch of about 50 top SKUs, which are right now working where there is a high velocity, which we focus on, not just on velocity, but also on the gross margins. These are the two criteria for us to look at in terms of the growth. We are adding the medical cannabis portfolio. I mean, the medical cannabis portfolio is helping us to grow both in margins as well as in revenue because per unit revenue is much higher and margins are better. These are the two big things in terms of the selling side of the business.

Of course, on distribution, we are now with our new alliances which are coming forward, we are now actually increasing our distribution across the pharmacy channel, which helps us to grow not just per unit, but also in the depth of distribution and the width of coverage of pharmacy. This is really on the seller side, but more importantly also on the buy side. I think our purchasing is becoming much more robust in terms of the timely decisions. We’ve implemented automation in our purchasing system, which predicts the pricing patterns, and then it helps us to take decisions quicker. I mean, these are a few things which in the pharmacy distribution is helping us to grow.

Of course, on the operation side, a lot of our business, we are also looking at in-house packaging to out-house packaging. Whichever way is working for us, there’s a big team which is working to make sure that there is a consistency in supply from the operators, both in-house and out-house, and that’s also helping us to improve the margins.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: You know, when we bought CC Pharma, that was a big part of it, but again, it was bought during the Aphria time, was for a tender and was the age of sub pharmacies. That was not really happening. Number one. Now, there was challenges with getting different, you know, medicines as we’re buying all different types of medicines. But as Rausin said, we’re focused on the core medicines with the higher margins. Yeah, and you know, we’ve done a lot of automation at CC Pharma. The other thing is what’s happened, we’ve gone from servicing 6 to 13,000 drugstores now to 16,000 drugstores. So we’ve expanded the amount of drugstores in Germany. The other, you know, major thing is as we expand out CC Pharma into Italy and into the U.K. is a bigger platform that we’ll be selling through.

Not the highest margins, but again, as the volume grows, there’s a lot more contribution. As we put a lot more cannabis through it with much higher margins, you’re gonna see the margin grow there dramatically.

Bill Kirk, Analyst, ROTH Capital Partners: Awesome. Thanks. Thank you for those detailed answers. A second question. Irwin, in the opening comments, you know, you talked about now being a run rate of $1.2 billion in revenue. You know, the last twelve months, I think it’s something like $850 million. Is the bridge between the two mostly the revenue from acquired BrewDog assets? And I ask because you didn’t take all the assets. How much of the BrewDog revenue that they’ve released in their annual reports is generated by the assets that you took on and now have? And how much of their annual revenue was tied to assets that you didn’t take?

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Let’s say between 225-250 is what we’ve taken. Okay? Again, we took, you know, all the U.K., Ireland, Scotland distribution through retail. We’ve taken it through on-premise, and we’ve taken 16 BrewPubs in U.K., Ireland, and Scotland. We’ve taken the BrewPubs in Australia, we’ve taken the distribution in Australia. We’ve taken two BrewPubs ourselves, and there’s three franchises. There’s 15 other franchises out there today around the world that we sell them beer to, and we get some type of royalty. In regards to the U.S., we’ve taken the distribution, the manufacturing in the U.S., and we’ve taken with them Las Vegas, Columbus, St. Albans, and Cleveland. And the airport in Columbus. That’s what we’ve taken there.

There’s somewhere between $225 million and $250 million in sales that we have taken. In regards to the other piece, Bill, it’s all coming from growth. I mean, that’s where it’s gonna come from. Don’t forget, you saw from a standpoint there, what we’ve gone through in SKU rationalization in regards to our beer business. If you take, you know, what we’re down this year and what was SKU rationalization, what was distributor rationalization, and what was product rationalization, I mean, quite a bit of the sales come out of our, you know, come out of our business.

Bill Kirk, Analyst, ROTH Capital Partners: Thank you. That was exactly what I was looking for. Thank you.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Thank you.

Operator: Our next question is coming from the line of Aaron Grey with Alliance Global Partners. Please proceed with your question.

Aaron Grey, Analyst, Alliance Global Partners: Hi, good morning, and thank you for the questions. First question from me, I just wanna dig a little bit more in terms of of hemp. Just want to talk in terms of your outlook potentially for changes to come before the ban on any products with more than 0.4% THC come to fruition in November. Taking that into context, you know, how you’re looking at the CMS program. You mentioned potentially looking to enter into that. How are you looking at the potential opportunity there, particularly if there is a restriction on THC products, and how appealing that program will be for patient, you know, adoption or rejection? Just how you think about that longer term opportunity there. Thanks.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Listen, number 1, let me go back to Hemp-Derived Delta-9 and how we’re looking at that. We’re looking at it three ways. Number 1, it gets extended and stays as is. Number 2, there is, you know, some type of new legislation that comes out that regulates it either 3, 4 or 5 milligrams, and which would be great, and that way we can sell it. Or, you know, the ban in November 2026 happens, and it completely stops. Listen, I think it’s gonna be 1 or 2. That will be my opinion. You know, in regards to, you know, our CBD drinks into Medicare and that within the US, listen, we have Happy Flower. We have the drinks. We’re prepared for that now.

It’s just making sure that as we talk to the FDA and we talk to them that how we go about it and how we do it. We’re able to do it. We have the products to do it. It’s just making sure the right approvals and, you know, we have a team that is working on this within the U.S., you know, regulations and what could happen here. Stay tuned for that.

Aaron Grey, Analyst, Alliance Global Partners: Okay, great. Appreciate that color, Irwin. Second question for me, I just wanted to go back in terms of alcohol gross margin and the outlook. Carl, I know you mentioned in terms of how you guys are hedging some of the aluminum, but just taking a step back and there’s been some lumpiness. You guys now have Project Four Twenty completed. So how should we think about that margin for the segment going forward? Q4, I imagine obviously be higher just given the higher sales flow through, but just on a full year basis, just how best to think about the gross margin there. Thanks.

Carl Merton, Chief Financial Officer, Tilray Brands: Aaron, good question. You know, if you look at where we are right now, I think this represents the bottom. We have done a significant amount of work and will continue to do work to manage costs and to keep costs at a reasonable level versus where our volume is. As we said on the call, we’ve got some headwinds with aluminum costs, and there’s potential for headwinds with fuel surcharges and things like that we’re gonna keep a close eye on. The key is really in the overhead utilization rates. As we’ve adjusted to that, and we continue to make adjustments going forward, like we’ll see that start to come up over time. Right now we think this is the bottom of the trough.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Aaron, I think there’s, again, you know, remember we get in the beer business in late 2020 with SweetWater and the acquisitions of the three brands in the West Coast and Montauk, and then the ABI pieces, and the Molson pieces. You know, we at one time had 10, 11 manufacturing facilities. Since then, now with Carlsberg coming on, with, you know, the rescaling of the beer business and the SKU rationalization, it hasn’t been the easiest road for us, but nothing dissimilar than was that was cannabis in regards to as we opened up these growth facilities, and we had to go deal with it. Now we got time. You know, we now have the right sets in place. We have the right, you know, new products in place.

You know, we’ve had some new products out there that didn’t do as well as we thought. As Carl said, now with the purchasing power between BrewDog International, between bringing Carlsberg on with us, you know, we feel good about moving forward where we’ve done a lot of the overhauling. You know, we’re now down to seven manufacturing facilities. We might even get smaller, you know, in regards to that. In regards to, you know, the facility in Columbus, Ohio, which is a beautiful facility, and what are we moving there from HDD9 if that, you know, is a product that’s able to stay within the portfolio. You know, we have a great energy drink called HiBall that’s growing in leaps and bounds.

Some of the other non-alc products that we have out there today that we will move into our facilities. As we introduce a lot of, you know, vodka seltzers and some of the other drinks that we’re doing, we’ll look to bring most of that in-house. We will have capacity as we have a great plan to grow Carlsberg. We think the growth opportunities at Carlsberg is tremendous of what we can do with that brand. Again, it’s we’ve only been at this five years, where most craft brewers have been out there a long time. You know, we’ve had some pain, but we’ve managed through it, and I think we’ve really got it in a good place now from a scale standpoint. You know, I could be wrong.

I think we’ll combine with BrewDog and what we’re doing today. You know, it’s almost 18 million cases of beer that we’ll be selling. That’s between, you know, the worldwide. We’re buying lots of cans, we’re buying lots of hops, we’re buying lots of ingredients here. Yes, some of it is across the water. We’re buying lots of kegs, but how do we utilize that? We’re just not a little craft brewer anymore, from a standpoint there.

Aaron Grey, Analyst, Alliance Global Partners: Okay, great. Thanks for that color. I’ll go and jump back in the queue.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Thanks.

Operator: Our next questions are from the line of Pablo Zuanic with Zuanic & Associates. Please proceed with your questions.

Pablo Zuanic, Analyst, Zuanic & Associates: Yes, good morning, everyone, and congratulations on the very strong international growth and also very nice to see the share count being stable quarter-over-quarter. Look, I have three questions on Germany specifically, and I’ll try to keep it brief. The first question I want to get your take in terms of the advantage of being vertically integrated versus the many distributors out there. I mean, for a while we saw that the distributors were growing faster. We saw consolidation, Curaleaf by FOUR20, High Tide by Remexian more recently. Now with lowered prices, some of the distributors are being squeezed out, and they don’t seem to have very stable supply chain. I’m just trying to understand if you can remind people of the advantages in Germany, especially the way the market is evolving or being vertically integrated versus the distributor model.

The second question is that it would help if you can expand on your route to market. Like, how many people do you have on the ground? How many people are visiting doctors? You know, what are the efforts in terms of reaching out to patients given all the restrictions? Just if you can give more color on your route to market in Germany. The third, which is related to all of this, I could make the argument, playing devil’s advocate, that pharmacy reach does not matter too much, right? That all these numbers that we hear about CC Pharma and Alliance now are not so relevant when the doctors and the patients are making the decision and the 80/20 rule applies, right?

We know that maybe 50 pharmacies, especially online, account for the bulk of sales and only one of seven pharmacies sell medical cannabis. Why does pharmacy reach matter in the short term and in the long term? I know there’s a lot there, but there are three questions on international that would help if you can cover. Thank you.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: I would like to remember all three, okay? In number one, to your point, and I stressed this before, from a growth standpoint of having, you know, our Cantanhede facility and that up and growing the way it is today and growing some of the best cannabis that it ever has, and having the permits to get out of Portugal into Germany is a major advantage to us, and this is what helped us in the quarter to get the sales. Again, as we’re getting yields and flower to become that low cost seller in there in the marketplace and deal with price compression. Number two, you heard me talk about now as we bring on our facility in Gatineau, Quebec, that is a GMP facility and that from a supply standpoint.

I got to tell you, there’s a reason we were going to sell that, and thank God we didn’t, because from electricity costs, from labor costs, that is an excellent facility and it’s an excellent facility for us to have and supply the international market. That’s what it’ll do because it’s GMP, because it’s a lower cost facility. Then our German facility, which, you know, originally we were selling 2-3 metric tons out of there. Rajnish and the team has done a great job of getting that up into additional metric tons. Before that we were only allowed to sell into the German government there. To your point, you know, Pablo, yes, we have supply. Yes, we can be that lowest cost producer.

Yes, the big thing is we can be consistent in regards to, you know, the customers that we’re selling to. I’m going to let Rajnish talk about what we have on the ground there on the infrastructure in a minute. Just going to the pharmacies, you know, you may not agree that having a vertical integration. Number one, you know, having CC Pharma, the big part of CC Pharma today’s business is not the cannabis business. There’s three things CC Pharma does. It has 60,000 pharmacies, and a lot of these pharmacies, Pablo, are buying medical cannabis. Now they have the ability and at the end to sell, it has the ability to go to pharmacies, number one.

Number 2, there’s a lot they can do in regards to online and selling online through CC Pharma, and that is something that we’re working on. Again, as we look at expanding our product lines in Germany, whether it is vapes, whether it is pre-rolls, CC Pharma has medical, you know, licensing application that they can do these things for. We’re looking at numerous things with CC Pharma. Today having it is, you know, it is very important for us. You know, it has a tremendous network too with other, you know, CC Pharma types of distributors that we can sell products through them too. CC Pharma has a relevance to us and it’s a big relevance for us in the cannabis growth market where no one else really has a CC Pharma today.

Rajnish Ohri, in regards to your sales organization on the ground. Go ahead.

Rajnish Ohri, Senior Executive (International Operations/Tilray Pharma), Tilray Brands: Yeah. Two things here. There is a price compression in Germany which is kind of changing the route to market, and the route to market is diverting, becoming more integrated. The distributor is now getting squeezed out because of the margins, et cetera. I think we don’t see it now, but we do see it going forward that the route to market will become more direct to pharmacies and through the channels of prescriptions to doctors, et cetera. CC Pharma and our medical team there is presently working along with the prescribers and also in the pharmacies to work and build this integrated supply chain to reach the patients. That’s number one. Number two, to your question of what’s the feet on street. We have today two teams which work on the street.

One is the one which work with the prescribers. This is a team of about 20-plus people who are medical representatives and medical advisors who work on with the prescribers. We have a team with CC Pharma, which is also about 7 to 8 people who are basically telecall services people who continuously to work with pharmacies to make sure that the prescriptions which reach there and the stocks are available for them. There is a twin approach there, both at the pharmacy and at the prescriber level, at the ground in Germany. As we go and see this forward, I think and these are signs which we see in the market today, that the route to market is going more direct than through the distribution.

With CC Pharma and our Tilray Medical team, I think this change we are seeing and we also see data coming to us which is telling us that the pharmacy sales are improving. Still small, but improving compared to what the distribution sales have been.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Thank you. Pablo, not only that, what we have internationally today, I mean, basically we have marketing teams, we have R&D teams, we have quality teams. We have research that’s working on, you know, our different cannabis strains and genetics over there for, you know, from a medical standpoint, that when doctors prescribe for pain, for anxiety, for cancer, you know, we can grow and support it. Again, what we’re not is just somebody selling into the marketplace. I mean, as Rajnish said, we have a big infrastructure in Cantanhede, Portugal, we have in Germany, and then we have a team to support it in London, in regards to a marketing team. There’s a whole supply team. The good news is we have, you know, moved a lot of our Canadian colleagues over there to help us with this growth.

You were going to ask something else. Go ahead, Pablo.

Pablo Zuanic, Analyst, Zuanic & Associates: I mean, that’s great color. Can I ask just one more quickly? You mentioned

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Yeah.

Pablo Zuanic, Analyst, Zuanic & Associates: You’re keeping an eye on the CMS program in the U.S. for the full spectrum CBD. Does that mean that you would be considering or looking at buying a U.S. CBD brand?

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: We have a brand today called Happy Flower, okay? We produce CBD products internationally, so we have formulations, we have products. You know, it just gotta fit to what the U.S. standards are and the regs are here. Listen, I’ve always liked if it made sense to buy something that gives you a foothold in there. Like anything, we have the ability today to do our own with CBD products.

Pablo Zuanic, Analyst, Zuanic & Associates: That’s good. Thank you.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Thank you.

Operator: Our next question is from the line of Matt Bottomley with Canaccord Genuity. Please proceed with your questions.

Matt Bottomley, Analyst, Canaccord Genuity: Thank you, and good morning. The majority of my questions have been asked, so just a couple of quick follow-ups. With respect to the beverage segment, you called out trough margins in quarter. Is that including or excluding the BrewDog integration? Just trying to get a handle on, you know, whether that’s a trough on legacy or trough on go forward and how we should think about that evolution of the margins.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: No, BrewDog. From these margins, BrewDog was acquired March second, so there’s nothing in here in regards to BrewDog, and there’s nothing in here in regards to Carlsberg from a margin standpoint. Again, from a procurement, from the sales, from an infrastructure, from the manufacturing, you know, again, I’m not gonna, you know, come out there with numbers, but I would think there would be upside just putting volume.

Matt Bottomley, Analyst, Canaccord Genuity: Great. Thank you. That was the gist of the question, was just on that evolution from here forward with Carlsberg and BrewDog, but I can leave it there. Just a follow-up with respect to the brewpubs and that footprint. Just with how consumer trends and consumption patterns have changed, how are you thinking about that footprint going forward? Is it becoming more important to you as a sort of a strategic buffer on the consumption side? Any color around the brewpub footprint would be useful.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Listen, good question. You know, it’s something today within Tilray, we have 18 of our own brewpubs here in the U.S. Again, it’s something we understand. In regards to the U.K., you know, Ireland, Scotland and the other markets, listen, I’m big on brewpubs to look at them from a marketing tool and to build our brand out there, to bring, you know, people together. That’s a whole thing on longevity today, to bring people together. A big part, and I plan to spend a lot of time looking at our brewpubs in regards to what we got to do to interact with our customers that come there. How do we serve them good food and good value?

I’ve also talked about whether it’s, you know, Carlsberg, Guinness or other our other beers of how we bring other beers into there, because if they don’t want BrewDog, we want them to come to our brewpubs at least to enjoy our food, enjoy the environment, and maybe we convince them to, you know, have BrewDog. You know, is that gonna be a big part of our growth as a part of our strategic plan to open up another 100 of those? No. Is a big part of those to look to upgrade them, to put more TVs, more interactive types of communications in regards to getting more and more of our consumers to that and is something, yes. Is there a opportunity for us to franchise more and more BrewDogs where we did not take them and make them franchisees? Absolutely, yes.

There’s some exciting things here as we look to grow, you know, from a franchise model, as we look to increase the sales with the ones we own and where do we license the brand today in airports. That’s something that we’re looking at too, because there’s, you know, with airports today, you license your brand name, you collect a royalty, and you sell product. That’s how we’re looking, you know, at these brewpubs.

Matt Bottomley, Analyst, Canaccord Genuity: Great. Thanks for that insight. I’ll get back with you.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Thank you.

Operator: Thank you. At this time, I’ll turn the floor back to management for closing remarks.

Irwin Simon, Chairman and Chief Executive Officer, Tilray Brands: Well, thank you, everybody. Number one, it’s April Fools, and our numbers are not an April Fools joke, so that’s the good news, okay? Our numbers are some real strong numbers out there, and congratulations to the team on the growth. You know, not one of these, you know, businesses, nothing has been easy out there in regards to what we deal from a regulatory standpoint, what we deal, you know, in regards to pricing in regards to tariffs and just looking at the consumer today. Again, you know, you stop and look at Tilray from 2019 to hitting over the $1 billion mark with the acquisition of BrewDog is a very exciting time for us.

In regards to where we’re going in 2027 and with two months left in our quarter of 2026, you know, there’s a lot to be proud of here. As you heard me talk about the big overhaul that we’re gonna do in the Canadian market in regards to our genetics, in regards to our strains, in regards to using AI to help us there, in regards to how we modernize those facilities to take out, you know, lots of costs. Blair and the team have done a tremendous job in doing that. Again, as you come back and think about what we have in grow today and how we’ve converted these facilities to, you know, much more economical and dealt with the challenges of the cost of utilities in Ontario.

Again, we’ve accomplished a lot in the Canadian market, in the only market where recreational cannabis is legal in the world, and at the same time dealing with and growing our medical market and, you know, introducing more and more patients and consumers to the product. In regards to U.S., listen, again, you know, I’d like to see some better results coming out of our beverage business. But on the other hand, as you bring everything together since late 2020 and we’re here where we are today, I see some good light at the end of the tunnel here of what we’re building here and being the fourth-largest craft brewer out there and the fourth-largest, you know, craft beer business. There’s been a lot of changes in the craft beer business, been a lot of changes in the beer business.

One thing I can tell you is I really feel we got the footprint right, we got the model right, and now we got the products right because we, you know, we brought up a lot of SKUs. We have over 18 brands. We have over 900 distributors. We’ve had multiple people, multiple contracts out there that we had to deal with, whether it’s buying kegs, cans, oats, hops, et cetera. As we bring all that together. In regards to our spirits business, you heard me talk about our consumpt-- our depletions on Breckenridge being up. You know, we dealt with lots of distributor trans-trans-transition out there with RNDC now being acquired by Reyes, which is good news for us, and it’s something that we will consolidate into the new Reyes distribution system.

You know, in regards to some other changes in the market is something we’re going to do. What I’m really happy about in seeing our Breckenridge is some of the new stuff that we’re really coming out with in regards to our tequilas, our drinks with Moonshot, our Mountain Shot, it is a Moonshot, some of our non-alc drinks, and some of our products there. It’s great to see some of the stabilization that’s gonna happen in regards to the distribution moves. Listen, this industry is a difficult industry with a three-tier system, and you can have the greatest products, but it’s the distribution that you need.

In regards to international, again, Rajesh and team have done some great things in regards to the international piece and the grower and dealing with a regulated market in regards to medical cannabis, dealing with permits when you ship out of the country or permits when you ship into the country. Again, what we’ve had to do to get our Cantanhede facility up to the yields and up to the grow that we’ve done in Canada and up to being able to supply consistent product to the marketplace. Back to Pablo’s, you know, point before, that’s something that Tilray now is going to be known for because if you think about it, look where our volumes are today and look where they were a year ago and how we’ve doubled, you know, in the quarter. A lot to be, you know, proud of there.

Again, there’s a lot more that we’re going to do in those marketplaces. We had to overcome Germany being only sold into the German government, which we’re losing money and almost doubling the amount of production coming out of that facility. Now, we’re running Cantanhede probably at 50%-60% capacity, and we have tremendous opportunities to grow more and more in our Cantanhede market. Really, the highlight is where we’ve come with CC Pharma, where we’re at 2%-3% margins and closer to 5%-6% margins now. We really see the opportunity in that business and see opportunities from an integration standpoint and even seeing it grow throughout the rest of Europe. Last, not...

Well, our wellness business in regards to Manitoba Harvest and the growth within that business and the growth in regards to some of the beverage businesses that’s in that business. You know, listen, we’ll see what happens in regards to Delta-9. I think as you heard me say, there’s three options out there. Either one or two will happen. I’ll be disappointed if it’s three. Again, we’re out there in full force selling, you know, our products today that we have in the marketplace and sticking with it and out there lobbying the governments to really take a hard look at that. Last but not least, you know, on March second, you know, I just sort of wanna step back one second in regards to Carlsberg, as we announced our partnership with Carlsberg.

It’s something I’m very proud of because I grew up on Carlsberg. It’s a worldwide brand. It’s one of the largest brewers out there. What a class organization to be associated with. I spent lots of time with the Carlsberg team, and it’s tremendous what we can learn from Carlsberg. You know, what we have the ability to tap into their, you know, knowledge base, tap into their new products, tap into their marketing things. I always say this, when I grow up, I’d like just to be like Carlsberg is something that we aspire to and having that for the U.S. The U.S. being the biggest beer market, you know, in the world, Carlsberg is looking for some big things for us, and I promise we’re not gonna let them down.

Last but not least, in regards to BrewDog. I looked at BrewDog numerous times, you know, throughout the years in acquisition. I congratulate the founders for what they did in regards to building this brand and what they did in regards to opening up these beautiful brew pubs, you know, around the world today. Since 2015 and, you know, basically 10, 11 years what they’ve built. You know, unfortunately, not everything goes as planned. Tilray, when it had the opportunity to participate in the administration to buy this without being able to do due diligence the way we could, but we knew of the brand, without being able to go into data rooms and ending up buying this, you know, at a little over GBP 40 million is something that I’m excited about.

I always say it’s not what you bought it for, it’s what you do with it. With that, there’s a lot to do. This changes a lot within Tilray in regards to our beverage business, our worldwide known of who Tilray is. You heard me say in my comments that, you know, I’ve done lots of acquisitions, whether it’s at Anheuser or here, and I’ve never had so many reach outs about the brand BrewDog and the excitement that is. We’re pretty excited. It’s just a month that we own the business. We’re in the midst of getting our hands around this. One of the big things, this business, as it was going through and in administration, was in the midst of either being shut down or sold in pieces or sold as a whole like us.

It’s almost like we’re starting this back up again and getting it back up to capacity, getting the factories back up, making sure we have hops, where suppliers didn’t get paid, and there were random suppliers that we got to do that. There were employees that had their resumes on the streets that didn’t know if they were gonna have a job or not, and that’s something that we’ve got to make sure. Stabilization, as I keep saying, is the key to this year. With that, we will have in place great strategic plans to grow the business in, you know, the U.K., Ireland. We’ll have great plans in place for Australia. In European markets, we’ll have plans in place for France. What we will do with our current brew pubs, and what we’re gonna do in the U.S.

There’s a lot of exciting things with BrewDog that we can do and will do. Remember, there’s a lot of heavy lifting there on how do we integrate it within our business. With that, some exciting things happen at Tilray. Let me tell you, as I always say, there’s two by fours that hit you in the head every day, and that’s something we live by and how do we deal with it. I want to thank everybody for getting on our call today and listening to us. Happy Passover. Happy Easter to everybody. You know, enjoy some good beer out there. Enjoy some of our good cannabis. To March Madness, hey, when you’re watching March Madness this weekend, make sure you have, you know, one of our great beers, you know, that we produce out there.

Thank you very much for listening to us today.

Operator: This will conclude today’s conference. You disconnect your lines at this time. Thank you for your participation. Have a wonderful day.