Tilray Brands, Inc. (NASDAQ:TLRY) Q4 2025 Earnings Call Transcript

Tilray Brands, Inc. (NASDAQ:TLRY) Q4 2025 Earnings Call Transcript July 28, 2025

Tilray Brands, Inc. beats earnings expectations. Reported EPS is $0.02, expectations were $-0.03.

Operator: Thank you for joining today’s conference call to discuss Tilray Brands’ Financial Results for the Fourth Quarter and Fiscal Year 2025 ended May 31, 2025. [Operator Instructions] I will 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: Thank you, operator, and good afternoon, everyone. By now, you should have access to the earnings press release, which is available on the Investors section of the Tilray Brands website at tilray.com and has been filed with the SEC and SEDAR. 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 fourth quarter and fiscal year 2025.

Also joining us for the question-and-answer segment are Denise Faltischek, Chief Strategy Officer and Head of M&A; Blair MacNeil, President of Tilray Canada; Rajnish Ohri, Managing Director, International; and Prinz Pinakatt, Chief Growth Officer of Tilray Beverages. And now I’d like to turn the call over to Tilray Brands Chairman and CEO, Irwin Simon.

Irwin David Simon: Thank you, Berrin, and good afternoon, everyone, and thank you for joining us today. In fiscal 2025, we continue to execute on our long-term strategy of solidifying our global leadership in cannabis and expanding our beverage and wellness business with new innovation, strategic bolt-on acquisitions and geographic expansion. We are in categories that are emerging quickly like cannabis, as well as categories that have been around for years, but are evolving and changing like our beer and spirits businesses. As we bring our businesses together, we are creating a unique and scalable global platform while remaining laser-focused on profitability and cash flow. Our strategy is paying off, and I want to start by highlighting 3 key points.

We reached a record revenue of $22.4 million in the international cannabis business in Q4, up 71% year-over-year. Total cannabis gross margin increased by 400 basis points and reached to 44% in Q4, and cannabis gross margin increased by 700 basis points in the fiscal year. And in Q4, we also achieved our second highest ever quarterly consolidated adjusted EBITDA of almost $28 million. In terms of full year consolidated fiscal financial metrics, in fiscal ’25, Tilray achieved record annual revenue of $821 million, a 4% increase year-over-year on a constant currency basis, and $834 million, a 6% increase year-over-year. During the fiscal year, we implemented strategic initiatives aimed at enhancing business operations by improving margin and our profitability.

However, these decisions impacted our revenue by $35 million. If we eliminated these onetime impacts of these strategic decisions and currency fluctuations, revenue would have been approximately $870 million for a 10% growth year-over-year. Importantly, Tilray delivered its highest gross profit to date at $241 million, an 8% increase year-over-year. All this was achieved while maintaining a strong balance sheet with approximately $256 million in cash, reducing our debt by approximately $100 million to date and improving our net debt-to-EBITDA ratio to 0.3x from 1.7x last year. We aim to continue strengthening our balance sheet through further strategic debt restructuring in our fiscal year 2026. Over the past 5 years, Tilray has experienced significant growth through both organic expansion and strategic acquisitions and geographic expansion.

We generated revenues from over 21 countries and operated a portfolio of over 40 brands in 4 diversified business units. As Carl is going to explain in further detail, we booked a noncash impairment this quarter. To offer some color, in 2021 when we completed the reverse takeover at Tilray, where there was lots of excitement in the market regarding the acquisition and the potential for U.S. cannabis legalization, the growth in our share price reflected that enthusiasm at the time at the deal closing. Since then, U.S. regulatory changes have not advanced the way we’d hoped, which has impacted our share price and in turn, our market cap. From an accounting standpoint, that meant we need to recognize a noncash impairment charge this quarter. Let me be very clear, despite recording this noncash accounting charge, it does not change how we feel about the future of our business today, including the intrinsic value of our tangible assets, our liquidity and, of course, our brand equity.

We remain incredibly optimistic, and we believe we have the right long-term strategy to deliver for our shareholders. We have transformed Tilray Brands into a company generating nearly $1 billion in annual revenue, establishing ourselves as a leading global cannabis business outside the United States, the fourth largest craft beer producer in the U.S. and a dominant force in the global market for high-protein hemp foods, snacks and wellness drinks. Our progress is rooted in deep understanding of product, innovation, evolving consumer needs, shaping offerings not only reflect but anticipate it, how people choose to eat, drink, relax and address their health and well-being. In fiscal 2025, we led the Canadian cannabis market with over $185 million in revenue.

We operate a leading international medical cannabis business outside North America, generating almost $65 million in annual cannabis revenue, totaling to be approximately $0.25 billion in cannabis sales worldwide and over $270 million in medical pharma distribution revenue. Our U.S. beverage division generated approximately $240 million in sales, and our wellness division, which continues to dominate the hemp industry with nearly 60% branded market share in the U.S. and 80% in Canada contributing $60 million in revenue. Now let’s look at our performance by divisions, beginning with our international cannabis business, as a result of our industry- leading international infrastructure, international cannabis revenue grew and Q4 was up 71% year-over-year.

And excluding Australia, European cannabis revenue increased organically 112% in Q4 compared to the prior year’s quarter. In fiscal year 2025, our international cannabis business revenue grew approximately 20% year-over-year. This top line improvement is evidence that our growth in our international markets is accelerating and will continue, particularly in Germany, where we maintain our #1 leadership position in the reimbursed market and increased our sales in self-pay market. Tilray is well positioned to expand its market share across Europe, supported by vertically integrated operations, EU GMP cultivation facilities in Portugal and Germany and a comprehensive sales and distribution infrastructure. Let me take a moment to spotlight our progress in Germany, where in Q4, we achieved revenue growth of 134% over the prior year quarter and 54% revenue growth in fiscal year 2025 when compared with the prior fiscal year.

Our wholly owned subsidiary, Aphria RX, remains at the forefront as 1 of the just 3 licensed cultivators of medical cannabis. This license positions us to better serve patients’ needs and expand access to the highest quality cannabis products across broader market. It also serves as a significant competitive advantage, as we are not required to procure import and export permits to sell and distribute Aphria RX products in Germany. In addition to increasing our revenue in existing markets, we’re also laser-focused on entering and expanding developing markets. In June, our wholly-owned subsidiary, FL Group, received from the Ministry of Health an extension to its license to import and distribute 3 medical cannabis flowers which are cultivated and produced in our EU GMP-certified facility in Portugal.

Moving on to our pharmaceutical distribution segment in Europe. CC Pharma continues to be a consistent performer and a key enabler of our international cannabis performance. It continues to serve as a competitive differentiator, as it allow us to provide excellent service to our customers throughout our order fulfillment and quick delivery to our customers. The infrastructure we have in place positions us for success as regulations continue to change across Europe. As we look ahead, our experiences, portfolio and infrastructure keeps us exceptionally well positioned to lead our scale of medical cannabis business not only across Europe, but in every market that regulation evolves. I am confident that our team, our vision and our execution will continue to drive Tilray’s growth and our ability to deliver value for medical cannabis patients worldwide.

Turning to our cannabis operations in Canada. After 6 years, we’re seeing stabilization within the Canadian cannabis market alongside new growth opportunities. With continued consolidation on both the producer and retail sides, we are starting to see signs of industry normalizations and balancing inventories. The Canadian cannabis sector continues to evolve at a rapid pace with a goal of combating the illegal market and putting safe products in the hands of our consumers to meet their needs and wants. Tilray continues to lead revenues as the largest cannabis business in Canada, which remains the largest federally legal cannabis market. In fiscal year 2025, our Canadian cannabis revenue totaled $186 million and $191 million on a constant currency basis.

Excluding the impact of strategic decisions made to enhance margin performance, revenue would have reached $206 million when excluding currency fluctuations. In Q4, Tilray maintained a 9.3% market share in the adult recreational segment, distinguishing itself as the only top 5 licensed producer to do this. We maintained the #1 position in THC beverages, chocolate edibles, oils and capsules combined and non-infused pre-rolls. We also held a top 10 position in all other categories. In the cannabis flower category, we regained the #1 market share in Q4 and as a result of strong innovation and launches under the Redecan and Broken Coast brand. Tilray operates as a vertically integrated company, manufacturing 90% of its products internally to maintain high standards of quality and reliability.

Operationally, we remain laser-focused on cost optimization through labor balancing, production improvements and contract streamlining. As a result, we continue to improve our cost per unit. On the cultivation side, we have the most flexible footprint in the global cannabis industry, which we have strategically optimized to maximize efficiency. With a facility footprint of approximately 5 million square feet, our value chain and business processes are recognized as an industry- leading business. In fiscal 2025, we put the building blocks in place to transition cultivation from 150 metric tons to over 200 metric tons as a result of increase in volume demand in Canada and internationally. We have the capacity for continuous growth. We are confident in the industry outlook and the strength of our brands.

Our product portfolio serves as a wide range of consumer segments, offering options that appeal to various taste profiles. We sharpen our product mix to focus on higher-margin SKUs, which has had a direct impact on improving gross margins across the board. The strategic shift is yielding in real benefits. We’re generating more profits per gram, while aligning with consumers’ preferences for quality and consistency. Those that follow the Hifyre data may have already noticed our double-digit percent gains in revenue per gram in flower. We have great products and major new innovations coming up that will hit every market in Canada in the next 3 quarters. Globally, the cannabis industry continues to evolve, and Tilray has the cultivation and manufacturing agility at the right cost to compete in the market commercially, both in Canada and around the world, and hopefully one day in the U.S. And with the recent appointment of the new administrator, the US DEA, we anticipate he will play a significant role in potential rescheduling of cannabis in the United States, which should open up new opportunities for Tilray in the U.S. market.

Also in the Canadian market, the future holds significant promise as regulatory reform to bring about pivotal changes including medical cannabis available one day through pharmacies, enhance enforcement to reduce the illicit market, authorization for cannabis beverages to be sold outside dispensaries, reformation of excise tax policy, and last but not least, broad accessibility of CBD products and beverages. Turning to our beverage business. Fiscal 2025 was a total year of transition and rebuilding for our beverage business, which includes beer and spirits highlighted by the acquisition of 4 craft brands from Molson Coors to expand our portfolio and the continued integration of several other beer brands. We launched Project 420 to integrate operations and optimize process and revitalized brands, resulting in $24 million in annualized savings towards a $33 million goal, which we will continue to work on.

By working closely with our distributors in various markets, we streamlined our portfolio to eliminate duplicate and slower growth products and concentrate our brands in the region where they have the most strength. The strategic initiatives impacted revenue to date by approximately $20 million and an adjusted EBITDA of $6 million. We expect the offset to come in future quarters. These efforts also led to a 100 basis point improvement in beverage gross profit for the year. So while we grew our beverage business 19% in fiscal ’25. Like the rest of the beer industry, our business was impacted by softer consumer demand. We attribute this to lower demand and short-term influences and broader category-related challenges, including adverse weather, integration process and delayed innovation.

In Q4, the beverage segment reported net revenue of $65.6 million. Q4 traditionally represents the peak sales period for this business. However, this year outcomes diversions from previous projections. The beer business was primarily affected by SKU rationalization initiatives and generally softer consumer demand observed across the sector due to the factors I just mentioned. Following our acquisition from ABI, we encountered unexpected distribution headwinds at retail due to missed reset windows that occurred prior to the closing of the acquisition. We also saw a shift to on-premise dynamics. And while we introduced new products, not all met our expectations. Additionally, although our SKU rationalization made strategic sense, there’s a natural time lag before higher-performing SKUs could replace those phased out.

Now with substantially revitalized brands, a refreshed innovation pipeline, SKU rationalization behind us, we are well positioned to recapture revenue and secure more points of distribution in the up-and-coming resets. During the quarter, we implemented several measures, including leadership changes, restructuring of the sales and marketing teams and the launch of targeted initiatives to design and reinforce what our beer portfolio is and what it can be. Our beer operations are now under the directions of Tilray’s Chief Growth Officer, Prinz Pinakatt. We are confident that our prompt and strategic corrective actions, which yield improved gross margins year-over-year, position us for favorably success in fiscal year 2026. Today, Tilray Beverages operates more than 20 beverage brands, including 15 American craft beer brands across 8 network manufacturing facilities and 18 brew pubs.

In the spirits category, Breckenridge Distillery has proven its strength in the bourbon sector, experienced higher depletions compared to others in declining market. It also made a significant progress in the vodka and gin markets, complemented by its world-class restaurant and retail operations that provide an immersive brand experience. We’ve introduced several world-class innovations, including Mock One, our new line of non- alc spirits, and Mountain Shot, which aims to disrupt the shot occasion and Casa Breck in the tequila space. Our national distributor for spirits, RNDC, had experienced several changes within the fiscal year, as we have. We maintain and are committed to working in major markets while also working with other distributors in the California and the additional markets.

Regarding our non-alcoholic beverage portfolio, Runner’s High, our new non-alc beer brand, which we launched in fiscal 2025, is now recognized as a top 15 brand and ranks as the fourth fastest-growing non-alcohol beer in the Southeast, now sold across 4,500 distribution points. In the fiscal year within 3 months, Tilray launched hemp-derived THC beverage sales and expanded the distribution of those drinks to over 1,300 distribution points across 13 states as well as through online and direct-to-consumer channels, leveraging our established national beverage distribution network, which spans independent retailers, convenience stores and packaged stores, including multistate retailers such as Total Wine and ABC. We see this category evolving continuously and expect it to be a significant part of our growth in 2026.

Unlike other newcomers to the sector, we have an edge with our established beer network. Looking ahead to 2026, we see strong opportunities and anticipate increased demand for beer. Beer is not going away with continued consolidation in the craft beer industry and exits of smaller craft brewers and consumer demand continuing, we see opportunities within this business where we have several new exciting innovation plan and are committed to driving Tilray’s beverage growth under our new leadership. Our Tilray wellness business delivered strong financial results in 2025 as consumers continue to seek out better-for-you functional foods and beverages made with clean ingredients. Tilray wellness has a portfolio of products that meet their needs. Tilray wellness net revenue was over $60 million in fiscal 2025, representing a 9% growth year-over-year and 11% growth on a constant currency basis.

This growth was driven by continued expansion of our Manitoba Harvest Hemp Hearts and alongside our new supersede innovation, including snacks, breakfast items and smoothie blends. Tilray wellness successfully launched — relaunched HiBall Energy on Amazon and at retailer Whole Foods Market in the fiscal year and experienced a 68% growth. HiBall Energy is a brand of functional better-for-you energy drinks known for being a premium alternative to traditional energy drinks. It’s formulated with clean ingredients and has 0 calories, 0 sugar, no artificial sweetener and packed with vitamin B and tastes great. In addition to delivering strong top line growth, Tilray wellness expanded its margins to 32% in fiscal 2025, up from 30% in 2024, driven by favorable sales mix and productivity savings generated in our manufacturing facilities.

Tilray will look to expand its wellness segment in fiscal 2026 both in wellness and functional foods and beverages. We’ll continue to diversify and expand the Manitoba Harvest portfolio in the North American area in better-for-you and high protein categories and begin to bring the brand into new international markets. We see the success of HiBall as a validation that Tilray wellness has the right infrastructure and experience to build and acquire more broad-based wellness beverage portfolio. In terms of our management team, we have strengthened our leadership by appointing Rajnish Ohri as the Managing Director of International. Based in London and Dubai, Rajnish will drive growth across international markets in medical cannabis beverages and wellness.

And in regions like Asia, the Middle East, India and Turkey, we will focus on strategic opportunities in non-alcoholic beer and hemp-based food products. I am confident that with Rajnish’s leadership and deep industry experience, Tilray is strongly positioned to accelerate our international growth and capitalize on emerging opportunities. His innovative mindset and strategic approach perfectly aligns with our vision for global expansion. I look forward to working closely with Rajnish. I’ll close this with fiscal ’25 as a big year for Tilray across the board. It would not have been possible without the tireless work and dedication of our employees around the world, and I want to thank each and every one of you. We’ve built a unique business at the forefront of the beverage, cannabis and wellness industries on a global scale.

And guess what, we’re just getting started. With that, I will now turn the call over to Carl to discuss our financials in greater detail. Carl, are you ready?

Carl A. Merton: Thank you, Irwin. Please note that we present our financials in accordance with U.S. GAAP and in U.S. dollars. Throughout our discussion, we will be referring to both GAAP and non-GAAP adjusted results, and we encourage you to review the reconciliation contained within our press release of our reported results under GAAP with the corresponding non-GAAP measures. Focusing on our fiscal year results first. Net revenue for fiscal 2025 grew by 4%, reaching a record $821.3 million or $833.7 million on a constant currency basis. This growth was primarily driven by a 71% increase in international revenue during the fourth quarter. While this figure represents an improvement over the prior year’s $788.9 million, it is below the lower end of our revised guidance of $850 million.

This was mainly due to reduced beverage volumes and delayed export permits, which led to lower-than-expected international revenue in the fourth quarter. Typically, our beverage business sees its highest revenue in Q4, but this year’s results did not meet expectations. As Irwin mentioned, we took corrective actions to improve future performance in our beverage business. In response to challenging and evolving market conditions, we took this divisive action — decisive action. Our results reflect an approximate $35 million revenue impact from deliberate strategic decisions. This includes a $15 million reduction in cannabis revenue due to our decision to scale back in the vape and infused pre-roll categories, which at the time were margin dilutive.

Additionally, there was a $20 million impact associated with our beer SKU rationalization initiative aimed at enhancing the long-term performance of our beverage portfolio. Had these actions not been taken and excluding the effects of currency fluctuations, our revenue would have been approximately $870 million for the year. These were necessary steps to position the business for sustainable profitable growth. Although international cannabis saw strong Q4 growth, cannabis net revenue decreased 9% year-over-year, largely due to our focus on maintaining and growing gross margin and a higher average selling price. Specifically, in Canada, vapes and infused pre-rolls experienced a high degree of price compression, which led to a $15 million reduction in our revenue as we instead focused on maintaining and growing margin.

Additionally, we redirected inventories to international cannabis markets to capitalize on higher margins abroad, only to have a portion of those inventories trapped due to unexpected regulatory challenges in obtaining export permits. The resulting impact of this strategic decision caused a temporary decline in gross adult-use cannabis revenue, international cannabis revenue and cannabis revenue overall until their eventual sale. It should be noted that we have expanded our cultivation footprint for fiscal ’26 to be able to satisfy the growing demand in both Canadian and international cannabis markets in the coming year. Beverage revenue increased 19% year-over-year, primarily driven by acquisitions. The increase in sales from acquisitions were offset by the SKU rationalization implemented in connection with Project 420, which resulted in a reduction of revenue of $20 million for the year ended May 31, 2025, and an overall softness in consumer demand for craft beer.

Wellness net revenue increased 9% for the year. The increase in revenue was primarily attributable to our strategic focus on continued innovations, including the relaunch of HiBall Energy and organic growth within our branded hemp food business related to higher consumption. Distribution net revenue increased 5%, primarily as a result of a change in product mix. From a revenue contribution perspective, 30% of our net revenue was generated by our cannabis business, 29% was generated by our beverage business, 8% by our wellness business and 33% by our business. This compares to 35% in cannabis, 25% in beverage, 7% in wellness and 33% in Distribution last fiscal year. We expect to see continued growth in contribution from our higher-margin segments in future periods.

Gross profit for fiscal 2025 increased 8% to $240.6 million compared to the prior year at $223.4 million, also representing our highest level ever. Gross margin increased 100 basis points to 29% from 28% in the prior year. Turning to our gross margin by segment. Cannabis gross margin increased to 40% from 33% in the prior year, which was driven by our increased international cannabis revenue as a portion of total cannabis revenue, given its higher margin, as well as a continued focus on maintaining a higher average selling price and favorable product mix to improve gross margins in Canada despite lower sales in the Canadian adult-use market. Beverage gross margin was 39% compared to 44% in the prior year. The decrease in gross margin is primarily a result of the decrease in demand in the fourth quarter and its resultant impact on overhead absorption as well as the lower margin contribution from our recently acquired brands from Molson Coors.

Wellness gross margin increased to 32% from 30% in the prior year. This increase was driven by strong operational efficiencies, lower input costs and the culmination of a change in sales mix towards higher-margin product offerings, including HiBall Energy drinks. Distribution gross margin remained steady at 11% and consistent with the prior year despite shortages in key pharmaceutical product lines in the third quarter as well as price reductions. Net loss for fiscal 2025 increased to $2.2 billion or $2.46 per share compared to a loss of approximately $220 million in the prior year or $0.33 per share. From an adjusted perspective, we are reporting adjusted net income of $9 million or $0.01 per share compared to $6.2 million or $0.01 per share in the prior year, an approximate 45% increase.

Our net loss was principally driven by noncash impairment charges of approximately $2 billion in the fiscal year, comprised of almost $700 million in the third quarter and almost $1.4 billion in the fourth quarter. The noncash impairment charges during the fourth quarter includes $661.3 million of depreciable intangibles, $186.6 million of indefinite-lived intangibles and $549 million of goodwill. Our consecutive noncash impairment charges are the result of a combination of factors, including a sustained decline in the company’s market capitalization from February 28 to May 31 stemming from the uncertainty around certain changes in U.S. global economic policy, slower-than-anticipated progress in global cannabis regulatory change and a change in the nondiscretionary inputs in the company’s discount rate in the latest quarter.

The impairments represent numerical calculations based solely on accounting rules related to impairment calculations and do not reflect our views on our business. We continue to have full confidence in the intrinsic value of these assets, and these noncash charges do not reflect any change in our long-term strategy for the business. Further, approximately $1.1 billion of the $1.4 billion impairment relates to intangible assets acquired as part of the Tilray business combination in 2021. Under U.S. GAAP accounting rules, the over 50% increase in the value of Aphria shares from the date of announcement of the transaction until the transaction closed became part of the accounting purchase price, even though both companies had made the decision to transact at the consideration to be given on the date of announcement.

We believe that increase was caused almost entirely by temporary increased expectations of cannabis legalization in the U.S. as a result of the blue wave in the U.S. Senate by-elections in January 2020 — this — January 2021. This run up in our stock price created a purchase price of $3.2 billion or an almost $1.1 billion increase in the purchase price versus if the transaction had occurred on the date of announcement. After recording the impacts of the impairment, we anticipate that our net income will improve by approximately $70 million next year as a result of no longer recording amortization on the impaired intangibles. Adjusted EBITDA for fiscal 2025 was $55 million compared to $60.5 million in the prior year. For the year ended May 31, 2025, our SKU and geographic rationalization resulted in a reduction in net sales of approximately $20 million and an adjusted EBITDA impact of $6 million.

We believe this temporary reduction will be offset by the growth of our new product innovation, including new beverage categories and future brand extensions. Cash flow used in operations in fiscal 2025 was $94.6 million compared to $30.9 million in the prior year. Adjusted free cash flow was negative $114.2 million as compared with $6.6 million in the prior year period. The $114.2 million includes approximately $63 million of working capital increases, $20 million in CapEx, net of growth CapEx, and approximately $31 million of cash losses from operating the businesses. The cash losses from operating the businesses primarily relate to nonrecurring restructuring, litigation and transaction costs, as well as the investments in the beverage business as we rebuild the craft brands purchased from ABI and Molson Coors.

The CapEx spend includes approximately $7 million on sports sponsorships, reflecting the full multiyear cost of the license agreements, and $6 million in CapEx in the beverage segment as we invested in infrastructure at key facilities to increase production. The working capital increase relates to increases in accounts receivable late in the year in our international cannabis and beverage segments, increases in inventory related to the trapped permit inventory in Portugal, inventory in the wellness segment to manage tariff risks and to reflect the increased demand on certain products, including HiBall. Over the past fiscal year, we reduced our convertible debt outstanding by $67.8 million and reduced it by a further $5 million shortly after year-end.

Our intention is to continue lowering our indebtedness, optimize our capital structure and enhance our financial flexibility. The net reduction in our convertible debt will decrease our annual interest expense by over $4 million, which flows directly to net income and free cash flow. Switching to our quarterly performance. Q4 total net revenue was $224.5 million compared to $229.9 million in the prior year quarter, with the softness in the beer business offsetting a 71% increase year-over-year in international cannabis revenue. In Q4, net cannabis revenue was $67.8 million. Net beverage revenue was $65.6 million, but would have been over $71.6 million if we had not made the strategic decisions previously discussed. Wellness revenue was increased to $17 million.

And finally, distribution revenue increased to $74.1 million. Gross profit was $67.6 million compared to $82.4 million in the prior year quarter. Gross margin was 30% compared to 36% in the prior year quarter. Most of the variance was related to the decreased demand in the beverage revenue in the quarter, impacting overhead absorption, combined with investments in the acquired brands. As I previously mentioned, in the fourth quarter, we reported a $1.4 billion noncash impairment related to the decrease in our share price at May 31. The perception of the reduced likelihood of U.S. and/or cannabis regulatory changes in the short term and an increase in the nondiscretionary inputs in our discount rates utilized in the accounting exercise that is impairment.

As a result of this noncash impairment, we’re reporting a net loss of $1.3 billion compared to a net loss of $15.4 million in the prior year quarter. On a per share basis, this amounted to a net loss of $1.30 per share compared to $0.04 per share in the prior year quarter. The noncash impairment charge had no impact on the company’s tangible assets, compliance with debt covenants, its cash flows or available liquidity. Adjusted net income was $20.2 million compared to $35.1 million in the prior year period. On a per share basis, this resulted in an adjusted EPS of $0.02 as compared to $0.04 in the prior year period. Adjusted EBITDA was $27.6 million compared to $29.5 million in the prior year quarter. Again, the decline in adjusted EBITDA is a result of our SKU and geographic rationalization efforts.

Operating cash flow was negative $12.8 million compared to $30.7 million in the prior year quarter. The decrease in operating cash flow was primarily a function of investments in our beverage segment, combined with investments in working capital associated with demand for our products. Adjusted free cash flow was negative $12.9 million compared to $30.6 million in the prior year quarter, consistent with the changes in operating cash flow. Moving to our 4 business segments. Gross cannabis revenue of $89.2 million was comprised of $58.4 million in Canadian adult- use revenue, up from $49.3 million in Q3; $22.4 million in international cannabis revenue, up from $13.9 million in Q3 or 60%; $6.2 million in Canadian medical cannabis revenue; and $2.2 million in wholesale revenue.

Net cannabis revenue, which excludes $21.4 million in excise taxes, was $67.8 million, down from $71.9 million in the prior year quarter. Again, we want to highlight. International revenues would have been even higher if not for delays in export permits. The year-over-year decline in cannabis revenue was primarily driven by focusing on margin-accretive SKUs, which resulted in a temporary drag on revenue. As mentioned, we paused vape and infused pre-roll categories to focus on improving profitability, but are expecting to be able to participate more in this growing category in fiscal year ’26 given the improvements in our cost structure. As a result of our efforts, cannabis gross profit increased to $29.6 million, and cannabis gross margin increased to 44%, compared to $28.8 million and 40% in the prior year quarter.

Beverage revenue was $65.6 million compared to $76.7 million in the prior year quarter. Beverage gross profit was $25 million compared to $40.8 million. This underperformance was principally due to unusually weak consumer demand in the fourth quarter. The fourth quarter is typically our highest revenue quarter. However, this year, it did not meet our expectations. While our fourth quarter revenue and beverage did not meet our expectations, our late Q4 launch of new innovations have been stronger than the prior year. Innovation PODs are up over 14% from the prior year. Revenue from innovation is up 50%, and velocity is up over 30%. More specifically, when compared to last year’s lead innovation in the Southeast, which was gummies, this year’s innovation, SweetWater Daytrip IPA, is the #1 new craft brand in the Southeast and the #7 new craft brand in all of the U.S. despite only being available in 8 states.

Further, we are extremely encouraged by the initial orders of Breckenridge’s new innovation, Mountain Shot, an occasion-centric bourbon and malt-based shot with its own unique packaging. Wellness revenue grew 9% to $17 million from $15.7 million in the prior year quarter. The increase was driven by our strategic focus on targeted advertising campaigns aligned with emerging trends in favor of healthier lifestyle, coupled with our continuous innovation efforts. Wellness gross profit increased to $5.6 million, up from $4.9 million in the prior year quarter, and gross margin rose to 33% compared to 31%. Distribution revenue, derived predominantly through Tilray Pharma, increased to $74.1 million from $65.6 million in the prior year quarter. Distribution gross profit was $7.4 million compared to $7.8 million in the prior year quarter and distribution gross margin was 10% compared to 12% in the prior year quarter.

Our cash and marketable securities balance as of May 31 was $256 million. During the year and through to today, we continue to strengthen our balance sheet, net repaying $22.9 million in our long-term debt and bank indebtedness and repurchasing $67.8 million in outstanding convertible notes. After taking into consideration these actions, we reduced our net debt position to approximately $19 million, which when combined with our trailing 12 months adjusted EBITDA, puts our net debt to adjusted EBITDA leverage ratio at approximately 0.3x and should lead to approximately $4.2 million in net interest expense savings next fiscal year. Fiscal year 2025 was a year marked by the strengthening in both Canadian and international cannabis businesses, the continued steady improvement of our wellness business and headwinds in the beverage business, with the latter a key area of focus under new leadership.

Across each of our businesses, we employed a relentless focus on our strategy. We increased gross profit in each of our businesses year-over-year and increased total margin by 100 basis points, albeit with beverages increase tied to acquisitions. As Irwin mentioned, there is a significant opportunity for Tilray in international markets. And the work that we are doing now to improve profitability and streamline our operations will position us well to capture the global opportunity. Finally, we are pleased to provide the following guidance for fiscal 2026. We anticipate adjusted EBITDA between $62 million and $72 million. Let me now conclude our prepared remarks and open the lines for questions.

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question is from Kaumil Gajrawala with Jefferies.

Kaumil S. Gajrawala: I guess a couple of questions. First, on timing of the importing rights and some of the delays. Where are we now? Do you have a line of sight on if they come through, when they come through and sort of what contribution they’re going to have?

Irwin David Simon: So absolutely have a line of sight, and there was some issues from a legal standpoint in Portugal. And I’m in the midst of working with the Portuguese government and our legal people there to get meetings. But right now, we’re seeing that lightening up, and we’re able to start shipping product. The other issue we had was in Spain in regards to shipping some of our products to Spain and getting permits. So I feel good about that. I feel we’ll see the pickup within our first and second quarter. So I feel good. That’s mostly behind us now. But for the fourth quarter, there was approximately $8-plus million that we just could not get permits. And when we ship product out of Portugal, we need a Portuguese permit to ship it, and we weren’t getting it. But the government is now working with us both in Portugal and Spain, and we see that primarily behind us. Denise, Rajnish, you agree?

Denise Menikheim Faltischek: Yes.

Rajnish Ohri: Yes.

Kaumil S. Gajrawala: Okay. Great. And then you mentioned Canada sort of hitting equilibrium, maybe price pressure is starting to abate. Can you just give us some more color on exactly what you’re seeing and maybe how you expect it to play out over the course of the year?

Irwin David Simon: Well, I think a couple of things happening in Canada. Number one, it’s 6 years into legalization. And I think there’s more and more retail stores opening up. I think the consumer now — is now skewed to go into Canada stores and not buying from the illicit market. And some of the great innovation that’s coming out, before it was predominantly flower, where 80% of the market was flower, now whether it’s pre-rolls, infused pre-rolls, vapes, drinks and edibles. I also see there’s consolidation at retail more and more stores. The Quebec market, which is controlled by the government there, has about 110 stores today. More and more stores will open up in Quebec. So with that, I’m really seeing the market, you’re seeing consumers now enjoying more and more cannabis products.

You see it cannibalizing some of the beer and the spirits industry up there. Also, originally, there was probably between 1,800 and 2,000 licenses that were given out. You’re seeing either consolidation or some of these licenses just folding up. So you saw in my prepared remarks, I see there’s some light potentially to lightening up on some of these excise tax. I see a national stamp, which means you don’t have from shipping each product, a province. I see potentially seeing drinks sold not only in cannabis stores, but potentially in restaurants and maybe on-premise. And I also see the potential, whether it’s CBD products or other products sold with — in drugstores. So I’m really seeing a change in the whole regulatory piece in regards to cannabis in Canada.

And after 5, 6 years, it’s something that I’m excited to see because as you’ve heard me complain about, in the Canadian market, we pay over $135-plus million just in excise tax. And as price compression happened — and over the 5 years, we’ve probably — price compression probably cost us about $250-plus million. So I’m seeing that, and that’s why we’re taking our grow up from 130 metric tons up to 150 metric tons because of demand. And the team has done a great job in regards to some of the innovation that’s coming.

Operator: Our next question is from Rob Moskow with TD Securities.

Xin Ma: This is Victor on for Rob. So a couple of things. The growth in international in 4Q was nice to see, but how should we view the growth next year, understanding that the timing is — it’s kind of lumpy around timing and shipments. And did I hear you correctly that you said $6 million in sales was from trapped shipments in Portugal? So that should be recognized in 1Q, right?

Irwin David Simon: So it’s $8 million, not $6 million, and it was trapped shipments, and you should see that predominantly in Q1, and also we’ll start to see maybe there’s a little in Q2. But we see tremendous — just like I talked about the Canadian market, as the market continues to evolve and change and the demand for medical cannabis in Germany, and you saw growth there. But in regards to Poland, the U.K., the Czech Republic just now announced, Turkey, we’re working on some stuff in India. We think there’s some strong opportunities back in Australia, and we’re relooking at some things in New Zealand. What’s that?

Unidentified Company Representative: Italy.

Irwin David Simon: And Italy, we just as we — 3 licenses or 3 different cultivars that we just got in Italy. And again, as you go back and look, Tilray, from a share standpoint, our 5%, 6% share of the market was a smaller share, but we provided a lot of other companies with products. So we see some big, big opportunities. And I will tell you, without giving guidance, there’s some pretty big numbers built into our plans for Europe for next year for us. And that — we haven’t even ultimately — and that is just based on flower. There’s stuff we’re doing to see if we can sell pre-rolls there in regards from a medical standpoint. You got to remember, everything sold in Europe has to be prescribed by doctors and is sold from a medical standpoint. So we have some pretty big plans of how to get to a good growth number. And the great thing about Europe is we’re not paying anywhere near the excise tax, you see what our margins are in our European markets.

Xin Ma: Okay. That’s helpful. And then just a follow-up. I noticed that you mentioned that the cost savings initiative, Project 420, is expected to be completed by fiscal 3Q ’26. Can you walk through just some of the different things that still need to be done for that program?

Irwin David Simon: So number one, we started off with 10 manufacturing facilities. We’re now down to 7. So as we consolidate manufacturing facilities, as we consolidate warehouses, we went through a SKU rationalization where we took $20 million of SKUs out and hit us by $6 million of EBITDA. We didn’t see the benefits from it as we looked at replacing them with faster moving SKUs and some new SKUs. We’re also going through some distributor consolidation. We have 800, 900 distributors out there. And from a standpoint of freight, as we brought up organizations together whether it was from the original Molson’s organization or the ABI organization in regards to one sales force and marketing force. We also, as we look at our 18 brew pubs that are out there, how we can make them more efficient from a labor standpoint.

We also consolidated procurement agreements with Sysco in buying our food. So there’s multiple things we’ve put in place. We’ve really looked at our inventories. We really looked at buying our hops. So there’s numerous costs that we’ve taken out of here. The other thing is, as you heard me say before, talked about timing as we did these acquisitions in regards to the categories being set in May and June. As we were in front of the buyers, we lost distribution, we lost space. And now that we’re in front of these buyers, we’re getting a lot of that back. We also did not have the growth and the emphasis on convenience stores, where convenience stores is one of the biggest sellers of beer out there. So it’s — last year was a lot of resets. A lot of things happened, but there’s some great plans in place of how to get a lot of this volume back, how to take a lot of costs out of these businesses.

And don’t forget, we’ve been doing this since 2020 in the beer industry. Now we’re the fourth largest craft brewer. And similarly, there’s a lot of the smaller craft brewers that have gone out of the business. There’s a lot of opportunities, and consumers are looking for new unique beer products out there, whether it’s the non-alc, whether it’s the light beers, whether it’s some of the flavored stuff we’re doing, whether some of the stuff we look to do with protein. So we’re pretty excited about our beer business. You heard me talk about consolidating distributor networks. We have a Molson distributor network. We have an ABI distributor network, so we have to look at some things there.

Operator: Our next question is from Aaron Grey with Alliance Global Partners.

Aaron Thomas Grey: Good evening. Thank you for the questions. So first, for the 2026 EBITDA guide, could you maybe offer some color in terms of how best to think about some of the key drivers there, even if not specific, how much of that’s going to be driven by sales growth and some SG&A leverage or gross margin expansion versus cost cuts? And then also, if it’s fair to think about the seasonality to be similar to what we’ve seen in past years in terms of being somewhat similar with the strong 4Q?

Carl A. Merton: So in terms of seasonality, yes, you’re going to — we continue to expect to see a stronger Q4 than Qs 1, 2 and 3, primarily related to the seasonality of beverages but also a little bit of seasonality inside of the cannabis business. With respect to the increases in the guide, I think bigger portions of it are expected from our international business. We see some improvements happening inside of our Canadian business. And beverage as well, along with wellness. Wellness, I think you’re going to see that driven by some of the new categories and new innovations that they’re getting into. On the beverage side, you’re going to see some of it related to revenue, but you’re also going to see pieces related to Project 420, the cost savings flow through. Remember, a lot of those savings were achieved in ’25, but the cash flow impact of them takes longer to work its way through the income statement.

Irwin David Simon: But I think — just, Carl, I’m sorry, we’ve done lots of acquisitions. And as we get close to that $1 billion revenue, it’s called scale. So number one, it’s a much bigger company. There’s more gross margin that will contribute. But just as you look at our businesses, as I said before, on the cannabis business, we’re starting to hit strides. And when you go from metric tons and the increase of metric tons of growth, our costs are absolutely going to come down. As you come back with our beer businesses, as we put the multiple acquisitions together and from a scalable standpoint. And today, we have close to a $250 million beverage business. So I think what we’ve shown, and this year was a challenging year in our beverage beer business as we put the ABI acquisition together, the Molson’s acquisitions and SweetWater and Montauk.

But as we take costs out, as we get efficiencies, as we consolidate facilities. And the good news is 90% of our products today, maybe a little more come from our own facilities, so we control the growth. We can control the cost. We’re not necessarily affected by tariffs out there other than maybe buying cans. So again, after 5, 6 years, as maturation comes into place, I feel good about the top line growth — we feel good about the top line growth. We feel good about the scalability. And one of the things we’ve always had to deal with as you build out this corporation from a public company standpoint, there’s an infrastructure to put in place, whether it’s insurance, whether it’s public accounting, whether it’s legal that we have to fund, and as we have a bigger business we can support the overheads to make sure that we have the right processes in place to build Tilray beyond and then some.

And again, we as a company today, sell in 21 different countries around the world. We’re dealing with multiple currencies. So there’s a lot within here, but it’s all starting to come together.

Aaron Thomas Grey: That’s really helpful color there. Second quick one for me. I know you guys seem pretty constructive and optimistic on international growth opportunities and good to see that in the fourth quarter. But just if you could dive a little bit into Germany. Can you talk a little bit maybe about the dynamics of supply-demand equilibrium, where we are at and any potential impact you might have on pricing there? I know there’s been a lot of operators in Canada and otherwise kind of allocating more of the product to international markets like Germany because of the higher margin. So just wanted to get some color on that. And then any concerns there potentially with the new government in Germany potentially disrupting the current medical market there?

Denise Menikheim Faltischek: It’s Denise. Thanks for the question. So in terms of growth in Germany, what we see is — or when talked about enhancing supply chain, so we’ve ramped up our volumes in Cantanhede, basically increasing our production about 2.5x what it was in fiscal year 2025. We also have been sourcing from our Canadian facilities, and Irwin talked about the fact that we’re increasing our supply chain there. And then as well, we have Aphria RX, which is in-country, producing high-quality cannabis from cultivars that we’ve transferred from Canada. And one of the great things about Aphria RX is already in Germany. So supply chain and getting that right, having the right product in market — you talked about the price compression.

Yes, we are seeing price compression, but that is why we are so focused on our cost. And one of the things we spent a lot of time in 2025, and this shows in our margins, is the fact that we have taken our costs down tremendously. And as Irwin mentioned, as we continuously ramp up, those costs will come down even further. So we’re prepared for price compression.

Irwin David Simon: And you got to remember, we have built the international business almost from scratch. We acquired — when we acquired the Tilray business, I think it was probably $10 million in size, and we acquired that during COVID and couldn’t even get to visit. So again, we’re building out — we have one of the largest growth facilities in Cantanhede and now with the German facility. So we have access to growth. And back to your earlier question is shipping product from Canada, which we can do, which is much, much higher margin, it’s probably 10x the contribution margin when it’s coming from Canada to the international. So again, our hope and wish is more and more markets open up. I’d be excited to see India, which Rajnish is quite familiar with, markets there opening, and there are some things we’re seeing there.

I’m excited about some stuff in Turkey, the Czech Republic. I think Italy is going to be a big market. I think U.K. has some big opportunities, and then to continuously expand upon Poland and Germany. And just again, with Europe, we think there’s tremendous opportunities for our hemp business there, high protein and which we’ve talked about is going into the Middle East with our non-alcoholic drinks and now we can add our beverage business. So the infrastructure is there to do it. The growth facilities are there to do it, and the investment over the last 4, 5 years is there. And we have quite a bit of the know-how of how to go about it.

Aaron Thomas Grey: That’s helpful detail there. I appreciate that. I’ll go and join back the queue.

Operator: Our next question is from Pablo Zuanic with Zuanic & Associates.

Pablo Ernesto Zuanic: Irwin, you made mention of rescheduling in the U.S. with the new DEA head. Can you explain to us how would Tilray benefit directly from rescheduling given that you do not have U.S. cannabis operations right now?

Irwin David Simon: So again, we could quickly enter that market with our medical business, Pablo. As you know, we sell quite a bit of medical cannabis in Canada, and we have a big international. So from a standpoint of that, we could ultimately do something from a medical cannabis. But from a rescheduling, Pablo, I think the big thing is get the uncertainty out of the way here, okay? And from a rescheduling, it would allow institutional investors to come into the market. It would allow in regards to retail banking come into the market. So it’s just not about the sales. And ultimately, does it open up the opportunity to sell our cannabis drinks or our beverage — our hemp business. So again, there’s not a direct one that I could point to, but I’ll tell you what.

There’s a lot of things that it would do for Tilray of rescheduling if that happens within the U.S. markets. And I think if one thing happens with rescheduling, I think there is a great possibility do they move to legalizing from a medical cannabis standpoint. And there always would be the opportunities to buy something, Pablo, if that happened. Because right now, we cannot do anything with cannabis in the U.S.

Pablo Ernesto Zuanic: Right. That’s good color. Look, just one on beverages. I guess the big picture question for me in beverages is how much is under your control? And how much is just the industry, right? So we can make adjustments on a pro forma basis of what the decline might have been in the fourth quarter versus last year. But whatever the numbers are, there seem to be a steep decline, right? And I’m trying to understand how much of that was like own goals versus just industry challenges. I mean own goals, you can fix, you have new leadership. Industry challenges are tougher, right? So I don’t know if you can — it’s tough to quantify, but if you can just walk us through that in a way.

Irwin David Simon: So I would come back and say, listen, the industry from a craft beer industry is down 4% or 5%. I think you see from a craft business, when there’s a lot of small players out there, there’s a lot of them going away. There’s a lot of consolidation. So number one, there’s still a big beer business out there and the craft beer business is a good size. And we’re number four, and we only got into this business in late 2020 and then you had 2 years of COVID. In regards to our decline this year, we’re up, and most of that is coming from acquisitions. But some of that was self-inflicted. We’re just having — us making some mistakes. Some of that was, as you heard me say, timing in regards to authorizations and not getting the placements at supermarket.

And some of that was just bringing all this organizations together with acquisitions. And some of it was — that’s why there’s leadership change. And that’s why a lot of things happen in place. But again, I will say it. The beverage business as a whole is one of the biggest categories out there. And what I aim Tilray to be is not just a beer business, it’s a beverage business, and you see some of the valuations out there in regards to what’s happening with energy drinks, and HiBall is one example. When we acquired, it was 0. And this year, the opportunity for growth. I think there is tremendous opportunity in the Delta-9 business for us. I think there’s opportunities in regards to the non-alc industry for us, whether it’s in the U.S., whether it’s in other countries in the Middle East.

And I think there’s still lots of opportunities in the cocktail business and the seltzer drinks. And again, beer will not go away. And I think the opportunity is going to be as we will take share away from some of the smaller craft beer businesses. And if you look at some of the craft beer businesses, Pablo, Boston Beer growth is not coming from their beer business. It’s coming from their Sun Cruisers and some of their other drinks. So again, we’re not a one-trick pony out there, and we’re focused on the category in many different ways. But we’re big into Delta-9. We’re big into energy drinks. We’re going to be bigger into non-alc. We’re going to be bigger in the seltzer drinks. We’re going to be bigger into lighter beers. And we’ll stay within the craft beer industry.

The other thing is some of the unique stuff that we’re coming out with in our spirits business and some great different drinks that we’re coming out with some of the non-alcoholic drinks. So I think we got some good things set up within our industry, and it’s going to depend on leadership timing, innovation here from a standpoint.

Operator: Our next question is from Frederico Gomes with ATB Capital Markets.

Frederico Yokota Choucair Gomes: First question, just on the beverage and wellness expansion that you mentioned, international, in Europe and Asia. Could you talk more about that? Which categories you’re most excited about in parts of that potential expansion? What could be the timing of that? And would that happen organically or through M&A?

Irwin David Simon: So number one, timing is now. Rajnish, who is sitting in this room with me, who is based today in Dubai and London, knows that market well and has built businesses in those markets. So that is immediately that we’re focused on that. We have a team that’s focused on it immediately, and we’re talking to both manufacturers and distributors. If there is an acquisition, we would look at it. The other thing we’re interested in talking to is with President Trump talking about all his tariffs and you have a lot of import beers coming in and imports coming in from Europe, there’s potentially — we’re talking to people today that want to manufacture their products in the U.S., and we have capacity to do that on import products.

And vice versa, as we look at potential acquisitions and bringing, whether it’s Montauk and some of our brands into the international market. So that is imminent right now. The other thing is we think everybody today is into protein. And it’s all you hear about protein, protein, protein. And there’s a lot of protein within hemp and our hemp food products, and our seeds. So there’s discussions in looking to bring that into the Middle East. Rice is a big business in India and the Middle East, and what are we doing in regards to supplementing the rice business with some of our hemp business. So that is a big, big focus for us as we speak.

Frederico Yokota Choucair Gomes: Perfect. And then just second question on your cultivation expansion in Canada. How far along are you in ramping that? And how should we think about where that product expansion is going to in terms of exports or staying in Canada?

Irwin David Simon: So some of it — I think it’s what, about 2.5, 3 metric tons will go internationally. And Blair is on the phone here. But the majority of that will stay within Canada. And the interesting thing is, and you see our revenue down on cannabis in Canada, and that was mostly us deciding not to sell wholesale. But that — the majority of that now is going into some of our new products, whether it’s infused pre- rolls or pre-rolls. Some of our oils, our baked products, but majority of that is going into the Canadian market. And that is expanding our outdoor grow in Cayuga, and that is expanding our Masson facility today, which is — which we acquired from HEXO. So that’s where that grow will come from. And I don’t think anybody has anywhere near 5 million square feet within our growth facilities within the Canadian market.

And there’s continuously requests from us to buy cannabis from us because as oversupply happened in the Canadian market, a lot of these facilities have closed and have sold off. So there is demand for us to be a third-party supplier, but that’s not what we’re interested in. We’re interested in supplying our own facilities. And that’s why we had to increase our growth capabilities in the Canadian market.

Operator: Our next question is from Bill Kirk with ROTH Capital Partners.

Nicholas Steven Anderson: Yes. This is Nick on for Bill. First one for me, just wanted to expand on Germany and the potential changes coming over there. It looks like some of the proposed legislation could potentially inhibit the telemedicine opportunity? So I guess just a couple of questions there. What do you expect to come of these proposals? And is there anything you can kind of do to prepare for a potentially different selling environment over there?

Denise Menikheim Faltischek: So in terms of there has been a proposed legislation, but this is simply a proposed legislation. What we — at Tilray, we take very seriously is patient safety and of course, looking at how do we continue to service our patients in the right way. And when we — the legislation definitely was a bit of a surprise, and we’re taking it very seriously along with our industry group. There’s a long way between here and actually looking at what ultimately could be a change in legislation. And through our industry group, we’re taking this very seriously. We are putting forward various proposals in terms of how to address it. And when they talk about the removal of telemedicine and the mail order, we do have to remind government that, in fact, the [indiscernible] rule was put in place because they wanted to look after patient safety, patient health and provide accessibility of the patients.

And the current legislation accomplishes all of those things. And we believe that by pushing through changes in telemedicine and in mail order, essentially, you’re just going to push the patient into the black market. And that is exactly what the German government doesn’t want to do. So we believe that there is plenty of room here and a path forward to negotiate and look at really what is the right thing for German patients and the right thing for industry. We also need to remind the government that many companies have invested very heavily in these new reforms that were put forth. And in essence, by kind of taking a step back, it would really persuade investors in other industries, not just medical cannabis, but other industries, well, why would I invest in Germany if I can’t rely on basically legislation that moves forward?

So we are very much very actively going after this and working with our government relations group to come out with the right outcome.

Irwin David Simon: And I think as Denise said, it’s a long way away from anything being effective there. And it’s something that was put out there. It’s not anything that’s a proposal. It’s not any legislation. So it’s a long way of anything happening. And I think everybody is out there doing something about it. And personally, I think the government put it out there to test it. And I think there will be a lot of pushback on it. So I would not sit here and say I don’t worry about it. Absolutely, we’ll be focused on it. But it’s not something that’s happening imminently.

Nicholas Steven Anderson: No, that makes sense. I appreciate that color. Second one for me, just on the U.S. landscape. We’ve seen discussions kind of picking up here and some more news flow from outside kind of the traditional echo chamber. My question is, are you becoming kind of incrementally more bullish on the U.S. reform opportunity? Or are you still kind of in wait and see mode? Just how are you evaluating kind of the uptick in news flow around U.S. cannabis just over the last month or so?

Irwin David Simon: Listen, I think some — as I said before, I think President Trump is about how we enhance business and what can we do. And as they look right now, tariffs have sort of taken the time on all of this here, but the new appointment in regards to rescheduling, I think, is a good step in the right direction. I feel good that something will happen. But the big thing is Tilray is so well diversified, it will be a big lift for Tilray if it does. But if it doesn’t, we have a lot of opportunities out there, and we got a lot of things happen. But I think we’re hearing more and more about changes coming in regards to regulatory of cannabis in the U.S. But I’ve been there before. So — I think we’re dealing with a different government today that’s interested in business and interested how to bring more and more jobs and how to get rid of an illicit market.

Nicholas Steven Anderson: Understood. Appreciate the color.

Irwin David Simon: Thank you very much. I think that is our last question. So I want to thank everybody for joining us on this last or second last or third last day of July. We got a lot happening at Tilray. And as we brought this company together over the last 5 to 6 years, as you can see, we are a very well-diversified business. We have a strong balance sheet. We have over 40 brands. We have multiple beverage facilities. We have a distillery. We have within 5 million square feet of grow in Canada. We have 2 great growth facilities in Europe. We have great facilities that are producing our wellness products of Manitoba Harvest. And with that, it’s interesting because what holds back our stock price today is very much focused on the U.S. and legalization in the U.S. But looking at our growth in regards to being close to $1 billion, yes, if U.S. cannabis was legalized, as I looked at it 4 years ago, I expected it to happen.

And I thought we’d be a lot different. But as I’ve always gone back and said, if I could sell cannabis drinks throughout the U.S. today, the sales opportunity that would be. If I could sell drinks in Canada, just in restaurants, the opportunity that would be. If I could sell medical cannabis in a legalized market in Canada, how big that would be. If I could sell pre-rolls from a medical standpoint in Europe, where that would be. We’re new within the beer business and the opportunities there. The spirits business, there will be more consolidation. You’ve seen some of the things with the bigger spirits companies. And in regards to international and imports, I think there’s an opportunity for Tilray to play a role in that. And I think with our balance sheet, how strong it is and our free cash flow, I think there’s continuous opportunities for us in regards to future acquisitions, and that’s something that we’ll be focused on.

And last but not least, geographic expansion. I’ve been part of growth in the Middle East. I’ve been part of growth in India, been part of growth in Europe. And with Rajnish joining the team and rounding that out and us opening an office in London and looking to grow in the Middle East, we’re well positioned. Last but not least, we have a team in place that over the last years has been here building that. And I must say that I’m very lucky to get to work with my team, and I want to thank each and everyone for what they contribute. So I’m glad fiscal 2025 is behind us. It was not one of our easiest years, but there’s no years out there that are easy. I think we have a lot of good strategic plans, and we just went through our Board meetings and strategic plans for 2026 and a recap of 2025.

And I must tell you, I’m excited about some of the things in front of us. And I will tell you, there’ll be some of the great things that will happen. There will be some challenges, but I never want us to be flatlined because that’s not a good place in life to ever be, this will be a flatliner place. And I growth on the top line, expect growth in the margin, expect growth in EBITDA. And I expect free cash flows coming from our businesses to offset that. So enjoy the rest of your summer. Be safe out there. On a nice warm day like this here, it’s great to enjoy a great cold beer. Thank you very much.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.