Tilray Brands (TLRY) 13 Aug 192019 Q2 Earnings call transcript

Good day, ladies and gentlemen. And welcome to Tilray's Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. Later, we will conduct a question-and-answer session and instructions will follow at that time.

conference today's remainder, a maybe recorded. As

like Ms. Rachel now to ahead. introduce conference, today's for host Perkins. your I'd Ma'am, go please

Good Financial call. for quarter you Chief Executive Brendan afternoon on Mark and and second Castaneda, and Tilray's Chief Kennedy, joining President XXXX today's On us conference Officer; call Officer. are earnings thank

based meaning could this these on and These make forward-looking may Before please that remember management and laws. expectations we current uncertainties described from securities during within management's call, events of the beliefs begin, statements risks in federal and those statements. are the differ course of involve actual the statements forward-looking and materially that

Regulators from with actual issued reports made refer release those today. and discussion and today any Tilray's for Please implied a Securities differ statements the to the expressed cause its time-to-time could to or risks that in detailed press Exchange filed from Securities materially of results Canadian Commission and forward-looking

note please adjusted financial will on adjusted are measures. to Finally, loss management which net EBITDA, non-GAAP and today's call, refer

substitute in net or believes information GAAP. not adjusted the considered EBITDA to and presentation useful the for is presented provide information in the company accordance be for While of information a adjusted this as financial loss intended investors, isolation with

in Please refer GAAP. reconciliation prepared for accordance the measure release of a with adjusted to loss, today's comparable EBITDA to most net

Now, the I Brendan. over would like turn to to call

long-term the second will After on for for global quarter our everyone. targets. in thanks of will afternoon, we joining Good will progress an Rachel. call that, discuss open detail And Mark and results financial then growth your the our Today, you, questions. made our more us. overview financial Thank XXXX provide strategy. we've review I

building countries stages. global currently XX tens paradigm supported class a and a global aspire the packaged serves thousands do Tilray early supply with world still to that, multinational dollar its cannabis consumers shift a of in five to consumer company, And is be company. we're spanning goods brands continents. world's patients multibillion be by The platform of trusted of most to chain. to cannabis in We portfolio regard with a

We're in capital create scaled an creates a world shareholder way and be to the around that actions committed infrastructure can taking are order in long-term. the value to decisive deploying that over

to balance between equilibrium the Adult-use quarter the believe We're of pleased nearly be Harvest Canada quarter basis full sales. with from to and year-over-year our to supply included the could a increased XX demand. sold sequentially and million. revenue in quarter both kilograms. a million first of second equivalent XXX% Revenue quarter which US$XX with and total the on In second market finds revenue results, $XX.X as we kilograms first doubled year-over-year next increased X,XXX supply to XX there months, Manitoba an

enable While support the value LPs industry signed model improved on asset-light up further have and continues cultivation to have agreements our focus ramp the across performance chain and wholesale to supply production, long-term us cannabis seen downstream. the we to we

processing factors. Leamington, production new space manufacture investments production facility High space to this. High this regulations for investing of and topicals ready we're vapes, in edibles, Ontario. to including second adult-use capacity focused to production of The British the facility Columbia, Tilray’s ready High we've formats, be later US$XX.X new a phase to and strips, five are Park and support facilities with three Park beverages We increase products the The announced, And portfolio London million cannabis form cannabis of Gardens in brands expect the and oral the innovative Canada previously our our as as Ontario, year cannabis processing broad-based allow. Nanaimo, Canadian in on Park across is in

expansion other track. are The on two projects

export We our allows us export dried for Campus EU manufacture the license GMP in and for standard manufacturing certified have to Portugal products. certification that capacity expanded GMP international with and cannabis medicinal

We second particularly this of expect us which in Europe. additional enable scale international will markets, certifications to half to GMP year, in two the receive

our Just last cultivation in sophisticated the Definitive Agreement Esporão, of XX businesses international week, most Portugal. with we agreement of agricultural with and an increases additional our Portugal. Alentejo, also hectors largest space announced one in capacity This outdoor export

to harvest our manufacturing We distribution and materials international at other for site processing, transport then the medical dry cannabis will and EU across and grow, Europe new and Campus markets. it

of The is expected entire XXXX. successfully harvest outdoor cultivation site planted and in a was fall

ramp of significant growth we've a top already expect revenue in the strong on international We seen.

focused strategy that continues strong six performance business returns remains to grow. as expect Our global generate the top-line we drivers growth on to

increase to adult-use manufacturing as in over the market, capacity growing global well production and First, as market serve rapidly other medical and our time. Canada the markets

focus quality a rigorous as we on Second, maintain scale.

build Third, partner and that by and medical addressable products further a research diverse distribution pioneer the in appeal of and expand governments. with of with investing established patients mainstream portfolio faster. to fostering by and Fourth, a Fifth, the products consumers. differentiated and set innovation, medical and and development, future six, distributors retailers of community research. And of acceptance clinical scale market brands to the our industry our

accelerate and growth. We acquisitions expect our partnerships our strategic to

the for brands leveraging ABG year which with we launch The first Our its continues CBD build to of announced the States. half deal kind XX our market. the second in portfolio partnership more in of momentum with is a Authentic Group, partnership United first of strategic the ABG’s most of planned product global than Brands for QX iconic the world's

We InBev partnerships beverages. continue on with research on infused make AB cannabinoid our non-alcohol progress to

ready later in allow this be to as beverages regulations year. launch will Canada We

international large in with we on have half our market. markets, available the Sandoz we new working supply for depending to of add more pharmaceutical As countries and second companies other expect in-country this year additional the

Generally Hemp in the second in a we CBD U.S. Recognized the Manitoba year the Late Spectrum earlier in acquisition Tilray’s of Our launched is Manitoba the Safe marking this quarter, Harvest Broad entry opportunity an into as Harvest that line under U.S., brand. immense America. provides first market North Extract

we for leveraging starting thoroughly consistency a chain and all quality, execute tested are and are the Our products this have compliant. trusted in of taking hemp foods to of to asset safety and brand and thesis products against CBD supply We're our FDA ensured deliver products.

the acquired innovation. consumer infused July crafts for exciting brand CBD we acquisition & edible permit. On Sinclair, for the cocktails and portfolio United regulations focus in reflects XXth, expanding fragrances to with distribution This which States, also Tilray Smith on United our other enables disruptive and markets our develop Kingdom, known as edibles in brands candies,

will We long-term States to the our why global acquisitions of markets invest and cannabis two our opportunities for global partnerships the particularly growth. be focus global of the long-term, which United and our largest in expect demonstrate is our strategic markets. believe in We operations, for diversification those Europe we continue on

pursue research will we channels. factors, mergers provides that forward, opens new development and access brand capacity, to continue through our innovative Going to strategic brings acquisitions form increases territories, strategic our distribution technologies, us and offerings increases retail

industry we by acquisitions estimated such portfolio, With the Group, our building Our States to US$XX strategy to Manitoba as portfolio as Authentic on or via on will our be trusted brands. United a centered own capitalize our Sinclair, Harvest is brands. billion partnerships in foundation, hemp whether it derived as Brands to of such building continue Smith the add CBD &

will the United not Our is products any THC legal. in federally include it States until

hub Turning as operations. as be well to and Campus sites, The will export international mentioned earlier, have which EU packaging, products. for cultivation we as for Europe, labs, Portugal, with our international our distribution located I Cantanhede, includes our expanded outdoor facility processing, indoor, and sites research capacity medical in greenhouse

current shipping begun build to And phase we we the continue utilize of GMP have full year, of facility already manufacturing as later awaiting next under are will We some to the capacity our license. inventory. this products the our certification

we the currently demand of the approved with medical cannabis use supply a six supply. cannabis United Kingdom leading products. medical United have We medical imported up, second Kingdom. ramps oil quarter, well-positioned into the authorized are patients in to be solutions as for And locally maintained In we of provide products supplier to a wholesale

medical successfully this of year cannabis Ireland. The XXth certified Access is the medical that products. intended announced In Medical half finished in solutions July, Tilray oil we for makes under with solution country oil the we Cannabis second had cannabis Ireland cannabis This the imported nationwide The GMP in distribution Programme.

across indoor Additionally, Canada launch to research X space. Esporão number phase cultivation remains of a regulations as market of a in challenged I next with adds cultivation allow and supply manufacturing, lack hectors Campus’ the outdoor for we're cannabis Definitive retail and of and quality existing adult-use Agreement and XX mentioned processing our products meters X,XXX of excited Canadian the limited of outdoor earlier, of our outlets today. But of hectares mid-December. EU as square with The space

allows legalization more of deliver choose wave second we consumers formats, preferred possible the experiences. The best while of to their

In strips, to beverages. oral new topicals vapes, a and brands factors of High launching addition innovative cannabis including edibles, and number Park across various form

School NYU and mainstream Medicine in two quarter, medical from research in Disorder. to our and participation already patients successfully cannabis help field. new of of Tilray support Disorders announced approval Use received Stress two is believe last And Australia the with at led clinical governments. medical U.S. acceptance of In support at the for shipment the the announced a We just community need for by the serious with an clinical government of Post-Traumatic and we foster new imported clinical forefront the and U.S. we second trials in the more the week, clinical two will initial NYU. into Disorder And research industry. our cannabinoids There's we Alcohol within medical Alcohol data Use in studies trials Canada. the

balance in new transactions drive continuing we additional enter investment global anticipate and and For into strategic and growth. and clinical partnerships ones, continued will the enable of to year already us expansion XXXX, the trials that we serve in the markets

cannabis enable to a year; strategic shareholdings final initiating international partnerships and expanding sales further adding in markets and several the regions; expect additional further we the additional increasing before the to for end second close Ontario; processing our we added growth. finally, further obtaining we to currently announcing merger downstream additional that Highlights quarter; GMP added we facility and in strengthen anticipate during the half in we which Tilray from Park’s executives in agreement production two accelerate the facility third second and with two partnerships product of team, extending High our additional us quarter London, the quarter; in medical management and second and this year; in for certifications licenses the Portugal our and the and Nanaimo include: to Leamington of products offerings pharmaceutical countries to medical new our capacity serve; of countries Exporting clinical recruiting during private trials, obtaining Portugal the industry expanding our outside already

Now, execute to have I’m the over expect progress accelerate our I that on summary our before continues year. made in and back our all with growth strategic we call can half growth and of I on Mark, hand into next to team cylinders. initiatives, say this to firing the to-date the in pleased further year

can avenues have We and we long-term drive strong shareholder multiple growth for value. are confident

I would call like to Mark. the that, to With over turn

indicated. all call with Thanks, dollars in information is Good Please today and joining here discuss prepared we accordance those otherwise speaking note today. to U.S. financial a with U.S. us in be pleasure you unless GAAP and Brendan. to webcast. today's on is It afternoon the

We had this to second year. a believe half start gain year of continue we to in strong momentum the the and will

last on compared million million C$XX.X the XQ results year. US$XX.X in second to detail, more QX tripled Focusing than to more of or our quarter revenue

$XX These product. due taxes was us excise results our which cultivation estimates output improved ship million. to our more Excluding to facilities revenue internal from allowed exceeded adult-use

by the Revenue the in markets was legalization of adult-use Canadian acquisition, international compared to prior the growth driven medical markets. primarily and Harvest growth year Manitoba

growth the The same in XX% and represented the year. was reduction which is flower products revenue by of adult-use extract XX% a of to period Canada, markets the food non-hemp primarily driven in in for due quarter of to for second Extract significant products pre-rolls. last revenue XXXX compared

form quarter. with have limited Adult-use market so pleased performance QX. Canadian represents sequentially grew We We're expect far XX% QX regulations. available distribution continue of of we factor year products approximately to to which of at quarter. new In always second in the XX% revenue number the to additional to the second available this later ramp a the of the fourth revenues half retail adult-use from adult-use revenue for and becoming due

Manitoba of this included full results. quarter On the was hemp the food Harvest first side, being

$XX approximately contributed in expected, we As Harvest million Manitoba QX.

by the year. in was million primarily $X.X more than Germany On international side, our Growth prior and driven Australia. tripled $XXX,XXX revenues to the from

export second this to our year in to Campus our Portugal international EU international in as half the sales our We accelerate expect products to began of markets.

to operational US$X.XX X,XXX foods, average same equivalents than of quarter or kilograms net metrics, compares total X,XXX year. first kilograms Moving sold on price from or prior year's kilogram more to the C$X.XX last was tax. selling hemp This tripled and per excluding gram US$X.XX overall excise C$X.XX The the in quarter. in excluding US$X.XX to

Price the per of quarter. of of low internal which a in sequentially from the to a compared to improved increased Gross and greater quarter, prices to second XX%, decreased higher was margin to for ahead slightly per in XX% gram productivity. products mix first gram the compared plans XX% adult-use margin due mix to priced Gross our year other due up extract and are prior the revenues, fourth reduced quarter channels. at

by up the continues to supply. cost costs margin Gross be our facilities, of well increased as cultivation third-party as impacted and ramping high

addition, approximately inventory. of value $X.X non-cash food were for related by impacted to accounting In purchase charge fair million hemp margins

margin second gross higher full Canada Portugal increase expect result products a certification, as to we scale gain sell to this value-added the half year sequentially and adult-use of with as for ability our online, We markets. GMP continue of the in coming facility to

expenses. includes to million, Total stock $X.X $XX.X operating acquisition of million million expenses in and non-cash compensation increased which $X.X related

which prior is of comprised of by in of million. Excluding increase these $XX.X million increase compared quarter, primarily year’s the $XX.X items second sales $XX.X increased G&A operating an and an of and million to marketing expenses

share The added increase public of of quarter million $XX.X $X.XX purchase fair loss a or $XX.X in increased for or share adjusted non-GAAP was costs and per second per non-recurring the headcount share, inventory. charges XXXX. of quarter net charge was loss growth to acquisition or per related through non-recurring recent adjustments loss acquisitions. a million driven by the $X.XX operating The to accounting are of XXXX. to activities, to net quarter costs non-cash $XX.X value compared The for Net company our second loss related for million and $X.XX the the the for related was

increase quarter to and was probably an net reported growth We expense to Manitoba international of the $XX.X loss Harvest of operating year. last million in adjusted a net loss in notes adjusted in of of and from initiatives, Natura compared to second increase loss the related $X.X interest businesses, EBITDA and The expansion million teams. of expenses due convertible the addition and

balance the short-term equivalents with the of investments to quarter Turning $XXX and cash, million. cash sheet, we approximately ended

believe our XX to plus the execute sufficient have months. we to continue on for We plans capital that growth

years creation continue multiple to achieve We have we with growth believe value to opportunities for growth paths and strong for significant come. expect to

today. EBITDA XX%. margins The economic sizable share adjusted and of are capture margins on Long-term, markets as provides plus added, we estimated impact XX% are short which but the to markets, greater continue of new exist future also expect term based invest cannabis develop margins a we upside. a that to may of gross And global will revenue for those with have XX% EBITDA market, on markets to to legal margins,

In with pleased for are we the our second very quarter. summary, results

consistent are company growth investments make the We to order continue and in long-term profitable for strategy. our position to in executing

prepared open our to I concludes take remarks. now This and questions. Brendan are your

Instructions]. [Operator

of comes Cowen. Azer question with first Our lien from Vivien

open. Your line is now

perspective, in the looking So a for, little terrifically particular we on from strong adult-use. better than a quarter revenue were

offer think the shipments? kind about first about anticipate between to And like how XQ? you fourth a in of that can of kind phasing balanced the just color the year, bit of little should Do be about pretty back little a so meaningful we more of the guys will think or in channel you load as being we there commercial XQ the Thanks. quarter, and more bit half

was that the original the that know selling going you start as timeframe. to October Vivien, originally plan Yes, in we're

strong shift the the as lot corporations the timeframe, that regulations -- holidays. would expect the going the with thought carry into inventory QX QX we very of to in are about be as don't we to think going shipments we December now Crown most a So talking mid-December of

seems enough. that Okay, reasonable

On place sounds but with bit had little a the in international you of to back late certifications. new meaningfully a into it that generation half guys GMP that going side, and then was pieces revenue like two lot improve XXXX in the

even Portugal Given you think just more from there? we should how now capacity, So is ramp what that those about ultimate the revenue assets? like have opportunity

none from first We that in to for quarters, on or be to one seeing first turned do reported GMP of was or now. the certification, half, two or looking a were not Portugal so -- of be we're those clear, some we'll Yes, have we the able And three sales fully Portugal. in certified. start sales.

sales little see nice will change you a the So in in and in step QX. QX EU

So far a for improvement, Canada. been all today produced has products sold we've so big the

follow queue. a I'll to up the just and back that in And jump

One of to believe. December in Sandoz all after think for the -- announced things how is I the been expanded that back waiting see relationship I having we've that an materializes

of coming market with whether the to And Sandoz relationship prevented I'm in this with guys just from terms wondering Portugal facility really so it's you like scaling that Germany, Brendan? say

Ireland. the in have we we quarter, have and wholesale pharmaceutical countries wholesale distributor products six UK the two in our available added we So so a now in at supply

branding year. the to revenue six expect half Ireland we additional the expect in the -- countries the second country, we -- we second that on in so been year of the to see may still to distribution the Depending have footprint suppliers of countries half better a And of to sort distributors in other will four in add start or and in Based partner. that may for the may go the we've on be sales example countries having, Latin of with some marketing America. not certain and Sandoz had conversations

comes next Our question from with Jaffray. Michael Piper Lavery

clarify three right some sounds Could that just elaborate little on GMP Portugal? specifically bit building? Is think one small, it a of the you What’s portion the could can maybe You it’s there like but by you just way said EU certifications. just you ship about, have have you more? of to you

a Part So -- Part ingredient, for for certification an we X ingredient is for API. there's -- a X active a an for for essentially GMP. have two of active flower. API, pharmaceutical pharmaceutical so Part is an product. parts X pharmaceutical Currently, whole API, finished pharmaceutical

Part a then awaiting together. We’re X really parts X for And those it’s for of will product. X, a flower building, parts it’s certification and not whole a portion of GMP for type come really oil and but

adapt mentioned the And back a exactly you outlook you of can amount give might obviously to much potentially adjust? XX buyer, months? you sense you little ways how some next maybe looks an what own And do like or think how about you adjust too the XX you capacity maybe would demand, could relative opportunistic are industry there it just and to for the and you’ve expecting be has or of your capacity if

about look at really can't order that holistically. In you think it

Canada rest you I from need to of world. separate think out the

about processing additional some online. mostly that capacity. lot that million space of Canada, is about increased we quality, in third-party Canada Leamington. despite we've investments, lot It capacity cultivation are third-party processing made And increased a facilities, But that the about so, some space, supply different third capacity in $XX those in two as A across or in is facilities. come investment, small three of supply it’s capacity. -- that’s increasing relatively A seeing facility

our farmers. we supply see so to from more and expect hopefully of And third-party come more

six buy where We the like a farmers. will easing we'll And That’s and slight supply announce weeks. buy over we've we essentially feels -- more it one of from announced to seen for deal, situation hope to supply eight Canada. last several -- from

rest of building lack in of to world, of severe we the For supply is continue invest Canada. a other -- outside will global the global There supply. for

-- last feet from at cultivation, two lot about And outdoors. square we space X.X over the so, the square A X.X about We've gone million year and of processing the of tripled million the that’s over really last feet our to manufacturing quarters. today. start

another have we or one acres Portugal so outdoor. hectares, facility, another in location And hectares so XX about XX location we At X XX acres have with outdoor.

outdoor. of So XX acres

We heavily in to invest Portugal. continue

Portugal. and and hectare addition -- the And build in to heavily X continue build to in quarters that invest in we coming Portugal greenhouse have, will years. space there additional to additional greenhouse indoor and We additional will in the to expect the capacity

We're certifications. we build inventory await to harvest monthly GMP there. and on GMP building have inventory We're those we and licenses, supply additional weekly as we'll and until those continue building basis a

turnkey get how And build of inventory can -- you light? you big it could once you give us And how a green sense sell the quickly that is? how

Yes.

don't So U.S. inventory. from and cost markup our standpoint, we’re GAAP, reporting we're a because we costs,

a cost as from in at sells inventory rate inventory And So a $X Portugal. than standpoint, the million we product in of have at QX does Canada. in EU higher the of or it you end much about know,

can do you value is value. -- math on for the So revenue it what

Our comes with Mike next question Benchmark Hickey Company. from

is now line Your open.

you 'XX, in I'm dispensary market brushstrokes unlimited. continuing Canada that And looking retail with, it? you I retail. opened has sort develops? in my what's side a sales the on your 'XX little of trend? the on that estimate of sort goes just I'm Mark, stores Canadian the legal many guess from then on flower to if approach sort going year at where market been questions many are sort we expect higher stores in taking sure Brendan, where market or legalized And of thanks of Hey, of that quarter. and you’ve legalization, done legal broad the And goes through of versus view, how percentage maybe now one for how channels just the you the the great of what the am as can, looking in curious job that curious for is sort what channels? on as are how I Obviously sort illegal

don't distribution a a continues there's Alberta, than think I more others. to at in fast Ontario, on opened Canada, locations In think expect. clip. there's retail many provinces certainly opened less XXX XXX has today. some stores and than don't more severe of Washington is opened -- Quebec constraint Ontario, fairly I would have stores. than the as source which State, have as larger But for example, one

big retail I think continuing estimate market one in restricting $X range. the it's in two that constricting revenue. things, of really Canada different I Canada. doing fuel billion sources the think so it’s And market in illicit is Canada illicit And growth is that's constraint it's that is -- doing the other that the thing still And in to

from would captured illicit and expect illicit market products market between so, and you And continue illicit and other of the already One to market and to market, a factor overall full flower XX% edibles are market of but the as and is that the in those that products different have that legal and legal available do come the vapes legal and grow, concentrates the to factors pre-rolls the number that market. XX% All beverages. market. between form range is products that We and oils online. the suggest not somewhere has new

relief But you to can patients. consumer? it side, distributions relative deliver are services. obviously expect through maybe delivery I do the the tension Obviously sort on and the Canada, of to or in of some in that less size the dispensary even from terms retail, on ship an medical directly the it But population in your have alleviated States, the some think directly call on there. California the adult-use deliver of there Obviously, the any states side ability to product potential adult-use you

government, Yes, their market I OCS and go one provinces, in is in Ontario -- States. about two online stores the of Ontario consumers different the with adult-use that's Quebec, can consumers at cannabis from purchase have the both United which Canadian looking the online and the where and really the Quebec, different provincial think SQDC things really that, is -- from

they products are an -- those to assuming generally shipped placed are Now today, and you packaged in XX within packaged hours. XX order

that are or to will on States hours like in essentially What at in but Canada you the point you receive doesn't the today sort it Canada doesn't that immediate XX delivery that model really would but for after there market. some it see do that hours within which the today. like exceptions companies driver get you’ve are see product that there product. doesn't is exist exist if is sort or trying There’s so we the available some XX such of illicit you legal don't like to -- -- really are few And lots today you no is United of and in an services are of from see XX some an that states. in pizza it order that you of expect delivery in some sort -- There some U.S. you place I have U.S. like see hour of a provinces an two you in order ordered, in states.

question. guys. Thanks Last

like vape. of it’s view maybe on that? is sort being your was the Cannabis seems edibles, maybe I But on curious regulated, low over the X.X fruit Just curious hanging

was vape I hoping could So et you strategy, dig that Thank maybe helpful? new you. into hardware, would cetera be

factor segment first a distribute form three vape. of by expect under by products to number sort have multiple vape of on categories form not we brands, category. the It products line I of this different products that call, We disposable to but brand full sort factor, are into by available expect would broad be vape the a of would

sort would thread the could some someone interchangeable in third then see an fits into category proprietary you like in see states. I be would category second most states. XXX system. Also cartridge The essentially U.S. delivery of And that U.S. else's be some

the full line for whenever available building regulations we year. continue the been a in expect to those this those of quarter sell us allow we that across product for and factors to vapes form different inventory the will to We’ve So have preparation oil three end beginning products. stockpiling

question comes with next Oppenheimer. Our Rupesh from Parikh

is line now Your open.

a CBD So market. to more I touch bit wanted U.S. the on little

can if on ramp just curious terms see how the you launch, I year was of distribution in in CBD much Manitoba of you more So color the CBD guys I far? half provide how the back was so Harvest in on the curious gotten also also terms And you've on the of front?

are -- Harvest extract QX, about stores Currently North stores in in the hemp hemp the available in food products and in we've U.S. products, today. are products, this broad launched quarter those Their so X,XXX U.S., the food America spectrum their in stores today. products of nearly they're Manitoba XX,XXX products XX,XXX CBD in

We grow that in number significantly half continue to year. this second of expect the to

we're a looking and and broad regulation forward extract products. to and products FDA spectrum think on clarification the I CBD all from

And the hoping terms I the how in more guys color of the ramp of in on the back was U.S. for half see in CBD you potentially just also year? side the

until So off, much retailers ingestible We more the a of ramp be the FDA clarity. will major do clarity the how products the upon they holding lot on dependent have somewhat does especially give. see

CBD on we ramp see half second half, ingestible ramp that not, again, of we If the significant slower much in year. on As the a clarity in see comes it side. side, the for does the second

then one housekeeping question. maybe And just

you about of you at least in looks back It off leveled I can Mark, expenses, if of it's about in sales and front, and half color are see to at the was XX% how the G&A sales. the on of more and like sales marketing So hoping provide year? marketing thinking terms guys

additional any provide So just curious you there's color line on if either can item?

or see percent for Manitoba a bump. having the as sales little small because Harvest was sales half the quarter. there of the of of a a From bump a of and on lot pretty year. portion big for Harvest, marketing, that come a a the But the that so in full second down of it down sales, you'll percent was that this quarter, that's ticks And saw of Yes, you of slightly. Manitoba bit

from Northland comes Our with next Grondahl question Mike Securities.

line open. now Your is

like and for insight Brands, other the product does the Any a products product. into going kind half? that look the On in of you talked back to Authentic be first is pipeline what what about

yet. haven’t We announced it

topical and brand The will of first a products first line set be products. of the

But I -- the or six next the Brands We will brand the it’s -- can’t that Group. haven't conjunction announce that three make we'll product next the to that the I announced and But SKUs months SKUs, launch. about, Authentic at remember, in brand would in it's expect will in five yet. guess partners I announcement with

the products? just pipeline other And Brendan for

well as on team and made So then acquisition, addition pipeline company innovation side this have called of Manitoba Smith branding small an a product factors Harvest product -- side the quarter of ABG the we and Sinclair. on form and with as at the a &

We expect bring factors to additional to the form market space. brands, U.S. CBD in products,

with Tamy from comes question markets. Chen capital BMO next Our

open. now is line Your

Yes, thanks.

sales into First notable the question is, really drove have had increase the to what I'm more just channel, volumes the in trying several volume. this considering in understand quarter modest recreational past quarters

corner now production there? really So you're more it a function own quarters, wholesale you prioritizing into Or you turning just production it were on managed advantage heading the and previous to in before? that was that good of it third-party Or take QX was LP supply? procure was pricing had you constrained to your of been

So cultivation. out, combination you Tammy pointed things. as third-party getting been many as as of some it’s supply ramping well our it But A, is, a own

was XX% You saw almost last. this amount quarter the -- up our versus we harvested

supply. ramp to sources continuing own as as well cultivation, our more continuing we're provide we're for quality to So third-party

competitors one probably biggest adult-use increases kind for the So some industry. you the look in I us we’re think for if of the of QX sales versus at of in

you could non-vape for was How much revenue. sell direct licensed medical of to continuing producers? to other down wondering, gross cannabis $X.X it’s the I'm -- other to million of patients I channel versus And that channel, believe of break the

So about medical $X.X other million was direct to patients.

And the was other rest producers? two licensed

That's correct.

because Okay. you provide have if average different the your wondering did could decline gross Mark, how the for And prices? housekeeping just out specifically understand was just and in selling average channels recreational the item. channel, pricing to this, a worked total trying selling I you price, the

Yes.

or So Tamy? about gram that looking was the you're overall price adult-use -- C$X.XX. pricing what Is US$X.XX per for

was that Yes, growth. enough

correct. That's

Okay. last Harvest, And Extract. Hemp is question. on This Spectrum the I Broad Manitoba just have one

wondering, secondly, called CBD First, versus you that being FDA is or oil? named it why way branded issues about, like, there. I'm And the talking were just

in selling of right are just have the currently some ingestibles now? of or you you are selling that terms topicals So sort products do you

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the ingredients, of is oil package, the see Tammy, so CBD. it that on CBD is is you is and it CBD will one And --

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so with comfortable in extract were the those that's based more much individual spectrum hemp the And factors. product broad language on form we

of the generally status. CBD has that's thing product that GRAS, a in the other that in as safe other that the team we important are how attained Manitoba is distinguish Harvest products The self-affirmed market lot regarded

trust. and demonstrates our And that building first distinction so and to to compliance knowledge, the Harvest it achieve that commitment Manitoba consumer makes our to company,

Alliance Partners. next comes Our Grey Global from Aaron question with

open. line now is Your

Nice to gross see in margin improvement sequentially.

in coming then markets the Just novel margins, sales year should improves? online. margin And you how gross form any provide we in next as as half just look to factors with back trend as international utilization higher much carry the with well increased color as could on the

Justhow best to Thank think next about over months? XX gross margins the you.

about ahead this expect about we the see as last or to call, gross points margins on XXX we of that quarter. did improve, actually So basis talked

probably year. expect this half of the back another basis through points We XXX

be do to in margins we year. expect of So the gross by the end XX% plus the for range

do get expect as year, product we next carry expansion for higher have more do other to which margins. form and markets, For available we into international factors, see

and see mid XXs getting the and by -- XXs year will even getting mid the you us end the in starting So higher. of probably potentially

how to CBD thinking U.S EBITDA. as provided marketing factors to overall SG&A on just provide online along best potentially about breakeven thinking with with some think you you margins form you come on with sense that. and about And then closer moving Any spin then could lookinto entermarketing to what about gross around just outthe profitability as just

Just overall best how Thank EBITDA. to think you. about

the and for QX, For levels this overall we're as EBITDA, probably see and that we'd quarter then and to by to were to see in, something no you think similar new be some I improvements stop year. at If the in improvement invest then the was look countries we believe forward. at of going start next world next positively quarter, end there do that some we'll

far to new invest other continue as we in markets. to will and the As be markets, want U.S. in we successful U.S., the

in here. pipe I'll just

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Graeme Capital. Our comes Eight from Kreindler next question with

is line now open. Your

How seeing Canada Understanding much the they've on next get there. be the and XX label necessary question, to the does the XX about supply could on think source I supply had something brand be it months. of quality the that would and just balance a actually the potentially about in a First own in that to of how company that call follow-up to on earlier put that? comments looked their supply balance

in the was quality so. or the were frustrated really month with has working last of I six think supply a that last similar the that's they've The team eight did the announced our time with agreements the to with last, difference we quality know few we I last lack big the We for And of I really similar quality that sourcing on more been product. over this call, that And pleased supply. weeks. agreement one suppliers.

in from to have I ago. pretty than today quality what more don't optimistic. so been were I continue Canada. too to I online supply days difference And talking that that's we XX optimistic will come want big And certainly sound But am about

any trend Obviously, note in with on here And just to another on seen average there's the sort that how the selling of then more thoughts Is sequential price respect long-term? the might decrease quarter in with the quarter-over-quarter. there the supply partially terms by derivatives? the curious that and of heading medium be quality could in market, of So and coming supply that just sees the also offset that introduction into company -- is in term. the where

well. bit let on a color as Graeme, that little more So give me you

So of mix. some is that

this was our in past. look of the it really X% was extract much product sales, quarter, you if products adult-use mix at So for higher

that down, provinces of more which So function pricing mix we're been it's a actually in. our hasn't into come selling

of pricing, standpoint if that do selling looking XXXX purely of a start higher of pressure adult we factors. the down to primarily which pricing. overall So mix, to adult-use taking go is just from mix have pricing from that with do because we year, as in standpoint Up expect mix will the on do other we helps pricing a think be the percentage bigger But pricing. overall international, the will on you're Canadian the mix Also of yes, pricing use novel mix. at form half we're portion where becomes up second some

it. Got And up Mark. to there, lastly follow

or or the you for where quarter stockpile said that provincial the happening the what they derivatives it of any adult-use. terms of in do with has that that things mix of ahead extracts capacity launch? on to oil was what Was of taking terms is the processing of inventory, side in and supplier In wanted, to offline because

-- the are for and for did we primarily mostly, But for less provinces they're both. for today. of combination looking extracts and flower looking flower a actually It's

with Carter Our question Stifel. Andrew next comes from

open. is line Your

Just in year. out a that's revenue there half potential of the understand second quick just the question, the

alluded year. kind Just of you've in fact quarter the kind of to wave the the understand, second next first to that want obviously is going to start

acceleration? how opportunity understand want to me Help it's your have supply now? balancing or lot we should So there's you the What second the for right -- market it'd to of ability meaningful you're a year. be hold of should the back, revenue understand see if a constrained, half to

really on the depends channel. So it

So the flower increases from revenue side. here look pretty we do the the the see adult-use significant at channel, some growth to more factors. for as mix ready be muted getting have Canadian international bit a From it the channel, other and as little on shifting see will we be we related their form buyer which QX, heavily to the inventory as starts will

the the stores. So going to they're just in the mix stores getting bigger, aren't any changing be

muted couple corporations. for some some retail except orders by the see next to -- we you'll muted new So quarters expect see crown over the locations

growth. So you'll from revenue a from see back I the half, -- guess

this past quarter. the of like growth see You won't doubling have we

growth the channel for a adult-use. muted much more see into You'll

And last question. then just a

risks we there, remain get I have I regulation view Health perspective market guess you out processes any Canada the of to to your getting here? fully that outstanding. on the want from approval product Now that How

the X.X cannabis form are talking around Andrew, specifically you factor?

I'm heard Is I Yes, you that ship before? to of strict kind here. Can start to that's things I expiration, be. XX-day I've trying a conflicting they’ve window. can know thrown at, of how getting it kind you what was That's shipping? sorry. What about understand going

Canada is be significant products the orders these to end -- or on as at just new -- and corporations crown December, the on end in Yes, will and factors hit But really of really or those predict able or how not What before December some to sort the on regulations. are XXth. unknown does to they might going those through orders the holidays, sometime Health November, January. not given the form up the what's ship trying I've be of them place to entities where whether just their to just pause whether year place we of going willing expect are of act. and

comes Seaport of question the line next Brett Our Global. with Hundley from

is line now Your open.

wanted just the regarding on follow-up I discussion supply to So in Canada. third-party additional

sign peers, agreements, to so potentially supply The up you more entities agreements. willing entities? to more guys or as parties smaller for them going them third are as sign Would you larger up look would these supply characterize So forward. that you characterize as

It's a mix.

and ones the two farmers. we've of some focused craft smaller on high-quality are strains, entirely seen cannabis one of Some or products of some those out

large other for supply of whole and we products we were high-quality around the and aggressive sense markets hand, us of with they at capital. supply a made Zenabis, than price. that able an to a need And lot rather announced agreement or do guaranteed On and were of capital us go to a time, favorable in structure deal

I to discussion wanted in then CBD And revisit the also U.S. a about

the So declining the cannabinoids broad-spectrum hemp year-to-date really look states. chain prices you supply have I and on the in been in at side, U.S., when guess

shelves. and I CBD this in supply I of partnerships chain own mean, states us we guys I your and you of understand conduct right ahead. it on to point this will store the if We time out M&A, see happens at or can your understand much But what now? this time. out the as change in But onto and could harvest this and approach field, as better supply makes just get at hemp update hemp you chain wanted year in how point

of collectors my farmers company We've the LiveWell. U.S., a the agreements guess from slipping out also, Brands farmers. in I that we've right high and CBD for And a supply for name mind group And the for Authentic of couple from Manitoba of and supply can't it. different Tilray products. hemp signed the so name potency through called supply of now, Harvest, Group Montana, agreement Oregon. with group of We've some In announced is I procured farmers, a that's

the your market have let's negative the their important your Can mean, the the free leeway you And the personally say, views owners' to periods to the you're you flow been marketplace platform about for within relates and just success? a next, longer-term looking space build your get you think long-term. longer. there Can just from at that position five then, we've size from seem profitability have out maybe from community. are -- last of talk I of for to just how be investment look to I your some then in of three to characterize of across guys cash do from you positive time little think you let's peers, building continue running on revisit broader And within longer far But discussion. change as it where for long at bit leniency saying and to examples And to profitability least that that it just you side. course, I so at you enough guys as the market, the seen ownership ownership wanted views and guys me, term? might flow to agree in for order broader your hasn't years? I its differently. of and what that maybe border that with acceptance you just what cash trying Can

And long taking multiple long rewarding stocks. concentrated market, are we it because look think of we a advantage, one ownership which opportunity. the investors we're at you an from looking highest a in view. When an for So standpoint, multiples ownership, ownership have view of that the us the do start the this is and at

view Obviously, So ride us. much with I think view. people that have are the that a taking taking are the companies long shorter there's

to as we years, during But of approach know five day kind yes, you looking expect in at to we're next three today that one. timeframe. be positive our the cash flow So do

biggest and maybe year one in thing -- so into really we've looking be it. biggest be of not company the were it's couple days This in still a Canada. early space we're really We're to leaders, just the the So the, still of from IPO, to we or gone year a building day the such one this globally. the

and have with agree long investors that patient that I on betting do term us. thoughts people we your we are So have

And Mr. for that will session. back closing turn to conclude call the remarks. today's question-and-answer to Kennedy like I'd

building for Thank participation and efforts dedication lives you, their today's Tilray more patients consumers everyone. company, of everyone's to our call. improving through and I appreciate and thank a want great We Have and of extraordinary employees evening. for X,XXX questions than on cannabis. in

and Ladies and gentlemen, disconnect. concludes program This you the Everyone, thank day. today's a in your conference. participation you for may great now have