Tilray Brands (TLRY) 12 May 202020 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing-by, and welcome to Tilray's First Quarter 2020 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to your first speaker today, Mr. Raphael Gross. Thank you, please go ahead.

you conference us call thank quarter Tilray's and earnings XXXX and afternoon for on joining first Good webcast.

Chief On Kennedy, with Officer. the Chief Brendan Financial Executive Officer; me and Michael today are Kruteck,

remember we make expectations are Securities based These may within Litigation that Before Act statements risks beliefs please during course and XXXX call, forward-looking the of of meaning current statements of on and the involve the Reform management's management this Private from amended. begin, time-to-time actual Securities forward-looking and materially and United and those to press these uncertainties differ and Regulators that Securities in events statements. earnings the Tilray's release described could Canadian States with Commission Exchange reports with issued refer along Please today. filed from the as

that risk could expressed the of cause from results differ statements. discussion detailed implied a or to those any materially in forward-looking actual For

will on measures. adjusted inventory adjustment, which management Finally, are margin please and call, excluding financial refer note, gross valuation to non-GAAP today's EBITDA,

to a these EBITDA, loss comparable measure reconciliation net with release Please accordance adjusted While presentation GAAP. adjustments provide the be isolation company believes substitute net for or today's excluding with and intended loss margin of to information in inventory as margin to those GAAP. adjusted gross this valuation for considered refer accordance is gross of investors. to for in presented a to measure not information useful financial information the prepared that these non-GAAP The in

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

good you, afternoon operator everyone. Thank [ph] and

reductions Michael our focus continued performance across business. review of in in our for to significant actions detail. our quarterly results to the will efficiencies response my areas XXXX, COVID-XX our will cost recent prepared of taken and first our afterward discuss summary Today, pandemic, Kruteck drive A quarter I remarks, and

and COVID-XX top our and pandemic wellbeing committed to the safety are business control. elements on impact, transparent within empathy executing where focused through employees, we and patient, communication, this priority. of our customers period our remains The unprecedented we communities with of Due our against leading to operate

COVID-XX a we and collaboratively created to since, this senior and our situation. the and to works protect week taken have at actions monitor quarter to our numerous actively evolving leadership first operations, have taskforce Throughout which adapt business. Tilray, the our our We employees with to

around sanitation Our with operating we've consistent distance including the measures and facilities safety recommendations local federal of globe, the authorities. enhanced and and health protocols physical

doing worked global business minimizing I’m Our implemented have are together so employees has to have work plan. that ability our team, ensure and continuity which to safety, the our operations. of proud a to we impact while remotely today incredibly potential

to around continue the product quality We safe, patients and our to consumers world. high provide

chain receiving seen We have to to brief COVID-XX interruptions, with of shipments. our related exception any the the material changes provinces not supply

is Cannabis and created validate not essential enormous headwinds, product, opportunity. has an COVID-XX This and mainstream state. Australia, emergency legal While U.S. an that in Portugal, lose as Despite mainstream Cannabis a we global growth net sight multiple thesis a category is orders, new product was should our Germany, recognized by presents that Cannabis Canada, patients business consumed COVID-XX that consumers.

words, this likely seeing consumer long legal as indulgent rather We have true. in than believed is thing we luxury items to also product, cyclical that need are which believe We across behaves more that a such Cannabis people the industry counter signs that be will products. Cannabis staple, pandemic other demonstrate

pandemic. result as with contingencies unsatisfied that customers who and us remained We for are and little patients our operate our focused, further to disruption We have the from possible? prepare and we as patients to depending may on customers continued business any

began implementing start have taken Unrelated the to of costs quarter global reduce across efficiency comprehensive COVID-XX, our and drive discuss now a to that we efficiencies cost at I action business. we the plan. significant first

communicated profitability EBITDA year. at have end the we planned of previously the adjusted We to drive to that

level Tilray we pandemic broader believe accordingly. we goal for is executing the that Of this COVID-XX a today, based course and what achievable on of provides said and uncertainty know the are we That industry.

during Beginning in a on better restructuring our capital last call, and cost duplication with with of February demand. to competitive earnings and by supply began align businesses, organization to reviewing reduce each aligning on return generating as and our focus market discussed we the operating landscape, with our

of help our to ability can will leading capital. by our difficult, possible Company one the stewards our good we Cannabis long-term, manage be needed. While been to-date costs In success these made pivot react to has when the ensure changes of continue were this to as and and shareholder

to reduction; first cost headcount our quarter, to Canadian corporate estimate operational at components action including following: million cultivation total, the Portugal additional significant are automation; our changes of manage in savings of we and we the annualized today US$XX and substantially quarter These transitioning In first, efficiencies. of cost thirdly, sales achieve fourth took special that approximately to the Kindred, relative costs the our as rate complete include brokerage. we drive most in would run second, Canada XXXX. savings, site implementation adult-use efficiencies and the Throughout Cannabis

excluding to sales building country. relationship, the our exclusive resources their services all Kindred this intend for grow agent act leverage Through across footprint provinces we territories will Quebec. as to brand and our and

first saving of before second realized ramping our quarter, our were be the impact The in clearly the will For embedded more up results. these quarter. million full in financial improvements quarter starting $X.X within there cost benefit our third of

million equity first which more detail. address quarter, will in separate two transaction Michael rates, and debt facility We million $XX also the $XX a closed during

on efficient of strong core We court quarterly positioned steps and balance cash current feel global drive the on takes that on business of itself, well hemp With pleased product. in With and the medical, growth all and our the we’ve XXX% Revenue increased the compete adult-use to is sequential strong report to consisted This Canada revenue the I'm market and record sheet. to respect additional million. businesses; $XX.X environment. first our quarterly to cost marked results. to footing financial year-over-year across

revenue Within XX% diversified grew believe XXX%. in Europe, States, global medical and America. aggregate with We In and base well on XXX%. Latin in a global with XXX%. Canada stage Canada grew positioned grew and the medical and United we're Canada, to adult-use international grew asset medical, compete facilities offices Australia

nine Our adult-use allows. brands in are where with today authorization Cannabis products in XX and territories provinces X.X regions

expand share. distribution We’re committed to to market and continuing

shifts well. markets such we Quebec, Alberta are As to certain positioned we see regulation those as as in provinces, serve and well

our retailers, in XX in and in around available XX,XXX hemp products Cannabis Medical countries the XX over are are Our available products countries continents world. five and

markets We cultivation to an to Canada and facilities only Portugal, have Company are the Cannabis us international two medical allowing serve efficient manner. in GMP-certified in

participated and in the clinical have and product in commitment We United around Cannabis States research, furthering development. Cannabis the trials world, to our

was of providing the platform Anheuser-Busch that Fluent Beverage Company Directors us two XX the first on hemp quarter beverages States Manitoba with the At InBev, we March end with the products world. venture launch joint in around other the the announced of CBD-infused Holdings. Board United XX, release released of of product year Our beverage our and the and Canada. to are shares the previously Harvest, continue two in the release the shares. holders unanimously XX April former the release stock announced of million Privateer stock, period. Xrd proactively took of approved part the equity The release shares the X Tilray on held Class of of prorate manage over common We'll effect by and remaining to countries

long-term on we of the focused year, the efficiencies. profitable cost drive to executing are For growth on while continuing remainder opportunities,

introduce products. three existing sale adult-use goals Our continuing be efforts and as our accomplished hemp energy global expand market, new form businesses, market factors. well our The building the towards will by top and to which will priority. medical global a Canada in are X.X be existing products directed cannabis Cannabis the of the These Canada as

out driving Growing in cannabis final entering markets share of and Portugal we our certification enable offerings to cost our currently into medical, the new facility in product product medical Completing market further to that strategic growth. products the build and finally, Tilray obtaining And new there. our Exporting expanding hemp efficiencies. medical us countries international our our and serve. adult-use accelerate partnerships GMP and Canadian aggressively global

the we let operate, me the that the days early very to this and is quality which broader there for demand markets products of industry we growth. in significant industry's in reiterate, Turning scale at

legal revenue cannabis the first all further, the sales across already channels paradigm a followed of the in and medicine product. allowed, Our around legalization the use the growth will points shift grow as cannabis, it by for to case as it cannabis the And for world, consumer is medical where countries mainstream adult-use. a and both

a and do key so development brand consumers. enter material a foods expand pure by well lifting research to heavy the new the of much advance positioned done and legal global relationship It's We're strategically markets and hemp to permitted in across already cannabis to footprint. business have supply, to and our investing solid continue when foundation and globally. patients with legally build market, We've raw

supply that win and and a with chain. brand believe valued to Hemp strategy. by strengthened firmly we conclude, to trusted building Company cannabis multinational supported assets on I sheet execute intend To most best-in-class the our team, the we globally by right have and a world's of balance portfolio

review Officer, Michael like to financials. Chief things turn Financial With that, over I'd to new to our Kruteck our

note Please today us all dollars GAAP to everyone that is the discussed thanks we US in prepared financial and otherwise and and webcast. of accordance call indicated. is on Brendan Thanks, in information with U.S. joining today's unless

EBITDA a excluding sequential and both adjustments, very year As sequential compared Brendan with are year-over-year period. first improved we indicated, and sequentially gross on adjusted our basis, improvement to ago the quarter growth inventory revenue valuation notably, our and pleased margin,

the strengthening in path closing allowed million in and two provide detail balance sheet describe to the our We’re million to our These $XXX shortly. more capital profitability, I quarter us net million balance with successful with facility us equity also focus will $XX.X offering. to debt close with theme sufficient the on transactions $XX that a will in cash, of

results more detail. Focusing in on our quarterly

million last more of quarter product XX.XX quarter due grew the of compared This year. million, increased million in growth to first approximately full XXX% or compared to hemp First was volumes bulk to sales achieved impact a $XX growth revenue CAD increase quarter channels than basis, in and the the last largely hemp bulk excluding to sales fourth offset million a or by all in from partial and sales, driven our adult-use quarter XX.X% quarter sales. revenue increase XX% partially year; in XX% sequential was in by a XXXX. product $XX.X decline a in grew a $XX.X On

basis, revenue compared XXX% generated We and year-over-year segment the hemp, in first during XX% mix sequential adult-use to hemp $XX growth in our XX% adult-use in last million cannabis last to revenue and business quarter XX% XX% XX% over or year. $XX.X quarter prior cannabis the grew the fourth compared a the year. $X.X period. quarter Our was million in year the first million On

business million XX% revenues million grew and year million $X.X $X.X fourth quarter, Our last increased first $X from to international year. the in compared ago to medical quarter the nearly in in period XXX% a sequentially

million. products. saw the and sequential by XX% to driven $X increased to On hemp revenues quarter partial the prior business food products of growth than year the the Revenue of from to from million $XX.X in medical sequentially. $X.X Canadian XX% generated compared approximately Our of XX.X% last from prior $XX.X tripled we growing basis, million year year, fourth million a more primarily period,

focused the prior sales in as to $X.X higher year, our margin on indicated, fell opportunities. bulk and previously zero Finally, we million as from

However, bulk for quarters inventory future and we rebalancing. opportunistic in need sales the see on some depending may revenue

Going increased period, compared in form quarter, ago of first generally XX% of adult-use. revenue and in to new year our X.X to cannabis the Adult-use retail factors. represented cannabis XX% a on distribution deeper Canada in the little due sales a introduction

On to adult-use a at our selling from driver was of basis, per price change quarters. growth gram expect revenue to in $X.XX continue in average QX We net $X.XX a aggregate future quarter be the an XXXX.

X.XX or a prior Our XX% decrease the first year average or cannabis for net X% quarter, of price the flower CAD for was from $X.XX selling period.

over $X.XX, first XXXX. cannabis price excluding to of taxes price quarter the during Generally, for of to selling last shift price this course the net partially as we cannabis for average and increased product of CAD adult-use to expect sales medical in a X.XX introduce the The were average increased in and largely Canadian X.X per we factors of form of time our selling was mix products the gram excise XX QX the offset channel our due year. increase continued decreases over sales months adult-use market. international by new The

related prior cannabis. quarter and growth of XXXX, a increase kilograms significant metrics fourth write-down XXXX a cannabis the for adult-use first operational quarter. cannabis the Total in doubled margins to XXX XX%, the $X Moving compared to negative with and resulted flower was decline of X,XXX quarter. first kilograms kilogram quarter point quarter year’s nearly the on margin in of to X,XXX increases basis This to a partially over X.X approximately million Gross equivalent sold in the increase from products. of due to sales the the in

of from XX% First gross margin, excluding quarter compared and the the from XXXX, for XX% in increased XXXX. the hemp, decreased margins evaluation for adjustments Gross excluding the compared XX% adjustments XX% quarter to to quarter growth to first adjustments inventory of XXXX, evaluation of fourth valuation XX% quarter to cannabis, XXXX. quarter inventory in margin to while and inventory and excluding compared XX%, decreased fourth XX% to fourth

expect reductions X.X scale we cannabis we benefit positive year to forward, cost we of products and second international in half growth in with adult-use take Canada. medical increase and our in sequentially product mix, from gross the as particularly the and in gain hold Going see margins greater channel

expenses, current ABG by to support from and million sale QX to in million excluding we under did prior agreement, $XX.X on impairment uncertainty the near-term concluded Moving our write-downs operating $XX.X million related the The to compared the sheet this primarily the our impairments XXXX. stance a charge, given million $XX.X sales expenses operating expenses Total of agreement increased represented increase non-cash balance totaled value. expectations QX of FDA included XX% CBD U.S., XXXX the year. expenses. and $XX.X products not the a for year

we a meaningful to earlier. Brendan of decrease progresses, savings as actions, XXXX the expect result As operating in cost see expenses mentioned a

quarter the impact the to of loss the and XXXX. for $X.XX million value assets the dollar. quarter million Canadian impairment $XX.X the per due loss $X.XX the loss for foreign largely first share the of on to fair loss cents to weakening the in per warrant the the liability, change The attributed the net share increased $XXX.X of or of The or was compared the exchange of of was

increase in and continued headcount We to expenses initiatives also support an saw operating reductions. to costs severance our related growth

the reflected increased related EBITDA loss in the costs We increased related basis, efficiencies. growth reported EBITDA a initiatives an adjusted sequential million and operating On and last costs $XX.X cost from loss EBITDA loss to first to our The compared due quarter cultivation a loss of adjusted of to generally in in due the million reductions efforts. primarily year. $XX.X XX% million, was QX was increase to in SG&A improvement adjusted operational a loss $XX.X to year-over-year our commercial in

$XXX the Turning to cash ended quarter We the and with sheet. of balance approximately equivalents cash million.

net of capital facility execute During on a senior access the shares EBITDA. a capital credit XX. your offering operations $XX and with to registered million on closed have sufficient March plans quarter, million We and February we term of proceeds achieve year to believe manage and positive our two with to we a XXth $XX.X

of adjusted created and impact in a new of towards results on to of actions QX our the control are remain has this level year. to all uncertainty, While we EBITDA XXXX working focused deliver within taking in solid profitability committed COVID-XX

our $XX flow $XX may and carryover CapEx efforts year. a to which from on operating total to some million. expect of is originally million than return. in cash Phase our The and million project and reduce CapEx better construction higher may we $XX to however, due indicated XXXX, to for of Portuguese facility. in due of cash Phase for flow million slightly delays we partially payments to and as finish the million partially cash $XXX XXXX interest $XX approximately COVID-XX of efficient Portugal, X principal our million call, previous to actual of million a is a reviewing CapEx Completing number single $XX our to In requirements for cash for plus conference $XXX X Portugal has Due experience more

are to our on we Going forward, path focused profitability.

we'll taken evaluate have our to be year more leaner to actions structures identify and cost We efficient continue and our the areas for additional business in throughout improvement. to

cutting to as across will as we cost sales Just our our continue efforts, growth important drive business.

retail Kindred existing continue products hemp to in of to new online relationship we the in of continue will international adult-use our the we We new for and supply market, and presence brick-and-mortar, products with build factors, channel. and expand Portugal our and on new we X.X the leverage will salesforce will settings, our new introduce medical form will GNP introduce product into existing

As and our share and our market, sizable To a and capture generate focus key to driving cannabis and the and margin we adjusted channels sequentially on categories. managing conclude and positive gross shareholder global work markets production we value, with hemp strengthen leader food a of cannabis the costs an leaner and grow growth our costs, efficient more effort Tilray in sales to sheet, delivering strengthening be profile EBITDA. manage positioning to our will we're balance in our

continue positioned trusted Company. as We believe profitability to and growth in establish as Tilray ourselves future most is we Hemp the the cannabis for and

I take Operator? and are questions. now Brendan your to available

Zuanic our Fitzgerald. [Operator I question Thank Please Pablo from show first comes Instructions] ahead. from you, sir. Cantor go

the on Hello everyone, and results. congratulations

Thank COVID? And if about previous Just was the How year sales. growth that market, in call, you with you. related projection, this that okay that on that doubling Are the XXXX. uncertainty give to the still can of of you much How X.X? color talked you that much some flower? in around recreational probably XX% given Canadian in was

much. Hi Pablo, thank you very

in flower. But was see primary as as – So driver, growth REC growth primarily our well we the we our very vapes, a growth did flower good saw edibles.

projection market regarding you gave late what's before. just of that There terms March, trying happening bumpy sales. in growth low low punchy the I’m COVID, some just understand color the to distributes. that overall in impact in from Right. about April, And in was in

Yes. Sure.

but So a bump and what things is in bit that in in we than March, January a a of so that have were seeing we higher settled we seen at did level was see what February. April down far

the a sales February. through and And January in and probably of settling where in an went higher a people were March than in a [indiscernible] as we’ve at buying result we increase COVID. January, So is we saw seen February, as we in rate that then

Okay. you much. Thank very

add need to I one point there.

lot doubling the in What could year X,XXX, question, the a the end with adult-use think up, revenue think growth dependent Canada. Do when And year? about retailers and number going end I Canada, is we I in terms X,XXX XXX of consumer’s to if we to adult-use be more of the do the retail more stores we and the we tracking will that, currently adult-use be in illicit legal prove is or opened Canada stores that upon in retail growth really licensed as to transition retailers market. this now we're Canada, do of in that in XXXX to licensed continue year-over-year end X,XXX from Canada, market accurate. we see opened

great. Okay, you. Thank

you. Thank

from ahead. comes Oppenheimer. Rupesh Please next Our question from Parikh go

want for thanks taking back questions. Good I go afternoon, to expenses. and my to just

range ability an to line? think a adjusted run rate some year math for close for QX. of reducing thoughts is to of G&A the line, or the especially that want get your for on see continue the that my still you I definitely line, if more I GNA progress I the So just G&A is your $XX so to expenses, Do or balance lot million the correct, so on sequentially, guess

thanks Rupesh, very so much. Yes,

bit about related is probably the yes, took fair of in about XX – XX. So was million, then that $XX we out a – And G&A the $XX million that. well to line, we probably non-headcount

get manageable down And of want so revenue we're a looking, to I mean to level. we the percent

you XX%. well look up our QX, at so were – And think we when I

on that marketing, year. If you sales and cost of looking a G&A, we high-XXs, kind some on has the down bring if not into includes XX% which just of probably the it’s just look to it low-XX, and out, the go lines, at we're the through touched

through million, the million And it G&A million, Board, I'm $XX – headcount, and so we've about – $XX million and and $X different part through things. SG&A. about come it's – some T&E excuse major of come $X me, of COGS that’ll COGS, of see the coming of got that sorry $X the the – of the coming and that professional across a million, that'll through get the COGS million through through we $XX relations when public $XX fees, will bunch And at was we million look stuff, come

to thinking the medical. That's medical that provide the of And switching terms just been to guess Okay. color business. some something there I you how ramp in of – guess you gears of – helpful. given; international can for ramp model, front? I the the Anymore been within the Lease about is are year in on guys the international process harder that's balance

Hello, start Rupesh. Michael. Maybe turn to then This it and answer is Brendan. it I’ll over

I that key our in back, cannabis is revenues. growth our throughout the medical international think revenue of first time that the an of next cannabis quarter-over-quarter one delay medical expect world in a year of and cannabis this revenues our back start international basis, QX always to go And will and medical right, medical we excess the never Canadian our that year. be exceeded rest on milestones continue

a milestone, next company. milestone some in the one exceed paying point that our three our that Canada I revenue is think at quarters And so milestone or will four internationally achieved we attention and be I'm will while for – the that to revenue important next as over

revenue lot which that cannabis was a Canada, only not exports, medical in driven online. our Portuguese is in from Canada, of international from consolidate, by QX, at Looking but

growth to occurred from Portugal in exports so that And Germany.

maybe, in be specific? expect to continue want year. Michael, do a QX you we more this and trend so And and that QX little to of QX

Yes.

on XXXX the we cannabis at side of kind things, and medical of up about that our look is just mix mix international we'd into you mid made see see when and growing where like look to I QX XX% range the it. that So we guess, at of XX

Okay, you. great. Thank

Thank you.

Our comes Grey Partners. Aaron from from Global Please go next question Alliance ahead.

questions. for and afternoon thanks good Hi, the

First over mix up-tick you I of see ASP just as question just Can the know, increased kind that do line more about only there? market was to form at of had you. next sequentially. I item of talk how of for and the terms in sales there Canada, adult-use in quarters, we start of look that in our terms couple Thank you factors see not and just our expectation to

Yes.

selling that seeing edibles good more the expect and some out products. in the on we So see we're products price, our vapes rolled some as in particular X.X additional to growth we pretty

And well selling help would as pretty price very and should good being out so edibles move average say growth now, through our the significantly, growth year. that, are also. I We're the there seeing pretty taken vapes we that right in

pricing the see X.X just and products. really some the form especially there's I to we price, an to we're think at take our look looking factors higher it's potency if So constantly at if opportunity

pretty the of take additional you moment on Canadian products the through trends both growth solid is adult-REC moment. medical, seeing actually overall the of space, I that our see or opportunity But average international price at we X.X medical selling at growth just the it's think more some got increase the do where or which the we're of to a

you. All more could. And right, if one I just great. Thank

last recent, gross commentary just so you you target, about XQ XX of to the a of XX for terms about in XXXX. embedded reaching by talk we have you you. trying the believe what's for on positive your that XXXX. reaching assumption call expectation to end and I Is underlying margins Thank the gross margins? In that by positive? Can talked

Yes.

specific margin not necessarily on under So calling the a Aaron, that, number. were gross we’re

all should a Portuguese up some our to I will think there. efficiency made The what for for we the efficient and that pass in facility, more function sequential increasing improvement we just our are very we're as We're recently in that'll in and product to produce and start good Canadian margins, gross of, leverage our we’re degree. there. at be show we’ve the looking getting operations efficiencies doing headcount more cost some looking and

The pressure fact got So little about on moving a for lot by-product mention on thing them zero we're I due that I accounting of is see a think our we'll one the our gross parts. of probably would other basis. to we've that bit a margins that

And so guess, you other I guess by-product – I doing the what zero by-product. that well to except on is and us attributing for, value as historically been industry have what's sheet we built-up for players. for balance there that is write-offs why few we're has significant that's been as happened – industry know, And are instances, we're

the year. don't write-offs at the will everything of have structure that So that we we sell have all cost end the associated with so it, any

we're on ongoing through the P&L an the by-product essentially taking So basis.

that see bit margins and, a growth us. be a on bit gross we sheet – of will do otherwise and balance but of be on depressed gross balance as building will look so a sequential to expect We the little there for the So a – the won't function that margins. inventory change up little in the

lot. a helpful. Thanks That’s the I’ll back go Great. in queue.

you. Thank

comes question Tamy next from from Our Chen ahead. Markets. Capital Please BMO go

Hi Yes. Thanks. guys.

in question the flower a First wanted the growth the quarter just you the dynamics segment, going where what's more and forward. competitive bit color driving just see is, on

I pack think larger shift we're value, continued apparent sizes. seeing the this

you I you've recently. a there's And about what’s to – disruption thinking this? understand wanted supply think and how this been seeing Just mentioned Tilray

and what wondering exactly is Just is that that over now?

across whether to a growth flower that right try categories. and is we producing all the we it potency So, information spectrum the to in marketplace more Obviously own. or of I provide get that a unfortunately more I there were growth help you. across see bit have on don't available, flower I of that the you. at more we growth have for in higher growth What now. potency if to our are driver seeing flower I the would products. say were in don't would that's the flower information But can if hat-size we seeing in are you But that higher product understand in

that medical And Canadian in of mentioned patient for, thing sales well. and growth think that as compared seeing it's increase rapidly see COVID growing manifest medical, growth bit see settle I that on Germany; is in Again, January far some to like a for us. I also. level did which goes harder although We're a in February of – think so business counts, April good we the just market we during higher our piece did that that, and adult-use estimate pretty into itself for the increased our quarter. that earlier fact, to because same the saw higher in in little I We

So big in across we flower. board the growth are just seeing

I sorry; your question. didn't I'm second catch

it got Michael. I Hi, Tamy.

Hi.

of COVID call, our mostly disruption was throughout at the some distribution May. delayed But that due few seen chain supply Our not that here QX Canada challenges in significant days to our mostly and distribution around mentioned pretty April or related our in shipments – in Xst there. of and we've is by some really and overall of adult-use and deliveries where were some COVID – in minimal. Internationally Canada I of March

it. Got

think Okay. reimbursed, there now. of there's how follow-up on be the I cannabis market, terms may And regulatory is; sort a of a to and German in the be my medical would cap environment change been

case market? the and pricing is impact the of Thanks. where respect it wondering, expectation to could started possibly and making your growth or with just how So

where through product some pharmacy pricing. pharmacies retail limit, how We were to can have the changing Germany, is some should sorts the means framework, pharmaceutical the medical that distributed more What Germany don't a in that say going the – normally there in In see regulation, it level, revenue regulatory that, but cannabis and to market pharmacies impact at cash of our it fairly market and the is some patients. some of medical little cannabis to German that some distributed of changes some to the – those on I'm retail significantly impacting of growth margin.

and Germany basis increase start to the throughout the – guess, medical Europe year. last, for of we this see year see We a so in continue over cannabis, throughout demand to on continue month-over-month, and in and I quarter-to-quarter

you. Thank Okay.

you. Thank

Our next ahead. Please Cowen. from Azer question comes go from Vivien

everyone hemp from selling please. is American year had you it's calendar the seasonal period you. Thank tied XQ. business We in little a bit bit dive that evening, a on I wanted and our why safe. know I hope a which later healthy is North in of business Good is last to school attendance, to because

that business. North guys in right to So now. seeing not I'm you with curious kids broadly in going school what are America,

FMCG demand end seen So up April, that March, load the seems it demand. but and categories, in particular, not has a pantry a incremental kind other you at and for also have the categories some of held categories into pantry subsequent got of load broader beverage have then because and of and food kind

So any helpful? be color on Thanks. that would

and growth called to a sequential QX. both from question, sequential additional a continued called something basis, we U.S., have part On because hard – it’s in million answer in of significant but QX in where they in stores demand hemp we And Amazon April and seen hi, not something for from saw by Costco mailer, driven products, the so value And that be into should question. food – XX% May. entirely Yes. only $XX.X a demand and I has product. food we've from the Costco a your Costco financial it growth Thanks the monthly On in Canada and for saw almost happens basis of approximately to say, a Vivien.

in the in seen summer routine being consumer’s hard and hard that's so underway. attracted it’s typically week to this QX, know of that its already mostly a will destruction whether a products, for downtick the summer Manitoba due we it’s to Harvest as result – have revenue by past to food we in see And changed

Okay.

or the to a so. over just change three you months summarize patterns probably Costco, from consumer some So demand the of came but growth haven't material last seen portion in

We had not.

for help, forget Thanks the it. forget. let’s Okay,

Thank you.

from Our go Sandler. question next Please from comes ahead. Lavery Michael Piper

Thank Michael. you. and Good evening welcome

give might far or us color plan. sense outlook. on positive Obviously your level, at and you could of position be a wondering a like maybe least if mindful your timing high have longer Can some was EBITDA may been a little importantly, for you be. that capital just something away cash sort allocation Just medium, if you how more and the at of of term give more flow positive you

The think on I breakeven operating period to we EBITDA achievable. for given what positive things we you thank and QX how And I XXXX. goal. something given see other business. both indicated our know mean that today squarely that's for think and the what that mean, COVID I focus or question And see we're Michael. that Yes we We don't may I is trying as Brendan marketplace. But focused that's achieve is in the the is the we're on

In the, cash terms of flow…

cash clarify flow I will the that. piece Yes

I'm sorry.

But on you side flow to there. go the cash about yes were

interrupted I Sorry, you.

cash Yes, at lot a a I working that of around the days have hundred arms view I've I'm getting mean, component. the things towards positive here necessarily We're flow been a look of and EBITDA my clear moment.

of when our looking are finish XXXX. projects, big year, particular also see we where Portuguese should in all looking CapEx. at this that be won't a we two, CapEx year We And Stage at this significant coming our we

visibility at just cash into driving I of So I a that, the hard cost that to got cuts that exact out the XXXX and trying a cash we'll think of I positive. flow some put comes goal pressure be towards this achieve we've we've timeframe think don't have kind moment. timely off got, I that with

illicit example, the digital for delivery, gains broader do have or industry, you be on sense market? driving of COVID-XX something would the trade legal and be for might share just And any impacting how like

over the something bit that's a thinking last been few Yes, weeks. I've about

to are product the Canada argue to of pickup, are transaction. from able – product which mail. elicit the Canadian interested are providers Obviously the could through or You obtain some more through of may deliver in producer. they in curbside elicit that a do as – lead traditional they license consumers to retailer the mail opposed from obtaining time fewer interactions COVID it via do have that the In a or in and online licensed a

about concerned to I as of a it lead But of January the and to there’s elicit February, of are that But continuation based the as COVID consumers sort growth quality speculation April. faster on and in revenue There's migration that Canadian growth think, I a a March safety, if seems that statement. legal possibility we market into in may and from lot market. that people think the of from saw

Thank you Great. much. very Okay.

you. Thank

Scott Fortune Our go ROTH Partners. next Capital ahead. question Please from from comes

is of here Thank for bit call. the but delivery taking get seeing Ontario, a the it? we're meant key these amount U.S. and less Kind that April. you in what you're want the just that's from sense color for and to consumer in A they wanting you on a What consumer are Good on the the of to and and store you higher as little fair a afternoon. like from Ontario transactions retail side stores curbside access much ramp that were view more seeing activities. transactions, bring

of right from track in Ontario, Ontario licensed now ended, We growth them licensing. last year, basis. continued on retailers year. we're significant seeing provincial We're where at is a which a end the XX looking roughly And

year. of continue the up expect of in up? that that year do of throughout question the where the during be open We growth end we this retailers And the remainder the that end will to number

and I it issue like be end the on X,XXX of year positive looks we at these somewhere of will the like the somewhere between year being basing COVID And following open end were Canada. up year between the for end this we’ll in and growth X,XXX, which, think, of market some end of looks at the model with XXXX to last our at XXX it XXXX

get you're track from pretty it follow-up difficult, positive more looking make to guys EBITDA adjust much kind X,XXX, are unless getting at? then you Okay, that little it a X,XXX, on standpoint great. of just you if that is And that makes, would how

if That’s of key easier get opening with That's be we And it XXXX the in one XXX and Canada. better, X,XXX, drivers. last challenging stores or we XXX a add if somewhere year were it XXXX it makes stores. stores to under there would X,XXX bit looking ended we in

products driver for us countries The other from our international other portion continued growth and key southern to ability is the globe. to the around shift

the Great. color. I Thanks guys. appreciate

Scott. Thanks

Thank you.

Our ahead. next from comes Please Andrew from question Stifel. go Carter

consumption in thanks, the you've and Is in side big alluded the April evening. of kind ask, to wanted were of some quarter, kind and are then of levels provinces have shipment of you're to that to lockstep or understand surge but I March. inventory that they of kind they things? in are seeing just kind March Hey on kind returning know reducing that? Are with in because kind where they matching of good increased I size? what help you market, the the normal there Can the And are – order us levels? closures,

what significantly out that Yes, February, in What X.X EBITDA. driven so they'd the a through are consumer that essentially.com, differently that, of a were X.X we as soon of during or which ago. different to almost that managing chain from purchases lot mean of around, January, of as This lot getting from second has by first that shipped really in midst place the order Canadian many problems their – orders lot but In rolled all continuing was of or it's in, of in patient, smaller even we corporations year And a client much supply products distributors, they I how a the is the pantry we the inventory. their April is potentially decided of February. more go-round think, products increased and roll one that more first from really large were a and March of them was they October significantly its Cannabis frequency primarily Cannabis stock both Canada. XXXX the that times a way orders the XXXX frequently. I place products from what but in December we they October And out in And over January, order. time province

go seeing Are the of the producers obviously of template? can For their profitable and of frequent to you is then frequency need me, increase that to supply to on handful in pretty say higher order achieve order burden of kind kind less chain. And that orders, robust more products Okay. that. you Canadian Do only back to a your suite provinces showed a a like sizes? it point, you up

a – bought they and in think were that were there the around provincial buyers couple didn't sell. products of I stories that

to be some and able go-round with to who was they're if they of peers actually on avoid returns, issues going this also our were to to deliver So provinces. that looking had looking their see

were And which – Canadian part so of in from think way happened to what that X.X were And along Cannabis what they buyers product. I and we which And were which wide products we chocolates consumers we that form we the bought. is to learning buying QX were teas a of range learning to-date. led learning produced the a interested, factors, flavors,

rest the go-round some And wrong try this But get frequency the the burned increased more the of get as – happened. year. as we – I sell-through to close the placed the I bet the think what information, are has not at the or that quantities to getting to see not think and buyers increased may retailers throughout just would of

Thanks. it on. I'll pass

Andrew. Thanks,

Thank you.

question from Our Graeme from comes Please Eight Capital. ahead. Kerindler go next

comment you Hi, looking on made the good partnerships. and pursue afternoon my for to I to thanks about new wanted taking up questions. Brendan, follow Tilray

could two versus some discussions what now looking ago. might had talks at provide in or changed prioritized more terms right way I in have what wondering they you year all stage verticals you're those have discussed at, now or and discussions are a So the if specific being being what's on at about what's was Thanks. general, you the detail of how

mean, on tobacco, lot of a Constellation’s people depends into the industry industry I years how and a the others ago, I beverage, it, it generally entry two year – it look into the entry you a scared at CBD. in half over ago. the think and

company As educated much pretty had, a we they're meetings so industry. were the we about year ago lot the were conversations of larger – more cannabis educational a more much

looking the a between in were first answer in early joint Fluent announced of to they trying the tended to venture, they at bit question they them our the understand the and the to case about took with when a a conversation a be industry year. And wasn't industry we and with, panic that That started it hurry.

methodical patient approach. really a had they So

industry this – of a think more XXX year that and their companies that XXX companies the taking within today Fortune means sort industry Fortune I are meetings, lots I the more. more compete methodical valuation the Also, those are are diligence, would and working of much due and And ago, half of a lots that a volatility, a to interests of of say generally companies add approach. the realistic lots valuations off lot companies scared that of of have they stewards.

who I products of at products, certain guess, pharmaceutical world. the certain other CBD in my medical final from point products partners region would be more countries, working compounding in international are interest we're seeing

lot domestic conversations Canada. today the a market on not focused so we're markets, And to international of having are

environment regulatory States could progressing that know in a on just how those now Thank sort the that but on here? side. the of of Appreciate movement there you of food things obviously a driven interesting deeper it United just products, quarter-over-quarter? segment or follow-up saw to you just there’s CBD significant terms as in could, growth if are and of us just was the if then, challenge most seen with And if color update trends the you. the like give sales bit dig an wondering any hemp there. was bit question in side. I'm wondering sounds right a I to respect just on We a you increases the wondering Okay.

Yes. I I've time. anything over change enjoy that is predicting What is challenging to predicting What how FDA. going challenging? this is involving is learned industry

so. portfolio a U.S. do focus And where brands of in legally so for is states our strategy around building trusted permitted we’re CBD to

when quarter, accept of the Red go one in lot really they ready address it’s FDA. happened on clarity difficult your will it it's they in signatures. what ballot reality the ballot And provided happened we market know of U.S. collect the U.S. to depend federal states, in once And what's become CBD we're the last initiative with of that further Republicans out is will to as the states, that difficult – primarily today opportunity feel with November. a around But by action a the to individual that initiative disappointment I very

ballot state use I medical how for address now overall CBD it'll So see think legalization be legalization between think November. fewer and in U.S. both cannabis the and candidate but to we're other November, have legalization, in a I interesting initiatives in successful presidential

you. Thank Okay. I appreciate it.

Thank you.

you. Thank

Ladenburg Our Mattson Glenn ahead. next question comes go Please from Thalmann. from

I try quick. really the call, Hi. taking Thanks in it’s for question. so late know be the to I'll

level year cash you at burn stands, the and do that are as Just one balance you the one the needs that it CapEx more have as payment debt that? Where out at you and business achieve the interest should as of go on or and with and results that like you of end money guidance that on level capital quick far Matt feel Is to spent would you're XXXX? things going project to cash as like cash your stand to? comfortable into a the

Hey, question. for thanks Glenn. Yes, the

upon be much So balance how the dependent ATM. access we I will the that partially think cash

at that we'll determine the XXXX. balance how what the access, choose end up then cash looks into $XXX end have of and We kind year where the ATM, we we left the of million upon on and with much like to of that depending

if guess growth could. your Thanks. projection I medical? growth as more a think a at perhaps what you that'd share maybe for that this from that a it one you it year in market us market expect can I you this international international – and you market have appear And year? what or would One would that further some year is to having come this color maybe Just say – great. be German gains on about at share can your be it medical. around grow me. look sense would revenue little and Can Okay, I my learn maybe I model think I quick more to from give

revenue in on saying much lot is to we to whole have in market market there a to It's today. be aren't found really that hard Germany don't constraints the are of predict of today. supply What And essentially there products share competitors due products two some New quarter-to-quarter our continued growth we Germany, growth yes, The some in EU a in Latin temporary growth do bulk year. Zealand, – basis Australia, their on But sites. being America that expect throughout growth, countries. internationally see in and small other we of the we although

That's Great. it for me. Thanks.

you. Thank

question Mike last Our Benchmark Please ahead. from from comes Hickey go Company.

me at squeezing Michael, on Hey, curious Yes, legal discrepancy Thanks there shops not? here major good. I’m I legal wondering pricing hope first the in across store, you between Brendan categories, recessionary product follow-up. have illegal could comparing here how’s are that or consumers shops. big and appreciate and between guys pressures impact on retail illegal retail a it. or perhaps the I mix how for late. And

lower indeed especially Canada, products. That in whole we’re products. seeing flower high on potency on the support product flower flower by some as So well [indiscernible] pricing countered on is potency strength, some compression as the being some

that all and I maybe think use things and cannabis is we've that of cannabis, medical luxury internationally the in more product, Canada think consumer countercyclical. that – in like QX cannabis and one medical and is staple I like learned less a cannabis a

the if I that. haven't so your in caused illicit think a I to global an by seen you something because health see market. were issues migrate answer of But think other the people back than question that midst economic it's pandemic, health hard issue, to might a far we

products consumers, through I untested, an trying high come also to rather think and and are are healthy transaction. working possible as illicit as patients are because market than products from an unregulated illicit be quality safe for obtained that

not intuitively or smoke Okay. mean, seeing was the right? wouldn't You're on shift seeing vape health vape. flower, the to you But of or if inhaling I that concern, into a you're lungs your mix a think now side, want away for you sort be opposite.

Yes.

seen that or haven't it. haven't yet We seen

factors, seen and four vape other and edibles like this at seen with things chocolates. strengths and concerns cheese flower haven't But have in point. so We

the Okay. [indiscernible] premium Last potency on What's best that the giving your retail? you're side, question, strength? what's highest to flower

and The we've highest – XX% potency to XX% was called in a got it believe, strain XX%, QX and Rockstar. to that's retail, that XX% I

from that Is Nice. best volumes you? your

it not It’s but it, volume, quickly. by since [indiscernible] have we

safe. Best guys. thanks, luck right, and All be Sure. of

Thank you.

remarks. call you. At I’d to for closing concludes the our This over Brendan time Thank CEO, like to back Mr. this Q&A session. turn Kennedy,

appreciate and of Thank you. lives cannabis questions employees of the for dedicated at I'd patients I on great to and patient, – through our improving like their work, now. today’s hard power call. Have and all we participation members thank ones team a appreciate and evening. consumers

Ladies and gentlemen, thank our call call. you concludes today's This conference attending today. for

You may now disconnect.