TLRY Tilray

Raphael Gross Investor Relations
Brendan Kennedy Chief Executive Officer
Michael Kruteck Chief Financial Officer
Tamy Chen BMO Capital Markets
Aaron Grey Alliance Global Partners
Rupesh Parikh Oppenheimer
Steve Schneiderman Cowen and Company
Pablo Zuanic Cantor Fitzgerald
Michael Lavery Piper Jaffray
Call transcript
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Greetings, and welcome to Tilray's Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Mr. Relations. Investor Gross, Raphael you. Thank

begin, sir. may You

Raphael Gross

me thank Good Michael Tilray's call Kruteck, joining Kennedy, with on Chief Financial for full afternoon and Executive fiscal and On conference and XXXX earnings year us quarter Brendan you and Officer; are today Officer. webcast. Chief fourth

circular. earnings cause companies discussion by revenue. matters and press expressed in transaction release Aphria issued On two create risks any the their from Tilray Aphria plans largest are forward-looking and statement the proposed be of amended. Securities Reform results and related incorrect connection within on forward-looking Before of December containing the or and the transaction risks and prove based announced course Canadian differ Securities Exchange filed actual information that during global from with Actual the combine involve to we These Act from those reports implied cannabis in may and management Private Tilray's will important with may will and that the statements. remember known discussion, begin, results Litigation XXA materially world's a proposed of detailed materially file meaning Schedule In could company Commission as these and XXXX those make the Tilray statements time-to-time to described of along please on proxy a information Securities unknown expectations differ Regulators, with States that uncertainties. XXXX, to current the our XX, United and today management for forward-looking management's the a refer could statements about Please statements. and beliefs the file to

making important will Tilray holders the securities entire contain are Additionally, file and the and about urged transaction documents, available any to the EDGAR Tilray including any parties SEDAR transaction in information authorities, proposed be relevant before to these security respect with Aphria proxy the of documents carefully with the with will to information proposed the transaction, Tilray regulatory circular profiles The because Aphria appropriate of will to decisions circular the proxy voting and respectively, and information read proposed on shareholders, management other Aphria statement and the respective amendments or materials supplements the be mailed and connection Tilray such and transaction. companies. Aphria

gross compensation, Finally, and call non-GAAP and will margin, also adjustments adjusted measures. today's on inventory, which refer stock-based management valuation to EBITDA are excluding financial

these not earnings investors, non-GAAP useful to this measure for the be information information accordance comparable a for substitute press with the in accordance financial financial of isolation with contains GAAP. considered release GAAP. each of Today's or the non-GAAP company reconciliation provide measures believes most measure as information the that in presentation prepared is While the intended presented to in

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

Brendan Kennedy

and positive and solid thank you able in enter and for environment that the The today's in was adjusted revenue on headline everyone quarter was EBITDA update growth the as but quarter Hello investor that to normal. team us. is call our outstanding deliver for year joining anything the we

Our focused operational shareholder relentless Tilray's growth, is excellence, ability these revenue profitability, attribute achieve to on value. results and to

worked from variety Cannabis growth XX% in introduce in the will X.X as products excluding Canada, Harvest Adult of a bulk landscape. sales successfully our we Canadian presence we the to business aggressively across Canada. pursued reducing Medical BXB significantly foods, Specifically while expanding businesses, core XXXX, International growth Use, get on Use hemp revenue side, These focusing in efforts Adult Manitoba year-over-year our our bulk sales by three retail while profitable and

and infrastructure. and We as Medical we in markets, international market grew key it business also International share presence our in generated over leveraged XXX% growth our

resources, efficiencies. significantly On to process operating and SG&A align and increasing before of our market of Park operational with our right-sizing closing Gardens structure front, COVID-XX reducing the the consisted reduced onset This we began significantly better conditions. expenses, cost High

presented progress. however, it to surpassing goals. our Through compared efforts did pandemic we XXXX from hinder million distract run were our our cost not annualized able million challenges, XXXX, revenue growth unanticipated the to did allow XX%. $XX by QX $XX cutting in of goal to QX not achieve While original our our savings rate, approximately Notably, approximately us we

performance. Turning now our to the detailed of

year million. For to generated total $XXX.X we a revenue the XX% increase XXXX, full in

earlier set we to in million commitment, delivered team -- of QX. in and required of in EBITDA EBITDA As proud more. and the noted, $XX.X in and types These doubled impressive this Medical Canadian adjusted to Along achieved XX% of growth million. was this $X.X I'm Use growth driven the $XX.X say than we've and adjusted than all to Tilray Tilray with Adult sales goal by our revenue, million the more more results, results which dedication, year International that demonstrated focus. business

successfully results accomplish the XXXX. Our COVID-XX navigated changes dynamics, presented outstanding during in to teams our and industry by challenges organization changing ever-present

each our in discuss segments of let's business Now, greater detail.

Use Our have to many grow continues evolve, and grown while revenues value the of by market. on LPs the business Canadian segment deep focusing Adult

offerings, or grew by balanced XXXX our of QX million while to more margins. sensible from revenue XXXX. we We $XX.X goal revenues rational grew as XX% approach XX% to -- and the sequentially million, $XX.X manage maintaining product QX to continue with take pricing XXXX year Full a our grew

factors. solid several Our attributed to can performance be

expanding of XX the our sales in focused significantly has Kindred product had First, at working and our internal Tilray. to Notably, partners, distribution on XX our marketplace breadth people agent, offerings exclusive our roughly depth profile. previously salespeople we compared Kindred expanded the as the has

the XXX estimated and count. of of store the beginning increased between taking Second, year we XXXX, advantage end of store X,XXX. count At an

view positive growth growth, and in store the well we During year by stores Tilray XXX Canada. were new use We as account COVID, market as including of opening broader net the Ontario. new retail a evolution the for the encouraged as X,XXX, XXX despite adult and opening in total of stores for

for Third, year, we mix consumer of had fair thoughtfully effectively their our ensure are we of to our our improved we the product all our compete across share segments. category ensure priced manage Throughout the and evaluating offerings process proactively product wallet. appropriately portfolio to

that our also paid product high a with As made mix price of X.X premium some stronger categories. presence previously competitive for discussed, market potency our we price and consumers our focused been innovative growing QX. and starting which Use primarily portfolio premium has believed competitive Adult introducing dividends adjustments new on Canadian the More more we delight in QX, line maintaining set, products of the potency some bring in in higher existing to in generally, products, products the

We continue the premium to of the sector prioritize market.

in mid to were in XX% range, products the our of XX% approximately were high mainstream and premium about QX, the potency offerings. During

offerings, maintain While flavor launched at with flavor cannabis and and and the third a Cherry. value the In presence continue best delivering balanced pre-rolls we a offerings, Natural Mango. we we Gummies flower Wowie focus In THC Marley batch to high prices. and two in Chowie our segment QX, brand grow introduced Sour competitive QX, and THC THC/CBD Watermelon mainstream we potency quality our premium was on focused Pineapple

During mint a hash offering QX, beverage market, including also product, new new factors a every we form brought tea. to several

hurdles International activity. legal to at temporary market. the greater and not continually safety. emphasis to the Looking the use during cautiously Use Canadian Consumers Adult medical leading positioned a as offerings prepared Based in the relative increased term and points growth incredibly added significant to power the operational and all these dynamic track our this XX% There's retail illicit we on as legal market are plans partnerships, excited continue opinion, heightened marketplace from longer appealing virtually our Tilray launch vape and and of business ingredients and forefront and will the as evolving will and trends. is the address remain through of our more any and to affordability value cannabis XX% were the challenges Union of smart, more Enniskillen of supported Tilray, be enviable in harvest by market in we're informed, of potential new inevitable had yields We disciplined accepting Adult our cannabis success Medical, products, XXXX facility European medical expansion are becoming believe interest In our that other quality and impede the as we market our THC Ontario XXXX yields Use of and be in will the ahead, retail results, increased GMP resulting operational the from a as view above innovation roughly we bullish chocolates. the cannabis well to in the in QX to markets. of also reflects distribution, changing Cannabis mix more In topicals the XXXX, well and business discerning that record in accessibility part and are conversion Canadian growth of new COVID-XX meaningful success in adult products. we of at international growth, increase driving any related advantage and take The unknown resulting position Canada on certified and product improvements In about our potency. on potency. excellence. in face we provider more our to restrictions

International markets, Medical Australia. which position to International member XX increased mentioned increased across EU's is global opening sales focused already be companies people Germany we I of not aggregate the cannabis XXX if As our XX%. the our Medical XXX%. in revenue revenue year, should other More broadly, other on represent QX, remain of States. to most growth market. than full million nearly for this Sequentially, the It win EU Tilray in better well-positioned, and

see of prescribing increase. both to opportunities in growth the to continue for doctors number Germany patients as continued We and

gain as we to continues expect market will also the to market continue overall grow. We share

at business we and know, our early stage customer Germany As awareness. our based brand our a building and very our you on knowledge, relationships market we're entered

Canada, and a Tilray's in We certified is with revenue this Germany. market of Hormosan. our extracts familiarize products, elements to and Tilray sells presence prescriber's the the neurology Germany. At Portugal to partnership December, seven team and We're a strategic international Hormosan at further complete. Hormosan phase announced primarily occurred two will the believe quality on signing them GMP and part medical the pain XXXX, promotion GMP doctors corporation cannabis supply. standards expansion end Lupin In years with innovative by these generics. substantially Group, The in drugs our of cooperation expand as early early generate positioned similar we the of relationship ago. to for our six of focused therapy is the performance growth or Tilray All expands, encouraged what to of canvases the ongoing Hormosan offices of continue that in some with an agreement reliable in facility

items on XX the XXX will outstanding the finish area. days, Over growing next the work and new commissioning start to we small

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campus and GMP need medical growing Medicines facility. prescription to is area and French will Beginning you XX in that QX, consistent products markets selected fully expected As of outdoor recently by GMP supply supply and cannabis cultivation French as French select of for hub includes for and with the for we medical of experiment, Agency serves source international facility an other to for XX Portugal duration the which the Tilray products be site Products In to in EU primary has we for EU manufacturing know, serve last patients the facility our been glasshouse medical produced noticed cultivation certified experiment. months. This France, Health Safety certified plot, our and in the to Portugal and supplying international R&D GMP markets. National state-of-the-art cannabis from the

European more optimistic are We the medical include and another the French and for the This about well-established program market counts authorization gets expect important rapidly example this of last of the partnership and week, the GMP-certified the with the we cannabis Tilray in of announced our how announced market offer very during our and following the the there's oil to Kingdom. full just study doctors cannabis products only in continues Obviously, outcome medical received patient and for And new making Biotech our and Tilray from prospects is expand medical credit Portugal. in agreement once to approval first team to also medical initial patients sustainable first to quickly the supply all business We a accelerate pleased program. in clinical range to even our to We import new agreement experience of we milestones events. interests. happen. European to commitment European with cannabis. with medical This Portugal Grow United a first cannabis and Worldpharma pharmaceutical-grade Spain. products. and access products Spain gives products will Worldpharma medical Pharma cannabis and distribute the of cannabis flower for export trials Tilray’s produce broader

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France, implementing medical cannabis. will EU programs doctors, and embrace Germany, and believe Following we as pharmacists begin Spain, countries cannabis patients, Portugal, other medical

months market $XX.X versus due XXXX across million QX did built XXXX. that probably million our QX period of confidence we XXXX the full and a decreased to XX date a Harvest Manitoba benefit from in operations achieve goals. opportunities. from XXXX. to divisions we compared to In our $XX.X success In XX% XX% Our foundation ago EU revenue however, to that in months XX XX% to acquisition us from XXXX gives year these ongoing increased the Hemp QX, not revenue Tilray have

management we that to factors make necessary were these the and to several by disappointed outcome this results, contributed to it are found team. there changes While

hemp continue to products commercial CBD aggressively in expectations Harvest products in Manitoba and We food business, solid the more the high have the in our business, a arena. to establish to leverage for operations look expand platform presence

effects remain deliver confident was our behind our retailers XXXX which also our impacts outstanding the will despite COVID year in a are delivered about in consumer challenging start line conditions. to on changes more expectations, We behavior that cautious the carry with management to it, to related results, but year in Michael. and team briefly this like Tilray that With I product. I solid the to transformative with chapter of the to the discuss we highlight to strategic Tilray's calendar many during anticipate call specifically I'd There next the and year. Aphria completing transaction like before would turn journey the second financial the benefits are that quarter combination over results,

product revenue major expansion and be earliest the beyond, the First company market. across largest continued It combined product scale scale brand company scale, Canada massive cannabis will and the Cannabis in and portfolio expertise range be and win. and development based matters. stages categories. companies the market the brands In all cannabis that will of both a global footprint, with global on market in clear We're geographies of of characteristics that major of the broad complete pro breadth forma leading is

the over just our of positive finished seven adjusted first quarter adjusted EBITDA. generated quarters, positive has EBITDA Aphria last we Additionally, and

Tilray business to will As profitability. new be market positioned to deliver a combined

Given and capital EBITDA combined robust have will the additional two be company and the companies company's million sheet of global cash profitability platform revenue stockholder of our to growth benefit growth The pretax the opportunities accelerate the business realized, to future the also the synergies from resulting help CAD$XXX balance will profile and will the in and strength the combined flow. a that access combined value. the

and flower, mainstream, leadership. curated The capsules, segments, vape major category, a edibles value, complimentary of in and pre-roll, and and economies, oils, company premium. cannabis core, all product consumer have combined Second, portfolio beverages, across brands will every including carefully

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Given Tilray entire financial and shareholders. bring and a our the also geographic working for to combined developed offerings, meet footprint, capabilities entity enhanced companies to cannabis production deliver returns world, and team as distribution, best-in-class these product positive together The delivering with combined sustainable while leverage dynamics, looks to around patients low-cost brand consumers leverage, the to and we're Aphria thrilled forward the expertise scale, results. strengths the two leading attractive needs team to of

all at U.S., will our that, will both a is the as may Michael exploit likely and global occur the over With landscape call envision when its the Tilray/Aphria clear financials. Finally, valuing, and I to to they turn CFO, of that to I look the review and business combined favorite. I are attributes believe when in the our financial political Kruteck, winner positive strategic a industry be partners positive future cannabis investors and changes who

Michael Kruteck

you on thank afternoon. and joining the call Brendan, everyone to you this us Thank

with and dollars provided GAAP U.S. prepared in information in financial was accordance the all indicated. is reminder, today the otherwise unless a As U.S.

item. related income Before distributed and marketing, on stock-based In sales, general cost of get started, of and acquisition expenses. compensation one our we we on broken to and like I'd expenses stock-based of care sales statement. case take out Previously, housekeeping this compensation, administrative, now is expense, had the R&D

As the related a included expenses. you the general of total expenses, administrative item and on In are these non-cash the statement. case find in will cash now acquisition flow amount still

financial our to Now performance.

and EBITDA As adjusted deliver significant made drive during progress strengthen to our XXXX revenue demonstrates, financial business, performance transform our and our against growth we solid goal.

team Our managing came initiatives, an through grow the related prudently organization our margins. noticeably so, substantially executing our improve incredible meaningfully also the has globe In business entire around pandemic line, the job ambitious while on done challenges. together doing top gross reduce costs our and to

us prepared of to evolution the cannabis is for business world's next company team Aphria Tilray's Our to the the we largest stage Tilray revenue. with look as by combine create

This Now XXXX QX to of growth consisted bulk of Adult to $XX.X hemp our up and quarter year. our compared last Use and Canadian was revenue our the was robust partially in product results. total declines year-end by XX% channels, offset medical International Medical, channels. in same million which

revenue compared hemp XX% and cannabis XX% sales, to XX% XX% cannabis QX was in QX and cannabis XX% bulk last XX% Excluding mix XXXX in XXXX. and in QX segment cannabis hemp year hemp and

same sales XX% certain essentially Use The a and XX% levels were through to XX% was to $XX.X million, Canadian we Adult sales channel in to basis, to increase million in a segment million Cannabis sales planned to revenue increase million. $XX.X $X on $XX.X help reduced products. medical year. sales, increase in bulk opportunistic zero primarily in XXX% the in $XX.X to a Excluding compared by to to increased sell driven as period Medical International Bulk inventory last million this manage increase an sales

growth factors, opportunities. Use relationship the we efforts growth outlets, to Cannabis form several in in attributable product our for use margin this factors, new approximately case and indicated, introduction pricing improved and establish Kindred increased active the to of in launch factor QX mostly strategies accounted sales our of adult due retail is back December, adult the in gummy and brands, use of will our in in due due of medical QX and the in attributable prescriptions, the locations. part contributed in In presence exciting focus XXXX to product the to half X.X lineup. hash form products Canadian in to of some previously The our Adult is lines higher of flavors on continue including and a XX% new our in XXXX, QX, The our mix X.X the across including As starting channel of the year. with partly launching vapes management to launch we growth in starting early of growth year, renewal pricing to shifts as more products the medical

earlier, by mentioned German As was was in business, Brendan Australian Medical International but our to our our growth attributable strong in performance generally also market. results solid at complimented

the basis, quarter. versus to XX% label XXXX, Hemp year and revenue strategy, decrease period bulk The compared and in to in due million and to million XX% part compounded and adult Our was QX $XX all as mix product XX% and consumer XX% regain of million Cannabis $XX.X customer to and which to private grow food period from XXXX improved its down International and ago provide to platform bulk Medical to to shifting surface XX% segments. XXXX Cannabis million international Canada and made XX% to up decreased and establish last business results segment million; offset sales million. sequential XX% this essentially footing of all working Below branded business products $XX.X hemp in in $XX.X strategic to in to was period medical major to our Total the mostly changes. The increases grew XX% $XX.X continues sold year's prior in XX% inventory and category. quarters, make COVID-XX further of a product Use XX% a XXXX QX, QX, XXXX. that in the from and XX% notwithstanding, lack decision they increased direction from segment QX. primarily by medical due no during the Canada led expand Harvest use sales. behavior moved same will clear compared in sells is in while versus for of presence in QX, prior excluding Manitoba XXXX XXXX and in Harvest to QX, story their a evolve to XX% Medical in $XX.X increased hemp in equivalent coming a Adult management a in we will good to million; our the partially XX,XXX XX% On kilogram X,XXX to the solid XX% in These Canada a sales Manitoba due the the $XX.X XX% quarter by were XX% for of in and revenue believe grow robust the of decreased sales, $X.X ago in XXXX, represented the QX, QX CBD they year to XX% news QX. bulk of XX% also The decrease QX, decline in was lack XXXX. XXXX conscious a XXXX, QX, year million

X.X distribution net to potency XXX adult of the cannabis from decrease per channel in X.X% during reported in in in during period due was mix, Canadian and and the price adult increase to or Canada. shift was products products a price product accelerated products XXXX in of was and price sales, the a and market versus QX use QX and XXXX shifting in gram medical sales in and continued including growth Our due a of $X.XX QX sales increase decrease $X.XX, average The the year. of QX. XXXX same in The growth flower the XXX% this growth $X.XX selling cannabis use in international of channels higher a selling continued to our slight Cannabis

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to As near we permit Brendan to European these and in positioned-well we capitalize medical indicated, countries of expect the see additional reasonably on use a cannabis term, opportunities. are

compared the partly cost Cannabis of of year-over-year Our the discontinuation increase sales from lower third quarter of the to sold of due products fourth and to $X.XX result the XXXX, increased program The of to decreased X.X kilograms in bulk average increase quarter cannabis $X.XX The was make $X.XX which due our and XXXX. cost sales to need higher are decrease in any QX reduces Recall which cost Portugal. cutting is stopped Portugal in turn absorption of attributable inventory that we to costs realization dried and and by-product than have High in attributing flower. measures that in adjustments. Park additional future to facilities, better rates to

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year assets In as the holdings cultivation see increased High absorption XX% negative production QX see for margin adjustments X.X improved in we we and ongoing expect also sales to use, ongoing grow last the at expansion costs continued XXXX. of in to and offerings in come our Portugal, online fully international facilities. to including Park Gross our expect during and processing QX adult our same period High from X% inventory medical improvements XXX% during XXXX, valuation XXXX. our cost farms With Park Canada and throughput

partly QX was period compensation, The XXXX and production basis adjustments QX gross and XX.X% and XX.X% from excluding margin year to at cutting in stock-based roughly margin lower XX.X%, point XX.X% represented sequential in margin medical in for from which in sales X,XXX increase resulting XX.X% basis gross and XXXX period increase Cannabis, from a our a point for XX.X% QX and valuation due was increased inventory stock-based international increase Excluding QX XXXX. cost in costs from compensation, increased adjustments the in Gross XXXX. XXX to ago measures. ago our inventory facilities year valuation from

continued business. strategy and absorption, inventory and to QX our see margin front XX% full cutting realization for XX% at expansion more quarter better to XXXX adjustments, a excluding on process in and expect we end Gross ago head, the our margins fixed pricing of to XX% improvements, cost measures, by XXXX. throughput additional Hemp, year in compared in our of cost facilities Looking rational evaluations flat the QX due remain at complimented

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negative with mid impacts XXs between forward, fluctuate Going margins market as we to new the XXs to mid we distribution of offset margin products. Hemp to the higher expect work

Moving to expenses.

favorable leader significant impairment and our charges, compensation, and the expenses reflect with net strengthening hemp million the loss the decrease operating and position quarters QX in environment $XX.X Excluding the the related slightly a XXXX. past $XX.X acquisition investments method few more compared million we cost in in prior million, equity QX comparisons aligning to made our below year from as These over progress expenses, structure $XX.X quarter were the expense and a total stock-based efficient business and leaner current industries. cannabis

implemented savings These rate to severance impact achieve net the of million operating of XXX efficiencies run in achieved QX $XX headcount and XXXX, efforts costs close with Over cost course $XX.X an of million. our resulted positions structure. we our reductions already annualized combined eliminated approximately savings XXXX cost to versus annualized

in in for for in of of in net million $X.X to XXXX in from share QX improvement our gross QX per $X.XX a impacts. ability $XX.X to and adjusted This XXXX. significant efforts established $X.X EBITDA adjusted its compared to a was our compared last negative noted, and or On in EBITDA The were is $X.X was you year. XXXX costs. $X.XX improve QX, we segments. positive $X.X know per $XXX.X sequential achievement per $X.X year. share savings basis, began to goal and cost improve million negative net QX was EBITDA loss efficiencies, loss our and Brendan last before share XXXX. is Net mix, delta was loss of to not late quarter the XXXX response negative in a revenue the $X.XX the reduce million our measure to direct accelerate to EBITDA loss year-over-year As attributable due million our operating subsequent improvement of key reduce loss and a the or or significant pandemic, was as a million third QX Adjusted million improve negative million negative The margins the adjusted costs, sales

Regarding senior approximately some in million the shares for million November, two of $XXX.X exchanged XXXX X% XX.X balance activities. amount sheet stock. notes aggregate In our of common principle our due class convertible approximately we

million, the XXXX of debt $XXX.X We Following purpose transactions, ended eliminate the aggregate to QX was cash million the cash interest shares annual at reduce outstanding. remain $X.X increase exchange in our opportunistically principle of amount The $XXX.X of holders million warrants and end transaction million approximately costs. notes approximately approximately Since of $XX.X in million and our proceeds $XXX.X of the with equivalents XX.XX cash from QX, million XXXX. of $XX.X representing for have an of XX, million. exercised December

cash our $XXX.X XX, million. cash and February equivalents stood As of at

future. the to Turning

cultivation are cannabis leaders and development culture brand year. the As to our acceptance close know, transaction two this of combination we this innovation, share to view a together future brings that complete cannabis transaction you working and Aphria exploit We a with business current QX as of during strategically international of and in positioned win-win. quality the It products. expect us industry that are

we pursue help combined a the As to products, opportunities and a delight to for branded growth patients company, with accelerated leading designed consumers. portfolio intend of

to and on sheet capital balance strength have the We favorable will access flexibility terms.

first will Brendan. closes. will And identified delivering transaction I'll now focus to pass on approximately two CAD$XXX synergies We the attractive it back after stockholders. the on achieving the we returns years for during pretext focus million

Brendan Kennedy

Michael. you, Thank

opportunity turn in for Before questions, the over XXXX. take I to this want thank call we success for supporting to since life to our company came to you Tilray

adult So, use and let's We're Canada first producer production point to in certified Health North are numerous. and one licensed first cannabis distribution. by for first on America, GMP the the from medical that medical producers of be

producer legally of the licenses to America Africa, America, The countries, first and first licensed Australia, Portugal. to and Europe, from medical the South to receive from and national cultivation cannabis Canada, two export producer North governments

production We'll giving with public certified accelerated initial an to GMP for brands, Tilray into the Director competitive stakeholders. new cost to and all forward success so to including you. research Throughout and work critical U.S. Tilray. immensely And medical low the patients not and only cannabis strengths. value Portugal. has time, our evolved and industry And partnerships ensure a footprint, and alliances growth. Thank us in of in look industry we able help product new which of established We create our global facility the cannabis the distribution forward company I and global you. production ideally proud built to questions. helped drive positioned entered the continue were that the I our was we state-of-the-art world-class serve medical now also disruptive over turn our all Operator? to advanced after that offering exchange, we but further to We real-time. market closing iconic the which and on of guide the to board, their efficacious, call be our continuing to will stock a supported advisory Based the as do with complete on were to global and feel transaction that first


Our we'll this line of be At with comes conducting first Capital Chen Instructions] question a the Tamy session. BMO question-and-answer time, from Markets. [Operator

question. You with may proceed your

Tamy Chen

bit Thanks. business. to just a the on wanted Good recreational I Hi. afternoon. focus

it sequentially. wrong, rec my me looks declined to sales the I'm X.X it wanted correct seems of from just I understand, a math as percentage but a like So, and if bit kind like

strength like in was seemed of side. the it the flower more So

for hoping color a was there. more bit just So

of in to loaded you. Ontario some flower lockdowns? the we new impact you look And addition the products expanded the Thank of with was February we In as distribution think significant trajectory mentioned, how quarter. the the of that form about should January, there into

Brendan Kennedy

Sure. Thanks, Tamy.

distribution growth led all on the by in product the our of terms actually QX of the products, or within growth the saw of good quarter-over-quarter on the set products we So was flower. category, in but it

across saw growth edibles vapes oils we and the So solid in board.

didn't necessarily say I flower that, that So, decline, see the just faster. grew would we

first that part of So your question. was the

increased distribution, what added points have self-reported, talking excess is terms we about the bit -- probably we're reach the, it's a -- plus, that to by X,XXX. our I XXX of terms probably in XXX guess about of so. and it's listings because distribution, And of what on this marketplace little in X,XXX XXX something in listings that the hard or we're seen seeing but is we've somewhat -- In basis, a self-reported is of

that of of It's that's in a new -- bunch So, existing new products I things. combination a It's or products markets. and products think new in markets. existing

the we've we depth more they that where of had with and that something What I more and I terms a what So replace more, here working they've of the got, to to people a yet. in our they've how is with that, provincial to out think breadth sophisticated out to attractive internally we're approach their of we that is, that it's is compared that actively And seeing marketplace. products guess, the portion consider are in don't reach be where in boards relative on got that us maintaining for that number own discontinuing getting we're quarter Kindred, think with and in is carrying consumers. boards, things And else to with are that the of got that the to we've first shelf. the and true relationship as we then, the the as well the team try might kind figure visibility quite I -- want know it's them real-time. that for working good have And both got combination. relationships we've provincial got And they products it

got means business. But of it don't go specific to for doing quite being visibility to yet replace considered managing we've discontinuation. in what goes wrong can what a we the actively terms products know are that and ahead So, we're I and that


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

your You question. may with proceed

Aaron Grey

Hi. Good question. evening and the thanks for

me, a I for Harvest. want So question just quick on to Manitoba ask

of just management to some changes. some get of in So reasoning more color for the kind the terms having of

to private talked So that you down on shift on for the margin. seem a We not only I a about but weight good sales, large label realized amount also customer. pretty sequentially, to

or kind forward So the the hopefully about to you trend around do you're the of team are going just of seeing Thanks. think will that's of switching other management new to guys. what for Hemp further you're want you customers that that there kind hoping of Do think label private margin maybe changes trend kind profile terms that overall a you in to impacts on side. segment might that the the turn talk

Brendan Kennedy

as customers. historically, product of seen Harvest Manitoba successful extremely at have clearly We've and its well. our three company success Looking Those are historically in Whole Costco. in the Amazon largest a lot been and Foods

two Looking successful for has States been other at products. the always been the other and distribution the produce we the products. company is make as private Costco years last the points label aware of the historically United label the small for a that as to over of private where and really the Costco at at Harvest has to long-term shift objective Manitoba in for is we've company at certainly label customers few Costco, the something move private But had business a

And so, that's the real opportunity.

has the had to customers Manitoba and objective So the a there opportunity Hemp out Kroger purchase customers Costco at those products it's them Walmart retailers, that, they -- purchased whether other that's Michael, at at Target, or of consumers anything there. lot historically to just products is get Manitoba get Harvest rephrase U.S. add to like customers Harvest, Costco. food and purchase to to

Michael Kruteck

to visibility our believe additional customers got we've margin. a be that, the to say switch upon significant private is now. to recapture just don't think our based that would is looking goal with the portion of I that will I label, we that distribution the right

of branded the that's And that of in that believe brand I a is CBD we Pollen business a going than other building out name us. So, CBD more have. plan a in to we certainly we do acquired a that the space owned with aggressive that and business the go-forward piece product play. our the We've would is, product are the on to leverage focus by of fashion we we we for hope got portion Pollen previously brand a as that it

Aaron Grey

Great. All right. Thank you.


Our Rupesh of comes line with Oppenheimer. question the next from Parikh

question. the may You with proceed

Rupesh Parikh

Thanks question. for taking my Good afternoon.

towards think how current terms in of you any forward you I for sales EBITDA just So, or guys the quarter? guess, the about going QX, current quarter, commentary are providing

Brendan Kennedy

if think I Rupesh, me let this but if -- were -- mean this out. not were start I --

a with of commercial pleased We about position that a XXXX moving I opportunities that would results a we've through cost But we I the are and we we've sits line. that how to got delivered that business, and and in good in facing, on business down a and to the here's guidance. EBITDA There of to we're the side feel the So, give guidance provide over specific for QX, But entirety environment, we Things progress this we're COVID about say to the coming parts that feel lot that quarters. moving just at of obviously that really the solid good the a We're point of can continue are given turn its we've obviously to specifically guidance. don't the us. a bullish now, right know think just in know due the I made. be business, the probably COVID, feel. -- be or and in place don't unusual given where out we the that on more think that circumstances relatively absent we're to make I quarter going front the we progress I parts side the that and just bit all

Rupesh Parikh

Great. I'll you. pass Thank all it Okay. on.


from comes and Cowen with Our Azer of the Company. Vivien line next question

question. may your proceed with You

Steve Schneiderman

Steve is Schneiderman, pinch-hitting This Hi. Vivien tonight. for

price you guys see which what the business, side quarter? well most of within flower, as did On use you the that product lines. given by you other in Thank primarily flower, indicated traction the at point was driven you. did reset adult third market the as the But

Brendan Kennedy

I here. pull information just Well, and me Steve some mean, say, let I'd up Yeah.

continue as and to continue we in -- high the segments. our premium sales we the So, potency our predominantly be and mainstream see in in sales the to indicated, premium,

sales indicated the to we compared So, some had value additional as did We QX. segment XX%. have

and And the that's that Dubond received driven that driven way products in think product in by the we did the I And QX, rolled kind just was on some it. fact the partially which characterize well out we side, Quebec. [ph] so -- of was hash we that primarily by see very

I in think fact, one number product it's right the hash In considered the marketplace now.

we So, driving those potency been forces And products. last continue premium of the the I'd some -- of focused say the behind that higher to but that, that's quarter. were consistent, I that mainstream on stay think and the from now

Steve Schneiderman

Thank you right. guys. Great. All


comes from Cantor question Fitzgerald. Zuanic of line next Our the Pablo with

You may proceed your with question.

Pablo Zuanic

I Thank you. two ask can if Brendan, here. questions

negotiate you. the first big and the last did to So the business Thank back other that those export be you on would in doesn't then in markets that terms companies why all -- here. The had the way, all? month, good they had And our service the and the export exchange your congratulations just very on room providing. fuel the markets also, is enter related to and that sharing would you of have and between trying products you that talk Aphria of markets? Portugal make stickiness sales to get at What second brand a but you Tilray, one, about the valuation by Can maybe go part It of ratio? a question, to I the seem of the comes talk you're there question given Canada, sense about repeat in or the making. stickiness those and do it a right? you're quarter news but lot gap markets person the in stupid great shipments are across the or as

Brendan Kennedy

always that's a can XX going to basis. Thanks. combined the Tilray, the continual individual next And metric, offers this to Pablo. Thanks. a to perspective. out industry I over when growth I've every years. look another my can't operational, the think identify reach, for -- in I return. I geographic the across speak I industry new been greatest look year-over-year And on sentiment. shareholder Tilray decade, see Great. can't financial, I short-term product, speak shareholders when I Obviously,

So, that. announced close And proposed we're that's the I working to XXth beyond speculate December transaction on and on focus. can't really the our terms and

is grows -- In on quarter-over-quarter that And We've entrance the distributes years. then the a grow terms process seeing last sticky. into finding goes Patient it market pharmacist the goes because -- in and seeing into patient it pharmacy doctor, question, the seen we're last right? prescribes the purchase two of share basis, second extremely different, Germany. new really throughout throughout product, We're to doctor we're market, despite a some grow the the the the product. our

that's country. the in terms in in agreement in pharmacists patients. It's France. announcements that and see six we've would some announcements and a say only I not physicians I more brand stickiness regarding the Germany, then each optimization New to of international loyalty the of that -- each we the use Spain, markets on well made rationale for establish and you see as we're adult and the in And we behind Germany probably so, the we're registration, -- it country, seeing export in to the in regulators see market as educated pharmaceutical seeing important certainly establish important but that's more eight of the to with part part in weeks And in in Australia and And side in Zealand. It's relationship and Portugal, stickiness of Hormosan U.K. think Canada. last over

the guess to in expect countries, yes, as short we been, share market have I such are we answer so, Germany. continue to But would And seeing thickness. take

Pablo Zuanic

you. Thank Great.


line next Sandler. Our from Lavery question of Piper comes with the Michael

proceed question. your You may with

Michael Lavery

U.S. wanted to you. I back the come evening. Good Thank to just

to then you're think why, love some little reform you and from In You you And I'd think favorite what succeeding. of as timing trying on them positioned a certainly things a to that. the thinking maybe to some you I for brand, planning? referred for of well clear with of entry? all expect piece as now are advantages to How do touched And to but timing. you prepare I part on are regulatory at far working maybe ability believe related of point your terms bit to for the reasons yourselves the little be understand like bit in any U.S. of a do just as have Aphria you actively it, any to

Brendan Kennedy

we're very the active. on So medical side,

opportunity one I medical and the like XX an at to we And -- XX to think the we import going XX world. that like just we I I other around -- U.S., there's announced think around when be countries that to world. with countries shipped cannabis, we've to just medical trials. the dozen into And DEA have-- cannabis the import countries so for look and at we the the far I few when we're companies agreements multiple, when it's clinical We around I the we U.S. look have performed the have of multiple FDA imports has world, And half say around approval. think a I

I there's medical pharmaceutical U.S. pharmaceutical be to think more cannabis a chain. to going distribution for an import certified GMP grade a product opportunity the in at through supply

model. So really MSO the of outside

it's And think do. international are U.S. And available opportunity so prepared I that's almost GMP product a think I of something relatively companies to few that's and inside no the there's huge

to states adult It's new legalizing -- that's a And comes U.S., use pay very changes, so in I attention it we huge When regulatory something the market for to the we continue adult to think use. aggressively pursuing. that's opportunity. are close

in think is I to that. going year unique this be

measures through more see will ballot the states and than through legalized initiatives. ballot You legislative branch rather

recently And that think see possibility it'll paying in the think U.S. two November, really and ballot between it's a thing the existing key the a of from adult tobacco the state republican of I to alcohol the we're and this that a use U.S. in another Although, And about thirdly, There's through doing model. is Altria be place legalize the has four measure. seeing close you'll companies. really distribution take November, five -- now MSOs the year I years companies. out, U.S. a cannabis. a like cannabis press been or that Ohio legalize a think then I been lobbying in medical then states some The lots battle We're attention right

question the that be so it strong going is future. we MSO pretty adult And to model is is opinion in. the model which use I big have not existing the of be to going the a have model

I tobacco. think it looks more like

-- And adult to interstate that it's products think also like you extremely be to alcohol. commerce. cross more see I I I that's players extremely players. -- lines going costly think think cannabis will to disruptive will state use entrenched And entrenched

And the that's look what that's imagine at company we in deploy at. to comes time I it so look the when And what will combined U.S. capital

Michael Lavery

you touch think the can when you on of piece And come? that timing might

Brendan Kennedy

timeline right I to that question. next mean, still sort think the incremental. XX think you're I asking and I XX it's of month

the you'll rather of think couple steps I a one shift. than way see giant along

now. Although, it's completely unpredictable right

believe should medical be. XX% be should XX% legal, Looking adult of Americans cannabis at use believe

certainly also issues it's -- support, among the And bipartisan of few voters, Congress. have one that but there's so, in the

from two at could XX-month it from but months sort And XX be so, that I'm still looking timeline, XX to now. now, months of

Michael Lavery

much. very Thank you Okay. Great.


Brendan I we back reached end call the turn to and Mr. closing would over session. Q&A gentlemen, Ladies Kennedy the of for today's have to remarks. like

Brendan Kennedy

we'll the by deep we're broad a have Thank leverage ready patient financial call. mission our brand Tilray to are results needs phase like combined profile, lives our their for bringing and strong attractive you companies consumer like and combined leaders, through company able business and will next Have well-positioned thank network together deliver and world. of to meet and And Aphria. Tilray operator. be pleasant advance two you, believe participation of returns a for Tilray of our and for To company be Thank people's and the Great. leading I'd scale, conclude, I'd QX production, team partnerships, low-cost and to our to quarterly both With your unique around of improving geographic an to strength in you. The and distribution to to cannabis industry interest unmatched commitment portfolio. of thank sustainable, care will the on to shareholders. our all product take power the the hemp. cannabis proud your evening. combined capabilities the brands, we


conference. for concludes Thank joining today's This today. you us

this You time. may at disconnect your lines