管理層發言
Thank you for joining today's conference call to discuss Tilray Brands' financial results for the third quarter of fiscal year 2026, which ended on February 28, 2026. I will now turn the call over to Ms. Berrin Noorata, Tilray Brands' Chief Communications and Corporate Affairs Officer. Thank you. You may now begin.
Thank you, operator, and good morning, everyone. By now, you should have access to the earnings press release, which is available on the Investors section of the Tilray Brands website at tilray.com and has been filed with the SEC and OSC. Please note that during today's call, we will be referring to various non-GAAP financial measures that can provide useful information for investors. However, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. The earnings press release contains a reconciliation of each non-GAAP financial measure to the most comparable measure prepared in accordance with GAAP. In addition, we will be making numerous forward-looking statements during our remarks and in response to your questions. These statements are based on our current expectations and beliefs and involve known and unknown risks and uncertainties, which may prove to be incorrect. Actual results could differ materially from those described in those forward-looking statements. The text in our earnings press release includes many of the risks and uncertainties associated with such forward-looking statements. Today, we will be hearing from key members of our senior leadership team, beginning with Irwin Simon, Chairman and Chief Executive Officer, who will provide opening remarks and commentary followed by Carl Merton, Chief Financial Officer, who will review our financial results for the third quarter of fiscal year 2026. And now I'd like to turn the call over to Tilray Brands' Chairman and CEO, Irwin Simon.
Thank you, Berrin, and good morning, everyone. It's been an exciting year at Tilray Brands. We delivered a record quarter with continued international expansion across our platforms. I also want to briefly highlight our BrewDog acquisition. When you have good news, you go to the tallest building and scream it and don't wait. This transaction positions Tilray at approximately $1.2 billion global revenue company on an annualized basis and meaningfully strengthens our long-term growth profile. I've done over 100 acquisitions in my life, and I've never received more calls, congratulations and a brand with more awareness on a global basis, which helps Tilray to be at the forefront around the world. Since 2019, we have transformed the company from a Canadian cannabis business with approximately $50 million in revenue to a global lifestyle consumer products company approaching over $1 billion in revenue on an annualized basis, providing the strength and effectiveness of our strategy and our execution going forward. We are building a diversified global platform grounded in a long-term vision of bringing people together through meaningful connection. With a strong team and clear priorities, we remain confident in our path forward. Today, Tilray leads its global platform as the #1 cannabis company in Canada by revenue, the fourth largest craft brewer in the U.S., a global leader in medical cannabis and a wellness leader in North America. And now with BrewDog, the #1 craft brewer in the U.K. Transforming this business has not been easy. We operate in highly regulated environments globally. Face cannabis regulatory reform in the U.S. and navigate constraints across international markets. At the same time, we've strengthened our global brand portfolio, scaled and optimized our cultivation capabilities and brewing capabilities, built a $0.5 billion beverage platform within a long-established category and established a meaningful wellness strategy. This level of progress reflects both the pace of our execution and the strength of our strategic foundation and the teams that we have in place. Yes, there have been challenges along the way, particularly with integration, and there will continue to be challenges. This takes time. But today, we see the pieces coming together in the way that few businesses can replicate, and we're building something truly differentiated. Our Q3 results reflect this. In the third quarter and consecutively from Q2 to Q3, we delivered record results with net revenue reaching $207 million, reflecting 11% organic growth year-over-year and gross profit increasing to $55 million, up 6% from the prior year despite ongoing industry and macroeconomic headwinds. We also maintained a strong financial position, ending the quarter with $265 million in cash, restricted cash and marketable securities and approximately $3.5 million in net cash, providing the flexibility to invest in growth while maintaining financial discipline. Our Q3 results reinforce the momentum we outlined last quarter, improving fundamentals, sharper execution and increasing leverage from our diversified global platform. Turning first to our cannabis business. We delivered strong results this quarter across our global platform, with continuous momentum in both Canada and our international markets. As the regulatory environment evolves, particularly in the U.S., we're well positioned with scale infrastructure and experience to expand this business globally. We've built this platform deliberately, and we're ready to execute as opportunities develop. Q3 was the largest quarter ever for international cannabis growth. We generated $24.1 million in net sales with 73% year-over-year growth and 20% sequential growth. This was driven by exceptional sales volume growth. Medical cannabis flower volume was up 100% year-over-year and medical cannabis oil volume was up 90% year-over-year. Tilray holds top position by a significant margin in the medical cannabis oil category across leading international medical markets while we leverage our expertise and reputation in the doctor-led distribution channels. Germany, our largest international market grew 43% year-over-year, an important achievement for our international team as they continue to navigate evolving regulatory frameworks and significant price compression across global markets. Notably, we overcame $7 million in price pressure that flows directly to the bottom line. Turning to our medical distribution business in Europe. I'm extremely proud to say that CC Pharma was recognized as one of the top 100 innovators, leaders and trusted partners in the European pharmaceutical market. Congratulations to the team on a great accomplishment for continuously driving our business forward. Our Tilray Pharma business grew 35% year-over-year to $83 million, making it our highest ever third quarter for sales and profitability. The increase in distribution revenue in the period was driven by portfolio optimization, mix, positive market trends and increased medical device sales. Our recently announced partnership with Alliance Healthcare further strengthens our leadership in Germany, expanding our reach to more than 16,000 pharmacies, up from 13,000 previously. In addition, we entered into a partnership with Smartway, a leading U.K.-based pharmaceutical distribution company to expand the availability of our pharmaceutical products across the United Kingdom. Together, these partnerships speak to the strength of Tilray Pharma as a valuable strategic asset within our global medical cannabis platform. Looking ahead, our distribution business is laser-focused on driving future operational efficiencies, be automation, centralized sourcing, harmonized packaging and label that sets us up with vertical integration for our cannabis business. Turning to Canada, our Canadian cannabis business continues to deliver strong results. We reinforced our position as Canada's leading cannabis company by revenue on a trailing 12-month basis, and our adult-use medical grew 8% year-over-year to almost $40 million in net revenue. This performance speaks to the strength of our portfolio and the resilience of our commercial execution and the team that we have in place today. From a market share perspective, Tilray maintained the #1 market share position in cannabis dried flower, pre-rolls, beverages, oils and chocolate edibles. Importantly, this leadership reflects the strength of our tiered brand strategy in dried flower. Tilray is the only licensed producer with three brands in the top 10. In pre-rolls, we hold two of the top three brands. And in beverages, we delivered the top two brands in the market during quarter 3. This approach diversifies our reliance across brands and facilities while allowing us to serve the seed consumer segments with clearly differentiated offerings. From a brand portfolio perspective, Broken Coast delivered its strongest quarter in the past two fiscal years, growing 16% year-over-year. We also continue to innovate with our core categories launching Good Supply, Where's My Bike and Blueberry Donuts cannabis strains during the quarter, both of which finished the quarter among the top 10 dried flower SKUs in British Columbia, and we plan to scale them nationally and introduce additional genetics in Q4 and into fiscal 2027. Finally, we also introduced a new brand, Portal, featuring vapes and infused pre-rolls late in the quarter. While still early, we're beginning the national rollout. We expect to launch Portal to build upon our momentum and drive meaningful growth in these key categories going forward. We're also making clear progress in high-growth price-sensitive categories such as vapes. Quarter 3 marked our strongest vape quarter in the past two fiscal years, reestablishing Tilray as a top 10 player in the category. Importantly, this performance reflects our disciplined approach to revenue generation. We intentionally scaled back our vapes volume until we achieve the right cost structure and return the category to profitability. After seven years of federal cannabis legalization in Canada, we are modernizing the store. We built a strong foundation on Canadian cannabis, and we're now advancing to the next phase transforming our cultivation platform through AI-driven growing systems, next-generation genetics and improved yields across our operations. We're executing a comprehensive end-to-end upgrade of our cultivation capabilities. And while this transition is still underway, we're already seeing progress as we move towards more consistent, higher quality and more efficient production. This evolution is designed to enhance margins, strengthen product quality and position us ahead of the curve as the industry continues to mature. In the U.S., we continue to monitor the rescheduling of medical cannabis and are actively engaged with legislators and regulators. We're also evaluating our participation in the center for Medicare and Medicaid Innovation pilot programs. Tilray is well positioned to contribute to the pilot program with its proven track record of operating at scale in a highly regulated medical cannabis globally. Moving to our beverage business. This quarter and shortly after the quarter end, we successfully executed against our key strategic priority to expand our global beverage platform through a strategic licensing partnership with Carlsberg and the targeted acquisition of BrewDog, strengthening our portfolio, improving utilization and advancing our global growth strategy. We are honored and proud to begin our partnership with Carlsberg, one of the world's leading brewers starting in January of 2027. Through this partnership, we'll produce, market and distribute a portfolio of leading Carlsberg brands across the U.S., leveraging our brewing network, commercial capabilities and our national distribution footprint. We expect this to drive immediate scale accretive to revenues, supported by increased volumes, expanded shelf presence and a more favorable product base. Following the Carlsberg announcement and post quarter close, we acquired craft beer icon, BrewDog, creating approximately $500 million global craft beverage platform on a pro forma basis. We acquired BrewDog's global IP, strategic brewing and brewpub assets across the U.K., Ireland, Australia and the U.S., creating immediate scale, strengthening our infrastructure and broadening our international reach. This positions us to extend our reach into previously untapped markets such as the Middle East and Asia Pacific and take our U.S. brands globally while strengthening their portfolio with a highly recognized craft brand. We acquired this platform for approximately EUR 40 million, which reflects a fraction of its replacement cost. This strategic acquisition has significantly accelerated the implementation of our global strategy by several years. Now turning to the results of our beverage business. We're making disciplined progress on the integration of our beverage acquisitions while staying focused on the work still ahead to generate growth and profitability. As expected, beverage net revenue of $43 million in Q3 was impacted by margin-focused actions as well as industry-wide softness. These margin-focused initiatives are delivered and necessary to reset the business for profitable long-term growth. What's important is that the underlying fundamentals are improving. Through Project 420, we rationalized the portfolio, removing nonstrategic SKUs to improve velocity, margin and execution. We continue to focus on cost discipline, delivering over $6.2 million in annualized savings during the quarter, completing our target synergy program of $33 million enabling us to achieve approximately 32% gross margins despite significant input costs and headwinds. Without these decisive actions taken, margin would have been more significantly impacted. Operationally, we're building a more focused, higher performing portfolio, we're prioritizing fewer, bigger, better innovations aligned with consumer demand. Products like Pub Light are expanding distribution and our ready-to-drink cocktails on the West Coast are delivering margin accretive growth. We're also starting to see sequential improvement across our core brands, including Sweetwater, Shock Top, Blue Point, Revolver and Montauk. Looking ahead, we expect continued momentum on improving fundamentals and a stronger path to growth. Within the spirits category, in Q3, we focused on enhancing our commercial plan. Wholesale completions were 160 basis points above the national spirits trends, demonstrating strong consumer demand and awareness. Our ongoing efforts remain focused on expanding product distribution to additional states and beyond. Regarding our U.S. hemp-derived THC beverage business, we continue to offer Fizzy Jane's, Happy Flower, hemp-derived THC beverages in 5-milligram and 10-milligram formats through nationwide retail partnerships, including major wine, liquor and grocery outlets across the country. While federal and regulatory changes may affect HDD9 products after November 2026, we continue to stay engaged with legislators and regulators who are closely monitoring the development in Washington. Turning to wellness. Net revenue increased by 16% to $16.4 million in the quarter, driven by our focus on value-added innovation across superseed, better-for-you breakfast and snacking and continued momentum in the high-vol energy grade. We'll continue to focus on distribution expansion, broader assortment and promotional improvements while continuing to strengthen the profitability profile of wellness business. With that, I will now turn that over to Carl. Carl?
Thank you, Irwin. Before I begin, please note that we present our financials in accordance with U.S. GAAP and in U.S. dollars. Throughout our discussions, we will be referring to both GAAP and non-GAAP adjusted results and we encourage you to review the reconciliation contained within the press release of our reported results under GAAP with the corresponding non-GAAP measures. This quarter, we achieved record third quarter revenue and strong year-over-year improvements in gross profit and adjusted EBITDA and we are reaffirming our adjusted EBITDA guidance for fiscal 2026. Net revenue was a third quarter record of $206.7 million, an 11% increase year-over-year. Revenue growth was across multiple businesses. Cannabis net revenue increased 19% year-over-year to $64.8 million during the quarter, driven by strong growth in gross international cannabis revenue of 73% and 8% in net Canadian adult-use and medical cannabis. The exceptional revenue performance of our international cannabis business solidifies our point from the last conference call that Q4 2025 and Q2 and Q3 of this year's performance are more indicative of what investor expectations should be going forward. Growth in international cannabis accelerated based on an enhanced supply chain, increased patient adoption in certain markets and our targeted expansion into emerging markets. This quarter, we continued to strategically reallocate supply from the Canadian wholesale market to higher-margin international markets and we'll maintain this approach as those markets continue to scale. Year-to-date, we allocated approximately six metric tonnes of product from Canada to international markets, which continues to supplement our ever-increasing cultivation. Distribution net revenue increased 35% to $83 million based on a focus on higher velocity and margin SKUs and positive impacts from foreign exchange rates. We expect distribution to continue to be a strong contributor as it complements and scales alongside our international business. Beverage net revenue for the quarter was $42.6 million compared to $55.9 million in the prior year. However, the results do not fully reflect the operational progress we have made in the segment. During the quarter, we successfully completed Project 420, closing and delivering $33 million in annualized cost savings, which improved the underlying cost structure of the business. Those cost savings are not always visible in our margin results as they've been largely offset by almost $2.9 million of higher aluminum costs year-to-date and lower overhead utilization rates. Getting our cost structure right in beverage has been and will continue to be a key focus area for us. Looking ahead, Carlsberg represents a compelling opportunity for us through a partnership with one of the largest global brewers. The relationship enables us to improve overhead utilization without deploying capital to acquire a brand while creating meaningful operational leverage. It also provides multiple avenues to strengthen the platform including increased scale with key global raw material suppliers and the ability to collaborate and learn from one another on innovation and best practices to support long-term growth. BrewDog represents an equally compelling opportunity to strengthen our beverage business in the future, but for different reasons as it is more about an international opportunity. The BrewDog transaction was unique because it represented a chance for the business to start with a clean piece of paper and hand-select the best and most important elements of a strong business that was placed in administration for reasons other than its core business. After this transaction, Tilray strengthens BrewDog, BrewDog strengthens Tilray. Lastly, wellness net revenue in the quarter was $16.4 million, growing 16% year-over-year based on our focus on high-value innovations the continued strength of high-vol and growth in the ingredient sales channel. In terms of contribution, cannabis accounted for 31% of revenue, beverage revenue was 21%, distribution was 40% and wellness was 8%. Moving on to profitability. We achieved a record third quarter gross profit of $55 million, a 6% year-over-year increase. Gross margin was 27% compared to 28% last year. By segment, cannabis gross margin was 40% for the quarter compared to 41% year-over-year and remained largely flat, primarily due to price compression in international markets, which reduced international cannabis revenue by approximately $7 million despite higher gram equivalents sold. Distribution gross margin increased to 12% this quarter compared to 9% year-over-year due to favorable changes in product mix and increases in average selling price during the quarter. Beverage gross margin was 32% this quarter compared to 36% in the prior year quarter. This change was a function of lower overhead absorption rates and higher input costs, including the previously discussed aluminum costs. Wellness gross margin increased to 33% during the quarter from 32% year-over-year as strategic price increases largely offset an unfavorable change in sales mix. Net loss was $25.2 million, a $768.3 million improvement compared to a $793.5 million loss year-over-year or a net loss per share of $0.24 compared to a net loss per share of $8.69. The improvement in both net loss and net loss per share is primarily driven by the onetime noncash impairment we reported in the prior year quarter. Adjusted net income and adjusted net income per share, which both exclude the noncash impacts of amortization, stock-based compensation, impairments and nonrecurring charges, improved $5.3 million year-over-year to $2.4 million and $0.02 per share, compared to an adjusted net loss of $2.9 million and adjusted net loss per share of $0.03. Our adjusted cash operating income for the quarter was $4.1 million compared to a loss of $3.1 million last year. Adjusted EBITDA for the quarter increased 19% to $10.7 million compared to $9 million last year, reflecting continued execution against our strategic plan, particularly from our international cannabis business. Cash flow used in operations was $21.9 million compared to $5.8 million last year. The increase in cash used in operations was largely related to inventory ahead of our seasonally stronger fourth quarter and accounts receivable for our growing international cannabis business. Excluding the impacts of working capital, cash generated from operations was $3.4 million compared to cash used in operations of $9.3 million in the prior year. We ended the quarter with cash, restricted cash and marketable securities of $264.8 million and a net cash position of $3.5 million, which improved $40.2 million from a net debt position year-over-year. As we have recently demonstrated, our strong liquidity position has enabled us to act decisively in a dynamic environment and provides continuing flexibility to pursue strategic opportunities. We remain focused on managing and strengthening our balance sheet throughout the remainder of the year and beyond. Lastly, we are reaffirming our fiscal 2026 adjusted EBITDA guidance of $62 million to $72 million. Operator, we can now open the call for Q&A.
分析師問答
And the first question is from Kaumil Gajrawala with Jefferies.
Can you guys hear me now?
Yes.
Yes.
Great. I wanted to first maybe ask about supporting the international business in the context of Canada looks like it's also stabilizing. So you have a lot of growth and great margins in one. But on the other hand, you've got stabilization in your bigger markets. So how are you managing the balance between those two?
What was the line? I didn't hear. You broke up the last piece, the cannibalization?
Not cannibalization, but just managing the balance between supporting your international business and what looks like stabilization in Canada?
And you're talking cannabis right now for us, right?
Yes, cannabis. I'm sorry, this is about cannabis.
We are preparing to launch our Masson grow facility in Gatineau, which will increase our production from 137 metric tonnes to nearly 200 metric tonnes. Additionally, we are starting outdoor grow operations in Cayuga. Despite facing challenges with yields this year, we are modernizing our processes to improve them in the Canadian market. On a positive note, our facilities in Cantanhede, Portugal, and Germany are achieving some of the best yields and quality of flower we’ve ever produced. This ensures that we have ample supply for the European market. We are experiencing price compression, but with our increased yields, we are well-equipped to handle it. Consistent supply is crucial in Europe, and previously, we faced delays in obtaining necessary permits to get our products to market. However, we’ve seen significant improvements from the Portuguese government, which has expedited this process. Being able to deliver products to our customers is essential. Our refined growing techniques and strong yields will help us maintain our margins amid price pressures. From Tilray's perspective, having a reliable product supply is key for capturing volume in the market and addressing price compression. We have successfully managed price compression in Canada, which amounted to $250 million over five years, and we are prepared to do the same in Europe. Currently, we have more supply than anyone else in both the Canadian and European markets.
Got it. And on Project 420, now that I guess, it's coming sort of towards the end or at completion, is there a new project? Or is it sort of more ongoing business as usual as we look forward from a productivity standpoint?
This is a good question. I mean there is absolutely project ongoing. We never just say, okay, we made a $33 million, $35 million of cost savings, stop. Now with BrewDog in the mix and bringing that together, both internationally and domestically in regards to buying hops, cans, labels, et cetera. And it's definitely something as we combine now. And just remember, we've gone from a $200-plus million beer business, almost $0.5 billion now in size. So from scale, that's going to help us. And as we look at rationalization continuously on our plants, we look at rationalization on distributors. We just said, how do we bring all the organizations together? There'll definitely be additional cost savings available to us.
Our next question is from the line of Robert Moskow with TD Securities.
This is Victor Ma asking about international performance. International grew by 73%, while Germany saw a growth of 43%. What accounted for this difference? Was it due to shipment timing or permit delays from the previous quarter that were resolved this quarter? Also, looking ahead, is the 43% growth rate for Germany a reliable benchmark for future growth in this segment?
There were some products that were not shipped in the second quarter due to permit issues, and the same is true for the third quarter. Overall, it balances out. Regarding growth, it depended on our supply and demand situation. I'm uncertain about the true run rate, especially with a significant fourth quarter ahead. What the market, patients, and doctors are beginning to understand is that we will have a steady supply. We will offer high-quality flower and various innovations, along with solid oils, and we will also be competitive in pricing. I'm not prepared to provide a specific growth figure yet, but there are substantial opportunities for us in international markets, including Germany, Poland, the U.K., and others. We are also exploring additional markets like Spain and France, which is promising. With our partnerships at CC Pharma, Tilray Pharma, and our operations in the U.K., our vertical integration—selling through our distributor directly to drug stores—benefits us as growers and brand owners. This integration significantly supports our operations.
Got it. My second question is about the beverage segment. Given the rising aluminum costs from the Midwest premium due to tariffs and additional supply shocks from the Iran conflict, can you provide any information on how hedged you are regarding your aluminum exposure? Additionally, how does incorporating Carlsberg into the U.S. portfolio help in managing that cost impact?
I'm going to let Carl discuss the hedge shortly since we are hedging on some aspects. Adding Carlsberg, a substantial business, and BrewDog while being able to purchase through global contracts will be extremely beneficial for us. Currently, a significant portion of our hops for BrewDog internationally comes from Washington State. As we move forward, having Carlsberg, one of the largest brewers in the world, and potentially acquiring their contract, presents more opportunities. We also have some hops available from our ABI resources. There are numerous opportunities at scale for purchasing hops and cans, especially as aluminum prices have increased. Carl will address the hedges, but it’s crucial to monitor the situation with fuel as it is uncertain. Carl, would you like to elaborate on our hedging strategy?
Yes. I mean you answered most of it, but just specifically on the hedge for aluminum, we're currently hedging 65% to 75% of our buy on a month-to-month basis, and we're hedging a year out.
Got it. And just one last question, if I can. In terms of just the distribution gains from the shelf resets that typically happen in the spring. How are those conversations going? How is that tracking? Any color you can share there?
Things are going well. I want to mention that we have both gained and lost some ground. In the craft beer category, we did lose some shelf space. The main issue stems from the acquisitions of the Molson's and ABI segments, during which we lost a number of SKUs that we couldn't influence. Although we’ve gained significant distribution, it’s important to ensure that these products sell. Overall, we likely lost more than we gained, but it's acceptable as those SKUs weren't part of our offerings at the time. We are excited about the new SKUs, products, and innovations we have introduced. We've experienced strong sales days at Walmart, Kroger, Albertsons, and other retailers, which is encouraging. Overall, we are pleased with our progress. I prefer having a smaller set if it means we can be a more significant player within it rather than just having a large assortment. There is considerable restructuring happening in the craft beer industry regarding sizes and the needs of retailers.
Just to supplement that a little, when Irwin talked about the acquisitions, it's more about the timing of the acquisitions because we bought those brands after the initial discussions on spring resets that already happened.
We were not the ones presenting the spring resets. However, regarding Molson or ABI, we will be involved in January as we prepare for Carlsberg, presenting in February for the next spring resets for Carlsberg.
Our next question is from the line of Bill Kirk with ROTH Capital Partners.
I want to spend a little time on the improvements at Tilray Pharma. Carl, you mentioned a focus on the highest velocity SKUs. So what SKUs or product types are those that are leading the way? And then maybe more importantly, how can you or how are you leveraging this improved CC Pharma for your cannabis business in Germany?
So Rajnish, since you’re on the call, I’m going to let you take over here because you’re managing this. I think there are three key elements. First, it’s the purchasing activity our team has been engaged in there. Second is our product assortment. And third, as we expand our sales of products into Italy and the U.K., could you provide specifics on which products have experienced the most significant increase in sales?
We have identified a group of about 2,800 SKUs and focused on approximately 50 top SKUs that show high sales velocity along with favorable gross margins. This focus is crucial for our growth strategy. Additionally, the medical cannabis portfolio is positively impacting both our revenue and margins due to higher per unit revenues and better margins. On the distribution side, we are increasing our presence in the pharmacy channel through new alliances, which enhances not just per unit sales but also the depth of distribution and coverage. On the purchasing side, we have made our processes more efficient through automation, allowing for quicker decision-making based on predicted pricing patterns. In operations, we are evaluating both in-house and out-house packaging solutions to ensure consistent supply from our operators, which is also contributing to margin improvements.
When we acquired CC Pharma, it was a significant factor for us. However, the purchase occurred during the Aphria period for a tender, during a time when sub-pharmacies were not widely active. Additionally, we faced challenges in sourcing various medications as we were acquiring a diverse range of products. As Rajnish mentioned, our focus is now on core medications with higher profit margins. We have also implemented significant automation at CC Pharma. Furthermore, our reach has grown from servicing 13,000 drugstores to 16,000 in Germany. As we expand CC Pharma into Italy and the U.K., we are creating a larger platform for sales. While the margins may not be the highest, increasing volumes lead to greater contributions. With a higher volume of cannabis sales, which offer much better margins, we expect to see a substantial increase in profitability.
Awesome. Thank you for the detailed answers. My second question, Irwin, in the opening comments, you talked about now being a run rate of $1.2 billion in revenue. The last 12 months, I think, it's something like $850 million. So is the bridge between the two? Is that mostly the revenue from acquired BrewDog assets? And I ask because you didn't take all the assets. So how much of the BrewDog revenue that they've released in their annual reports is generated by the assets that you took on and now have? And how much of their annual revenue was tied to assets that you didn't take?
We estimate that we've captured between $225 million to $250 million. This includes all distribution in the U.K., Ireland, and Scotland through retail and on-premise channels. We've also acquired 16 brewpubs in those regions and taken over distribution in Australia, where we have three brewpubs, including two we own and three franchises. Additionally, we sell beer to 15 other franchises around the world and receive some form of royalty from those sales. In the U.S., we’ve established distribution and manufacturing, including locations in Las Vegas, Columbus, St. Albans, Cincinnati, and the airport in Columbus. This brings our sales to between $225 million and $250 million. Bill, the growth all comes from this segment, and it's important to note that we've gone through SKU rationalization in our beer business. The sales impact from SKU rationalization, distributor rationalization, and product rationalization has been significant for our business.
Our next question comes from the line of Aaron Grey with Alliance Global Partners.
First question for me. I just want to dig a little bit more in terms of hemp. So in terms of your outlook potentially for changes to come before the ban on any product is more than 0.4% THC coming to fruition in November. And then taking that into context, how you're looking at the CMS program, you mentioned potentially looking to enter into that. So how are you looking at potential opportunity there, particularly if there is a restriction on THC products and how appealing that program will be for patient adoption or rejection? And then just how you think about that longer-term opportunity there?
So number one, let me go back to HDD9 and how we're looking at that. We're looking at it three ways. Number one, it gets extended and stays as is. Number two, there is some type of new legislation that comes out that regulates it either 3, 4 or 5 milligrams, and which would be great and that way we can sell it or the ban in November of 2026 happened, and it completely stops. Listen, I think it's going to be one or two. That will be my opinion. In regards to our CBD drinks into Medicare and that within the U.S. Listen, we have Happy Flower, we have the drinks, we're prepared for that now. It's just making sure that as we talk to the FDA, and we talk to them that how we go about it and how we do it. So we're able to do it. We have the products to do it. It's just making sure the right approvals, and we have a team that is working on this within the U.S. regulations and what could happen here. So stay tuned for that.
I appreciate the clarification, Irwin. For my second question, I wanted to revisit the topic of alcohol gross margin and the outlook. Carl, I understand you mentioned your hedging strategies regarding aluminum. However, looking at it from a broader perspective, there has been some inconsistency. With Project 420 now complete, how should we consider the margin for this segment moving forward? I expect the fourth quarter to show higher results due to increased sales, but I'd like your insights on how to best assess the gross margin for the entire year.
So Aaron, good question. If you look at where we are right now, I think this represents the bottom. We have done a significant amount of work and will continue to do work to manage costs and to keep costs at a reasonable level versus where our volume is. As we said on the call, we've got some headwinds with aluminum costs, and there's potential for headwinds with fuel surcharges and things like that, that we're going to keep a close eye on. But the key is really in the overhead utilization rates. And as we've adjusted to that, and we continue to make adjustments going forward, like we'll see that start to come up over time. And right now, we think this is the bottom of the trial.
And Aaron, as a reminder, we entered the beer business in late 2020 with Sweetwater and the acquisitions of three brands on the West Coast, along with the ABI and Molson brands. Initially, we had around 10 or 11 manufacturing facilities. Since then, with Carlsberg joining us, we have been rescaling the beer business and rationalizing our SKUs. The journey hasn't been the easiest, but it resembles our experience in cannabis when we opened the grow facilities and had to navigate through various challenges. Now, we have the right systems and new products in place. Some of our new products didn't perform as expected, but as Carl mentioned, the purchasing power we have through BrewDog International and the addition of Carlsberg makes us optimistic about our future. We have successfully overhauled our operations and reduced our manufacturing facilities to seven, with the possibility of further consolidation. Our facility in Columbus, Ohio, is excellent, and we’re assessing the transition of HDD9 products into our portfolio. Additionally, our energy drink High Voltage is experiencing significant growth, and we plan to integrate more of our non-alcoholic products into our facilities. We will also focus on bringing many of our vodka seltzers and other beverages in-house to maximize our capacity. We believe there is a tremendous growth opportunity for Carlsberg, and even though we've been in this business for only five years compared to many established craft brewers, we’ve navigated the challenges and are in a better position now. Combining forces with BrewDog means our sales are reaching nearly 18 million cases of beer globally. We are purchasing significant quantities of cans, hops, and other ingredients, and we are no longer just a small craft brewer in this market.
Our next questions are from the line of Pablo Zuanic with Zuanic & Associates.
Congratulations on the impressive international growth and the stability of the share count quarter-over-quarter. I have three questions regarding Germany that I will keep brief. First, could you explain the advantages of being vertically integrated compared to the many distributors in the market? Previously, distributors were growing faster and we saw some consolidation, such as Curaleaf acquiring Four 20 and High Tide merging with Remexian. However, with lower prices now affecting the market, it appears some distributors are struggling and have an unstable supply chain. Could you highlight the benefits of your vertical integration in Germany as the market evolves? Secondly, can you elaborate on your route to market in Germany? Specifically, how many people do you have on the ground, how many are visiting doctors, and what efforts are being made to reach out to patients given the current restrictions? Additional details on your market strategy would be helpful. Lastly, I could argue, as a devil's advocate, that the reach of pharmacies may not be as crucial, since decisions are primarily made by doctors and patients. We often hear statistics from CC Pharma and Alliance that may not reflect this reality, especially considering that about 50 pharmacies, mainly online, constitute the bulk of sales while only 1 in 7 pharmacies actually sell medical cannabis. So, could you explain why pharmacy reach is important both in the short term and long term? I know I'm covering a lot here, but I appreciate any insights you can share on these three international questions.
I hope I can remember all three, okay? And number one, to your point, and I stressed this before, from a growth standpoint of having our Cantanhede facility and that up and going the way it is today and growing some of the best cannabis that it ever has and having the permits to get out of Portugal into Germany is a major, major advantage to us, and this is what helped us in the quarter to get the sales. Again, as we're getting yields and flower to become that low-cost, that low-cost seller in there in the marketplace and deal with price compression. Number two, you heard me talk about now as we bring on our facility in Gatineau, Quebec, that is a GMP facility. And that from a supply standpoint, and I got to tell you, because originally, we were going to sell that and thank God, we didn't because from electricity costs, from labor cost, that is an excellent facility and it's an excellent facility for us to have and supply the international market, and that's what it will do because it's GMP, because it's a lower cost facility. And then our German facility, which originally we were selling 2 to 3 metric tonnes that are there and Rajnish and the team has done a great job of getting that up into additional metric tonnes and before that, we were only allowed to sell into the German government there. So to your point, Pablo, yes, we have supply. Yes, we can be that lowest cost producer. Yes, the big thing is we can be consistent. In regards to the customers that we're selling to. I'm going to let Rajnish talk about what we have on the ground there and the infrastructure in a minute, but just going through the pharmacies, you may not agree that having a vertical integration. So number one, having CC Pharma. The big part of the CC Pharma today's business is not the cannabis business. But there's three things CC Pharma does. It has 16,000 pharmacies and a lot of these pharmacies are buying medical cannabis. So now they have the ability and at the end to sell, it has the ability to go to pharmacies, number one. Number two, there's a lot they can do in regards to online and selling online through CC Pharma, and that is something that we're working on. Again, as we look at expanding our product lines in Germany, whether it is vapes, whether it is pre-rolls, CC Pharma has medical license and an application that they can do these things for, and we're looking at numerous things with the CC Pharma. Today, having it, it's very important for us. It has a tremendous network too with other CC Pharma types of distributors that we can sell products through them too. So CC Pharma has a relevance to us, and it's a big relevant for us in the cannabis grow market where no one else really had a CC Pharma today. Rajnish, in regards to your sales organization on the ground, go ahead.
Yes. There are a couple of things to note. In Germany, we are seeing price compression that is affecting the route to market, which is becoming more integrated. Distributors are increasingly being squeezed out due to margins. Although we don't see the full impact yet, we believe that the market will shift towards more direct sales to pharmacies and through prescriptions to doctors. Our CC Pharma and medical team are currently collaborating with prescribers and pharmacies to establish this integrated supply chain for reaching patients. As for our current field teams, we have two groups active in the market. One team, consisting of over 20 medical representatives and advisors, engages directly with prescribers. The second team, with about 7 to 8 people from CC Pharma, focuses on telecalling services to ensure pharmacies have the necessary prescriptions and stock available. This dual approach targets both pharmacies and prescribers on the ground in Germany. As we evaluate the situation moving forward, we are noticing trends indicating a shift towards direct sales rather than relying on distribution. With the cooperation of CC Pharma and the Tilray Medical team, we are witnessing changes, and we have data suggesting that pharmacy sales are improving, even if modestly, compared to distribution sales.
And Pablo, not only that, what we have internationally today, I mean, basically, we have marketing teams, we have R&D teams, we have quality teams. We have researchers working on our different cannabis streams and genetics over there from a medical standpoint that when doctors prescribe for pain, for anxiety, for cancer, we can grow and support it. So again, what we're not is just somebody selling into the marketplace. I mean, as Rajnish said, we have a big infrastructure in Canada and Portugal, we have in Germany. And then we have a team that supports it in London in regards to the marketing team, and there's a whole supply team. The good news is we have moved a lot of our Canadian colleagues over there to help us with this grow. You were going to ask something else. Go ahead, Pablo.
I mean, that's great color. Can I add just one more quickly? You mentioned that you're keeping an eye on the CMS program in the U.S. for a full-spectrum CBD. Does that mean that you would be considering or looking at buying a U.S. CBD brand?
So we have a brand today called Happy Flower, okay? We produce CBD products internationally. So we have formulations. We have products. It just got to fit to what the U.S. standards are and regs are here. But listen, I've always liked if it made sense to buy something that gives you a foothold in there. But like anything, we have the ability today to do our own with CBD products.
Our next question is from the line of Kenric Tyghe with Canaccord Genuity.
The majority of my questions have been asked, but just a couple of quick follow-ups. With respect to the beverage segment, you called out trough margins in the quarter. Is that including or excluding the BrewDog integration? Just trying to get a handle on whether that's a trough on legacy or trough on go forward, and how we should think about that evolution of the margins?
No. BrewDog, from lease margins, BrewDog was acquired, March 2, so there's nothing in here in regards to BrewDog. And there's nothing in here in regards to Carlsberg from a margin standpoint. And again, from a procurement, from the sales, from an infrastructure, from manufacturing, again, I'm not going to come out there with numbers, but I would think there would be upside just putting volume.
Great. The essence of the question was about the evolution with Carlsberg and BrewDog going forward, but I can leave it at that. I would like to follow up regarding the brewpubs and their footprint. Given the changes in consumer trends and consumption patterns, how are you approaching that footprint moving forward? Is it becoming increasingly important as a strategic buffer for consumption? Any insights about the brewpub footprint would be helpful.
It's a good question. Currently, Tilray operates 18 brewpubs in the U.S., and we see their potential as a marketing tool to enhance our brand presence in markets like the U.K., Ireland, and Scotland. The intention is to create community spaces where people can come together, which is key for long-term success. I'm focused on improving customer interaction at our brewpubs, ensuring we provide great food and value. We're also considering offering other beers, like Carlsberg and Guinness, alongside BrewDog, so patrons can enjoy the environment and possibly be persuaded to try BrewDog. While opening an additional 100 brewpubs isn't a primary growth strategy, we do want to enhance the existing ones with more TVs and interactive features to engage consumers. There’s definitely potential to franchise more BrewDogs, which is an exciting opportunity for growth alongside increasing sales in the brewpubs we own and our licensed brands in airports. This strategy allows us to license our brand, earn royalties, and sell products, which is how we envision maximizing the potential of our brewpubs.
At this time, I'll turn the floor back to management for closing remarks.
Thank you, everyone. First, it's April Fools' Day, but our numbers are genuine. We're seeing strong performance, and I want to congratulate the team on the growth. It's been challenging across the board due to regulatory issues, pricing pressures, and tariffs, as well as changing consumer behavior. If you look at Tilray's journey from 2019 to surpassing the $1 billion mark with the BrewDog acquisition, it’s an exciting time for us. As we look ahead to 2027, even with two months left in our 2026 quarter, there's much to be proud of. Our enhancements in the Canadian market, especially regarding genetics and utilizing AI, along with modernizing facilities to cut costs, are commendable efforts by Blair and the team. We've converted our facilities to be more economical, addressing utility challenges in Ontario. In the only legal recreational cannabis market worldwide, we've made significant strides in both the recreational and medical sectors by introducing more patients to our products. In the U.S., I hope to see better results from our beverages business. However, since late 2020, I see a promising pathway ahead as we become the fourth largest craft brewer. The craft beer space has undergone many changes, but I’m confident that we have the right footprint, model, and products, with over 18 brands and 900 distributors. We’re managing various contracts related to kegs, cans, and hops as we consolidate our gains. Regarding our spirits division, I’m pleased to see improved depletions for Breckenridge and progress despite the transitions with distributors like RNDC. We're excited about new tequilas and drinks like Mountain Shot, and some stabilization in distribution is forthcoming. The three-tier system makes this industry challenging, but distribution is key. On the international front, Rajnish and his team have made great strides in medical cannabis. We are navigating regulatory frameworks and optimizing our Cantanhede facility. We've doubled our volumes compared to last year, and there's much to be proud of. Our German operations faced hurdles, but we've improved production capacity at Cantanhede, which has tremendous growth potential. CC Pharma has also seen margin improvements, and there are integration opportunities as we expand in Europe. Our wellness business, Manitoba Harvest, shows promising growth, particularly in beverages. We are actively advocating for our Delta-9 products, and I hope to see positive developments there. Lastly, I want to take a moment to reflect on our partnership with Carlsberg, a brand I greatly respect. It’s a major achievement for us, and I'm eager to learn from them as we operate in the U.S. beer market, which is the largest worldwide. I assure you, we won’t disappoint. In regard to BrewDog, I’ve admired them for years, and I commend their founders for creating a successful brand and establishing beautiful brewpubs globally. Acquiring BrewDog was a significant opportunity for us, and I believe it’s not just about what we paid but how we integrate and grow it within our business. We're excited about the possibilities at Tilray and appreciate everyone joining the call today. Wishing everyone a happy Passover and Easter, and don’t forget to enjoy our beers and cannabis during March Madness. Thank you for listening.
This will conclude today's conference. You disconnect your lines at this time. Thank you for your participation. Have a wonderful day.