Thank you for joining today's conference call to discuss Tilray Brand's Financial Results for the Third Quarter of Fiscal Year 2024 ended February 29, 2024. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session for analysts and investment firms conducted via audio. I will now turn the call over to Ms. Berrin Noorata, Tilray Brand's Chief Corporate Affairs and Communications 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 SEDAR. Please note that during today's call, we will be referring to various non-GAAP financial measures that can provide useful information for investors. However, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. The earnings press release contains a reconciliation of each non-GAAP financial measure to the most comparable measure prepared in accordance with GAAP. In addition, we will be making numerous forward-looking statements during our remarks and in response to your questions. These statements are based on our current expectations and beliefs and involve known and unknown risks and uncertainties, which may prove to be incorrect. Actual results could differ materially from those described in those forward-looking statements. The text in our earnings press release includes many of the risks and uncertainties associated with such forward-looking statements. Today, we will be hearing from key members of our senior leadership team beginning with Irwin Simon, Chairman and Chief Executive Officer, who will provide opening remarks and commentary; followed by Carl Merton, Chief Financial Officer, who will review our quarterly financial results for the third quarter and update our financial guidance for the fiscal year 2024. Also joining us for the question-and-answer segment are Denise Faltischek, Chief Strategy Officer and Head of International; Blair MacNeil, President of Tilray Canada; and Ty Gilmore, President of our US Beer Business. And now I'd like to turn the call over to Tilray Brands' Chairman and CEO, Irwin Simon.

Thank you, Berrin. Good morning, everyone, and thank you for joining us. At Tilray Brands, we take great pride in our mission to be the most responsible, trusted and market leading cannabis and consumer products company across the globe. Today, with our complementary business units, we believe Tilray Brands is the best positioned company in the world to take advantage of all the positive regulatory tailwinds happening globally with cannabis legalization and drug policy reform. In Canada, Tilray continues to lead the cannabis industry with the leading portfolio of adult-use brands and the number one market share. In the event, the current excise tax regime were to be replaced with a 10% Ad Valorem Tax based on the value of the product sold and not a per gram tax, we expect an annual savings of $80 million. We also expect to benefit from additional cannabis related regulatory reforms around marketing and THC potencies. I'll take a deeper dive in the Canadian market shortly. In Germany, Tilray has the leading cannabis market share by revenue for the trailing 12-months and we believe we are best positioned to capture a large portion of the expected growth in the medical market with both our in-country cultivation facility in Germany and our state-of-the-art facility in Portugal. We also have the ability to ship products from Canada to Germany. In the U.S., Tilray has multiple options and, in particular, is well positioned to benefit from the federal legalization of medical cannabis as a result of rescheduling. Yes, we believe that the rescheduling of cannabis from Schedule I to Schedule III in the U.S. would provide a path for Tilray to sell pharmaceutical grade medical cannabis in the U.S. subject to doctor prescriptions. This is a different strategy from what MSOs are doing today. We believe…

Thank you, Irwin. Recall that we present our financial results in accordance with U.S. GAAP and in U.S. dollars. Throughout our discussion, we will be referring to both GAAP and non-GAAP adjusted results and we encourage you to review the reconciliation contained within our press release of our reported results under GAAP to the corresponding non-GAAP measures. Let's now review our quarterly performance for the three months ended February 29, 2024. Q3 total net revenue rose to $188.3 million, compared to the prior year quarter of $145.6 million, representing almost 30% growth. Excluding acquisitions completed within the fiscal year and the $8.7 million HEXO advisory fee captured in the prior year quarter, our legacy businesses remain consistent, despite a 13% revenue decline in our lowest margin segment. We continuously emphasize the strategic importance of our adjacency business model, which is a key differentiator for us. This is best reflected by the contribution of our four segments to our overall results, which shows that we are not too dependent on any individual segment having a disproportionate impact on our sales or profit growth. Each segment is also, in our view, on a path to sustainable long-term growth. Looking at each segment now, during Q3 and compared against the prior year period, net beverage alcohol rose 165% and represented 25% of our total revenue mix, more than double relative to last year's 14% of total mix. Net cannabis revenue grows 33% and represented 34% of total mix, up slightly from 33% last year. Distribution revenue decreased 13% and represented 30% of total mix, down from 45% last year. And wellness revenue rose 12% and represented about 7% of total mix, down only slightly from 8% last year, respectively. Diversification is also reflected in our geographic footprint. During Q3, more than 62% of…

Thank you. [Operator Instructions] Our first question comes from the line of Andrew Carter with Stifel. Please proceed with your question.

Hey, thank you. Good morning. Wanted to ask about the German changes. I mean, obviously it's going to likely manifest in a big uptick in patients with doctors now having more freedom to prescribe cannabis. But kind of thinking through this competitively, how do you see this as your position unique in being able to attack this market? I know that for the past five years, we've seen a lot of decks with Germany circled and capacity to hit that market. Is that capacity still out there? How expensive it is to maintain this? And can you give us a reminder of kind of the stringent quality standards you have to have in place to serve the German market? Thanks.

Andrew, thank you, and great question. Number one -- listen, we see the opportunities in Germany in multiple ways. We have a facility in Germany today and that Germany before only would serve as a tender to the German government. Now that tender will -- process will go away and we'll be able to sell product into the marketplace, so that's number one. Number two is before only a certain amount of doctors were able to prescribe cannabis and it was a very small amount for specialty reasons. And now every doctor, because it's no longer a narcotic, will be able to prescribe cannabis. Number three, we also have a facility in Portugal, which will be able to supply Germany. Number four is we have something called Tilray Pharma, CC Pharma, which is a distribution company that distributes cannabis and other medicines to over 13,000 drug stores. We have a team based in Germany. We have a sales team based in Germany. We have R&D. We have quality insurance. So we've been there for four or five years. And we've had some tough four or five years because of what's happening. The other big thing here is Europe is a big country. And with no longer being a narcotic and decriminalized, we see lots of other places -- countries opening up. I have Denise Faltischek to check here as head of Europe. Denise, is there anything I missed here or anything that you should add?

Yeah, no Irwin, you did not miss anything. Just to add a little bit more in terms of facts. So in terms of that abolishment of the tender that Irwin spoke about and the fact that under the new regulations, we'll be able to apply for a license with our facility in Neumunster. So today, just to refresh, everyone's memory, we are subject to a tender contract. We are capped at about 1,000 kilograms that we can grow every year and that is done pursuant to certain pricing. So with the abolishment of the tender, we now open up into a licensing process where we are now subject to just market conditions as it relates to patient demand. And so we can utilize that facility to meet that demand, which would allow us to increase our capacities. We have the ability to today grow up to about 5,000 kilograms to 6,000 kilograms without any additional CapEx. And we can basically then also have pricing that is subject to market demand today. So that is an immediate benefit there. In terms of the ability to prescribe, we are amping up our ability to be in front of doctors and working on symposiums and educational platforms. One of the things we've done on the prescription platform software, if a doctor wants to prescribe medical cannabis, they go to that page and there's a Tilray banner at the bottom which shows all of our portfolio of products, what the conditions are, how to prescribe, so we are out there also providing basically information for doctors who are willing to prescribe and want to prescribe.

I think the big thing is, Andrew, we do have a brand, in Tilray brand, but the whole thing of socialized medicine and prescription and paying for it, we see lots of changes happening. So we have been working in the German market in regards to products for pain, for anxiety, for sleep, for cancer, for epilepsy. So we've been all over that and take our expertise of what we do at medical cannabis in Canada and translated there. And secondly, like I said, there is a market out there that will be looking for medical cannabis, but ultimately using it for recreational cannabis. So from a standpoint, we really are excited about what's happened in Germany. It does not affect us in regards to the social measures that have come in place there. And we have the team, we have the grow, we have the infrastructure, the research and development ready to go here and it's effective now.

Thanks. I'll pass it on.

Thank you.

Thank you. Our next question comes from the line of Nadine Sarwat with Bernstein. Please proceed with your question.

Hi, thank you. Two for me, please. First, on the guidance, I appreciate the added color that you gave. Could you be a little bit more specific in perhaps what exactly has changed versus last quarter and this quarter? What sort of surprised to the downside and how do you see that progressing over the quarters to come? And then my second question, I know you guys called out your number one position in Canadian cannabis, so looking at the market share numbers you guys quote in the press release, I think that's on the downward trend for the last couple of quarters? So could you break down what's driving that? And if you think you can regain that over the quarters to come? And if so, how do you anticipate doing that? Thank you.

So I'm going to take -- start part of it. Number one, not all quarters are equal. This third quarter being one of our lowest quarters in regards to bev-alcohol and our cannabis business, our fourth quarters and our first quarter, second quarter. So that's as you look at our quarters and absolutely there's seasonality within all these businesses. Secondly, we did lose some share in Canada. Some of it was again coming back to price compression and some of it was coming back to some of the prices in regards to our flower. The other thing would happen is we have a lot of innovation that was coming into the marketplace that we didn't get into the market in our third quarter, which we expect to get back in our fourth quarter. I think what's important here, again there's been lots of price compression in Canada there in regards to we talked about our percentage in excise tax. And the market is changing dramatically there in regards to potencies and being infused pre rolls, et cetera. So some of it is just timing and do I expect to get it back? Blair, you're on the line. Do you expect to get your share back?

Yes. Thanks, Irwin. And thanks, Nadine, for the call. Just to add a little bit more color to what Irwin was talking about, Q2 and Q3 were our most operational complex period. So, in addition to what Irwin talked about, what we also saw is when you are moving the location of SKUs and where they're going to be distributed from. And one of the things we've done is centralized all our packaging and logistics out of Bloomington. That requires us to draw down inventories in each of the boards and then rebuild that inventory once we’ve changed the source location. So what you're seeing in some of the numbers is in addition to the price compression Irwin talked about and the innovation side is just a reflection of the operational complexity we implemented in Q2 and Q3. Once that is completed and it was all completed inside of Q3, that will generate very strong operational efficiencies for us moving forward as everything outside of beverages will be shipped out of one location.

Carl?

Yes, so just -- I'll add a couple things to -- for the explanation as well. In our beverage-alcohol business and I think in the entire industry, was hit a little bit harder than it has in the past in terms of dry January. So that took away a bit of a portion of our sales expectation for the year. The beverage alcohol business with the new acquisition of the new brands, those brands are at a lower gross margin than the rest of our businesses. We're working very hard to bring those pieces up and we will get that up over time. As I said in the script, we expect to be able to bring those up much closer to the historical margins that we've achieved. But it's going to take a few quarters. And so it's coming. It's really a function of the co-manufacturing agreements that we have and getting that production moved and into our facilities and organized in an effective manner while not causing operational problems during that move. And in terms of the free cash flow guidance, we had some expectations on cash receipts, on some of the bigger things, including some of the make hole provisions inside of the spirits business, which we now see coming in, in June or July as opposed to in May and that's really what's led to that thing.

I think the big thing here is just timing and that's -- I can't always predict things. And with our beer businesses, the ABI businesses bought lower margins. But just from an integration standpoint, we had a trans-service agreement with ABI. We're moving away from that at the end of May, moving it into our facilities. We expect to get our margins up into the high ‘30s, low ‘40s today. With our SweetWater and our legacy businesses, we're running margins at that rate. So, with that, we look to those margins. In regards to the Canadian cannabis businesses, as Blair said, integrating HEXO with SKU rationalization with some of the strains and looking at some of the potencies and timing and when you're dealing with agriculture products, not everything lose accordingly here. We've made some moves in regards to our Cayuga, in regards to Molson, in regards to Belleville, and consolidating our businesses there, taking out costs. So Again, as we look at guidance, yes, there's guidance out there, but a lot of it is just timing. And as we move forward, we have four quarters, not six quarters, otherwise for six quarters, it would be different.

Understood. Thank you.

Thank you.

Thank you. Our next question comes from the line of Aaron Grey with Alliance Global Partners. Please proceed with your question.

Hi, good morning. Thank you for the question. This is Remington Smith on for Aaron Grey. My first question is in term of the CRA having the provinces garnish wages, have you started to see any changes in purchase habits from provinces of your overall competitive environment yet? And then with kind of greater focus on those LPs paying their taxes?

I don't think we've necessarily seen changes in purchasing patterns. I think we saw very quickly after CRA started garnishing those wages a couple of LPs filed for protection within the same week. And then I think there's been a few more that have filed since that period of time. And so someone who's excessively behind on their excise tax and having the payments garners are looking at four, five, maybe six months of time before they're going to get their next payment, they just don't have a lot of choices. And so they're having to file for that protection. I don't think the Boards are actually changing those patterns yet. I think that will probably happen over the next three or four months as more of these LPs realize and get caught up in the garnishment.

But there's a lot of the Boards out there that have been asked by CRA to garnish excise tax when they sell into it. And I think the big thing for us is we're finally seeing the Canadian government taking that serious and those that weren't paying excise tax could keep going and putting the rest of us at a disadvantage. So I think we're going to continuously see changes. And we've talked about the study that's come out there in regards to changes, in regards to excise tax and marketing medical cannabis, et cetera, I think there are some major things here that could really benefit the Canadian Cannabis industry.

Great. Thank you. I appreciate the color there. And then my second question. Go ahead.

No, go ahead.

My second question just regards the excise change -- excise tax changes that you mentioned that could potentially occur in the budget is really next week. You mentioned tax savings essentially of $80 million for Tilray. So I guess with those savings, you expect it to mostly be realized by the LPs or could there be some benefit realized in the province and the retailer as well? Any color that would be helpful.

You know, good question. I think as we know provinces and we know government, I'm sure they're going to try and grab some of that. But I think, listen, as we've said and we've openly said it's about $80 million to Tilray. And the big thing is you got price compression and you still have the same amount of excise tax that you pay. And I think in this quarter, it was 32%, 33% of our sales was going to excise tax, so something has to be done. I don't mind if some of it goes back to the governments on education and promoting the safety, bringing awareness, marketing and allow us to do these things. So again, if we got half of the $40 million back to best scrapping the business. I think it would be tremendous beneficial to Tilray and other LPs.

Yes. And I think the key in this piece is that if the government is making a change to strength in the industry because the tax became in a way impressive, they need to avoid creating new things that pull that money back. I mean you allow it to go to the industry to help the industry continue to grow and strengthen.

Great. Thank you for the answer today.

Thank you. Our next question comes from the line of Bill Kirk with Roth MKM. Please proceed with your question.

Thank you for taking the questions. Maybe I missed it in the prepared remarks, but what is the $29 million in assets that have been moved to held for sale? I imagine some of it might be facilities that you mentioned earlier, but what specifically is in that number? And how was it determined?

So that number is the Cayuga facility. It's Molson and it's the Belleville facility that we acquired as part of Truss. And so in each case, it's a facility, it isn't the business. The business is being reorganized within our existing footprints. And then we're releasing or selling that what become redundant assets at that point in time.

Okay. Got it. That's what I was looking for on and not the businesses, okay. And then in the third quarter, compared to 2Q, selling, marketing expenses up a little bit [Technical Difficulty]

Did we lose you Bill?

I'm sorry, it seems that his line may have a technical difficulty. Our next question comes from the line of Michael Lavery with Piper Sandler. Please proceed with your question.

. Thank you. Good morning. I just wanted to touch on the U.S. and I understand at the moment, it's -- strictly speaking, a little bit hypothetical still. But if rescheduling occurs, you laid out at a high level how you're thinking about it and a more pharmaceutical approach? I guess a couple of questions just maybe what's your patients level if it does come to that just because the FDA certainly is known not for its speed? And so -- is your understanding just that obviously, if that door opens, it could still take quite some time? Or how are you thinking about that? And in the release as well, you reminded us about the connection to MedMen. And how would that fit into that potentially? Is that something that would still stay separate or could potentially become sort of like pharmacies? I guess just maybe lay out some of how you're thinking about potential U.S. opportunities should regulatory change come through.

So as I said, within the U.S. medical cannabis is rescheduled and medical cannabis becomes legal. We being a large medical cannabis producer in Canada and Europe and have the expertise and have the research not knowing what the FDA and not knowing in regards to what the guidelines will be, Tilray is ready to capitalize on all our expertise. Is there a possibility with NAFTA or with other rules that we can export cannabis from Canada that's GMP certified? Today, you can export cannabis from Canada to other parts of the -- other countries around the world if it's GMP certified. So I'm not sure why that wouldn't be the case in the U.S. if that happens. My personal belief, if it's rescheduled from a medical cannabis standpoint, and they leave it up to each of the states on a recreational standpoint, then that is something different. So I think the big thing is I look into a crystal ball of not knowing where this is going. I think something happens from a rescheduling standpoint. And Tilray is ready to move from a medical standpoint, if there was an acquisition for us, we're ready to move. And we hold the debt of MedMen. We think the MedMen name still has a strong brand name, even though it's had its challenges and it's going through some changes right now to get rid of some of those liabilities in that. And there's an opportunity that we could execute with the MedMen name across the U.S. The other thing is depending and I think one of the biggest opportunities and we're seeing some opportunities with Delta 9, which is infused drinks with hemp infused THC. I think the biggest opportunity is in drinks and with our distribution systems, with our brands, within our beer business and spirits, Tilray could get into that. So not knowing and not -- what's going to happen, I think, as I've said, Tilray is circled in the U.S., and it's not like we'd have to change our model being an MSO where we're restricted to each state. Right now, we could take our expertise from around the world. We can take our medical expertise, we can take our beverage expertise and bring it to the U.S., once we know which way rescheduling happens, and it goes. So that's where I'm excited about is once we know what the guidelines are, once we know what the opportunities are, we could easily jump in there without on doing something that we own today.

Okay. And just on the beverage side, you touched on your hopes for distribution upside on a lot of the -- especially recently acquired brands, but do you have a sense how you coming into this spring shelf resets and what sort of shelf space gains you're positioned for that are already in hand?

So I have -- hey Ty, you're on the call, right? Do you want to jump in there? Listen, I got to tell you in a short period of time. A lot of these brands were just starved on innovation, starved on distribution. We have 500 distributors out there. And I always say to Ty each distributor can do $1 million more, which is not a lot, that's $500 million. So I think the upside on beer is tremendous. As you look at pricing, you look in regards to the whole spirits industry. I think we're so well positioned on beer, on innovation that we're coming out with moving into water, we're moving into some energy drinks, moving into some other infused drinks. So we're well positioned with our distributors. We have over 100 salespeople and headquartered people between marketing. So Ty, do you want to just talk about some of the stuff that's happening.

Yes. No. Thanks, Irwin, and thanks for the question, Michael. Yes. No, we feel really solid about some of the distribution gains, not only that we've made in the third quarter. But we also feel solid about the conversations we're having with several national and regional retailers across on- and off-premise with our brands. Specifically, if I look over Q3, and we've gained north of 1,200 new effective placements on our existing brands. And with the innovation, we continue to see uptick every day with our distributor network and how they're leaning in with us and helping drive distribution. So chains are going to continue to play a critical role in our success, and we're well suited, as Irwin said, to leverage our partnerships with our distributors and the relationships that we have across the U.S.

Okay, thanks so much.

Thank you. Our next question comes from the line of Matt Bottomley with Canaccord Genuity. Please proceed with your question.

Good morning, everyone. This one is for Carl. I just wanted to go back to the revised guidance here on adjusted EBITDA going into fiscal Q4 here. So I'm just wondering if you could give a little more color on the dynamic between overall revenue progression versus margin expansion. There's obviously quite still a big step-up expected even in the revised guidance? And then specifically, within that, I'm wondering how much of that is beverage related given that I think you had commented that you're close to about a $300 million business now in all your beverage portfolios if you run rate this quarter, and I understand there's seasonality. It's close to $200 million to $225 million. So I'm just wondering if there's some step-up on the revenue side, specifically in Q4 when it comes to your alcohol contribution?

So thanks, Matt. There is significant increase in sales in Q4 in beer. I think we've talked a little bit already on the call in terms of the spring reset and hitting those in the key summer selling season, which is really driven in our April and May sales results for the organization, particularly in beer. We've also -- we've talked a few times about challenges in the spirits business with sales growth and that we were going to get resolution of that in Q4 of this year. So that's also reflected inside of those -- that expectation on EBITDA. It's potentially driving both revenue and margins during that time period. I think on the beer businesses margin side, you are going to see an increase in margins in Q4 that will be driven by just more volume flowing through the facilities as we ramp up production in March and April to hit those April and May sales, because there's such a quick turnaround time and lack of inventory inside that segment. We've also got the buildup on the cannabis business for the summer period of time and increases in things like pre-rolls and other product forms in the cannabis business that are consumed on a more of a, let's call it, a shared basis, either in a shared setting or actually share on its own. And so that's a part of it. And with that increased sales level comes increases in margins just because of efficiency on the production side.

Okay, very helpful. Thank you.

Thank you. Our next question comes from the line of Doug Miehm with RBC Capital Markets. Please proceed with your question.

Yes, thank you and good morning. Question just has to do with, again, the excise tax and going back to this. There's obviously an opportunity for your company. But I am curious if these changes were to go through and you benefit somewhere between $40 million and $80 million, the way you expected. What do you -- what's your thinking on the other companies, because we're starting to lose some of the smaller companies, but is this going to provide the smaller companies with another year or two of life? And I'd say the other thing that I'm curious about as it relates to this, could this result in another leg of downward pricing as I try to maintain market share?

So I think a couple of things. Yes, I think if companies don't have to pay the same amount of excise tax that everybody is. I think some of these companies absolutely will survive. And I think listen -- I think at the end of the day, we all want a strong cannabis market in Canada. The big thing is, again, what's got to change is the excise tax. And yes, we probably are the highest, we are the highest payer of excise tax in Canada. So for us to receive back $80 million is a lot of money. But at the end of the day, it's money that we're going to put into building our brands, building our products, our innovation and hopefully, marketing and building a bigger category out there. And I think that's ultimately the benefit that the money is not going back to taxes, it’s going back in to build the marketplace and back into continuously grow the industry. So yes, well more competition be out there. Could there be price compression? Absolutely. But I'll tell you what, I don't mind some more price compression. I don't mind some more LPs being in there. I wouldn't mind that $80 million coming into our company where we can invest it back in our business and drive growth, drive innovation and drive marketing of brands to a much bigger category.

I think it's also important to understand that different entities are going to have different amounts of a win rate into this, right? And as we get closer to the tail end of share, the impact for a lot of those companies is going to be a lot less. And if they're behind on their excise taxes, the excise tax garnishment may have the bigger impact for them. We're on the -- as Irwin said, we're on the opposite end of that tail, because we're the largest. And then you've got a bunch of companies in the middle where I think that is more towards what your question was, where you're going to see some people who will be able to survive a little bit easier.

And I don't think excise tax is going to keep everybody business here, okay? I hope not. I continuously see more consolidation in the Canadian market. I see some of the smaller players ultimately going away and I think that's what happens there as a new industry, there's just a filtration of these LPs. If you come back and look at it today, 25 LPs make up about 50% of the market share. There's about another 1,000 LPs that make up the other 50% market share. So A, see some consolidation. You see companies going away. And I think what this creates is a much stronger cannabis industry within the Canadian market. And if what happens also, as I said before, there could be opportunities for grow in Canada to be shipped into the U.S. and other parts of the world, which could enhance the Canadian cannabis industry.

Okay, excellent. Thank you.

Thank you.

Thank you. Our next question comes from the line of John Zamparo with CIBC. Please proceed with your question.

Thank you. Good morning. My question is on the cost side, both COGS and SG&A. And there's just a lot of moving parts here. And I wonder how much FQ3 represents a run rate because you've got additional synergies coming from HEXO. It sounds like you have savings on the beverage side as you move away from co-packing agreements, but you're also investing in innovation and product extensions and it sounds like another variable is selling the production facilities, which I think you said saves $5 million to $7 million annually? So I wonder, when you think about all of this in aggregate, is there a net benefit on the cost side? And do you expect to see total costs come down from FQ3? Because it seems like organic revenue growth is a bit more difficult to achieve in the near-term. Thank you.

So first off, I think organic growth is going to come, particularly in the fourth quarter as we see the new launches and the new innovation hit the market, particularly in some of these new categories that we're doing on the beverage alcohol side, including the water and the non-alc playing in that space, playing in the FMB Part T space, things like that are new categories for us. And so I think there are opportunities for organic growth. But if you're using Q3 as a baseline, I don't think that's the right way to look at it. And similarly, I don't think Q4 is necessarily the right baseline for the exact polar opposite reasons. Q3 is traditionally our lowest quarter in terms of revenue and production, and Q4 is traditionally our highest quarter in terms of revenue and production. So we're going to get an uptick on margins as a result of that incremental volume, particularly in beverage alcohol in our legacy business. And that's going to be what drives a chunk of the earnings guidance, and it's going to be what drives our results next part.

I think the big thing here is, too, you heard me say before, the savings we're getting from the integration of HEXO and Truss and somewhere is between close to $35 million. We don't get that immediately. It evens out over the quarter, so it takes us a full-year to get that amount. The second thing is, as we just own the ABI businesses for two months, and just two quarters, as we integrate them into our businesses and start from the procurement from the distribution standpoint, I mean there's a lot for us to get done here, but we're focused on organic growth, and we're starting to see that already. We're focused on which facilities date and rate these products do, which states we're going to focus on. We also have 13 group hubs out there that we're focused on growing our brand through these brewpubs, big event for us, 4/20, coming up April 20. We have two big events, one in Atlanta and one in Long Island. And there's also in every retailer, there's displays built out. So July 4 is one of the biggest beer category months that is sold out there from occasions. So right now, as we bring this together and our aspiration is to grow our beer business to a $300 million business, you have to remember, in 2020, we sold 2.5 million cases when we first acquired the SweetWater brand. Today, we're on a run rate to 12.5 million cases with tremendous opportunity with all the innovation that's happening. So there's just a lot of evening out here, and there's a lot of moving pieces to bring all this together. And I think the big thing is as we look at it, when we get a full-year behind all these acquisitions with HEXO, with Truss and the integration there, we get all those full-year together with all the ABI stuff, where we're seeing some great stuff. And listen, just with Montauk, we've owned it over a year, one of the fastest-growing beer within New York today, some of the stuff we're seeing on the West Coast with Green Flash, Nelson and Alpine. So the legacy stuff that we've already bought and on the year, we're seeing good results for. It just takes us some time here to get these things integrated.

Okay, I appreciate the color. I'll pass it on. Thank you.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Simon for any final comments.

Thank you, everybody, for joining us today. Listen, I wish I could predict what's going to happen in the cannabis industry. There's going to be one thing for sure I can predict, there will be change. And we've been waiting for change for a long time in the German market. It finally came to fruition. And there's going to be a lot of execution to get it where it needs to be, but it's happening. I do think we've been sitting and waiting through the Biden administration before that change happened within the cannabis industry. There's lots of discussion about rescheduling. And again, it's not something we have control of. But one thing we do have control of, we do know how to grow cannabis. We do know how to sell medical cannabis. We know about research. We do have within Canada today over 5 million square feet of growth. We do have in Europe, two major facilities. And with that, depending what happens in the U.S., we will be ready to launch what needs to be launched in the U.S., whether it's taking from our existing businesses, acquiring, putting something together, we'll have the opportunity to do that. As I've said, our aspiration is to grow our beer business to a $300 million beer business. We already are the fifth largest craft brewer today within the U.S. We have a great business within Breckenridge Distillery. We've been named some of the number one whiskeys within the world, within the U.S. and some exciting things happening. I'm also really excited about what's happening in our wellness business in regards to Manitoba Harvest and what's happening with hemp from a high protein food and now the perception of hemp as a great product and a healthy product. So as Tilray Brands…

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.