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TILT Holdings Reports Second Quarter 2022 Results, Delivers 11% Sequential Revenue Growth
- Delivers 8% QoQ and 22% YoY growth in the Company’s cannabis operations
- Announced new brand partnerships and cross-collaboration products
PHOENIX, Aug. 15, 2022 (GLOBE NEWSWIRE) — TILT Holdings Inc. (“TILT” or the “Company”) (NEO:TILT) (OTCQX: TLLTF), a global provider of cannabis business solutions that include inhalation technologies, cultivation, manufacturing, processing, brand development and retail, is reporting its financial and operating results for the three months and six months ended June 30, 2022. On June 18, 2022, TILT’s registration statement on Form 10 filed with the U.S. Securities and Exchange Commission (“SEC”) became automatically effective and TILT became a reporting company with the SEC on that date. As such, TILT’s financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All financial information is provided in U.S. dollars.
“TILT’s business strategy, while still in its infancy, was forged with an eye towards the type of market volatility the cannabis industry has endured over the first half of 2022,” said Gary Santo, CEO of TILT. “Macroeconomic conditions have exacerbated the pressures felt by cannabis operators, causing many to reduce their expectations for the remainder of the year, and the downstream effect on TILT was to be expected. The early results from our strategic shift continue to demonstrate that we are on the right path. By partnering with brands that have authenticity, depth, and a proven ability to compete, TILT’s cannabis operations grew more than 20% year-over-year and continue to outpace sequential market trends in the each of the states in which we operate. Most importantly, while retail and wholesale pricing has been volatile in those markets, pricing for our brand-partner products has remained relatively flat.”
“After getting off to a fast start in the quarter, our hardware business saw a shift in ordering patterns as some of our largest customers who have historically placed sizeable orders in the second quarter were still working through older inventory,” continued Santo. “As the largest supplier of CCELL products to cannabis operators throughout the country, we worked closely with our manufacturing partner to develop a new product and pricing structure better suited to these evolving conditions. I am pleased to announce that last week, we implemented this new structure, and the timing could not be better as TILT as we head into our fall selling season.”
The foundation for TILT is set. Early results have shown that we have the right strategy in place and the right team to execute upon it. That said, we are committed to increasing our pace given market conditions, with even more brand partners and SKUs to launch across a larger operating footprint going forward.
Gary Santo, CEO of TILT
Together with a more competitive hardware portfolio, the launch of our medical dispensary in Cambridge, Massachusetts later this month and New York operations on the horizon, we will continue to scale our operations while generating positive cash flow to fund our business and growth objectives.
Q2 2022 Financial Summary
- Revenue was $47.1 million compared to $48.5 million in the prior year. The decrease in revenue was driven by lower sales volume and pricing for certain products in the Company’s inhalation business, partially offset by more than 20% growth in the Company’s cannabis operations.
- Gross profit was $10.9 million or approximately 23% of revenue, compared to $12.9 million or approximately 27% of revenue in the prior year. The decrease in gross profit was primarily driven by pricing of certain product lines in the Company’s hardware business, product mix at our Massachusetts facility as we transition to new genetics, as well as lower pricing in the Company’s wholesale cannabis operations.
- Net Loss for the quarter was $7.1 million compared to a Net Income of $1.0 million in the prior year. The decrease was primarily due to the $6.7 million noncash goodwill impairment incurred in the quarter.
- Adjusted EBITDA was $1.1 million compared to $7.1 million in the prior year. The decrease was driven by the lower sales volume and pricing contractions within the Company’s inhalation business, similar contractions in the wholesale cannabis operations, as well as higher operating expenses.
- Year to date cash provided by operations was $3.8 million, compared to $2.7 million in the prior year, driven by the sell through of inventory.
- Total cash balance at June 30, 2022 was $34.7 million compared to $7.0 million at December 31, 2021. This cash balance included restricted cash of $28.2 at June 30, 2022, compared to restricted cash of $2.7 million at December 31, 2021. Unrestricted cash and cash equivalents were $6.5 million compared to $4.2 million at December 31, 2021.
- During the second quarter, the Company completed a sale leaseback for its Massachusetts facility and signed a purchase and sale agreement for its Pennsylvania facility totaling $55 million. The Massachusetts transaction closed in May 16, 2022 and the Pennsylvania transaction is targeted for September 30, 2022.
Q2 2022 Operational Highlights
The majority of operational highlights occurred in June, with one new partnership announced in May. These second quarter highlights include:
- Launched Timeless, expanding its vaporization product footprint to patients in Ohio through a previously announced exclusive partnership.
- Launched Infinity™, Jupiter Research LLC’s proprietary vaporizer, featuring Commonwealth Alternative Care Inc. (“CAC”) cold press and cured resin cannabis oils, in Massachusetts for both medical and recreational use.
- Announced a new manufacturing and distribution partnership with Highsman, a purpose-driven cannabis lifestyle brand founded by former NFL running back, Ricky Williams.
- Announced exclusive partnership with social impact driven brand, Black Buddha Cannabis, to launch products in both Massachusetts and Pennsylvania later this year.
- Launched a partnership with Last Prisoner Project, a non-profit organization dedicated to facilitating clemency, expungement, and successful re-entries for individuals with cannabis convictions.
- Received its final license from the Massachusetts Cannabis Control Commission for medical marijuana sales in the Company’s Cambridge dispensary.
Recent Operational Highlights
- Launched lifestyle cannabis brand Toast™ to both patients and adult-use consumers throughout Massachusetts at TILT subsidiary CAC’s locations in Taunton and Brockton, as well as wholesale dispensary partner locations.
- Celebrated the Shinnecock Indian Nation and TILT breaking ground on Little Beach Harvest, a 5,000 square-foot cannabis dispensary located on Shinnecock tribal territory in Southampton, New York.
2022 Financial Guidance
Due to the evolving macroeconomic environment, inflationary impacts on consumer spending, and lower cannabis wholesale pricing in Massachusetts and Pennsylvania, TILT is revising its 2022 financial outlook and now expects revenue to range between $205 – $210 million, with Adjusted EBITDA ranging between $10 – $15 million.
Earnings Call and Webcast
TILT management will host a conference call today at 5:00 p.m. Eastern time to discuss its financial and operational results, followed by a question-and-answer period.
Date: Monday, August 15, 2022
Time: 5:00 p.m. Eastern Time
Toll-free dial-in number: (877) 423-9813
International dial-in number: (201) 689-8573
Conference ID: 13731638
Webcast: TILT Q2 2022 Earnings Call
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Elevate IR at (720) 330-2829.
The conference call will also be broadcast live and available for replay in the investor relations section of the Company’s website at www.tiltholdings.com.
TILT helps cannabis businesses build brands. Through a portfolio of companies providing technology, hardware, cultivation and production, TILT services brands and cannabis retailers across 37 states in the U.S., as well as Canada, Israel, South America and the European Union. TILT’s core businesses include Jupiter Research LLC, a wholly-owned subsidiary and leader in the vaporization segment focused on hardware design, research, development and manufacturing; and cannabis operations, Commonwealth Alternative Care, Inc. in Massachusetts, Standard Farms LLC in Pennsylvania, Standard Farms Ohio, LLC in Ohio, and its partnership with the Shinnecock Indian Nation in New York. TILT is headquartered in Phoenix, Arizona. For more information, visit www.tiltholdings.com.
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