TILT Holdings Announces Financial Results for the Three and Six-Months ended June 30, 2020
- Gross margin1 of 28.3%, a 384 basis point improvement year-over-year
- Positive cash flow from operations for second consecutive quarter, a 196% improvement year-over-year
- Cannabis revenues during the six-months ended June 30, 2020 up 103% year-over-year
- Operating expenses decrease 76% year-over-year
PHOENIX, Aug. 25, 2020 (GLOBE NEWSWIRE) — TILT Holdings Inc. (“TILT” or the “Company”) (CSE: TILT) (OTCQB: TLLTF), a provider of business solutions to the global cannabis industry, today reported its financial and operating results for the three and six-months ended June 30, 2020. All financial information is unaudited and provided in US dollars except where otherwise indicated.
Second quarter results reinforced our position that TILT’s balanced portfolio of businesses offers multiple trajectories for ongoing shareholder value creation. For a second consecutive quarter, the company generated positive adjusted EBITDA, increased positive cash flow from operations and improved its cash position, all while navigating the effects COVID-19.
Mark Scatterday, CEO of TILT
Jupiter’s highly efficient operating model continues to provide a foundation of consistent profitability and broad client reach. This is supplemented by the strong cash flow of our plant-touching businesses in two of the strongest limited license markets, and by Blackbird, which provides additional upside with its highly versatile integrated suite of enterprise software and logistics solutions.
Financial Summary for the Quarter Ended June 30, 2020
- Revenue of $38.6 million, down 9% from the quarter ended March 31, 2020 and down 1% from the prior year period, driven primarily by COVID-19 related headwinds2 including decreased sales at the Company’s inhalation technology subsidiary, Jupiter Research, LLC (“Jupiter”), as well as lower wholesale demand in the cannabis segment due to the temporary suspension of adult-use sales in Massachusetts from March 24th to May 25th.
- Gross margin1 of 28.3%, up 63 basis points (“bps”) from the quarter ended March 31, 2020 and 384 bps from the prior year period driven by margin expansion at the Company’s software and services subsidiary, Blackbird, as well as improved harvest yields across the cannabis segment.
- Positive adjusted EBITDA for the second consecutive quarter of $1.2 million, down $0.5 million from the quarter ended March 31, 2020 and an improvement of $5.2 million from the prior year period.
- Cash and cash equivalents increased $2.1 million, up 25% from the previous quarter to $10.5 million as of June 30, 2020.
Operational Highlights for the Quarter Ended June 30, 2020
- Jupiter’s Canadian revenue continues to grow, contributing $2.4 million for the quarter, an increase of 100% from the quarter ended March 31, 2020.
- Operating cash flow was positive for the second consecutive quarter, increasing 40% from the quarter ended March 31, 2020 and 196% over the prior year period.
- Operating expenses less non-cash adjustments for stock compensation, depreciation and amortization decreased 5% from the quarter ended March 31, 2020 and 29% from the prior year period as the Company continues to streamline operations and drive down costs.
- Cultivation and manufacturing productivity continue to improve with second quarter revenue from the Company’s Standard Farms, LLC and Commonwealth Alternative Care, Inc. (“CAC”) plant touching subsidiaries up 69% compared to the prior year period.
Earnings Call and Webcast
The Company will host a webcast at 5:00 PM EDT to discuss financial and operational results for the reported quarter. The live webcast may be accessed from the Events and Presentations menu in the Investor Relations section of the Company’s website at https://investors.tiltholdings.com/ir-calendar or at http://public.viavid.com/index.php?id=141211. Please register at least 15 minutes prior to the scheduled start to download and install any necessary audio software. A replay of the webcast will be available in the “Past Events” section of the Company’s Investor Relations website approximately two hours after the live event and will be archived for 30 days.
TILT helps cannabis businesses build brands. Through a portfolio of companies providing hardware, software, logistics, cultivation and production, TILT services more than 2,000 brands and cannabis retailers across 33 states in the U.S. as well as Canada, Israel, Mexico, South America, and the European Union. TILT’s core businesses include Jupiter, a wholly owned subsidiary and leader in the vaporization segment focused on hardware design, R&D and manufacturing, Blackbird, a software and operations solutions provider for wholesale and retail distributors; and cannabis operations Commonwealth Alternative Care, Inc. in Massachusetts and Standard Farms, LLC in Pennsylvania. TILT is headquartered in Phoenix, Arizona. For more information, visit www.tiltholdings.com.
Non-IFRS Financial and Performance Measures
In addition to providing financial measurements based on International Financial Reporting Standards (“IFRS”), the Company provides additional financial metrics that are not prepared in accordance with IFRS. Management uses non-IFRS financial measures, in addition to IFRS financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate the Company’s financial performance. These non-IFRS financial measures are EBITDA and Adjusted EBITDA.
Management believes that these non-IFRS financial measures reflect the Company’s ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies. Management also believes that these non-IFRS financial measures enable investors to evaluate the Company’s operating results and future prospects in the same manner as management. These non-IFRS financial measures may also exclude expenses and gains that may be unusual in nature, infrequent or not reflective of the Company’s ongoing operating results.
As there are no standardized methods of calculating these non-IFRS measures, the Company’s methods may differ from those used by others, and accordingly, the use of these measures may not be directly comparable to similarly titled measures used by others. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are financial measures that are not defined under IFRS. The Company uses these non-IFRS financial measures, and believes they enhance an investor’s understanding of the Company’s financial and operating performance from period to period, because they exclude certain material non-cash items and certain other adjustments management believes are not reflective of the Company’s ongoing operations and performance. The Company calculates EBITDA as net income (loss), plus (minus) income taxes (recovery), plus (minus) finance expense (income), plus depreciation and amortization expense. Adjusted EBITDA excludes certain one-time, non-cash or non-operating expenses, as determined by management, including stock compensation expense, business acquisition expense, debt issuance costs, severance, unrealized (gain) loss on changes in fair value of biological assets and fair value changes in biological assets included in inventory sold.
Reconciliations of Non-IFRS Financial and Performance Measures
Adjusted EBITDA is reconciled to Net Loss below as well as the section labelled “Reconciliation of Net Income (Loss) to Non-IFRS Measures” in the Management Discussion and Analysis of the Company for the quarter ended on June 30, 2020, which is available on the Company’s SEDAR profile at www.sedar.com.
1 Gross margin before adjustment for changes in fair value of biological assets and inventories.
2 Additional details regarding COVID-19 impact on TILT businesses can be found in the Management Discussion and Analysis of the Company for the quarter ended June 30, 2020, available on the Company’s SEDAR profile at www.sedar.com.
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