TILT Holdings Reports First Quarter 2023 Results

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 ended March 31, 2023. All financial information is reported in U.S. dollars and prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) unless otherwise indicated.

“In my first few weeks as the Interim CEO, I have had the pleasure of visiting some of our current and future operational sites — engaging with our employees and speaking directly with our customers,” said Interim Chief Executive Officer Tim Conder. “I am encouraged by the passion I have encountered and the excitement about TILT’s future.”

Conder continued, “Looking ahead, I will be working closely with our team to sharpen our focus on operational excellence. We expect to optimize our operations, instill frugality as a core value, and hold ourselves and our team to high levels of accountability. Our responsibility to our stakeholders — employees, customers, partners, and shareholders — is paramount.”

Q1 2023 Financial Summary 

  • Revenue was $42.3 million in the three months ended March 31, 2023, compared to $42.4 million in the prior year period.
  • Gross profit was $8.8 million in the three months ended March 31, 2023, or approximately 20.8% of revenue, compared to $9.4 million or approximately 22.1% of revenue in the prior year period. The decrease in gross profit and gross margin was primarily due to price compression in the Massachusetts cannabis market, partially offset by an increase in gross profit and margin in the Company’s inhalation business driven primarily by lower costs of goods.
  • Net loss improved to $4.9 million in the three months ended March 31, 2023, compared to a net loss of $11.6 million in the prior year period. The improvement was primarily driven by an $8.4 million gain from the previously announced sale leaseback transaction for the Company’s Pennsylvania cultivation and manufacturing facility.
  • Adjusted EBITDA (non-GAAP) was $(79) thousand in the three months ended March 31, 2023, compared to $1.5 million in the prior year period. The decrease was driven by lower gross profit, higher general and administrative expenses, and increased retail headcount in Massachusetts.
  • At March 31, 2023, the Company had $5.2 million of cash, cash equivalents and restricted cash compared to $3.5 million at December 31, 2022. Total net debt at March 31, 2023 was $48.9 million compared to $59.7 million at December 31, 2022.

Recent Financing Update

  • In March 2023, the Company announced it amended its existing revolving credit facility to increase credit availability, improve terms, and extend the maturity date.
  • In February 2023, the Company announced a series of transactions that alleviated its near-term debt maturity and further reduced its non-revolving debt.
  • In conjunction with the issuance of the Amended and Restated Notes in February 2023, the Company also completed a sale-leaseback transaction for its Pennsylvania cultivation and manufacturing facility for approximately $15 million.

Q1 2023 Operational Highlights

  • Launched Coda Signature, a leading cannabis industry chocolatier, in the Massachusetts market.
  • Introduced Black Buddha Cannabis, social impact driven cannabis wellness brand, in the Pennsylvania market.
  • Announced a licensing agreement to bring new patented stackable cartridge technology ThredzTM, to market through subsidiary Jupiter Research, LLC (“Jupiter”).

Recent Operational Highlights

  • Appointed Tim Conder, Board member and former President and Chief Operating Officer of the Company, as Interim Chief Executive Officer and Mark Scatterday, founder of Jupiter and former Chief Executive Officer of the Company, as senior advisor focused on the Company’s inhalation business.

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. There will not be a question-and-answer period.

Date: Monday, May 15, 2023
Time: 5:00 p.m. Eastern Time
Toll-free dial-in number: (888) 886-7786
International dial-in number: (416) 764-8658
Conference ID: 19884450
Webcast: TILT Q1 2023 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.

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