Completes Year of Strong Organic Growth and Builds on New B2B Strategy
Q4 Revenue and Adjusted EBITDA up 28% YoY to $54.1 Million and 6% to $4.8 Million, Respectively
FY 2021 Revenue and Adjusted EBITDA up 28% YoY to $202.7 Million and 33% to $22.5 Million, Respectively
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 and twelve months ended December 31, 2021. All financial information is provided in U.S. dollars unless otherwise indicated.
“2021 was a strong year for TILT—growing organically, building our team, and implementing the new B2B strategy we unveiled in late 2020. As this brand strategy continues to unfold in 2022, we expect our wholesale mix to drastically change, highlighting the strength of our partnerships with proven brands and the emphasis we place on building reciprocal relationships,” said Gary Santo, CEO of TILT. “Over the course of 2021, we doubled our canopy in Massachusetts and added two adult-use dispensaries, entered into our third market with the acquisition of Standard Farms Ohio, and our fourth market with the launch of a strategic partnership with the Shinnecock Indian Nation of New York, and we activated four new marquee brand partnerships. This is in addition to maintaining our position as the category leader in cannabis inhalation and accessory sales. These achievements underscore the success of our new strategy and the relentless effort from our growing team.”
Q4 2021 Financial Summary
- Revenue increased approximately 28% to $54.1 million compared to $42.3 million in the year ago period.
- Gross profit before fair value adjustments was $11.3 million or approximately 21% of revenue, compared to $11.3 million or approximately 27% of revenue in the year ago period. The decrease in gross margin was primarily driven by lower margins in the Company’s inhalation and accessories business due to customer concentration mix. The Company also experienced increased freight costs related to global supply chain disruption and lower bulk wholesale prices in its cannabis business.
- Operating expenses less non-cash adjustments for stock compensation, depreciation and amortization, and impairment charges were $9.2 million compared to $10.5 million in the year-ago period. As a percentage of revenue, operating expenses less non-cash adjustments totaled approximately 17% in the fourth quarter of 2021 compared to approximately 25%.
- Adjusted EBITDA increased to $4.8 million compared to $4.5 million in the year ago period.
- At December 31, 2021, cash and cash equivalents was $7.0 million compared to $8.9 million at December 31, 2020. Working capital was $41.1 million compared to $57.4 million at December 31, 2020.
- Total debt was $86.6 million compared to $71.8 million. The Company is actively exploring options to address its debt structure.
Q4 2021 Operational Highlights and Recent Events
- Commenced adult-use retail sales at its Brockton and Taunton, Massachusetts dispensaries.
- Divested non-core assets including Sante Veritas Therapeutics and Providence dispensary sites.
- Expanded contract with AIRO Brands to manufacture and distribute select products in Massachusetts.
- Entered into multi-state agreement to manufacture and distribute cannabis brand Toast™.
- Signed an exclusive Ohio partnership with leading vape brand, Timeless Refinery.
- Launched an adult-use cannabis delivery service in Massachusetts with Bracts & Pistils.
FY 2021 Financial Summary
- Revenue increased approximately 28% to $202.7 million in 2021 compared to $158.4 million for the year ended 2020. The increase was primarily attributable to an approximate 33% increase in inhalation and accessory revenue, as well as an approximate 11% increase in cannabis revenue.
- Gross profit before fair value adjustments was $50.5 million or approximately 25% of revenue, compared to $46.7 million or approximately 29% of revenue for the year ended 2020. The decline in gross margin was primarily driven by customer mix and higher freight costs in the Company’s inhalation and accessory business, as well as lower wholesale prices and ramping cultivation in the Company’s cannabis business.
- Operating expenses less non-cash adjustments for stock compensation, deprecation and amortization, and impairment charges in 2021 totaled $37.7 million compared to $36.6 million in 2020. As a percentage of revenue, opex less non cash adjustment was approximately 19% compared to approximately 23%.
- Adjusted EBITDA increased approximately 33% to $22.5 million compared to $16.9 million in 2020.
Santo continued: “TILT, along with most of the cannabis industry, faced considerable challenges in the back half of the year as inflationary pressure set in on the consumer, and supply/demand imbalances impacted the wholesale market. We also experienced higher supply chain costs in our inhalation and accessory business. We were not immune to these macro pressures. In fact, we launched our B2B strategy last year specifically with this environment in mind and the early results are proving this out. We believe that brand differentiation will be key as competition heats up across the U.S. and new cultivation comes online.
“Looking ahead, we expect another solid year of growth and profitability that will be somewhat back-half weighted in 2022 given the broader market pressure. We look forward to executing our multiple avenues for growth and introducing additional SKUs for those partners who launched in 2021. This quarter, we have already signed two new brand partnerships this year, and we expect our two adult-use dispensaries that came online in December to begin ramping. In addition, we look forward to opening our Cambridge, Massachusetts medical dispensary later this year.”
2022 Financial Guidance
TILT expects 2022 annual revenue to range between $255 – $265 million, and adjusted EBITDA to range between $27 – $32 million. At the midpoint, this reflects approximately 28% revenue growth and approximately 31% adjusted EBITDA growth over 2021.
Earnings Call and Webcast
TILT management will host a conference call today at 4:30 p.m. Eastern time to discuss its financial and operational results, followed by a question-and-answer period.
Date: Wednesday, March 30, 2022
Time: 4:30 p.m. Eastern time
Toll-free dial-in number: (877) 705-6003
International dial-in number: (201) 493-6725
Conference ID: 13727877
Webcast: TILT Q4 2021 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.
