TILT Holdings Reports Record Fourth Quarter and Full Year 2021 Results and Issues 2022 Annual Guidance

Rhea-AI Summary

TILT Holdings reported strong financial results for Q4 and FY 2021, with revenues up 28% YoY to $54.1 million and $202.7 million, respectively. Adjusted EBITDA for Q4 increased to $4.8 million, while FY 2021 adjusted EBITDA rose 33% to $22.5 million. The company expanded its operations significantly, launching new dispensaries and increasing its cultivation capacity. However, gross margins declined due to higher freight costs and customer mix. Looking ahead, TILT anticipates 2022 revenues between $255-$265 million, marking potential growth despite external market pressures.

Positive

• Q4 2021 revenue increased 28% YoY to $54.1 million.
• FY 2021 revenue up 28% to $202.7 million.
• Adjusted EBITDA in Q4 increased to $4.8 million, and FY 2021 adjusted EBITDA rose 33% to $22.5 million.
• Expanded operations with new dispensaries and partnerships, enhancing market presence.

Negative

• Gross profit margin decreased to 21% in Q4 2021 from 27% YoY.
• Increased freight costs and lower wholesale prices impacted profitability.
• Total debt rose to $86.6 million from $71.8 million, necessitating a review of debt structure.

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

PHOENIX, March 30, 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 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.

About TILT

TILT helps cannabis businesses build brands. Through a portfolio of companies providing technology, hardware, cultivation and production, TILT services brands and cannabis retailers across 36 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.

Instagram: @tiltholdings
Twitter: @TILT_Holdings

Forward-Looking Information

This news release contains forward-looking information based on current expectations. Forward-looking information is provided for the purpose of presenting information about management’s current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward looking information may include, without limitation, expectations regarding 2022 revenue and Adjusted EBITDA guidance, the opinions or beliefs of management, prospects, opportunities, priorities, targets, goals, ongoing objectives, milestones, strategies and outlook of TILT, and includes statements about, among other things, future developments, the future operations, strengths and strategy of TILT. Generally, forward looking information can be identified by the use of forward looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. These statements should not be read as guarantees of future performance or results. These statements are based upon certain material factors, assumptions and analyses that were applied in drawing a conclusion or making a forecast or projection, including TILT’s experience and perceptions of historical trends, the ability of TILT to maximize shareholder value, current conditions and expected future developments, as well as other factors that are believed to be reasonable in the circumstances.

Although such statements are based on management’s reasonable assumptions at the date such statements are made, there can be no assurance that it will be completed on the terms described above and that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Accordingly, readers should not place undue reliance on the forward-looking information. TILT assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by applicable law.

By its nature, forward-looking information is subject to risks and uncertainties, and there are a variety of material factors, many of which are beyond the control of TILT, and that may cause actual outcomes to differ materially from those discussed in the forward-looking statements.

For additional information regarding forward-looking statements and their related risks, please refer to the “Risk Factors and Uncertainties” section in the Annual Information Form of the Company for the year ended on December 31, 2021, which will be available on the Company’s SEDAR profile at www.sedar.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, Adjusted EBITDA, and Working Capital, and gross margin percentage. 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.

Working Capital

The calculation of working capital provides additional information and is not defined under IFRS. The Company defines working capital as current assets less current liabilities. This measure should not be considered in isolation or as a substitute for any standardized measure under IFRS. This information is intended to provide investors with information about the Company’s liquidity. Other businesses in the Company’s industry may calculate this differently than the Company does, limiting usefulness as a comparative measure. A reconciliation of working capital to IFRS measures can be found under the “Q4 2021 Financial Condition Including Liquidity and Capital Resources” section of the Management Discussion and Analysis of the Company for the three and twelve months ended on December 31, 2021.

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 three and twelve months ended on December 31, 2021, which will be available on the Company’s SEDAR profile at www.sedar.com. 

Company Contact:
Lynn Ricci, VP of Investor Relations & Corporate Communications
TILT Holdings Inc.
lricci@tiltholdings.com

Investor Relations Contact:
Sean Mansouri, CFA
Elevate IR
TILT@elevate-ir.com
720.330.2829

Media Contact:
Juliet Fairbrother
MATTIO Communications
juliet@mattio.com
631.338.5343

 

Table 1: Consolidated Statements of Operations
(in US$ thousands)
			Three Months Ended												Year Ended
	($ thousands)		Dec 31, 2021				Sep 30, 2021				Dec 31, 2020				Dec 31, 2021				Dec 31, 2020				Dec 31, 2019
	Revenue		$	54,057			$	53,362			$	42,265			$	202,705			$	158,409			$	146,935
	Cost of Goods Sold			42,801				40,697				30,985				152,214				111,738				106,236
	Gross Profit, Before FV Adj.			11,256				12,665				11,280				50,491				46,671				40,699
	Gross Margin %, Before FV Adj.			21%				24%				27%				25%				29%				28%
	Gain on FV of Bio. Assets			12,103				8,559				13,650				47,189				47,298				37,459
	FV of Bio. Assets in Inventory Sold			(5,969)				(9,886)				(14,063)				(39,474)				(35,014)				(19,790)
	Gross Profit, After FV Adj.			17,390				11,338				10,867				58,206				58,955				58,368
	Gross Margin %, After FV Adj.			32%				21%				26%				29%				37%				40%
	Total Operating Expenses			54,375				16,260				49,703				98,788				93,552				170,353
	Loss from Operations			(36,985)				(4,922)				(38,836)				(40,582)				(34,597)				(111,985)
	Total Other Income (Expense)			1,433				2,371				(15,841)				(9,571)				(22,553)				(13,217)
	Income Tax Recovery			4,704				652				9,313				3,860				5,043				3,275
	Net Loss from Continuing Operations, Net of Tax		$	(30,848)			$	(1,899)			$	(45,364)			$	(46,293)			$	(52,107)			$	(121,927)
	Net Loss from Discontinued Operations, Net of Tax			-				-				(46,783)				-				(53,650)				(11,447)
	Net Loss		$	(30,848)			$	(1,899)			$	(92,147)			$	(46,293)			$	(105,757)			$	(133,374)
	EBITDA, Non-IFRS			(26,611)				6,618				(49,612)				(16,457)				(29,032)				(89,022)
	Adjusted EBITDA, Non-IFRS		$	4,801			$	4,954			$	4,545			$	22,497			$	16,924			$	(845)

Table 2: Reconciliation of Non-IFRS Measures
(in US$ thousands)
			Three Months Ended										Year Ended
	($ thousands)		Dec 31, 2021			Sep 30, 2021			Dec 31, 2020				Dec 31, 2021			Dec 31, 2020			Dec 31, 2019
	Net Loss from Continuing Operations		$	(30,848)		$	(1,899)		$	(45,364)			$	(46,293)		$	(52,107)		$	(121,927)
	Add (Deduct) Impact of:
	Interest (Income)			(6)			1			(1,595)				(592)			(3,835)			(3,280)
	Finance Expense			2,872			3,035			1,847				10,988			10,336			13,463
	Income Tax (Recovery)			(4,704)			(652)			(9,313)				(3,860)			(5,043)			(3,275)
	Depreciation and Amortization			6,075			6,133			4,813				23,300			21,617			25,997
	Total Adjustments			4,237			8,517			(4,248)				29,836			23,075			32,905
	EBITDA (Non-IFRS)		$	(26,611)		$	6,618		$	(49,612)			$	(16,457)		$	(29,032)		$	(89,022)
	Add (Deduct) Impact of:
	Share-based Compensation			1,398			849			817				3,804			4,200			75,628
	Severance			159			739			-				915			279			1,204
	(Gain) Loss on Sale of Assets			(20)			(127)			(32)				(88)			70			610
	Lease Restructuring Costs			(117)			-			-				(131)			280			-
	Deferred Rent Adjustment			-			-			-				(548)			-			-
	Legal Settlement			-			36			275				2,363			275			-
	Unrealized Loss on Investment in Equity Security			62			71			23				891			337			-
	Loss on Loan Receivable			4,562			-			16,416				4,562			16,416			4,689
	Derecognition and Impairment Loss			39,306			194			34,076				39,500			34,214			22,560
	Foreign Exchange (Gain) Loss			-			-			-				15			-			(76)
	One Time Bad Debt Expense			137			-			2,169				137			2,169			-
	One Time Adjustments			842			451			-				1,250			-			1,231
	Change in Fair Value of Financial Instruments			(8,783)			(5,204)			-				(6,001)			-			-
	Unrealized (Gain) on Changes in FV of Bio. Assets			(12,103)			(8,559)			(13,650)				(47,189)			(47,298)			(37,459)
	FV Changes in Bio. Assets Included in Inventory Sold			5,969			9,886			14,063				39,474			35,014			19,790
	Total Adjustments			31,412			(1,664)			54,157				38,954			45,956			88,177
	Adjusted EBITDA (Non-IFRS)		$	4,801		$	4,954		$	4,545			$	22,497		$	16,924		$	(845)

Table 3: Consolidated Statements of Cash Flows
(in US$ thousands)
		Twelve months ended
		December 31, 2021				December 31, 2020
Cash provided by operating activities - continuing operations			(8,822)				16,693
Cash (used in) operating activities - discontinuing operations			-				(7,040)
Net cash (used in) provided by operating activities			(8,822)				9,653
Cash (used in) provided by investing activities - continuing operations			872				(2,578)
Cash (used in) investing activities - discontinuing operations			-				58
Net cash (used in) provided by investing activities			872				(2,520)
Cash (used in) financing activities - continuing operations			6,024				(2,275)
Cash (used in) financing activities - discontinuing operations			-				(638)
Net cash (used in) financing activities			6,024				(2,913)
Effect of foreign exchange on cash and cash equivalents			19				627
Net change in cash and cash equivalents			(1,907)				4,847
Cash and cash equivalents, beginning of period			8,859				4,012
Cash and cash equivalents, end of period		$	6,952			$	8,859

Table 4: Consolidated Statements of Financial Position (Select Items)
(in US$ thousands)
	($ thousands)		Dec 31, 2021		Dec 31, 2020			Dec 31, 2019
	Cash and Cash Equivalents		$	6,952	$	8,859		$	4,012
	Biological Assets			9,609		11,201			8,580
	Inventory			85,017		52,634			48,169
	Total Current Assets			140,575		101,889			94,708
	Property, Plant & Equipment, Net			62,360		66,795			80,576
	Total Assets			414,011		429,604			545,903
	Total Current Liabilities			99,482		44,488			50,365
	Total Long-Term Liabilities			81,669		102,069			111,672
	Total Shareholders’ Equity			232,860		283,047			383,866
	Working Capital			41,093		57,401			44,343

 

FAQ

What were TILT Holdings' Q4 2021 financial results?

TILT Holdings reported Q4 2021 revenue of $54.1 million, a 28% increase YoY, with adjusted EBITDA reaching $4.8 million.

How did TILT Holdings perform in FY 2021?

For FY 2021, TILT's revenue was $202.7 million, up 28% YoY, and adjusted EBITDA increased 33% to $22.5 million.

What are TILT Holdings' revenue expectations for 2022?

TILT expects 2022 revenue to range between $255 million and $265 million, indicating around 28% growth.

What factors affected TILT Holdings' gross profit margin?

The gross profit margin declined due to increased freight costs and a challenging customer concentration mix.

What new initiatives did TILT Holdings launch in 2021?

TILT launched new adult-use dispensaries, expanded partnerships, and introduced a cannabis delivery service in Massachusetts.