TILT Holdings Inc. (NEO: TILT) (OTCQX:TLLTF), a global provider of cannabis business solutions that include inhalation technologies, cultivation, manufacturing, processing, brand development, and retail, reported its financial and operating results for the three and twelve months ended December 31, 2021, late on Wednesday.
“2021 was a strong year for TILT—growing organically, building our team, and implementing the new B2B strategy we unveiled in late 2020. (...) we expect our wholesale mix to drastically change,” 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,” added Santo.
“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 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,” the CEO explained.
Financial Summary
- Revenue increased approximately 28% to $54.1 million compared to $42.3 million in the year-ago period. 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 $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 the customer concentration mix and 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.
- Adjusted EBITDA increased to $4.8 million compared to $4.5 million in the year-ago period.
- On December 31, 2021, cash and cash equivalents were $7.0 million compared to $8.9 million on December 31, 2020. Working capital was $41.1 million compared to $57.4 million on December 31, 2020, and total debt was $86.6 million compared to $71.8 million in 2020.
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.
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 a 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.
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