TILT Holdings Q1 Revenue Down, Net Loss Up Due To Lower Prices, Optimistic On Rescheduling, Plans To Address Debt

TILT Holdings TILT TLLTF, reported financial and operating results for the first quarter that ended March 31, 2024, with revenue of $37.5 million down by 11.3% from $42.3 million in the prior year period. The Arizona-based company said the expected decrease in revenue was mainly due to lower sales volume and price compression in Massachusetts and Pennsylvania, as well as lower Jupiter average price per unit for certain product lines.

"We continue to navigate the company's transition from operational improvement to revenue growth," stated TILT's CEO Tim Conder. "Although the cannabis industry has been facing challenges related to hardware commoditization and pricing pressure in select markets, we are adapting accordingly, and the fundamentals of our business are improving despite those headwinds. Our primary focus is the same as it has always been – deepening our relationships with customers across both our plant-touching and Jupiter hardware businesses.

"There is still work to be done to improve the business; however, we believe TILT is poised for future growth, especially with exciting industry catalysts potentially on the horizon, such as federal rescheduling and the corresponding elimination of Section 280E taxes. We are also acutely focused on strengthening the balance sheet and plan to address our debt throughout the year as we execute on our growth and profitability objectives in 2024."

More about investments and financial data from the industry you can hear at the 19th Benzinga Cannabis Capital Conference in Chicago this October 8-9. Engage with top executives, investors, policymakers, and advocates to explore the industry’s future. Secure your tickets now before prices increase by following this link.

Q1 2024 Financial Summary 

• Gross profit was $6.7 million and gross margin was 17.9%, compared to $8.8 million or 20.8% of revenue in the prior year period. The decrease in gross profit was primarily driven by lower revenue at Jupiter and the cannabis division, while the contraction in gross margin was primarily driven by lower average pricing relative to the prior year period.
• Net loss was $9.7 million, which compares to a net loss of $4.9 million in the prior year period. The difference was primarily due to lower gross profit and an $8.4 million gain on asset sales recognized in Q1 2023.
• Adjusted EBITDA was $38,000 in the three months ended March 31, 2024, versus an Adjusted EBITDA loss of $79,000 in the prior year period. The improvement was primarily driven by efficient operating cost controls.
• Cash used from operations was $2.4 million for the three months ended March 31, 2024, compared to cash provided by operations of $3.8 million in the prior year period. The decrease was primarily related to the timing of inventory purchases.
• On March 31, 2024, the company had $3.5 million of cash, cash equivalents, and restricted cash compared to $3.3 million on December 31, 2023. Notes payable net of discount on March 31, 2024, was $59.7 million compared to $52.2 million on December 31, 2023.

Q1 2024 & Recent Operational Highlights

• Launched Level, a leading West Coast pressed tablet brand, in the Pennsylvania market.
• Crowned NECANN Cup winner for the third year in a row, its Standard Farms brand won first place for best vape cartridge with its Mimosa Liquid Live Rosin "All-in-One" Vape using the Jupiter/CCELL Voca Pro hardware.
• Announced that an experienced retailer and operator will lend capital to Standard Farms PA, to construct and operate dispensaries under Pennsylvania's Senate Bill 773.

Price Action

TILT Holdings shares closed Wednesday's market session 11.93% lower at $0.03 per share. 

Photo: Courtesy of SD_FlowerPower via Shutterstock