Cannabis Investment Club

[JohnCM]

TILT Holdings Reports Third Quarter 2020 Financial Results Including Record Adjusted EBITDA, Enters into Definitive Agreement for the Sale of Blackbird Subsidiary

11/18/2020

Revenue of $40.4 million, driven in part by a 24% sequential increase in the cannabis segment compared to the second quarter of 2020

Gross margin of 30.3%, a 193-basis point improvement from the second quarter of 2020, driven by margin expansion in the cannabis segment

Record adjusted EBITDA of $2.8 million, an increase of 134% from the second quarter of 2020

Upon closing, Blackbird divestiture reduces cash burn, improves third quarter 2020 adjusted EBITDA by 96% on a pro-forma basis

PHOENIX, Nov. 18, 2020 (GLOBE NEWSWIRE) -- TILT Holdings Inc. (“TILT” or the “Company”) (CSE: TILT) (OTCQB: TLLTF), a provider of business solutions to the global cannabis industry, reported its financial and operating results for the three and nine-months ended September 30, 2020. All financial information is unaudited and provided in U.S. dollars except where otherwise indicated.

“In the third quarter we saw sequential growth across our core Jupiter and plant-touching operations reflecting our diversified position within the growing U.S. cannabis industry,” said Mark Scatterday, CEO of TILT. “We also reported record adjusted EBITDA that was positive for the third consecutive quarter, a result of our actions to right-size the business while strengthening our platform to scale as a preferred B2B partner to the cannabis industry.”

Scatterday continued: “We are encouraged by the continuing trends that we see in our businesses, supported by recent regulatory tailwinds in the U.S. that we believe will continue to create more opportunities for TILT to deliver value to our shareholders.”

Financial Summary for the Quarter Ended September 30, 2020

Revenue of $40.4 million, a 5% increase from the second quarter of 2020 and a decline of 12% from the prior year period.

Gross margin of 30.3%, up 193 basis points (“bps”) from the second quarter of 2020 and up 8 bps from the prior year period.

Positive adjusted EBITDA for the third consecutive quarter at $2.8 million, a 134% increase from the second quarter of 2020, and a 3% increase from the prior year period.

Excluding the impact of Blackbird, pro-forma adjusted EBITDA of $5.4 million for the second quarter of 2020 and $12.7 million year to date.

Cash and cash equivalents of $4.3 million, a decline from the previous quarter $10.5 million as of June 30, 2020 due, in part, to additional inventory required to fulfill increasing orders.

Operational Highlights for the Quarter Ended September 30, 2020

Jupiter Research LLC’s (“Jupiter”) Canadian revenue improves 20% compared to the second quarter of 2020, contributing $2.9 million for the quarter.

Cultivation and manufacturing throughput at the Company’s Standard Farms, LLC (“Standard Farms’) and Commonwealth Alternative Care. Inc. (“CAC”) plant-touching subsidiaries continued to improve with revenue increasing 24% from the second quarter of 2020.

Operating expenses less non-cash adjustments for stock compensation, depreciation and amortization was $10.6 million, a 3% decline from the second quarter of 2020 and a 17% decline from the prior year period as the Company continues to streamline operations.