JohnCM Investment Corner

[JohnCM]

The Charles Report
Featuring TILT Holdings OTC QX TLLTF
$0.5689
March 9th, 2021

TILT helps cannabis businesses build brands. Through a portfolio of companies providing technology, hardware, cultivation, and production, TILT services brands and cannabis retailers across 35 states in the U.S., as well as Canada, Israel, Mexico, 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 and Standard Farms, LLC in Pennsylvania. TILT is headquartered in Phoenix, Arizona.

Outstanding Shares 323,756,294 03/02/2021

TILT Holdings Provides Preliminary Fourth Quarter Results, Operational Highlights, and 2021 Outlook 02/17/2021

Jupiter Q4 2020 revenues return to pre-COVID levels

Standard Farms extraction capacity increased by 100% during Q4 2020

CAC lab and kitchen production capacity increased by 100% during Q4 2020

Projected Preliminary Financial Highlights:

• Q4 2020 revenue is projected to be between $42.2 million and $43.2 million, compared to Q3 2020 revenue of $40.4 million

• Q4 2020 Adjusted EBITDA is projected to be between $2.6 million and $3.6 million, compared to Q3 2020 Adjusted EBITDA of $2.8 million

• Pro-forma Q4 2020 revenue excluding the Company’s former subsidiary, Blackbird, is projected to be between $41.3 million and $42.3 million, compared to Q3 2020 Pro-forma revenue of $39.1 million

• Pro-forma Q4 2020 Adjusted EBITDA excluding the Company’s former subsidiary, Blackbird, is projected to be between $4.6 million and $5.6 million, compared to Q3 2020 Pro-forma Adjusted EBITDA of $5.4 million

• $7.4 million cash balance as of Dec. 31, 2020, compared to $4.3 million at Sept. 30, 2020

Fourth Quarter 2020 Operational Highlights:

• Jupiter Research LLC’s (“Jupiter”) power supply revenue doubled from Q3 2020 to Q4 2020; revenues during the quarter reached pre-COVID levels

• Commonwealth Alternative Care, Inc.’s (“CAC”) lab and kitchen production capacity increased 100% during the quarter; cultivation expansion approved October 2020 planted during Q4 2020 and expected to yield the first harvest in March 2021

• Standard Farms, LLC (“Standard Farms”) doubled extraction processing capacity during the quarter; introduced six new manufactured product offerings

Full Year 2021 Outlook:

2021 strategic initiatives fully funded; outlook not expected to require significant CAPEX or M&A.

• Revenue range of $205 million to $210 million

• Adjusted EBITDA range of $30 million to $32 million

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

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 margin1 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.
• Net loss ($4,617,000)

• 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.

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John Mueller is not a licensed financial, income tax advisor, stockbroker, or licensed real estate agent (almost!). All investment/financial opinions expressed by John Mueller are from my personal research and 35 years of investing experience and are intended as educational material only. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur. Purchase and sell real estate and stocks at your own risk.