TILT (TILT) Q2 2024 earnings summary

Executive summary

• Sequential growth in plant-touching business offset by challenges in Jupiter hardware segment, which faced production, supply chain, and transition issues.

• Strategic cost reductions, product portfolio optimization, and sales reorganization implemented to stabilize business and position for long-term success.

• Transition to a just-in-time, asset-light model for Jupiter aims to improve gross margins and reduce working capital needs.

• Optimism for growth opportunities, especially in Ohio with the launch of adult-use cannabis and potential regulatory tailwinds from rescheduling.

Financial highlights

• Q2 2024 revenue was $26.6M, down from $41.6M year-over-year, mainly due to Jupiter hardware business decline.

• Gross margin improved to 16% from 9.7% year-over-year; adjusted gross margin was 16.8%.

• Net loss was $35.9M, compared to $26.9M year-over-year, driven by a non-cash impairment charge.

• Adjusted EBITDA was negative $1.2M, compared to $1.5M positive year-over-year.

• Cash from operations was $1.4M, compared to cash used of $3.3M year-over-year; cash and equivalents at June 30, 2024, were $2.7M.

Outlook and guidance

• Transition to asset-light, just-in-time model for Jupiter expected to reduce revenue but improve gross margin and working capital through 2024-2025.

• Management remains focused on strengthening unit economics, improving the balance sheet, and returning to growth and profitability.

• Anticipates growth in Ohio with adult-use launch and potential future catalysts in Pennsylvania pending adult-use legalization.