Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TILT Holdings Inc (TLLTF, Financial) reported sequential growth in its plant-touching business, despite challenges in Massachusetts and Pennsylvania.
- The company launched new products, such as Level tablets and Edie Parker Flower, which have shown strong initial market traction.
- Gross margins improved to 16% from 9.7% year-over-year, driven by enhancements in plant-touching markets.
- The company has implemented a sales reorganization at Jupiter to better align with market realities and expand into emerging markets.
- TILT Holdings Inc (TLLTF) is optimistic about the adult-use cannabis market launch in Ohio, expecting significant sales growth.
Negative Points
- Revenue decreased significantly to $26.6 million from $41.6 million year-over-year, primarily due to challenges in the Jupiter hardware business.
- The company experienced supply chain issues with its manufacturing partner in Asia, impacting revenue and profitability.
- Net loss increased to $35.9 million from $26.9 million year-over-year, driven by a noncash impairment charge.
- The transition to a new asset-light model for Jupiter is expected to result in a sizable reduction in revenue through 2024 and 2025.
- Persistent pricing pressure in the Massachusetts market continues to pose challenges for TILT Holdings Inc (TLLTF).
Q & A Highlights
Q: Can you elaborate on the impact of the transition to the new asset-light model for Jupiter and any unexpected hurdles?
A: Tim Conder, CEO, explained that the transition is temporary, expected to last about a year, and is aimed at benefiting customers through pricing and inventory improvements. While it will have a material impact on revenue, EBITDA is expected to remain flat, and gross margins should improve, benefiting working capital.
Q: How do you plan to capitalize on the Ohio adult-use market, and what is your current market penetration?
A: Tim Conder, CEO, expressed excitement about the transition to adult-use sales in Ohio, noting a significant increase in sales. TILT has a strong market position, delivering to over 50% of stores, and expects to grow both sales volume and store penetration.
Q: Can you provide an update on Jupiter's innovation plans and initiatives for customized, high-margin products?
A: Tim Conder, CEO, highlighted Jupiter's focus on innovation and customization, including the development of a liquid medical device for the European market and a proprietary device for Curaleaf. These efforts are crucial for long-term success and customer growth.
Q: What percentage of Jupiter's sales come from the five customers transitioning to the direct billing model?
A: Tim Conder, CEO, stated that Jupiter sales represent 70% to 75% of TILT's overall business, which will likely decrease to around 60% following the transition.
Q: Is the transition to the new billing model for Jupiter temporary, and could it become permanent?
A: Tim Conder, CEO, confirmed that the transition is temporary, intended to last at least a year, and is being tested for benefits to customers, Jupiter, and the supplier. If successful, it could become a permanent model.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
