TILT Holdings Stock: Pot Stock Up 64% Year-to-Date & Could Still Quadruple

TLLTF Stock Bullish on Growing Brand Partnerships

Marijuana stocks have had a tough go of it over the last few years as politicians in Washington, D.C. dragged their feet on federal legalization of cannabis.

Despite the fact that the majority of American voters on both sides of the political aisle want marijuana legalized, Republican senators, for the most part, have decided not to act on the will of their constituents.

Until there’s more progress toward federal U.S. legalization, cannabis stocks will face an uphill battle. Even marijuana companies that have reported strong financial results have seen their stock prices take a hit.

Shares of TILT Holdings Inc (FRA:0T01, OTCMKTS:TLLTF) might be down by 64.5% year-over-year, but they’re at least showing signs of life. As of this writing, TILT Holdings stock is up by 63.7% year-to-date.

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That’s a big short-term gain, and TLLTF stock still has plenty of room to run. Even conservative Wall Street thinks so, with analysts providing a 12-month share-price target in the range of $0.15 to $0.30. This points to potential gains in the range of 114% to 328%.

Chart courtesy of StockCharts.com

About TILT Holdings Inc

TILT Holdings is the company that other marijuana companies call to help build their brands.

Through subsidiaries that provide technology, hardware, cultivation, and production, the Arizona-based company serves cannabis brands and retailers in 36 U.S. states, as well as Canada, Mexico, Israel, South America, and Europe. (Source: “Corporate Presentation: November 2022,” TILT Holdings Inc, last accessed February 1, 2023.)

One of TILT Holdings’ core businesses is Jupiter Research, a leading provider of vaporizer supplies. Essentially, Jupiter provides the cartridges and batteries while companies like Curaleaf Holdings Inc (CNSX:CURA, OTCMKTS:CURLF) provide the cannabis oil. Jupiter Research’s disruptive inhalation technology supports more than 1,000 marijuana brands worldwide.

Commonwealth Alternative Care is a cannabis cultivator and manufacturer with dispensaries in Brockton, Taunton, and Cambridge, MA.

Standard Farms was one of the first medical marijuana growers in Pennsylvania. The company specializes in cultivating and extracting pure, organic, and natural medical cannabis products. Standard Farms offers a variety of medical marijuana strains, tinctures, capsules, and cartridges to patients in Pennsylvania and Ohio.

TILT Holdings Inc also has a partnership with the Shinnecock Indian Nation in New York State. Through a joint venture, TILT Holdings Inc will finance, build, and provide management services for the vertical cannabis operations of the Shinnecock Nation’s wholly owned cannabis business, Little Beach Harvest LLC.

TILT Holdings Inc will be launching a new Shinnecock Nation cannabis product in Massachusetts at some point in the first quarter of 2023. The first release will be focused on marijuana flower.

Shinnecock Nation expects to launch products in additional categories throughout 2023.

Cash From Operations Grew to $8.3M in First 9 Months of 2022

For the third quarter ended September 30, 2022, TILT Holdings announced that its revenue dipped to $40.5 million. The 24% decline was driven by lower sales in the company’s inhalation business. That decline was partially offset by continued growth in the company’s cannabis operations. (Source: “TILT Holdings Reports Third Quarter 2022 Results,” TILT Holdings Inc, November 14, 2022.)

The company’s plant-touching revenues in the third quarter climbed by eight percent year-over-year, driven by 424% growth in brand partner sales.

TILT Holdings Inc’s gross profit in the third quarter of 2022 was $9.5 million (approximately 24% of its revenue), compared to $12.6 million (approximately 24% of its revenue) in the same prior-year period. The company reported a net loss of $15.7 million, versus a third-quarter 2021 net income of $1.2 million.

The company ended the third quarter of 2022 with cash of $16.6 million, compared to $8.1 million at the end of the third quarter of 2021.

TILT Holdings’ cash from operations in the first nine months of 2022 was up significantly at $8.3 million, compared to cash used of $3.9 million in the same prior-year period.

Gary Santo, TILT Holdings Inc’s CEO, commented, “Macro-economic pressures have affected consumer spending habits and both retail and wholesale pricing volatility has been exacerbated by cannabis supply and demand imbalances occurring in key markets such as Massachusetts and Pennsylvania.” (Source: Ibid.)

He added,

However, TILT’s brand partner strategy continues to outperform the market with modest to no declines in our wholesale pricing. While still in the early days of executing a mix-shift in our product offerings, wholesale brand partner sales increased 15% sequentially and now account for nearly 40% of our wholesale revenue mix, contributing to stable gross margin on a year-over-year basis as we continue to scale our [consumer packaged goods] business.

TILT Holdings Inc expects to report full-year 2022 revenues in the range of $175.0 to $180 million and adjusted EBITDA in the range of $5.0 to $6.0 million.

Other Business Updates

In the third quarter of 2022, TILT Holdings launched 10 new product-line stock-keeping units (SKUs) and had more than 23 new product-line SKUs planned for the fourth quarter. The company had expected to have more than 145 product lines by the end of the year.

TILT Holdings’ aggressive brand-partner pivot over the last five quarters has led to its brands expanding from zero percent to nearly 40% of its wholesale revenue. In 2022, the company signed five new brands.

In the third quarter of 2022, TILT Holdings Inc launched the self-care brand “1906” for patients in Pennsylvania, as well as the cannabis brands “Toast” and “Highsman” for medical marijuana patients and recreational pot customers in Massachusetts.

In November 2022, the company entered into amendments to the senior secured promissory notes to certain senior debt noteholders totaling $9.6 million.

In the third quarter of 2022, TILT Holdings Inc received approval from the Massachusetts Cannabis Control Commission to start medical marijuana operations at the company’s dispensary in Cambridge.

Analyst Take

Macroeconomic headwinds have been hurting the broader cannabis industry, but TILT Holdings Inc’s brand-partner strategy has helped the company outperform the market—with modest to no declines in wholesale pricing.

The company continues to report positive adjusted EBITDA and cash flow. With its recently announced $9.6 million in debt refinancing, TILT Holdings is well positioned to return to higher financial growth in 2023.

All of this means TLLTF stock might not be a penny stock for long.