Tilt Holdings (OTCQX: TLLTF) posted fourth quarter and full-year earnings on Thursday that show the company continues to struggle in an increasingly harsh market environment.
The company reported fourth quarter revenue of $44.3 million, an 9% uptick versus the previous quarter but down 18% from the prior-year period.
Tilt reported a net loss of $73.1 million for the quarter, more than triple the $20.1 million net loss recorded in the same period in 2021. The rise was primarily driven by a $54.6 million goodwill impairment.
The completed refinancing of its legacy debt, which reduced its principal debt outstanding by nearly half, will help the company improve its financial flexibility and reduce its interest expense.
Gross profit in the quarter was $8.3 million, around 19% of revenue, versus to $11.2 million or 21% of revenue in the prior-year period. Adjusted EBITDA was at a $400,000 loss versus $4.5 million in the prior year period due to the price compression in the company’s cannabis operations in Massachusetts.
Despite the decrease in revenue and gross profit, Tilt maintained positive adjusted EBITDA and produced positive cash flow from operations for the year, a critical metric for any business, according to CEO Gary Santo.
“We believe our asset-light approach and nimble structure coupled with the now-completed refinancing and debt reduction efforts, allows us to enter 2023 with positive momentum, a stable capital structure, on-going positive cash flow from operations and a team fully equipped to tackle the critical optimization phase of our strategic pivot,” Santo said in a statement.
The company generated $8.6 million in positive cash flow from operations, primarily driven by improvements to working capital, versus negative outflow of the same amount in 2021. Total cash balance was $2.2 million, down from $7 million in the prior year, including restricted cash of $1.3 million.
Revenue was $174.2 million in 2022, down from $202.7 million in the prior year due to lower volumes and pricing in the inhalation business, though the slump was partially offset by general growth in the company’s expanding cannabis operations.
Net loss was $107.5 million in 2022 versus a net loss of $35.1 million in the prior year, mainly driven by a goodwill impairment in the fourth quarter.
Gross profit was $38.2 million, down from $50.2 million in the prior year, primarily due to pricing pressure in both inhalation and cannabis operations. Adjusted EBITDA was $2.8 million, down from $22.3 million in the prior year due to lower revenue.