TILT Holdings Inc.

and welcome to Tilt Holdings' first quarter 2024 conference call and webcast. Today's call is being recorded for replay purposes. A replay of the audio webcast will be available in the investor section of the company's website approximately two hours after the completion of the webcast and will be archived for 30 days. I would now like to turn the conference call over to your host today, Tilt's Head of Investor Relations and Corporate Communications, Lynn Ritchie. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us. Earlier today, we issued our first quarter 2024 earnings press release. The press release, along with our report on Form 10-Q, is available on the U.S. Securities and Exchange Commission's website at www.sec.gov, on CEDAR+, at www.cedarplus.ca and on our website at www.tiltholdings.com. Please note that during this afternoon's webcast, remarks made regarding future expectations, plans, and prospects for the company constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various factors, which we disclose in more detail in our most recent 10-K filed by TILT with the SEC and on CDOT+. We remind you that any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may update such forward-looking statements in the future, we specifically disclaim any obligation to do so, except as otherwise required by law. As of today's call, We are presenting our financial results in accordance with the United States Generally Accepted Accounting Principles, or GAAP. During the call, management will also discuss certain financial measures that are not calculated in accordance with GAAP. We generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for TILTS financial results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to their nearest equivalent GAAP measure is available in our earnings press release that is an exhibit to our current report on Form 8K that we filed with the SEC and CDAR Plus today and can be found in the investor relations section of our website. Joining on today's call are our CEO, Tim Condor, and interim CFO, Brad Hoke. Following prepared remarks, we will open the call for questions. During today's prepared remarks, we may offer metrics to provide greater insight into our business and or financial results. Please be advised that we may or may not continue to provide these additional metrics in the future. With that, I will turn the call over to our CEO, Tim Condor.

Thank you, Lynn, and good afternoon, everyone. During the first quarter, we continued to navigate tilt transition between operational improvement and growth. The cannabis industry continues to be impacted by trends related to hardware commoditization and pricing pressure in select markets. However, we are adapting accordingly, and the fundamentals of our business are improving despite those headwinds. Most importantly, we continue to deepen our relationships with our customers across our plant touching and Jupiter hardware businesses as we work to further optimize our operations, address our debt stack, and position the business for future growth. Looking deeper, we are focused on improving operations across the organization by maximizing margins through product portfolio optimization, brand partner contract renegotiation, increased throughput in our plant touching businesses, and overhauling people, processes, and technology at Jupyter. Current operations are more effectively centered around our core inhalation competencies, brands, and products, and our fixed cost base will remain relatively stable from here as we focus on revenue growth. In Massachusetts, we are investing in maintenance CapEx to improve cannabis yields, potency, and cannabinoid profiles, while in Ohio, we are preparing for adult use sales, which are reported to begin as early as next month. we have already begun to increase biomass inventory and product inputs for our in-house and brand partner SKUs. In 2023, as part of our overall strategy refinement, we initiated a plan to refocus our cannabis brand partnerships to better align with our broader inhalation strategy. We have added strong brands to our portfolio, including Level and Edie Parker Flower. We continue to look for additional opportunities to increase revenue, expand margins, drive retail door penetration, and add distribution channels. In addition to refining our brand partner strategy, we are investing in the growth of our in-house brands and contract manufacturing initiatives. We see early results of this taking shape in 2024. Touching now on each of our plant-touching markets in more detail. Massachusetts remains challenging as pricing pressure persisted in the first quarter given the increase in cultivation throughout the state during Q1. However, wholesale remains a growing opportunity as we look to increase door penetration and total points of distribution. As mentioned on our last call, we are working to increase cultivation yield to meet both the demand in our stores as well as the wholesale market. We have made investments in lighting upgrades that will produce higher quality product and greater yields on a consistent basis. And we are seeing positive early results with an increase in yields in our overhauled flower rooms of over 70%. We are selling through all ABUD that we grow and harvest and expect additional flower from our lighting investments over the summer. On the brand front in Massachusetts, In Q1, we won first place for Best Vape Cartridge in the 2024 Nikan Cup with our Mimosa Liquid Live Rosin All-in-One Vape using our Commonwealth Alternative Care Cannabis and Jupiter's C-Cell VOCA Pro hardware. Old Pal and Standard Farms continue to be bright spots, with Old Pal ranking as one of the top-selling flower brands in 2023, and Standard Farms, recognized as the fastest-growing brand in the state last year by Headset, a cannabis data company. In Q1, Old Pal was the number four selling flower in the state, up from number 25 in Massachusetts in Q1 of 2023, and from the 11th-ranked flower brand in Q4 2023 per BDSA. The three brands ahead of Old Pal are all large MSO brands. In Pennsylvania, we continue to focus on the rationalization of our brand portfolio. We recently brought our new brand partner Level to market and early results from our launch in April have been strong. In fact, we added 30 more doors in our wholesale business in Pennsylvania immediately following the launch of Level, which speaks to the market demand. Although pricing pressure persists in the state, we are making real-time adjustments to our product portfolio to offset margin compression by focusing on higher margin products and customers. Level has been added to the TIL portfolio product lineup to optimize the cannabis material available to us from parting ways with 1906. We are working diligently to ensure that Level, which is one of the leading press tablet brands in cannabis, becomes a known favorite in Pennsylvania and is available throughout the state in the near future. Finally, TILT recently reached an agreement with an experienced retailer and vertical operator wherein this operator will lend capital to TILT's Pennsylvania subsidiary Standard Farms in order for Standard Farms to construct and operate dispensaries under Pennsylvania's Senate Bill 773. Under the terms of this agreement, standard farms can borrow up to $10.5 million, which will be used to construct dispensaries obtained via permit. The permit application window opened Monday. In Ohio, with adult use expected to go live in the coming months, if not weeks, we anticipate a significant tailwind for the market. As a reminder, we are a manufacturer and processor in the state. We have strong partnerships and a good line of sight on biomass that will be needed for the anticipated ramp. We continue to work closely with our brand partner, Timeless, to support their accelerated growth in Ohio from adult use, and we anticipate as much as a 3x initial increase with expected growth beyond as volume is fully realized. To summarize our plant touching business, we are continuing to evaluate and act on a market-by-market basis. Our operations are lean and optimized, and we will continue to identify white space to enter and exploit to grow revenue. Moving to our Jupiter vape hardware business. As discussed on our last conference call, during the first quarter, we worked through certain challenges with our manufacturing partner and signed a collateral agreement to meet our business and customer needs and support larger seasonal order volumes. Delayed shipments during this process impacted our results in both Q4 and Q1. However, the Jupiter team continues to make progress on internal goals that we believe will set us up for a better year in 2024. We've introduced new hires at the upper levels of the Jupiter organization to improve our business operations and optimize for growth. This includes modifying sales processes, improving contracts, and broadening our customization work. In addition, by working with our manufacturing partner, Smore, we started to receive the first shipments for certain product lines out of their Indonesian facility in Q1, which we believe will be a positive change for both Jupiter and our customers to address the tariffs charged on Chinese imports to the US. With respect to our product updates at Jupiter, We are still awaiting regulatory approvals for the liquid medical device, a vaporizer battery with a cartridge accessory announced in 2020 to be available through European partners for new territories abroad. This will be the first medically certified inhalation device once approved. We are also moving forward with several new products built on Jupiter intellectual property that we expect will be introduced later this year. All that said, demand for Jupiter products remains strong, and we continue to partner with many of the largest MSOs, LPs, and brands in cannabis. I'd now like to pass it over to Brad to review the financial highlights of the first quarter before returning for closing remarks. Brad?