TILT Holdings Inc.

Good afternoon, everyone, and welcome to Tilt Holdings' fourth quarter and full year 2024 conference call and webcast. Today's call is being recorded for replay purposes. A replay of this 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 fourth quarter and four-year 2024 earnings press release. The release, along with our report on Form 10-K, is available on the U.S. Securities and Exchange Commission's website at www.sec.gov, on CDAR Plus at www.cdarplus.ca, and on our website at www.tiltholdings.com. Please note that during this 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 CDAR+. 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 TILT 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 CEDAW Plus today and can be found in the investor relations section of our website. Joining on today's call is our CEO, Tim Condor, and our interim CFO, Brad Hoke. Following the 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 our financial results. Please be advised that we may or may not continue to provide these additional metrics in the future. With that, I will now turn the call over to our CEO, Tim Condor.

Thank you, Lynn, and good afternoon, everyone. At the start of 2024, we committed to making meaningful changes to better position TILT for long-term success. Throughout the year, we took decisive action to sharpen our focus and streamline our business. And in the fourth quarter of 2024, we announced a strategic review that had been underway of our plant touching businesses, which has resulted in the signing of a definitive agreement for the purchase of our retail stores in Massachusetts. We expect to divest our remaining assets this year. We believe the consummation of these divestitures will allow us to unlock the value of Jupiter and expand upon its existing book of business in new territories and with new products and increasing access to mainstream financing options and U.S. exchanges. Today, I'll provide updates on the strategic review, the momentum in our Jupiter business and vision for the future, as well as the steps we are taking to create long-term financial health for the company by addressing balance sheet challenges. First, in February, we announced a definitive agreement to divest our Massachusetts operational retail locations to In Good Health, a private single state cannabis operator for $2 million. Under the terms of the transaction, we will transition ownership of our cotton dispensary to In Good Health and shut down our location in Brockton. That shutdown has already taken place. To minimize any short-term disruptions from this divestiture and position both the dispensary and our cultivation for long-term success, In Good Health has also committed to purchase product from our cultivation facility to help ensure operational continuity and to add value to the transaction. In Good Health has been a great partner through this process, and we are excited for what the future holds for our retail team in Taunton. This transaction is currently under state regulatory review, and we expect final approvals for the retail divestiture in the second quarter. The In Good Health transaction leaves cultivation and manufacturing in Massachusetts and Pennsylvania and manufacturing in Ohio. As mentioned, we believe that the active process we pursued in 2024 will result in a transaction in 2025. We hope to be able to share more in the second quarter. With so much expected movement in plant touching as we work to divest of those assets, I will just briefly cover the performance of those businesses. In the fourth quarter, we made changes to our cost structure and team composition in preparation for divestiture, which had a temporary impact on revenue. We also experienced continued pressure in the Massachusetts and Pennsylvania markets that we and other cannabis operators have been experiencing for some time and a slower than expected rollout of adult use in Ohio. However, I am pleased to see a market pickup today in Q1. With our changes fully implemented and our focus tailored to accommodate current and future divestiture, revenue is increasing. We are especially pleased with the renewed focus on our in-house brand standard farms and the solventless products that we have brought to market under the Standard Farms banner. Once again, we were awarded Best Vape at Niken in Massachusetts for our live rosin in a Jupiter VOCA Pro Max vaporization device. We have also seen a great deal of success in our vape and concentrate products selling out in Pennsylvania and widely recognized by patients in that market for superior quality. In Ohio, we expect to launch solventless vape products in Q2, and despite Ohio's somewhat lackluster transition to adult use, it has continued to be a bright spot for us from a growth and profitability standpoint. The changes that we have implemented to further streamline our plant touching businesses by optimizing our product portfolio and streamlining our team structure will position these assets to be immediately accretive for the right buyer. I want to emphasize that divestitures are about more than just financial restructuring. They represent a strategic decision to focus on the most actionable opportunity within our portfolio of businesses. And on that note, turning to Jupiter. It should be clear from our strategic review and pending divestitures that we are doubling down on our commitment to Jupiter as we look to reassert ourselves as the leading provider of vape hardware technology in the industry. Our goal is to redefine the standards for innovation and service in the vaporization space. To achieve this, we are making key investments in our leadership team and internal operations. As mentioned last quarter, we welcomed Ken Yuen and Khaled Al Nasser to the Jupyter team. Khaled came in as our SVP of commercial, and we have just elevated his role to Chief Commercial Officer of Jupyter as we rolled Jupyter's marketing, sale, and product teams all under his umbrella. Both Khalid and Ken bring a wealth of experience that better aligns with our future vision for Jupiter, which I will expand on momentarily. These additions over the last few quarters may be subtle changes to the outside world, but critical for us as a company and a team. We are not just refocusing on Jupiter the way it was, but transforming Jupiter to reach its full potential. Penn's executive background in private equity, in C-suite positions, and at a Fortune 100 company brings strong supply chain, financial restructuring, and strategic operational and leadership experience. College's strong entrepreneurial and cannabis industry experience brings deep relationships, product and consumer knowledge, and a passion for cannabis vaporization and the plant that will inspire our team and customers. As the co-founder of one of the largest vape brands in the U.S., Raw Garden, Collid has bought and filled more hardware than most people in the world. Some of our competitors see their knowledge of plant extracts as a competitive advantage. However, with Collid on our team, we believe our ability to support our partners and their innovation teams is unmatched. Together, Ken and Kala bring invaluable experience to the Jupiter leadership team as TILT looks to divest plant touching and turn all our energy to Jupiter. Their contributions will be critical to achieve our long-term vision. In addition, we are continuing to evaluate our cost structure as well as our existing team composition to ensure that we are purpose-built for sustained long-term growth. the vaporization space is evolving rapidly. We must regain our rightful position as the leader of those changes, as Jupiter was in 2017 when it introduced the ceramic heater in partnership with CECL. With these leadership enhancements and organizational refinements, we believe we are well positioned to accelerate our growth and cement our role as the partner of choice for innovative brands and operators looking to scale their vaporization businesses. Over the past couple of years, vaporization products have evolved dramatically. The growth of all-in-one vaporizer sales, as well as the evolution of input materials and consumer preferences, has transformed the vape market. Vaporization remains the number two category behind flour across demographics, but is the number one product category for Gen Z. There are also potentially transformative regulatory changes as a reaction to the move to all-in-ones that we must contend with, like the potential banning of single-use batteries. Add in the increasing tariffs in China, we have our hands full. Our job through all of this is to ensure that our customers have the right products at the right price to help their brands win. And given the uncertainty that we face, as well as the need to constantly evolve to meet market demands, we have begun to add additional suppliers' products to our portfolio. Since 2017, we have been single source with C-Cell. They are still our largest supplier by far. But we are looking to other suppliers to fill in gaps in our portfolio, create redundancy for our customers, and drive innovation through competition. Jupiter is also actively developing new hardware solutions internally that address specific market opportunities and could dramatically expand our business. As we touched on last quarter, one of our key initiatives has been working with the European Union Medical Device Regulation for medical certification of our LMID and QMID devices. Earlier this month, we received correspondence from the notified body that all audit activities were closed and that our application was in final review for certification. We expect to commercialize the QMID device in Q2 of this year. We are optimistic that we will also hear more on the LMID certification process during the second quarter. The last two years have been focused on rebuilding the company. from our decision to explore strategic alternatives to pushing forward with how we envision the future of Jupiter. This has been a major undertaking. However, we believe that we are taking meaningful steps forward and expect by the second half of the year, we will be a narrowly focused business. I want to take a moment to thank our employees for their dedication and hard work during this period of transformation. I also want to express my appreciation to our investors, customers, and partners for their continued support. With that, I'll let Brad take us through the financial highlights for the quarter and year before returning for closing remarks.