Quarterly Net Sales Increased 33% to $10.6
Million
Direct to Consumer (DTC) Net Sales Increased
77%
Company Expects to Reach Positive Adjusted
Operating Income During Calendar 2020
cbdMD, Inc. (NYSE American: YCBD, YCBD PR A) (the “Company”),
one of the leading, highly trusted, and most recognized cannabidiol
(CBD) brands, reported today record net sales of $10.6 million in
its third fiscal 2020 quarter ended June 30, 2020.
“cbdMD reported its single biggest quarterly net sales in its
history. Our decisions to concentrate on building brand equity for
award winning cbdMD and Paw CBD brands, as well as and focus on our
e-commerce strength, has paid off. We have separated ourselves from
our competitors and demonstrated that we can grow market share and
be fiscally responsible at the same time, with our GAAP and
non-GAAP operating results improving by 80% and 96%, respectively,
from the comparable periods in fiscal 2019. With $15 million in
cash on hand at June 30, 2020, we believe we have more than enough
financial strength to grow our operations for the foreseeable
future, absent any additional unforeseen impact from COVID-19,”
said Martin Sumichrast, the Company’s Chairman and co-Chief
Executive Officer.
The highlights from the June 2020 quarter were:
- The Company reported net sales of $10.6 million for the three
months ended June 30, 2020, a year-over-year quarterly increase of
approximately 33% and a sequential quarterly increase from the
three months ended March 31, 2020 of approximately 13%.
- The Company reported record quarterly e-commerce, direct to
consumer (DTC) net sales of $8.2 million, an increase of 77%
year-over-year and a sequential quarterly increase of approximately
21%. The Company’s e-commerce, direct to consumer (DTC) sales
accounted for in excess of 77% of total net sales in the June 2020
quarter, an increase from 58% from prior year’s quarter.
- The Company’s CBD pet brand, Paw CBD, reported an approximate
64% increase in net sales from its March 2020 quarter of
approximately $750,000 to approximately $1,229,000 for its June
2020 quarter.
- The Company reported a gross profit margin of 64.7% as a
percent of net sales as compared to 63.4% for the comparable period
in fiscal 2019 and adjusted non-GAAP gross profit margin as a
percent of net sales was 67.7% as compared to a 65% in the
comparable period in fiscal 2019.
- The Company reported an 80% year-over-year improvement in its
GAAP loss from operations of ($1,337,508) as compared to
($6,466,639) in the comparable 2019 period.
- The Company reported a 96% year-over-year improvement in its
non GAAP adjusted loss from operations of ($187,092) as compared to
($5,019,541) in the comparable fiscal 2019 period after adjusting
for the following: a non-cash inventory adjustment of $311,000, a
non-cash stock option expense of $388,000, a depreciation expense
of $233,000 and a non-cash charge of $233k for old inventory.
- The Company reported a net loss of ($9,052,752), or $(0.18) per
share, which was mainly due to a non-cash expense of approximately
$7.58 million in the Company’s contingent liability which is
associated with earnout shares which may be issued under the terms
of the December 2018 acquisition of Cure Based Development.
- Working capital was $19.7 million and cash on hand was
approximately $15 million at June 30, 2020, respectively.
- CBD Industries, LLC, the Company’s wholly owned manufacturing
and distribution subsidiary, was recently added to NSF
International’s dietary supplements Good Manufacturing Practice
(GMP) registration.
CONFERENCE CALL DETAILS
Wednesday, August 12, 2020, 4:15 p.m.
Eastern Time
Domestic:
1-844-407-9500
International:
1-862-298-0850
Replay dial in – Available through
September 12, 2020
Domestic:
1-877-481-4010
International:
1-919-882-2331
Replay ID:
36267
Webcast Replay link – available through
September 12, 2020:
https://www.webcaster4.com/Webcast/Page/2206/36267
About cbdMD, Inc.
cbdMD, Inc. is a nationally recognized consumer cannabidiol
(CBD) brand whose current products include CBD tinctures, CBD
capsules, CBD gummies, CBD topicals, CBD bath bombs, and CBD pet
products. cbdMD is also a proud partner of Bellator MMA and Life
Time, Inc., and has one of the largest rosters of professional
sports athletes who are part of “Team cbdMD.” To learn more about
cbdMD and our comprehensive line of over 100 SKUs of U.S. produced,
THC-free1 CBD products, please visit www.cbdMD.com, follow cbdMD on Instagram and
Facebook, or visit one of the 6,000 retail outlets that carry cbdMD
products.
Forward-Looking Statements
This press release contains certain forward-looking statements
that are based upon current expectations and involve certain risks
and uncertainties within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking statements can
be identified by the use of words such as ''should,'' ''may,''
''intends,'' ''anticipates,'' ''believes,'' ''estimates,''
''projects,'' ''forecasts,'' ''expects,'' ''plans,'' and
''proposes.'' These forward-looking statements are not guarantees
of future performance and are subject to risks, uncertainties, and
other factors, some of which are beyond our control and difficult
to predict and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking statements,
including, without limitation, statements made with respect to the
expansion of the consumer market for CBD products and our ability
to increase our market share, our limited operating history, our
ability to expand our business and significantly increase our net
sales, our ability to effectively leverage our brand partnerships
and sponsorships, our ability to effectively compete in our market,
and our ability to report profitable operations in the future. You
are urged to carefully review and consider any cautionary
statements and other disclosures, including the statements made
under the heading "Risk Factors" in cbdMD, Inc.'s Annual Report on
Form 10-K for the fiscal year ended September 30, 2019, as amended,
as filed with the Securities and Exchange Commission (the "SEC")
and our other filings with the SEC. All forward-looking statements
involve significant risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking
statements, many of which are generally outside the control of
cbdMD, Inc. and are difficult to predict. cbdMD, Inc. does not
undertake any duty to update any forward-looking statements except
as may be required by law. The information which appears on our
websites and our social media platforms, including, but not limited
to, Instagram and Facebook, is not part of this press release.
_________________________ 1 Non-THC is defined as below the
level of detection using validated scientific analytical tools.
Non-GAAP Financial Measures
This press release includes certain financial measures that
exclude the impact of certain items and therefore have not been
calculated in accordance with U.S. generally accepted accounting
principles (“GAAP”). The Company has included adjusted income
(loss) from operations and adjusted gross profit because management
uses this measure to assess operating performance, in order to
highlight trends in the Company’s business that may not otherwise
be apparent when relying on financial measures calculated in
accordance with GAAP. Neither adjusted income (loss) from
operations nor adjusted gross profit has not been prepared in
accordance with GAAP. These non-GAAP financial measures should not
be considered as alternatives to, or more meaningful than, net
income (loss) and gross profit margins as indicators of the
Company’s operating performance. Further, these non-GAAP financial
measures, as presented by the Company, may not be comparable to
similarly titled measures reported by other companies. The Company
has attached to this press release a reconciliation of these
non-GAAP financial measures to their most directly comparable GAAP
financial measures.
cbdMD, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
JUNE 30, 2020 AND SEPTEMBER
30, 2019
(Unaudited)
June 30,
September 30,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
15,006,319
$
4,689,966
Accounts receivable
715,205
1,425,697
Accounts receivable other
-
160,137
Accounts receivable – discontinued
operations
700,884
1,080,000
Marketable securities
52,527
198,538
Investment other securities
-
600,000
Deposits
-
6,850
Merchant reserve
-
519,569
Inventory
6,397,326
4,301,586
Inventory prepaid
281,885
903,458
Deferred issuance costs
-
93,954
Prepaid software
-
206,587
Prepaid equipment deposits
201,698
868,589
Prepaid expenses and other current
assets
755,906
688,104
Total current assets
24,111,750
15,743,035
Other assets:
Property and equipment, net
3,067,909
1,715,557
Operating lease assets
7,119,289
-
Deposits for facilities
706,852
754,533
Intangible assets, net
21,635,000
21,635,000
Goodwill
54,669,997
54,669,997
Total other assets
87,199,047
78,775,087
Total assets
$
111,310,797
$
94,518,122
cbdMD, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
JUNE 30, 2020 AND SEPTEMBER
30, 2019
(continued)
(Unaudited)
June 30,
September 30,
2020
2019
Liabilities and shareholders'
equity
Current liabilities:
Accounts payable
$
1,825,135
$
3,021,271
Accrued expenses
1,396,983
681,269
Operating leases – short term
liabilities
1,109,585
-
Note payable
54,720
-
Customer deposit – related party
-
7,339
Total current liabilities
4,386,423
3,709,878
Long term liabilities:
Long term liabilities
-
363,960
Note payable
182,714
-
Paycheck Protection Program loan
1,456,100
-
Operating leases - long term
liabilities
6,305,422
-
Contingent liability
15,400,000
50,600,000
Deferred tax liability
-
2,240,300
Total long term liabilities
23,344,236
53,204,260
Total liabilities
27,730,659
56,914,138
cbdMD, Inc. shareholders' equity:
Preferred stock, authorized 50,000,000
shares, $0.001 par value, 500,000 and 0 shares issued and
outstanding, respectively
500
-
Common stock, authorized 150,000,000
shares, $0.001 par value, 51,345,648 and 27,720,356 shares issued
and outstanding, respectively
51,346
27,720
Additional paid in capital
124,558,046
97,186,524
Accumulated deficit
(41,029,754
)
(59,610,260
)
Total cbdMD, Inc. shareholders’
equity
83,580,138
37,603,984
Total liabilities and shareholders'
equity
$
111,310,797
$
94,518,122
cbdMD, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS
ENDED JUNE 30, 2020 AND 2019
(Unaudited)
Three months
Three months
Nine months
Nine months
Ended
Ended
Ended
Ended
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Total Gross Sales
10,809,387
9,734,459
30,925,678
18,170,667
Allowances
(172,842
)
(1,729,310
)
(741,861
)
(4,063,252
)
Total Net Sales
10,636,545
8,005,149
30,183,817
14,107,414
Cost of sales
3,748,024
2,929,160
10,180,637
5,009,187
Gross Profit
6,888,521
5,075,989
20,003,180
9,098,228
Operating expenses
8,226,029
11,542,628
33,053,962
18,683,905
Income (Loss) from
operations
(1,337,508
)
(6,466,639
)
(13,050,782
)
(9,585,677
)
Realized and Unrealized gain (loss) on
marketable securities
(30,849
)
(13,162
)
(146,011
)
(77,802
)
(Increase) Decrease of contingent
liability
(7,580,000
)
(21,547,606
)
30,580,000
(52,461,680
)
Impairment on investment other
securities
-
-
(600,000
)
-
Impairment accounts receivable other
-
-
(160,000
)
-
Interest income (expense)
3,436
6,229
46,311
50,189
Income (loss) before provision for
income taxes
(8,944,921
)
(28,021,178
)
16,669,518
(62,074,970
)
Benefit (Provision) for income
taxes
-
1,088,000
2,240,300
2,296,000
Net Income (Loss) from continuing
operations
(8,944,921
)
(26,933,178
)
18,909,818
(59,778,970
)
Net Income (Loss) from discontinued
operations, net of tax (Note 16)
(7,781
)
(2,269,778
)
(48,983
)
(3,463,123
)
Net Income (Loss)
(8,952,702
)
(29,202,956
)
18,860,835
(63,242,093
)
Net Gain (Loss) attributable to
noncontrolling interest
-
(1,503,707
)
-
(1,641,391
)
Preferred dividends
100,050
-
266,800
-
Net Income (Loss) attributable to
cbdMD, Inc. common shareholders
$
(9,052,752
)
$
(27,699,249
)
$
18,594,035
$
(61,600,702
)
Net Income (Loss) per share:
Basic earnings per share
$
(0.18
)
$
(1.19
)
$
0.45
$
(4.22
)
Diluted earnings per share
$
-
$
-
$
0.44
$
-
Weighted average number of shares
Basic:
51,335,648
23,193,793
41,411,261
14,585,619
Weighted average number of shares
Diluted:
-
-
42,534,519
-
cbdMD, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND NINE MONTHS
ENDED JUNE 30, 2020 AND 2019
(Unaudited)
Three months
Three months
Nine months
Nine months
Ended
Ended
Ended
Ended
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Net Income (Loss)
$
(8,952,702
)
$
(29,202,956
)
$
18,860,835
$
(63,242,093
)
Comprehensive Income (Loss)
(8,952,702
)
(29,202,956
)
18,860,835
(63,242,093
)
Comprehensive Income (loss) attributable
to non-controlling interest
-
(1,503,707
)
-
(1,641,391
)
Preferred dividends
(100,050
)
-
(266,800
)
-
Comprehensive Income (Loss)
attributable to cbdMD, Inc. common shareholders
$
(9,052,752
)
$
(27,699,249
)
$
18,594,035
$
(61,600,702
)
cbdMD, INC.
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE
30, 2020 AND 2019
(unaudited)
Nine Months Ended June 30,
Nine Months Ended June 30,
2020
2019
Cash flows from operating
activities:
Net Income (loss)
$
18,860,835
$
(63,242,093
)
Adjustments to reconcile net (income)
loss to net cash used by operating activities:
Stock based compensation
1,391,271
2,022,812
Restricted stock expense
138,001
92,000
Issuance of stock / warrants for
service
84,450
289,750
Intangible impairment
-
2,114,334
Inventory and materials impairment
233,372
-
Impairment on discontinued operations
asset
45,783
-
Depreciation and amortization
499,394
272,121
Gain on settlement of Note
-
(20,000
)
Other than temporary impairment other
securities and other accounts receivable
760,000
-
Increase/(Decrease) in contingent
liability
(30,580,000
)
52,461,680
Realized and unrealized loss of marketable
securities
146,011
1,705,069
Merchant reserve settlement
132,657
-
Non-cash consideration received for
services
-
(470,000
)
Non-cash lease expense
878,986
-
Changes in operating assets and
liabilities:
Accounts receivable
710,629
399,074
Accounts receivable – related party
-
204,902
Other accounts receivable
-
(298,754
)
Note receivable
-
(27,000
)
Note receivable – related party
-
156,147
Deposits
(147,166
)
-
Merchant reserve
386,912
(199,907
)
Inventory
(2,329,112
)
(2,581,958
)
Prepaid inventory
621,573
-
Prepaid expenses and other current
assets
1,007,374
(717,894
)
Marketable securities
-
701,593
Accounts payable and accrued expenses
(480,424
)
1,073,211
Accounts payable and accrued expenses –
related party
-
(313,591
)
Operating lease liability
(766,289
)
-
Note payable
42,968
-
Deferred revenue / customer deposits
(7,339
)
(380,804
)
Collection on discontinued operations
accounts receivable
333,333
-
Deferred tax liability
(2,240,300
)
(2,296,000
)
Cash used by operating activities
(10,277,081
)
(9,055,308
)
Cash flows from investing
activities:
Net cash used for merger
-
(1,167,295
)
Purchase of intangible assets
-
(79,999
)
Purchase of property and equipment
(1,851,746
)
(359,421
)
Cash used by investing activities
(1,851,746
)
(1,606,715
)
Cash flows from financing
activities:
Proceeds from issuance of common stock
16,771,756
19,009,897
Proceeds from issuance of preferred
stock
4,421,928
-
PPP loan
1,456,100
-
Note Payable – related party
-
(764,300
)
Preferred dividend distribution
(266,800
)
-
Deferred issuance costs
62,197
(232,914
)
Cash provided by financing activities
22,445,180
18,012,683
Net increase (decrease) in cash
10,316,353
7,350,660
Cash and cash equivalents, beginning of
period
4,689,966
4,282,553
Cash and cash equivalents, end of
period
$
15,006,319
$
11,633,213
cbdMD, INC.
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE
30, 2020 AND 2019
(unaudited) (continued)
Supplemental Disclosures of Cash Flow
Information:
Nine Months ended June 30,
Nine Months Ended June 30,
2020
2019
Cash Payments for:
Interest expense
$
26,126
$
36,418
Non-cash financial activities:
Warrants issued to secondary selling
agent
$
524,113
$
309,592
Stock received for prior period services,
adjusted for other accounts receivable write down prior to
receipt
$
-
$
1,352,000
Adoption of ASU 2016-01
$
-
$
2,512,539
cbdMD, Inc.
SUPPLEMENTAL FINANCIAL
INFORMATION
RECONCILIATION OF ADJUSTED INCOME
(LOSS) FROM OPERATIONS
(Unaudited)
Three months
Three months
Ended
Ended
June 30, 2020
June 30, 2019
GAAP Income (Loss) from
operations
(1,337,508
)
(6,466,639
)
Adjustments:
Inventory adjustment (1)
316,922
-
Non-cash stock related expense (2)
388,185
1,389,224
Depreciation expense
211,937
57,874
One-time abnormal inventory adjustment
(3)
233,372
-
Adjusted Income (loss) from
operations
(187,092
)
(5,019,541
)
Three months
Three months
Ended
Ended
June 30, 2020
June 30, 2019
GAAP net sales
10,636,545
8,005,149
GAAP cost of sales
3,748,024
2,929,160
Adjustments:
Inventory adjustment (1)
316,922
130,795
Adjusted cost of sales
3,431,102
2,798,365
Adjusted Gross Profit
7,205,443
67.7
%
5,206,784
65.0
%
(1)
Amount represents an adjustment after
performing a physical inventory account.
(2)
Represents non-cash expense related to
options, warrants, restricted stock expenses that have been
amortized during the period.
(3)
Amount represents an operating expense
related to inventory loss related to regulatory changes impacting
labels and packaging.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200812005052/en/
John Weston Director of Investor Relations john.weston@cbdmd.com
704-249-9515
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