Fiscal Year Net Sales Increased 77% To
Record $41.9 Million
e-Commerce Direct-to-Consumer Sales Jump
106% to $30.5 Million
cbdMD, Inc. (NYSE American: YCBD, YCBDpA), one of the nation’s
leading and most highly trusted and recognized cannabidiol (CBD)
brands, today announced its financial results for the fourth
quarter and fiscal year ended September 30, 2020.
Commenting on today’s results, Chairman and co-CEO Martin A.
Sumichrast said, “We believe cbdMD is now one of the most
successful CBD companies in world, with two of the most recognized
and valuable CBD brands, cbdMD and Paw CBD. We are committed to
continuing to deliver on our financial goals. We have grown
quarterly sales over 900% in eight fiscal quarters. We have
remained focused on our core competency, which is e-commerce
direct-to-consumer sales, which increased to $30.5 million, or 73%
of total net sales in fiscal 2020, a 106% increase from the prior
year. We have also maintained one of the strongest balance sheets
in the CBD industry and we believe we have more than ample enough
capital to execute on our 2021 strategy. In fact, we have recently
more than doubled our liquidity, which now stands today at
approximately $30 million in cash, with virtually no debt. To put
this into context, we built two brands in two years with less cash
than we have in the bank today. In addition, we dramatically
reduced our non-GAAP adjusted loss from operations from over $10
million in the first half of fiscal 2020 to approximately $1.3
million in the second half of fiscal 2020. Earlier this year we set
a goal of achieving positive adjusted operating income during
calendar year 2020, a non-GAAP financial measure. We are presently
confident we will reach this milestone in early fiscal 2021.
However, based upon marketing opportunities that may arise during
the year, achieving this goal may be extended later into the fiscal
year. While we have not committed to any financial guidance, we do
expect continued robust sales growth in fiscal 2021.”
Financial Highlights:
Fiscal 2020:
- Net sales increased by 77% year-over-year to a record of $41.9
million in fiscal 2020, from $23.6 million in fiscal 2019.
- Our gross profit margin increased to 63% in fiscal 2020 from
61% in fiscal 2019. Our non-GAAP adjusted gross margin totaled
67.7% for fiscal 2020, after approximately $2.2 million in non-cash
inventory adjustments for the year, as compared to 61% for fiscal
2019.
- Our loss from operations was $17.6 million in fiscal 2020 as
compared to $14.8 million in fiscal 2019, of which approximately
$11.7 million, or 67%, was recorded in the first half of fiscal
2020 and approximately $5.8 million was recorded in the second half
of the fiscal year.
- Our non-GAAP adjusted loss from operations in fiscal 2020 was
approximately $11.5 million, of which $10.2 million, or 89%, was
recorded in the first half of fiscal 2020, and approximately $1.3
million, or 11%, was recorded for the second half of the fiscal
year. Our non-GAAP adjusted loss from operations in fiscal 2019 was
approximately $11.5 million.
- Net income attributable to common shareholders for fiscal 2020
was approximately $12.2 million, or $0.28 per share, as compared to
a net loss for fiscal 2019 of approximately $50.4 million, or $2.82
per share. The increase in fiscal 2020 was principally attributable
to a decrease of approximately $29.8 million in the non-cash
contingent liability which is associated with earnout shares which
may be issued under the terms of the December 2018 acquisition of
Cure Based Development (which owned the cbdMD brand).
- At September 30, 2020, we had working capital of approximately
$16.0 million and cash on hand of approximately $14.8 million as
compared to working capital of approximately $12 million and cash
on hand of approximately $4.7 million at September 30, 2019. Our
working capital position has been further bolstered subsequent to
year end following our receipt of approximately $15.8 million in
net proceeds from our December 2020 sale of shares of our 8.0%
Series A Cumulative Convertible Preferred Stock in a firm
commitment underwritten public offering. As a result, as of today
we have approximately $30 million in cash on hand.
- We reported record e-commerce, direct to consumer (DTC) net
sales of $30.5 million, or 73% of total net sales in fiscal 2020,
an increase of $15.6 million, or 106% increase from fiscal
2019.
- Our CBD pet brand, Paw CBD, reported approximately $4.5 million
in net sales in fiscal 2020, which was the brand’s first full
fiscal year.
For the Quarter Ended September 30,
2020:
- Our net sales for the fourth quarter of fiscal 2020 increased
by 23% year-over-year to a record of $11.7 million from $9.5
million in the fourth quarter of fiscal 2019.
- Our gross profit margin for the quarter decreased to 54% in the
fourth quarter of fiscal 2020 from 57% in the fourth quarter of
fiscal 2019, which was principally attributable to an approximate
$1.66 million in non-cash inventory adjustment during the quarter.
Our non-GAAP adjusted gross margin totaled 68% for the fourth
quarter of fiscal 2020 as compared to approximately 57% in the
fourth quarter of fiscal 2019.
- Our loss from operations was approximately $4.5 million
compared to $5.2 million from the prior year’s quarter.
- Our non-GAAP adjusted operating loss was approximately $1.06
million, compared to a $4.1 million non-GAAP adjusted operating
loss from the prior year’s quarter.
- We reported record fourth quarter fiscal 2020 e-commerce,
direct to consumer (DTC) net sales of $8.6 million, an increase of
$3.2 million, or 58%, from the fourth quarter of fiscal 2019.
- Our pet brand, Paw CBD, which was launched in the fourth
quarter of fiscal 2019 reported approximately $1.67 million in net
sales in the fourth quarter of fiscal 2020.
cbdMD, Inc. will host a conference call at 4:15 p.m., Eastern
Time, on Tuesday, December 22, 2020, to discuss the company’s
September 30, 2020 fourth quarter and fiscal year-end financial
results and business progress.
CONFERENCE CALL DETAILS
Tuesday, December 22, 2020, 4:15 p.m.
Eastern Time
Domestic:
1-888-506-0062
International:
1-973-528-0011
Replay dial in – Available through January
20, 2020
Domestic:
1-877-481-4010
International:
1-919-882-2331
Replay Passcode:
39191
Webcast/Webcast Replay link- available
through December 23, 2020:
https://www.webcaster4.com/Webcast/Page/2206/39191
About cbdMD, Inc.
cbdMD, Inc. is one of the leading, most highly trusted, and most
recognized cannabidiol (CBD) brands, 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, Non-THC1 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.
1 Non-THC is defined as below the level of detection using
validated scientific analytical tools.
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.
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, 2020 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.
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”). cbdMD, Inc. has included adjusted income
(loss) from operations and adjusted gross profit because management
uses these measures to assess operating performance, in order to
highlight trends in our business that may not otherwise be apparent
when relying on financial measures calculated in accordance with
GAAP. The adjusted income (loss) from operations and the adjusted
gross profit margin have 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) from
operations and gross profit as indicators of our operating
performance. Further, these non-GAAP financial measures, as
presented by cbdMD, Inc., may not be comparable to similarly titled
measures reported by other companies. cbdMD, Inc. has attached to
this press release a reconciliation of these non-GAAP financial
measures to their most directly comparable GAAP financial
measures.
CBDMD, INC.
CONSOLIDATED BALANCE
SHEETS
SEPTEMBER 30, 2020 AND
2019
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
14,824,644
$
4,689,966
Accounts receivable
911,482
1,425,697
Accounts receivable other
-
160,137
Accounts receivable – discontinued
operations
447,134
1,080,000
Marketable securities
26,472
198,538
Investment other securities
250,000
600,000
Deposits
40,198
6,850
Merchant reserve
-
519,569
Inventory
4,603,360
4,301,586
Inventory prepaid
288,178
903,458
Deferred issuance costs
-
93,954
Prepaid software
174,308
206,587
Prepaid equipment deposits
40,197
868,589
Prepaid sponsorship expense
1,203,300
-
Prepaid expenses and other current
assets
902,979
688,104
Total current assets
23,712,252
15,743,035
Other assets:
Property and equipment, net
3,183,487
1,715,557
Operating lease right-of-use assets
6,851,357
-
Deposits for facilities
790,708
754,533
Intangible assets, net
21,635,000
21,635,000
Goodwill
54,669,997
54,669,997
Total other assets
87,130,549
78,775,087
Total assets
$
110,842,801
$
94,518,122
CBDMD, INC.
CONSOLIDATED BALANCE
SHEETS
SEPTEMBER 30, 2020 AND
2019
(continued)
2020
2019
Liabilities and shareholders'
equity
Current liabilities:
Accounts payable
$
2,850,421
$
3,021,271
Deferred revenue
45,141
-
Accrued expenses
2,724,779
681,269
Operating leases – short term
liabilities
1,159,098
-
Paycheck Protection Program Loan
854,000
-
Note payable
55,639
-
Customer deposit – related party
-
7,339
Total current liabilities
7,689,078
3,709,878
Long term liabilities
Long term liabilities
264,367
363,960
Paycheck Protection Program loan
602,100
-
Operating leases – long term
liabilities
6,010,208
-
Contingent liability
16,200,000
50,600,000
Deferred tax liability
895,000
2,240,300
Total long-term liabilities
23,971,675
53,204,260
Total liabilities
31,660,753
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,
52,130,870 and 27,720,356 shares issued
and outstanding, respectively
52,131
27,720
Additional paid in capital
126,517,784
97,186,524
Accumulated deficit
(47,388,367
)
(59,610,260
)
Total cbdMD, Inc. shareholders'
equity
79,182,048
37,603,984
Total liabilities and shareholders'
equity
$
110,842,801
$
94,518,122
CBDMD, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
FOR THE YEARS ENDED SEPTEMBER
30, 2020 AND 2019
2020
2019
Sales
$
43,172,778
$
28,023,848
Sales related party
-
55,596
Total Gross Sales
43,172,778
28,079,444
Allowances
(1,289,044
)
(4,427,893
)
Net sales
41,883,734
23,595,955
Net sales related party
-
55,596
Total Net Sales
41,883,734
23,651,551
Costs of sales
15,514,727
9,136,677
Gross profit
26,369,006
14,514,873
Operating expenses excluding impairment
losses
43,950,862
28,875,186
Impairment of intangible assets
-
436,578
Operating expenses
43,950,862
29,311,764
Income (loss) from operations
(17,581,856
)
(14,796,891
)
Realized and unrealized gain (loss) on
marketable securities
(172,066
)
(102,716
)
Impairment on investment other
securities
(760,000
)
(502,560
)
(Increase) decrease of contingent
liability
29,780,000
(32,461,680
)
Interest income
39,877
75,071
Income (loss) before provision for
income taxes
11,305,955
(47,788,776
)
Benefit from (provision for) income
taxes
1,345,300
2,359,000
Net Income (loss) from continuing
operations
12,651,255
(45,429,776
)
Net Income (loss) from discontinued
operations, net of tax (Note 16)
(48,983
)
(5,927,773
)
Net Income (loss)
$
12,602,272
$
(51,357,549
)
Net Income (loss) attributable to
non-controlling interest from discontinued operations (Note
16)
-
(929,323
)
Preferred dividends
366,850
-
Net Income (loss) attributable to
common shareholders
$
12,235,422
$
(50,428,226
)
Net Income (Loss) per share
Basic earnings (loss) per share
$
0.28
$
(2.82
)
Diluted earnings (loss) per share
$
0.28
$
-
Weighted average number of shares
basic
44,140,360
17,887,247
Weighted average number of shares
diluted
45,171,674
-
CBDMD, INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED SEPTEMBER
30, 2020 AND 2019
2020
2019
Net Income (Loss)
$
12,602,272
$
(51,357,549)
Comprehensive Income (Loss)
12,602,272
(51,357,549
)
Comprehensive Income (loss) attributable
to non-controlling interest
-
(929,323
)
Preferred dividends
(366,850
)
Comprehensive Income (Loss)
attributable to cbdMD, Inc. common shareholders
$
12,235,422
$
(50,428,226
)
CBDMD, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER
30, 2020 AND 2019
2020
2019
Cash flows from operating
activities:
Net income (loss)
$
12,602,272
$
(51,357,549
)
Adjustments to reconcile net loss to
net
cash used by operating
activities:
Stock based compensation
1,900,194
2,458,530
Restricted stock expense
138,000
230,000
Depreciation and amortization
720,755
289,574
Issuance of stock / warrants for
services
338,400
289,750
Realized and unrealized (gain)/loss on
marketable securities
172,066
2,439,996
Impairment on investment other
securities
760,000
502,560
Inventory impairment
233,372
-
Impairment on discontinued operations
asset
45,783
3,398,438
Payment in-kind interest
-
(30,000
)
Loss on sale of property and equipment
-discontinued operations
-
39,013
Severance agreement
489,381
-
Increase/(decrease) in contingent
liability
(29,780,000
)
32,461,680
Intangible impairment
-
436,578
Non-cash consideration received for
services provided
132,657
(470,000
)
Non-cash lease expense
1,180,213
-
Changes in operating assets and
liabilities:
Accounts receivable
514,352
60,155
Accounts receivable - related party
-
(462,137
)
Other accounts receivable
-
2,737
Inventory
(535,146
)
(3,123,437
)
Note receivable – related party
-
156,147
Deposits
(938,112
)
(761,383
)
Merchant reserve
386,912
(93,316
)
Prepaid inventory
615,280
(903,458
)
Proceeds from sale of securities
-
410,094
Prepaid rent
-
180,000
Prepaid expenses and other current
assets
645,796
(963,044
)
Accounts payable and accrued expenses
1,479,189
2,280,726
Accounts payable and accrued expenses –
related party
-
(7,502
)
Operating lease liability
(1,045,285
)
-
Deferred Revenue/customer deposits
37,802
(416,619
)
Collection on discontinued operations
accounts receivable
587,083
-
Deferred tax liability
(1,345,300
)
(2,425,000
)
Cash used by operating activities
(10,664,336
)
(15,377,467
)
Cash flows from investing
activities:
Net cash used for merger
-
(916,555
)
Purchase of other investment
securities
(250,000
)
-
Purchase of intangible assets
-
(50,000
)
Purchase of property and equipment
(1,320,095
)
(1,198,618
)
Cash used by investing activities
(1,570,095
)
(2,133,850
)
CBDMD, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER
30, 2020 AND 2019
(continued)
Cash flows from financing
activities:
Proceeds from issuance of common stock
16,766,106
19,009,897
Proceeds from issuance of preferred
stock
4,421,928
-
Proceeds from Paycheck Protection Program
loan
1,456,100
-
Preferred dividend distribution
(366,850
)
-
Proceeds from Note payable
29,629
-
Payments on Note payable – related
party
-
(764,300
)
Deferred issuance costs
62,197
(326,868
)
Cash provided by financing activities
22,369,110
17,918,729
Net increase in cash
10,134,678
407,413
Cash and cash equivalents, beginning of
year
4,689,966
4,282,553
Cash and cash equivalents, end of
year
$
14,824,644
$
4,689,966
cbdMD, Inc.
SUPPLEMENTAL FINANCIAL
INFORMATION
RECONCILIATION OF NON-GAAP
ADJUSTED INCOME (LOSS) FROM OPERATIONS
(Unaudited)
Fiscal Year Ended September
30
Three Months Ended September
30
2020
2019
2020
2019
GAAP (loss) from operations
$
(17,581,856
)
$
(14,796,891
)
$
(4,531,073
)
$
(5,286,154
)
Adjustments:
Depreciation
720,754
289,574
221,360
17,453
Employee and director stock compensation
(1)
1,985,803
2,688,529
537,943
1,136,158
Other non-cash stock compensation for
services (2)
338,400
289,750
253,950
-
Non-cash inventory adjustment (3)
2,207,000
-
1,663,000
-
Write down of legacy accounts receivables
(4)
102,000
-
102,000
-
Accrual for severance
489,381
-
489,381
-
Accrual / expenses for discretionary
bonus
200,000
-
200,000
-
Non-GAAP adjusted (loss) from
operations
$
(11,583,516
)
$
(11,529,036
)
$
(1,063,439
)
$
(4,132,543
)
(1)
Represents non-cash expense related to
options, warrants, restricted stock expenses that have been
amortized during the period.
(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 issues tied to physical
inventory issues, regulatory changes impacting labels and
packaging, write-off of raw materials and a net realized valuation
adjustment on non-core finished goods.
(4)
Write down of legacy accounts
receivable.
cbdMD, Inc.
SUPPLEMENTAL FINANCIAL
INFORMATION
RECONCILIATION OF NON-GAAP
ADJUSTED GROSS PROFIT MARGIN
(Unaudited)
Fiscal Year Ended September
30
Three Months Ended September
30
2020
2019
2020
2019
Total net sales
$
41,883,734
$
23,651,551
$
11,699,917
$
9,544,137
Cost of sales
15,514,728
9,136,677
5,334,090
4,127,491
Gross profit
$
26,369,006
$
14,514,873
$
6,366,359
$
5,416,646
Gross profit margin
63.0
%
61.4
%
54.4
%
56.8
%
Adjustments:
Non-cash inventory adjustment (1)
1,974,000
-
1,663,000
-
Non-GAAP adjusted gross profit
$
28,343,539
$
14,514,873
$
8,029,359
$
5,416,646
Non-GAAP adjusted gross profit margin
67.7
%
61.4
%
68.6
%
56.8
%
(1)
Amount represents an operating expense
related to inventory loss related to issues tied to physical
inventory issues, write-off of scrap material and a net realized
valuation adjustment on non-core finished goods.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201222005655/en/
PR:
cbdMD, Inc. Lauren Greene Communications Specialist
Lauren.Greene@cbdMD.com (843) 743-9999
Investors:
cbdMD, Inc. John Weston Director of Investor Relations
John.Weston@cbdMD.com (704) 249-9515
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