Greenlane Holdings, Inc. (“Greenlane” or "the Company”) (Nasdaq:
GNLN), one of the largest global sellers of premium cannabis
accessories and specialty vaporization products, today reported
financial results for the third quarter ended September 30, 2020.
Third Quarter 2020
Highlights
- Net sales of the Company's
Greenlane Brands grew approximately 65% to $5.6 million in Q3 2020
compared to $3.4 million in Q3 2019;
- Core revenue (defined as
non-nicotine revenue) grew 36% to $32.3 million in Q3 2020,
compared to $23.8 million in Q3 2019;
- Total revenue grew 10% to
approximately $35.8 million in Q3 2020 compared to $32.4 million in
Q2 2020;
- Excluding the impact of certain
inventory adjustments which incurred in the quarter, gross profit
would have been $7.3 million or 20.4% of net sales, a 610 basis
point year over year improvement in gross profit percentage as
compared to Q3 2019;
- Expanded management team through
key hires to support Greenlane sales and marketing efforts in North
America and Europe;
- Launched a first-of-its-kind line
of responsibly sourced, precision-manufactured, pre-rolled cones
made from organically-sourced paper exclusively processed in France
and sealed with 100% natural Arabic gum;
- Obtained the exclusive right to
expand the availability of Marley Naturals Accessories to specialty
locations in Europe, Central and South America, and the
Caribbean;
Management Commentary
“During the third quarter, with the help of our
new senior leadership team, we acted on several key initiatives
related to our go forward category emphasis, organizational
structure, and related staffing levels. Building on the success
we've achieved in growing Greenlane brands and non-nicotine sales
year over year by 65% and 36%, respectively, we've taken additional
decisive steps to de-emphasize certain product lines, invest in our
fastest growing and highest margin opportunities, and further
reduced our headcount by 4.5%,” said Aaron LoCascio, Greenlane’s
Chairman and Chief Executive Officer. “While this has had an impact
on our Q3 financials, we believe these decisions have positioned
Greenlane to return to near-term profitability and long term
success."
Mr. LoCascio added, "We are building a
comprehensive suite of high-quality, Greenlane branded products
which will enable us to capture more of the margin on each product
we sell. At the same time, we continue to work very closely with
our brand partners to launch innovative new products into the
market leveraging our best-in-class global distribution platform. I
remain very encouraged that we are on track to enter 2021 on a
solid footing, returning to positive adjusted EBITDA in the first
quarter as a result of the changes we have implemented.”
Q3 2020 Financial Summary
Net sales were $35.8 million in the third
quarter of 2020 ("Q3 2020"), compared to $44.9 million for the
third quarter of 2019 ("Q3 2019"), a decrease of $9.1 million or
20.3%. The change in revenue is largely attributable to the
execution of Greenlane's business transformation initiative,
whereby the Company has deliberately moved away from low-margin
nicotine sales, to focus on higher-margin products. On a sequential
basis, Q3 2020 net sales increased 10% from $32.4 million in the
second quarter of 2020 ("Q2 2020").
Sales of nicotine products decreased to
approximately $3.5 million in Q3 2020, from approximately $21.1
million in Q3 2019. Isolating for the impact of declining consumer
demand for nicotine products on Greenlane’s total sales, Q3 2020
core revenue grew 36% to $32.3 million compared to $23.8 million in
Q3 2019.
Net sales of Greenlane branded products grew to
approximately $5.6 million, representing 15.5% of total revenue in
the third quarter of 2020, as compared to approximately $3.4
million in the third quarter of 2019, or 7.5% of total revenue.
As of the fourth quarter of 2020, Greenlane has
fully transitioned to a more streamlined and centralized model with
fewer, but larger, highly automated distribution facilities. We
believe these changes will greatly improve the scalability of the
Company's business model.
In Q3 2020, gross profit was $2.5 million, or
6.9% of net sales, compared to $6.4 million, or 14.3% of net sales
in Q3 2019. In the quarter, Greenlane made certain strategic
decisions concerning existing inventory levels and go forward
product lines. As a result of those decisions the Company recorded
write-offs and adjustments of $4.8 million to damaged and obsolete
inventory. Excluding the impact of these inventory adjustments, Q3
2020 gross margin would otherwise have been $7.3 million and gross
profit margin would otherwise have been 20.4% or 610 basis points
higher than Q3 2019 gross profit. Greenlane expects overall gross
margin to expand from the current adjusted levels of 20.4% as it
executes on its strategic vision with Greenlane Brands at its
core.
Salaries, benefits, and payroll taxes in Q3 2020
decreased approximately $1.6 million, or 23.7%, compared to Q3
2019, primarily due to a net decrease in equity-based compensation
expense. Q3 2020 general and administrative expenses increased by
approximately $5.9 million. This increase was primarily due to a
non-recurring loss of approximately $2.2 million related to a
portion of an indemnification asset, in addition to other expenses
related to the Company's business transformation initiatives which
are expected to generate long term cost savings.
Q3 2020 net loss was $13.8 million, compared to
$9.0 million in the same period for the prior year. Adjusted net
loss was $6.9 million in Q3 2020 compared to adjusted net loss of
$7.5 million for Q3 2019. Adjusted EBITDA loss was $6.3 million in
Q3 2020 compared to adjusted EBITDA loss of $3.4 million in Q3
2019. Definitions of adjusted net loss and adjusted EBITDA and
reconciliations of such metrics to the nearest GAAP measure are
included below.
Cash was $40.0 million and total debt was $8.2 million as of
September 30, 2020, compared to $47.8 million and $8.3 million,
respectively, as of December 31, 2019. Year to date, cash used in
operating activities was $3.8 million, compared to $33.5 million in
the prior year, an 89% improvement. Greenlane continues to actively
manage its balance sheet to fund the Company’s growth initiatives
and potential M&A opportunities.
Conference Call Information
Greenlane will host a conference call Tuesday,
November 17, 2020, to discuss these results. Aaron LoCascio, Chief
Executive Officer, will host the call starting at 8:30 a.m. Eastern
time. A question and answer session will follow management's
presentation.
Date: |
Tuesday, November 17,
2020 |
Time: |
8:30 a.m. Eastern Time |
Dial-In Number: |
(833) 519-1285 |
Conference ID: |
9693218 |
Webcast: |
https://edge.media-server.com/mmc/p/crczypsj |
Replay: |
(855) 859-2056 or (404)
537-3406 |
|
Available until 11:30 p.m.
Eastern Time Thursday, November 26th, 2020 |
About Greenlane Holdings, Inc.
Greenlane (NASDAQ: GNLN) is the leading global
platform for the development and distribution of premium cannabis
accessories and lifestyle products. The company operates as a
powerful house of brands, third-party brand accelerator, and
omni-channel distribution platform. Greenlane serves the global
markets with an expansive customer base of more than 7,000 retail
locations, including licensed cannabis businesses, smoke shops, and
specialty retailers. As a pioneer in the cannabis space, Greenlane
is the partner of choice for many of the industry’s leading brands,
including PAX Labs, Storz & Bickel (Canopy-owned), Cookies,
Grenco Science, and DaVinci. Greenlane also proudly owns and
operates a diverse brand portfolio including packaging innovator
Pollen Gear™, the K.Haring Glass Collection by Higher Standards,
Marley Natural™, and VIBES™ rolling papers. Higher Standards,
Greenlane’s flagship brand, offers both a high-end product line and
immersive retail experience with groundbreaking stores in both New
York City’s Chelsea Market and Malibu, California. Greenlane also
owns and operates both Vapor.com and VapoShop.com, two
industry-leading, direct-to-consumer e-commerce platforms in North
America and Europe respectively. For additional information, please
visit: https://gnln.com/.
Presentation of Financial
Information
This press release includes historical
consolidated results for the periods presented of Greenlane
Holdings, LLC, the predecessor of Greenlane Holdings, Inc., for
financial reporting purposes. Accordingly, the consolidated
financial statements for periods prior to the completion of the IPO
on April 23, 2019 have been adjusted to combine the previously
separate entities for presentation purposes. Amounts for the period
from January 1, 2019 through April 22, 2019 represent the
historical operations of Greenlane Holdings, LLC. The amounts for
the period from April 23, 2019 through September 30, 2019, and from
January 1, 2020 through September 30, 2020 reflect the consolidated
operations of Greenlane Holdings, Inc.
Use of Non-GAAP Financial
Measures
Greenlane discloses Adjusted Net Loss and
Adjusted EBITDA, which are non-GAAP financial measures, because
management believes these metrics assist investors and analysts in
assessing the Company’s overall operating performance and
evaluating how well Greenlane is executing its business strategies.
You should not consider Adjusted Net Loss or Adjusted EBITDA as
alternatives to net loss determined in accordance with GAAP as
indicators of Greenlane’s operating performance. Investors are
cautioned that there are material limitations associated with the
use of non-GAAP financial measures as an analytical tool.
Accordingly, you should not view Adjusted Net Loss or Adjusted
EBITDA in isolation or as a substitute, or superior to, financial
information prepared and presented in accordance with GAAP.
Furthermore, these non-GAAP measures may be different from non-GAAP
financial measures used by other companies, limiting their
usefulness for comparison purposes.
Adjusted Net Loss and Adjusted EBITDA have
limitations as an analytical tool. Some of these limitations
are:
- Although depreciation and
amortization are non-cash charges, the assets being depreciated and
amortized may have to be replaced in the future and adjusted EBITDA
does not reflect capital expenditure requirements for such
replacements or for new capital expenditures;
- Adjusted EBITDA does not include
interest expense, which has been a necessary element of the
Company's costs;
- Adjusted EBITDA does not reflect
income tax payments we may be required to make;
- Adjusted EBITDA and Adjusted Net
Loss do not reflect equity-based compensation;
- Adjusted EBITDA and Adjusted Net
Loss do not reflect transaction and other costs which are generally
incremental costs that result from an actual or planned
transaction;
- Other companies, including
companies in Greenlane's industry, may calculate adjusted EBITDA
and adjusted net loss differently, which reduces its usefulness as
a comparative measure.
For more information on Greenlane's non-GAAP
financial measures and a reconciliation of GAAP to non-GAAP
financial measures, please see the "Reconciliation of GAAP to
Non-GAAP Financial Measures" table in this press release.
Forward Looking Statements
Certain matters within this press release are
discussed using forward-looking language as specified in the
Private Securities Litigation Reform Act of 1995, and, as such, may
involve known and unknown risks, uncertainties and other factors
that may cause the actual results or performance to differ from
those projected in the forward-looking statements. These
forward-looking statements include, among others: comments relating
to the current and future performance of the Company’s business;
the impact of the ongoing COVID-19 pandemic on the Company's
business; growth in demand for the Company’s products; growth in
the market for cannabis and nicotine; the Company’s marketing and
commercialization efforts; and the Company’s financial outlook and
expectations. For a description of factors that may cause the
Company’s actual results or performance to differ from its
forward-looking statements, please review the information under the
heading “Risk Factors” included in the Company's most recent Annual
Report on Form 10-K for the year ended December 31, 2019 and the
Company's other filings with the SEC, which are accessible on the
SEC’s website at www.sec.gov. Additional information is also set
forth in Greenlane's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2020. Undue reliance should not be placed on
the forward-looking statements in this press release, which are
based on information available to Greenlane on the date hereof.
Greenlane undertakes no duty to update this information unless
required by law.
Media ContactMATTIO
CommunicationsGreenlane@mattio.com
Investor Contact:Rob
KellyInvestor Relations, MATTIO
CommunicationsGreenlane@mattio.com1-416-992-4539
GREENLANE HOLDINGS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands, except par value per share
amounts)
|
September 30,2020 |
|
December 31,2019 |
Assets |
(Unaudited) |
|
|
Current assets |
|
|
|
Cash |
$ |
39,993 |
|
|
|
$ |
47,773 |
|
|
Accounts receivable, net of allowance of $1,324 and $936 at
September 30, 2020 and December 31, 2019, respectively |
6,438 |
|
|
|
8,091 |
|
|
Inventories, net |
36,919 |
|
|
|
43,060 |
|
|
Vendor deposits |
8,775 |
|
|
|
11,120 |
|
|
Assets held for sale |
1,177 |
|
|
|
— |
|
|
Other current assets |
8,924 |
|
|
|
4,924 |
|
|
Total current assets |
102,226 |
|
|
|
114,968 |
|
|
|
|
|
|
Property and equipment,
net |
12,392 |
|
|
|
13,165 |
|
|
Intangible assets, net |
5,930 |
|
|
|
6,301 |
|
|
Goodwill |
3,128 |
|
|
|
11,982 |
|
|
Operating lease right-of-use
assets |
3,085 |
|
|
|
4,695 |
|
|
Other assets |
2,053 |
|
|
|
2,091 |
|
|
Total assets |
$ |
128,814 |
|
|
|
$ |
153,202 |
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
17,963 |
|
|
|
$ |
11,310 |
|
|
Accrued expenses and other current liabilities |
15,956 |
|
|
|
10,600 |
|
|
Customer deposits |
2,593 |
|
|
|
3,152 |
|
|
Current portion of operating leases |
725 |
|
|
|
1,084 |
|
|
Current portion of finance leases |
208 |
|
|
|
116 |
|
|
Total current liabilities |
37,445 |
|
|
|
26,262 |
|
|
|
|
|
|
Notes payable, less current
portion and debt issuance costs, net |
7,886 |
|
|
|
8,018 |
|
|
Operating leases, less current
portion |
2,708 |
|
|
|
3,844 |
|
|
Finance leases, less current
portion |
277 |
|
|
|
194 |
|
|
Other liabilities |
1,038 |
|
|
|
620 |
|
|
Total long-term liabilities |
11,909 |
|
|
|
12,676 |
|
|
Total liabilities |
49,354 |
|
|
|
38,938 |
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
Preferred stock, $0.0001 par value, 10,000 shares authorized, none
issued and outstanding |
— |
|
|
|
— |
|
|
Class A common stock, $0.01 par value per share, 125,000 shares
authorized; 13,072 shares issued and outstanding as of September
30, 2020; 9,999 shares issued and 9,812 shares outstanding as of
December 31, 2019 |
131 |
|
|
|
98 |
|
|
Class B common stock, $0.0001 par value per share, 10,000 shares
authorized; 3,591 and 5,975 shares issued and outstanding as of
September 30, 2020 and December 31, 2019, respectively |
1 |
|
|
|
1 |
|
|
Class C Common stock, $0.0001 par value per share, 100,000 shares
authorized; 76,489 and 77,791,000 shares issued and outstanding as
of September 30, 2020 and December 31, 2019, respectively |
8 |
|
|
|
8 |
|
|
Additional paid-in capital |
39,194 |
|
|
|
32,108 |
|
|
Accumulated deficit |
(20,732 |
) |
|
|
(9,727 |
) |
|
Accumulated other comprehensive loss |
(154 |
) |
|
|
(72 |
) |
|
Total stockholders’ equity attributable to Greenlane Holdings,
Inc. |
18,448 |
|
|
|
22,416 |
|
|
Non-controlling interest |
61,012 |
|
|
|
91,848 |
|
|
Total stockholders’ equity |
79,460 |
|
|
|
114,264 |
|
|
Total liabilities and stockholders’ equity |
$ |
128,814 |
|
|
|
$ |
153,202 |
|
|
GREENLANE HOLDINGS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS(Unaudited)(in thousands,
except per share amounts)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net sales |
$ |
35,764 |
|
|
|
$ |
44,886 |
|
|
|
$ |
102,032 |
|
|
|
$ |
147,770 |
|
|
Cost of sales |
33,297 |
|
|
|
38,448 |
|
|
|
85,419 |
|
|
|
123,194 |
|
|
Gross profit |
2,467 |
|
|
|
6,438 |
|
|
|
16,613 |
|
|
|
24,576 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
Salaries, benefits and payroll taxes |
5,010 |
|
|
|
6,562 |
|
|
|
17,745 |
|
|
|
21,673 |
|
|
General and administrative |
10,673 |
|
|
|
4,751 |
|
|
|
25,758 |
|
|
|
15,549 |
|
|
Goodwill impairment charge |
— |
|
|
|
— |
|
|
|
8,996 |
|
|
|
— |
|
|
Depreciation and amortization |
599 |
|
|
|
650 |
|
|
|
1,959 |
|
|
|
1,980 |
|
|
Total operating expenses |
16,282 |
|
|
|
11,963 |
|
|
|
54,458 |
|
|
|
39,202 |
|
|
Loss from operations |
(13,815 |
) |
|
|
(5,525 |
) |
|
|
(37,845 |
) |
|
|
(14,626 |
) |
|
Other income (expense),
net: |
|
|
|
|
|
|
|
Change in fair value of convertible notes |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(12,063 |
) |
|
Interest expense |
(115 |
) |
|
|
(119 |
) |
|
|
(335 |
) |
|
|
(862 |
) |
|
Other income, net |
357 |
|
|
|
7,746 |
|
|
|
1,483 |
|
|
|
8,670 |
|
|
Total other income (expense),
net |
242 |
|
|
|
7,627 |
|
|
|
1,148 |
|
|
|
(4,255 |
) |
|
(Loss) income before income
taxes |
(13,573 |
) |
|
|
2,102 |
|
|
|
(36,697 |
) |
|
|
(18,881 |
) |
|
Provision for income
taxes |
220 |
|
|
|
11,063 |
|
|
|
147 |
|
|
|
10,966 |
|
|
Net loss |
(13,793 |
) |
|
|
(8,961 |
) |
|
|
(36,844 |
) |
|
|
(29,847 |
) |
|
Less: Net loss attributable to non-controlling interest |
(9,300 |
) |
|
|
(2,563 |
) |
|
|
(25,839 |
) |
|
|
(4,016 |
) |
|
Net loss attributable to Greenlane Holdings, Inc. |
$ |
(4,493 |
) |
|
|
$ |
(6,398 |
) |
|
|
$ |
(11,005 |
) |
|
|
$ |
(25,831 |
) |
|
|
|
|
|
|
|
|
|
Net loss attributable to Class A common stock per share - basic and
diluted |
$ |
(0.35 |
) |
|
|
$ |
(0.64 |
) |
|
|
$ |
(0.95 |
) |
|
|
$ |
(0.67 |
) |
|
Weighted-average shares of Class A common stock outstanding - basic
and diluted |
12,798 |
|
|
|
9,998 |
|
|
|
11,559 |
|
|
|
9,998 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss): |
|
|
|
|
|
|
|
Foreign currency translation adjustments |
285 |
|
|
|
(13 |
) |
|
|
130 |
|
|
|
38 |
|
|
Unrealized gain (loss) on derivative instrument |
35 |
|
|
|
(310 |
) |
|
|
(525 |
) |
|
|
(310 |
) |
|
Comprehensive loss |
(13,473 |
) |
|
|
(9,284 |
) |
|
|
(37,239 |
) |
|
|
(30,119 |
) |
|
Less: Comprehensive loss attributable to non-controlling
interest |
(9,066 |
) |
|
|
(2,809 |
) |
|
|
(26,152 |
) |
|
|
(4,238 |
) |
|
Comprehensive loss attributable to Greenlane Holdings, Inc. |
$ |
(4,407 |
) |
|
|
$ |
(6,475 |
) |
|
|
$ |
(11,087 |
) |
|
|
$ |
(25,881 |
) |
|
GREENLANE HOLDINGS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)(in thousands)
|
Nine Months EndedSeptember
30, |
|
2020 |
|
2019 |
Cash flows from
operating activities: |
|
|
|
Net loss (including amounts attributable to non-controlling
interest) |
$ |
(36,844 |
) |
|
|
$ |
(29,847 |
) |
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
1,959 |
|
|
|
1,980 |
|
|
Reversal of tax receivable agreement liability |
— |
|
|
|
(5,721 |
) |
|
Change in deferred tax asset, net |
— |
|
|
|
10,879 |
|
|
Equity-based compensation expense |
182 |
|
|
|
6,083 |
|
|
Unrealized gain on equity investment |
— |
|
|
|
(1,537 |
) |
|
Goodwill impairment charge |
8,996 |
|
|
|
— |
|
|
Change in fair value of contingent consideration |
(719 |
) |
|
|
— |
|
|
Change in fair value of convertible notes |
— |
|
|
|
12,063 |
|
|
Change in provision for doubtful accounts |
766 |
|
|
|
91 |
|
|
Loss on disposal of assets |
569 |
|
|
|
— |
|
|
Loss related to indemnification asset not probable of recovery |
2,200 |
|
|
|
— |
|
|
Other |
242 |
|
|
|
37 |
|
|
Changes in operating assets and liabilities, net of the effects of
acquisitions: |
|
|
|
Decrease in accounts receivable |
886 |
|
|
|
1,396 |
|
|
Decrease (increase) in inventories |
6,140 |
|
|
|
(15,764 |
) |
|
Decrease (increase) in vendor deposits |
2,543 |
|
|
|
(778 |
) |
|
Decrease (increase) in deferred offering costs |
— |
|
|
|
2,284 |
|
|
(Increase) in other current assets |
(6,217 |
) |
|
|
(1,720 |
) |
|
Increase (decrease) in accounts payable |
6,653 |
|
|
|
(13,182 |
) |
|
Increase in accrued expenses |
9,558 |
|
|
|
465 |
|
|
(Decrease) in customer deposits |
(670 |
) |
|
|
(272 |
) |
|
Net cash used in operating activities |
(3,756 |
) |
|
|
(33,543 |
) |
|
Cash flows from
investing activities: |
|
|
|
Purchase consideration paid for acquisitions, net of cash
acquired |
(1,841 |
) |
|
|
(1,283 |
) |
|
Purchases of property and equipment, net |
(1,438 |
) |
|
|
(1,268 |
) |
|
Purchase of intangible assets |
(300 |
) |
|
|
(58 |
) |
|
Investment in equity securities |
— |
|
|
|
(500 |
) |
|
Net cash used in investing activities |
(3,579 |
) |
|
|
(3,109 |
) |
|
Cash flows from
financing activities: |
|
|
|
Proceeds from issuance of convertible notes |
— |
|
|
|
8,050 |
|
|
Proceeds from issuance of Class A common stock sold in initial
public offering, net of underwriting costs |
— |
|
|
|
83,003 |
|
|
Payment of debt issuance costs - convertible notes |
— |
|
|
|
(1,734 |
) |
|
Deferred offering costs paid |
— |
|
|
|
(3,523 |
) |
|
Redemption of Class A and Class B units of Greenlane Holdings,
LLC |
— |
|
|
|
(3,019 |
) |
|
Member distributions |
— |
|
|
|
(897 |
) |
|
Other |
(310 |
) |
|
|
(187 |
) |
|
Net cash (used in) provided by financing
activities |
(310 |
) |
|
|
81,693 |
|
|
Effects of exchange rate
changes on cash |
(135 |
) |
|
|
158 |
|
|
Net (decrease) increase in
cash |
(7,780 |
) |
|
|
45,199 |
|
|
Cash, as of beginning of the
period |
47,773 |
|
|
|
7,341 |
|
|
Cash, as of end of the
period |
$ |
39,993 |
|
|
|
$ |
52,540 |
|
|
|
|
|
|
Supplemental
disclosures of cash flow information |
|
|
|
Cash paid for amounts included in the measurement of lease
liabilities: |
|
|
|
Operating cash flows for operating leases |
$ |
1,193 |
|
|
|
$ |
547 |
|
|
Lease liabilities arising from obtaining finance lease assets |
$ |
272 |
|
|
|
$ |
88 |
|
|
Lease liabilities arising from obtaining operating lease
right-of-use assets |
$ |
331 |
|
|
|
$ |
2,973 |
|
|
Non-cash investing and financing activities: |
|
|
|
Conversion of convertible debt to Class A common stock |
$ |
— |
|
|
|
$ |
60,313 |
|
|
Redeemable Class B Units issued for acquisition of a subsidiary,
net of issuance costs |
$ |
— |
|
|
|
$ |
6,664 |
|
|
Shares of Class A common stock issued for acquisition of Conscious
Wholesale |
$ |
1,988 |
|
|
|
$ |
— |
|
|
Exchanges of non-controlling interest for Class A common stock |
$ |
(4,616 |
) |
|
|
$ |
— |
|
|
GREENLANE HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES(Unaudited)
The reconciliation of our Net Loss to Adjusted Net Loss for each
of the periods indicated is as follows:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in
thousands) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net loss |
$ |
(13,793 |
) |
|
|
$ |
(8,961 |
) |
|
|
$ |
(36,844 |
) |
|
|
$ |
(29,847 |
) |
|
Debt placement costs for
convertible notes (1) |
— |
|
|
|
— |
|
|
|
— |
|
|
|
422 |
|
|
Transition to being a public
company (2) |
— |
|
|
|
— |
|
|
|
— |
|
|
|
775 |
|
|
Equity-based compensation
expense |
(980 |
) |
|
|
1,508 |
|
|
|
182 |
|
|
|
6,062 |
|
|
Initial consulting costs
related to ERP system implementation (3) |
45 |
|
|
|
— |
|
|
|
153 |
|
|
|
— |
|
|
Restructuring expenses
(4) |
495 |
|
|
|
— |
|
|
|
859 |
|
|
|
— |
|
|
Due diligence costs related to
acquisition target |
— |
|
|
|
— |
|
|
|
903 |
|
|
|
— |
|
|
Goodwill impairment
charge |
— |
|
|
|
— |
|
|
|
8,996 |
|
|
|
— |
|
|
Adjustments related to the
product rationalization to increase inventory turnover of
slow-selling products |
3,222 |
|
|
|
— |
|
|
|
3,222 |
|
|
|
— |
|
|
Obsolete inventory charges
related to management's strategic initiative (5) |
1,137 |
|
|
|
— |
|
|
|
1,137 |
|
|
|
— |
|
|
Allowances for uncollectible
vendor deposits incurred in connection with management's strategic
initiative (5) |
822 |
|
|
|
— |
|
|
|
822 |
|
|
|
— |
|
|
Loss related to
indemnification asset not probable of recovery |
2,200 |
|
|
|
— |
|
|
|
2,200 |
|
|
|
— |
|
|
Change in fair value of
convertible notes |
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,063 |
|
|
Adjusted net
loss |
$ |
(6,852 |
) |
|
|
$ |
(7,453 |
) |
|
|
$ |
(18,370 |
) |
|
|
$ |
(10,525 |
) |
|
(1) Debt placement costs related to the
issuance of convertible notes in January
2019.(2) Includes certain non-recurring fees and
expenses primarily attributable to consulting fees and incremental
audit and legal fees incurred in connection with our
IPO.(3) Includes non-recurring expenses related to
the initial project design for our planned ERP system
implementation.(4) Includes primarily severance
payments for employees terminated as part of our transformation
plan.(5) Includes certain non-recurring charges
related to management's strategic initiative. These adjustments
were incurred liquidate inventory on hand and on order, rationalize
product offerings, improve inventory turnover of slow-selling
products and vacate warehouse space for products with higher margin
and marketability.
The reconciliation of our Net Loss to Adjusted EBITDA for each
of the periods indicated is as follows:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in
thousands) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net loss |
$ |
(13,793 |
) |
|
|
$ |
(8,961 |
) |
|
|
$ |
(36,844 |
) |
|
|
$ |
(29,847 |
) |
|
Other income, net (1) |
(357 |
) |
|
|
(7,746 |
) |
|
|
(1,483 |
) |
|
|
(8,670 |
) |
|
Transition to being a public
company (2) |
— |
|
|
|
— |
|
|
|
— |
|
|
|
775 |
|
|
Interest expense |
115 |
|
|
|
119 |
|
|
|
335 |
|
|
|
862 |
|
|
Provision for (benefit from)
income taxes |
220 |
|
|
|
11,063 |
|
|
|
147 |
|
|
|
10,966 |
|
|
Depreciation and
amortization |
599 |
|
|
|
650 |
|
|
|
1,959 |
|
|
|
1,980 |
|
|
Equity-based compensation
expense |
(980 |
) |
|
|
1,508 |
|
|
|
182 |
|
|
|
6,062 |
|
|
Initial consulting costs
related to ERP system implementation (3) |
45 |
|
|
|
— |
|
|
|
153 |
|
|
|
— |
|
|
Restructuring expenses
(4) |
495 |
|
|
|
— |
|
|
|
859 |
|
|
|
— |
|
|
Due diligence costs related to
acquisition target |
— |
|
|
|
— |
|
|
|
903 |
|
|
|
— |
|
|
Adjustments related to product
rationalization to increase inventory turnover of slow-selling
products (5) |
3,222 |
|
|
|
— |
|
|
|
3,222 |
|
|
|
— |
|
|
One-time early termination fee
on operating lease in connection with moving to a centralized
distribution center model |
— |
|
|
|
— |
|
|
|
262 |
|
|
|
— |
|
|
Goodwill impairment
charge |
— |
|
|
|
— |
|
|
|
8,996 |
|
|
|
— |
|
|
Obsolete inventory charges
related to management's strategic initiative(5) |
1,137 |
|
|
|
— |
|
|
|
1,137 |
|
|
|
— |
|
|
Allowances for uncollectible
vendor deposits incurred in connection with management's strategic
initiative (5) |
822 |
|
|
|
— |
|
|
|
822 |
|
|
|
— |
|
|
Loss related to
indemnification asset not probable of recovery |
2,200 |
|
|
|
— |
|
|
|
2,200 |
|
|
|
— |
|
|
Change in fair value of
convertible notes |
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,063 |
|
|
Adjusted
EBITDA |
$ |
(6,275 |
) |
|
|
$ |
(3,367 |
) |
|
|
$ |
(17,150 |
) |
|
|
$ |
(5,809 |
) |
|
(1) Includes rental and interest income,
changes in the fair value of contingent consideration, and other
miscellaneous income.(2) Includes certain
non-recurring fees and expenses primarily attributable to
consulting fees and incremental audit and legal fees incurred in
connection with our IPO.(3) Includes non-recurring
expenses related to the initial project design for our planned ERP
system implementation.(4) Includes primarily
severance payments for employees terminated as part of our
transformation plan.(5) Includes certain
non-recurring charges related to management's strategic initiative.
These adjustments were incurred liquidate inventory on hand and on
order, rationalize product offerings, improve inventory turnover of
slow-selling products and vacate warehouse space for products with
higher margin and marketability.
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