Greenlane Holdings, Inc. (“Greenlane” or "the Company”) (Nasdaq:
GNLN), a global house of brands and one of the largest sellers of
premium cannabis accessories, child-resistant packaging, and
specialty vaporization products, today reported financial results
for the first quarter ended March 31, 2021. Note, for the
highlights below, core revenue is defined as all non-nicotine
revenue and Greenlane Brand revenue is inclusive of Eyce figures
since acquisition.
First Quarter 2021 (“Q1 2021”)
Highlights
- Greenlane Brands registered
back-to-back record quarterly sales records, growing 9.4% from Q4
2020 to a to a now record of $8.5 million for Q1 2021;
corresponding to a 18.4% growth over the $7.2 million sales for Q1
2020;
- VIBES performed exceptionally well
during the quarter and achieved a quarterly sales revenue record of
$2.7 million, a 72.8%, increase for Q1 2021 compared to Q1
2020;
- As of Q1 2021 Greenlane Brands
accounted for 25.1% of total revenue compared with 21.3% of total
revenue for Q1 2020;
- Q1 2021 core revenue (defined as
non-nicotine revenue) grew 11.6% to $32.3 million, compared to
$28.9 million in Q1 2020;
- Total revenue increased 0.4% to $34.0
million for Q1 2021, compared to $33.9 million for Q1 2020;
- Gross profit and gross margin were
flat at $7.3 million and 21.5% respectively; excluding for the
impacts of damaged and obsolete inventory, gross margin would
improve to 24.1%, up 260 basis points;
- Acquired Eyce, the world’s leading
brand of silicone smoking products; and
- Announced definitive merger agreement
between Greenlane and KushCo Holdings, Inc. (“KushCo”) which will
establish the leading ancillary cannabis company and house of
brands.
Management Commentary
“Our first quarter 2021 results demonstrate our
continued forward momentum on the heels of a successful 2020,” said
Aaron LoCascio, Greenlane’s Chairman and Chief Executive Officer.
“This quarter saw significant progress on the execution of one of
our key growth strategies, with the acquisition of Eyce, further
adding to our portfolio of premium owned brands and the
announcement of our impending transformative merger with KushCo.
During the quarter we also saw further proof our strategy to focus
on growing our portfolio of owned brands is delivering significant
results as we transition away from lower-margin revenue categories,
with our Greenlane Brands accounting for a quarter of our revenue
in the first quarter of 2021. The continued improvement in revenue
mix backed by our robust pipeline of potential acquisitions and
continued organic growth, combined with our pending merger with
KushCo we believe will strongly position us as the leader in the
cannabis ancillary space as we drive further revenue growth and
profitability improvements in 2021, and continue to build value for
both shareholders and customers.”
Financial Summary
|
Quarter Ended March 31, |
% |
|
2021 |
2020 |
Change |
Net Sales |
$ |
34,009 |
|
|
|
$ |
33,868 |
|
|
|
0.4 |
|
% |
|
Core (non-nicotine) Sales |
$ |
32,291 |
|
|
|
$ |
28,928 |
|
|
|
11.6 |
|
% |
|
% of Net Sales |
94.9 |
|
% |
|
85.4 |
|
% |
|
|
Greenlane Branded Sales |
$ |
8,525 |
|
|
|
$ |
7,201 |
|
|
|
18.4 |
|
% |
|
% of Net Sales |
25.1 |
|
% |
|
21.3 |
|
% |
|
|
Non-Greenlane Brands |
$ |
23,766 |
|
|
|
$ |
21,727 |
|
|
|
9.4 |
|
% |
|
% of Net Sales |
69.9 |
|
% |
|
64.2 |
|
% |
|
|
Non-Core Sales |
$ |
1,718 |
|
|
|
$ |
4,940 |
|
|
|
(65.2 |
) |
% |
|
% of Net Sales |
5.1 |
|
% |
|
14.6 |
|
% |
|
|
Cost of Sales |
$ |
26,696 |
|
|
|
$ |
26,539 |
|
|
|
0.6 |
|
% |
|
Gross Profit |
$ |
7,313 |
|
|
|
$ |
7,329 |
|
|
|
(0.2 |
) |
% |
|
Gross Margin |
21.5 |
|
% |
|
21.6 |
|
% |
|
|
Salaries, Benefits & Payroll Taxes |
$ |
6,370 |
|
|
|
$ |
6,614 |
|
|
|
(3.7 |
) |
% |
|
% of Net Sales |
18.7 |
|
% |
|
19.5 |
|
% |
|
|
General and Administrative |
$ |
8,339 |
|
|
|
$ |
8,659 |
|
|
|
(3.7 |
) |
% |
|
% of Net Sales |
24.5 |
|
% |
|
25.6 |
|
% |
|
|
Net Loss |
$ |
(7,714 |
) |
|
|
$ |
(16,739 |
) |
|
|
(53.9 |
) |
% |
|
Adjusted Net Loss |
$ |
(5,519 |
) |
|
|
$ |
(6,080 |
) |
|
|
(9.2 |
) |
% |
|
Adjusted EBITDA |
$ |
(5,201 |
) |
|
|
$ |
(6,281 |
) |
|
|
(17.2 |
) |
% |
|
Cash |
$ |
12,309 |
|
|
|
$ |
30,435 |
|
|
|
(59.6 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales were $34.0 million in Q1 2021,
compared to $33.9 million in Q1 2020, an increase of $0.1 million,
or 0.4%. Net sales in Q1 2021 were significantly less reliant on
nicotine revenue, as the Company continues to focus on core
(non-nicotine) sales and higher-margin products, including
Greenlane Brands.
Gross profit was $7.3 million, or 21.5% of net
sales in Q1 2021, compared to $7.3 million, or 21.6% of net sales
in Q1 2020. While merchandise margin increased by 4.9% and resulted
in a $1.7 million or 19.0% increase in merchandise gross profit,
the improvements were largely negated by a $0.9 million increase in
damaged and obsolete inventory write-offs and a $0.5 million
increase in third-party profit sharing contract fees.
Cash totaled $12.3 million as of March 31, 2021,
a decrease from approximately $30.4 million as of December 31,
2020, due in large part to payments to vendors decreasing our
accounts payable by $10.2 million over the period, payments to
European tax authorities totaling $2.7 million and $2.4 million in
cash paid as partial consideration for the acquisition of Eyce. As
of March 31, 2021, working capital was $43.0 million, compared to
working capital of $58.2 million as of December 31, 2020.
Additionally, we received a refund from the Dutch tax authorities
of approximately $4.1 million in April 2021.
|
Quarter Ended March 31, |
% |
|
2021 |
2020 |
Change |
United States - Net Sales |
$ |
28,667 |
|
|
|
$ |
27,130 |
|
|
|
5.7 |
|
% |
|
Core Revenue |
$ |
27,727 |
|
|
|
$ |
24,560 |
|
|
|
12.9 |
|
% |
|
Non-Core Revenue |
940 |
|
|
|
2,570 |
|
|
|
(63.4 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
Canada - Net Sales |
$ |
2,561 |
|
|
|
$ |
4,405 |
|
|
|
(41.9 |
) |
% |
|
Core Revenue |
1,784 |
|
|
|
2,044 |
|
|
|
(12.7 |
) |
% |
|
Non-Core Revenue |
$ |
777 |
|
|
|
$ |
2,361 |
|
|
|
(67.1 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
Europe - Net Sales |
$ |
2,781 |
|
|
|
$ |
2,333 |
|
|
|
19.2 |
|
% |
|
Core Revenue |
$ |
2,781 |
|
|
|
$ |
2,333 |
|
|
|
19.2 |
|
% |
|
Non-Core Revenue |
$ |
— |
|
|
|
$ |
— |
|
|
|
n.a. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales for our United States reporting
segment increased $1.5 million, or 5.7% in Q1 2021, to $28.7
million, compared to approximately $27.1 million in the same period
in 2020. Net Sales for our Canadian reporting segment decreased to
approximately $2.6 million for Q1 2021 compared to approximately
$4.4 million in the same period in 2020, primarily due to a
decrease of $1.6 million in non-core revenue sales as a result of
the Company’s strategic shift away from low-margin nicotine sales.
Net sales for our European reporting segment increased to $2.8
million for Q1 2021, compared to $2.3 million in the same period of
2020, primarily due to the establishment of third-party website
sales, which resulted in $0.4 million of additional net sales and a
$0.2 million growth in B2B sales, which offset a $0.2 million
decrease in retail store sales impacted by COVID-19 restrictions
during the quarter.
Conference Call Information
Greenlane will host a conference call Tuesday,
May 18th, 2021, to discuss these results. Aaron LoCascio, Chief
Executive Officer, will host the call starting at 8:30 a.m. Eastern
Time.
Date: |
Tuesday, May 18th, 2021 |
Time: |
8:30 a.m. Eastern Time |
Dial-In Number: |
(833) 519-1285 |
Conference ID: |
3068055 |
Webcast: |
Click here to access |
Replay: |
(855) 859-2056 or (404) 537-3406 |
|
Available until 11:30 PM Eastern Time on June 1st, 2021 |
About Greenlane Holdings, Inc.
Greenlane Holdings, Inc. (NASDAQ: GNLN) is a
global house of brands and one of the largest sellers of premium
cannabis accessories, child-resistant packaging, and specialty
vaporization products to smoke shops, dispensaries, and specialty
retail stores, as well as direct to consumer through its online
e-commerce platforms, Vapor.com, Higherstandards.com,
Aerospaced.com, Harringglass.com, Eycemolds.com, Canada.Vapor.com,
Azarius.net, Vaposhop.com, and recently-acquired Puffitup.com.
Founded in 2005, Greenlane serves more than 7,000 retail locations
and has over 250 employees with operations in United States,
Canada, and Europe. With a strong global footprint, Greenlane has
been the partner of choice for many of the industry’s leading
brands, who chose to leverage its strong distribution platform,
unparalleled customer service, and highly efficient operations and
logistics to accelerate their growth. Greenlane’s curated portfolio
of owned brands includes EYCE, packaging innovator Pollen
Gear™, VIBES™ rolling papers, Marley Natural™
Accessories; K.Haring Glass Collection, Aerospaced grinders,
and Higher Standards which offers both an upscale product
line as well as an innovative retail experiences with flagship
stores located in Chelsea Market, New York and Malibu,
California.
For additional information, please
visit: https://gnln.com/.
Use of Non-GAAP Financial
Measures
Greenlane discloses Adjusted Net Loss and
Adjusted EBITDA, which are non-GAAP performance measures, because
management believes these metrics assist investors and analysts in
assessing our overall operating performance and evaluating how well
we are executing our business strategies. You should not consider
Adjusted Net Loss or Adjusted EBITDA as alternatives to net loss,
as determined in accordance with U.S. GAAP, as indicators of our
operating performance. 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 our costs,
and 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 contemplated or completed
transaction;
- Adjusted EBITDA and Adjusted Net Loss
do not reflect other one-time expenses and income, including
consulting costs related to the implementation of our ERP system
and the reversal of an allowance against indemnification
receivables associated with the EU VAT liability.
- Other companies, including companies
in our industry, may calculate adjusted EBITDA differently, which
reduces its usefulness as a comparative measure.
Because Adjusted Net Loss and Adjusted EBITDA do
not account for these items, these measures have material
limitations as indicators of operating performance. Accordingly,
management does not view Adjusted Net Loss or Adjusted EBITDA in
isolation or as substitutes for measures calculated in accordance
with U.S. GAAP.
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 pending merger with KushCo; the Company’s strategies; the
impacts of acquisitions and other similar transactions; 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, 2020, the
Company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2021 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 quarterly period ended March 31, 2021.
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 ContactRob
KellyInvestor Relations, MATTIO
CommunicationsGreenlane@mattio.com1-416-992-4539
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 March 31, |
(in thousands) |
2021 |
|
2020 |
Net loss |
(7,714 |
) |
|
|
(16,739 |
) |
|
EU VAT indemnification allowance adjustment [1] |
(621 |
) |
|
|
— |
|
|
Initial consulting costs related to ERP system implementation
[3] |
301 |
|
|
|
64 |
|
|
Restructuring expenses [4] |
247 |
|
|
|
108 |
|
|
Equity-based compensation expense |
529 |
|
|
|
270 |
|
|
Due diligence costs related to acquisition target [5] |
— |
|
|
|
1,221 |
|
|
Legal and professional fees related to M&A transactions
[6] |
1739 |
|
|
|
— |
|
|
Goodwill impairment charge [7] |
— |
|
|
|
8,996 |
|
|
Adjusted net loss |
$ |
(5,519 |
) |
|
|
$ |
(6,080 |
) |
|
The reconciliation of our Net Loss to Adjusted
EBITDA for each of the periods indicated is as follows:
|
Three Months Ended March 31, |
(in thousands) |
2021 |
|
2020 |
Net loss |
(7,714 |
) |
|
|
(16,739 |
) |
|
EU VAT indemnification allowance adjustment [1] |
(621 |
) |
|
|
— |
|
|
Other (expense) income, net [2] |
(324 |
) |
|
|
(940 |
) |
|
Provision for (benefit from) income taxes |
(18 |
) |
|
|
(81 |
) |
|
Interest expense |
116 |
|
|
|
110 |
|
|
Initial consulting costs related to ERP system implementation
[3] |
301 |
|
|
|
64 |
|
|
Restructuring expenses [4] |
247 |
|
|
|
108 |
|
|
Equity-based compensation expense |
529 |
|
|
|
270 |
|
|
Depreciation and amortization |
544 |
|
|
|
710 |
|
|
Due diligence costs related to acquisition target [5] |
— |
|
|
|
1,221 |
|
|
Legal and professional fees related to M&A transactions
[6] |
1739 |
|
|
|
— |
|
|
Goodwill impairment charge [7] |
— |
|
|
|
8,996 |
|
|
Adjusted EBITDA |
$ |
(5,201 |
) |
|
|
$ |
(6,281 |
) |
|
|
|
|
|
|
|
|
|
|
|
(1) Adjustment to reserve
allowance for indemnification receivable from ARI's sellers
primarily due to seizure of seller bank accounts indicating
recoverability of receivable.(2) Includes rental
and interest income and other miscellaneous
income.(3) Includes non-recurring expenses related
to the initial project design for our planned ERP system
implementation. (4) Severance related to European
reduction in force related and one-time termination fee for Visalia
lease.(5) Non-recurring due diligence costs
attributable to acquisition
target.(6) Non-recurring legal and other
professional fees relating to the Eyce acquisition and KushCo
merger.(7) Impairment expense recognized on our
United States reporting unit's goodwill.
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