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 second quarter ended June 30, 2021 ("Q2 2021").
Q2 2021 Highlights
- Total revenue increased 7.1% to $34.7 million for Q2 2021,
compared to $32.4 million for Q2 2020;
- Q2 2021 core revenue (defined as non-nicotine revenue) grew
14.9% to $34.5 million, compared to $30.0 million in Q2 2020;
- Achieved third consecutive quarterly sales record for Greenlane
Brands, which grew to $9.0 million in Q2 2021, up 62.5% compared to
$5.5 million in sales for Q2 2020;
- Greenlane Brands accounted for 25.9% of Q2 2021 total revenue
compared with 17.1% of total revenue for Q2 2020;
- Successfully transitioned to core business lines. Core revenue
accounted for 99.3% of total revenue for Q2 2021;
- Gross profit and gross margin grew by $1.0 million and 1.3%,
respectively, to $7.8 million and 22.4%, compared to $6.8 million
and 21.0% in Q2 2020;
- Subsequent to quarter end, the Company completed a $32.0
million registered direct offering priced at-the-market.
Management Commentary
“Our second quarter 2021 results reflect the
success of our efforts to drive growth in our core business lines
and higher margin Greenlane brands,” said Aaron LoCascio,
Greenlane’s Chairman and Chief Executive Officer. “I am proud of
our accomplishments and want to thank our entire team for their
ongoing dedication as we execute on the opportunity ahead. During
the quarter, we drove solid Greenlane Brands revenue growth, up 62%
year over year and representing 26% of our total Q2 revenue,
supported by strong organic growth."
Mr. LoCascio added, "Our focus on growing our
portfolio of owned brands and driving strong performance from our
existing brand portfolio, combined with our pending merger with
KushCo, has positioned our business to be the leader in the
ancillary cannabis space and to build strong, long-term value for
both our customers, partners, employees, and shareholders."
Financial Summary
|
|
Three Months Ended June 30, |
% |
|
|
|
|
|
|
2021 |
|
|
|
|
2020 |
|
|
Change |
|
|
|
Net Sales |
|
$ |
34,715 |
|
|
|
$ |
32,400 |
|
|
7.1 |
|
% |
|
Core (non-nicotine) Sales |
|
$ |
34,463 |
|
|
|
$ |
29,984 |
|
|
14.9 |
|
% |
|
% of Net Sales |
|
|
99.3 |
|
% |
|
|
92.5 |
|
% |
|
|
|
|
Greenlane Branded Sales |
|
$ |
8,981 |
|
|
|
$ |
5,528 |
|
|
62.5 |
|
% |
|
% of Net Sales |
|
|
25.9 |
|
% |
|
|
17.1 |
|
% |
|
|
|
|
Non-Greenlane Brands |
|
$ |
25,482 |
|
|
|
$ |
24,456 |
|
|
4.2 |
|
% |
|
% of Net Sales |
|
|
73.4 |
|
% |
|
|
75.5 |
|
% |
|
|
|
|
Non-Core Sales |
|
$ |
252 |
|
|
|
$ |
2,416 |
|
|
(89.6 |
) |
% |
|
% of Net Sales |
|
|
0.7 |
|
% |
|
|
7.5 |
|
% |
|
|
|
|
Cost of Sales |
|
$ |
26,944 |
|
|
|
$ |
25,583 |
|
|
5.3 |
|
% |
|
Gross Profit |
|
$ |
7,771 |
|
|
|
$ |
6,817 |
|
|
14.0 |
|
% |
|
Gross Margin |
|
|
22.4 |
|
% |
|
|
21.0 |
|
% |
|
|
|
|
Salaries, Benefits &
Payroll Taxes |
|
$ |
5,596 |
|
|
|
$ |
6,121 |
|
|
(8.6 |
) |
% |
|
% of Net Sales |
|
|
16.1 |
|
% |
|
|
18.9 |
|
% |
|
|
|
|
General and
Administrative |
|
$ |
7,116 |
|
|
|
$ |
6,426 |
|
|
10.7 |
|
% |
|
% of Net Sales |
|
|
20.5 |
|
% |
|
|
19.8 |
|
% |
|
|
|
|
Net Loss |
|
$ |
(5,840 |
) |
|
|
$ |
(6,312 |
) |
|
7.5 |
|
% |
|
Adjusted Net Loss |
|
$ |
(4,219 |
) |
|
|
$ |
(5,121 |
) |
|
17.6 |
|
% |
|
Adjusted EBITDA |
|
$ |
(3,693 |
) |
|
|
$ |
(4,277 |
) |
|
13.7 |
|
% |
|
Cash |
|
$ |
11,632 |
|
|
|
$ |
30,435 |
|
|
(72.2 |
) |
% |
|
Net sales were $34.7 million in Q2 2021,
compared to $32.4 million in Q2 2020, an increase of $2.3 million,
or 7.1%. As the Company continues to focus on core (non-nicotine)
sales and higher-margin products, including Greenlane Brands, Q2
2021 net sales included negligible nicotine revenue compared to the
prior year period.
Gross profit was $7.8 million, or 22.4% of net
sales in Q2 2021, compared to $6.8 million, or 21.0% of net sales
in Q2 2020. While merchandise margin increased by 2.3% and resulted
in a $0.8 million or 7.4% increase in merchandise gross profit, the
improvements were slightly offset by a $0.9 million increase in
inventory adjustments and a $0.5 million increase in customs duties
and fees.
Cash totaled $11.6 million as of June 30, 2021.
As of June 30, 2021, working capital was $36.4 million, compared to
working capital of $54.2 million, as of December 31, 2020.
|
|
Three Months Ended June 30, |
|
% |
|
|
|
|
|
|
2021 |
|
|
2020 |
|
Change |
|
|
|
United States - Net Sales |
|
$ |
30,590 |
|
$ |
26,368 |
|
16.0 |
|
% |
|
Core Revenue |
|
$ |
30,345 |
|
$ |
25,120 |
|
20.8 |
|
% |
|
Non-Core Revenue |
|
$ |
246 |
|
$ |
1,248 |
|
(80.3 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada - Net Sales |
|
$ |
1,342 |
|
$ |
3,510 |
|
(61.8 |
) |
% |
|
Core Revenue |
|
$ |
1,336 |
|
$ |
2,342 |
|
(42.9 |
) |
% |
|
Non-Core Revenue |
|
$ |
6 |
|
$ |
1,168 |
|
(99.5 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe - Net Sales |
|
$ |
2,585 |
|
$ |
2,522 |
|
2.5 |
|
% |
|
Core Revenue |
|
$ |
2,585 |
|
$ |
2,522 |
|
2.5 |
|
% |
|
Non-Core Revenue |
|
$ |
— |
|
$ |
— |
|
n.a. |
|
Net sales for our United States reporting
segment increased $4.3 million, or 16.4%, to $30.7 million in Q2
2021, compared to approximately $26.4 million in the same period in
2020. Net Sales for our Canadian reporting segment decreased to
approximately $1.4 million for Q2 2021 compared to approximately
$3.5 million in the same period in 2020, primarily due to a
decrease of $1.1 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 remained flat at $2.6
million for Q2 2021, primarily due to the third-party website
sales, which resulted in $0.4 million of additional net sales and a
$0.2 million growth in B2B net sales, which offset a $0.6 million
decrease in E-Commerce sales.
Conference Call Information
Greenlane will host a conference call Tuesday,
August 17th, 2021, to discuss these results. Aaron LoCascio, Chief
Executive Officer, will host the call starting at 8:30 a.m. Eastern
Time.
Date: |
Tuesday, August 17th, 2021 |
Time: |
8:30 a.m. Eastern Time |
Dial-In Number: |
(833) 519-1285 |
Conference ID: |
2317189 |
Webcast: |
Click here to access |
Replay: |
(855) 859-2056 or (404)
537-3406 |
|
Available until 11:30 PM
Eastern Time on August 31st, 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 June 30, 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 June 30, 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 June 30, |
(in thousands) |
|
2021 |
|
|
|
2020 |
|
Net loss |
$ |
(5,840 |
) |
|
$ |
(6,312 |
) |
EU VAT indemnification
allowance adjustment [1] |
|
(1,071 |
) |
|
|
— |
|
System implementation and
website-development expenses [3] |
|
723 |
|
|
|
44 |
|
Restructuring expenses
[4] |
|
— |
|
|
|
256 |
|
Equity-based compensation
expense |
|
421 |
|
|
|
891 |
|
Legal and professional fees
related to M&A transactions [5] |
|
1,548 |
|
|
|
— |
|
Adjusted net
loss |
$ |
(4,219 |
) |
|
$ |
(5,121 |
) |
The reconciliation of our Net Loss to Adjusted
EBITDA for each of the periods indicated is as follows:
|
Three Months Ended June 30, |
(in thousands) |
|
2021 |
|
|
|
2020 |
|
Net loss |
$ |
(5,840 |
) |
|
$ |
(6,312 |
) |
EU VAT indemnification
allowance adjustment [1] |
|
(1,071 |
) |
|
|
— |
|
Other (expense) income, net
[2] |
|
(253 |
) |
|
|
(186 |
) |
Provision for income
taxes |
|
4 |
|
|
|
8 |
|
Interest expense |
|
133 |
|
|
|
110 |
|
System implementation and
website-development expenses [3] |
|
723 |
|
|
|
44 |
|
Restructuring expenses
[4] |
|
— |
|
|
|
256 |
|
Equity-based compensation
expense |
|
421 |
|
|
|
891 |
|
Depreciation and
amortization |
|
642 |
|
|
|
650 |
|
Legal and professional fees
related to M&A transactions [5] |
|
1,548 |
|
|
|
— |
|
One-time early termination fee
on operating lease in connection with moving to a centralized
distribution center model |
|
— |
|
|
|
262 |
|
Adjusted
EBITDA |
$ |
(3,693 |
) |
|
$ |
(4,277 |
) |
(1) |
Adjustment to reserve allowance for indemnification receivable from
ARI's sellers primarily due to decrease of outstanding payable
resulting from lower-than-expected interest and penalties. |
(2) |
Includes rental and interest
income and other miscellaneous income. |
(3) |
Includes non-recurring expenses
related to multiple software implementations, including the ERP
implementation; along with non-recurring website development
expenses. |
(4) |
Severance related to European
reduction in force related and one-time termination fee for Visalia
lease. |
(5) |
Non-recurring M&A legal and
other professional services costs relating to the KushCo
merger. |
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