Company Closes Transformational Merger with KushCo, Creating the Industry’s Leading Ancillary Cannabis Company and House of Brands
Revenue up 16% Year-over-Year; Greenlane Brands Revenue up 26% Year-over-Year
Company Targets $70 Million and $100 Million of Greenlane Brands Revenue for 2022 and 2023, Respectively, with Gross Margins of 45%+
Greenlane Holdings, Inc. (“Greenlane” or “the Company”) (Nasdaq:GNLN), one of the largest global sellers of premium cannabis accessories, child-resistant packaging, and specialty vaporization products, today reported financial results for the third quarter ended September 30, 2021 (“Q3 2021”).
- Total revenue increased 16% to $41.3 million for Q3 2021, compared to $35.8 million for Q3 2020
- Achieved second-highest sales level in Company history for Greenlane Brands, which grew to $8.4 million in Q3 2021, up 26% compared to $6.7 million in sales for Q3 2020;
- Greenlane Brands accounted for 20.4% of Q3 2021 total revenue compared with 18.7% of total revenue for Q3 2020
- Completed transformative merger with KushCo Holdings Inc. (“KushCo”), creating an undisputed leader in the ancillary cannabis industry
- Entered into agreement to acquire industry leading vaporizer brand DaVinci, expanding Greenlane Brands portfolio and intellectual property pipeline
Nick Kovacevich, CEO of Greenlane Holdings, said: “Q3 was a transformational quarter for Greenlane, with the completion of our merger with KushCo creating the industry’s leading ancillary cannabis company and house of brands. Our first few months as a combined company have been off to a strong start, as demonstrated through several realized revenue and cost saving synergies, including the consolidation of certain vendors and infrastructure and the development of go-to-market cross-selling strategies across each of our respective platforms. We are extremely pleased with the progress we have made on our integration efforts to date, while simultaneously driving meaningful progression in the business. We also generated another strong quarter of sales for our Greenlane Brands, which, despite the normal and expected challenges of closing a merger, still represented the second highest quarterly revenue contribution in Company history.”
Kovacevich continued, “Looking ahead, we will continue to build our portfolio of higher-margin proprietary brands, as seen by our recent announcement to acquire leading high-margin vaporizer brand DaVinci, which expands our Greenlane Brands portfolio, and is expected to strengthen our overall margins and profitability in the near-term. With our enhanced operations, customer base, and product portfolio, we are in a stronger position than ever to execute on our growth strategy and drive significant value for our customers, partners, and shareholders.”
Greenlane Brands Outlook
The Company is targeting to achieve $70 million and $100 million in Greenlane Brands revenue for 2022 and 2023, respectively. In addition, the Company expects Greenlane Brands, as a whole, to generate 45% product margins, and to comprise between 22% and 28% of total revenue in 2022.
|Three Months Ended September 30,||%|
|($ in thousands)||2021||2020||Change|
|Greenlane Branded Sales||8,414||6,696||25.7||%|
|% of Net Sales||20.4||%||18.7||%|
|Cost of Sales||$||41,192||$||33,297||23.7||%|
|Salaries, Benefits & Payroll Taxes||11,192||5,010||123.4||%|
|General and Administrative||15,430||10,673||44.6||%|
|Adjusted Net Loss||(9,156||)||(6,852||)||33.6||%|
Net sales were $41.3 million in Q3 2021, compared to $35.8 million in Q3 2020, an increase of $5.6 million, or 16%.
Adjusted gross profit was $8.8 million, or 21.3% of net sales in Q3 2021, compared to $7.8 million, or 22.4% of net sales in Q2 2021 and $6.8 million, or 19.1% of net sales in Q3 2020 (see notes below regarding “Use of Non-GAAP Financial Measures” and “Adjusted Gross Margin” for further discussion of this and other non-GAAP measures included in this earnings release). A one-time inventory rationalization of $8.7 million was implemented in connection with the closing of the merger with KushCo, resulting in an impact to adjusted gross profit. The inventory rightsizing initiative will allow the Company to reallocate resources to higher-margin, top-performing SKUs and eliminate redundancies between the combined product portfolio of Greenlane and KushCo.
As of September 30, 2021, cash totaled $13.2 million and working capital was $70.8 million in comparison to working capital of $54.2 million as of December 31, 2020.
|Three Months Ended |
|($ in thousands)||2021||2020||Change|
|United States – Net Sales||$||37,501||$||28,984||29.4||%|
|Canada – Net Sales||982||4,447||(77.9||)%|
|Europe – Net Sales||2,831||2,333||21.3||%|
Net sales for our United States reporting segment increased $8.5 million, or 29.4%, to $37.5 million in Q3 2021, compared to approximately $29.0 million in the same period in 2020.
Net sales for our Canadian reporting segment were approximately $1.0 million for Q3 2021 compared to approximately $4.4 million in the same period in 2020, primarily due to an expected decrease in nicotine sales as a result of the Company’s strategic shift away from low-margin nicotine sales.
Net sales for our European reporting segment increased 21.3% to $2.8 million for Q3 2021, primarily due to an increase in B2B and third-party marketplace website sales.
Conference Call Information
Greenlane management will host a scheduled conference call and webcast tomorrow, Tuesday, November 16at 8:30 a.m. Eastern time to discuss the results for its third quarter ended September 30, 2021, followed by a question-and-answer session. The call will be webcast with an accompanying slide deck, which will be accessible by visiting the Financial Results page of Greenlane’s investor relations website.
All interested parties are invited to listen to the live conference call and presentation by dialing the number below or by clicking the webcast link available on the Financial Results page of the Company’s investor relations website.
|DATE:||Tuesday, November 16th, 2021|
|TIME:||8:30 a.m. Eastern Time|
|WEBCAST:||Click to access|
|DIAL-IN NUMBER:||(888) 506-0062 (Toll-Free)(973) 528-0011 (International)|
|REPLAY:||(877) 481-4010 or (919) 882-2331Replay Passcode: 43437Available until November 30th, 2021|
If you have any difficulty connecting with the conference call or webcast, please contact Greenlane’s investor relations at email@example.com or 714-539-7653.