Greenlane(US:GNLN)2021-08-17 16:29Financial Data and Key Metrics Changes - Core revenue increased by 14.9% to $34.5 million in Q2 2021 from $30 million in Q2 2020, accounting for 99% of total revenue [7][18] - Net sales of Greenlane-owned brands grew by 62.5% to $9 million, representing 25.9% of total net sales, up from 17.1% in Q2 2020 [7][18] - Total net sales rose to $34.7 million in Q2 2021 from $32.4 million in Q2 2020 [18] - Gross profit was $7.8 million, or 22.4% of net sales, compared to $6.8 million, or 21% of net sales in Q2 2020 [23] - Net loss for Q2 2021 was $5.8 million, an improvement from $6.3 million in Q2 2020 [25] Business Line Data and Key Metrics Changes - Greenlane-owned brands revenue accounted for 25.9% of total revenue, marking a significant increase [8][18] - Eyce brand saw an 85% year-over-year growth, while Pollen Gear grew by 35% [32] Market Data and Key Metrics Changes - U.S. segment net sales increased by 16.4% to $30.7 million in Q2 2021 from $26.4 million in Q2 2020, driven by B2B sales growth [19][20] - Canadian segment sales decreased by $2.1 million to $3.5 million due to a strategic shift away from low-margin sales [21] - European segment sales remained flat at $2.6 million, with growth potential anticipated in the latter half of the year [22] Company Strategy and Development Direction - The company is focused on launching new consumer products, expanding through M&A opportunities, and enhancing its position in the cannabis consumption products market [9][12] - The merger with KushCo is expected to create a best-in-class product portfolio and enhance cross-selling opportunities [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth in core and branded revenue, particularly in the U.S. market [44] - The company is monitoring operational supply chain challenges, particularly related to logistics from China [46] - Management expects continued improvements in gross margins as strategic initiatives are executed [23][25] Other Important Information - The company completed a $32 million direct offering to support strategic initiatives and the merger with KushCo [25][68] - The transition to third-party logistics is ongoing, with expectations for improved gross margins as a result [47][56] Q&A Session Summary Question: Performance of other Greenlane brands - Eyce brand grew by 85% year-over-year, while Pollen Gear increased by 35% [32] Question: Initiatives for dispensary placements - The company is leveraging both inside and outside sales teams to establish relationships with new and existing dispensaries [34] Question: Revenue trends and MSO partners - The company did not observe a deceleration in growth within smoke shops, maintaining about 20% year-over-year growth in the U.S. [45] Question: Impact of third-party logistics on gross margin - Improvements in gross margin are expected as the optimization of third-party logistics continues [47] Question: Future gross margin expectations - The company aims for a gross margin of around 35% on a standalone basis, with current margins in the low to mid-20s [59] Question: Update on Canadian market recovery - The company is shifting away from nicotine sales and expects to build the non-nicotine component of Canadian sales [66] Question: Rationale behind recent capital raise - The capital raise is intended to cover expenses related to the merger with KushCo and support working capital needs [68]