Greenlane(US:GNLN)2021-05-18 18:18Financial Data and Key Metrics Changes - Core revenue increased by 11.6% to $32.3 million in Q1 2021 from $28.9 million in Q1 2020, accounting for 95% of total revenue [7][26] - Revenue from Greenlane owned brands rose by 18.4% to a record $8.5 million in Q1 2021 from $7.2 million in Q1 2020, representing 25% of total revenue [7][9] - Net loss for Q1 was $7.7 million, a significant improvement from $16.7 million in Q1 2020, with adjusted net loss at $5.5 million compared to $6.1 million in Q1 2020 [34] Business Line Data and Key Metrics Changes - VIBES brand revenue reached $2.7 million in Q1 2021, up 72.7% from Q1 2020, while Marley Natural line grew by 222.4% [8][9] - Eyce, acquired in early March, reported a revenue increase of 52.6% in Q1 2021 compared to Q1 2020 [11] Market Data and Key Metrics Changes - U.S. segment net sales increased by 5.7% to $28.7 million in Q1 2021 from $27.1 million in Q1 2020, driven by increases in B2B and e-commerce sales [27] - Canadian segment net sales decreased by $1.8 million, primarily due to a strategic shift away from low-margin sales [28] - European segment net sales grew by 18.5% to $2.8 million in Q1 2021, attributed to third-party website sales and B2B growth [29] Company Strategy and Development Direction - The company aims to enhance its position as a leading provider of cannabis consumption products globally, focusing on launching new consumer products and pursuing M&A opportunities [10][18] - The merger with KushCo is expected to enhance scale and create significant synergies, with anticipated revenue growth between $310 million and $330 million for the combined entity [22][24] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory, citing strong organic growth in Greenlane Brands and a robust M&A pipeline [36] - The company is adapting to industry changes, including increased regulations on vaping products, leveraging its compliance infrastructure to maintain revenue streams [14][15] Other Important Information - Gross profit for Q1 was $7.3 million, representing 21.5% of net sales, with merchandise margin improvements offset by increased inventory write-offs [30][31] - Cash balance decreased to $12.3 million as of March 31, 2021, primarily due to vendor payments and acquisition costs [34][35] Q&A Session Summary Question: Impact of Eyce on House Brands Revenue - Management indicated that Eyce contributed to the growth but did not disclose specific revenue figures, noting a 56% increase compared to the previous period [40] Question: Future Growth of House Brands - Management anticipates continued organic growth in house brands, aiming for a 40% mix level over the next three years [43] Question: Cross-Selling Opportunities Post-Merger - Early interest from major MSOs in cross-selling opportunities was noted, indicating positive feedback on retail merchandising programs [45] Question: Incremental Stores in C-store Channel - Management has not set specific targets for additional stores but is ramping up production capabilities for VIBES due to strong early interest [52] Question: Logistics and Freight Costs Impact on Margins - Logistics costs had a minor impact on gross margins, with higher shipping costs noted globally [64] Question: Changes in Consumer Purchasing Behavior - E-commerce growth has leveled off, but year-over-year growth continues as brick-and-mortar sales increase [71] Question: Canadian Market Strategy - Canada remains important, but the focus is shifting away from low-margin sales due to COVID-19 impacts on brick-and-mortar stores [88]