cbdMD(YCBD) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total net sales for Q1 fiscal 2025 were $5.1 million, a 12$3.4 million from $4.6 million in the prior year [13] - The company achieved positive net income of$15,000 compared to a loss of $977,000 in Q1 fiscal 2024 [14] - Non-GAAP adjusted EBITDA was$214,000, a significant improvement from a loss of $698,000 in the prior year [14] Business Line Data and Key Metrics Changes - E-commerce direct-to-consumer sales were$3.9 million, a 10% year-over-year decrease, representing 77% of total net sales [12] - Wholesale business generated $1.1 million in net sales, up 22$950,000 in the prior year [12] Market Data and Key Metrics Changes - The beverage market is identified as the fastest-growing category within the CBD and hemp sectors, with significant growth observed in 2024 and continuing into 2025 [50][52] Company Strategy and Development Direction - The company is focused on achieving profitability and resolving capital structure challenges, with a clear roadmap for sustainable profitability [11][19] - New product launches, particularly in the Oasis social tonic line, are expected to drive future revenue growth [9][10] - The company is committed to enhancing its customer experience and optimizing its business operations [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's financial progress and the potential for future growth, emphasizing the importance of addressing capital structure to unlock shareholder value [19][25] - The company has transformed into a leaner organization focused on long-term success despite challenges in the hemp and CBD industry [26] Other Important Information - The company is now debt-free, excluding ordinary course liabilities and accrued dividends, which allows for better cash management [17] - A proposal for a conversion ratio of one to thirteen for Series A preferred stock is aimed at improving capital structure and regaining compliance with NYSE standards [23][24] Q&A Session Summary Question: Progress on Oasis Social Tonics - Management noted that the product has been well-received, though wholesale distribution is slower than expected due to legal document iterations [33] Question: DTC Margins for Oasis - DTC margins for Oasis are tighter than other products, but the channel remains viable with potential for profitable growth [36] Question: Revenue from Oasis in December Quarter - Some revenue was booked in the December quarter, but it was limited due to the short time frame [38] Question: Total Shares Outstanding Post-Conversion - Total shares outstanding as of February post-conversion are just over 6.2 million [41] Question: Liquidity Runway - Management maintains a positive outlook on liquidity, expecting to operate a positive EBITDA business [42][43] Question: Future Working Capital Needs - Management anticipates more normal working capital relationships in upcoming quarters [44]