cbdMD(YCBD) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the first quarter of fiscal 2026, net sales totaled $5 million, a 12% sequential increase from the fourth quarter of fiscal 2025, but a slight decrease from $5.1 million in the prior year period [12] - Gross margin decreased to 60% from 66% in the prior year, primarily due to increased warehouse expenses and a shift in revenue mix towards wholesale [12] - Net loss attributable to common shareholders improved to approximately $325,000, or $0.04 per share, compared to a net loss of approximately $1 million, or $1.73 per share in the prior year quarter [13] Business Line Data and Key Metrics Changes - Direct-to-consumer sales represented approximately 72% of total revenue, while wholesale business accounted for 28% of revenue, showing a year-over-year growth of 17% [5] - The wholesale growth reflects improved execution in the core cbdMD brand and ongoing progress with the beverage brand, Oasis [5] Market Data and Key Metrics Changes - The company reported three consecutive quarters of sequential revenue growth, indicating positive trends in the business despite a challenging regulatory environment [4] - December 2025 and January 2026 marked the highest monthly revenue levels since 2022, suggesting a recovery in core business performance [4] Company Strategy and Development Direction - The company is focused on reducing fixed costs, simplifying operations, and strengthening the balance sheet to position for regulated growth [5] - The acquisition of Bluebird Botanicals is seen as strategically important, adding incremental revenue and a loyal customer base, while also enhancing regulatory and scientific positioning [7][8] - The company aims to maintain separate brand identities for Bluebird and cbdMD to cater to different customer bases [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term runway supported by a strong cash position and the incremental benefits from the Bluebird acquisition [15] - The regulatory environment remains uncertain, but recent bipartisan efforts to revisit restrictive hemp legislation are viewed positively [10] - The company is focused on generating positive EBITDA and managing cash carefully to support sustainable operating results [14] Other Important Information - The company completed approximately $2.25 million in Series C Preferred financing, strengthening liquidity and working capital [9] - As of December 31, 2025, cash and cash equivalents increased to approximately $3.4 million, reflecting improved liquidity [14] Q&A Session Summary Question: Insights on the integration of Bluebird Botanicals - Management indicated that they have brought over some team members from Bluebird and see opportunities for growth by leveraging their expertise and improving marketing activities [19] Question: Plans for integrating e-commerce capabilities - The company intends to maintain Bluebird as a separate brand due to differences in customer bases, allowing for continued growth [22] Question: Contribution of the Oasis line of seltzers to sales - While Oasis is starting to contribute, it remains small relative to the overall size of the core cbdMD brand, with expectations for improvement throughout the year [24]