Greenlane(US:GNLN)2023-04-03 23:41Financial Data and Key Metrics Changes - For the year ending December 31, 2022, total net sales were approximately $137.1 million, a decrease of $29 million or 17.4% compared to approximately $166.1 million for the previous year [35] - Gross profit was $24.9 million, down from $33.8 million, representing a decrease of $8.8 million or 26.1% due to declining revenue [16] - Net loss for fiscal year 2022 was $125.9 million, including a $71.4 million intangible asset impairment charge, compared to a loss of $53.4 million for the prior year [17] - Adjusted EBITDA for fiscal year 2022 was a loss of $31.8 million, compared to a loss of $22.3 million for the prior fiscal year [65] Business Line Data and Key Metrics Changes - The Consumer Goods segment saw a revenue decrease of $62 million or 56.3%, while the Industrial segment increased by $33 million or 59% due to contributions from the merger with KushCo [35] - SG&A expenses increased by $66.2 million or 76.5% for fiscal year 2022, totaling $152.7 million compared to $86.5 million for the prior fiscal year [36] - The company reported a gross margin of 26.7% for the three months ending December 31, 2022 [36] Market Data and Key Metrics Changes - The company ended the year with $40.6 million in net inventories, down from $67 million as of December 31, 2021 [37] - The gross margin decreased by 2.1% to 18.2% for the year ended December 31, 2022, compared to 20.4% for the same period in 2021 [64] Company Strategy and Development Direction - The company is engaged in a strategic shift to a higher margin, less capital-intensive business model aimed at profitability and sustainability [24] - A focus on enhancing and growing its position as a product innovator and disruptor in the segment is emphasized [53] - The company plans to reduce SG&A by another 40% from Q4 2022 to Q4 2023 through continued cost-cutting measures [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the transformative efforts in 2022 beginning to positively impact 2023 financial results, with expectations of 5% to 10% revenue growth in Q1 [18][45] - The company anticipates gross margins to grow throughout the year, with Q1 expected at 24.5% and Q4 at 34.3%, leading to an aggregate of about 30.1% for the year [20] - Management acknowledged operational issues impacting revenue during the first half of the year related to new ERP and B2B systems [49] Other Important Information - The company reduced headcount by 49% throughout 2022, from 308 employees to 157 [12] - A non-dilutive capital of $4.8 million was received in Q1 from the sale of ERC Credits, which helped reduce total debt by 40% [11] - The company launched 13 products under the Groove brand, with plans for an additional 20 products in 2023 [38] Q&A Session Summary Question: Can you discuss the gross margin expectations related to the EBITDA target for Q4 2023? - Management indicated that gross margins are expected to improve as higher margin CPG products are shifted into focus [67] Question: What initiatives are in place for expanded channel distribution? - The company is focusing on mid-tier operators and small dispensary groups, aligning resources to meet their needs, and is seeing positive results early in 2023 [69]