Greenlane Reports Record Core Business Revenue in Q3 2020
Greenlane Holdings reported Q3 2020 financial results, showing core revenue growth of 36% to $32.3 million compared to Q3 2019. Greenlane Brands grew 65% to $5.6 million. Total revenue rose 10% sequentially to $35.8 million. The company implemented G&A cuts, targeting annual savings of $5 million. Cash reserves stand at $40 million. Despite a net loss of $13.8 million, adjusted net loss improved to $6.9 million. Greenlane is focused on transitioning to high-margin products and anticipates a return to profitability in early 2021.
- Core revenue grew 36% to $32.3 million year-over-year.
- Sales of Greenlane Brands increased 65% to $5.6 million compared to Q3 2019.
- Achieved total revenue growth of 10% sequentially from Q2 2020.
- Implemented G&A expense reductions expected to save $5 million annually.
- Strong balance sheet with $40 million in cash for expansion.
- Net sales decreased 20.3% from $44.9 million in Q3 2019 to $35.8 million.
- Gross profit fell to 6.9% of net sales from 14.3%% in Q3 2019.
- Reported a net loss of $13.8 million, up from $9 million in Q3 2019.
- Adjusted EBITDA loss increased to $6.3 million compared to $3.4 million in Q3 2019.
Core Revenue Expands
Sales of Greenlane Brands Grew Approximately
Implements Further G&A Expense Reductions to Achieve Annualized Savings of Approximately
Strong Balance Sheet Includes
BOCA RATON, Fla., Nov. 16, 2020 (GLOBE NEWSWIRE) -- Greenlane Holdings, Inc. (“Greenlane” or "the Company”) (Nasdaq: GNLN), one of the largest global sellers of premium cannabis accessories and specialty vaporization products, today reported financial results for the third quarter ended September 30, 2020.
Third Quarter 2020 Highlights
- Net sales of the Company's Greenlane Brands grew approximately
65% to$5.6 million in Q3 2020 compared to$3.4 million in Q3 2019; - Core revenue (defined as non-nicotine revenue) grew
36% to$32.3 million in Q3 2020, compared to$23.8 million in Q3 2019; - Total revenue grew
10% to approximately$35.8 million in Q3 2020 compared to$32.4 million in Q2 2020; - Excluding the impact of certain inventory adjustments which incurred in the quarter, gross profit would have been
$7.3 million or20.4% of net sales, a 610 basis point year over year improvement in gross profit percentage as compared to Q3 2019; - Expanded management team through key hires to support Greenlane sales and marketing efforts in North America and Europe;
- Launched a first-of-its-kind line of responsibly sourced, precision-manufactured, pre-rolled cones made from organically-sourced paper exclusively processed in France and sealed with
100% natural Arabic gum; - Obtained the exclusive right to expand the availability of Marley Naturals Accessories to specialty locations in Europe, Central and South America, and the Caribbean;
Management Commentary
“During the third quarter, with the help of our new senior leadership team, we acted on several key initiatives related to our go forward category emphasis, organizational structure, and related staffing levels. Building on the success we've achieved in growing Greenlane brands and non-nicotine sales year over year by
Mr. LoCascio added, "We are building a comprehensive suite of high-quality, Greenlane branded products which will enable us to capture more of the margin on each product we sell. At the same time, we continue to work very closely with our brand partners to launch innovative new products into the market leveraging our best-in-class global distribution platform. I remain very encouraged that we are on track to enter 2021 on a solid footing, returning to positive adjusted EBITDA in the first quarter as a result of the changes we have implemented.”
Q3 2020 Financial Summary
Net sales were
Sales of nicotine products decreased to approximately
Net sales of Greenlane branded products grew to approximately
As of the fourth quarter of 2020, Greenlane has fully transitioned to a more streamlined and centralized model with fewer, but larger, highly automated distribution facilities. We believe these changes will greatly improve the scalability of the Company's business model.
In Q3 2020, gross profit was
Salaries, benefits, and payroll taxes in Q3 2020 decreased approximately
Q3 2020 net loss was
Cash was
Conference Call Information
Greenlane will host a conference call Tuesday, November 17, 2020, to discuss these results. Aaron LoCascio, Chief Executive Officer, will host the call starting at 8:30 a.m. Eastern time. A question and answer session will follow management's presentation.
Date: | Tuesday, November 17, 2020 |
Time: | 8:30 a.m. Eastern Time |
Dial-In Number: | (833) 519-1285 |
Conference ID: | 9693218 |
Webcast: | https://edge.media-server.com/mmc/p/crczypsj |
Replay: | (855) 859-2056 or (404) 537-3406 |
Available until 11:30 p.m. Eastern Time Thursday, November 26th, 2020 |
About Greenlane Holdings, Inc.
Greenlane (NASDAQ: GNLN) is the leading global platform for the development and distribution of premium cannabis accessories and lifestyle products. The company operates as a powerful house of brands, third-party brand accelerator, and omni-channel distribution platform. Greenlane serves the global markets with an expansive customer base of more than 7,000 retail locations, including licensed cannabis businesses, smoke shops, and specialty retailers. As a pioneer in the cannabis space, Greenlane is the partner of choice for many of the industry’s leading brands, including PAX Labs, Storz & Bickel (Canopy-owned), Cookies, Grenco Science, and DaVinci. Greenlane also proudly owns and operates a diverse brand portfolio including packaging innovator Pollen Gear™, the K.Haring Glass Collection by Higher Standards, Marley Natural™, and VIBES™ rolling papers. Higher Standards, Greenlane’s flagship brand, offers both a high-end product line and immersive retail experience with groundbreaking stores in both New York City’s Chelsea Market and Malibu, California. Greenlane also owns and operates both Vapor.com and VapoShop.com, two industry-leading, direct-to-consumer e-commerce platforms in North America and Europe respectively. For additional information, please visit: https://gnln.com/.
Presentation of Financial Information
This press release includes historical consolidated results for the periods presented of Greenlane Holdings, LLC, the predecessor of Greenlane Holdings, Inc., for financial reporting purposes. Accordingly, the consolidated financial statements for periods prior to the completion of the IPO on April 23, 2019 have been adjusted to combine the previously separate entities for presentation purposes. Amounts for the period from January 1, 2019 through April 22, 2019 represent the historical operations of Greenlane Holdings, LLC. The amounts for the period from April 23, 2019 through September 30, 2019, and from January 1, 2020 through September 30, 2020 reflect the consolidated operations of Greenlane Holdings, Inc.
Use of Non-GAAP Financial Measures
Greenlane discloses Adjusted Net Loss and Adjusted EBITDA, which are non-GAAP financial measures, because management believes these metrics assist investors and analysts in assessing the Company’s overall operating performance and evaluating how well Greenlane is executing its business strategies. You should not consider Adjusted Net Loss or Adjusted EBITDA as alternatives to net loss determined in accordance with GAAP as indicators of Greenlane’s operating performance. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Accordingly, you should not view Adjusted Net Loss or Adjusted EBITDA in isolation or as a substitute, or superior to, financial information prepared and presented in accordance with GAAP. Furthermore, these non-GAAP measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.
Adjusted Net Loss and Adjusted EBITDA have limitations as an analytical tool. Some of these limitations are:
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;
- Adjusted EBITDA does not include interest expense, which has been a necessary element of the Company's costs;
- Adjusted EBITDA does not reflect income tax payments we may be required to make;
- Adjusted EBITDA and Adjusted Net Loss do not reflect equity-based compensation;
- Adjusted EBITDA and Adjusted Net Loss do not reflect transaction and other costs which are generally incremental costs that result from an actual or planned transaction;
- Other companies, including companies in Greenlane's industry, may calculate adjusted EBITDA and adjusted net loss differently, which reduces its usefulness as a comparative measure.
For more information on Greenlane's non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial measures, please see the "Reconciliation of GAAP to Non-GAAP Financial Measures" table in this press release.
Forward Looking Statements
Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statements. These forward-looking statements include, among others: comments relating to the current and future performance of the Company’s business; the impact of the ongoing COVID-19 pandemic on the Company's business; growth in demand for the Company’s products; growth in the market for cannabis and nicotine; the Company’s marketing and commercialization efforts; and the Company’s financial outlook and expectations. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2019 and the Company's other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Additional information is also set forth in Greenlane's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to Greenlane on the date hereof. Greenlane undertakes no duty to update this information unless required by law.
Media Contact
MATTIO Communications
Greenlane@mattio.com
Investor Contact:
Rob Kelly
Investor Relations, MATTIO Communications
Greenlane@mattio.com
1-416-992-4539
GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value per share amounts)
September 30, 2020 | December 31, 2019 | ||||||||
Assets | (Unaudited) | ||||||||
Current assets | |||||||||
Cash | $ | 39,993 | $ | 47,773 | |||||
Accounts receivable, net of allowance of | 6,438 | 8,091 | |||||||
Inventories, net | 36,919 | 43,060 | |||||||
Vendor deposits | 8,775 | 11,120 | |||||||
Assets held for sale | 1,177 | — | |||||||
Other current assets | 8,924 | 4,924 | |||||||
Total current assets | 102,226 | 114,968 | |||||||
Property and equipment, net | 12,392 | 13,165 | |||||||
Intangible assets, net | 5,930 | 6,301 | |||||||
Goodwill | 3,128 | 11,982 | |||||||
Operating lease right-of-use assets | 3,085 | 4,695 | |||||||
Other assets | 2,053 | 2,091 | |||||||
Total assets | $ | 128,814 | $ | 153,202 | |||||
Liabilities and stockholders' equity | |||||||||
Current liabilities | |||||||||
Accounts payable | $ | 17,963 | $ | 11,310 | |||||
Accrued expenses and other current liabilities | 15,956 | 10,600 | |||||||
Customer deposits | 2,593 | 3,152 | |||||||
Current portion of operating leases | 725 | 1,084 | |||||||
Current portion of finance leases | 208 | 116 | |||||||
Total current liabilities | 37,445 | 26,262 | |||||||
Notes payable, less current portion and debt issuance costs, net | 7,886 | 8,018 | |||||||
Operating leases, less current portion | 2,708 | 3,844 | |||||||
Finance leases, less current portion | 277 | 194 | |||||||
Other liabilities | 1,038 | 620 | |||||||
Total long-term liabilities | 11,909 | 12,676 | |||||||
Total liabilities | 49,354 | 38,938 | |||||||
Commitments and contingencies | |||||||||
Stockholders’ Equity | |||||||||
Preferred stock, | — | — | |||||||
Class A common stock, | 131 | 98 | |||||||
Class B common stock, | 1 | 1 | |||||||
Class C Common stock, | 8 | 8 | |||||||
Additional paid-in capital | 39,194 | 32,108 | |||||||
Accumulated deficit | (20,732 | ) | (9,727 | ) | |||||
Accumulated other comprehensive loss | (154 | ) | (72 | ) | |||||
Total stockholders’ equity attributable to Greenlane Holdings, Inc. | 18,448 | 22,416 | |||||||
Non-controlling interest | 61,012 | 91,848 | |||||||
Total stockholders’ equity | 79,460 | 114,264 | |||||||
Total liabilities and stockholders’ equity | $ | 128,814 | $ | 153,202 |
GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Net sales | $ | 35,764 | $ | 44,886 | $ | 102,032 | $ | 147,770 | |||||||||||
Cost of sales | 33,297 | 38,448 | 85,419 | 123,194 | |||||||||||||||
Gross profit | 2,467 | 6,438 | 16,613 | 24,576 | |||||||||||||||
Operating expenses: | |||||||||||||||||||
Salaries, benefits and payroll taxes | 5,010 | 6,562 | 17,745 | 21,673 | |||||||||||||||
General and administrative | 10,673 | 4,751 | 25,758 | 15,549 | |||||||||||||||
Goodwill impairment charge | — | — | 8,996 | — | |||||||||||||||
Depreciation and amortization | 599 | 650 | 1,959 | 1,980 | |||||||||||||||
Total operating expenses | 16,282 | 11,963 | 54,458 | 39,202 | |||||||||||||||
Loss from operations | (13,815 | ) | (5,525 | ) | (37,845 | ) | (14,626 | ) | |||||||||||
Other income (expense), net: | |||||||||||||||||||
Change in fair value of convertible notes | — | — | — | (12,063 | ) | ||||||||||||||
Interest expense | (115 | ) | (119 | ) | (335 | ) | (862 | ) | |||||||||||
Other income, net | 357 | 7,746 | 1,483 | 8,670 | |||||||||||||||
Total other income (expense), net | 242 | 7,627 | 1,148 | (4,255 | ) | ||||||||||||||
(Loss) income before income taxes | (13,573 | ) | 2,102 | (36,697 | ) | (18,881 | ) | ||||||||||||
Provision for income taxes | 220 | 11,063 | 147 | 10,966 | |||||||||||||||
Net loss | (13,793 | ) | (8,961 | ) | (36,844 | ) | (29,847 | ) | |||||||||||
Less: Net loss attributable to non-controlling interest | (9,300 | ) | (2,563 | ) | (25,839 | ) | (4,016 | ) | |||||||||||
Net loss attributable to Greenlane Holdings, Inc. | $ |
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FAQ
What were Greenlane Holdings' Q3 2020 revenue figures?
Greenlane reported total revenue of approximately $35.8 million for Q3 2020.
How much did Greenlane Brands sales increase in Q3 2020?
Sales of Greenlane Brands increased by approximately 65% to $5.6 million compared to Q3 2019.
What was the core revenue growth rate for Greenlane in Q3 2020?
Core revenue grew by 36% to $32.3 million in Q3 2020 compared to Q3 2019.
How did Greenlane's net loss change in Q3 2020?
Greenlane reported a net loss of $13.8 million in Q3 2020, compared to $9 million in Q3 2019.
What strategic actions is Greenlane taking regarding its product lines?
Greenlane is focusing on higher-margin products and has moved away from low-margin nicotine sales.
Greenlane Holdings, Inc.
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