cbdMD Generates $19.1 Million in Year Over Year Reduction in Net Loss Improvement

Rhea-AI Summary

cbdMD (NYSE: YCBD) reported significant financial improvements for fiscal year 2024, reducing its operational loss to $3.3 million, a $19.1 million year-over-year improvement from the $22.9 million loss in 2023. Despite revenue challenges with net sales decreasing 19.1% to $19.5 million, the company maintained a 62% gross profit margin.

Key developments include launching ATRx Labs functional mushrooms, expanding D-9 products into beverages, and eliminating HQ lease obligations for $1.2 million annual savings. The company projects Q1 fiscal 2025 revenues to approach $5 million and aims for positive non-GAAP EBITDA in 2025.

However, cbdMD faces NYSE American compliance challenges, needing to increase its net book value of equity from $2.0 million to at least $4 million by December 2025 to maintain listing.

Positive

• Reduced operational loss by $19.1 million year-over-year
• Maintained 62% gross profit margin
• Eliminated HQ lease for $1.2 million annual savings
• Projects Q1 2025 revenues of $5 million
• Strong cash position of $2.4 million at year-end
• Published positive clinical trial results for CBD products

Negative

• Net sales declined 19.1% to $19.5 million
• Risk of NYSE American delisting if equity requirements not met
• Net book value of equity at $2.0 million, below $4 million requirement
• Direct-to-consumer sales decreased 19.9%
• Going concern warning from auditors

Insights

Financial Analyst

cbdMD's fiscal 2024 results reveal a significant turnaround story, with a $19.1 million reduction in operating losses from $22.9M to $3.3M. The 19.1% revenue decline to $19.5M is concerning, but cost optimization efforts have substantially improved the bottom line. The company maintained a healthy 62% gross margin and reduced non-GAAP EBITDA loss to $1.5M. The strong cash position of $2.4M and working capital of $1.1M provide near-term stability, though the NYSE American compliance requirement of $4M net book value poses a challenge. The projection of $5M revenue for Q1 2025 signals potential recovery, but the going concern note from auditors warrants careful monitoring.

Market Research Analyst

The company's strategic pivot shows promise with the launch of ATRx Labs functional mushrooms and expansion into the beverage category with D-9 products. The direct-to-consumer channel remains dominant at 80.4% of sales, though the $3.9M decline needs addressing. The successful publication of clinical trials in respected journals adds scientific credibility to their products. The $1.2M annual savings from the HQ lease exit demonstrates pragmatic cost management. The conversion of most convertible notes reduces future debt obligations. However, the $4.7M in accrued Series A preferred dividends presents a significant capital structure challenge that needs resolution for sustainable growth.

Finishes the year with a stronger cash position.

Charlotte, North Carolina--(Newsfile Corp. - December 18, 2024) - cbdMD, Inc. (NYSE American: YCBD) (NYSE American: YCBDpA), one of the nation's leading and most highly trusted and recognized CBD companies, and operator of the leading CBD brands cbdMD and Paw CBD, along with its new functional mushroom brand ATRx Labs today announced our financial results for the full fiscal year ended September 30, 2024.

For Fiscal 2024, we continued to make strong progress on our turnaround. The Company incurred a loss from operations of only $3.3 million, or a $19.1 million year-over-year improvement from the $22.9 million loss in the prior year. This is the second consecutive year of strong financial and operational improvements, accomplished despite revenue challenges.

"We made tremendous strides in strengthening our operational foundation and moving closer to our goal of profitability," said Ronan Kennedy, CEO and CFO of cbdMD. "While the fourth quarter presented temporary revenue headwinds, for the fiscal year we successfully executed key initiatives to lower our operating costs, including the elimination and settlement of our headquarter (HQ) lease obligations, and strengthening our cash position through disciplined working capital management and outside investment. With revenues rebounding, we project Q1 fiscal 2025 revenues to approach $5 million, putting us back on track to accelerate our growth trajectory."

Kennedy continued: "We are laser-focused on delivering positive non-GAAP EBITDA in fiscal 2025. Our operational advancements in 2024 have provided a more stable and scalable platform, and we've entered 2025 with a strong cash position, improved marketing metrics, and exciting new products driving consumer engagement. Notably, the launch of our Herbal Oasis functional beverage in November has been met with enthusiastic early feedback."

As part of its growth strategy, the company remains committed to addressing its equity capital structure to unlock additional shareholder value and ensure compliance with NYSE American standards.

Kennedy added: "2024 was a year of transformation for cbdMD. We've demonstrated our ability to execute against goals and overcome challenges, all while keeping our focus on creating long-term value for our shareholders. We are confident in our direction, and our entire team is energized to continue driving growth, innovation, and operational excellence in 2025."

cbdMD enters fiscal 2025 as a leaner, more agile company, ready to build on its turnaround momentum. With a portfolio of trusted brands, a disciplined approach to financial management, and a commitment to innovation, cbdMD is well-positioned to lead in the evolving CBD and wellness markets.

Highlights for Fiscal 2024 and Notable Business Updates

• The Company launched its brand of functional mushrooms, ATRx Labs, initially through Amazon US and subsequently launched systemwide in GNC during the spring.

• cbdMD expanded its successful line of D-9 products entering the fast-growing beverage category with its Mixers and Herbal Oasis Social Tonic.

• The Company successfully negotiated an exit to its HQ lease in August, saving approximately $1.2 million a year in fixed costs.

• cbdMD secured $1.25 million in net financing through $1.5 million convertible Notes during the second fiscal quarter to bolster its working capital.

• The Company received notice from the NYSE American that is has accepted the Company's plan of compliance. During the plan period, the Company will be subject to quarterly review to determine if it is making progress consistent with the plan. If the Company does not regain compliance with the NYSE American listing standards by December 5, 2025, or if the Company does not make sufficient progress consistent with its plan, then the NYSE American may initiate delisting proceedings. NYSE American requires that cbdMD's net book value of equity must be at least $4 million. At fiscal year end, it totaled approximately $2.0 million, which was negatively impacted by the $4.7 million of Series A Preferred accrued dividends.

• The results from cbdMD's double blind placebo controlled clinical trial were published in the Journal of the International Society of Sports Nutrition in June 2024, highlighting the demonstrated reduction of pain, reduced inflammation and improved mood using a 100mg / day regimen of cbdmd's broad spectrum

• The results from cbdMD's double blind placebo controlled clinical study in dogs performed in conjunction with Colorado State university's veterinary program were published in Frontiers in Veterinary Science in September 2024. The study emphasized cbdMD's broad spectrum product improved mobility, gait and quality of life in dogs with osteoarthritis.

Financial Highlights from our Fiscal Year 2024:

• Net sales totaled $19.5 million in fiscal 2024 or a decrease of 19.1% compared to $24.1 million in fiscal 2023.

• Our gross profit for the year was flat at 62% in fiscal 2024 compared to 62% in fiscal 2023.

• Our loss from operations was $3.3 million in fiscal 2024 as compared to a loss of $22.4 million in fiscal 2023.

• Our non-GAAP adjusted EBITDA loss from operations in fiscal 2024 was approximately $1.5 compared to our non-GAAP adjusted EBITDA from operations in fiscal 2023 of approximately $5.5. million, despite the decline in revenue. Our non-GAAP adjusted EBITDA loss for the second half of 2024 was reduced to only $0.2 million from $1.2 million in the prior year comparative period.

• Net loss attributable to common shareholders for fiscal 2024 was approximately $7.7 million or $1.79 per share as compared to a net loss for fiscal 2023 of approximately $26.9 million, or $13.30 per share. The improvement in fiscal 2024 was principally attributable to ongoing management's efforts on improving profitability, as well as the $13.2 million intangible impairment during 2023.

• At September 30, 2024, we had working capital of approximately $1.1 million and cash on hand of approximately $2.4 million (which includes $4.7 million of accrued Series A dividend payments) as compared to working capital of approximately $3.4 million and cash on hand of approximately $1.8 million (which includes $0.67 million of accrued Series A dividend payments) at September 30, 2023.

• We reported direct to consumer (DTC) net sales of $15.7 million or 80.4% of total net sales in fiscal 2024, a decrease of $3.9 million, or 19.9% from fiscal 2023.

• As of the filing date of our annual report, the majority of our Notes have been converted and the balance of the Notes totaled approximately $0.36 million. When factoring in our cash balance of $2.4 million at the end of September 30, 2024 and ongoing cash consumption rate, management believe the Company has a strong liquidity position going into calendar 2025.

Pursuant to the disclosure requirements of the NYSE American Company Guide Section 610(b), cbdMD is reporting that its audited consolidated financial statements for the fiscal year ended September 30, 2024, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 18, 2024, contains an audit opinion from its independent registered public accounting firm that includes an explanatory paragraph related to cbdMD's ability to continue as a going concern. This announcement does not represent any change or amendment to cbdMD's financial statements or to its Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

We will host a conference call at 4:20 p.m., Eastern Time, on Wednesday, December 18, 2024, to discuss our September 30, 2024, fourth quarter and full fiscal year financial results and business progress.

CONFERENCE CALL DETAILS

Tuesday December 17, 2024, 4:20 p.m. Eastern Time
USA/Canada:	844-763-8274
International:	647-484-8814
Teleconference Replay dial in:
USA/Canada:	855-669-9658
International:	412-317-0088
Replay Passcode:	5369354
Webcast/Webcast Replay link- available through January 18, 2026: https://www.gowebcasting.com/13876

 

About cbdMD, Inc.

cbdMD, Inc. is one of the leading and most highly trusted and most recognized cannabidiol (CBD) brands with a comprehensive line of U.S. produced, THC-free¹ CBD products, including NSF Certified for Sport® products, as well as our new Full Spectrum products. Our cbdMD brand currently includes high-grade, premium CBD products including CBD tinctures, CBD gummies, CBD topicals, CBD capsules, CBD bath bombs, CBD sleep aids and CBD drink mixes and an array of Farm Act compliant Delta 9 products. Our Paw CBD brand of pet products includes veterinarian-formulated products including tinctures, chews, topicals products in varying strengths, and our ATRx brand of natural functional mushroom support. To learn more about cbdMD and our comprehensive line of U.S. grown, THC-free¹ CBD oil and Full Spectrum products as well as our other brands, please visit www.cbdmd.com, www.pawcbd.com, or ATRxlabs.com, follow cbdMD on Instagram and Facebook, or visit one of the thousands of retail outlets that carry cbdMD's products.

Forward-Looking Statements

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements can be identified using words such as ''should,'' ''may,'' ''intends,'' ''anticipates,'' ''believes,'' ''estimates,'' ''projects,'' ''forecasts,'' ''expects,'' ''plans,'' and ''proposes.'' These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict. You are urged to carefully review and consider any cautionary statements, including but not limited to expectations on our ability to continue as a going concern, increasing our revenues, continued cost reductions, potential need for additional working capital, regaining compliance with NYSE American continued listing standards, continued listing on the NYSE American, future profitability, development and sales of new products, and other disclosures, including the statements made under the heading "Risk Factors" in cbdMD, Inc.'s Annual Report on Form 10-K for the fiscal year ended September 30, 2024 as filed with the Securities and Exchange Commission (the "SEC") on December 17, 2024, and our other filings with the SEC. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of cbdMD, Inc. and are difficult to predict. cbdMD, Inc. does not undertake any duty to update any forward-looking statements except as may be required by law. The information which appears on our websites and our social media platforms, including, but not limited to, Instagram and Facebook, is not part of this press release.

¹ THC-free is defined as below the level of detection using validated scientific analytical methods.

Non-GAAP Financial Measures

This press release includes a financial measure that excludes the impact of certain items and therefore has not been calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). cbdMD, Inc. has included adjusted loss from operations because management uses this measure to assess operating performance in order to highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The adjusted operating loss has not been prepared in accordance with GAAP. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, net loss from operations as an indicator of our operating performance. Further, this non-GAAP financial measure, as presented by cbdMD, Inc., may not be comparable to similarly titled measures reported by other companies. cbdMD, Inc. has attached to this press release a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure.

cbdMD, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2024 AND SEPTEMBER 30, 2023
		September 30,				September 30,
		2024				2023
Assets
Cash and cash equivalents	$	2,452,553			$	1,797,860
Accounts receivable		983,910				1,216,090
Inventory		2,365,187				4,052,972
Inventory prepaid		159,006				182,675
Prepaid sponsorship		21,754				70,061
Prepaid expenses and other current assets		406,674				750,383
Total current assets		6,389,084				8,070,041
Other assets:
Property and equipment, net		454,268				716,579
Operating lease assets		85,817				3,350,865
Deposits for facilities		62,708				138,708
Intangible assets, net		2,889,580				3,219,090
Investment in other securities, noncurrent		700,000				700,000
Total other assets		4,192,373				8,125,242
Total assets	$	10,581,457			$	16,195,283
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2024 AND SEPTEMBER 30, 2023
(continued)
		September 30,				September 30,
		2024				2023
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	1,541,108			$	1,906,319
Accrued expenses		632,674				632,195
Accrued dividends		4,671,000				667,000
Deferred revenue		503,254				185,246
Operating leases - current portion		98,696				1,277,089
Convertible notes, at fair value		1,171,308
Note payable		-				2,492
Total current liabilities		8,618,040				4,670,341
Long term liabilities:
Other long term liabilities		-				9
Operating leases - long term portion		-				2,403,286
Contingent liability		-				90,363
Total long term liabilities		-				2,493,658
Total liabilities		8,618,040				7,163,999
cbdMD, Inc. shareholders' equity:
Preferred stock, authorized 50,000,000 shares, $0.001 par value, 5,000,000 and 500,000 shares issued and outstanding, respectively		5,000				5,000
Common stock, authorized 150,000,000 shares, $0.001 par value, 3,939,057 and 2,960,573 shares issued and outstanding, respectively		3,939				2,961
Additional paid in capital		184,029,565				183,387,095
Comprehensive other expense		(7,189)				-
Accumulated deficit		(182,067,898)				(174,363,772)
Total cbdMD, Inc. shareholders' equity		1,963,417				9,031,284
Total liabilities and shareholders' equity	$	10,581,457			$	16,195,283

 

cbdMD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS SEPTEMBER 30, 2024 and 2023
		September 30,				September 30,
		2024				2023
Gross Sales	$	19,922,319			$	25,053,857
Allowances		(440,152)				(898,495)
Total Net Sales		19,482,167				24,155,362
Cost of sales		7,486,626				9,177,703
Gross Profit		11,995,541				14,977,659
Operating expenses		15,310,951				24,246,208
Impairment of intangible assets		-				13,219,000
Loss from operations		(3,315,410)				(22,487,549)
Realized and unrealized loss on marketable and other securities, including impairments		-				(700,000)
Decrease of contingent liability		74,580				185,638
Increase in fair value of convertible debt		(429,789)				-
Interest (expense) income		(29,507)				63,702
Loss before provision for income taxes		(3,700,126)				(22,938,209)
Net Loss		(3,700,126)				(22,938,209)
Preferred dividends		4,004,001				4,002,000
Net Loss available to cbdMD, Inc. common shareholders	$	(7,704,127)			$	(26,940,209)
Net Loss per share:
Basic and diluted earnings per share	$	(1.79)			$	(13.32)
Weighted average number of shares Basic and Diluted:		4,312,546				2,022,320

 

cbdMD, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEARS SEPTEMBER 30, 2024 and 2023
		September 30,				September 30,
		2024				2023
Net Income (loss)	$	(3,700,126)			$	(22,938,209)
Comprehensive Loss		(3,700,126)				(22,938,209)
Preferred dividends		(4,004,001)				(4,002,000)
Comprehensive Loss attributable to cbdMD, inc. common shareholders	$	(7,704,127)			$	(26,940,208)

 

cbdMD, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS SEPTEMBER 30, 2024 and 2023
		September 30,				September 30,
		2024				2023
Cash flows from operating activities:
Net Loss	$	(3,700,126)			$	(22,938,209)
Adjustments to reconcile net loss to net
cash used by operating activities:
Stock based compensation		5,015				233,666
Restricted stock expense		11,885				109,202
Write off of prepaid assets due to termination of contractual obligation		-				884,892
Inventory and materials impairment		921,314				175,499
Intangibles amortization		697,510				1,396,459
Depreciation		452,326				404,280
Impairment of intangible assets		-				13,219,000
Decrease in contingent liability		(74,580)				(185,638)
Increase in fair value of convertible debt		429,789				-
Other-than-temporary impairment on other investments		-				700,000
Gain on termination of operating lease		696,280				-
Amortization of operating lease asset		670,621				1,126,976
Changes in operating assets and liabilities:
Accounts receivable		232,180				278,482
Deposits		76,000				105,898
Inventory		766,472				27,443
Prepaid inventory		23,670				328,784
Prepaid expenses and other current assets		396,311				2,095,323
Accounts payable and accrued expenses		(1,124,141)				(1,290,141)
Operating lease liability		(1,151,326)				(1,178,683)
Deferred revenue / customer deposits		318,008				203,341
Collection on discontinued operations accounts receivable		-				1,375
Cash used by operating activities		(352,792)				(4,302,051)
Cash flows from investing activities:
Proceeds from sale of other investment securities		-				1,000,000
Purchase of intangible assets		(100,000)				-
Purchase of property and equipment		(190,015)				(297,549)
Cash (used) provided by investing activities		(290,015)				702,451
Cash flows from financing activities:
Proceeds from issuance of common stock		50,001				2,478,325
Note payable		1,247,499				(132,599)
Preferred dividend distribution		-				(3,668,500)
Cash used by financing activities		1,297,500				(1,322,774)
Net decrease in cash		654,693				(4,922,374)
Cash and cash equivalents, beginning of period		1,797,860				6,720,234
Cash and cash equivalents, end of period	$	2,452,553			$	1,797,860
Supplemental Disclosures of Cash Flow Information:
		2023				2022
Cash Payments for:
Interest expense	$	74,638			$	6,399
Non-cash financial activities:
Issuance of shares for conversion of debt and accrued interest	$	515,601			$	-
Issuance of share for intangible asset	$	40,725			$	-
Preferred dividends accrued but not paid	$	4,004,001			$	667,000

 

cbdMD, Inc.
SUPPLEMENTAL FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP ADJUSTED LOSS FROM OPERATIONS
(unaudited)
		Three months				Three months				Twelve Months				Twelve Months
		Ended				Ended				Ended				Ended
		September 30,				September 30,				September 30,				September 30,
		2024				2023				2024				2023
GAAP loss from operations	$	(316,553)			$	(15,217,070)			$	(3,315,410)			$	(22,487,549)
Adjustments:
Depreciation & Amortization		287,783				667,950				1,149,836				1,800,739
Employee and director stock compensation (1)		5,881				33,263				43,688				349,245
Inventory adjustment (2)		588,160				70,000				588,160				70,000
Impairment of Goodwill and other intangible assets (3)		-				13,219,000				-				13,219,000
Incremental bad debt		-				45,000				-				45,000
Mergers and Acquistions and financing transaction expenses		-				-				125,838				-
Non-cash expense incurred as a credit (4)		-				-				439,926				-
Termination of HQ lease		(696,280)								(696,280)				-
Non-cash accelerated amortization of expense related to terminated IT contracts		-				-				72,101				-
a-369 non-cash trade credit		-				609,732				-				1,476,967
Non-GAAP adjusted loss from operations	$	(131,009)			$	(572,125)			$	(1,592,141)			$	(5,526,598)

 

(1) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.
(2) Represents an operating expense related to inventory loss related to regulatory changes impacting labels and packaging and obsolete/expired inventory.
(3) Represents non-cash impairment of the cbdMD, DCO and Technology Relief from Royalty trademarks of $13.21 million during the fourth quarter of fiscal 2023, non-cash impairment of the cbdMD trademark of $4.28 million during the first quarter of fiscal year 2022 and $56.67 million of goodwill impairment during the fiscal year ended 2022
(4) Represents non-cash expense incurred as a credit provided to GNC to replace expired product.

Contacts:

Investors:
cbdMD, Inc.
Ronan Kennedy
Chief Executive Officer and Chief Financial Officer
IR@cbdmd.com
(704) 445-3064

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/234173

FAQ

What was YCBD's revenue performance in fiscal 2024?

YCBD reported net sales of $19.5 million in fiscal 2024, representing a 19.1% decrease from $24.1 million in fiscal 2023.

How much did YCBD reduce its operational losses in 2024?

YCBD reduced its operational loss by $19.1 million, from $22.9 million in 2023 to $3.3 million in 2024.

What is YCBD's deadline to meet NYSE American listing requirements?

YCBD must meet the NYSE American listing requirements, including a $4 million minimum net book value of equity, by December 5, 2025.

What new products did YCBD launch in 2024?

YCBD launched ATRx Labs functional mushrooms and expanded its D-9 product line with Mixers and Herbal Oasis Social Tonic beverages.

What cost savings did YCBD achieve from its HQ lease exit?

YCBD's exit from its headquarters lease in August will save approximately $1.2 million annually in fixed costs.