cbdMD Generates $5.1 Million in Revenue, Positive Earnings

Rhea-AI Summary

cbdMD (NYSE: YCBD) reported financial results for Q1 FY2025 ended December 31, 2024. The company achieved $5.1 million in revenue, marking a 12% sequential increase from Q4 FY2024, though representing a 19.1% year-over-year decrease. Notable achievements include the company's first-ever positive non-GAAP Adjusted EBITDA of $214,000 and a net income of $15,000, improving by approximately $1 million from the prior year.

The company maintained a 66% gross profit margin and reduced its operating loss to $80,000 from $1.1 million in the previous year. Direct-to-consumer sales accounted for 77% of total revenue at $4.0 million, while wholesale revenue increased by 22% to $1.1 million. The company ended the quarter with $2.0 million in cash and became debt-free following the conversion of remaining convertible notes in January 2025.

cbdMD also launched Herbal Oasis, a new ready-to-drink hemp-derived beverage brand, and announced plans for its 2025 annual meeting, including a proposal to convert Series A Preferred stock and accrued dividends into common stock.

Positive

• First-ever positive non-GAAP Adjusted EBITDA of $214,000
• Net income of $15,000, improving from $996,000 loss year-over-year
• 12% sequential revenue growth from Q4 FY2024
• 22% increase in wholesale revenue
• Conversion of remaining convertible notes making company debt-free
• Maintained strong gross profit margin of 66%

Negative

• 19.1% year-over-year revenue decline to $5.1 million
• Operating loss of $80,000
• Working capital deficit of $2.8 million
• 11% decrease in direct-to-consumer sales
• Net loss attributable to common shareholders of $0.98 million

Insights

Financial Analyst

The Q1 FY2025 results reveal a significant operational turnaround for cbdMD, marked by several key developments that signal improving financial health. The achievement of positive adjusted EBITDA of $214,000 represents a important milestone, demonstrating that the company's cost optimization efforts are bearing fruit. This $909,000 improvement in adjusted EBITDA from the previous year suggests sustainable operational efficiency gains.

The revenue mix shows interesting dynamics, with DTC sales comprising 77% of total revenue at $4.0 million. While this represents an 11% year-over-year decline, the 22% growth in wholesale revenue to $1.1 million indicates successful channel diversification and potentially improved retailer relationships. The sequential revenue growth of 12% from Q4 FY2024 suggests that the business may be stabilizing after previous declines.

The company's balance sheet has notably strengthened with the conversion of convertible notes to common stock, making it essentially debt-free except for ordinary business liabilities. However, the working capital deficit of $2.8 million requires attention, though this figure improves to a positive $2.8 million when excluding preferred dividend obligations. The stable gross margin of 66% demonstrates maintained pricing power and cost control in a competitive market.

The launch of Herbal Oasis, entering the hemp-derived beverage segment, represents a strategic move into a high-growth market segment. This diversification could provide new revenue streams and help offset challenges in traditional CBD product categories. The proposed conversion of Series A Preferred stock could simplify the capital structure and eliminate the burden of accruing preferred dividends, which currently impact reported earnings.

Charlotte, North Carolina--(Newsfile Corp. - February 13, 2025) - (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 first quarter of fiscal year ended December 31, 2024.

The Company started fiscal 2025 with a historic quarter, achieving sequential revenue growth, positive net income and, although a loss from operations, the first ever quarter of positive non-GAAP Adjusted EBITDA. The Company generated Net Income of $15,000, an approximate $1 million improvement from the prior year.

"We are really proud of our team's performance for the quarter. The hard work over the last year is paying off and this quarter's results are an indication of the earnings potential under our new cost structure," said Ronan Kennedy, CEO and CFO of cbdMD.

In addition to announcing its financial results, the Company also filed a preliminary proxy statement for its 2025 annual meeting, scheduled April 10, 2025. Shareholders of record as of February 18, 2025 will be eligible to vote. The proxy statement includes a proposal to convert the Series A Preferred and all accrued dividends into common stock.

Highlights for the First Quarter of Fiscal 2025 and Notable Business Updates

• The Company launched Herbal Oasis, a new ready-to-drink hemp derived beverage brand, entering the fastest growing segment in the industry.

• The remaining balances of the Company's convertible Notes were converted to common stock during January 2025 and the Company is debt free, excluding liabilities incurred in the ordinary course of business and accrued dividends.

Financial Highlights from our First Quarter of Fiscal Year 2025:

• Net sales totaled $5.1 million in the first quarter of fiscal 2025 or a decrease of 19.1% compared to $5.3 million in fiscal 2024. Sequentially, revenue was up 12% from the fourth quarter of fiscal 2024.

• Our gross profit held flat year over year and totaled 66% for the first quarter of fiscal 2025.

• Our loss from operations was $80,000 in the first quarter of fiscal 2025 as compared to a loss of $1.1 million in the prior year comparative period.

• Net Income before preferred dividends totaled $15,000 in the first quarter of fiscal 2025 as compared to a loss of $996,000 in the prior year period.

• Our non-GAAP adjusted EBITDA profit from operations in the first quarter of fiscal 2025 was approximately $214,000 compared to our Adjusted EBITDA loss from operations in fiscal 2023 of approximately $695,000. This is the first time since we have been public that we have generated positive Adjusted EBITDA from the business.

• Net loss attributable to common shareholders for the first quarter of fiscal 2025 was approximately $0.98 million or a loss of $0.22 per share as compared to a net loss for the first quarter of fiscal 2024 of approximately $2.0 million, or $0.67 per share. The improvement in fiscal 2025 was principally attributable to ongoing management's efforts on profit improvement.

• At December 31, 2024, we had a working capital deficit of approximately ($2.8) million and cash on hand of approximately $2.0 million as compared to a working capital deficit of approximately ($2.2) million and cash on hand of approximately $2.4 million at September 30, 2024. Excluding $5.7 million and $4.7 million of respective accrued Series A dividend payments, adjusted net working capital totaled $2.8 million and $2.4 million for the respective periods.

• We reported direct to consumer (DTC) net sales of $4.0 million or 77% of total net sales in the first quarter of fiscal 2025, a decrease of $0.47 million, or 11% from the first quarter of fiscal 2024.

• We reported wholesale net sales of $1.1 million or 23% of total net sales in the first quarter of fiscal 2025, an increase of $0.2 million, or 22% from the first quarter from fiscal 2024.

We will host a conference call at 4:20 p.m., Eastern Time, on Thursday, February 13, 2025, to discuss our December 31, 2024, first quarter of fiscal 2025 financial results and business progress.

CONFERENCE CALL DETAILS

Thursday February 13, 2025, 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:	7970691
Webcast/Webcast Replay link- available through March 13, 2026: https://www.gowebcasting.com/13965

 

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, continued listing on the NYSE American, regaining compliance with NYSE American continued listing requirements, 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.

No Offer or Solicitation

This press release is for informational purposes only and shall not constitute a solicitation of a proxy, consent or authorization with respect to the 2025 annual meeting. This communication may be deemed to be solicitation material in respect of the annual meeting proposals. In connection with the annual meeting proposals, the Company has filed a preliminary proxy statement with the SEC and intends to mail to shareholders a definitive proxy statement in connection with the solicitation of proxies for its annual meeting, and the Company may file other documents with the SEC regarding the proposals in the proxy statement. THE COMPANY'S SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE CAREFULLY IN THEIR ENTIRETY, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE PROPOSALS.

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 EBITDA 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. 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
DECEMBER 31, 2024 AND SEPTEMBER 30, 2024
		(unaudited)
		December 31,			September 30,
		2024			2024
Assets
Cash and cash equivalents	$	1,970,217		$	2,452,553
Accounts receivable		1,272,846			983,910
Inventory		2,116,136			2,365,187
Inventory prepaid		356,819			159,006
Prepaid sponsorship		7,126			21,754
Prepaid expenses and other current assets		637,559			406,674
Total current assets		6,360,703			6,389,084
Other assets:
Property and equipment, net		511,915			454,268
Operating lease assets		1,209,338			85,817
Deposits for facilities		62,708			62,708
Intangible assets, net		2,698,313			2,889,580
Investment in other securities, noncurrent		700,000			700,000
Total other assets		5,182,274			4,192,373
Total assets	$	11,542,977		$	10,581,457
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2024 AND SEPTEMBER 30, 2024
(continued)
		December 31,			September 30,
		2024			2024
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	1,161,133		$	1,541,108
Accrued expenses		775,946			632,674
Accrued dividends		5,671,500			4,671,000
Deferred revenue		527,438			503,254
Operating leases - current portion		671,765			98,696
Convertible notes, at fair value		362,021			1,171,308
Total current liabilities		9,169,803			8,618,040
Long term liabilities:
Operating leases - long term portion		591,583			-
Total long term liabilities		591,583			-
Total liabilities		9,761,386			8,618,040
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, 5,543,124 and 3,939,057 shares issued and outstanding, respectively		5,543			3,939
Additional paid in capital		184,832,130			184,029,565
Comprehensive other expense		(7,777	)		(7,189	)
Accumulated deficit		(183,053,305	)		(182,067,898	)
Total cbdMD, Inc. shareholders' equity		1,781,591			1,963,417
Total liabilities and shareholders' equity	$	11,542,977		$	10,581,457

 

cbdMD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 and 2023
(unaudited)
		December 31,			December 31,
		2024			2023
Gross Sales	$	5,113,476		$	5,375,630
Allowances		-			(225)
Total Net Sales		5,113,476			5,375,405
Cost of sales		1,712,867			1,817,907
Gross Profit		3,400,609			3,557,498
Operating expenses		3,486,881			4,623,333
Loss from operations		(86,272	)		(1,065,835	)
Decrease of contingent liability		-			69,752
Increase in fair value of convertible debt		89,963			-
Interest (expense) income		11,404			(418	)
Income (loss) before provision for income taxes		15,095			(996,501	)
Net Income (loss)		15,095			(996,501	)
Preferred dividends		1,000,501			1,000,501
Net Loss available to cbdMD, Inc. common shareholders	$	(985,406	)	$	(1,997,002	)
Net Loss per share:
Basic and diluted earnings per share	$	(0.22	)	$	(0.67	)
Weighted average number of shares Basic and Diluted:		4,552,067			2,960,945

 

cbdMD, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 and 2023
(unaudited)
		December 31,			December 31,
		2024			2023
Net Income (loss)	$	15,095		$	(996,501)
Comprehensive Income (loss)		15,095			(996,501)
Preferred dividends		(1,000,501	)		(1,000,501	)
Comprehensive Loss attributable to cbdMD, inc. common shareholders	$	(985,406	)	$	(1,997,001	)

 

cbdMD, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 and 2023
(unaudited)
		December 31,			December 31,
		2024			2023
Cash flows from operating activities:
Net Income (loss)	$	15,095		$	(996,501)
Adjustments to reconcile net loss to net
cash used by operating activities:
Stock based compensation		-			1,772
Restricted stock expense		2,007			689
Issuance of stock for services		82,250			-
Intangibles amortization		191,267			172,842
Depreciation		106,740			110,864
Decrease in contingent liability		-			(69,752	)
Increase in fair value of convertible debt		(89,963	)		-
Amortization of operating lease asset		41,131			290,459
Changes in operating assets and liabilities:
Accounts receivable		(288,936	)		67,169
Deposits		-			6,505
Inventory		249,051			498,577
Prepaid inventory		(197,813	)		(5,575	)
Prepaid expenses and other current assets		(216,256	)		(195,850	)
Accounts payable and accrued expenses		(236,770	)		142,292
Operating lease liability		-			(311,661	)
Deferred revenue / customer deposits		24,248			182,290
Cash used by operating activities		(317,949	)		(105,880	)
Cash flows from investing activities:
Purchase of property and equipment		(164,387	)		(184,635	)
Cash (used) provided by investing activities		(164,387	)		(184,635	)
Cash flows from financing activities:
Note payable		-			(2,501	)
Cash used by financing activities		-			(2,501	)
Net decrease in cash		(482,336	)		(293,016	)
Cash and cash equivalents, beginning of period		2,452,553			1,797,860
Cash and cash equivalents, end of period	$	1,970,217		$	1,504,844
Supplemental Disclosures of Cash Flow Information:
		2024			2023
Cash Payments for:
Interest expense	$	-		$	11,614
Non-cash financing/investing activities:
Issuance of shares for conversion of debt and accrued interest	$	718,490		$	-
Issuance of share for services	$	82,250		$	-
Change in lease asset	$	1,164,652		$	-
Preferred dividends accrued but not paid	$	1,000,501		$	1,000,501

 

cbdMD, Inc.
SUPPLEMENTAL FINANCIAL INFORMATION
FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 and 2023
(unaudited)
		Three months			Three months
		Ended			Ended
		December 31,			December 31,
		2024			2023
GAAP loss from operations	$	(86,272	)	$	(1,065,835	)
Adjustments:
Depreciation & Amortization (1)		298,007			283,706
Employee and director stock compensation (2)		3,082			16,542
Mergers and Acquisitions and financing transaction expenses (3)		-			67,599
Non-GAAP adjusted income (loss) from operations	$	214,817		$	(697,988	)

 

(1) Represents depreciation of property, plant and equipment and amortization of the Company's intangible assets.
(2) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.
(3) Represents expenses incurred in relation to M&A and financing activities during the quarter ended December 31, 2023.

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/240835

FAQ

What was cbdMD's (YCBD) revenue for Q1 FY2025?

cbdMD reported revenue of $5.1 million for Q1 FY2025, representing a 19.1% decrease year-over-year but a 12% sequential increase from Q4 FY2024.

Did YCBD achieve profitability in Q1 FY2025?

Yes, YCBD achieved net income of $15,000 and its first-ever positive non-GAAP Adjusted EBITDA of $214,000, though it still reported an operating loss of $80,000.

What is YCBD's current debt status as of January 2025?

YCBD became debt-free in January 2025 following the conversion of remaining convertible notes to common stock, excluding ordinary business liabilities and accrued dividends.

What was YCBD's direct-to-consumer sales performance in Q1 FY2025?

Direct-to-consumer sales were $4.0 million, representing 77% of total net sales but showing an 11% decrease from Q1 FY2024.

What new product did YCBD launch in Q1 FY2025?

YCBD launched Herbal Oasis, a new ready-to-drink hemp-derived beverage brand, entering the fastest-growing segment in the industry.