cbdMD Reports First Quarter Fiscal 2021 Results

Rhea-AI Summary

cbdMD, Inc. (NYSE American: YCBD) reported strong financial results for Q1 FY 2021, with net sales increasing by 22% year-over-year to $12.3 million. Gross profit margin improved to 72.2%, up from 63.5% in the previous quarter. E-commerce sales soared 41% to $9.7 million, and Paw CBD net sales grew by 83% to $1.5 million. Operating expenses decreased by 15% to $10.7 million, while the loss from operations fell 71% to $1.8 million. However, the net loss attributable to shareholders was $9.5 million, primarily due to a non-cash contingent liability related to previous acquisitions.

Positive

• Net sales increased by 22% to $12.3 million.
• Gross profit margin improved to 72.2%.
• E-commerce sales rose by 41% to $9.7 million.
• Paw CBD sales increased by 83% to $1.5 million.
• Operating expenses decreased by 15% to $10.7 million.
• Loss from operations reduced by 71% to $1.8 million.
• Working capital increased to approximately $30.6 million.

Negative

• Net loss attributable to shareholders was $9.5 million.
• Non-cash contingent liability increased by approximately $8.5 million.

cbdMD, Inc. (NYSE American: YCBD, YCBDpA), one of the nation’s leading and most highly trusted and recognized cannabidiol (CBD) brands, today announced its financial results for its first quarter ended December 31, 2020.

Financial Highlights for the Quarter Ended December 31, 2020:

• Our net sales for the first quarter of fiscal 2021 increased by 22% year-over-year to a record of $12.3 million from $10.1 million from the prior year’s quarter.
• Our gross profit margin for the quarter increased to 72.2% from 63.5% in the prior year’s quarter.
• We reported record quarterly E-commerce, direct-to-consumer, net sales of $9.7 million, an increase of $2.8 million, or 41%, from the prior year’s quarter and 13% sequential quarterly growth.
• Our CBD pet brand, Paw CBD, reported in net sales in quarter increased 83%, to $1.5 million compared to $820,000 from the prior year’s quarter.
• Our quarterly operating expenses decreased by 15% YOY to $10.7 million from $12.6 million from the prior year’s quarter, a sequential quarterly decrease of 2%.
• Our loss from operations decreased by 71% to $1.8 million compared to $6.1 million from the prior year’s quarter.
• Our non-GAAP adjusted operating loss decreased by 90% to $523,841, compared to $5.0 million from the prior year’s quarter.
• Our net loss attributable to common shareholders for the quarter was approximately $9.5 million, or ($0.18) per share, as compared to net income of approximately $12.9 million, or $0.45 per share from the prior year’s quarter. Our net loss attributable to common shareholders was principally attributable to an increase of approximately $8.5 million in the non-cash contingent liability which is associated with earnout shares which may be issued under the terms of the December 2018 acquisition of Cure Based Development (which owned the cbdMD brand).
• At December 31, 2020, we had working capital of approximately $30.6 million and cash on hand of approximately $28.8 million as compared to working capital of approximately $16.0 million and cash on hand of approximately $14.8 million at September, 2020. Our working capital position was bolstered during the quarter following our receipt of approximately $15.8 million in net proceeds from our December 2020 sale of shares of our 8.0% Series A Cumulative Convertible Preferred Stock in a firm commitment underwritten public offering.

cbdMD, Inc. will host a conference call at 4:15 p.m., Eastern time, on Tuesday, February 9, 2021, to discuss the company’s first quarter fiscal 2021 financial results and business progress.

CONFERENCE CALL DETAILS

Title:	cbdMD First Quarter 2021 Earnings Call
Event Date:	Tuesday, February 9, 2021 - 4:15 PM Eastern Time
Event Link:	Webcast URL https://www.webcaster4.com/Webcast/Page/2206/39768
Webcast Replay Expiration:	Wednesday, February 9, 2022
Participant Numbers:	Toll Free: 888-506-0062 International: 973-528-0011 Entry code (not required): 117414
Replay Number:	Toll Free: 877-481-4010 International: 919-882-2331 Replay Passcode: 39768

About cbdMD, Inc.

cbdMD, Inc. is one of the leading, most highly trusted, and most recognized cannabidiol (CBD) brands, whose current products include CBD tinctures, CBD capsules, CBD gummies, CBD topicals, CBD bath bombs and CBD pet products. To learn more about cbdMD and our comprehensive line of over 130 SKUs of U.S. produced, THC-free¹ CBD products, please visit www.cbdMD.com, follow cbdMD on Instagram and Facebook, or visit one of the 6,000 retail outlets that carry cbdMD and Paw CBD products.

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

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 by the use of 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 and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You are urged to carefully review and consider any cautionary statements 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, 2020 as filed with the Securities and Exchange Commission (the "SEC") on December 22, 2020, Item 1A. Risk Factors, contained in our Quarterly Report on Form 10-Q for the period ended December 31, 2020 as filed with the SEC on February 9, 2021 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.

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.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2020 AND SEPTEMBER 30, 2020
									(Unaudited)
									December 31,		September 30,
									2020		2020
Assets
Current assets:
Cash and cash equivalents									$ 28,763,812		$ 14,824,644
Accounts receivable									1,021,554		911,482
Accounts receivable – discontinued operations									24,717		447,134
Marketable securities									29,181		26,472
Investment other securities									250,000		250,000
Deposits									-		40,198
Inventory									4,383,501		4,603,360
Inventory prepaid									336,362		288,178
Prepaid software									-		174,308
Prepaid equipment deposits									-		40,197
Prepaid sponsorship									1,069,600		1,203,300
Prepaid expenses and other current assets									1,496,721		902,979
Total current assets									37,375,449		23,712,252
Other assets:
Property and equipment, net									3,084,321		3,183,487
Operating lease assets									6,547,278		6,851,357
Deposits for facilities									766,708		790,708
Intangible assets, net									21,635,000		21,635,000
Goodwill									54,669,997		54,669,997
Total other assets									86,703,304		87,130,549
Total assets									$ 124,078,753		$ 110,842,801

CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2020 AND SEPTEMBER 30, 2019
(continued)
									(Unaudited)
									December 31,		September 30,
									2020		2020
Liabilities and shareholders' equity
Current liabilities:
Accounts payable									$ 2,174,529		$ 2,850,421
Deferred revenue									22,440		45,141
Accrued expenses									2,301,154		2,724,779
Operating leases – current portion									1,242,608		1,159,098
Paycheck Protection Program loan, current portion									939,826		854,000
Note payable									56,573		55,639
Total current liabilities									6,737,130		7,689,078
Long term liabilities:
Long term liabilities									-		264,367
Note payable									153,957		-
Paycheck Protection Program loan									516,274		602,100
Operating leases - long term portion									5,688,746		6,010,208
Contingent liability									24,700,000		16,200,000
Deferred tax liability									563,000		895,300
Total long term liabilities									31,621,977		23,971,675
Total liabilities									38,359,107		31,660,753
cbdMD, Inc. shareholders' equity:
Preferred stock, authorized 50,000,000 shares, $0.001 par value, 2,800,000 and 500,000 shares issued and outstanding, respectively									2,800		500
Common stock, authorized 150,000,000 shares, $0.001 par value,
52,130,870 and 52,130,870 shares issued and outstanding, respectively									52,131		52,131
Additional paid in capital									142,548,752		126,517,784
Accumulated deficit									(56,884,037)		(47,388,367)
Total cbdMD, Inc. shareholders' equity									85,719,646		79,182,048
Total liabilities and shareholders' equity									$ 124,078,753		$ 110,842,801

cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019
			Three months				Three months
			Ended				Ended
			December 31, 2020				December 31, 2019
Gross Sales			$	13,131,946			$	10,412,491
Allowances				(803,643	)			(264,255	)
Total Net Sales				12,328,303				10,148,236
Cost of sales				3,430,274				3,700,537
Gross Profit				8,898,028				6,447,699
Operating expenses				10,657,973				12,560,297
(Loss) from operations				(1,759,945	)			(6,112,598	)
Realized and Unrealized gain (loss) on marketable & other securities				542,710				(62,010	)
(Increase) decrease of contingent liability				(8,500,000)				16,898,006
Interest (expense) income				(10,386	)			7,267
Income (loss) before provision for income taxes				(9,727,621)				10,730,665
Benefit for income taxes				332,000				2,240,300
Net (Loss) Income from continuing operations				(9,395,621)				12,970,965
Net (Loss) from discontinued operations, net of tax (Note 13)				-				(41,202	)
Net (Loss) Income				(9, 395,621)				12,929,763
Preferred dividends				100,050				66,734
Net (Loss) Income attributable to cbdMD, Inc. common shareholders			$	(9,495,671	)		$	12,863,029
Net (Loss) Income per share:
Basic earnings per share			$	(0.18)			$	0.46
Diluted earnings per share				(0.18)				0.45
Weighted average number of shares Basic:				52,130,870				27,720,356
Weighted average number of shares Diluted:				52,130,870				28,553,856

cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(Unaudited)
		Three months				Three months
		Ended				Ended
		December 31, 2020				December 31, 2019
Net (Loss) Income		$	(9,395,621)			$	12,929,763
Comprehensive (Loss) Income			(9,395,621)				12,929,763
Preferred dividends			(100,050)				(66,734		)
Comprehensive (Loss) Income attributable to cbdMD, Inc. common shareholders		$	(9,495,671	)		$	12,863,029

cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(unaudited)
		Three Months Ended December 31,				Three Months Ended December 31,
		2020				2019
Cash flows from operating activities:
Net (Loss) Income			(9,395,621	)		$	12,929,763
Adjustments to reconcile net (income) loss to net
cash used by operating activities:
Stock based compensation			248,894				542,574
Restricted stock expense			15,279				138,000
Issuance of stock / warrants for service			35,712				-
Impairment on discontinued operations asset			-				38,002
Depreciation and amortization			232,658				113,252
Increase/(Decrease) in contingent liability			8,500,000				(16,898,006	)
Realized and unrealized loss of marketable and other securities			(542,709	)			62,011
Termination benefit			305,326				-
Non-cash lease expense			304,080				382,432
Changes in operating assets and liabilities:
Accounts receivable			(110,072	)			755,515
Deposits			24,000				(22,365	)
Merchant reserve			-				106,590
Inventory			219,859				(1,005,631	)
Prepaid inventory			(48,184	)			(237,753	)
Prepaid expenses and other current assets			(310,268	)			(100,803	)
Accounts payable and accrued expenses			(1,500,755	)			454,490
Operating lease liability			(237,952	)			(318,758	)
Note payable			-				268,115
Deferred revenue / customer deposits			(22,701	)			(7,339	)
Collection on discontinued operations accounts receivable			422,417				166,667
Deferred tax liability			(332,000	)			(2,240,300	)
Cash used by operating activities			(2,192,038	)			(4,873,544	)
Cash flows from investing activities:
Proceeds from sale of other investment securities			540,000				-
Purchase of property and equipment			(93,294	)			(555,674	)
Cash provided (used) by investing activities			446,706				(555,674	)
Cash flows from financing activities:
Proceeds from issuance of preferred stock			15,798,115				4,421,928
Note payable			(13,564	)			-
Preferred dividend distribution			(100,050	)			(66,734	)
Deferred issuance costs			-				45,368
Cash provided by financing activities			15,684,500				4,400,562
Net increase (decrease) in cash			13,939,168				(1,028,656	)
Cash and cash equivalents, beginning of period			14,824,644				4,689,966
Cash and cash equivalents, end of period		$	28,763,812			$	3,661,310
Supplemental Disclosures of Cash Flow Information:
		Three Months ended December 31, 2020				Three Months ended December 31, 2019
Cash Payments for:
Interest expense		$	3,672			$	8,221
Non-cash financial activities:		$	254,950			$	178,513
Warrants issued to underwriter

cbdMD, Inc.
SUPPLEMENTAL FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP ADJUSTED INCOME (LOSS) FROM OPERATIONS
(Unaudited)
GAAP (loss) from operations			$ (1,759,945)		$ (6,112,597)
Adjustments:
Depreciation			232,806		113,251
Employee and director stock compensation (1)			264,174		680,574
Other non-cash stock compensation for services (2)			35,713		91,069
Accrual for severance			403,412		-
Accrual / expenses for discretionary bonus			300,000		222,500
Non-GAAP adjusted (loss) from operations			$ (523,841)		$ (5,005,203)

(1) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.

(2) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.

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FAQ

What were cbdMD's Q1 2021 financial results?

cbdMD reported Q1 2021 net sales of $12.3 million, a 22% increase year-over-year.

How did cbdMD's operating expenses change in Q1 2021?

Operating expenses decreased by 15% to $10.7 million in Q1 2021.

What was cbdMD's net loss in Q1 2021?

cbdMD's net loss attributable to shareholders in Q1 2021 was approximately $9.5 million.

When will cbdMD discuss its Q1 2021 results in a conference call?

cbdMD will host a conference call on February 9, 2021, at 4:15 PM Eastern Time.

What is the stock symbol for cbdMD?

The stock symbol for cbdMD is YCBD.