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Greenlane Reports Record Q3 2021 Revenue of $41.3 Million
- Company Closes Transformational Merger with KushCo, Creating the Industry’s Leading Ancillary Cannabis Company and House of Brands
- Revenue up 16% Year-over-Year; Greenlane Brands Revenue up 26% Year-over-Year
- Company Targets $70 Million and $100 Million of Greenlane Brands Revenue for 2022 and 2023, Respectively, with Gross Margins of 45%+
BOCA RATON, FL / ACCESSWIRE / November 15, 2021 / Greenlane Holdings, Inc. (“Greenlane” or “the Company”) (Nasdaq:GNLN), one of the largest global sellers of premium cannabis accessories, child-resistant packaging, and specialty vaporization products, today reported financial results for the third quarter ended September 30, 2021 (“Q3 2021”).
Recent Highlights
- Total revenue increased 16% to $41.3 million for Q3 2021, compared to $35.8 million for Q3 2020
- Achieved second-highest sales level in Company history for Greenlane Brands, which grew to $8.4 million in Q3 2021, up 26% compared to $6.7 million in sales for Q3 2020;
- Greenlane Brands accounted for 20.4% of Q3 2021 total revenue compared with 18.7% of total revenue for Q3 2020
- Completed transformative merger with KushCo Holdings Inc. (“KushCo”), creating an undisputed leader in the ancillary cannabis industry
- Entered into agreement to acquire industry leading vaporizer brand DaVinci, expanding Greenlane Brands portfolio and intellectual property pipeline
Management Commentary
Nick Kovacevich, CEO of Greenlane Holdings, said: “Q3 was a transformational quarter for Greenlane, with the completion of our merger with KushCo creating the industry’s leading ancillary cannabis company and house of brands. Our first few months as a combined company have been off to a strong start, as demonstrated through several realized revenue and cost saving synergies, including the consolidation of certain vendors and infrastructure and the development of go-to-market cross-selling strategies across each of our respective platforms. We are extremely pleased with the progress we have made on our integration efforts to date, while simultaneously driving meaningful progression in the business. We also generated another strong quarter of sales for our Greenlane Brands, which, despite the normal and expected challenges of closing a merger, still represented the second highest quarterly revenue contribution in Company history.”
Looking ahead, we will continue to build our portfolio of higher-margin proprietary brands, as seen by our recent announcement to acquire leading high-margin vaporizer brand DaVinci, which expands our Greenlane Brands portfolio, and is expected to strengthen our overall margins and profitability in the near-term.
Nick Kovacevich, CEO of Greenlane Holdings
With our enhanced operations, customer base, and product portfolio, we are in a stronger position than ever to execute on our growth strategy and drive significant value for our customers, partners, and shareholders.
Greenlane Brands Outlook
The Company is targeting to achieve $70 million and $100 million in Greenlane Brands revenue for 2022 and 2023, respectively. In addition, the Company expects Greenlane Brands, as a whole, to generate 45% product margins, and to comprise between 22% and 28% of total revenue in 2022.
Financial Summary
Net sales were $41.3 million in Q3 2021, compared to $35.8 million in Q3 2020, an increase of $5.6 million, or 16%.
Adjusted gross profit was $8.8 million, or 21.3% of net sales in Q3 2021, compared to $7.8 million, or 22.4% of net sales in Q2 2021 and $6.8 million, or 19.1% of net sales in Q3 2020 (see notes below regarding “Use of Non-GAAP Financial Measures” and “Adjusted Gross Margin” for further discussion of this and other non-GAAP measures included in this earnings release). A one-time inventory rationalization of $8.7 million was implemented in connection with the closing of the merger with KushCo, resulting in an impact to adjusted gross profit. The inventory rightsizing initiative will allow the Company to reallocate resources to higher-margin, top-performing SKUs and eliminate redundancies between the combined product portfolio of Greenlane and KushCo.
As of September 30, 2021, cash totaled $13.2 million and working capital was $70.8 million in comparison to working capital of $54.2 million as of December 31, 2020.
Net sales for our United States reporting segment increased $8.5 million, or 29.4%, to $37.5 million in Q3 2021, compared to approximately $29.0 million in the same period in 2020.
Net sales for our Canadian reporting segment were approximately $1.0 million for Q3 2021 compared to approximately $4.4 million in the same period in 2020, primarily due to an expected decrease in nicotine sales as a result of the Company’s strategic shift away from low-margin nicotine sales.
Net sales for our European reporting segment increased 21.3% to $2.8 million for Q3 2021, primarily due to an increase in B2B and third-party marketplace website sales.
Conference Call Information
Greenlane management will host a scheduled conference call and webcast tomorrow, Tuesday, November 16at 8:30 a.m. Eastern time to discuss the results for its third quarter ended September 30, 2021, followed by a question-and-answer session. The call will be webcast with an accompanying slide deck, which will be accessible by visiting the Financial Results page of Greenlane’s investor relations website.
All interested parties are invited to listen to the live conference call and presentation by dialing the number below or by clicking the webcast link available on the Financial Results page of the Company’s investor relations website.
DATE: Tuesday, November 16th, 2021
TIME: 8:30 a.m. Eastern Time
WEBCAST: Click to access
DIAL-IN NUMBER: (888) 506-0062 (Toll-Free) (973) 528-0011 (International)
CONFERENCE ID: 714372
REPLAY: (877) 481-4010 or (919) 882-2331
Replay Passcode: 43437
Available until November 30th, 2021
If you have any difficulty connecting with the conference call or webcast, please contact Greenlane’s investor relations at ir@greenlane.com or 714-539-7653.
About Greenlane Holdings, Inc.
Greenlane Holdings, Inc. (Nasdaq:GNLN) is a global house of brands and one of the largest sellers of premium cannabis accessories, child-resistant packaging, and specialty vaporization products to smoke shops, dispensaries, and specialty retail stores, as well as direct to consumer through its online e-commerce platforms, Vapor.com, Higherstandards.com, Aerospaced.com, Haringglass.com, Eycemolds.com, Canada.Vapor.com, Vaposhop.com, and Puffitup.com. Founded in 2005, Greenlane serves more than 8,000 retail locations and has over 275 employees with operations in United States, Canada, and Europe. With a strong global footprint, Greenlane has been the partner of choice for many of the industry’s leading brands, who chose to leverage its strong distribution platform, unparalleled customer service, and highly efficient operations and logistics to accelerate their growth. Greenlane’s curated portfolio of owned brands includes EYCE, packaging innovator Pollen Gear™, VIBES™ rolling papers, Marley Natural™ Accessories; K.Haring Glass Collection, Aerospaced grinders, and Higher Standards which offers both an upscale product line as well as an innovative retail experiences with flagship stores located in Chelsea Market, New York and Malibu, California.
For additional information, please visit: https://gnln.com/.
Use of Non-GAAP Financial Measures
Greenlane discloses Adjusted Net Loss and Adjusted EBITDA, which are non-GAAP performance measures, because management believes these metrics assist investors and analysts in assessing our overall operating performance and evaluating how well we are executing our business strategies. You should not consider Adjusted Net Loss or Adjusted EBITDA as alternatives to net loss, as determined in accordance with U.S. GAAP, as indicators of our operating performance. 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 our costs, and 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 contemplated or completed transaction;
- Adjusted EBITDA and Adjusted Net Loss do not reflect other one-time expenses and income, including consulting costs related to the implementation of our ERP system and the reversal of an allowance against indemnification receivables associated with the EU VAT liability;
- Other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Because Adjusted Net Loss and Adjusted EBITDA do not account for these items, these measures have material limitations as indicators of operating performance. Accordingly, management does not view Adjusted Net Loss or Adjusted EBITDA in isolation or as substitutes for measures calculated in accordance with U.S. GAAP.
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.
Adjusted Gross Margin
Adjusted gross margin is a supplemental non-GAAP financial measure, which the Company calculates as total revenues less cost of revenues, prepared in accordance with GAAP, adjusted for certain non-recurring, non-cash items to the extent such items relate to cost of revenues, including charges relating to the Company’s inventory rationalization initiatives. The Company uses Adjusted gross margin as a supplemental performance measure because it believes that Adjusted gross margin is beneficial to investors for purpose of measuring the Company’s operational performance, exclusive of certain non-recurring non-cash items that are not expected to be incurred in future periods. Specifically, in excluding charges relating to the Company’s inventory rationalization initiatives, which the Company does not believe are indicative of the Company’s operating performance, Adjusted gross margin provides a performance measure that, when compared period-over-period, more accurately reflects the Company’s operational performance. Adjusted gross margin should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. The Company’s definition of Adjusted gross margin may differ from similarly titled measures used by other companies.
Additional financial tables available in original press release
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