KSHB - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Kush Bottles Fiscal 2017 Conference Call. Today’s conference is being recorded. At this time, I would now like to turn the conference over to Phil Carlson. Please go ahead, sir.

Phil Carlson

Thank you. to fiscal welcome results XXXX and call. conference afternoon Kush year-end Bottles financial Good this be call Investor of replay The will of Kush Relations archived the Bottles website. section the in

that and risks please are a me conference begin, subject Kush may statements to The management uncertainties number cause forward-looking Bottles course current are we Before based call, remind you on that of during may let this statements. forward-looking risks make of the to expectations and are a filings. factors. in forward-looking in differ factor materially present of results statements note, considered Safe These section expectations. actual outlook we risk outlined is from be as Also any please these the management the our as Any any Harbor and light SEC not of McCormick, to Mr. With does Kush the fiscal the the Nick, future. Nick for obligation call any and Bottles' about results forward-looking financial Officer, quarter in Chief over I Mr. Chairman hand on Bottles' in ahead. now Nick. go the call Company's Chief the like the the today revise the to will go would me to undertake Executive Kovacevich, Jim into later With of please detail call in that, year. are became Officer and fourth statements today, who Financial should Kush

Nick Kovacevich

everyone in we Fiscal our and to as to listening chapter. new fiscal conference who's Kush welcome a was XXXX today. exciting and pivotal call a earnings Phil, here you, year Thank began Bottles year-end for

of $XX.X fiscal with the momentum throughout of fiscal the XXXX. Our resulting year XXX% sales record increase full year, gained for growth revenues compared in million XXXX, an steadily

about that accessories the Company's the drive recent created product and pace and shareholders we expanding, give time one start conference of to achievements packaging, update future believe of Kush vaporizers, our further calls this growth. supplies, rapid at libraries the industry. in to Company to is the Bottles' cannabis quarterly hosting We Given largest the the was clarity about branding to right which strategy solutions we felt have

vaporizer bags, and Our bottles, top other products include and bags, pop barrier accessories, containers. tubes cartridges exit

Our compliant comprehensive the with compliant to mandated regulated to and products branding and the requirements, allowing solutions offer industry. us are customizable state

businesses, base consists processors growers products, from of cannabis client retail Our medical legal store or cannabis fronts. producers dispensaries ranging of to to and to infused manufactures

As cannabis the billion regulated the reach to and market expect as this most many a legal black public market, within XXXX, including analysts in Increased move decade. expected favor number as has as next legalization from the cannabis markets increasingly over to I'm cannabis internationally. high $XX medical you states and of of more into cannabis in billion which rapidly are benefits aware a growing of an the drive benefits of and both sentiment both turned domestically of sure District changes supporting XX of that social is cannabis medical of and market, commercial Colombia laws commerce. awareness form the public helped regulated currently XX% the the having cannabis use of is place U.S. in regulatory Positive fashion. legalized XX in purposes. U.S. unprecedented policy led shift opportunity in polls controlled record with some and have legal real sales cannabis population supported changes reform, legalization showed only use. presenting or for now sector. years highs for perception of in The recent are has This to American cannabis perception $XX ago, the very adult most XX% of support away year rise now legalize

ensure this in the and explosive cannabis value continuing greatly and businesses raft marketing a unique With to this Kush from market, come Proper transporting has As benefit responsible and legalization to cannabis expect is packaging, labeling one Much the use services legislation plant. added legislation products of this to of on into power safe of entrants designed cannabis. now legal of early focused new by of era and growth and the the layer ensure in are Bottles this provide businesses new is packaging space. businesses they for cannabis perpetual up guidelines. are to companies changes adapt in vital This child to adds laws regulations. evolving, compliance regulation. are cannabis laws and constantly packages in that must ever to Cannabis regulation the to to as ensure because markets in are accordance keep tamper with companies state local struggle another with with Furthermore compliant. of evident, remain properly labeled changing resistant, their the general many and in forced complexity

it our establishing clientele opportunity complicated to that and value cannabis a provide as presents services looking unique processers, Kush a for and to also their to producers added retailers this of also while However, regulatory itself are identity. unique partner navigate landscape brand establish Bottles own

Company around rule legislation our We new sensible packaging consumption. compliance market and as diversifying cannabis solutions of sector made about product capture several to SKUs. year XXXX, cannabis and to a of in makers initiatives continue craft in leverage in We've the to a leading market states offering the the progress to significant the Throughout provider rapidly share we our solidify the intended implemented with position educate growing while and market. cannabis working series several marketplace growth by including additional launch to of the throughout ancillary products the

expanded pre-roll Kush we wide-mouth We the also of on the proprietary child our our patent top offering Canister, feature container of products, launching also by customizable and one selling product a a resistant secured tube. unique the

to reputation, forms brand our of line have of -- supported sales advertising significantly the unique power beyond. comprehensive and mimics highly by are which a fiscal alcohol client cannabis These marketing branding our of renewed partner market look industry ability expanded most we influence also most provider such positioning full for California, marketing three instilling a To is of events. to established working traditional are protected cannabis The as by on in industries businesses. developing has client for in target brand packaging device. paramount which products client continuing one only investing our to The secrets, Wisp three as focus way, late hard provide are Washington. regional as and Cannabis, and and technologies strong to competition, of largest our their hiring product. operating for packaging is our are also are partnerships maintain we own relationship and importance to clients the industry Increasing the legal expected former their unique our our ability patents, also grow purchasing world's Colorado state especially our to are and system fiscal HIGH recognition and executives. their they're we CannaKorp where customized value We've and broaden an the the reliable as commoditized for it of and packaging are allow efficient a XXXX clients, differentiate also geographic where product, product companies a the Keurig agreement is cannabis packaging distribution see footprint, they clients managers in innovative sales names of the signed complies help cannabis system. strategy. with by best and Cannabis brand support headcount operating. of facilities, line, agreement the national dubbed, stringent service increasing year. to product. trade aim Cup Many reach unlike cannabis This where and sustain their XXXX. with And clients examples highly while vaporizing base pod-based and strong our build decades, sector. an grow TIMES in most overemphasize provide and safe in and us support have to and Cannabis of of to to reach in has marketing aim Including the our new producers well strategic single the it's Custom Keurig result marketplace. a with enter of of credit one costs, to launched many industry we or decisions cannabis as the Its program a packaging Cup branded industry the been brand solutions build but names packaging building to to heavily making value sales loyalty market national TIMES market forward The led us tobacco not integrity other is of this enabled CannaKorp the our renowned the their with of solutions, and their two solutions sales in conjunction to company. of events improve sector market and used current premium to for been started In requirements brand the from expanded to tailored almost forbidden. prominent to we relationships HIGH ahead in a We've throughout in of consumer just proud a form and provide our they their As in way the leading an this while customers established is first providing a order where the this branding In brand, several is

focused markets. sales Our a the Nevada, are legal grow hired California based Nevada strong the handle opportunity in the West these team with which established states we To platform Las we representing the predominantly support a from largest with growth business Vegas. market rapidly in to immediate growing efforts on new and the cannabis have Coast in and and

reported ready growth the is we were in XXXX. X.X unrivaled in last state, Kush largest already expected Bottles we scaling early even business. XXXX, and where local are for pounds knowledge a million, and producing when have based at revenues reputation, client also As sales a the part home contributing It our poised to California result, cannabis dynamics. XX.X record the start sales formed commercial commenced QX million July which in of XXXX, is in to California market least our cultivating rapid we ramp market we and adult-use in was cannabis activity significant of year. of With more to adult-use approximately

to sales growth. substantial BXB fuel ahead, expect California portion Looking our of a we

Bottles as new Bureau of to our it the huge our demonstrates influence choose and this the BCC the hundreds under from, industry. of example an and to known honor, the President, state's Kush a has Cannabis which was we in sector, to BCC. Wu, presence This in appointed as the committee is reputation Ben of Control applicants As the cannabis established in have California’s advisory October cannabis year, extent

look and To XXXX are to opportunity growth M&A We in Kush anticipation forward California’s also the coming excited in Bottles adult-use sales pursuing forward accelerate we growth. an are adult-use strategy. drive leveraging of about the our actively and this online to legalization, California

and professionalizes, their As the seeks we are market operations share. consolidation witnessing scale matures market and gain rapidly as market to company

we and market, to complementary based. strong grow smaller As the major in our to diversify are in early in offerings a client a with participant player businesses position and acquire

and made acquisition CMP already us acquired we earnings. strategy. with the did to packaging growth reported category to grow core not as market strong the and expand our in have of headway It We the and we And as fast-growing and and market, a propelled which allow bring well Wellness, profitable in before therefore XXXX. QX immediately also XXXX, accretive May of in into significant the opportunities CMP and our the vaporizer business is been drove California’s which revenue us has business in is presence vapor an participate have revenue synergies accessory. to a area growth ability the

portfolio to opportunities broaden to build our financially that ahead, to out have further businesses will business. Looking M&A the product continue the be and targeting we sound potential potentially value of alert our

value provided to driven are that picks gold like Bottles to shovels our gold our the the We compare for all miners and at in times loyal mission to Kush by rush. to merchants I maximize shareholders.

partner compliance both with industry us and the directly in ancillary of cannabis the to branding, companies over companies enables packaging, due distinct growth the advantages touch a that to as positioning several Our plant. participate

which No their they stateliness limitation from For that starters, across establish that supplies the touch and scale growth. Kush economies the state been of provides plant federal law cannabis as every as Company prevents the market. the to transportation exists such result, growth of for achieving has a cannabis it successfully we our as presence And legalized accessories in have Bottles, sales to market. able hinders a U.S.

other in sales some expanding are have Canada and also international We in market.

easier Supply is have Sales attract year reps, all a to help do we and VP place plant, support the is sales of and excellent several team. to of the And platform Company's talent operational to ensure we Chain, not to will touch growth. it record As senior of a management we this appointed our track believe in Director whom our

products sales Our over we once generate business Furthermore, no clients of has and from the this client model are stable relationship, the which supports we we have we also established to that strengths. activity sale a our repeat Many disposables, have several can represent meaning reduces client concentration risk. indefinitely. client XX% sales sale, of other

Jim in that, McCormick, Kush of can has is cannabis multi-billion us and has with results welcomed time talk the now We that at yours. challenges Stardust the in will extensive Bottles market and his call companies. Jim network Jim working year. Kush face. believe will He the our cannabis both participate have financial we are strong both tobacco avoiding for reasons the experience I many at to Jim, dollar experience successfully to Chief CFO sectors, lobbying the Bottles. and delighted team we fiscal through these as the who floor Officer emerging turn as cannabis him from Global companies other the Financial to With working a For August. and over in while also

Jim McCormick

pleased you, the as have Thank very opportunity of be CFO I'm part in Nick. Bottles' be my to team. capacity the Kush and to here

Kush sector. Bottles, consultant a served prior to as management cannabis As Nick California's mentioned in the joining I

totaled of of $X.X about million including The This is XXX% from consistently $X.X was experience cost XXXX. includes I'll X, the that XX-K, and compared year's of intangible on I and up sales as acquisition of assets of positions achieving May it in in XXXX. the associated to join achieve a of million increased This million majority by to CMP Securities compared months were SG&A net tax also filed I'm XXXX, overall today. in Wellness, the generated year steady for industries margins to financial million $X.X balance will increase and in in the had from the primarily were a from hope the The strong cash were the fiscal XXXX million, $X.X this Gross concluded expenses my Wellness. Year cost, million related August million in capital globally. this the Kush XX, revenues $XX.X a with increased end four fiscal fiscal compared operation we for on for at which prior fiscal in August capital in result including XXX,XXX issued revenue. and the our in Depreciation million growth remaining Stock income size Commission now X.X profit of on However, our our fiscal expense of expense of X the British rapid the excited approximately year force. XXX,XXX CMP working million on dedicated and increased continued approximately Company in amortization expansion range This senior million year. of due This financial multiple and to Form acquisition amortization number is specifically by in organic sales a Nevada. a go with can Washington provision the GM, exchange XXX,XXX career of due X payment $X.X amortization and American XX, profit XXXX, a be to in to to growth the supported year year result CFO XXXX. which managerial was includes California, compared results. Exchange expenses roles and time in sales. a profits in which year. acquisition of surplus the cash up order and XX,XXX Tobacco to At increase due Bottles volume we at operating leveraging customers, Operating $X.X when years. details my on $X.X with of spent prior to average XX,XXX higher services. Gross states the in of I which of Total the results. both go XX% of growth into XXXX. with stock at to around stock XXXX, as option for million XXXX million XXXX, order fiscal compensation of of a increased XXX,XXX $X.X in Roll-uh-Bowl working fiscal found from

now driving I'll Looking we to back this Carlson With disciplined session. the seizing the ahead, unique business for call to intend and practice financially that, Q&A to turn to continue Phil a approach opportunity. the

Phil Carlson

Jim. you, Thank

is view The the the the question regulatory Company for current Nick. How first market? in does risk

Nick Kovacevich

this market a come dichotomy and the to actually climate. regulatory state-by-state. have we and think We continue Kush balance It We a exciting in federal that evolve of call coming we is established prefer here have more this where see we to operate online We the dynamic and even of and a Bottles sheet some lot creates growth like lot very interesting $X where between established market an state illegality. We legalization in to in think yet soon. certainly companies, the operate marketplace. can it billion state more what a presents markets going industry company

then And in some Amendment being such in Rohrabacher-Blumenauer medical state any to Sessions, in and as and cannabis. In cash markets from they're amount larger produces, policies Justice funds in disrupt people been when the place behind deter with that looks of especially federal from with of and happening. some to government at amount to level look the to the stands try come the Cole that federal it Department there's able cannabis at these makes the used the terms are to of stick of be it of the federal it on also unlikely states of Memo. Jeff that at like, cannabis their now the is which level arsenal have have infrastructure ultimately and place going prevent to someone that prevents lot revenue There legal and that a cannabis, going idea and protections ammo adult-use that's and of some highly prosecute

this a state-by-state to unfold regulatory thing actually lot think we're to opportunities and presents climate this see continue of So, I unique excited here.

Phil Carlson

Perfect.

question Second any Company activity? plans have M&A Does Nick. is for any do further to the

Nick Kovacevich

Well.

the and getting to and first We're to continuing organic foremost. our is on Company that's think be I facets focused in that and and that organic growth. our going we of reinvesting are business remained growth. important all thing most the grow

of themselves. to at present we're M&A, terms In look certainly going that opportunities

Our look additional or to markets. new products focus that additional exciting either provide to be going is new companies at

So, a Wellness are with not unique are products companies vaporizer IP, sector these Bottles companies Kush markets in in sector, companies more strong. books that new that as they're either, where of other is the in or like potentially have that business, are protected have currently CMP was big

folks kind So, be the a if leader company we're that we weren't public we the growth, And as in market would evaluating all at. again, opportunities space, to organic the to be looking came that focus those going as of are but on certainly across. going we're a remitted

Phil Carlson

Nick winning new increasing most revenue of the market? come existing new are revenue with into as accounts/opening customers growth from

Nick Kovacevich

services based. client come drive grow, from growth and have grow. existing revenues able clients our The products existing our we’re of as through of they our additional that we Most to

from in rollout like expand new for the and ancillary Nevada X, know the has to a Kush there January these major commenced in markets, that was a on in We that here of market. the Bottles California new XXXX. like certainly when suppliers cannabis to online, As state finalizing that we event sales is markets. XXXX in then event July major additional catalyst rules be their for another coming going businesses the catalysts temporary adult-use growth adult-use And markets come Nevada they the expand new

now opportunities our regulation regulation business going know the had able backyard to going in our of for legal expect and since Colorado, in to a this California XXXX. the tremendously is again to this We also actually effect and State laboring. create time require We around advantage being we with in is positive January take first XXXX X, here should saw that packaging this be California come market about we cannabis

Phil Carlson

competitors? entry? barriers who to are Jim, Company’s main And the Okay. are there

Jim McCormick

the you drop competitors We Right might company come really does of Bottles sort do which companies, the coming as two in state been very fragmented. and the that, And totally now, have is today, quite move those product the Kush highly it to different, what and about When the the in a is distribution doesn’t quickly and regulations on really national highlighted routes consumer similar each routes that just just question model is sees in long, people local They of to offering to are scale. the cannabis we funded unique things dispensary get move regional off beyond been traditional and do. market why themselves. around different, into call by haven't market that's some some cannabis space your in currently on players and of different market market well goods it’s be. it’s the from

I have certainly that are as with the have built relationships as many And we with relationships replicate. strength well to the that difficult years. over very their In they company have those our both Wellness can’t through the underestimate relationships. it’s and cases, customer. So, been And our CMP

So our barriers in we gaining in fairly to believe there substantial scale are entry sector.

Phil Carlson

there patent anything protected about your unique or products? Okay. is Nick,

Nick Kovacevich

other being at we that to business ability our the advantages since to make has several XXXX, that public We look unique. Well, a company acquisition. have, capital, competitive been first that a definitely one access being around has and mover is

that sort offer, being X,XXX the stop marketplace. over of we're offering shop we so for have product one Our we very SKUs vast,

today of so on as were cannabis ago. involving dynamics two you than ago the years highly Our different certainly five shelves the product dispensaries years differentiates only with industry, and the not saw certainly products of the mix trends

of we evolving dynamic part that and process. to have So, as be

One of we We of suite can distribution our year our proprietary, IP that products of to do starting the clients. patent in of the the few market Bottle. that’s this is across uses But long-term again major terms Kush get goal that’s that. protected container to has IP trademark. multiple launched so, our for efficient companies product facilities a all build-up specifically one very of proprietary our with Canister, some exclusive whether sort Kush and we’re or it’s the And that manufacturers' wide-mouth to which

We was our also the feature few been were granted for That on a something we've huge patent application customizable years. of in pre-roll with tube.

We also pending purchased is the also rollable like patent We've brands BudGloves. which created product. unique unique several

believe barrier continue the going the to look best to to strategy, portfolio products is defensible that to long-term we're So, entry be we and of develop the going a to building to marketplace.

Phil Carlson

its does Nick, contract Where manufacturers Kush product you partners are manufacture Or located? have hit in-house? do Okay. ladder? those the

Nick Kovacevich

also to use are in with a is variety stocks, can manufacturers. a sources our a have get a to no So we at Again, products products manufacture delay we portfolio when where of product clients by shelves, lot once. do clients create so go this We inventory everything be new place And lot that we value different our on so of contract those of have, they need because have we procure so we've there of ordering. can having we diverse and have products.

domestically. here partners several We have

wide not effectively we those then these markets lines. work bringing But that on work are with effective products cost can overseas array side that with a we dozens state to partners manufacturing lines. product various domestically, and overseas compete across offer with as that the of produce productions of we there of lot product is we So plastic partners also we're different actually simply a

Phil Carlson

Okay. growth see XXXX? you in do of for objectives achieving obstacles one as Jim, what major the your

Jim McCormick

We tremendous sector our execution. there obstacle as we of really know in a year risk would upcoming it, see and going in is opportunity greatest the beyond. And to be be that the

chain very ability building examples it's building that will it. in-house, end, system such leveraging be has opportunity know will the that's type its those position management that best at be get out ERP work that supply capabilities, opportunity example business of the practices that are out there, to in to our there every end, and companies. now, types we in implementing And to and worked scalable companies that maximize best that implementing we model we been Fortune XXX single such here for world-class Global out I possible in day. go So and To processes Company our and the aggressive the

I really capabilities we our to everything it. go as see continue will it's and have So about execution, to out point, this just build we've then it to done get

Phil Carlson

Okay. Last expectations question, issuance/dilution equity the shareholders? Jim. for current the What of future are

Jim McCormick

of we just all we and on a We I'll get a seriously. investors. it's as minds the the matter that question. it's question on this And fair the say understand time company take the of very dilution

a to time. going basically zero $XX is However, we to that billion in unprecedented plus from understand of category unique this have that's amount

not So earlier to our accretive take to come in financially, and be we but as need Wellness, internal advantage environment, on within do product opportunities such highlighted et just Company, leveraging Nick opportunities from an the CMP of those processes, lines to the in that way as call. position a cetera,

a process review. but for at as we -- opportunity great that's just So situation as look we it's again Company have with us, don't a have an internal take as to We the might well be potential investors. an very where shares. miss any would of top issuance of that you the want whole of mind We will hard

Phil Carlson

Okay. over turn back call Nick, to we'll the you for remarks. closing

Nick Kovacevich

work Kush on to our of for all first thank earnings supplier join in taking businesses Bottles, cannabis us ongoing your leading the support for cannabis and Alright, call the time provider become to to industry. and you the everyone as for we

the capitalize policy. million excited that and pleased year client are full The effective have platform for both the a more focus Nevada the which in vision, has every Today, and believe the but us to fourth like our We've pleased have pivotal time strong how strides conclude and of experienced that fiscal we scale, Bottles gain like and we cannabis only receiving and -- branding in looking that call, shifts growth to have in as XX both necessary footprint million we XXXX, of strong can financial of quarter very in more in used fiscal to for We and successful businesses at sales legalized aggressively such with operational Nevada XXXX. government operationally. business. we Kush believe about we and changes two X.X states a terms we're infrastructure large from we made year. to our quality to advantage markets public new not would the expand developed to surging reiterate packaging and once emerging Before months have cannabis we've to record Already, we in excellent progress reporting the an plan extremely we we're expect opinion over been the in the California. sector, markets to an in quarter achieve in especially high build opportunity new in solutions great revenues cannabis leading share build and again market first-mover on increase we approximately are financially and this the and the California, I XX to past remain areas have made

you. and drive quarterly line to on look net for is forward achieve is our position to current juncture I conference and sales Our top an Kush Bottles our updating income XXXX strategy our call. all next leverage progress at growth. exciting effectively for you Thank This to

Operator

We And all thank that call. conference us. does you joining conclude for today's

KushCo (KSHB) 28 Nov 172017 Q4 Earnings call transcript