Earnings call transcript Q1 2023

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Operator

Good afternoon and welcome to today’s conference call to discuss Greenlane Holdings First Quarter Financial Results. A press release detailing the financial results for the quarter ended March 31, 2023 was distributed today and is available on the Investor Relations section of Greenlane website at investor.gnln.com.

As a reminder, today’s conference is being recorded. A replay of this call as well as a copy of the supplemental earnings slides will be archived on the company’s website at investor.gnln.com.

On the call today are Craig Snyder, Chief Executive Officer; and Lana Reeve, Chief Financial and Legal Officer.

to would contain remind may forward-looking forward-looking in Greenlane prepared that make begin, statements may received. remarks statements response we like listeners to today’s additional Before questions the and management statements not placed should not undue be future and upon performance These therefore do reliance them. guarantee company’s release. uncertainties statements factors and the expectations discussed are the involve in current on and These press other inherent based today’s of management risks and live as call May also information time-sensitive date XX, broadcast, This the that speaks XXXX. the of only contains

that could update today, results this XX-Q on forward-looking Greenlane’s Greenlane and statements quarterly and cause set Any forth to obligation today of result a as form are Factors in call information assumes no differ are in of filed report these release SEC. new made materially with based the today’s to events. or on press statements as Greenlane’s future assumptions

non-GAAP adjusted of reconciliation including non-GAAP is During website may measures, press release, section the adjusted today’s available a investor.gnln.com. at included company’s financial has which in and discuss Investor SG&A of in Greenlane today’s Relations management Greenlane the measures call, these EBITDA.

Craig. Officer the Greenlane. would Chief like Snyder, to Please Executive I Mr. now go Craig over call turn to ahead, of

Craig Snyder

Hello, call. everyone quarter you our XXXX attending first and thank for earnings

executing We for Greenlane been profitability. have busy transformative here on strategy aggressive our at our path to

our number relentless strategy. advancement number growing a a in we performance maintain and segment; three, three to position one, as end on key two, continue omnichannel developing As focus and and mentioned product call, XXXX of for our continued disruptor leading in I Greenlane: year during profitability; our global our areas innovator enhancing concentration number

XXXX. tangible remainder our optimistic for made are of and first have quarter during the progress We

segments pleased reduced we million First, to industrial QX our sequential our our path growth operating expenses growth from this period. this XXXX revenue profitability, have reduction X% growth, improvement XXXX a in QX XXXX over XX% decline showed have an from $XX aggressive to QX We with million $X $XX XX%. of had inventory Consistent consumer million during QX QX of to margin XXXX and in full Gross XX% are showed QX Both QX in to margins announce X%. compared from we XXXX, we a slight of that in total at showed or to to XXXX due QX XX% XXXX year XXXX XX%. in management. a to

XX% year-end believe Greenlane emphasis gross consumer call, As to XXXX this our we XX%. and our This has accelerate by We reduced provide have in labor-related and administrative path total our we led profitability. industrial reduction I general operating improve to expenses brands on reside. our our expenses will mentioned higher-margin our expenses where by by and during significantly a segment profile Year-over-year, XX%. have to reduced overall our restructured business, margin

of also growth trajectory improvement to created year-over-year reducing a operations. remainder up our XXXX. our across has XX% We in on from have a on focus profitability for quarter-over-quarter seen and expenses board healthy path continued our the the loss Revenue

value is with Let’s DaVinci Eyce, And house first our on extremely are next. a product brand, move and quarter at product point. innovation newest from price innovative brands. of pleased quality our to Groove, we our innovation, at three on launches which offering products XX aimed

our in due revenue product our already have We seen launches. to innovative positive impact

Line. and ORAFLEX Eyce the the Polycarbonate the & Eyce Acrylic Grinder, MIQRO-C; Spark, Shorty our Pivot Grinder, include Glass launches DaVinci Ripster, Hi-Pop Opener, product Bolt, QX Groove Rig;

our consumer see DaVinci, expand second beyond continued new which customer we be from expect traditional new by continue the these product quarter, a the brands Our with three product market, from segment. reach additional And from products well will launches to consumers. the received to slated in revenue including growth brand’s

design. products a also through reliable and sought-after a omnichannel also brand, to offer our auto and between global collaboration released with grinder house their modern platforms. our PAX successful Standards in has We Banana sleek with and had popular the Greenlane Higher our reestablished Bros. partnership

global vaporizers.com our redesigned updates management our to order and We more from our I’ll on user-friendly and relaunched integrated efficiency. strategy, customers for with migrations our allowing EU and advance and now relaunched Vapor.com anywhere the accomplishments On touch experience Shopify a continue BXB to websites, omnichannel BXC improve and completed strategy. that site DaVinci XX/X global worldwide, to and

Canada, expanded launched profitability. We allow inventory market XX%. also for which enhanced enhanced our allocation America, global product partners spanning globally year, channels brands lastly, our South to Last partnerships and Rico. performance enabled Puerto continue and we our Mexico us an marketing across distribution These reach management to tool to announced worldwide. with us have reach platform, by and we developed scale market And improve launched of consumers expanded higher-margin and strategic an into penetration

parts solutions As been are decisions our industrial intensive, to contrast allows our in and strategic partnership as us continue products. and cash industry. MJ restructure some challenge We in and profitability. Greenlane packaging a known strategic some capital goal in operations consistent very Greenlane’s timing continue providing in leading strategic announced help industrial a of we’ve with Greenlane cannabis customers. our to Pack made our working a enhancing MarijuanaPackaging.com, us Global flow business consumer we provides to now the these to for higher-margin partnership solutions provider our MJ consumer packaging investing capital Because announced, A&A toward business. to Imports, recently is business of Pack to has partner better of This

initiatives also we quarter, savings continued over that warehouse will consolidation exceed of cost-saving key million $X and annually. a During estimate we completed this

to Lana run detail. to further turn financial our it now over in I’ll results through

Lana Reeve

you joining today. Thanks Craig the and hello call everyone. Thank us for on

at of reminder, for a in that Relations results website investor.gnln.com. EDGAR be reviewing Investor I As earnings our the on release is can be the our found you will available in section

sales. net with Starting

approximately X or months XXXX, consumer segment compared of million increase $X the for increase. of of XX, $XX December an X.X% of were a an net million increase ended goods $X.X increase For the industrial total primarily and $X.X sales or first segment in the quarter quarter-over-quarter representing $XX X%. increase The million XX.X% million in XXXX, approximately or was million driven increase the an to by

increase of to year-over-year. major XX.X% in-house in sales to decrease in third-party the first and net while and in line with strategy revenue carry consumer $XX.X driven our higher The net The efforts, shift of Bickel our million Storz goods margin was that company’s generate profile higher lower Eyce $XX.X our was representing segment through to offerings, compares due which million revenue a reported the year-over-year a on total sales. for restructuring quarter XXXX, & our This or by PAX brand rationalizing decrease in brands sales top margins. the focus

top significantly The VIBES sale company by been of were sales intention reduced. revenue in the company’s the result, its brand and adversely is packaging of the has which in its during to focused a Net also company’s affected profitable as sales. line revenue, the XXXX announcement and on affected business, interest minority sell

to X.X%. representing gross QX million million gross profit of of quarter for margin million to Gross by For to due of for versus or decrease margin quarter. prior XXXX XX% expense QX for goods impact for of prior compared due $X.X inventory to $X.X the million XX.X% to sold a and XXXX. XXXX, a decreased QX margin negative $X cost The X.X% of compared the staff the $X.X $X.X to for adjustments decrease quarter, was in XXXX first is

XXXX. QX XXXX, recorded in the million compared $X.X XXXX QX for gross for impact QX negative XX.X% Excluding is XX.X% margin to

gross company of margin gross profit for XXXX of for $X compared XX% XXXX. XX.X% QX margin and gross to million The reported QX and $X.X million of

QX of the for and QX for compared XX.X% $X.X million write-offs inventory gross obsolete period same XXXX of XXXX. Excluding XXXX, decreased $X compared X.X% in XXXX to QX for to for inventory damage margins XX% to

Total million XXXX compared XX% prior or million to to $XX.X operating expenses the $X.X $XX quarter. million for for decreased QX

million $XX.X The the reduce by result $X.X on a corporate or ended operating XXXX, operating $XX XX% same business impairment prior in a which decrease for a period XXXX. total in $XX decrease Total the workforce XX, decreased cost million XXXX, focus restructuring company of to X for compared to were spend to reduction expenses greater the quarter. to our $X.X as for decreased operating March of to months million the revenue. $X.X XX.X% intangibles The for related major and quarter, the and of effort to expenses percentage throughout ongoing is Excluding is million the to related or rightsize QX approximately million profitability. million reduction compared to by XX% initiatives million a than $XX.X charges

quarter, of loss company’s Holdings, a in prior has asset for or same Net a Inc. to was The or for $XX.X million $XX.X first XXXX attributable Net to the company’s a Greenlane reduction prior share focus of for loss $X.XX $X.X efforts million for million per QX business share was attributable reported to of $XX.X of resulted diluted $X.XX XXXX. to compared loss to or the loss the an impairment XXXX net of Greenlane million to in $XX.X Inc. the compares Holdings, period share loss $XX.X on and diluted quarter. million compared and for quarter profitability loss in and compared rightsize million and $X.XX intangible net a basic $X.X XX.X% charge. the and XXXX. This basic or loss per diluted QX $XX.X of net the basic million per to million inclusive

We $X.X of recently XX% year in $X.X $XX.X existing ended million continues over operating cash capital The employee prior period and EBITDA the as reduced quarter. the the million efficiently with of $X.X $XX loss continue The same $X.X reported from with while with cycle $XX for focused The will improving $XX for also reduce its December flow XXXX and the the cash operations XXXX. XX, from more million inventory February capital We in loan to to million loss managing to company ended receiving net company debt. of levels. credit. in December focusing on million sale a inventory lower EBITDA XX, was compared in XXXX. quarter by facility $X.X $XX.X company the XXXX. retention million QX million of $X.X comparable of million versus working The as million for the loss total million compared million, Adjusted of working on company this quarter to adjusted a

it back that, With turn Craig. will now over I to

Craig Snyder

Greenlane a innovative effective XX on focused initiatives Thank product and quarter-over-quarter cost for of and future Lana. growth. to roadmap outlook launches. it its for of and maintain management strategies leadership performance for in and XX% well G&A reduction remains positive innovation the improved summary, profitability continued to value in a ability In industry. you, its in delivered improve, growth revenue generate its quarter, strategic position position new X%, company’s during profitability. achieving Greenlane quarter-over-quarter shareholders We maintain market financial the with The improved a confident

will today the to Thank over back time you look for operator to your and forward now your turn it to Q&A. questions. we I begin

Operator

is Instructions] Grey Alliance Partners. [Operator from question. Global your with Aaron question Your first post coming Please

line is live. Your

Remi Smith

Smith for is Remi This Hi. Grey. questions. Aaron the on Thanks for

is coming when margin speak can partnerships And for you together both first in your realize in to then been packaging about CCELL the one those? made benefits my So for you models progress expected? business? the your just you Have expect and as asset-light do regards, those

Craig Snyder

is months we be months the challenging balance to seven sometimes we where through And Yes. the to those those for and we of QX when largely sheet from And continue for year fourth that’s on they to question, structures timing Thanks six of clear. as on excess the track are quarter It as One, that is investments quarter those affect in flow tied sale, currently receive in the manufacturer reason QX. and in with becomes invoice, the the to cash pretty payment. products, work doing the will Remi. inventory cash up third to expect. our yes, will

net And time. that for that expect this as net basis benefit into not refill us I I see revenue allows basis a run start the up revenues timing that for middle in period go quicker of of the think we cash just most expect of gross percentages to a business QX business. we will Meanwhile, through as been the event will move will rise. a to for really it margin on you already also significant and QX to probably capital paid in the with from recognition, the to that back mentioned, but the where have see decline coming funding to inventory that’s that and we lot will where inventory, So, line will a QX, gross as as won’t tied act have

Remi Smith

And Great. was XQ. the more that so in

fluctuation XQ, you for kind continue guess through little expect of a I do as inventory? work So, Is sounding right? that bit you to that more

Craig Snyder

start it Yes. is QX QX. of QX be see segment I timing the so main a off don’t that industrialized are is large of as pull MSOs inventory indicated. that some – in a forward well. and lot QX, strong for the as to Industrial little in on What was I to a QX us we determined think a in different. strong customers our quarter do we is

balance our off balance will sheet that back that start to the to from see we products that on recognized that have our and products where think is QX are are sheet now. transition I half you of

Remi Smith

my CPG to question, And then in of business. Great. your kind last regards

that a sales and high-ticket in over those of and mix little a high kind year, the talked new impact And about seeing on in any consumer are is constrained items? little how any the of you then for bit between And a your I from expectations then you ticket XQ wallet the product bit rest know items? Your low launches XQ. of

Craig Snyder

Sure.

there it’s wanted that the that And is to new Groove affordable. is for user. first, reason more and say launched that I think we have we the brand or we average approachable user was a product, – on approachable the much so

has the really very users little I of – other are that segment is be a and side barbell that more premium is want dealing for excess type we bit nice in to would continue and the do had may But and QX. affordable marketplace. to house space seeing We we where that And in $XXX. say QX Groove are lot us side really are you of a see the more the products. vaporizers connoisseur with more of see The experienced to where for in in in starting those start expect growth that therefore, in get a a just

in two well, board. marketplace. disposable segments are We play are the marketplace Groove seeing are strength seeing heavy across we and the Those where kind rechargeable and that the of will

modest mentioned, of the a on been more pull-through of So, and would in the a reflection, I is there of marketplace end still a the reflection, emphasis more of I wallet. consumer spectrum, that’s two or think more the blend, but say has the as new and the in online you more things, users coming

Remi Smith

Great. Thank I queue. back hop you. will the in

Operator

floor [Operator over further appear turn queue Snyder I in would remarks. to questions Craig closing for like be Instructions] any to this at now no the back There time. to

Craig Snyder

for Thanks call. joining everyone. your today appreciate and I the time Greenlane

make everyone’s updated to We and you Appreciate look continue against progress plan progress. forward Thank to that we our time keeping you. make today. as

Operator

Thank call. you. today’s conference does conclude This

a for your day. time, phone wonderful your at Thank disconnect and participation. have this may You lines you

Greenlane (GNLN) 15 May 232023 Q1 Earnings call transcript