Earnings call transcript Q2 2023

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Operator

Good afternoon and welcome to today's conference call to discuss Greenlane Holdings' Second Quarter Financial Results. A press release detailing the financial results for the quarter ended June 30, 2023, was distributed today and is available on the Investor Relations section of the 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 IR website at investor.gnln.com.

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

response would contain remind management forward-looking additional statements Greenlane prepared that may begin, received. forward-looking may questions remarks statements in we like listeners to today's make Before the to and the These statements and reliance not should future placed them. therefore, upon undue be not do guarantee performance expectations based discussed management in press the release. and and involve statements are of uncertainties factors These inherent other on current company's risks and today's broadcast, the contains also speaks information XX, date of time-sensitive live of call This only this that August XXXX. as Factors results set that Greenlane's differ forth XX-Q to in on in SEC. filed report cause and could Greenlane's materially with the today's are press quarterly Form release update statements of a result these on today made future call this of assumptions new forward-looking information today are assumes as Greenlane or based to statements Any and events. as on obligation no

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

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

Craig Snyder

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

a $X.X in in of by XXXX decrease QX million segment decrease $X.X million. driven The of each from of business, million to and key advancing products. $X.X revenue declined by was Consumer QX During brands innovative Quarterly made strides our with focus and Industrial on QX, we decrease at Goods quarter-over-quarter the the segments our house a our segment to overall. the including profitability new and primarily

from more Marijuana QX QX group, to has had net shift packaging Global and historically the expected restructuring can parts A&A QX; business be decline the recognition attributed The than quarter partnership business The model Packaging. with our X our factors: of where with modest of in consistent a gross seasonality our from change to to a

moderate to space that industrial which basis the related intensifies margins and do on agreement with As to our recognized will QX. a net we to significant increase gross, revenues versus being in in revenue accelerate activity expect

The we those In by have nicotine remain expect based to new to bullish products months. our coming business attract in feel on substantial in of partners very a purchasing the MSO continues e-cigarette and our business expansion many space the and impact to in partnerships execution Consumer new advances and the MSOs the segment. in we by our space continued return on our roots, encouraged the

total a QX our in $XX to $XXX,XXX. QX, in million operating from We expenses million have $XX.X respectively, reduced reduction of

attacked QX professional expect as reductions related We fees we reductions facilities, in have these to and technology. aggressively expenses substantial accelerate showing to

of line is of partner, to more believe, our our the We own through management, alone have $X company than eight completed save facilities, item The our customers third-party former experience consolidation with Verst. annually a facility's better logistics Greenlane. including million anticipated we give and

expect realize initiatives similar continue over the X quarters. those and and have next savings technology to we services being We in to professional executed

$X.X to million quarter-over-quarter. million Labor-related $X.X expenses decreased from

overall we from For the where XX, another in has X labor. $X.X significant June and to more the business XXXX headcount expenses of ended become million cost is area XXXX. million in $XX.X months efficient to Labor decreased continued in labor-related $XX.X and reductions both million expect

clouded number in QX overall to agreements XX% made labor represented we related severance the X executives overall have in These In the of QX, we which more of gains in of X labor. cost are former onetime nature. and senior than had charges

focused profitability. labor brings on to the We aggressively expect reduce overall to that cost business of to continue are labor structure and

million QX. Overall, in million in G&A to decreased $X.X QX from $X

XXXX. in million $XX.X June months ended or $XX.X XX% X in XX, $X.X from decreased million million the XXXX G&A For to

often the goal As company's profitable, in to in with as and aggressive durable expense portfolio previously profile. to Expense business. make the create changes are active continue to leadership indicator adjustments costs a our stated, is gross as our lagging profit line we bring to

consolidation nature from we quarter, reduce costs them These as meaningful facility the expect multiple to had we expenses onetime were and we continue closures. aggressively. costs This to manage overall in

Gross margins XXXX. in in from improved XX% XX.X% slightly QX QX to

Of in improved that We the from months XXXX. June significantly provide X and are improve initiate revenue pleased margin recognition note, net programs slightly new our we margins which ended overall XX, margins to are quarter-over-quarter improved XX.X% XX.X% will XXXX as performance. should asset-light for in

next. Let's to move innovation

X launched new brands. we quarter, our from house products This

Pipe. and Artiq, line to the line time. limited critical of colorway addition new period Groove clean XXX along Glass, a Spoon in a acclaim line, short the brought compatible a MIQRO-C the of in edition newest market ORAFLEX Rigs a From with the premium the the to of with DaVinci, In popularity new Eyce oil rig, Micro of we vaporizer, Groove and in offering lot The portable convenience DaVinci's the Artiq has a technology garnered a vaporizers.

include as the our offerings. diversify our to market part leader products of This portfolio. product a is disposable announced our in to also of We expansion nicotine strategic vision

compound partners, our With the disposable industry-leading nicotine significant to We capitalize addressable Death a brands customer at and Tyson on have Row our Fume, market into X.X. including industry, annually manufacturers on U.S. revenues. annual impact identified Packspod billion expect rate and exceeding and the nicotine it $X Vapes, to products expansion total exceeding a grow XX%,

Capital. anniversary with over more previously date to able to and we order facility business leverageable the first to doing White the existing this And allows prior durable, strategic so, announced by Oak our in and scalable, believe finally, off $XX more million much was future. pay of we business recently direction make in facility The us the payoff our authority

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

Lana Reeve

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

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

$X.X the XX, decrease a second segment or $XX $XX.X the decrease sales by total Goods quarter months of in XXXX, decrease or XXXX, a primarily total of the $X.X second for of $X.X decrease million XX% net This in million a million reported million decrease XX% year-over-year. or decrease representing XX% quarter-over-quarter million sales ended X compared Industrial Consumer of the to for million XXXX, segment representing was million company's were the XX.X%. of decrease decrease. to or a a quarter driven The $XX.X of and compares For the $XX.X approximately in March net

representing The decrease is million $XX.X to million XX.X%. were sales change net $XX.X a the total or of Year-to-date, strategies $XX.X compared decrease initiatives revenue and related previously. management mentioned million, to in

for $X.X X.X% for to of XXXX second the XXXX, compared For increasing profit to quarter margin quarter. a decrease for QX to was the the was $X.X of representing million or quarter, prior gross XX.X% a XX% $XXX,XXX flat, XX%. gross by Gross of compared million relatively margin prior

is of write-offs of The gross related write-offs company and XXXX. for The XXXX of $X.X a compared gross reported of only and QX obsolete related gross QX June million the million $XX.X to increase margin write-offs million $X.X XXXX. million $X.X gross inventory profit for no obsolete in of inventory profit that inventory compared XXXX damaged is XX.X% X.X% XXXX. damaged in and XXXX to million $X.X $X.X million XX.X% and $XX.X and to The gross to margin to margin for XX, XXXX. of increase inventory Year-to-date, gross QX XX.X% of compared for XX.X% million X was compared year-to-date QX margin to and ended year-to-date months

to were million of ongoing quarter. XXXX ended Total for reduce operating initiatives approximately percentage compared The is operating corporate to decreased in $XX.X our of $X.X to the million operating the million XX, for reduction June expenses which same to X quarter compared $XX.X to expenses million cost million $XXX,XXX revenue. XX.X% spend XXXX, the for by as the to months throughout XXXX. related a $XX a QX period $XX.X for decreased result decrease or Total prior

company is $XX comparing effort the reduction rightsize in million first by XXXX. by the XX.X% X months related XX, to on June decreased major the ending expenses to than or The operating a decrease restructuring million, and million to Year-to-date, business workforce focus the total approximately in XX% profitability. greater favorably and to $XX.X a $XX.X

XXXX. for Net XXXX or was Holdings, for or QX prior Inc. loss Holdings, and loss quarter. $XX.X million of share, million Greenlane loss loss and and quarter the to $X.XX $XX.XX to reported $XX.X for company's for share, $X.XX a loss attributable diluted $XX.X the million compared Net of and basic $XX.X compares net Inc. diluted, share basic attributable prior million the $XX.X second per the diluted, compared or of a of to to This a loss basic net per million $XX.X million of to per Greenlane quarter. was

XXXX ended Year-to-date, XX, $XX.X Net June per XXXX, million X ended million million was basic net loss EBITDA XX, quarter. loss for and X $X.X XXXX. for months was June and prior diluted, share, to of million $XX.XX months loss to compared June $XX.X Adjusted the ended loss or a to was QX compared a million of to or loss $XX.X per XX, basic diluted, attributable for loss months Holdings, million a XXXX. of the for $XX.XX the Inc. Greenlane share, $X.X X $XX.X compared the for

the cash cash ended The $X.X capital million operations and levels. March quarter of million capital inventories to XX, improving with in capital $XX.X working we company of efficiently continues managing On flow the the as focus million to company inventory in total working lower We XX, sheet, the of quarter on ended of $XX.X versus more cash balance to XXXX. XXXX. cycle from The million focused on continues as and with operating $XX compared with in reduce debt. $X.X net existing total $XX.X million and working million second March

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

Craig Snyder

position innovation positive decline revenue toward company's continue profitability. continue to future focused growth. initiatives, steps show to for on strategic and The cost and we strategies, effective improve management quarter-over-quarter, it Despite

progress our profitability. road for continue map on to We make

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

Operator

[Operator with first Global Instructions] Partners. Alliance The Grey from Aaron comes question

Aaron Grey

terms guys more of around things So working first of changing question done for business model. the profitability me. a Obviously, asset-light you have in of an towards lot with

path with in that the like paint looks of guys if how having to improved asset-light gross of going have picture profitability Just a could now help you're things It look? the some might you of to place. you some start kind margins

Just sales on coming in. the nicotine

to enough be And if profitability? gross be [indiscernible] sales So to you growth you will if looking margin meaningful that whether model get just not for that you for the about be? to the going Or or could asset-light margin cuts improvement base to be how cost is needed there? we talk should reach with

Craig Snyder

for you thank Aaron, the question.

QX function we QX. decrease think of to of and made you cuts labor adjustments things. and I adjustments a be as of expense that won't X elements And think on today. combination and And by headcount I SG&A things a One, the significantly accelerate there's that of in QX have there make the leases. the bound those we a as lot need elements key side, as it's G&A or we contractual see cost of as of we've QX think some both are you'll either but of function those lot will see I inside also the just a mentioned, as a and

like year-to-date good through remainder the So feel accelerated about the but year. the we we've made not what be progress we the feel only progress of will -- the

side, sales were to your question. X components the there On

first what lot in work work we'll strategy we a business major the a of where first strategy, quarter timing we place with having those is asset-light be on partner, before QX the I'll really them. full the very closely to now on was revenues the manufacturing that And basis. call we on flow we'll beneficial cash have with The net very pressure think CCELL, a going to way is we'll recognize were in and our

you but So, demand of where see you margins and some seeing -- you see as the the very With that's e-cigarettes, also areas. revenues nicotine increase Shop that products assortment Shop/Vape you And bit a see I in the mix those a will very, see we've the you moderate of think seen where segment, we're may inside in nicotine heavy think broad to quite I'll mix that see group. a very in what to used changed group. now of very, Smoke I call high

We that, of from benefit expect benefit a to are aggressive from back way. hoping on QX that to half in pretty the

path with to good progress very feel of and strategy about made expenses, our that's some progress shown. this to on QX a we asset-light largely we're we on think, So want we feel overall nicotine it's We forces be. as here where got CCELL also and launching pushing QX a us We good on we've series the the well. are seasonality, the our about new products give see of but did QX driven I half weakness, by to in nice and lift we expect quarter to second

there's different clear to us path main starting is directions. working up where in So on number to goal forces overall again, for SG&A. a a match of to numbers our gross profit are the get with our profitability, But

Aaron Grey

as dispensary, or an guys the How fair? Is kind model some How within was of to the get or the that kind And some the MSO done and well? out shift from that have more the from has you there operators, MSOs the of second the you that's well? packaging just frontline traditional right of of for of your that near still for shifted question with of of broader, to away more me, initiative products transition That has term? turning away helpful. the you as asset-light dispensaries some is this business be to mom-and-pop initiative kind

Craig Snyder

No. I it's I think mean accelerated.

their product couple are of with as MSO I commodity, seen turning I'll cannabis, attachment call, a know, average become, a has in that segment. been places, think per is a for analytics. retail-centric And square to cannabis size. revenue and look the would One Those from decreasing price. mainstream we've they things And main dispensaries, many you people. analytics in more, has mainstream foot, order what rate the like their

more an important part of I of and So dispensary important think the merchandising becoming more the component or they do. is what a

We bear. it's of for players are their dispensary are that conversations array few for products, can having their one of whether bring we full looks the the how and to processing space that deeper and the for or in facility deeper

So those QX we improve conversations to and them to have expect continue aggressively QX. improved and

Operator

[Operator in further questions Instructions] have We no queue.

the session. now question-and-answer We I turn for have of to the over remarks. end Snyder call will reached Craig closing the

Craig Snyder

profitable are for call the everyone's time Thank all the business appreciate have for making we're we've a And your feel year thank X creating meaningful in call quarters and you time excited all today. -- the of today taken and for to do steps so. a and We evening. for we you we Thank like the working interests. you first today good again, towards

Operator

Thank concludes This your today's may your you you conference disconnect for and lines at this time. participation.

Greenlane (GNLN) 14 Aug 232023 Q2 Earnings call transcript