cbdMD Delivers on Sequential Revenue Growth and Positive Net Income for Q3 2024
cbdMD Achieves Significant Reduction in Operating Loss as Operational Efficiencies Significantly Improve in Q3 2024
Charlotte, North Carolina--(Newsfile Corp. - August 14, 2024) - cbdMD, Inc. (NYSE:YCBD) (NYSE:YCBD) one of the nation's leading and most highly trusted and recognized CBD companies, and operator of the leading CBD brands cbdMD and Paw CBD, along with its new functional mushroom brand ATRx Labs today announced our financial results for our third quarter of fiscal 2024 ending June 30, 2024.
This quarter, cbdMD made significant strides in its strategic objectives. Year-over-year, operational losses improved markedly, shrinking from $1.8 million in the third quarter of fiscal 2023 to $0.38 million in the third quarter of fiscal 2024.
"I am incredibly proud of what our team has accomplished this quarter," said Ronan Kennedy, CEO & CFO of cbdMD. "Profitability has been our top priority, and we've made meaningful progress in the fiscal third quarter. We committed to optimizing our cost structure, and as of August, we've delivered on those promises. With gross margins up, SG&A expenses down, and the best non-GAAP adjusted EBITDA result in our Company's history, we are moving in the right direction. While revenue growth in our category remains challenging, our focus remains on driving profits and enhancing shareholder value."
Financial Highlights from our Third Quarter of Fiscal 2024:
- Net sales totaled $5.1 million for the June 30, 2024 quarter or a decrease of 15% compared to $6.1 million for the prior year comparative fiscal quarter, but up 18% sequentially. For the nine months ended June 2024, Net sales totaled $14.9 million as compared to $18.4 million for the prior year period.
- We reported direct to consumer (DTC) net sales of $3.9 million or 76% of total net sales in the third quarter of fiscal 2024, a decrease from $4.9 million, or 20% from the third quarter of fiscal 2023, but an increase of 9% sequentially.
- We reported wholesale net sales of $1.2 million in the third quarter of fiscal 2024, an increase from $1.1 million, or 10% from third quarter of fiscal 2023.
- Our gross profit for the third quarter of fiscal 2024 totaled 65% in compared to 63% in the second quarter of fiscal 2023.
- Our loss from operations was $0.38 million during the third quarter of fiscal 2024 as compared to a loss of $1.8 million in third quarter of fiscal 2023.
- Our non-GAAP adjusted loss from operations during the third quarter of fiscal 2024 was approximately $0.08 million as compared to our non-GAAP adjusted loss from operations during the third quarter of fiscal 2023 of approximately $0.60 million, despite the decrease in overall revenue. This is the lowest non-GAAP adjusted EBITDA loss since cbdMD went public at the end of calendar 2018. For the nine months ended June 30, 2023 we reported non-GAAP EBITDA loss of $1.3 million as compared to $4.0 million in the prior year comparative period.
- Net income for the third fiscal quarter of 2024 was approximately $0.46 million, as compared to a net loss for the third fiscal quarter of 2023 of approximately $1.7 million. The improvement in the third fiscal quarter of 2024 was principally attributable to a $0.85 million non cash gain as a result of a reduction in the fair value of our convertible notes as well as operating improvements.
- Net loss attributable to common shareholders for third fiscal quarter of 2024 was approximately $0.5 million, or $0.15 per share, as compared to a net loss for the third fiscal quarter of 2023 of approximately $2.8 million, or $1.16 per share. The decrease in net loss in the third fiscal quarter of 2024 was principally attributable to operating improvements.
- At June 30, 2024, we had negative working capital of approximately $567,000. Our working capital is reduced by approximately $3.7 million of accrued dividend payments. At September 30, 2023 we had working capital of approximately $3.4 million, which was reduced by approximately $0.7 million for accrued dividends payable. In addition, at June 30, 2024 we had cash on hand of approximately $2.3 million as compared to cash on hand of approximately $1.8 million at September 30, 2023.
Highlights for the Third Quarter of 2024 and Notable Business Updates
- On June 5, 2024, the Company received notification from the NYSE American that the Company is no longer in compliance with NYSE American's continued listing standards. The notice provided that the Company must submit a plan of compliance by July 5, 2024 addressing how it intends to regain compliance with the continued listing standards by December 5, 2025. The Company timely submitted the plan to the NYSE American on July 5, 2024, advising of actions the Company intends to take to regain compliance with the continued listing standards. The Company expects to receive a response from NYSE American in mid August 2024.
- During the quarter, several convertible promissory notes holders elected to convert some of their accrued interested and principal balance, resulting in 714,229 common shares being issued during the third fiscal quarter of 2024. Approximately $1.075 million remains on the principal balance of the promissory notes.
- The Company has satisfied the recent agreements with its former landlord on the Red Oak Lease and effective August 1, 2024 has terminated its former executive office lease, eliminating the right of use asset and future lease liability from its balance sheet. The Company continues to have past due rent payable owed the landlord and continues to attempt to negotiate an amicable settlement. The Company's current facilities are sufficient for its current and future operations.
- The Company believes it has achieved over $200,000 in monthly operating costs savings as of August 2024. While it anticipates lower operating costs, it plans on increasing marketing costs during the fiscal fourth quarter of fiscal 2024.
We will host a conference call at 4:20 p.m., Eastern Time, on Wednesday, August 14, 2024, to discuss our June 30, 2024, third quarter of fiscal 2024 financial results and business progress.
CONFERENCE CALL DETAILS
| Wednesday August 14, 2024, 4:20 p.m. Eastern Time | ||
| USA/Canada: | 844-763-8274 | |
| International: | 647-484-8814 | |
| Teleconference Replay dial in: | ||
| USA/Canada: | 877-344-7529 | |
| International: | 412-317-0088 | |
| Replay Passcode: | 5067217 | |
| Webcast/Webcast Replay link- available through August 14, 2025: | https://www.gowebcasting.com/13431 | |
About cbdMD, Inc.
cbdMD, Inc. is one of the leading and most highly trusted and most recognized cannabidiol (CBD) brands with a comprehensive line of U.S. produced, THC-free1 CBD products, including NSF Certified for Sport® products, as well as our new Full Spectrum products. Our cbdMD brand currently includes high-grade, premium CBD products including CBD tinctures, CBD gummies, CBD topicals, CBD capsules, CBD bath bombs, CBD sleep aids and CBD drink mixes and an array of Farm Act compliant Delta 9 products. Our Paw CBD brand of pet products includes veterinarian-formulated products including tinctures, chews, topicals products in varying strengths, and our ATRx brand of natural functional mushroom support. To learn more about cbdMD and our comprehensive line of U.S. grown, THC-free1 CBD oil and Full Spectrum products as well as our other brands, please visit www.cbdmd.com, www.pawcbd.com, or ATRxlabs.com, follow cbdMD on Instagram and Facebook, or visit one of the thousands of retail outlets that carry cbdMD's products.
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 using 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. You are urged to carefully review and consider any cautionary statements, including but not limited to expectations on our ability to continue as a going concern, increasing our revenues, continued cost reductions, potential need for additional working capital, continued listing on the NYSE American, settlement of past due lease obligations, future profitability, development and sales of new products, 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, 2023 as filed with the Securities and Exchange Commission (the "SEC") on December 22, 2023, as amended on January 29, 2024, 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.
1 THC-free is defined as below the level of detection using validated scientific analytical methods.
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. | ||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| June 30, 2024 AND SEPTEMBER 30, 2023 | ||||||
| (unaudited) | ||||||
| June 30, | September 30, | |||||
| 2024 | 2023 | |||||
| Assets | ||||||
| Cash and cash equivalents | $ | 2,395,175 | $ | 1,797,860 | ||
| Accounts receivable, net of allowance for credit losses of $268,948 and $42,180, respectively | 915,988 | 1,216,090 | ||||
| Inventory | 3,225,915 | 4,052,972 | ||||
| Inventory prepaid | 79,866 | 182,675 | ||||
| Prepaid sponsorship | 8,978 | 70,061 | ||||
| Prepaid expenses and other current assets | 663,332 | 750,383 | ||||
| Total current assets | 7,289,254 | 8,070,041 | ||||
| Other assets: | ||||||
| Property and equipment, net | 553,067 | 716,579 | ||||
| Operating lease assets | 2,468,466 | 3,350,865 | ||||
| Deposits for facilities | 132,203 | 138,708 | ||||
| Intangible assets, net | 2,700,564 | 3,219,090 | ||||
| Investment in other securities, noncurrent | 700,000 | 700,000 | ||||
| Total other assets | 6,554,300 | 8,125,242 | ||||
| Total assets | $ | 13,843,554 | $ | 16,195,283 | ||
| CONSOLIDATED BALANCE SHEETS | ||||||
| JUNE 30, 2024 AND SEPTEMBER 30, 2023 | ||||||
| (continued) | ||||||
| June 30, | September 30, | |||||
| 2023 | 2023 | |||||
| Liabilities and shareholders' equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 1,273,044 | $ | 1,906,319 | ||
| Accrued expenses | 1,216,134 | 629,648 | ||||
| Accrued dividends | 3,667,667 | 667,000 | ||||
| Deferred revenue | 550,043 | 187,793 | ||||
| Operating leases - current portion | 1,149,976 | 1,277,089 | ||||
| Note payable | - | 2,492 | ||||
| Total current liabilities | 7,856,864 | 4,670,341 | ||||
| Long term liabilities: | ||||||
| Convertible notes | 1,378,000 | - | ||||
| Other long term liabilities | - | 9 | ||||
| Operating leases - long term portion | 1,580,569 | 2,403,286 | ||||
| Contingent liability | - | 90,363 | ||||
| Total long term liabilities | 2,958,569 | 2,493,658 | ||||
| Total liabilities | 10,815,433 | 7,163,999 | ||||
| cbdMD, Inc. shareholders' equity: | ||||||
| Preferred stock, authorized 50,000,000 shares, $0.001 | ||||||
| par value, 5,000,000 and 500,000 shares issued and outstanding, respectively | 5,000 | 5,000 | ||||
| Common stock, authorized 150,000,000 shares, $0.001 | ||||||
| par value, 3,759,433 and 2,960,573 shares issued and outstanding, respectively | 3,759 | 2,961 | ||||
| Additional paid in capital | 183,933,162 | 183,387,095 | ||||
| Comprehensive other expense | (1,200) | - | ||||
| Accumulated deficit | (180,912,600) | (174,363,772) | ||||
| Total cbdMD, Inc. shareholders' equity | 3,028,121 | 9,031,284 | ||||
| Total liabilities and shareholders' equity | $ | 13,843,554 | $ | 16,195,283 | ||
| cbdMD, INC. | ||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 | ||||||||||||
| (Unaudited) | ||||||||||||
| Three months | Three months | Nine Months | Nine Months | |||||||||
| Ended | Ended | Ended | Ended | |||||||||
| June 30 | June 30 | June 30 | June 30 | |||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Gross Sales | $ | 5,173,878 | $ | 6,462,965 | $ | 15,365,953 | $ | 19,288,155 | ||||
| Allowances | - | (343,585) | (440,152) | (843,538) | ||||||||
| Total Net Sales | 5,173,878 | 6,119,380 | 14,925,801 | 18,444,617 | ||||||||
| Cost of sales | 1,770,364 | 2,273,839 | 5,384,061 | 7,015,803 | ||||||||
| Gross Profit | 3,403,514 | 3,845,541 | 9,541,740 | 11,428,814 | ||||||||
| Operating expenses | 3,785,542 | 5,669,194 | 12,540,595 | 18,699,293 | ||||||||
| Loss from operations | (382,028) | (1,823,653) | (2,998,855) | (7,270,479) | ||||||||
| (Increase) decrease of contingent liability | - | 44,771 | 74,580 | 153,771 | ||||||||
| (increase) decrease in fair value of convertible debt | 854,506 | - | (591,494) | - | ||||||||
| Other income | - | 9,725 | - | 59,269 | ||||||||
| Interest expense | (12,741) | (1,246) | (31,558) | (5,831 | ||||||||
| Loss before provision for income taxes | 459,737 | (1,770,404) | (3,547,327) | (7,063,270) | ||||||||
| Net Loss | 459,737 | (1,770,404) | (3,547,327) | (7,063,270) | ||||||||
| Preferred dividends | 1,000,500 | 1,000,501 | 3,001,501 | 3,001,503 | ||||||||
| Net Loss available to cbdMD, Inc. common shareholders | $ | (540,763) | $ | (2,770,904) | $ | (6,548,828) | $ | (10,064,773) | ||||
| Net Loss per share: | ||||||||||||
| Basic and diluted earnings per share | $ | (0.15) | $ | (1.16) | $ | (1.84) | $ | (4.26) | ||||
| Weighted average number of shares Basic and Diluted: | 3,592,969 | 2,379,633 | 3,561,884 | 2,360,908 | ||||||||
| cbdMD, INC. | ||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||||||
| FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 | ||||||||||||
| (Unaudited) | ||||||||||||
| Three months | Three months | Nine Months | Nine Months | |||||||||
| Ended | Ended | Ended | Ended | |||||||||
| June 30 | June 30 | June 30 | June 30 | |||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Net Income (loss) | $ | 459,737 | $ | (1,770,404) | $ | (3,547,327) | $ | (7,063,270) | ||||
| Comprehensive Loss | 459,737 | (1,770,404) | (3,547,327) | (7,063,270) | ||||||||
| Other Comprehensive Income (loss) | 4,800 | - | (1,200) | - | ||||||||
| Preferred dividends | (1,000,500) | (1,000,501) | (3,001,501) | (3,001,503) | ||||||||
| Comprehensive Loss attributable to cbdMD, inc. common shareholders | $ | (535,963) | $ | (2,770,904) | $ | (6,550,028) | $ | (10,064,773) | ||||
| cbdMD, INC. | |||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||
| FOR THE THREE AND NINE ENDED JUNE 30, 2024 AND 2023 | |||||||
| (Unaudited) | |||||||
| Nine Months | Nine Months | ||||||
| June 30 | June 30 | ||||||
| 2024 | 2023 | ||||||
| Cash flows from operating activities: | |||||||
| Net Loss | $ | (3,547,327) | $ | (7,063,270) | |||
| Adjustments to reconcile net loss to net | |||||||
| cash used by operating activities: | |||||||
| Stock based compensation | 10,019 | 130,879 | |||||
| Restricted stock expense | 2,073 | 105,101 | |||||
| Write off of prepaid assets due to termination of contractual obligation | - | 884,892 | |||||
| Intangibles amortization | 518,526 | 832,063 | |||||
| Depreciation | 343,527 | 300,726 | |||||
| Increase (decrease) in contingent liability | (74,580) | (153,771) | |||||
| Increase (decrease) in fair value of convertible debt | 591,494 | - | |||||
| Amortization of operating lease asset | 882,399 | 840,079 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 253,361 | 336,091 | |||||
| Deposits | 6,505 | 105,898 | |||||
| Inventory | 827,057 | 424,079 | |||||
| Prepaid inventory | 102,810 | 66,337 | |||||
| Prepaid expenses and other current assets | 152,429 | 996,462 | |||||
| Accounts payable and accrued expenses | 449,686 | (1,172,306) | |||||
| Operating lease liability | (949,829) | (876,526) | |||||
| Deferred revenue / customer deposits | (88,319) | 203,341 | |||||
| Collection on discontinued operations accounts receivable | - | 1,375 | |||||
| Cash used by operating activities | (520,169) | (4,038,550) | |||||
| Cash flows from investing activities: | |||||||
| Proceeds from sale of other investment securities | - | - | |||||
| Purchase of property and equipment | (180,015) | (177,369) | |||||
| Other securities | - | 1,000,000 | |||||
| Cash used by investing activities | (180,015) | 822,631 | |||||
| Cash flows from financing activities: | |||||||
| Proceeds from issuance of common stock | 50,000 | 2,474,072 | |||||
| Note payable | 1,247,499 | (130,145 | |||||
| Preferred dividend distribution | - | (3,001,503 | |||||
| Cash used by financing activities | 1,297,499 | (657,576 | |||||
| Net decrease in cash | 597,315 | (3,873,495 | |||||
| Cash and cash equivalents, beginning of period | 1,797,860 | 6,720,234 | |||||
| Cash and cash equivalents, end of period | $ | 2,395,175 | $ | 2,846,739 | |||
| Supplemental Disclosures of Cash Flow Information: | |||||||
| 2023 | 2022 | ||||||
| Cash Payments for: | |||||||
| Interest expense | $ | 88,961 | $ | 2,638 | |||
| Non-cash financial activities: | |||||||
| Issuance of shares in exchange for a360 credit | $ | - | $ | 1,531,999 | |||
| Issuance of shares for conversion of debt and accrued interest | $ | 464,625 | $ | - | |||
| Preferred dividends accrued but not paid | $ | 3,001,501 | $ | - | |||
| cbdMD, Inc. | ||||||||||||
| SUPPLEMENTAL FINANCIAL INFORMATION | ||||||||||||
| RECONCILIATION OF NON-GAAP ADJUSTED LOSS FROM OPERATIONS | ||||||||||||
| (unaudited) | ||||||||||||
| Three months | Three months | Nine Months | Nine Months | |||||||||
| Ended | Ended | Ended | Ended | |||||||||
| June 30 | June 30 | June 30 | June 30 | |||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| GAAP loss from operations | $ | (382,028) | $ | (1,823,652) | $ | (2,998,855) | $ | (7,270,479) | ||||
| Adjustments: | ||||||||||||
| Depreciation & Amortization | 287,754 | 375,579 | 862,053 | 1,132,789 | ||||||||
| Employee and director stock compensation (1) | 9,321 | 61,016 | 16,835 | 315,982 | ||||||||
| Accrual for severence | - | - | - | 129,761 | ||||||||
| Mergers and Acquistions and financing transaction expenses (2) | - | - | 58,239 | - | ||||||||
| Non-cash expense incurred as a credit (3) | - | - | 439,926 | - | ||||||||
| Non-cash accelerated amortization of expense related to terminated IT contracts | - | - | 72,101 | - | ||||||||
| a-369 non-cash trade credit | - | 778,703 | - | 887,039 | ||||||||
| Non-GAAP adjusted loss from operations | $ | (84,953) | $ | (608,354) | $ | (1,549,701) | $ | (4,804,908) | ||||
(1) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.
(2) Represents expenses incurred in relation to M&A and financing activities during the nine months ended June 30, 2024.
(3) Represents non-cash expense incurred as a credit provided to GNC to replace expired product.
Contacts:
Investors:
cbdMD, Inc.
Ronan Kennedy
Chief Financial Officer
[email protected]
(704) 445-3064
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/219926