cbdMD Reports Second Quarter Fiscal 2021 Results
YOY Net Sales Increased 26% for the March 2021 Quarter Resulting in a Record Trailing Twelve Month Net Sales Of Over $46.4 Million
Company Expects Q1 Fiscal 2022 Net Sales to Range from $15.5 million to $16.25 million
cbdMD, Inc. (NYSE:YCBD, YCBDpA))), one of the nation's leading and most highly trusted and recognized cannabidiol (CBD) brands, today announced its financial results and its business highlights for its second quarter and six months ended March 31, 2021.
Financial highlights for the Quarter Ended March 31, 2021:
- Net sales of $11.8 million for the second quarter of fiscal 2021 increased by 26% year-over-year from $9.4 million in the second quarter of fiscal 2020 for a record high for the March quarter.
- Gross profit margin for the second quarter of fiscal 2021 remained strong at approximately 69%, down slightly from 71% in the prior year's second quarter.
- E-commerce direct-to-consumer net sales were $8.4 million, an increase of 23.3% from the prior year's second fiscal quarter.
- Wholesale (including brick and mortar retail customers) net sales were $3.4 million, an increase of 31.3% from the prior year's second fiscal quarter.
- Paw CBD (our award-winning CBD pet brand) had net sales of $1.4 million, an increase of 84% from the prior year's second fiscal quarter.
- Quarterly operating expenses for the second quarter of fiscal 2021 remained relatively constant as compared to the second quarter of fiscal 2020 at $12.3 million.
- Loss from operations decreased by 25.6% to $4.1 million for the second quarter of fiscal 2021 compared to $5.6 million from the prior year's second fiscal quarter.
- Non-GAAP adjusted operating loss decreased by 44% to $2.7 million, compared to $4.9 million from the prior year's quarter, and for the six months ending March 31, 2021, our non-GAAP adjusted operating loss decreased by 67% to $3.3 million compared to $9.9 million for the prior year's period.
- Net loss attributable to common shareholders for the second quarter of fiscal 2021 was approximately $13.1 million, or ($0.24) per share, as compared to net income of approximately $14.8 million, or $0.41 per share from the prior year's second fiscal quarter. Our net loss attributable to common shareholders was principally attributable to an increase of approximately $8.9 million in the non-cash contingent liability which is associated with earnout shares which may be issued under the terms of the December 2018 acquisition of Cure Based Development (which owned the cbdMD brand).
- As of March 31, 2021, we had working capital of approximately $27.9 million and cash on hand of approximately $23.7 million as compared to working capital of approximately $16.0 million and cash on hand of approximately $14.8 million at September 30, 2020.
Business highlights since the start of the second quarter of fiscal 2021 include:
- Entered Global Beauty and Skincare Market with the launch of cbdMD Botanicals.
- Successfully implemented NetSuite as our new ERP.
- Launched cbdMD Therapeutics subsidiary to advance cannabinoid science and clinical studies.
- Hired Dr. Sibyl Swift, Former FDA to Co-Chair cbdMD Therapeutics.
- Invested an additional $750,000 (total investment of $1 million) into ADRA Acquisition Corporation (SPAC), prior to its successful IPO of $115,000,000 (NYSE:ADRA).
- Renewed our NSF certification and underwent the US Hemp Authority audit, receiving our seal of approval on May 10, 2021.
- Developed new merchant processing relationships, expected cost savings starting third quarter of fiscal 2021.
- Expanded our portfolio of TV commercials to include Paw CBD and developed a new TV campaign that launched April 1, 2021.
- Continued to strengthen our portfolio of strategic athlete and sponsorship programs, including Professional rally driver megastar Ken Block.
- Signed an exclusive sponsorship agreement to be the Official CBD Partner of the NOBULL CrossFit Games.
- Signed a sponsorship agreement with Master Champion and 9 Time PGA Tour Winner, Patrick Reed, who is now on Team cbdMD.
- Won 2021 Product of the Year Awards for cbdMD's CBD Gummies and Paw CBD's CBD Hard Chews for Dogs.
"We continue to build upon our success and develop our science and infrastructure, which we believe will drive shareholder value and separate our brands from our competition. We believe that our proven ability to innovate our marketing as well as deliver award winning products to our consumers will achieve significant and lasting market brand recognition and consumer acceptance for our cbdMD, Paw CBD and cbdMD Botanicals brands," said Martin Sumichrast, Chairman and Co-CEO of cbdMD, Inc.
cbdMD, Inc. will host a conference call at 4:15 p.m., Eastern time, on Wednesday, May 12, 2021, to discuss the company's first quarter fiscal 2021 financial results and business progress.
CONFERENCE CALL DETAILS
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Title: |
cbdMD Second Quarter 2021 Earnings Call |
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Event Date: |
Wednesday, May 12, 2021 - 4:15 PM Eastern Time |
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Event Link: |
Webcast URL
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Webcast Replay Expiration: |
Thursday, May 12, 2022 |
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Participant Numbers: |
Toll Free: 888-506-0062
Entry code (not required): 233626 |
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Replay Number: |
Toll Free: 877-481-4010
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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. Our cbdMD brand currently includes over 130 SKUs of high-grade, premium CBD products including CBD tinctures, CBD gummies, CBD topicals, CBD capsules, CBD bath bombs, CBD bath salts, CBD sleep aids and CBD drink mixes. Our Paw CBD brand of pet products includes over 45 SKUs of veterinarian-formulated products including tinctures, chews, topicals products in varying strengths, and our CBD Botanicals brand of beauty and skincare products features 15 SKUs, including facial oil and serum, toners, moisturizers, clear skin, facial masks, exfoliants and body care. To learn more about cbdMD and their comprehensive line of U.S. grown, THC-free1 CBD oil products, please visit www.cbdmd.com, follow cbdMD on Instagram and Facebook, or visit one of the 6,000 retail outlets that carry cbdMD products.
1 THC-free is defined as below the level of detection using validated scientific analytical methods.
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 by the use of 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 and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including, but not limited to, our ability to achieve our first quarter fiscal 2022 net sales guidance. You are urged to carefully review and consider any cautionary statements 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, 2020 as filed with the Securities and Exchange Commission (the "SEC") on December 22, 2020, Item 1A. Risk Factors, contained in our Quarterly Report on Form 10-Q for the period ended March 31, 2021 as filed with the SEC on May 12, 2021 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.
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. |
|
||||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
|
||||
| MARCH 31, 2021 AND SEPTEMBER 30, 2020 |
|
||||
| (Unaudited) |
|
||||
| March 31, | September 30, |
||||
2021 |
2020 |
||||
| Assets |
|
||||
| Current assets: |
|
||||
| Cash and cash equivalents | $ |
23,711,600 |
$ |
14,824,644 |
|
| Accounts receivable |
|
1,848,465 |
|
911,482 |
|
| Accounts receivable – discontinued operations |
|
22,217 |
|
447,134 |
|
| Marketable securities |
|
32,034 |
|
26,472 |
|
| Investment other securities |
|
1,000,000 |
|
250,000 |
|
| Inventory |
|
4,331,545 |
|
4,603,360 |
|
| Inventory prepaid |
|
478,629 |
|
288,178 |
|
| Prepaid software |
|
- |
|
174,308 |
|
| Prepaid sponsorship |
|
1,777,304 |
|
1,203,300 |
|
| Prepaid expenses and other current assets |
|
1,544,541 |
|
983,374 |
|
| Total current assets |
|
34,746,335 |
|
23,712,252 |
|
| Other assets: |
|
||||
| Property and equipment, net |
|
2,976,904 |
|
3,183,487 |
|
| Operating lease assets |
|
6,240,059 |
|
6,851,357 |
|
| Deposits for facilities |
|
789,583 |
|
790,708 |
|
| Intangible assets, net |
|
21,635,000 |
|
21,635,000 |
|
| Goodwill |
|
54,669,997 |
|
54,669,997 |
|
| Total other assets |
|
86,311,543 |
|
87,130,549 |
|
| Total assets | $ |
121,057,878 |
$ |
110,842,801 |
|
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| MARCH 31, 2021 AND SEPTEMBER 30, 2020 | |||||||
| (continued) | |||||||
| (Unaudited) | |||||||
March 31, |
|
September 30, |
|||||
2021 |
|
2020 |
|||||
| Liabilities and shareholders' equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ |
2,835,236 |
|
$ |
2,850,421 |
|
|
| Accrued expenses |
|
1,729,594 |
|
|
2,769,920 |
|
|
| Operating leases – current portion |
|
1,213,891 |
|
|
1,159,098 |
|
|
| Paycheck Protection Program loan, current portion |
|
1,027,403 |
|
|
854,000 |
|
|
| Note payable |
|
57,522 |
|
|
55,639 |
|
|
| Total current liabilities |
|
6,863,646 |
|
|
7,689,078 |
|
|
| Long term liabilities: | |||||||
| Long term liabilities |
|
- |
|
|
264,367 |
|
|
| Note payable |
|
139,215 |
|
|
- |
|
|
| Paycheck Protection Program loan |
|
428,697 |
|
|
602,100 |
|
|
| Operating leases - long term portion |
|
5,414,751 |
|
|
6,010,208 |
|
|
| Contingent liability |
|
22,300,000 |
|
|
16,200,000 |
|
|
| Deferred tax liability |
|
27,000 |
|
|
895,000 |
|
|
| Total long term liabilities |
|
28,309,663 |
|
|
23,971,675 |
|
|
| Total liabilities |
|
35,173,309 |
|
|
31,660,753 |
|
|
| cbdMD, Inc. shareholders' equity: | |||||||
| Preferred stock, authorized 50,000,000 shares, $0.001 | |||||||
| par value, 2,800,000 and 500,000 shares issued and outstanding, respectively |
|
2,800 |
|
|
500 |
|
|
| Common stock, authorized 150,000,000 shares, $0.001 | |||||||
| par value, 56,337,787 and 52,130,870 shares issued and outstanding, respectively |
|
56,338 |
|
|
52,131 |
|
|
| Additional paid in capital |
|
155,780,222 |
|
|
126,517,784 |
|
|
| Accumulated deficit |
|
(69,954,791 |
) |
|
(47,388,367 |
) |
|
| Total cbdMD, Inc. shareholders' equity |
|
85,884,569 |
|
|
79,182,048 |
|
|
| Total liabilities and shareholders' equity | $ |
121,057,878 |
$ |
110,842,801 |
|
||
| cbdMD, INC. | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2021 and 2020 | |||||||||||||||
| Three Months | Three Months | Six Months | Six Months | ||||||||||||
| Ended | Ended | Ended | Ended | ||||||||||||
| March 31, | March 31, | March 31, | March 31, | ||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||
| Gross Sales | $ |
12,457,386 |
|
$ |
9,703,800 |
|
$ |
25,520,568 |
|
$ |
20,116,291 |
|
|||
| Allowances |
|
(658,775 |
) |
|
(304,764 |
) |
|
(1,393,654 |
) |
|
(569,019 |
) |
|||
| Total Net Sales |
|
11,798,611 |
|
|
9,399,036 |
|
|
24,126,914 |
|
|
19,547,272 |
|
|||
| Cost of sales |
|
3,643,127 |
|
|
2,732,076 |
|
|
7,073,402 |
|
|
6,432,613 |
|
|||
| Gross Profit |
|
8,155,484 |
|
|
6,666,960 |
|
|
17,053,512 |
|
|
13,114,659 |
|
|||
| Operating expenses |
|
12,323,207 |
|
|
12,267,637 |
|
|
22,981,180 |
|
|
24,827,934 |
|
|||
| (Loss) from operations |
|
(4,167,723 |
) |
|
(5,600,677 |
) |
|
(5,927,668 |
) |
|
(11,713,275 |
) |
|||
| Realized and Unrealized gain (loss) on marketable and other securities, including impairments | |||||||||||||||
| 2,852 | (813,152 | ) |
545,562 | (875,162 | ) |
||||||||||
| (Increase) decrease of contingent liability |
|
(8,871,000 |
) |
|
21,261,994 |
|
|
(17,371,000 |
) |
|
38,160,000 |
|
|||
| Interest (expense) income |
|
(10,603 |
) |
|
35,607 |
|
|
(20,990 |
) |
|
42,875 |
|
|||
| Income (loss) before provision for income taxes |
|
(13,046,474 |
) |
|
14,883,772 |
|
|
(22,774,096 |
) |
|
25,614,438 |
|
|||
| Benefit for income taxes |
|
536,000 |
|
|
- |
|
|
868,000 |
|
|
2,240,300 |
|
|||
| Net (Loss) Income from continuing operations |
|
(12,510,474 |
) |
|
14,883,772 |
|
|
(21,906,096 |
) |
|
27,854,738 |
|
|||
| Net (Loss) from discontinued operations, net of tax (Note 14) |
|
- |
|
|
- |
|
|
- |
|
|
(41,202 |
) |
|||
| Net (Loss) Income |
|
(12,510,474 |
) |
|
14,883,772 |
|
|
(21,906,096 |
) |
|
27,813,536 |
|
|||
| Preferred dividends |
|
560,280 |
|
|
100,016 |
|
|
660,330 |
|
|
166,750 |
|
|||
| Net (Loss) Income attributable to cbdMD, Inc. common shareholders | $ |
(13,070,754 |
) |
$ |
14,783,756 |
|
$ |
(22,566,426 |
) |
$ |
27,646,786 |
|
|||
| Net (Loss) Income per share: | |||||||||||||||
| Basic earnings per share |
|
(0.24 |
) |
|
0.41 |
|
|
(0.43 |
) |
|
0.76 |
|
|||
| Diluted earnings per share |
|
(0.24 |
) |
|
0.40 |
|
|
(0.43 |
) |
|
0.74 |
|
|||
| Weighted average number of shares Basic: |
|
53,471,607 |
|
|
36,503,005 |
|
|
52,793,872 |
|
|
36,503,005 |
|
|||
| Weighted average number of shares Diluted: |
|
53,471,607 |
|
|
36,336,505 |
|
|
52,793,872 |
|
|
37,336,505 |
|
|||
| cbdMD, INC. | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2021 AND 2020 | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months | Three Months | Six Months | Six Months | ||||||||||||
| Ended | Ended | Ended | Ended | ||||||||||||
| March 31, | March 31, | March 31, | March 31, | ||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||
| Net (Loss) Income | $ |
(12,510,474 |
) |
$ |
14,883,772 |
|
$ |
(21,906,096 |
) |
$ |
27,813,536 |
|
|||
| Comprehensive (Loss) Income |
|
(12,510,474 |
) |
|
14,883,772 |
|
|
(21,906,096 |
) |
|
27,813,536 |
|
|||
| Preferred dividends |
|
(560,280 |
) |
|
(100,016 |
) |
|
(660,330 |
) |
|
(116,750 |
) |
|||
| Comprehensive (Loss) Income attributable to cbdMD, inc. common shareholders | $ |
(13,070,754 |
) |
$ |
14,783,756 |
|
$ |
(22,566,426 |
) |
$ |
27,696,786 |
|
|||
| cbdMD, INC. | |||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||
| FOR THE SIX MONTHS ENDED MARCH 31, 2021 AND 2020 | |||||||
| (unaudited) | |||||||
| Six Months | Six Months | ||||||
| Ended | Ended | ||||||
| March 31, | March 31, | ||||||
2021 |
2020 |
||||||
| Cash flows from operating activities: | |||||||
| Net (Loss) Income | $ |
(21,906,096 |
) |
$ |
27,813,536 |
|
|
| Adjustments to reconcile net (income) loss to net | |||||||
| cash used by operating activities: | |||||||
| Stock based compensation |
|
451,527 |
|
|
972,225 |
|
|
| Restricted stock expense |
|
547,140 |
|
|
138,000 |
|
|
| Issuance of stock / warrants for service |
|
155,695 |
|
|
28,250 |
|
|
| Impairment on discontinued operations asset |
|
- |
|
|
38,002 |
|
|
| Depreciation and amortization |
|
473,324 |
|
|
287,457 |
|
|
| Other than temporary impairment other securities and other accounts receivable |
|
- |
|
|
760,000 |
|
|
| Increase/(Decrease) in contingent liability |
|
17,371,000 |
|
|
(38,160,000 |
) |
|
| Realized and unrealized loss of Marketable and other securities |
|
(5,562 |
) |
|
115,162 |
|
|
| Merchant reserve settlement |
|
- |
|
|
132,657 |
|
|
| Termination benefit |
|
352,279 |
|
|
- |
|
|
| Non-cash lease expense |
|
611,298 |
|
|
585,020 |
|
|
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable |
|
(936,983 |
) |
|
763,303 |
|
|
| Deposits |
|
1,125 |
|
|
(22,365 |
) |
|
| Merchant reserve |
|
- |
|
|
106,590 |
|
|
| Inventory |
|
271,815 |
|
|
(2,270,110 |
) |
|
| Prepaid inventory |
|
(190,451 |
) |
|
386,149 |
|
|
| Prepaid expenses and other current assets |
|
44,408 |
|
|
649,308 |
|
|
| Accounts payable and accrued expenses |
|
(1,366,373 |
) |
|
849,113 |
|
|
| Operating lease liability |
|
(540,664 |
) |
|
(496,834 |
) |
|
| Note payable |
|
- |
|
|
175,124 |
|
|
| Deferred revenue / customer deposits |
|
(41,418 |
) |
|
(7,339 |
) |
|
| Collection on discontinued operations accounts receivable |
|
424,917 |
|
|
250,000 |
|
|
| Deferred tax liability |
|
(868,000 |
) |
|
(2,240,300 |
) |
|
| Cash used by operating activities |
|
(5,151,019 |
) |
|
(9,147,052 |
) |
|
| Cash flows from investing activities: | |||||||
| Proceeds from sale of other investment securities |
|
(750,000 |
) |
|
- |
|
|
| Purchase of property and equipment |
|
(226,542 |
) |
|
(1,796,346 |
) |
|
| Cash provided (used) by investing activities |
|
(976,542 |
) |
|
(1,796,346 |
) |
|
| Cash flows from financing activities: | |||||||
| Proceeds from issuance of common stock |
|
- |
|
|
16,771,756 |
|
|
| Proceeds from issuance of preferred stock |
|
15,798,115 |
|
|
4,421,928 |
|
|
| Note payable |
|
(123,268 |
) |
|
- |
|
|
| Preferred dividend distribution |
|
(660,330 |
) |
|
(166,750 |
) |
|
| Deferred issuance costs |
|
- |
|
|
62,197 |
|
|
| Cash provided by financing activities |
|
15,014,517 |
|
|
21,089,131 |
|
|
| Net increase (decrease) in cash |
|
8,886,956 |
|
|
10,145,733 |
|
|
| Cash and cash equivalents, beginning of period |
|
14,824,644 |
|
|
4,689,966 |
|
|
| Cash and cash equivalents, end of period | $ |
23,711,600 |
|
$ |
14,835,699 |
|
|
| Supplemental Disclosures of Cash Flow Information: | |||||||
| Six Months | Six Months | ||||||
| Ended | Ended | ||||||
| March 31, | March 31, | ||||||
2021 |
2020 |
||||||
| Cash Payments for: | |||||||
| Interest expense | $ |
7,117 |
|
$ |
17,097 |
|
|
| Non-cash financial activities: | |||||||
| Issuance of Contingent earnout shares: | $ |
11,271,000 |
|
$ |
- |
|
|
| Warrants issued to representative | $ |
254,950 |
|
$ |
524,113 |
|
|
| cbdMD, Inc. | |||||||||||||||
| SUPPLEMENTAL FINANCIAL INFORMATION | |||||||||||||||
| RECONCILIATION OF NON-GAAP ADJUSTED INCOME (LOSS) FROM OPERATIONS | |||||||||||||||
| Three Months | Three Months | Six Months | Six Months | ||||||||||||
| Ended | Ended | Ended | Ended | ||||||||||||
| March 31, | March 31, | March 31, | March 31, | ||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||
| (Unaudited) | |||||||||||||||
| GAAP (loss) from operations | $ |
(4,167,723 |
) |
$ |
(5,600,677 |
) |
$ |
(5,927,668 |
) |
$ |
(11,721,275 |
) |
|||
| Adjustments: | |||||||||||||||
| Depreciation |
|
240,517 |
|
|
174,205 |
|
|
473,323 |
|
|
287,457 |
|
|||
| Employee and director stock compensation (1) |
|
825,833 |
|
|
435,301 |
|
|
1,090,007 |
|
|
1,115,875 |
|
|||
| Other non-cash stock compensation for services (2) |
|
33,358 |
|
|
55,479 |
|
|
69,071 |
|
|
146,548 |
|
|||
| Accrual for severance |
|
299,610 |
|
|
- |
|
|
703,022 |
|
|
- |
|
|||
| Accrual / expenses for discretionary bonus |
|
- |
|
|
- |
|
|
300,000 |
|
|
222,500 |
|
|||
| Non-GAAP adjusted (loss) from operations | $ |
(2,768,405 |
) |
$ |
(4,935,692 |
) |
$ |
(3,292,245 |
) |
$ |
(9,948,895 |
) |
|||
(1) |
Represents non-cash expense related to options and restricted stock expenses that have been amortized during the period. |
|
(2) |
Represents non-cash expense related to restricted stock expenses that have been amortized during the period. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210512005860/en/