Greenlane Q1 Sales Increase 15% to $49.9 Million

Greenlane Announces Financial Results for the First Quarter of 2019
  • First quarter revenue of $49.9 million increased 15.3% year-over-year
  • Commenced distribution of premium hemp-derived CBD products with two leading brands
  • Launched Vapor.com, expanding e-commerce capabilities and reach

BOCA RATON, Fla., May 09, 2019 (GLOBE NEWSWIRE) — Greenlane Holdings, Inc. (Nasdaq: GNLN) (“Greenlane” or “the Company”), a leading distributor of premium vaporization products and consumption accessories, today reported financial results for its first quarter ended March 31, 2019.

First Quarter 2019 and Other Recent Financial and Operating Highlights:
  • Completed Initial Public Offering (IPO) of 5.25 million primary shares on April 23, 2019;
  • Revenue increased 15.3% to $49.9 million;
  • Commenced distribution of premium hemp-derived CBD products in late February 2019, entering into exclusive distribution agreements with leading brands Mary’s Nutritionals and Select;
  • Launched Vapor.com in April 2019, which will leverage traffic from the Company’s existing e-commerce sites;
  • On January 14, 2019, closed the acquisition of Pollen Gear, a leading supplier of premium child-resistant packaging to the cannabis industry;
  • Completed a $48.25 million convertible note financing on January 4, 2019, which was subsequently fully converted to equity upon closing of the IPO;
  • Net loss was $17.7 million, impacted by a $12.1 million change in fair value of convertible notes payable, $2.9 million of equity-based compensation, $0.8 million of costs associated with transitioning to a public company and $0.4 million of debt placement costs;
  • Adjusted net loss was $1.5 million compared to adjusted net income of $2.4 million in the prior year period;
  • Adjusted EBITDA was a loss of $0.8 million compared to a gain of $2.7 million in the prior year period.

* All growth rates reflect year over year growth comparing the first quarter of 2019 to the first quarter of 2018.

We are very pleased to report our first quarterly financial results as a publicly traded company and are off to a strong start to fiscal 2019. We generated 15.3% revenue growth in the first quarter, which is particularly impressive given our very strong revenue numbers in the same period last year. Our top selling products continue to generate strong sales momentum and we have seen a robust response to our introduction of hemp-derived CBD products in late February.

Aaron LoCascio, Greenlane’s Chairman and Chief Executive Officer

We are continuing to expand our hemp-derived CBD offerings and see considerable opportunity in this on-trend and growing category. In April, we enhanced our e-commerce capabilities with the launch of Vapor.com, which will leverage traffic from our existing sites. We believe Vapor.com will become the leading e-commerce platform in the industry.

“Greenlane has never been better positioned or more excited for our opportunity to capitalize on the large and growing markets for cannabis, nicotine and hemp-derived CBD. We are the industry’s leading partner to bring premium vaporization and consumption accessories to market across channels and geographies. We believe we are uniquely positioned with the experience, the people, the infrastructure and the capital to support and drive continued industry growth,” continued LoCascio.

First Quarter 2019 Results

For the first quarter ended March 31, 2019, the Company reported revenue of $49.9 million, an increase of 15.3%, compared to $43.3 million in the first quarter of 2018. The revenue increase was driven primarily by the growing popularity and availability of the Company’s products in both the United States and Canada. In terms of product categories, the revenue increase for the quarter compared to the prior year period included an increase of $2.7 million of sales related to e-cigarette products, an increase of $2.6 million of sales related to child-resistant storage solution products and an increase of $1.0 million of sales related to vaporizers and vaporizer accessory products.

Gross profit for the first quarter of 2019 was $9.0 million, or 18.0% of revenue, compared to $9.1 million, or 20.9% of revenue, for the same period in 2018. The decline in gross margin as a percentage of revenue on a year-over-year basis primarily reflects changes in sales mix and promotions with a key product supplier.

Salaries, benefits and payroll tax expenses for the first quarter of 2019 increased approximately $5.1 million to $8.1 million, or 16.2% of revenue, compared to $2.9 million, or 6.8% of revenue, for the same period in 2018. The increase primarily reflects approximately $2.9 million of equity-based compensation related to membership units and profits interests granted as equity-based compensation and the addition of 79 employees related to the expansion of domestic sales and marketing efforts.

General and administrative (G&A) expense for the first quarter of 2019 increased approximately $1.8 million to $5.4 million, or 10.8% of revenue, compared to $3.5 million, or 8.2% of revenue, for the same period in 2018. The increase primarily reflects an increase in marketing expenses, subcontracted services, executive search and recruitment expenses, new facility expenses and the acquisition of the Company’s headquarters building, and the acquisition of Pollen Gear, among other expenses. Additionally, G&A includes $0.8 million of incremental audit and legal fees and consulting expenses related to the Company’s transition to becoming a public company.

Operating loss for the first quarter of 2019 was $5.2 million, compared to operating income of $2.3 million for the first quarter of 2018.

Net loss for the first quarter of 2019 was $17.7 million and was impacted by $12.1 million of expense associated with the change in fair value of convertible notes, $2.9 million of equity-based compensation expense, $0.8 million of non-recurring costs associated with transitioning to a public company and $0.4 million of debt placement costs. Subsequent to the first quarter and in conjunction with the initial public offering, the convertible notes were converted into equity. This compares to net income for the first quarter of 2018 of $2.3 million.

Adjusted net loss for the first quarter of 2019 was $1.5 million compared to adjusted net income of $2.4 million in the first quarter of 2018. Adjusted net loss for the first quarter of 2019 excludes the above-mentioned expenses in net loss. Adjusted net income for the first quarter of 2018 excludes $0.1 million of costs associated with transitioning to a public company.

Adjusted EBITDA was a loss of $0.8 million for the first quarter of 2019, compared to a gain of $2.7 million for the comparable period in 2018.

Balance Sheet & Liquidity

The Company’s cash and cash equivalents at March 31, 2019 were $2.8 million and total debt was $68.8 million, compared to $7.3 million and $48.4 million, respectively, at December 31, 2018. On April 23, 2019, the Company completed an initial public offering of 6.0 million shares, of which 5.25 million shares were offered by the Company raising net proceeds of approximately $80.4 million. In connection with the initial public offering, the convertible notes, which had a balance of $60.3 million and were included in the Company’s total debt at March 31, 2019, were converted into equity.

Conference Call Information

The Company will host an investor conference call today at 5:00 p.m. Eastern Time. Investors interested in participating in the live call can dial (888) 882-4478 from the U.S. or international callers can dial +1 (323) 794-2591. A telephone replay will be available approximately two hours after the call concludes and will be available through Thursday, May 16, 2019, by dialing (844) 512-2921 from the U.S. or +1 (412) 317-6671 from international locations, and entering confirmation code 7886998.

There will also be a simultaneous, live webcast available on the Greenlane Investors website in the Events & Presentations section at https://investor.gnln.com/events-and-presentations or directly at http://public.viavid.com/index.php?id=134501. The webcast will be archived for approximately 30 days.

Presentation of Financial Information

This press release presents historical consolidated results for the periods presented of Greenlane Holdings, LLC, the predecessor of Greenlane Holdings, Inc., for financial reporting purposes. The financial results of Greenlane Holdings, Inc. have not been included in this press release as it did not engage in any business or other activities prior to the completion of the IPO on April 23, 2019. Accordingly, these historical results do not purport to reflect the results of operations of Greenlane Holdings, Inc. had the IPO and related transactions occurred prior to the beginning of the periods included in this press release. For example, these historical results do not reflect the attribution of net income to non-controlling interests or the provision for corporate income taxes on any income that would have been attributable to Greenlane Holdings, Inc. during such periods had the IPO and related transactions occurred prior to the beginning of such periods.

Use of Non-GAAP Financial Measures

To supplement Greenlane’s condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), Greenlane uses Adjusted Net (Loss) Income and Adjusted EBITDA, which are non-GAAP measures, in this press release. Greenlane defines Adjusted Net (Loss) Income as net (loss) income before equity-based compensation expense, changes in fair value of our convertible notes, debt placement costs for the convertible notes, and non-recurring expenses primarily related to our transition to being a public company. The debt placement costs related to the convertible notes issued in January 2019 are reported in the interest expense line item in the condensed consolidated statement of operations for the three months ended March 31, 2019. Non-recurring expenses related to our transition to being a public company, which are reported within general and administrative expenses in our condensed consolidated statements of operations, represent fees and expenses primarily attributable to consulting fees and incremental audit and legal fees. Greenlane defines Adjusted EBITDA as net (loss) income before interest expense, income tax expense, depreciation and amortization expense, equity-based compensation expense, other income, net, changes in fair value of our convertible notes, and nonrecurring expenses primarily related to our transition to being a public company.

The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. These measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

Greenlane discloses Adjusted Net (Loss) Income and Adjusted EBITDA, which are non-GAAP performance measures, because management believes these metrics assist investors and analysts in assessing the Company’s overall operating performance and evaluating how well Greenlane is executing its business strategies. You should not consider Adjusted Net (Loss) Income or Adjusted EBITDA as alternatives to net (loss) income determined in accordance with U.S. GAAP as indicators of Greenlane’s operating performance.

For more information on Greenlane’s non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the “Reconciliation of GAAP to Non-GAAP Results” table in this press release.

About Greenlane Holdings, Inc.

Greenlane (NASDAQ: GNLN) is a leading distributor of premium vaporization products and consumption accessories in the United States and has a growing presence in Canada. Greenlane’s customers include over 7,000 independent smoke shops and regional retail chain stores, which collectively operate approximately 11,000 retail locations, and hundreds of licensed cannabis cultivators, processors and dispensaries. Greenlane also owns and operates one of the most visited North American direct-to-consumer e-commerce websites in the vaporization products and consumption accessories industry, Vapor.com, a unique e-commerce platform which offers convenient, flexible shopping solutions directly to consumers. Through Greenlane’s expansive North American distribution network and e-commerce presence, Greenlane offers a comprehensive selection of premium vaporizers and parts, cleaning products, grinders and storage containers, pipes, rolling papers and customized lines of premium specialty packaging. Following the passage of The Agriculture Improvement Act of 2018 (“The Farm Bill”) in February 2019, Greenlane commenced distribution of premium products containing hemp-derived cannabidiol in those states in which the distribution and sale of such products are authorized by, and can be effected in compliance with, applicable state laws and regulations.

Original press release

 

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