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Greenlane Reports Record Core Business Revenue of $125.2 Million in 2020
Greenlane Brands Revenue Grew 46.3% year-over-year
BOCA RATON, Fla., March 31, 2021 (GLOBE NEWSWIRE) — Greenlane Holdings, Inc. (“Greenlane” or “the Company”) (Nasdaq: GNLN), one of the largest global sellers of premium cannabis accessories and specialty vaporization products, today reported financial results for the fourth quarter and year ended December 31, 2020. Note, for the highlights below, core revenue is defined as all non-nicotine revenue and Greenlane Brand revenue is inclusive of Eyce figures.
Full Year 2020 (“FY 2020”) Highlights
- Total revenue for FY 2020 was $138.3 million compared to $185.0 million for FY 2019;
- Full year 2020 Core revenue (defined as non-nicotine revenue) grew 12.7% to $125.2 million, compared to $111.1 million in FY 2019;
- Merchandise Gross Margin (defined as sale price less the cost of merchandise) increased to 28.2% compared for FY 2020 compared to 15.7% for FY 2019;
- Gross profit was $22.8 million and gross profit margin was 16.5% for FY 2020. Excluding the impact of certain inventory adjustments which were incurred in the year, gross profit would have been $27.6 million or 20.0% of net sales, a 320 basis point year-over-year improvement in gross profit percentage compared to FY 2019’s gross profit margin of 16.8%;
- Net sales of Greenlane Brands increased to approximately 19.7% of total net sales for FY 2020 from 10.1% for FY 2019;
- Diversified and expanded Greenlane’s senior leadership team to support the Company’s business transformation plan as well as sales and marketing initiatives in North America and Europe;
- Restructured our sales team by adding field sales personnel in both the United States and Canada, which will enable us to build stronger customer relationships; additionally, we transitioned to a more streamlined and centralized model with fewer, but larger, more automated distribution facilities, increasing our reach to customers around the United States to ensure that they have the necessary inventory, increasing efficiencies both internally and externally while decreasing costs;
- Cash was $30.4 million as of December 31, 2020, compared to $47.8 million as of December 31, 2019.
Fourth Quarter 2020 (“Q4 2020”) Highlights
- Net sales of Greenlane Brands grew approximately 50.5% to $7.8 million, or 21.4% of total net sales in Q4 2020 compared to $5.2, or 13.8% of net sales in the fourth quarter of 2019 (“Q4 2019”);
- Core revenue grew 11.3% to $33.9 million in Q4 2020, compared to $30.5 million in Q4 2019;
- Vibes Rolling Papers, Marley Natural, K.Haring Glass Collection, and Aerospaced posted record quarterly sales figures with a quarter-over-quarter growth of $0.7 million or 53.6%, $0.3 million or 68.3%, $0.2 million or 73.1% and $0.1 million or 24.5% respectively.
“Though this year has been very challenging, I am incredibly proud of how the Greenlane team has aligned to accomplish all we have achieved in 2020,” said Aaron LoCascio, Greenlane’s Chairman and Chief Executive Officer. “Together, we successfully refocused our strategic efforts to grow our portfolio of owned brands, brought in new senior leaders, and took decisive steps to move away from lower margin revenue categories that has positioned us for sustained, long term growth.”
As we enter 2021, Greenlane will continue to innovate and adapt to meet the demands of the rapidly evolving Cannabis industry by executing on our growth strategy.
Aaron LoCascio, Greenlane’s Chairman and Chief Executive Officer
This includes continuing to improve our revenue mix with a focus on Greenlane branded products, further optimizing our organizational structure to reduce costs where appropriate and leveraging our best-in-class global distribution platform to launch innovative new products into the market.
Mr. LoCascio added, “We have made great progress thus far, and recently announced our acquisition of the Eyce, the world leader in premium silicone smoking products and a Greenlane partner for over seven years. We have built a robust pipeline of opportunities over the last year and I look forward to continuing to execute on the opportunity ahead of us as we accelerate our acquisition growth strategy to drive value enhancement for our customers, and shareholders.”
Q4 2020 net sales decreased 2.6% to $36.3 compared to $37.2 million in Q4 2019, and FY 2020 decreased 25.2% to $138.3 million compared to $185.0 million in FY 2019. The decrease in sales during FY 2020 was driven by a strategic decision to move away from sales of higher volume, lower margin merchandise to on higher margin revenue opportunities, including the Company’s Greenlane branded products, which accounted for 19.7% of FY 2020 net sales and 21.4% of Q4 2020 net sales, in comparison to 10.1% and 13.8% for FY 2019 and Q4 2019, respectively.
FY 2020 gross profit declined 26.8% to $22.8 million compared to $31.1 million for FY 2019. The year-over-year decline in gross profit is significantly impacted by certain strategic decisions made in the third quarter of 2020, relating to inventory level management and go-forward product lines. As a result of those decisions, the Company recorded write-offs and adjustments of $4.8 million relating to damaged and obsolete inventory. Excluding the impact of these inventory adjustments, FY 2020 gross margin would otherwise have been $27.6 million and gross profit margin would have been 20.0% or 320 basis points higher than FY 2019’s gross profit margin of 16.8%.
Our United States segment reported a net sales decrease of $47.7 million in 2020 due to a reduction in non-core nicotine revenue of $55.8 million, while core revenue grew by $8.1 million; $7.6 million of which come from growth in our Greenlane house brands. Our Canada segment reported a sales decrease of $6.7 million, and similar to the United Sates the decrease was driven by a $5.0 million decrease in non-core revenue. As for our European reporting segment, annual sales totaled $10.3 million, with Q4 2020 sales totaling $3.1 million and representing a $0.5 million or 15.2% growth in comparison to Q4 2019, the first quarter post acquisition.
Greenlane continues to actively manage its balance sheet to fund the Company’s growth initiatives and potential M&A opportunities. As of December 31, 2020, cash balance stood at $30.4 million and $54.2 million of working capital, compared to $47.8 million and $88.7 million of cash and working capital as of December 31, 2019, respectively. Non-Cash working capital decreased 41.8% year-over-year.
Conference Call Information
Greenlane will host a conference call Wednesday, March 31, 2021, to discuss these results. Aaron LoCascio, Chief Executive Officer, will host the call starting at 8:30 a.m. Eastern time.
Date: Wednesday, March 31st, 2021
Time: 8:30 a.m. Eastern Time
Dial-In Number: (833) 519-1285
Conference ID: 1881585
Webcast: Click here to access
Replay: (855) 859-2056 or (404) 537-3406
Available until 11:30 PM Eastern Time on April 14th, 2021
About Greenlane Holdings, Inc.
Greenlane Holdings, Inc. (NASDAQ: GNLN) is a global house of brands and one of the largest sellers of premium cannabis accessories, child-resistant packaging, and specialty vaporization products to smoke shops, dispensaries, and specialty retail stores, as well as direct to consumer through its online e-commerce platform, vapor.com. Founded in 2005, Greenlane serves more than 6,000 customers in over 8,000 retail locations and has over 250 employees with operations in 13 cities across the United States, Canada, and Europe. With a strong global footprint, Greenlane has been the partner of choice for many of the industry’s leading brands, who chose to leverage its strong distribution platform, unparalleled customer service, and highly efficient operations and logistics to accelerate their growth. Greenlane’s curated portfolio of house brands includes packaging innovator Pollen Gear™, VIBES™ rolling papers, Marley Natural™ Accessories; K.Haring Glass Collection, Aerospaced grinders, Eyce specialty silicone smoking products, and Higher Standards, which offers both an upscale product line as well as an innovative retail experiences with flagship stores located in Chelsea Market, New York and Malibu, California.
For additional information, please visit: https://gnln.com/.
Presentation of Financial Information
This press release includes historical consolidated results for the periods presented of Greenlane Holdings, LLC, the predecessor of Greenlane Holdings, Inc., for financial reporting purposes. Accordingly, the consolidated financial statements for periods prior to the completion of the IPO on April 23, 2019 have been adjusted to combine the previously separate entities for presentation purposes. Amounts for the period from January 1, 2019 through April 22, 2019 represent the historical operations of Greenlane Holdings, LLC. The amounts for the period from April 23, 2019 through December 31, 2019, and from January 1, 2020 through December 31, 2020 reflect the consolidated operations of Greenlane Holdings, Inc.
Use of Non-GAAP Financial Measures
Greenlane discloses Adjusted Net Loss and Adjusted EBITDA, which are non-GAAP financial 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 or Adjusted EBITDA as alternatives to net loss determined in accordance with GAAP as indicators of Greenlane’s operating performance. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Accordingly, you should not view Adjusted Net Loss or Adjusted EBITDA in isolation or as a substitute, or superior to, financial information prepared and presented in accordance with GAAP. Furthermore, these non-GAAP measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.
Adjusted Net Loss and Adjusted EBITDA have limitations as an analytical tool. Some of these limitations are:
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;
- Adjusted EBITDA does not include interest expense, which has been a necessary element of the Company’s costs;
- Adjusted EBITDA does not reflect income tax payments we may be required to make;
- Adjusted EBITDA and Adjusted Net Loss do not reflect equity-based compensation;
- Adjusted EBITDA and Adjusted Net Loss do not reflect transaction and other costs which are generally incremental costs that result from an actual or planned transaction;
- Other companies, including companies in Greenlane’s industry, may calculate adjusted EBITDA and adjusted net loss differently, which reduces its usefulness as a comparative measure.
For more information on Greenlane’s non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial measures, please see the “Reconciliation of GAAP to Non-GAAP Financial Measures” table in this press release.
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