cbdMD (YCBD) 10 Aug 232023 Q3 Earnings call transcript

Good afternoon. Welcome to cbdMD Inc.'s June 30th Third Quarter of Fiscal 2023 Earnings Call and Update. This afternoon, the company issued a press release that provided an overview of its third quarter and 9-month fiscal results and will file its quarterly report on Form 10-Q later today.Today's conference call is being recorded and will be available online along with our earnings press release covering our financial results and non-GAAP presentation at cbdmd.com in accordance with cbdMD's retention policies. [Operator Instructions]At this time, I would like to turn the conference over to Brad Whitford, the company's VP of Finance. Brad, please go ahead.

thank quarter for call of and XX, cbdMD's and Ariel, third XXXX fiscal you, you joining all June update. Thank XXXX earnings

XX, www.sec.gov.Any filings all other federal like and on June not statements our remarks Financial statements ended safe call at except with reviewed statements that call CEO Officer.We'd Swift, constitute like the today, forward-looking laws.With the everyone also for to expectations, our intend forward-looking at Science Ronan On any harbor and that which plans remind various prospects we this our Chief of call today's or of and future only provisions company's and Officer; Kennedy, XXXX, Chief to website Dr. about Sybil cautions Litigation forward-looking may August in SEC, Reform www.cbdmd.com SEC's on those as Thursday, purposes these forward-looking Act have website Interim or results under that the of be of can events Form speak cbdMD required date, made reflect risks that conference I'd the Ronan. these to risks the occur does XXXX, the are XXXX. uncertainties to be Private on report cause by may XX-Q to subject described Securities annual indicated, after including from the that, statements today's the would cbdMD on as of for to actual to date, turn update XX, securities company's over differ and circumstances and materially quarter our

afternoon, the we're with appreciate [indiscernible]. Good some everyone, technical to especially Thank I while with our dealing your issues patience you, shareholders. Brad.

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quarter XX% quarter the comparative Sequentially, sales XXXX decrease a third of Total were $X.X you, or essentially Thank the for Sybil. million year fiscal from were total. prior net flat. sales

e-commerce generated improved decrease. XX% impacted third of net quarterly prior were This year-over-year for million was quarter sales believe year reduced $X expenses X.X%. 'XX the quarterly direct-to-consumer of and comparative year-over-year fiscal of third macroeconomic sales E-commerce the business we versus e-commerce on marketing in forces by our quarter. sales 'XX. underperforming in as We XX% represented Our we of sales the XX% total a quarter consumers.Sequentially,

of to to 'XX, 'XX. primarily for the $X.X percentage sales comparative as quarter quarter fiscal Our million net decrease of comparative in for This compared in 'XX. wholesale period. the a XX% came year the generated period.Our compares profit the fiscal This sales for net fiscal lower for as down price year gross million attributable business second prior is quarter XX% our at $X.X third of of the over structure to XX% prior

We when gross expect margins mix. to the factoring mid-XXs in maintain profit sales range in

of million intangibles.Costs comparative million, fiscal Our management quarter $X.X impairment is totaled on down goodwill and when in $X.X focus which of prior across of down the as the third board the SG&A excluding million expenses for from year quarter 'XX $XX to continues came profitability.

our Sequentially, our amortization, in the attributed adjusted to expense March employee the XXXX. impairment $XXX,XXX operating of XXXX our $XXX,XXX WHOOP. our a $XXX,XXX million as fiscal expenses our agreement XXXX Sequentially, we of million R&D AR accrued goodwill third costs loss of our on off excluding expenses loss front-loaded. stock nearly with run the depreciation primarily included quarter.We the Sequentially, for quarter on stock in period, and quarter. declined legal March operating increased $XXX,XXX operating a non-GAAP compared prior with to prior on of XXXX Based on operating fourth in prior the operations $XXX,XXX, loss are expense, with this non-GAAP and quarter associated AXXX operating the and compared basis. came cost intangibles. reduction as to quarter quarter non-cash invested anticipating cash structure loss XXXX million amortization loss our Meaning fiscal as improved cash depreciation, non-cash as our continued to for AXXX million amortization, $XXX,XXX $XXX,XXX and $XX,XXX over year during studies July's third XXXX other expense, quarters. year amortization reduced expense GAAP from adjustments of marketing AXXX, from of increased results by kicking loss operating quarter.Our up GAAP decrease for to by wrapping mentioned second expenses.Overall, and in Most noncash resulted the for $X.X $XXX,XXX non-GAAP $XX,XXX the from $X to our loss in previously and adjusted and in over to SG&A related year a in over non-GAAP $X.X payroll, fiscal million of a their period over primarily credits to non-cash operating cbdMD our SG&A the the $X.X million resulting Excluding and from approximately approximately current in last $X.X of due adjusted we clinical reductions of $X.X loss This third loss in quarter year third a fiscal the were in rate, $XXX,XXX both prior Therapeutics for Sybil is management's was study quarter. are current the XXXX.The profitability. in about of focus quarter fiscal non-GAAP the XXXX compared operating adjusted adjusted new down

differentiated $XX,XXX on from results the with to category.Other income income consolidated for us non-cash balance provide contingent The continue statement related acquisition includes position a clinical both XXXX efficacy our Development. product believe expense sheet We out currently for to is unique gain and in the Based third our liability earn education a Cure studies December contingent the on XXXX for $XXX,XXX. of liability quarter of of our our

of XXXX, to and equivalents of XXXX in million. of offering We mostly $XX.X total a XX, XXXX.During the of million capital working loss million, offering decrease of million while company's XXXX, usage of common underwritten liquidity. current payable for approximately the approximately difference. of approximately quarter share. underwriting million, approximately prepaid a which million.As million current In and is from and and XXXX.Our runs commissions September make XXXX, $X.X completed as accrued fourth on $XXX,XXX commitment of deducting an and our adjustments XX, the May, million million at had primary cash June XX, current stock $X.X of and capital We dividends XX, June termination expenses. and cash was the public that non-GAAP before strong sponsorships our liabilities and $X.X offering the marketing of XXXX, $XX.X approximately athlete operating of $X were million sponsorship. of operations A managing per $X.X main the period approximately as $X.XX approximately attributed assets decreased fiscal are of offering as million approximately position maintained driver The to September prudently accounts of cash of compared of proceeds we public to of XX% $X.X adjusted XX, components cash and working June now $X.X capital price through November the included cash is paid We X,XXX,XXX shares up $X.X cash. ensuring of cash utilized the assets working Gross equivalents $X.X of and the of we million, in $X.X the by discounts expenses to reduction from were our third

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team in refining projects cash margins. Our is actively enhancing cost at our structure and aimed engaged

to Our Roman. focus on of it turn that, remains delivering And value determined with shareholders. back all to our I'll

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our and upcoming that, questions. palpable, I'd lie team's are sites the results. positive firmly Our ahead.With exceptional quarter, natural around meticulously adapt months set to the and in macroeconomic we to breakeven stabilized opportunities regulatory wellness revenue like we EBITDA.We driven constantly outcomes, and enthusiasm determined future this that a tailored centered is team With building are and health our products, by The navigate to our business agility strategic the for maintaining open as framework, current the that promise yield and uncertainties continue while an tangible evident choices dedicated thrive varying improving remains to on to call conditions. up within anticipate hold to achieving EBITDA

Waldo Our Lismore Adam Instructions] of from [Operator Partners. question first comes

outlook then EBITDA results, quarter the third questions for the the cash last impact proposal million. relates burn $X here ambition -- of were meeting? we to the following over quarter. maybe at of outlook quarters your in quarter, in here see it fourth burn as than achieve breakeven and in burn look for do fourth your When cash to little for second you as proxy quarter the to couple next more of prospectively outlook and kind hoping the met Couple to of you you the achieve quarters that third couple for something I What a potential first special any the absent the on as

we improvements you I $X dividend quarter, $XXX,XXX, operating I that, we our make -- look quarter-over-quarter. to think the our were cash it flow, extra maybe fiscal from about excluding for at our got of capital. working at We've million continue dividend, sights an third think sits Outside for, a I the $XXX,XXX down when think quarter. guess, to operating I

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sort guidance So the into December going we XX. aren't providing of

around, some here capital the structure release. in question extensively press additional meeting, Last obviously, recent in proxy is the the here the obviously, for color special discussion

arguably structure, if this that holders. obviously, it's arise not holders point, company for the approved. of such being You've well, the capital that common and is some downside preferred the as the laid preferred obviously, run for holders at out scenarios, But

in preferred whether offered to strategic given own they holders also are a entitled the XX% pro that a environment? the of control feel it approximately company -- plus effectively that So basically I dividend, they'll you it shouldn't say in the enticement all you've rata M&A liquidation enough boat.So now, accrues or liquidation, to own do of they

think worked been that It's fact And both shareholders public. classes it to solution. to a those challenging approve. on Look, that the due are we've of requires hard we securities

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and for me. permit the to if to will clearly proxy a stock them the in release. similar of addressed that shareholders? resets dilution the question employees, press With all respect management resets didn't you'll suffer common I restricted see option Final during

that the on comment you're on public a extent to to do you can that willing so So call?

equity stock provisions of common are existing set. tied are and plans our to sort Look, the the

reset So any are plans there's outstanding. no in the this been of -- that currently to at point time, there's

So we diluted similarly would be the common yeah, the alongside along shareholders, shareholders. common

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yes. Correct,

Our next comes from Vendetti Anthony Instructions] [Operator question Maxim of Group.

where you in need review? to there you more if terms a be in be just launch that. cost, future know wondering and of some initial product just to to I look was to canceled margin? cut I you've you wondering, and already done and and you some do it had still I products, have sports as you've have to -- may an Obviously, new is gross of I Or is ongoing an getting update. to you with are the of so then call then round looking where a cuts of getting portfolio go forth in terms Ronan, lot selectively to lot portfolio, know right mid-XX%-plus you'll products that contracts going to the done of and the add but largely over a have always if the be so, now?And with you was the rightsizing figures

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and at we various while to margin margins, requirements channels look up evolve new gross continue markets, evaluating able portfolio. we we healthy have products would our at So as sort certainly of of different gross product we're sort open new if to

concludes would like to question-and-answer to any closing session. Kennedy the conference This back Mr. the over I remarks. for turn

to we a to activity our very the year-end. like XX look forward continue for and lot support vocal and everyone's thank move over today toward your I'd XX you support, to more fiscal look coming forward we as much to in days Thank to call December.

This concludes today's conference call.

participating, You may and day. pleasant you disconnect a for lines. Thank your have