Greenlane (GNLN) 7 Aug 202020 Q2 Earnings call transcript

Good morning all. Welcome to today's conference call to discuss Greenlane Holdings' Second Quarter Financial Results. A press release detailing the financial results for the quarter was distributed this morning and is available on the Investor Relations section of the Greenlane website.

As a reminder, today's conference is being recorded. On today’s call are Aaron LoCascio, Chief Executive Officer; and Bill Mote, Greenlane incoming Chief Financial Officer.

to would contain remind may forward-looking forward-looking in Greenlane prepared that make begin, statements may received. remarks statements response we like listeners to today's additional Before questions the and management statements not placed should not undue be further and upon performance These therefore do reliance them. guarantee company's and statements discussed other the expectations on are inherent involve today's current on and The release. factors risks based press of management and uncertainties live time contains the sensitive information August only speaks of this also that date as of call broadcast, XXXX. XX, This cause that are the Form with on Factors annual and to set report forth Greenlane's filed on could results in SEC. differ in XX-K report release quarter XX-Q materially and its today's press Form Greenlane's as these and to of no obligation Any future as information statements assumes today call statements forward-looking today assumptions on Greenlane update made result events. this or of a new on are based

the Greenlane call, in available adjusted today's including and financial non-GAAP website I turn go our loss of to Mr. During non-GAAP net Please like to of at reconciliation conference has may adjusted which Officer Relations Investor is LoCascio. over management Executive would Aaron a press the section Mr. release the Greenlane measures, EBITDA. discuss ahead, gnln.com. Greenlane. included LoCascio, today's measures in Chief of

you Good today. joining thank for morning and us everyone

business call, this activities. development and sales I environment During will operating review XXXX our quarter highlights, second

than products discuss as a have Operating would additional Bill from years announced the Financial Bine welcome our drive into Chief we strategic added will set scaling like and support the manufacturing growth are new take experienced chain supply have an priorities. skill of to many results, with moment shortly, brands’ of Officer, priorities, we senior our as I Greenlane and few Mote, will to industries. Bill and more excited to supply transformation his we our getting executive our Chief formally operations and financial his experience Among consumer the hear in years finance accomplished support, chain leading apply to financial who and him XX additions significant to Bine, building accounting, growing planning to Before of and demand. over I tax is other the XX team complexity. Bill and and to executives treasury experience operating Bill to incoming functions. wanted four well recent global you week. has corporations last leading that Bill Mote analysis, Officer; and our teams scale with business a oversee

I towards benefits margin amid operations. am report XX year the important of pandemic, the to include revenues earlier even this the we revenue These focus. beginning global changes we changes achieved COVID workforce began on of to to million. proud the repositioning implementing quarter, that higher are focus our strategic opportunities, numbers, $X.X into ongoing the our Now and of come streamlining and the of $XX.X of million review our profit a In gross that

of returning that our are goal JUUL adjusted profitability, the to to While to the efficiencies quarter. reduced representing continue successfully our the have proportion focus implement. opportunities, revenue XX%, squarely derived we revenues million in we on $X.X higher With margin to from of to our products below our introduced savings additional from we uncertainty COVID-XX we achieving some by well the forecasting, EBITDA supported on way operational believe our has

period. our And line all we revenues QX JUUL sequentially, Looking and QX the prior by has XXXX. increased year to X.X% business XXXX has our revenue another factor X.X% way, top compared the out from at revenue if from XXXX, improved QX

ecommerce product million drive the higher point revenue assortment. emphasis our and With across the normalize we we BXC our well revenue long-term to in through channels our strong affiliated remains Vapor.com rounded strong. focus remained We that states margin on expect pleased dropship And period to beginning and of On at through pandemic. lows XX% the of BXC show begun dropship order country, continue $X that quarter, our will and quarter that these with net up Vapor.com quarters are growth our $X.X quarters growth. to around sites order In around revenue as over sales. sequential XX% BXC we XX% more channel total remain and see the our than has have represented increase to the saw JUUL sequential and Both levels to squarely channel volumes the revenue the and to reopening values doubling BXB million. to due believe have we sequentially from over seen

expansion the across quarter available the retail we products Canada specialty Canada. XXX into retailers of branded our VIBES Barcelona, our stores and than Spain. of in opening Europe international following VIBES now store at XXX in and announced Europe During over more are cookies

experienced our Greenlane achieve second given supply total chain Greenlane has and products assortment expected always have COVID brands, Greenlane we and expect network deliver our to access of of brands to partners other our continue of customers our our challenges, complimentary pressure component to as our the key which were a while VIBES support placed that innovative we pandemic the Greenlane customers own from sales the products. have sales. has brands quarterly we line XX% XX a they our of term represent comprehensive representing offering. worked And able While were brands ensured will short highest on our and develop of to operations, today, Greenlane

our on been streamlining on call, consolidating included centers. making also our We announced have our and progress last which distribution transformational initiatives significant

through that steady anticipate that strong operational QX, but achieve some should we a ahead, look we inefficiencies by we will transitional QX. As state remain

environment a our heightened profitable brought by operate run Our business to undergoing in today macro growth a is and we pace change on both desire high the business. of

end, business practices the broader our customer we multiple importance and both that we of to shifting into closely of bringing we international recognize and customer segments. of that digital we the We our We're a be to our in and outcome revenue both for While difficult digital support bring priorities automation as company, that strongly experience. macro for across have environment. bringing in upgrading see packaging that BXB we that component a supply Greenlane a companies’ I execute opportunities. channel especially in development be M&A the demand, environment has approach thank want again the to along and successfully better, despite their change we critical leadership best on strategies, different teams for hard BXC. distribution platform the are the will all our integrated consumer team believe work evaluating Like the solutions centers, service customer through potential our new journey. class To this are that to internal can with pandemic our to rapidly including been winning bringing continued the

We second and Bill have and profitable XXXX in our I to that, excited forge growth through and results. am to Mote half progress XXXX beyond. for it the continue With of long-term to made great second I'll quarter sustainable over to financial run turn our path now

and hello, Aaron, Thanks, everyone.

Greenlane say how team joining getting team to in excited we I starting be where us I'd to am has the just Before the that the and done work are like proud of to today.

our the in be be found relations will the with reminder, website our release I @gnln.com. morning section and you Edgar earnings can reviewing this in is a As that available of investor results

behaviors consumer QX representing COVID-XX purchasing $XX.X quarter sequential pandemic was of million, full on the decline Our million that XXXX placed of operations. revenue in impact a reflecting $X.X the our

that QX in average our our $X.X stale the realigned of the margin or or revenue quarter. also obsolete sales $XXX,XXX. plan resulted revenue inventory focus for adjustment XXXX. in net a implementation of XX% to than by $X.X significantly transformation June less net had higher Gross on sales million higher in Our was was our XX% relating to business the profit opportunities, of sales which compared total We XX% and of accounting affected QX sales million of than

believe were quarter, in leadership benefits margin Since been would XXXX. largely And adjustment our last performance from of tax adjusted going purchasing If $XXX,XXX. advanced This have have amount brought our that time, decreased by XX%. our XXXX in gross processes due reference, exclude $X.X payroll Salaries, year. from last software. the made $X.X second and For was drive forward, and we calculations, $XXX,XXX decisions better this will to new dimension. we that in million to that we to we QX million and was expenses million quarter purchasing for the $X.X

improved of Q&A. to with $X.X to net a of turn compared Net and $XX.X balance up XXXX. and as We XXXX. million quarter back General EBITDA the administrative $X.X of earlier to levels million Adjusted cash review net loss XXXX. compared inventory workforce $X.X of was capital, the continued the maintain to operator closely decreased over manage With $XX.X will million to loss million million As second of completed call our million, loss quarter balances, result strategic $X.X compared quarter prudently that, first the of million we in sequentially. $X.X for second this it a million, of XXXX, Adjusted quarter XXXX the healthy improved for million of approximately receivable second quarter our I to of working expenses year. adjusted to monitor the $X.X accounts XXXX have for by the our for million of of quarter $X.X quarter a in in in $X.X first loss by sheet. and the the to $XX.X ended to loss first the and open million

with Company. Thank first is you. Vivien & question [Operator of the Azer instructions] line And from your Cowen

good Hi, morning.

good morning, Vivian. Yes,

clarity going the for I a think that year? ahead half whether impact bit the be entails the thanks hoping Thanks. to decisions as to little more all specifically? we what to get And there's was and the purchase a So, color. of residual back on

scale called and level impact last QX this of reserve activities the No, we in refocusing obsolete do a towards question. efforts part that lot results margin really going because we broad forward. out specifically that inventory Sure, of that of our And QX. beginning energy -- it $XXX,XXX anticipate our spent came out to great was activity for place Since effort. of higher our transformational a of year, of take and time not to we

for That's helpful. enough. that. fair Thanks Okay,

that and you We're that business BXB your closing. offered of a reopening. economies about mixed bag think certainly see seeing you're to kind normalizes, starting business we As are reopening

steady-state So, Or that business? more of little some it in terms a there? is there is bit volatility improvement Thanks.

there's So there's pretty But the in activity seeing definitely also positive level good improvements to reopen. a overall seeing BXB channel. volatility QX. of of volatility. in that level the early direction some as some cadence of correct compared We're are parts to of higher Overall, states we a say you're the

to going closely But of going we're So, to our normalization do forward. revenues see in a bit QX. BXB anticipate a we watch that in

around terms right Okay, steady-state. perfect. That's you level commentary exposure And has expect the business helpful. meaningfully. frankly, is or But from current in implies don't that of Thanks. that disruption you your in the to note probably medium term, any JUUL, obviously, come you the did FDA. that then That sales down think your near

So, Thanks. that? can you just clarify that or on applying

Yes.

reason was it the of we BXB. channel that except revenue part other sell So in don't impacted JUUL was for any why

there BXB was for closures quarter. brick and definitely considering a So, was the there, of lot mortar slower

to definitely FDA. is we relates progress the from currently any FDA And as anticipating from the disruptions to front, So But and not other suppliers that. related seen we positive are yes, process. PMTA JUUL JUUL have it the impacted by

to going mind. one I'm you if in don't squeeze last Perfect. one

versus what the on like-for-like margin basis for us remind you VIBES domestically around from looks On can line? that a distribution product internationally Thanks. commentary your like profile the Europe, just encouraging

VIBES? to Specifically

and that you or Yes, geographic segment about can margins on year. Thanks. talk about

Sure.

the direct-to-consumer Europe lines higher in ecommerce a a business that There's there. There's lot a we more by activity So, general profile have business. largely has is there. which lot of more driven margin type

VIBES of COVID So, shifting we're channel XX%. to our overall range, or line margin items. how again channel. is is to margin profiles our in performing XX% typically even that's oftentimes overall margin profile product And impacts Europe in business one depending XX% and on, from for excess of that the seeing in strongest business XX%

great. the Thank for you color. That's

line next is from question with Glenn Your Thalmann. Ladenburg the Mattson of

Hi.

balance what M&A just don't you you're questions, sheet looking you far possible expand the at a is Can a the couple as price on things given, strong, activities. and still as So maybe share that kind of I little depressed. bit is know, mentioned

could some that? just of thoughts So, you give your on us

Sure, and good morning.

a and a new it geographical a to from reach, about strategy, Greenlane relates brands lenses, both a perspective, So, acquisitions talked perspective. from new Vertical we've to brands to opportunities, potential horizontal and historically, as of from it M&A vertical customers. horizontal two our bolt-on being territories,

going the So, I a potential going quite that look But opportunities a assets. is focus forward. still company pandemic opportunity of also remains digital key would at made to it around we've clear certainly for Greenlane forward. The component say M&A winning critical digital added strategies in has that

new our may infrastructure looking involve really digital building technologies it we’re just and also involve forward, platforms build So, organic carefully to which out at M&A, very ourselves. going but may some different

could of brands, so? down think then say, kind the you what over by the what’s you maybe? pipe where And of be, is end know, And months of thanks. next next to you year brands us Okay, with a can think you the of don't give house new status coming house regards six -- where or I the expect cadence

Sure.

some quarter quarter the most that supply being short So our over challenges growth with in brands, chain the tremendous seeing we we're term exceptions experienced ones of with.

So quarter over for have seen include, the increase of quarter and I Haring evaluating just That's a suspect couple that and Keith products, brands point, quarter. seeing increase at a over In carefully example, XXX% looking quarter XXX% Natural an at pipeline they'll timing the a XX% greater Marley now as we examples. any given launch. XX we've examples of overall thoughtful of as the through increase, long-term, really all we brands approximately in we're new and in we're building of evaluating initiative, products total between launch that new than evaluation look a we to to a close terms cadence point you talk color meaning end to products But we our process. gives and that very go it in bit our basis. the go of XX% year represents in forward a launching the the Internally, where be which clarity XXXX revenues. of division don't

for Okay, That's it great, thanks. me.

next line question is of Capital Scott from Partner. Your the with Fortune ROTH

Scott. morning, Good

is to you're If line your the open. Scott, muted, We'll question. please unmute. move next

the Your Securities. Mike Grondahl from next question of Northland line with

Mike. morning, Good

Good to morning, how morning. into that Good Vapor.com, July? trend Hey, does continue guys.

question. Great

do overall our sites and So remain e-commerce Vapor.com our strong.

as they're more They're and online. looking activity However, more like brick and reopen. mortar from more share taking QX back stores

on But BXB potential or in will BXC So continued likely on anticipate we a BXC do to a as overall gains share. year-over-year basis. be see just growth flattening there more decline even

it. And then of got it, are up in there? overall how Canada, kind going Got sales

as there Sales in Canada remain definitely of strong. We've seen -- on a the year occurred. a over was load-in year that cannabis relates to basis it legalization lot

a So we in our on seeing from very business activity bit historical a of saw The a but strong lot we're brands. remains of there. flattening overall core a perspective, Canada upfront

efforts We on have lot energy been a and brands. focusing Greenlane our more

in product Canada very will our than particular there performance our imagine, of revenue with look we geographies. would proportion might we're sales in in a to you pleased But sets, I to overall, the to far. As say core overtime, that But from thus brands. transition is higher Canada JUUL continue other Greenlane

lastly, Got to whatnot? the anything products CBD it. and with out And call

CBD a good remains opportunity overall.

dilution and of tremendous or lot place amount However, for the maybe a with a I coming year really as noise, saw in connect to really -- there's from of brands, ago there's brand taking marketplace, consumers lot the peak started we of lot roughly to so. beginning difficult CBD it's of a dilution. There's just the of a a brands. this and mean, find that's

consolidation XX the you'll in the months. some be So place there next space, will lot I but see a net CBD of expect over take that winners

it part driver going a performance it key overall, but I is overall assortment, wouldn't of forward. of call our So

That's fair.

a Hey, lot. thanks Okay.

And [Operator line Capital Fortune your is with Scott question the from Instructions] ROTH of next Partners.

Thanks call. morning. Good for taking my

more quick, on process higher if little down Just in that and look you kind real the side can standards of that pushing a go bit? European into

of Yeah, in a our lot activities. mean, focusing I we been have general,

geographies Europe. Greenlane U.S. to our brands, started we're is pushing of Our ground zero our in including our brands. of brands out house definitely higher the But for including our all brands kind standards the really

standards. have store to any retail we referring have Barcelona, standards stores, in any Now, the remain also to you footprint. But world store opted Spain. there. pandemic. we sure launch Market of higher a we But collaboration with in the current positive to our that also we due standards, progress Europe, the I'm launch if now both were higher the Cookies our reopen Malibu we higher historical still in with near-term seeing Cookies to environment, Frankly, not store our to can retail locations. did don't in But depressed physical figures intentions anywhere early some Chelsea right I mention are overall, though, And COVID-XX compared and indications

Okay. and or waiting cookies offering real the there? And to to then then follow-up, plan you from would you expand kind the see of quick rollout Barcelona go

Cookies. say cautious continue do from I take opportunities while We world. our of broad in key going would a opportunities pandemic the we're that we these And forward. like cautious to have continues approach lot look a But overall, to remain the with brick right around and discussing will we've going physical a the now mortar approach very to of pandemic. add we'll in COVID-XX light very standpoint, to been partners

for the Thanks color. Okay.

questions. for any I And at Mr. will closing this time, to there are call turn remarks. back no further the LoCascio

Greenlane's investor everyone this to approximately And day. will of want rest joining for two conference their Well, hope on section. today. again be Greenlane's everyone I I available call conference the the website hours relations call enjoys in for thank The replay in

you. conclude call. does This Thank today's conference

now may You disconnect.