par Greenlane Holdings, Inc. (NASDAQ:GNLN)
Greenlane Reports Third Quarter 2024 Financial Results
Quarterly Financial Highlights
$1.4 million, or 52%, sequential revenue increase vs Q2 2024
Gross margin of 75% driven, in part, by E&O inventory sales
$2.5 million decrease in salaries and benefits vs Q3 2023
$3.7 million decrease in G&A vs Q3 2023
$6.5 million capital raise
Operating Highlights
Executed two strategic distribution agreements to expand platform
Streamlined our third-party product portfolio
Restructured all existing third-party debt facilities
Upgraded our sales and marketing organizations
BOCA RATON, FL / ACCESSWIRE / November 15, 2024 / Greenlane Holdings, Inc. ("Greenlane" or the "Company") (Nasdaq:GNLN), one of the premier global sellers of premium cannabis accessories, child-resistant packaging, and specialty vaporization products, today reported its financial results for the third quarter and nine months ended September 30, 2024.
A Note on Our Revenue Reporting
Beginning with our second quarter 2023 earnings release, we implemented a major restructuring of our industrial product lines, transitioning much of this business from gross sales to a commission structure. While this change affects how we report revenue, we believe it enables us to preserve working capital and improve gross margins.
Third Quarter 2024 Results Compared to Prior Year Period
Total revenue was $4.0 million compared to $11.8 million in the prior year period.
Gross margin percentage increased 48.4% to 75%.
Total operating expenses were $3.6 million, a decrease of 64% compared to $10.0 million in the prior year period.
Operating loss improved by approximately $6.3 million to $538,000 compared to an operating loss of approximately $6.9 million in the prior year period.
Net loss was $3.8 million, which included a $3.2 million one-time non-cash charge for interest expense in connection with various merchant cash advances, compared to a net loss of $10.1 million in the prior year period.
Select Third Quarter 2024 Highlights Compared to Second Quarter 2024
Total revenue of approximately $4.0 million, an increase of 53.8%
Gross margin percentage increased to 75.0% from 38.1%
Total operating expenses decreased 20.0%
Loss from operations improved to $538,000 vs $3.5 million
Strategic Growth and Operational Initiatives
Initiated inventory revitalization, assortment expansion, and added complimentary products to better leverage Greenlane platform.
Exclusive multi-year distribution agreement with Safety Strips Tech Corp to distribute fentanyl, xylazine and drink spike detection test strips in the U.S.
Entered into a non-binding letter of intent to be a distributor in the U.S., Canada, Latin America, and the EU of the CURB Lifestyle, Inc. patented, non-heating, inhalation device capable of safely delivering a wide range of formulations, including nicotine, cannabinoids, and other wellness compounds.
Refocused sales team to be incentivized for growth & performance
Entered into an agreement with two senior lenders to extend the maturity of certain senior debt and additionally refinanced two merchant cash advance providers toreduce Greenlane's total debt outstanding by over $600,000,extending maturities, and lowering near-term cash burn and interest expense.
Strengthened the balance sheet through the previously announced private placement .
"During the third quarter, we continued to make progress on strengthening our product strategy and roadmap, enhancing our sales team structure and compensation arrangement, and further extracting operating efficiencies across the enterprise," said Barbara Sher, Chief Executive Officer for Greenlane. "We continue to see evidence that our efforts to reposition the business over the last six months have been proving successful. As we enter the next phase of our transformation, we are evolving our product portfolio with the addition of health, safety and wellness products that we believe can broaden our market opportunities and grow revenue."
Sher added, "We are working to enhance our cash flow profile and remain focused on strengthening our balance sheet and the Company's foundation to support long-term, sustainable, profitability and growth in the future."
Balance Sheet
As of September 30, 2024, the Company had cash and cash equivalents of approximately $2.3 million.
GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value per share amounts)
September 30, 2024 | December 31, 2023 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 2,309 | $ | 463 | ||||
Accounts receivable, net of allowance of $2,251 and $2,209 at September 30, 2024 and December 31, 2023, respectively | 2,313 | 1,693 | ||||||
Inventories, net | 16,013 | 20,529 | ||||||
Vendor deposits | 3,725 | 3,765 | ||||||
Other current assets (Note 8) | 2,279 | 3,319 | ||||||
Total current assets | 26,639 | 29,769 | ||||||
Property and equipment, net | 2,015 | 2,476 | ||||||
Operating lease right-of-use assets | 1,271 | 1,936 | ||||||
Other assets | 3,894 | 3,912 | ||||||
Total assets | $ | 33,819 | $ | 38,093 | ||||
LIABILITIES | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 10,885 | $ | 12,103 | ||||
Accrued expenses and other current liabilities (Note 8) | 2,521 | 3,056 | ||||||
Customer deposits | 1,255 | 2,775 | ||||||
Notes payable, net of debt discount | 8,626 | 7,283 | ||||||
Current portion of operating leases | 886 | 866 | ||||||
Current portion of finance leases | - | 7 | ||||||
Total current liabilities | 24,173 | 26,090 | ||||||
Operating leases, less current portion | 326 | 1,010 | ||||||
Other liabilities | - | 1 | ||||||
Total long-term liabilities | 326 | 1,011 | ||||||
Total liabilities | 24,499 | 27,101 | ||||||
Commitments and contingencies (Note 7) | - | - | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Preferred stock, $0.0001 par value, 10,000 shares authorized, none issued and outstanding | - | - | ||||||
Class A common stock, $0.01 par value per share, 600,000 shares authorized, 972 shares issued and outstanding as of September 30, 2024; 600,000 shares authorized, 339 shares issued and outstanding as of December 31, 2023* | 8 | 3 | ||||||
Class B common stock, $0.0001 par value per share, 30,000 shares authorized, and 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023* | - | - | ||||||
Common stock, value | - | - | ||||||
Additional paid-in capital* | 275,365 | 268,165 | ||||||
Accumulated deficit | (266,152 | ) | (257,289 | ) | ||||
Accumulated other comprehensive income | 248 | 245 | ||||||
Total stockholders' equity attributable to Greenlane Holdings, Inc. | 9,469 | 11,124 | ||||||
Non-controlling interest | (149 | ) | (132 | ) | ||||
Total stockholders' equity | 9,320 | 10,992 | ||||||
Total liabilities and stockholders' equity | $ | 33,819 | $ | 38,093 | ||||
GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(in thousands, except per share amounts)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Net sales | $ | 4,038 | $ | 11,800 | $ | 11,616 | $ | 55,384 | ||||||||
Cost of sales | 1,011 | 8,671 | 6,066 | 42,162 | ||||||||||||
Gross profit | 3,027 | 3,129 | 5,550 | 13,222 | ||||||||||||
Operating expenses: | ||||||||||||||||
Salaries, benefits and payroll taxes | 1,609 | 4,059 | 6,066 | 14,586 | ||||||||||||
General and administrative | 1,771 | 5,433 | 6,864 | 20,209 | ||||||||||||
Depreciation and amortization | 185 | 524 | 635 | 1,492 | ||||||||||||
Total operating expenses | 3,565 | 10,016 | 13,565 | 36,287 | ||||||||||||
(Loss) from operations | (538 | ) | (6,887 | ) | (8,015 | ) | (23,065 | ) | ||||||||
Other income (expense), net: | ||||||||||||||||
Interest expense | (3,219 | ) | (3,415 | ) | (4,030 | ) | (5,148 | ) | ||||||||
Change in fair value of contingent consideration | - | - | 1,000 | - | ||||||||||||
Gain on extinguishment of debt | - | - | 2,166 | - | ||||||||||||
Other income (expense), net | - | 204 | (3 | ) | 338 | |||||||||||
Total other income (expense), net | (3,219 | ) | (3,211 | ) | (867 | ) | (4,810 | ) | ||||||||
Loss before income taxes | (3,757 | ) | (10,098 | ) | (8,882 | ) | (27,875 | ) | ||||||||
Provision for (benefit from) income taxes | - | - | - | (6 | ) | |||||||||||
Net loss | (3,757 | ) | (10,098 | ) | (8,882 | ) | (27,869 | ) | ||||||||
Less: Net income (loss) attributable to non-controlling interest | - | 19 | (17 | ) | (27 | ) | ||||||||||
Net loss attributable to Greenlane Holdings, Inc. | $ | (3,757 | ) | $ | (10,117 | ) | $ | |||||||||