Greenlane Holdings (GNLN) Reports a Q2 Revenues Beat but the Stock Plunges

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August 13, 2019 5:42pm NYSE:MJ

NYSE:MJ | News, Ratings, and Charts

From Eric Bowler

Yesterday Greenlane Holdings, Inc (GNLN) released their Q2 2019 earnings report. Here’s what to make of it:

The backstory

Greenlane Holdings, Inc (GNLN) is one of the largest worldwide sellers of high-end cannabis accessories, CBD and liquid nicotine products. The company focuses on the distribution of vaporizer brands such as Juul, Pax Labs, Storz & Bickel, etc. They also generate revenue by providing ancillary services such as supply and packaging.

GNLN operates a direct-to-consumer platform distributing a small portion of their own brands, as well as others. They serve both B2B and B2C markets, which include more than 11,000 retail outlets and approximately 300,000 monthly visits to their e-commerce website.

Since completing an IPO last April at $17 per share, the stock has fallen 50% because of negative sentiment surrounding e-cigarettes. Currently, the stock trades at an EV/Revenue of 1.6x and has a market cap of $385 million based on 46 million fully-diluted shares (42 million as of March 31 and 4 million from the conversion of convertible notes).

Highlights from the Q2 earnings release

Here are some key takeaways from yesterday’s announcement:

  • Company net sales increased 30.6% to a record $53.0 million
  • GNLN ended the Q2 in a solid financial position, with $69.3 million of cash as of June 30, 2019, compared to $7.3 million as of December 31, 2018
  • Net loss was $3.2 million, effected by $1.7 million of equity-based compensation, $0.3 million of costs associated with transitioning to a public company
  • Completed IPO of 5.25 million primary shares in April 2019. As of July 12, GNLN had approximately 41.9 million Class A shares outstanding on a converted basis
  • Adjusted net loss was $1.2 million, compared to adjusted net income of $0.6 million during the same period last year
  • Adjusted EBITDA was a loss of $1.2 million, compared to a gain of $1.1 million during the same period last year
  • GNLN partnered with Canopy Growth (CGC) for exclusive distribution of Storz & Bickel’s vaporizers throughout the U.S.
  • The company broadened hemp-derived CBD offerings by leveraging exclusive distribution partnerships with name brands like Bloom Farms, Cookies, Slang Worldwide and Pax Era
  • Greenlane Holdings, Inc started shipping VIBES Rolling Papers
  • GNLN entering into distribution agreements with Hanu Labs and AVD, adding new vaporization products

“We had a record second quarter at Greenlane generating $53 million in revenue representing 31% revenue growth year-over-year and continue to expand our portfolio of leading brands and customer network,” said CEO Aaron LoCascio during yesterday’s call.

“We experienced growth during the quarter across each of the cannabis, hemp derived CBD, and liquid nicotine categories and have an aggressive pipeline of additional partnership in each segment. Gains in both the U.S. and Canada drove the growth particularly in the vaporizer category. We also advanced international development adding key talent in Europe and Asia while continuing to invest in the expansion of our sales team. Our goal of being the employer of choice is proving out well at we have attracted and hired top talent from leading consumer product, retail, cannabis and global tobacco organization. We will continue to search for and hire a world-class workforce to create, grow and nurture the best cannabis brands across the globe.”

Today, Greelane Holding’s stock closed down 14%, at $7.59.

Greenlane Holdings Inc. (GNLN) was unchanged in after-hours trading Tuesday. Year-to-date, GNLN has declined N/A%, versus a 10.18% rise in the benchmark S&P 500 index during the same period.

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About the Author: Eric Bowler

eric-bowlerEric Bowler is an accomplished journalist providing in-depth insights for more than two decades. Over the past several years his focus has been on the marijuana industry, with a special interest in cannabis growth stocks. His daily coverage of the industry keeps him on top of the key trends with the goal of helping investors make well-informed decisions.

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