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EX-99.2 - EARNINGS CALL SCRIPT - cbdMD, Inc. | ycbd_ex992.htm |
8-K - CURRENT REPORT - cbdMD, Inc. | ycbd_8k.htm |
Exhibit 99.1
cbdMD Reports Fiscal September 30, 2020 Results
Fiscal Year Net Sales Increased 77% To Record $41.9
Million
e-Commerce Direct-to-Consumer Sales Jump 106% to $30.5
Million
CHARLOTTE,
N.C. – December 22, 2020 - (BUSINESS WIRE) -- cbdMD, Inc. (NYSE American: YCBD, YCBDpA), one of
the nation’s leading and most highly trusted and recognized
cannabidiol (CBD) brands, today announced its financial results for
the fourth quarter and fiscal year ended September 30,
2020.
Commenting
on today results, Chairman and co-CEO Martin A. Sumichrast
said, “We
believe cbdMD is now one of the most successful CBD companies in
world, with two of the most recognized and valuable CBD brands,
cbdMD and Paw CBD. We are committed to
continuing to deliver on our financial goals. We have grown
quarterly sales over 900% in eight fiscal quarters. We have
remained focused on our core competency, which is e-commerce
direct-to-consumer sales, which increased to $30.5 million, or 73%
of total net sales in fiscal 2020, a 106% increase from the prior
year. We have also maintained one of the strongest balance sheets
in the CBD industry and we believe we have more than ample
enough capital to execute on our 2021 strategy. In fact, we have recently more than doubled our
liquidity, which now stands today at approximately $30 million in
cash, with virtually no debt. To put this into context, we built
two brands in two years with less cash than we have in the bank
today. In addition, we dramatically reduced our non-GAAP adjusted
loss from operations from over $10 million in the first half of
fiscal 2020 to approximately $1.3 million in the second half of
fiscal 2020. Earlier this year
we set a goal of achieving positive adjusted operating income
during calendar year 2020, a non-GAAP financial measure. We are
presently confident we will reach this milestone in early fiscal
2021. However, based upon marketing opportunities that may arise
during the year, achieving this goal may be extended later into the
fiscal year. While we have not committed to any financial
guidance, we do expect continued robust sales growth in fiscal
2021.”
Financial Highlights:
Fiscal 2020:
●
Net sales increased by 77% year-over-year to a record of $41.9
million in fiscal 2020, from $23.6 million in fiscal
2019.
●
Our gross profit margin increased to 63% in fiscal
2020 from 61% in fiscal 2019. Our non-GAAP adjusted gross margin
totaled 67.7% for fiscal 2020, after approximately $2.2 million in
non-cash inventory adjustments for the year, as compared to 61% for
fiscal 2019.
●
Our
loss from operations was $17.6 million in fiscal 2020 as compared
to $14.8 million in fiscal 2019, of which approximately $11.7
million, or 67%, was recorded in the first half of fiscal 2020 and
approximately $5.8 million was recorded in the second half of the
fiscal year.
●
Our
non-GAAP adjusted loss from operations in fiscal 2020 was
approximately $11.5 million, of which $10.2 million, or 89%, was
recorded in the first half of fiscal 2020, and approximately $1.3
million, or 11%, was recorded for the second half of the fiscal
year. Our non-GAAP adjusted loss from operations in fiscal 2019 was
approximately $11.5 million.
●
Net income attributable to common shareholders for
fiscal 2020 was approximately $12.2 million, or $0.28 per share, as
compared to a net loss for fiscal 2019 of approximately $50.4
million, or $2.82 per share. The increase in fiscal 2020
was
principally attributable to a decrease of approximately $29.8
million in the non-cash contingent liability which is associated
with earnout shares which may be issued under the terms of the
December 2018 acquisition of Cure Based Development (which owned
the cbdMD brand).
●
At
September 30, 2020, we had working capital of approximately $16.0
million and cash on hand of approximately $14.8 million as compared
to working capital of approximately $12 million and cash on hand of
approximately $4.7 million at September 30, 2019. Our working
capital position has been further bolstered subsequent to year end
following our receipt of approximately $15.8 million in net
proceeds from our December 2020 sale of shares of our 8.0% Series A
Cumulative Convertible Preferred Stock in a firm commitment
underwritten public offering. As a result, as of today we have
approximately $30 million in cash on hand.
●
We
reported record e-commerce, direct to consumer (DTC) net sales of
$30.5 million, or 73% of total net sales in fiscal 2020, an
increase of $15.6 million, or 106% increase from fiscal
2019.
●
Our CBD pet brand, Paw CBD, reported
approximately $4.5
million in net sales in fiscal 2020, which was the brand’s
first full fiscal year.
For the Quarter Ended September 30, 2020:
●
Our net sales for the fourth quarter of fiscal 2020 increased by
23% year-over-year to a record of $11.7 million from $9.5 million
in the fourth quarter of fiscal 2019.
●
Our gross profit margin for the quarter decreased to
54% in the fourth quarter of fiscal 2020 from 57% in the fourth
quarter of fiscal 2019, which was principally attributable to an
approximate $1.66 million in non-cash inventory adjustment during
the quarter. Our non-GAAP adjusted gross margin totaled 68% for the
fourth quarter of fiscal 2020 as compared to approximately 57% in
the fourth quarter of fiscal 2019.
●
Our loss from operations was approximately $4.5
million compared to $5.2 million from the prior year’s
quarter.
●
Our non-GAAP adjusted operating loss was
approximately $1.06 million, compared to a $4.1 million non-GAAP
adjusted operating loss from the prior year’s
quarter.
●
We
reported record fourth quarter fiscal 2020 e-commerce, direct to
consumer (DTC) net sales of $8.6 million, an increase of $3.2
million, or 58%, from the fourth quarter of fiscal
2019.
●
Our pet brand, Paw CBD, which was launched in the
fourth quarter of fiscal 2019 reported approximately $1.67
million in net sales in the fourth quarter of fiscal
2020.
cbdMD,
Inc. will host a conference call at 4:15 p.m., Eastern Time, on
Tuesday, December 22, 2020, to discuss the company’s
September 30, 2020 fourth quarter and fiscal year-end financial
results and business progress.
CONFERENCE CALL DETAILS
Tuesday, December
22, 2020, 4:15 p.m. Eastern Time
|
|
Domestic:
|
1-888-506-0062
|
International:
|
1-973-528-0011
|
Replay dial in – Available through January 20, 2020 |
|
Domestic:
|
1-877-481-4010
|
International:
|
1-919-882-2331
|
Replay
Passcode:
|
39191
|
Webcast/Webcast Replay link- available through
December 23, 2020:
|
https://www.webcaster4.com/Webcast/Page/2206/39191
|
About cbdMD, Inc.
cbdMD,
Inc. is one of the leading, most highly trusted, and most
recognized cannabidiol (CBD) brands, whose current products include
CBD tinctures, CBD capsules, CBD gummies, CBD topicals, CBD bath
bombs and CBD pet products. cbdMD is also a proud partner of
Bellator MMA and Life Time, Inc., and has one of the largest
rosters of professional sports athletes who are part of “Team
cbdMD.” To learn more about cbdMD and our comprehensive line
of over 100 SKUs of U.S. produced, Non-THC1 CBD products, please
visit www.cbdMD.com, follow cbdMD on
Instagram and
Facebook, or visit
one of the 6,000 retail outlets that carry cbdMD
products.
1 Non-THC is
defined as below the level of detection using validated scientific
analytical tools.
Forward-Looking Statements
This
press release contains certain forward-looking statements that are
based upon current expectations and involve certain risks and
uncertainties within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking statements can
be identified by the use of words such as ''should,'' ''may,''
''intends,'' ''anticipates,'' ''believes,'' ''estimates,''
''projects,'' ''forecasts,'' ''expects,'' ''plans,'' and
''proposes.'' These forward-looking statements are not guarantees
of future performance and are subject to risks, uncertainties, and
other factors, some of which are beyond our control and difficult
to predict and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking statements.
You are urged to carefully review and consider any cautionary
statements and other disclosures, including the statements made
under the heading "Risk Factors" in cbdMD, Inc.'s Annual Report on
Form 10-K for the fiscal year ended September 30, 2020 as filed with the Securities and
Exchange Commission (the "SEC") and our other filings with the SEC.
All forward-looking statements involve significant risks and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements, many of which are
generally outside the control of cbdMD, Inc. and are difficult to
predict. cbdMD, Inc. does not undertake any duty to update any
forward-looking statements except as may be required by law. The
information which appears on our websites and our social media
platforms, including, but not limited to, Instagram and Facebook,
is not part of this press release.
Non-GAAP Financial Measures
This press release includes certain financial measures that exclude
the impact of certain items and therefore have not been calculated
in accordance with U.S. generally accepted accounting principles
(“GAAP”). cbdMD, Inc. has included adjusted income
(loss) from operations and adjusted gross profit because management
uses these measures to assess operating performance, in order to
highlight trends in our business that may not otherwise be apparent
when relying on financial measures calculated in accordance with
GAAP. The adjusted income (loss) from operations and the adjusted
gross profit margin have not been prepared in accordance with GAAP.
These non-GAAP financial measures should not be considered as
alternatives to, or more meaningful than, net income (loss) from
operations and gross profit as indicators of our operating
performance. Further, these non-GAAP financial measures, as
presented by cbdMD, Inc., may not be comparable to similarly titled
measures reported by other companies. cbdMD, Inc. has attached to
this press release a reconciliation of these non-GAAP financial
measures to their most directly comparable GAAP financial
measures.
Contact:
PR:
cbdMD,
Inc.
Lauren
Greene
Communications
Specialist
Lauren.Greene@cbdMD.com
(843)
743-9999
Investors:
cbdMD,
Inc.
John
Weston
Director
of Investor Relations
John.Weston@cbdMD.com
(704)
249-9515
CBDMD, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2020 AND 2019
|
2020
|
2019
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$14,824,644
|
$4,689,966
|
Accounts
receivable
|
911,482
|
1,425,697
|
Accounts
receivable other
|
-
|
160,137
|
Accounts
receivable – discontinued operations
|
447,134
|
1,080,000
|
Marketable
securities
|
26,472
|
198,538
|
Investment
other securities
|
250,000
|
600,000
|
Deposits
|
40,198
|
6,850
|
Merchant
reserve
|
-
|
519,569
|
Inventory
|
4,603,360
|
4,301,586
|
Inventory
prepaid
|
288,178
|
903,458
|
Deferred
issuance costs
|
-
|
93,954
|
Prepaid
software
|
174,308
|
206,587
|
Prepaid
equipment deposits
|
40,197
|
868,589
|
Prepaid
sponsorship expense
|
1,203,300
|
-
|
Prepaid
expenses and other current assets
|
902,979
|
688,104
|
Total
current assets
|
23,712,252
|
15,743,035
|
|
|
|
Other
assets:
|
|
|
Property
and equipment, net
|
3,183,487
|
1,715,557
|
Operating
lease right-of-use assets
|
6,851,357
|
-
|
Deposits
for facilities
|
790,708
|
754,533
|
Intangible
assets, net
|
21,635,000
|
21,635,000
|
Goodwill
|
54,669,997
|
54,669,997
|
Total
other assets
|
87,130,549
|
78,775,087
|
|
|
|
Total
assets
|
$110,842,801
|
$94,518,122
|
CBDMD, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2020 AND 2019
(continued)
|
2020
|
2019
|
Liabilities
and shareholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$2,850,421
|
$3,021,271
|
Deferred
revenue
|
45,141
|
-
|
Accrued
expenses
|
2,724,779
|
681,269
|
Operating
leases – short term liabilities
|
1,159,098
|
-
|
Paycheck
Protection Program Loan
|
854,000
|
-
|
Note
payable
|
55,639
|
-
|
Customer
deposit – related party
|
-
|
7,339
|
Total
current liabilities
|
7,689,078
|
3,709,878
|
|
|
|
Long term
liabilities
|
|
|
Long
term liabilities
|
264,367
|
363,960
|
Paycheck
Protection Program loan
|
602,100
|
-
|
Operating
leases – long term liabilities
|
6,010,208
|
-
|
Contingent
liability
|
16,200,000
|
50,600,000
|
Deferred
tax liability
|
895,000
|
2,240,300
|
Total long-term
liabilities
|
23,971,675
|
53,204,260
|
|
|
|
Total
liabilities
|
31,660,753
|
56,914,138
|
|
|
|
cbdMD, Inc.
shareholders' equity:
|
|
|
Preferred stock,
authorized 50,000,000 shares, $0.001 par value, 500,000 and 0
shares issued and outstanding, respectively
|
500
|
-
|
Common stock,
authorized 150,000,000 shares, $0.001 par value,
|
|
|
52,130,870
and 27,720,356 shares issued and outstanding,
respectively
|
52,131
|
27,720
|
Additional paid in
capital
|
126,517,784
|
97,186,524
|
Accumulated
deficit
|
(47,388,367)
|
(59,610,260)
|
Total
cbdMD, Inc. shareholders' equity
|
79,182,048
|
37,603,984
|
|
|
|
Total
liabilities and shareholders' equity
|
$110,842,801
|
$94,518,122
|
|
|
|
CBDMD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019
|
2020
|
2019
|
Sales
|
$43,172,778
|
$28,023,848
|
Sales
related party
|
-
|
55,596
|
Total
Gross Sales
|
43,172,778
|
28,079,444
|
Allowances
|
(1,289,044)
|
(4,427,893)
|
Net
sales
|
41,883,734
|
23,595,955
|
Net
sales related party
|
-
|
55,596
|
Total Net Sales
|
41,883,734
|
23,651,551
|
Costs
of sales
|
15,514,727
|
9,136,677
|
Gross profit
|
26,369,006
|
14,514,873
|
|
|
|
Operating
expenses excluding impairment losses
|
43,950,862
|
28,875,186
|
Impairment
of intangible assets
|
-
|
436,578
|
Operating
expenses
|
43,950,862
|
29,311,764
|
Income (loss) from
operations
|
(17,581,856)
|
(14,796,891)
|
Realized
and unrealized gain (loss) on marketable securities
|
(172,066)
|
(102,716)
|
Impairment
on investment other securities
|
(760,000)
|
(502,560)
|
(Increase)
decrease of contingent liability
|
29,780,000
|
(32,461,680)
|
Interest
income
|
39,877
|
75,071
|
Income (loss) before provision
for income taxes
|
11,305,955
|
(47,788,776)
|
Benefit
from (provision for) income taxes
|
1,345,300
|
2,359,000
|
Net Income (loss) from
continuing operations
|
12,651,255
|
(45,429,776)
|
Net
Income (loss) from discontinued operations, net of
tax
(Note 16)
|
(48,983)
|
(5,927,773)
|
|
|
|
Net Income (loss)
|
$12,602,272
|
$(51,357,549)
|
Net Income (loss) attributable to non-controlling interest from
discontinued operations (Note 16)
|
-
|
(929,323)
|
Preferred dividends
|
366,850
|
-
|
Net Income (loss) attributable to common shareholders
|
$12,235,422
|
$(50,428,226)
|
|
|
|
Net Income (Loss) per share
|
|
|
Basic
earnings (loss) per share
|
$0.28
|
$(2.82)
|
Diluted
earnings (loss) per share
|
$0.28
|
$-
|
|
|
|
Weighted
average number of shares basic
|
44,140,360
|
17,887,247
|
Weighted
average number of shares diluted
|
45,171,674
|
-
|
CBDMD,
INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019
|
2020
|
2019
|
|
|
|
Net
Income (Loss)
|
$12,602,272
|
$(51,357,549)
|
Comprehensive Income (Loss)
|
12,602,272
|
(51,357,549)
|
|
|
|
Comprehensive
Income (loss) attributable to non-controlling interest
|
-
|
(929,323)
|
Preferred
dividends
|
(366,850)
|
|
Comprehensive Income (Loss) attributable to cbdMD, Inc. common
shareholders
|
$12,235,422
|
$(50,428,226)
|
|
|
|
CBDMD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019
|
2020
|
2019
|
Cash
flows from operating activities:
|
|
|
Net income
(loss)
|
$12,602,272
|
$(51,357,549)
|
Adjustments
to reconcile net loss to net
|
|
|
cash
used by operating activities:
|
|
|
Stock
based compensation
|
1,900,194
|
2,458,530
|
Restricted
stock expense
|
138,000
|
230,000
|
Depreciation
and amortization
|
720,755
|
289,574
|
Issuance
of stock / warrants for services
|
338,400
|
289,750
|
Realized
and unrealized (gain)/loss on marketable securities
|
172,066
|
2,439,996
|
Impairment
on investment other securities
|
760,000
|
502,560
|
Inventory
impairment
|
233,372
|
-
|
Impairment
on discontinued operations asset
|
45,783
|
3,398,438
|
Payment
in-kind interest
|
-
|
(30,000)
|
Loss on
sale of property and equipment -discontinued
operations
|
-
|
39,013
|
Severance
agreement
|
489,381
|
-
|
Increase/(decrease)
in contingent liability
|
(29,780,000)
|
32,461,680
|
Intangible
impairment
|
-
|
436,578
|
Non-cash
consideration received for services provided
|
132,657
|
(470,000)
|
Non-cash
lease expense
|
1,180,213
|
-
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable
|
514,352
|
60,155
|
Accounts
receivable - related party
|
-
|
(462,137)
|
Other
accounts receivable
|
-
|
2,737
|
Inventory
|
(535,146)
|
(3,123,437)
|
Note
receivable – related party
|
-
|
156,147
|
Deposits
|
(938,112)
|
(761,383)
|
Merchant
reserve
|
386,912
|
(93,316)
|
Prepaid
inventory
|
615,280
|
(903,458)
|
Proceeds
from sale of securities
|
-
|
410,094
|
Prepaid
rent
|
-
|
180,000
|
Prepaid
expenses and other current assets
|
645,796
|
(963,044)
|
Accounts
payable and accrued expenses
|
1,479,189
|
2,280,726
|
Accounts
payable and accrued expenses – related party
|
-
|
(7,502)
|
Operating
lease liability
|
(1,045,285)
|
-
|
Deferred
Revenue/customer deposits
|
37,802
|
(416,619)
|
Collection
on discontinued operations accounts receivable
|
587,083
|
-
|
Deferred
tax liability
|
(1,345,300)
|
(2,425,000)
|
Cash
used by operating activities
|
(10,664,336)
|
(15,377,467)
|
|
|
|
Cash
flows from investing activities:
|
|
|
Net
cash used for merger
|
-
|
(916,555)
|
(250,000)
|
-
|
|
Purchase
of intangible assets
|
-
|
(50,000)
|
Purchase
of property and equipment
|
(1,320,095)
|
(1,198,618)
|
Cash used by
investing activities
|
(1,570,095)
|
(2,133,850)
|
|
|
|
CBDMD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019
(continued)
Cash
flows from financing activities:
|
|
|
Proceeds
from issuance of common stock
|
16,766,106
|
19,009,897
|
Proceeds
from issuance of preferred stock
|
4,421,928
|
-
|
Proceeds
from Paycheck Protection Program loan
|
1,456,100
|
-
|
Preferred
dividend distribution
|
(366,850)
|
-
|
Proceeds
from Note payable
|
29,629
|
-
|
Payments
on Note payable – related party
|
-
|
(764,300)
|
Deferred
issuance costs
|
62,197
|
(326,868)
|
Cash provided by
financing activities
|
22,369,110
|
17,918,729
|
Net increase in
cash
|
10,134,678
|
407,413
|
Cash and cash
equivalents, beginning of year
|
4,689,966
|
4,282,553
|
Cash
and cash equivalents, end of year
|
$14,824,644
|
$4,689,966
|
cbdMD, Inc.
SUPPLEMENTAL
FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP ADJUSTED INCOME (LOSS) FROM
OPERATIONS
(Unaudited)
|
Fiscal Year Ended
September 30
|
Three Months Ended
September 30
|
||
|
2020
|
2019
|
2020
|
2019
|
GAAP (loss) from
operations
|
$(17,581,856)
|
$(14,796,891)
|
$(4,531,073)
|
$(5,286,154)
|
Adjustments:
|
|
|
|
|
Depreciation
|
720,754
|
289,574
|
221,360
|
17,453
|
Employee and
director stock compensation (1)
|
1,985,803
|
2,688,529
|
537,943
|
1,136,158
|
Other non-cash
stock compensation for services (2)
|
338,400
|
289,750
|
253,950
|
-
|
Non-cash inventory
adjustment (3)
|
2,207,000
|
-
|
1,663,000
|
-
|
Write down of
legacy accounts receivables (4)
|
102,000
|
-
|
102,000
|
-
|
Accrual for
severance
|
489,381
|
-
|
489,381
|
-
|
Accrual / expenses
for discretionary bonus
|
200,000
|
-
|
200,000
|
-
|
Non-GAAP adjusted
(loss) from operations
|
$(11,583,516)
|
$(11,529,036)
|
$(1,063,439)
|
$(4,132,543)
|
|
|
|
|
|
(1)
Represents non-cash
expense related to options, warrants, restricted stock expenses
that have been amortized during the period.
(2)
Represents non-cash
expense related to options, warrants, restricted stock expenses
that have been amortized during the period.
(3)
Amount represents
an operating expense related to inventory loss related to issues
tied to physical inventory issues, regulatory changes impacting
labels and packaging, write-off of raw materials and a net realized
valuation adjustment on non-core finished goods.
(4)
Write down of
legacy accounts receivable.
cbdMD, Inc.
SUPPLEMENTAL
FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP ADJUSTED GROSS PROFIT
MARGIN
(Unaudited)
|
Fiscal Year Ended
September 30
|
Three Months Ended
September 30
|
||
|
2020
|
2019
|
2020
|
2019
|
Total net
sales
|
$41,883,734
|
$23,651,551
|
$11,699,917
|
$9,544,137
|
Cost of
sales
|
15,514,728
|
9,136,677
|
5,334,090
|
4,127,491
|
Gross
profit
|
$26,369,006
|
$14,514,873
|
$6,366,359
|
$5,416,646
|
Gross profit
margin
|
63.0%
|
61.4%
|
54.4%
|
56.8%
|
Adjustments:
|
|
|
|
|
Non-cash inventory
adjustment (1)
|
1,974,000
|
-
|
1,663,000
|
-
|
Non-GAAP adjusted
gross profit
|
$28,343,539
|
$14,514,873
|
$8,029,359
|
$5,416,646 -
|
Non-GAAP adjusted
gross profit margin
|
67.7%
|
61.4%
|
68.6%
|
56.8%
|
(1)
Amount represents
an operating expense related to inventory loss related to issues
tied to physical inventory issues, write-off of scrap material and
a net realized valuation adjustment on non-core finished
goods.