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Net revenue increased 240% year-over-year to approximately $35 million, setting a new company record for quarterly revenue; Company raises full year fiscal 2019 net revenue guidance up to $140 million to $150 million
GARDEN GROVE, Calif., April 11, 2019 – KushCo Holdings, Inc. (OTCQB: KSHB) reported financial results for its second fiscal quarter of 2019, for the period ended February 28, 2019.
Second Fiscal Quarter 2019 Financial Summary
- Net revenue increased 240% year-over-year to $35.2 million compared to the same quarter a year ago. Net revenue rose by 39% sequentially over quarterly high of $25.3 million reported during the first fiscal quarter of 2019.
- On a GAAP basis, gross profit was 12.9%, compared to 28.1% during the prior year period.
- On a Non-GAAP basis, excluding the impact of certain non-recurring items, gross profit was approximately 20%.
- On a GAAP basis, net loss was approximately $8.9 million, compared to a net loss of approximately $7.6 million during the second quarter of fiscal 2018. Loss per share was negative $0.10, compared to negative $0.12 for the same period a year ago.
- On a Non-GAAP basis, excluding the impact of the non-recurring charges described above, as well as other non-cash items outlined below, net loss during the second quarter was $7.8 million and net loss per share was negative $0.09.
- Cash was approximately $17.9 million as of February 28, 2019, compared to approximately $3.0 million as of November 30, 2018. The increase in cash was the result of a registered direct offering that funded in January 2019. The Company is using the related net proceeds for working capital, product development, acquisitions, capital expenditures, general corporate purposes, and other strategic business opportunities.
Second Fiscal Quarter Operational Summary
- Appointed Rodrigo de Oliveira as Interim Chief Operating Officer, Jason Vegostsky as Chief Revenue Officer and Carmen Lam as Senior Vice President of Kush Supply Co.
- Entered into a number of long-term supply arrangements-in-principle with regard to three large, well-known new customers; these are expected to provide the Company with an aggregate value of up to $75.0 million of new revenue over the next three years, while providing more supply chain certainty for all parties involved.
- Added well-known investor Danny Moses and CNBC’s Tim Seymour to the Company’s Advisory Board.
Nick Kovacevich, Chairman and Chief Executive Officer, commented, “Revenue for the second fiscal quarter of 2019 saw record growth of 240% year-over-year, reaching $35.2 million, compared with $10.4 million in the second fiscal quarter of 2018 and $25.3 million in the first fiscal quarter of 2019. This strong performance was attributable to our growing customer base and increased sales across our key markets as we successfully leveraged our diverse business units to cross sell product classes and gain market share. We now have customers in every U.S. state where cannabis is legal and in 25 countries.”
“We continued to execute a number of strategic initiatives that have improved our cash flow during the quarter, including the elimination of free shipping, renegotiated terms from vendors and new inventory management systems that are improving operational efficiencies as we scale the business. We have introduced a number of measures to additionally enhance our gross margins. Improving gross margins will continue to be a priority as we execute on our growth plan,” continued Mr. Kovacevich.
“We continue to invest in the growth of the business by adding new product and service offerings and driving customer development and retention. As the industry further matures and large multi-state operators scale and prepare for additional market legalization, we expect to see demand for our core offerings, including vaping products, packaging, supplies and labeling solutions increase across our most important markets. Our focus remains the build out of a scalable, sustainable business, as we cement our presence as the primary supply chain partner to the cannabis, CBD and related industries. As a result of a strong first half of the year, including the signing of a number of long-term supply arrangements-in-principle with several new large, well-known customers, we are raising our revenue guidance from between $110 million and $120 million for fiscal year 2019 to between $140 million and $150 million,” concluded Mr. Kovacevich.