Greenlane Holdings, Inc. (Nasdaq: GNLN) announced preliminary financial results for its second-quarter ending June 30, 2021, but gave little detail. Greenlane said it had net sales of $34.5 million and that the gross margins were between 21% and 22%. Greenlane delivered $34 million in revenue for the first quarter of 2021 making the sequential growth to be basically flat. The total cash balance is roughly $11.5 million.
However, the company recalled its March proforma outlook for the calendar year ending in December. Greenlane blamed headwinds created by uncertainty in its supply chain and lingering impacts of Covid-19. The company said it expects to reestablish a pro forma outlook at a later date. In March, Greenlane had suggested that the combined company would have “pro forma revenue of over $250 million for the year ended December 31, 2020, and a pro forma market capitalization in excess of $350 million based on the respective share prices of Greenlane and KushCo (OTC: KSHB) as of market close on March 30, 2021. Following completion of the Transaction, the combined company is expected to generate pro forma revenue of between $310 million and $330 million for the year ended December 31, 2021.”
Greenlane also said it continues to expect the proposed merger with KushCo Holdings will close in the third quarter of 2021, subject to the satisfaction or waiver of all remaining conditions in the agreement, including the receipt of all necessary approvals.
KushCo recently reported its earnings on July 8 where the company said it had revenue of $28.3 million, or 27% year-over-year growth, in fiscal Q3 2021, driven by increased sales to the company’s top 25 customers, including leading multi-state operators (“MSOs”) and licensed producers (“LPs”). SG&A expenses were approximately $9.1 million, compared to $12.7 million in the prior-year period. The decrease was primarily driven by reductions in headcount, bad debt expense, consulting spend, and stock compensation expenses, largely as a result of the COVID-19 pandemic and the Company’s implementation of the 2020 Plan.
At the time, Nick Kovacevich, KushCo’s Co-founder, Chairman and Chief Executive Officer said, “”Our gross margins for fiscal Q3 continued to reflect the uncontrollable shipping delays we, and other importers of goods, have been experiencing for the past couple of quarters. Even though the situation has somewhat improved since the end of 2020-where there were record-breaking shipments during the holiday season, severe COVID-19-related restrictions at domestic ports and a global shortage of containers-a significant percentage of all products coming from overseas continue to experience delays, resulting in higher freight costs across the board. In addition, we experienced lower direct material margins on several of our products, as we cycle through higher-priced inventory and continue to work with our vendors to obtain more favorable pricing.”