Kush Bottles (OTC: KSHB) said third-quarter revenue rose 173 percent year-over-year as organic growth continued to remain strong and the company’s acquisition strategy is paying off.
Santa Ana, Calif.-based Kush Bottles, which sells everything from packaging to supplies to vaporizers and accessories for the cannabis industry, saw third-quarter revenue climb to $12.9 million, up from $4.7 million in the year-ago period. Gross margins took a hit, falling to 28.3 percent, down from 35.5 percent, as the vaporizer and cartridge segments continue to see increased competition.
Kush Bottle’s Chairman and CEO Nick Kovacevich said in a statement the results were driven by “organic growth across all our major markets and product lines as well as the inclusion of our new operating company Summit Innovations.”
During the quarter, which ended on May 31, Kush closed on its acquisition of Summit Innovations, which expands Kush’s offerings into the hydrocarbon and solvent market. The company also acquired a digital creative agency, The Hybrid Creative, which Kovacevich said has a big roster in both the cannabis and traditional industries.
Net loss during the quarter was $258,837 and the company finished the period with $3.6 million in cash, up from Aug. 31, 2017, due in large part to a $6 million investment from Merida Capital Partners in February 2018.
Kush, which describes itself on its website as “the nation’s largest and most respected distributor of packaging, supplies, and accessories,” also said its new Nevada-based distribution center will allow it to further expand and better serve its customers.
After the quarter, the company raised $32.9 million, which Kovacevich said gives the company a “financial foundation for continued expansion in support of our growth strategy.”
Kovacevich highlighted that the company has laid the foundation for its growth as a result and will increase staff to help meet its customers’ needs.
“The introduction of a number of innovative new proprietary products, as well as increased investment in research and development, further strengthens the sustainability and defensibility of the Company,” Kovacevich added. “During the quarter, the company witnessed strong growth in our custom branded products as customers seek differentiated brand building solutions and we believe there is significant opportunity to continue to increase sales in this regard.”