KushCo Holdings, Inc. (OTCQB: KSHB) reported that its revenue was up 177% to $52.1 million for its fiscal year 2018 ending August 31, 2018. The net loss, including $1.0 million in depreciation expense, was $23.9 million in SG&A, and $1.6 million in provisions for income tax, was approximately $10.2 million compared to net income of $69,000 in fiscal 2017.
Gross margins were 24.2% versus 35.2% for fiscal 2017, the company attributed it to the year-end inventory adjustments of $2.8 million. Kushco said that excluding this year-end adjustment, gross margins for the year would have been 30%.
“We are exceptionally pleased with the financial results we achieved during the fiscal year with revenues of $52.1 million, representing 177% growth compared to approximately $18.8 million in fiscal 2017,” said Nick Kovacevich, Chairman, and Chief Executive Officer. “Our strong revenue growth was the result of dramatic growth in our most critical markets, with growing customer numbers, an increasingly diversified offering and expanded facility capabilities. Our growth was further supported by an expanded global presence with recently-opened offices in Canada and China. While we are disappointed with the impact our dramatic growth has had on margins, we believe they are short-term consequences and we’re pleased to have already implemented several initiatives to improve margins on a go-forward basis.”
The company said that its cash balance was $13.5 million as of August 31, 2018, compared to $900,000 at August 31, 2017. The increase was mostly as a result of a registered direct offering for approximately $32.9 million in net proceeds in June 2018 and a $6.0 million equity investment by the company’s strategic partner, Merida Capital Partners in February 2018. The working capital was $40.2 million as of August 31, 2018, compared to $3.4 million at August 31, 2017.
“Our dramatic expansion of services has enabled us to enter new markets and reach a wider customer base. This drove a number of positive trends within the business in 2018, including strong growth in customer numbers, increased spending per customer, increased product consumption and the continued investment in geographic expansion and broader product offerings. To support this growth, we have implemented several initiatives designed to improve efficiencies and to establish, build and refine stronger, scalable and sustainable processes. These steps are expected to set us up to continue to effectively capitalize on the continued growth of the industry, and we hope to achieve between $110 million and $120 million in topline revenue during fiscal year 2019,” concluded Mr. Kovacevich.