KushCo Holdings, Inc. (OTCQX: KSHB) reported preliminary and unaudited financial results for its fiscal third quarter ended May 31, 2021. KushCo said it expects its preliminary and unaudited fiscal third quarter 2021 revenue to be between approximately $27.5 million and $28.0 million, compared to approximately $22.3 million for its fiscal third-quarter 2020. This is a decline from the $32.9 million in revenue in the second quarter.
The 21% to 26% expected increase in revenue is being driven primarily by an increase in sales to KushCo’s top 25 customers, which consist of leading multi-state operators (MSOs), licensed producers (LPs), and brands. Revenue from these top 25 customers is expected to increase 60%+ to at least $20.5 million in revenue in fiscal third-quarter 2021 from $12.7 million in the same year-ago period. KushCo said it expects to report its complete fiscal third-quarter 2021 financial results in early July 2021.
“Our preliminary fiscal third-quarter results demonstrate once again our continued success in penetrating many of the industry’s elite customers, including the top MSOs, LPs, and leading brands,” said Nick Kovacevich, KushCo’s Co-founder, Chairman, and Chief Executive Officer. “In fact, 24 of our top 25 customers in fiscal Q2 purchased similar products again in fiscal Q3, albeit not requiring the same quantities they did in the second quarter. Although our business will continue to remain lumpy given our concentrated customer base, our focus remains on retaining our elite customers and growing them over time, not just over a single quarter. To that end, revenue to our top 25 customers is expected to increase by more than 60% year-over-year in fiscal Q3 2021. Not only are our sales to these customers continuing to grow, but the quality of the customers we are serving is also continuing to improve, as we have a much stronger book of the right customers than we did a year ago. We have spent the last three years cultivating this elite customer base, and we are even more excited by the prospect of cross-selling these customers and others with proprietary-owned products, as we move closer toward the consummation of our merger with Greenlane. As a combined company, we have the potential to realize meaningful revenue synergies across our complementary customer bases, as well as generate significant cost synergies that can drive profitable growth amidst the backdrop of a booming industry still in the early innings of expansion.”
The KushCo and Greenlane merger is expected to close in the third quarter.