YCBD cbdMD Inc

cbdMD, Inc. (NYSE American: YCBD, YCBDpA), one of the nation’s leading and most highly trusted and recognized CBD companies, and operator of three of the leading CBD brands -- its flagship brand cbdMD, its animal health brand Paw CBD and its beauty and skincare brand cbdMD Botanicals, -- today announced its financial results for the fourth quarter and fiscal year ended September 30, 2021.

“Next week is the three-year anniversary of our company entering the CBD industry with the acquisition of Cure Based Development, the owner of our flagship brand, cbdMD. It’s also the three-year anniversary of the passage of the Farm Bill, which de-criminalized CBD in the US. In three short years we have grown from an unknown start-up brand competing against thousands of other CBD brands, outpacing the pack to firmly positioned at the top of CBD industry, with our three leading brands,” said Chairman and co-CEO, Martin A. Sumichrast.

“According to the Brightfield Group, the US CBD market experienced its most challenging year in 2021, with year-over-year growth rates expected to be nearly flat at 2.5%. Despite this anemic industry growth, cbdMD was able to outpace the industry average and record fiscal 2021 net sales of over 6% and gross sales of over 10% as compared to fiscal 2020. We were able to maintain our product pricing and firm up our product purchasing which resulted in an increase to our gross profit margin to a record high of 67% in fiscal 2021, from 63% in 2020. While our fiscal 2021 loss from operations was $19.6 million, we were able to reduce our non-GAAP adjusted operating loss by 6%. However, slower than anticipated sales in the second half of our fiscal year, our increased marketing costs in the first half of the fiscal year, (which have now been reduced), coupled with our investment into our therapeutics division, resulted in a GAAP operating loss for the fiscal 2021. While we are now seeing an increase in consumer demand as we enter our fiscal 2022 year and are optimistic that calendar 2022 will return to higher sales growth rates as our new products reach our customers and new distribution channels become available, we are withdrawing our previously announced sales guidance for the current quarter ending December 31, 2021. With that said, looking forward, our goal is to continue to outpace the overall industry growth, increase our market share, and achieve positive adjusted EBITDA. For more information about how we intend to achieve these goals, please listen to our earnings call this afternoon,” said Mr. Sumichrast.

Financial Highlights for Fiscal 2021:

Net sales increased by 6% year-over-year to a record of $44.5 million in fiscal 2021, from $41.8 million in fiscal 2020.

Our gross profit margin increased to 67% in fiscal 2021 from 63% in fiscal 2020. Our non-GAAP adjusted gross margin totaled 19.6% for fiscal 2021, as compared to 67.7% for fiscal 2020.

Our loss from operations was $19.6 million in fiscal 2021 as compared to a loss of $17.5 million in fiscal 2020 mostly because of increased in advertising spend and investing in cbdMD Therapeutics.

Our non-GAAP adjusted loss from operations in fiscal 2021 was approximately $13.6. million, compared to our non-GAAP adjusted loss from operations in fiscal 2020 of approximately $11.5 million.

Net loss attributable to common shareholders for fiscal 2021 was approximately $25.9 million, or $0.41 per share, as compared to a net income for fiscal 2020 of approximately $12.2 million, or $0.28 per share. The decrease in fiscal 2021 was principally attributable to an increase of approximately $6.7 million in the non-cash contingent liability which is associated with earnout shares which may be issued under the terms of the December 2018 acquisition of Cure Based Development (which owned the cbdMD brand).

At September 30, 2021, we had working capital of approximately $29.6 million and cash on hand of approximately $26.4 million as compared to working capital of approximately $16.0 million and cash on hand of approximately $14.8 million at September 30, 2020.

We reported record e-commerce, direct to consumer (DTC) net sales of $32.9 million, or 74.2% of total net sales in fiscal 2021, an increase of $2.5 million, or 8% increase from fiscal 2020.

Our CBD pet brand, Paw CBD, reported $5.7 million in net sales, a 27% increase in fiscal 2021, as compared to $4.5 million in fiscal 2020.

For the Quarter Ended September 30, 2021:

Our net sales for the fourth quarter of fiscal 2021 decreased by 16% year-over-year to $9.8 million from $11.7 million in the fourth quarter of fiscal 2020.

Our gross profit margin for the quarter increase to 58.6% in the fourth quarter of fiscal 2021 from 54.4% in the fourth quarter of fiscal 2020.

Our loss from operations was approximately $7.0 million compared to $4.5 million from the prior year’s quarter.

Our non-GAAP adjusted operating loss was approximately $4.8 million, compared to a $1.2 million non-GAAP adjusted operating loss from the prior year’s quarter.

We reported fourth quarter fiscal 2021 e-commerce, direct to consumer (DTC) net sales of $7.2 million, a 15% decrease from $8.6 million in the fourth quarter of fiscal 2020.

Our pet brand, Paw CBD, reported approximately $1.2 million in net sales in the fourth quarter of fiscal 2021, a decrease of 25% compared to $1.6 million from the prior year’s quarter.

cbdMD, Inc. will host a conference call at 4:15 p.m., Eastern Time, on Friday, December 17, 2021, to discuss the company’s September 30, 2021, fourth quarter and fiscal year-end financial results and business progress.

CONFERENCE CALL DETAILS

Friday, December 17, 2021, 4:15 p.m. Eastern Time

Domestic:

1-888-506-0062

International:

1-973-528-0011

Teleconference Replay dial in – Available through Saturday, January 15, 2022

Domestic:

1-877-481-4010

International:

1-919-882-2331

Replay Passcode:

43904

Webcast Link/Webcast Replay link- available through Friday, December 17, 2022:

https://www.webcaster4.com/Webcast/Page/2206/43904

About cbdMD, Inc.

cbdMD, Inc. is one of the leading and most highly trusted and most recognized cannabidiol (CBD) brands with a comprehensive line of U.S. produced, THC-free1 CBD products as well as our new Full Spectrum products. Our cbdMD brand currently includes over 130 SKUs of high-grade, premium CBD products including CBD tinctures, CBD gummies, CBD topicals, CBD capsules, CBD bath bombs, CBD bath salts, CBD sleep aids and CBD drink mixes. Our Paw CBD brand of pet products includes over 45 SKUs of veterinarian-formulated products including tinctures, chews, topicals products in varying strengths, and our CBD Botanicals brand of beauty and skincare products features 15 SKUs, including facial oil and serum, toners, moisturizers, clear skin, facial masks, exfoliants and body care. To learn more about cbdMD and their comprehensive line of U.S. grown, THC-free1 CBD oil products, please visit www.cbdmd.com, follow cbdMD on Instagram and Facebook, or visit one of the 6,000 retail outlets that carry cbdMD products.

Forward-Looking Statements

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements can be identified using words such as ''should,'' ''may,'' ''intends,'' ''anticipates,'' ''believes,'' ''estimates,'' ''projects,'' ''forecasts,'' ''expects,'' ''plans,'' and ''proposes.'' These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict. You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading "Risk Factors" in cbdMD, Inc.'s Annual Report on Form 10-K for the fiscal year ended September 30, 2021 as filed with the Securities and Exchange Commission (the "SEC") on December 16, 2021 and our other filings with the SEC. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of cbdMD, Inc. and are difficult to predict. cbdMD, Inc. does not undertake any duty to update any forward-looking statements except as may be required by law. The information which appears on our websites and our social media platforms, including, but not limited to, Instagram and Facebook, is not part of this press release.

1 THC-free is defined as below the level of detection using validated scientific analytical methods.

Non-GAAP Financial Measures

This press release includes a financial measure that excludes the impact of certain items and therefore has not been calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). cbdMD, Inc. has included adjusted loss from operations because management uses this measure to assess operating performance in order to highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The adjusted operating loss has not been prepared in accordance with GAAP. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, net loss from operations as an indicator of our operating performance. Further, this non-GAAP financial measure, as presented by cbdMD, Inc., may not be comparable to similarly titled measures reported by other companies. cbdMD, Inc. has attached to this press release a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure.

cbdMD, INC. CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020    

September 30,

 

September 30,

2021

 

2020

Assets   Current assets: Cash and cash equivalents

$

26,411,424

 

$

14,824,644

 

Accounts receivable

 

1,113,372

 

 

911,482

 

Accounts receivable – discontinued operations

 

10,967

 

 

447,134

 

Marketable securities

 

33,351

 

 

26,472

 

Investment other securities

 

1,000,000

 

 

250,000

 

Inventory

 

5,021,867

 

 

4,603,360

 

Inventory prepaid

 

551,519

 

 

288,178

 

Prepaid software

 

-

 

 

174,308

 

Prepaid sponsorship

 

1,212,682

 

 

1,203,300

 

Prepaid expenses and other current assets

 

1,147,178

 

 

983,374

 

Total current assets

 

36,502,360

 

 

23,712,252

 

  Other assets: Property and equipment, net

 

2,561,574

 

 

3,183,487

 

Operating lease assets

 

5,614,960

 

 

6,851,357

 

Deposits for facilities

 

529,583

 

 

790,708

 

Intangible assets, net

 

23,003,929

 

 

21,635,000

 

Goodwill

 

56,670,970

 

 

54,669,997

 

Total other assets

 

88,381,016

 

 

87,130,549

 

  Total assets

$

124,883,376

 

$

110,842,801

 

CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020 (continued)    

September 30,

 

September 30,

2021

 

2020

Liabilities and shareholders' equity   Current liabilities: Accounts payable

$

2,978,914

 

$

2,850,421

 

Deferred revenue

 

2,727,612

 

 

-

 

Accrued expenses

 

1,151,150

 

 

2,769,920

 

Operating leases – current portion

 

-

 

 

1,159,098

 

Paycheck Protection Program loan, current portion

 

854,000

 

Note payable

 

59,470

 

 

55,639

 

Total current liabilities

 

6,917,146

 

 

7,689,078

 

  Long term liabilities: Long term liabilities

 

108,985

 

 

264,367

 

Paycheck Protection Program loan

 

-

 

 

602,100

 

Operating leases - long term portion

 

4,859,058

 

 

6,010,208

 

Contingent liability

 

9,856,000

 

 

16,200,000

 

Deferred tax liability

 

-

 

 

895,000

 

Total long term liabilities

 

14,824,043

 

 

23,971,675

 

  Total liabilities

 

21,741,189

 

 

31,660,753

 

  cbdMD, Inc. shareholders' equity: Preferred stock, authorized 50,000,000 shares, $0.001 par value, 5,000,000 and 500,000 shares issued and outstanding, respectively

 

5,000

 

 

500

 

Common stock, authorized 150,000,000 shares, $0.001 par value, 57,783,340 and 52,130,870 shares issued and outstanding, respectively

 

57,783

 

 

52,131

 

Additional paid in capital

 

176,417,269

 

 

126,517,784

 

Accumulated deficit

 

(73,337,865

)

 

(47,388,367

)

Total cbdMD, Inc. shareholders' equity

 

103,142,187

 

 

79,182,048

 

    Total liabilities and shareholders' equity

$

124,883,376

 

$

110,842,801

 

cbdMD, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED SEPTEMBER 30, 2021 and 2020      

September 30,

 

September 30,

2021

 

2020

  Gross Sales

$

47,332,085

 

$

43,172,778

 

Allowances

 

(2,851,322

)

 

(1,289,044

)

Total Net Sales

 

44,480,763

 

 

41,883,734

 

Cost of sales

 

14,495,063

 

 

15,514,727

 

  Gross Profit

 

29,985,700

 

 

26,369,007

 

  Operating expenses

 

49,601,690

 

 

43,950,862

 

(Loss) from operations

 

(19,615,990

)

 

(17,581,855

)

Realized and Unrealized gain (loss) on marketable and other securities, including impairments

 

546,878

 

 

(932,066

)

Gain on extinguishment of debt

 

1,466,113

 

 

-

 

Decrease (increase) of contingent liability

 

(6,687,439

)

 

29,780,000

 

Other income

 

29,479

 

 

-

 

Interest (expense) income

 

(28,930

)

 

39,877

 

Loss (income) before provision for income taxes

 

(24,289,889

)

 

11,305,956

 

  Benefit for income taxes

 

895,000

 

 

1,345,300

 

Net (Loss) Income from continuing operations

 

(23,394,889

)

 

12,651,256

 

Net (Loss) from discontinued operations, net of tax (Note 14)

 

-

 

 

(48,983

)

Net (Loss) Income

 

(23,394,889

)

 

12,602,273

 

Preferred dividends

 

2,554,609

 

 

366,850

 

  Net (Loss) Income attributable to cbdMD, Inc. common shareholders

$

(25,949,498

)

$

12,235,423

 

  Net (Loss) Income per share: Basic earnings per share

 

(0.47

)

 

0.28

 

Diluted earnings per share

 

(0.47

)

 

0.28

 

Weighted average number of shares Basic:

 

54,938,128

 

 

44,140,360

 

Weighted average number of shares Diluted:

 

-

 

 

45,171,674

 

    cbdMD, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED SEPTEMBER 30, 2021 and 2020        

September 30,

 

September 30,

2021

 

2020

  Net (Loss) Income

$

(23,394,889

)

$

12,602,273

 

Comprehensive (Loss) Income

 

(23,394,889

)

 

12,602,273

 

  Preferred dividends

 

(2,554,609

)

 

(366,850

)

Comprehensive (Loss) Income attributable to cbdMD, inc. common shareholders

$

(25,949,498

)

$

12,235,423

 

    cbdMD, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2021 AND 2020

September 30,

 

September 30,

2021

 

2020

  Cash flows from operating activities: Net (Loss) Income

$

(23,394,889

)

$

12,602,273

 

  Adjustments to reconcile net (income) loss to net cash used by operating activities: Stock based compensation

 

1,298,106

 

 

1,900,194

 

Restricted stock expense

 

1,626,613

 

 

138,000

 

Marketing stock amortization

 

871,390

 

 

-

 

Issuance of stock / warrants for service

 

97,720

 

 

338,400

 

Inventory and materials impairment

 

670,580

 

 

233,372

 

Impairment on discontinued operations asset

 

-

 

 

45,783

 

Depreciation and amortization

 

1,017,408

 

 

720,755

 

Other than temporary impairment other securities and other accounts receivable

 

-

 

 

760,000

 

Increase/(Decrease) in contingent liability

 

6,687,439

 

 

(29,780,000

)

Realized and unrealized loss of Marketable and other securities

 

(546,878

)

 

172,066

 

Merchant reserve settlement

 

-

 

 

132,657

 

Termination benefit

 

196,896

 

 

489,381

 

Extinguishment of Paycheck Protection Program Loan

 

(1,466,113

)

 

-

 

Non-cash lease expense

 

1,236,397

 

 

1,180,213

 

Changes in operating assets and liabilities: Accounts receivable

 

(183,735

)

 

514,352

 

Deposits

 

261,125

 

 

(938,112

)

Merchant reserve

 

-

 

 

386,912

 

Inventory

 

(1,009,192

)

 

(535,146

)

Prepaid inventory

 

(263,341

)

 

615,280

 

Prepaid expenses and other current assets

 

525,670

 

 

645,796

 

Accounts payable and accrued expenses

 

(104,422

)

 

1,479,189

 

Operating lease liability

 

(1,159,097

)

 

(1,045,285

)

Deferred revenue / customer deposits

 

3,723

 

 

37,802

 

Collection on discontinued operations accounts receivable

 

436,167

 

 

587,083

 

Deferred tax liability

 

(895,000

)

 

(1,345,300

)

Cash used by operating activities

 

(14,093,433

)

 

(10,664,335

)

  Cash flows from investing activities: Proceeds from sale of other investment securities

 

540,000

 

 

-

 

Purchase of other investment securities

 

(750,000

)

 

(250,000

)

Purchase of DirectCBDOnline.com

 

(2,000,000

)

 

-

 

Purchase of property and equipment

 

(342,013

)

 

(1,320,095

)

Cash provided (used) by investing activities

 

(2,552,013

)

 

(1,570,095

)

  Cash flows from financing activities: Proceeds from issuance of common stock

 

-

 

 

16,766,106

 

Proceeds from issuance of preferred stock

 

30,938,386

 

 

4,421,928

 

Paycheck Protection Program Loan

 

-

 

 

1,456,100

 

Note payable

 

(151,551

)

 

29,629

 

Preferred dividend distribution

 

(2,554,609

)

 

(366,850

)

Deferred issuance costs

 

-

 

 

62,197

 

Cash provided by financing activities

 

28,232,226

 

 

22,369,110

 

Net increase (decrease) in cash

 

11,586,780

 

 

10,134,680

 

Cash and cash equivalents, beginning of period

 

14,824,644

 

 

4,689,966

 

Cash and cash equivalents, end of period

$

26,411,424

 

$

14,824,646

 

 

Supplemental Disclosures of Cash Flow Information:

2021

 

2020

  Cash Payments for: Interest expense

$

28,930

$

33,693

  Non-cash financial activities: Issuance of Contingent earnout shares:

$

13,520,000

$

4,620,000

Warrants issued to representative

$

499,587

$

524,113

  cbdMD, Inc. SUPPLEMENTAL FINANCIAL INFORMATION RECONCILIATION OF NON-GAAP ADJUSTED INCOME (LOSS) FROM OPERATIONS  

Three Months

 

Three Months

 

Year

 

Year

Ended

 

Ended

 

Ended

 

Ended

September 30,

 

September 30,

 

September 30,

 

September 30,

2021

 

2020

 

2021

 

2020

        GAAP (loss) from operations

$

(7,012,702

)

$

(4,531,072

)

$

(19,615,990

)

$

(17,581,855

)

Adjustments: Depreciation

 

297,552

 

 

221,360

 

 

1,017,408

 

 

720,754

 

Employee and director stock compensation (1)

 

1,100,362

 

 

537,943

 

 

3,149,688

 

 

1,985,803

 

Other non-cash stock compensation for services (2)

 

-

 

 

253,950

 

 

97,721

 

 

338,400

 

Inventory adjustment (3)

 

671,669

 

 

1,663,000

 

 

671,669

 

 

2,207,000

 

Write down of legacy accounts receivable (4)

 

-

 

 

102,000

 

 

-

 

 

102,000

 

Accrual for severance

 

-

 

 

489,381

 

 

703,022

 

 

489,381

 

Accrual / expenses for discretionary bonus

 

150,000

 

 

200,000

 

 

300,000

 

 

200,000

 

Non-GAAP adjusted (loss) from operations

$

(4,943,118

)

$

(1,263,437

)

$

(13,676,481

)

$

(11,538,517

)

 

(1)

Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.

(2)

Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.

(3)

Represents an operating expense related to inventory loss related to regulatory changes impacting labels and packaging and obsolete/expired inventory purchases during 2019/2020.

(4)

Write down of legacy accounts receivable.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211216006040/en/

PR: cbdMD, Inc. Robert Pettway Director of Public Relations rpettway@cbdmd.com (423) 503-5225

Investors: cbdMD, Inc. John Weston Director of Investor Relations john.weston@cbdmd.com (704) 249-9515