cbdMD, Inc.
Q2 2021 Earnings Call Transcript

Published: 12 May 2021

[Operator:]

Good afternoon. Welcome to the cbdMD, Inc. March 31, 2021, Second Quarter Fiscal 2021 Earnings Call and Update. This afternoon, the company issued a press release that provided an overview of its second quarter fiscal 2021 results, which followed the filing of its quarterly report on Form 10-Q. Today's conference call is being recorded and will be available online at cbdmd.com in accordance with cbdMD's retention policies. . At this time, I would like to turn the conference over to Ronan Kennedy, the company's Chief Financial Officer and Chief Operating Officer. Ronan, please go ahead.

[Ronan Kennedy:]

Thank you, Catherine, and thank you all for joining the cbdMD's March 31, 2021 second quarter of fiscal 2021 earnings call and update. On the call today, we also have our Chairman and Co-CEO Marty Sumichrast. Following the safe harbor, Marty will provide an overview of our business, then I'll provide a summary of the quarter financial results. Following that, we'll open up the call for questions.

[Martin Sumichrast:]

Thank you very much, Ronan, and good afternoon, everyone. We appreciate you joining us today. We are very excited about the long-term vision to be the leading global CBD consumer brand and company. Despite the impact to our business from the COVID-19 pandemic and the duration and magnitude of the lockdowns that were greater than we initially anticipated, we believe that our responsiveness and our ability to make adjustments to our business has allowed us to successfully deliver the largest fiscal Q2 net sales in our history. cbdMD increased its year-over-year net sales in Q2 by 26% to $11.8 million, while virtually maintaining almost a 70% gross profit margin. This growth rate was exceptional considering our March quarter net sales have historically been impacted by seasonality. I want to thank our team for their hard work and dedication to keeping the health and safety of our employees a top priority, while also delivering these results. We believe our business is at the precipice of more significant growth. We believe substantial net sales growth is achievable in the near term-based on anticipated launch of a variety of new products, new partnerships and sponsorships, new channels of distribution and new international markets. We're excited about the long-term potential to grow our core U.S. business and increase our wholesale footprint as the FDM channel opens up to CBD products, particularly our ingestible line.

[Ronan Kennedy:]

Thank you, Marty, and welcome, everybody. On a GAAP basis, total net sales for the second quarter of fiscal 2021 hit another all-time high of $11.8 million or a 26% year-over-year increase and a seasonal sequential dip of 4%. For the 6 months ending March 2021, we reported total sales of $24.1 million, a 24% increase compared to $19.5 million in the same period of last fiscal year. Our quarterly e-commerce business generated sales of $8.4 million in the second quarter of fiscal 2021, a 23% year-over-year increase. E-commerce for the quarter represented approximately 71% of our total net sales. For the 6 months ending March 31, 2021, e-commerce generated $18.1 million of net sales compared to $13.7 million for the comparative prior fiscal year period, representing 75% of our total net sales. We remain focused on our non-GAAP operating KPIs associated with our direct-to-consumer business and saw an average order value, retention rates and web traffic strengthened toward the end of the quarter and into April. Our wholesale business generated $3.4 million of net sales for the second quarter of fiscal 2021 as compared to $2.6 million for the comparative quarter in fiscal 2020.

[Martin Sumichrast:]

Well, thank you, Ronan. With that, I'd like to open up the line for any Q&A. Catherine?

[Operator:]

.With no questions in the queue, this does conclude our conference call for today. Thank you so much for your participation.

[End of Q&A:]