Greenlane's Q4 Revenue Plummets 23% Sequentially, Company Weighs In

Greenlane Holdings, Inc., GNLN a leading global retailer of high-end cannabis accessories, child-resistant packaging, and specialty vaporization products, reported its financial results late Monday for the fourth quarter and full year ending December 31, 2022.

Highlights

The company's total revenue for 2022 declined by 17.4% to $137.1 million, compared to $166.1 million in 2021.

Greenlane has taken several measures to align its fundamentals and streamline its operations to achieve profitability in 2023. These measures include restructuring the Industrial business, paying down debt, executing cost-cutting initiatives, and reducing adjusted SG&A by 11.8%.

The company also launched its Groove product line and expanded its global omnichannel strategy through partnerships with distributors in Latin America, Mexico, Puerto Rico, and Argentina.

Craig Snyder, CEO of Greenlane, acknowledged that the company had a difficult year in 2022 and did not meet expectations. However, the company has implemented a transformative strategy to achieve profitability, which includes demonstrating tangible proof points, product innovation and disruption, and advancing its global omnichannel strategy. Greenlane aims to focus on efficiency, scalability, leverage ability, and consistent margins in 2023.

The company has already seen growth in Q1-23 revenue compared to Q4-23 and plans to launch 23 proprietary products in 2023.

Strategic partnerships with distribution partners in Latin America, Canada, Puerto Rico, and Mexico will enable the company to reach consumers globally without establishing operations in those locations. With these initiatives in place, Greenlane is optimistic about its trajectory for success in 2023.

Financial Summary

• Net sales in FY 2022 were $137.1 million, down 17.4% from FY 2021.
• Gross profit was $24.9 million, or 18.2% of net sales in 2022, down from $33.9 million, or 20.4% of net sales in 2021.
• Cash totaled $12.2 million, and working capital was $41.0 million as of December 31, 2022, down from working capital of $53.8 million as of December 31, 2021.
• Net sales for the Consumer Goods segment decreased to $48.1 million, while net sales for the Industrial Goods segment increased to $89.0 million in 2022.
• The decline in Consumer Goods segment revenue is due to a major restructuring effort during the fiscal year 2022 to increase profitability, focusing on in-house brands that have a higher margin profile, and rationalizing third-party brand offerings.
• The increase in Industrial Goods segment revenue is directly related to net sales contributed by the merger with KushCo, which has been included in the results of operations since August 31, 2021.

Q1-23 Revenue Guidance

• Revenue for Q1-23 is expected to be between $23.0-24.0 million, which is a 5-10% growth rate over Q4-22.
• Strength is coming from the Consumer Goods segment, increasing greater than 10% versus the prior quarter.

Photo by Markus Spiske on Unsplash.