cbdMD Reports Q3 2023 Performance: Net Loss Improves, Focus On Cost Management & Strategic Growth

cbdMD, Inc. YCBD YCBD reported its financial and operating results Thursday afternoon for the Q3 fiscal 2023.

cbdMD's Interim CEO and CFO Ronan Kennedy stated: "We have had a dynamic and eventful quarter, marked by significant capital markets activity, a strategic re-platforming of our website, and dedicated efforts in new product innovation."

Q3 2023 Financial Highlights

• Net sales: $6.1 million (flat from Q2 2023, down 28% YoY). Over the nine months ending June 30, 2023, net sales were $18.4 million, compared to $27.5 million in the same period last year.
• Direct-to-consumer (DTC) net sales reached $5.0 million, reflecting a 26% decrease from the same period in 2022. However, its e-commerce net sales showed a sequential increase of 2.3%.
• Wholesale net sales were $1.1 million, marking a 46% decline from the same period in 2022. Sequentially, wholesale net sales decreased by 17%, partially attributed to temporary disruptions from the e-commerce platform change.
• Moreover, the company furthered cost rationalization efforts, reporting SG&A costs of $5.7 million, an improvement of $2.6 million from the prior year period's $8.2 million. Excluding certain non-cash expenses, cash SG&A costs decreased by $4.3 million to $4.4 million.
• Loss from operations of about $1.8 million, showcasing a substantial improvement of around $31.3 million compared to the $33.2 million loss from operations in the same period of 2022. Over the nine months ending June 30, 2023, its loss from operations was approximately $7.2 million, in contrast to the $63.2 million reported for the corresponding period in the previous year.
• Non-GAAP adjusted EBITDA of about $0.6 million, marking an improvement of $2.1 million compared to the $2.7 million reported for the June 30, 2022 quarter. Sequentially, there was a $0.2 million improvement. Over the nine months ending June 30, 2023, the company reported non-GAAP EBITDA loss was $4.0 million, contrasting with the $10.9 million loss reported in the same period of the prior year.

"Our unwavering commitment to profitability is resolute, with a keen eye on achieving break-even EBITDA in the near term," said Kennedy. "We view the upcoming proxy vote for our common and preferred shareholders as pivotal. This vote stands to fortify our capital structure while unlocking potential liquidity for our preferred shareholders, and opening up more transformational strategic activity that is stymied by our current capital structure."

In addition, the net loss for Q3 2023 was $1.7 million on $6.1 million in sales, a significant improvement from the $31.6 million net loss on $8.6 million in sales in Q3 2022.

Operating loss decreased from $2.3 million to $1.8 million, excluding a $30.7 million impairment. Notable highlights include reduced SG&A costs and enhanced cost management.

Recent Developments

• Completed 1-for-45 reverse stock split on April 24, 2023.
• Underwritten public offering raised $2.8 million on May 3, 2023.
• Transitioned to Shopify e-commerce platform in June 2023 for improved efficiency.
• Filed preliminary proxy statement for a special meeting on September 22, 2023, proposing changes to Series A Preferred Stock.
• Expanded hemp-derived Delta-91 product line in June 2023.
• Engaged in lobbying efforts for CBD product regulation.

Price Action: Shares of cbdMD were up 0.70% at $1.44 per share after the market closed on Thursday afternoon.

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