Benzinga | Jul 9, 2021 09:16AM EDT

KushCo Q3 Revenue Jumps 27% YoY To $28.3M Thanks To Improved Cannabis Products Sales

KushCo Holdings, Inc. (OTCQX: KSHB) generated net revenue of $28.3 million in its fiscal third quarter, representing 27% year-over-year growth.

Cannabis ancillary products supplier attributed revenue improvements to higher sales to the company's current multi-state operators and limited partnership customers, but also by ensuring new ones as part of its strategy.

Q3 Key Figures

* Net loss for the period amounted to $7.98 million or $0.05 per share, compared to a loss of $13.49 million or $0.11 per share in the prior-year period;

* Adjusted EBITDA was a loss of $1.1 million, which compares to around $2.7 million in the third quarter of fiscal 2020;

* Gross profit on a GAAP basis was 15%, versus 11% in the same period of the prior year;

* On a Non-GAAP basis gross profit was around 20%, which compares to 28% in the comparative period of 2020;

At the end of the reporting period, the Cypress, California-based company held $1.1 million in cash versus $35 million at the end of February. The decrease in cash was mostly due to the company using a part of its proceeds from its $40 million equity raise in February to pay off its $17 million term debt. At the end of May, KushCo reported $700,000 of total debt outstanding.

"Fiscal Q3 represented another major step forward for KushCo, as we achieved our second consecutive quarter of year-over-year growth with $28.3 million in revenue, which was up 27% from the prior year period," Nick Kovacevich, KushCo's co-founder, chairman and CEO stated. "More importantly, sales to our top 25 customers, which include many of the industry's top MSOs, LPs, and leading brands, was up by more than 60% year-over-year, as we continue to penetrate these customers and secure new ones."

Recent Milestones

* The earnings report comes on the heels of the company announcing a special shareholder meeting date -- August 26 -- to approve a merger with Greenlane Holdings, Inc. (NASDAQ: GNLN) under which, KuschCo will become a wholly-owned subsidiary of Greenlane.

Under the previously announced all-stock deal, which is expected to close in the third quarter of 2021, KushCo shareholders will obtain roughly 49.9% of the combined company, while Greenlane shareholders will hold the remaining 50.1%.

The joint company is estimated to generate Pro-forma revenue of approximately $310 to $330 million this year.

* KushCo recently opened a new 130,000 square foot West Coast warehouse in Moreno Valley, California as a part of its warehouse consolidation strategy to make a total of $1.3 million in annual cost savings.

* The company also revealed the dismissal of federal shareholder class action and derivative suit.

Price Action

KushCo's shares closed Thursday market session 1.60% higher at $1.05 per share.

Photo: Courtesy of Esteban Lopez on Unsplash