SANTA ANA, Calif. – April 11, 2018 – Kush Bottles, Inc. (OTCQB: KSHB), a leading provider of packaging, supplies, vaporizers, accessories and branding solutions for the regulated cannabis industry, today reported financial results for its second quarter of 2018, for the period ended February 28, 2018.
Fiscal Second Quarter Financial Summary
- Revenue was up 249% Year-over-Year to $10.36 million.
- Gross margins were 28.1%, compared with 35.6% in the prior year period, which is attributed to increased business in the lower margin vaporizer and cartridge product segment(s).
- Net loss, including $1.0 million in non-cash stock compensation, $206,000 in depreciation and amortization expense and $2.6 million in SG&A, was approximately $920,000 compared to net income of $3,619 in the fiscal second quarter of 2017.
- Cash balance was $7.1 million as of February 28, 2018 compared to $0.9 million at August 31, 2017. This increase was primarily a result of a $6 million equity investment by the Company’s new strategic partner, Merida Capital Partners.
- Working capital was $15.3 million as of February 28, 2018 compared to $3.4 million at August 31, 2017.
Fiscal Second Quarter Operational Summary
- Hired a Regional Sales Director, Kyle Heverly, to expand Kush Bottles’ physical presence in the rapidly growing East Coast legal cannabis market.
- Appointed Donald H. Hunter, former Senior Executive of Harbor Global Company Limited and The Pioneer Group, Inc., to Board of Directors
- Jim McCormick appointed Chief Operating Officer, in addition to continuing to serve in his current capacity as Chief Financial Officer
Nick Kovacevich, Chairman and CEO of Kush Bottles, commented, “We have made significant headway expanding our offering to encompass a comprehensive portfolio of solutions that power the cannabis industry and position Kush Bottles as a critical link in the cannabis supply chain. This expansive product portfolio, which included packaging, vaporizers, compliance and branding solutions, drove strong revenue growth of 249% to reach approximately $10 million in the second fiscal quarter of 2018 compared with approximately $3 million in Q2 of fiscal 2017. By staying on top of industry trends and developments and proactively building a dynamic and flexible business, we have increased the number of customers, average order size, and order volume in all our markets. This strategy has also broadened our client base and provided improved revenue stability to the Company.
“We are therefore entering the second half of fiscal 2018 in a strong position to grow revenues and gain market share, using a combination of organic growth and M&A activity. In January, adult use cannabis sales commenced in California, which we expect to drive a gradual revenue ramp throughout the remainder of the year. Furthermore, we have already made inroads building our East Coast distribution platform, which represents a new market for us and significantly expands our potential addressable market. Our recently announced proposed acquisition of Summit Innovations, a leading supplier of hydrocarbon gases to cannabis extractors, will further enable us to enter another critical stage of the cannabis supply chain and advance our strategy to build Kush Bottles into a diversified provider of critical support services to the cannabis industry.”
The company will also host a conference call today, Wednesday, April 11, 2018 at 4:30 PM Eastern Time.
Participant Dial-In Numbers:
Toll / International: 1-323-701-0225
*Participants should request the Kush Bottles Earnings Call or provide confirmation code 8956868
Investors are also invited to listen via webcast on the Kush Bottles investor section of the Company website at https://ir.kushbottles.com. Please visit the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. A replay of the call will be available on the Kush Bottles investor website approximately two hours after the conference call has ended.
Nick Kovacevich, Chief Executive Officer of Kush Bottles, and Jim McCormick, Chief Financial Officer and Chief Operating Officer, will be answering shareholder questions at the end of the call. Should you have questions during or prior to the conference call please send an email to [email protected] with ‘KUSH Question’ in the subject line. Mr. Kovacevich and Mr. McCormick will answer as many questions as time will allow.
To be added to the distribution list, please email [email protected] with ‘Kush’ in the subject line.