Greenlane Holdings Inc (NASDAQ:GNLN) Q1 2020 Earnings Conference Call - Final Transcript

Jun 04, 2020 • 08:30 am ET

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Greenlane Holdings Inc (NASDAQ:GNLN) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, all. Welcome to today's Conference Call to discuss Greenlane Holdings First Quarter Financial Results. A press release detailing the financial results for the quarter was distributed this morning and is available on the Investor Relations section of the Greenlane website. As a reminder, today's conference is being recorded.

On the call today are Aaron LoCascio, Chief Executive Officer; and Ethan Rudin, Chief Financial Officer.

Before we begin, Greenlane would like to remind listeners that today's prepared remarks may contain forward-looking statements, and management may make additional forward-looking statements in response to the questions received. These statements do not guarantee future performance and therefore, undue reliance should not be placed upon them. These statements are based on current expectations of the Company's management and involve inherent risks and uncertainties and other factors discussed in today's press release. This call also contains time-sensitive information that speaks only as of the date of the live broadcast, June 4, 2020. Factors that could cause Greenlane's results to differ materially are set forth in today's press release and in Greenlane's Annual Report on Form 10-K filed with the SEC. Any forward-looking statements made today on this call are based on assumptions as of today, and Greenlane assumes no obligation to update these statements as a result of new information or future events.

During today's call, Greenlane's management may discuss non-GAAP financial measures, including adjusted net loss and adjusted EBITDA. Greenlane has included a reconciliation of these non-GAAP measures in today's press release, which is available in the Investor Relations section of our website at gnln.com.

I would like to turn the conference over to Mr. Aaron LoCascio, Chairman and CEO of Greenlane. Please go ahead, Mr. LoCascio.

Executive
Aaron LoCascio

Thanks, everyone, for joining us today. During this call, I'll review our first quarter 2020 sales highlights, operating environment and business development activities before turning the call over to Ethan to discuss our financial results in more detail. After Ethan's comments, we'll open up the call for your questions.

First off, I'm proud to report that Q1 2020 top line revenue came in at $33.9 million ahead of our initial $32 million to $33 million revenue target. Gross profit was $7.3 million, compared to our original $7.2 million target, representing a 22% gross margin. And gross profit increased $0.8 million, compared to Q4 2019, representing an improvement in gross margin of 414 basis points.

As we previously announced, we anticipate returning to cash flow positive operations by the fourth quarter of 2020, and I remain confident as we track towards this goal. That being said, we continue to monitor the uncertainties in the macro environment that could potentially influence this timing.

Second, as it relates to gross margin, we have continued to pursue our business transformation initiatives and are focused squarely on driving higher-margin sales. I'm extremely encouraged by our progress thus far as our gross profit improved sequentially, even though our sales in Q1 2020 declined compared to Q4 2019. This positive trend has persisted since