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cbdMD (YCBD)

Participants
Mark Elliott CFO and COO
Marty Sumichrast Chairman and Co CEO
Ken Cohn Chief Marketing Officer
Lance Blundell General Counsel
Paul Cooney Joseph Gunnar
Aaron Grey Alliance Global Partners
Scott Fortune Roth Capital Partners
Gerald Pascarelli Cowen
Call transcript
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Operator

Good afternoon. And welcome to the cbdMD Third Quarter Fiscal 2020 Earnings Call and Update. This morning, the company issued a press release that provided an overview of its third quarter results, which followed the filing of its report on Form 10-Q. Today’s conference is being recorded and will be available online at cbdMD.com in accordance with cbdMD’s retention policies. All participants on this call will be in a listen-only mode. by session. followed be call a question-and-answer The At the the conference I would company’s to turn now like over Financial this Officer. time, Chief to Mark Elliott, Mark, go please ahead.

Mark Elliott

cbdMD thank update. and for Melinda, earnings you you, fiscal XXXX and joining Thank the third quarter call all

well today, as our the Marty call Chairman Co-CEO, Officer, also we On Chief our Marketing have and Sumichrast, as Cohn. Ken

financial business, summary Harbor will provide of quarterly our Ken of statement, a an provide and and Marty Safe I’ll the Following then results. the overview

uncertainties on Co-CEO, Marty? over to does XXXX, date. call would not today’s of statements our any conference cbdMD occur to on to the or that today’s June with filed Following Form future cause we’ll call in forward-looking questions. the like risks year and for actual Chairman SEC, Sumichrast. that indicated, SEC, that, XX, statements Litigation our Safe to from this reflect up open the period turn for that, on call Securities SEC’s to described website ended be Act including XX, of Form differ that these August circumstances the to the constitute on Private as speak of as forward-looking and Reform I’d risks We’d the cautions everyone With Wednesday, ended are these report remind can XX-K filings or of Harbor forward-looking XX,XXXX made with subject that Any various date, like the and annual the forward-looking all may cbdMD statements provisions company’s intend amended, Marty statements of prospects expectations, website events to materially for is our those www.cbdMD.com only XXXX purposes XX-Q remarks under the for which September about and company’s reviewed and update plans other at the results www.sec.com. at XXXX. after

Marty Sumichrast

Mark, afternoon. you. joining And us this thank who everyone is welcome to

XXXX. in sequential biggest in year non-GAAP to most top-tier own As from adjusted in Even comparable has leaning cbdMD CBD recognized respectively. March become we XX% earnings by history we aware do third the loss the Pet it's and just our our that fiscal grow our operations two brand Paw ourselves morning's CBD fundamentally respectively, competitors. basis, quarter Having in it and the And reduced because trajectory, brands value, single from quarter sales net US reduced XXXX now, current our of and from market. significantly and loss its our from XX% CBD fiscal non-GAAP quarter our quarter. reported of quarterly you're loss share, can impressive, its June operations market brands one a loss has America XXXX pet by our its all XXXX one and from operations brand, sound with from XX%, adjusted this and the a on trusted are in is XX% community model. we from more financial pet now national our financial to demonstrating in the brands of release, cbdMD June separated so business with We operations and for from

remains calendar of income goal the adjusted XXXX. Our achieve end to by operations from positive

at and a and work remote When work altered vendors. at and home office, schedules employees our was Carolina North we've In the June measures pandemic. to at health order the quarter, our closed let the our get dealt corporate on COVID-XX stay early update in to I secure implemented, Before warehouse temporarily into the structure how our help manufacturing March, take of we started with we me company everyone facilities. specifics of instituted

goods team challenges the our finished believe strong of growth delivering all We I were remained XXXX. changes to will as and as us In XXX inventory has while are this half our you interruptions production couldn't also took chains well which to in I only calendar growing second a position our significant to but happened. very fully we've items, has supply for business thereby months, not has the happen, tell risen I'm open inventory, focused build had be the up on to at operational, we maintain us purchased short, steps if are allowing during past to logistical we XXXX, cbdMD. increase make of more to and raw which employees few production material not additional prouder point, to put happy and in at

me historic let our financial a quarter. few from highlights June on focus Now,

high First, and or $XX.X total increase, sales million the hit XX% all-time net sequentially quarterly XX% a increase. of year-over-year

as and channel This Second, the quarterly and brick of up E-commerce direct-to-consumer decision. ability total record accounting XX% competency direct XX% consumer our increase. in to year-over-year XX% been also quarterly has was core for channel, right our our million, a of direct-to-consumer hit sales quarter year. pivot and our last traditional a sales net the resources high distribution $X.X direct our the to to sales seized past our mortar resulted compared always

XX%, wholesale seeing pandemic, June. in As are dipped rebound to sales the early we a by expected although, due the since COVID-XX quarter

margins between goal has profit gross XX%. XX% maintain and our been Third, always to

XX%. XXX,XXX, the expenses quarter for profit a non-GAAP gross accounting for Our adjusted dramatic margin non-cash and profit XX.X%. of ended of adjustment cash a gross June GAAP most reduced overall XX.X%, we XX we was after was that generated Fourth, operating inventory margin by and our

reduction much brand permanent periods infrastructure pandemic, some shift management cost changing the this by brought it of effect on the that from While direct cost COVID operational an required prior environment was building from aggressive was investment. a previously of a and

brand able from is However, result our significantly were complete. we foundation quarter. building largely our is improve infrastructure cash now, and this that to The expenditures prior

depreciation approximately eliminated non-GAAP we loss adjusted we in point stock XXX,XXX as quarter. by and seeing operations adjusting cross from XX% after XXX,XXX old in to an charge, quarter, June our $XXX,XXX for midway current from was Specifically, million which $X XXXX option, we of in our effectively this non-cash in the inventory, June XXX,XXX carry-through abnormal only XXXX in our are of

smaller Finally, we hand, And than end income perhaps confident saying the remain the jumped we adjusted able would and achieve believe that into is who $XX quarter said ended believe by be XXXX, last growth industry wide can continue space on operations sales record not sooner. we we strategy. cash capital which the execute year and would an of companies simply more of survive in was our with competition see generate I the to on I calendar to industry enough and from XXXX million the shakeout. positive to CBD I'm regulation. on that year significant hundreds

Now magnified is CBD COVID is a in our public the us, shakeout December of that leaders. the company intensity. a XXXX pure-play pandemic fraction XXXX, now When entered we market all the the CBD in upon sales this were its industry in as of -

CBD is the which competitors, the wholesale recognizable gained Simply to an The most I which cylinders, less strength, CBD smaller and and focus than same simply in cbdMD share have Our brands differentiated model, bet-it-all result users. big in XX firing retail materialized. cbdMD business and strategy, months, and on expect built through of trusted believe, the of put, our was box many the consumers. now are e-commerce for and market cbdMD stores, energy that new can we to is embarked now class has not introduced America channel on The soda which or entirely Paw who introduce Bull our becoming on two to Coca-Cola continue. introduced and CBD of all of thousands our way Red we build drink brands educate

that educated the that will Paw customers say, cbdMD is goal CBD and us Our and on worldwide introduced brands were CBD.

Chief pleasure can to introduce Officer, who Cohn, to our go and Ken Ken, my Now, everyone ahead. our brand our about marketing strategies. talk it's Marketing

Ken Cohn

Thank to marketing to in brand third-party one allowed deep, innovative brand, strategic a several accumulating assets, across voice share number data, cbdMD including we of awareness. the and focused the found defining on portfolio a you, spending metrics, After according ourselves industry which Marty. us build position XXXX unaided

retention, are took truly aided landscape are more year separation increasingly messaging and past with remote heavily diminish a accountable vigilance particular, all on garnered the for investment, and at of number offered within and for mindset we CBD decision, of were to so this In quarter. segmentation of displaying And asked everything the customer the assets, data-driven importance in continue CVD As ever, a year, disruption we at to adopt, lens home workplace, questions a commitment. accelerate in to and and being focus of drive e-commerce this resulted are opportunity insights Data potential profitability? could work we when the systems, which required pieces the How outset the to proven brand? breathe with going with The We to on day. looked continue to making every into we every a elements than live being and quarter, COVID-XX credibility? strong pathway coming through to team our of engagement, to faced while all us cbdMD drive the creative, for on sales. of a processes, the and level past to cost do in effective plan effectiveness we XXXX amplifying heightened culture. quarter added of How as email category. important, most a distinction. from challenges past to the with we intersecting every doing over so doing ultimately, the effectively future, going trust layers pivoted pathway of less, past increase lean reinforce about place to we This of we team this discipline. and marketing, of going and the Those an how on hit to sources More our

uptick march we similar We ended of success XX% XX, quarter, vertical. versus affiliate Our generated revenue drive more XXXX March XXXX. found those delivered us this a increase where an email marketing the podcasts the from quarter prior XX% pinpoint via and that best our also revenue revenue Data in programs quarter. in allowed to conversion this this traffic XX% e-commerce versus with quarter web program,

business, of continue of amount XXXX. our of to side stores mortar stores brands our we and maintaining brick our to we BXB carry are retail currently the grow who and the currently serve On level

the overall we While channel BXB our from pandemic mortar affected the channels, distribution COVID-XX a resurgence bit wholesale starting brick seen initially a of and June. in have

BXB levels COVID-XX sometime we pre return is in will at brick hope to and a mortar believe that point discovered be XXXX. Our vaccine which growth will that

product. our continue We R&D, all to and safety ensure to the quality testing and invest in highest for

industry, This an supplements to any good our earlier consists terms were the firm manufacturing the comprehensive a recently tailwind the of a CBD, we were commitment voted Media cbdMD participated voters where prestigious to booming a our best beauty. industry-leading topicals development, in XX unaided independent in prestigious of two award highest awareness Group. Aid brand Brightfield for two product as for the Product with accolades ranked XXXX XX,XXX Group, we entered a cbdMD dogs the brands the also research the market of named pet America's and analytics line year. our CBD research of cbdMD by offering domestic satisfaction, and Aids have top Kantar organized was pet added Topical respectively. product CBD was consumer to winners practice CBD fiscal in firm quality more in for Year as than CBD NSF significant as conducted our overall XXXX users. top registration study categories, and rewarded, products, in this of also products Our in Topical of pleased predictive of by skincare is We Sleep and product selling innovation, largest in dietary highest cbdMD saw Brightfield of XXXX in well online and February brand CBD We're International’s CBD cats. categories, XX Award consumer the Sleep consumer and the survey our honored voted the PM and Paw Freeze of

and a our all now $X launched XX% one XX% pet annualized rate, the CBD million direction, Paw we metrics sequentially Paw quarter, up CBDs the over America's approximately tremendous to net XXX,XXX over is last leading CBDs one of XXXX run increased announced being overall year revenue. its of less March brands. CBD Paw seeing sales with As moving million are it for in making its June X.XXX week, sales approximately trending Paw is Paw traction. direct-to-consumer quarter right than CBD sales XXXX channel despite from CBD brand's of ago

direct-to-consumer We pawscbd.com. significant for the cbdmd.com are seeing into of growth also translate power

to retention reward we'll continue rolling CBDs We programs and focus customer out shortly. on and Paw education, subscription be cross-selling, and

are as influencer these the we in partners a our As class the products, as Masters partnerships PGA Life Viacom cbdMD are Bellator CBD original such Sports include and Paw XX-time Rogan market. CBD X-time leader Bubba MMA, subsidiary Joe Barstool We in confident mimic the Inc., and a be expansion that sponsorship and and we CBD Watson, of believe owned industry, will pet in Time as well wholly Champion podcast. of first our

Jones well social and Olympia presence, entire banner who team August digital Louis. be Flex with CBD are on social the capitalize Our cbdMD renowned XX, cost affords effective, team's of focus and in activation. Saturday, positioned this X-time we Lolo cbdMD field as as athletes athlete, Daniel our Cormier, We remain as track and most the one bobsledder the fighting well names such we on media will the industry to remains under Mr. believe comprehensive as significant us

some we to position on in was guidance international as a focus for opportunities next and progress regulatory of expectation FDA CBD, the climate on hone the education, our in respect regulatory direct-to-consumer preparing prior COVID-XX, quarter, as continued upon to innovator, to television, solidifying would QX look category that announced the half our we'll the it for CBD and first as the finding for With Lastly, separation, category into entrance side. we customer build XXXX. on our

Elliott, end restart America Now in in release enact was most possibly we legislation that effort the our results. January CFO, XXXX, like the our an to government its of hopefully that in by sooner, financial to recent would like that, With introduced to which would is guidance over or I'll business CBD our XXXX, hope turn the Congress Mark call economy, will now HR XXXX. the fast-tracking FDA review

Mark Elliott

start based the On Thank quarter our sales GAAP sorry, second for you, quarter, XXXX, fiscal a total which ended a were I'm GAAP basis $XXX Ken. summary net June - going brief fiscal results. to our I'm the third of with million. XX, of approximately XXXX

the period this a XX% indicated, was previously increase Marty As for year-over-year.

for for period. was $XX the increase compared months XX.X% XXXX, came year-over-year. months a fiscal XXX% period approximately XXXX. June the XX, quarter Profit to for the of over is June nine the third net sales ended comparative XX.X% compared were the For XX, year as prior for Gross same sales XX.X% percentage X This was net comparative XX.X% And to prior period. million. a of XXXX in the nine This ended at

and labels abnormal expense. inventory We to the changes, due quarter a one-time also and adjustment had amount we operating XXX,XXX to regulatory charged was disposed the in of as of packaging

maintain margin. to percentage net gross and XX% of XX%, healthy XXXX, between sales a fiscal expect profit During of we very the our a balance as

ended supporting last months the company with addition COVID flow control in implemented discussed to the a during quarter, business adjusted reaching the relation expenses pandemic. growth, XX, a June As the cost operation, other cash while focus positive XXXX, measures methods various in on three

our June cash the result, a resulted $X.X $X.XX the XX% a Again, This million approximately for quarter use significant is were approximately an resulted reduction million the $XX.X in approximately million and for June which of which was in of a our of XXXX use quarterly from non-cash June of over expenses the approximately our $XX million from cash quarters. average this As over past years between $X.X expense. XXXX Overall, million, operating million use Year-to-date, a million cash year-o-ate. reduction expenses were X.XX XXXX quarter. operating operating $X operating quarter. of

Our fiscal expenses million the social related fiscal and ended $X.X periods follows, $XX.X expenses for million staff were year-to-date, million the major expense direct $X.X advertising, were had year-to-date. June million media events We as operating quarter this for for quarter. of expenses $X.X and marketing, XX,XXXX the for for of approximately

of in canceled and that been our have overall our on forward. have our as a reduced with discussed, were we controls of going quarter events budget as well cost spend the implementation as As result COVID-XX, the

the approximately $X.XX Our XXX,XXX in of million fiscal for sponsorships and quarter year-to-date.

with We channels As of commissions for in had this foundation and the as support our our are quarter we sponsorships XXXX, able reaching established multiple and and mentioned year-to-date, brand for activating XXX,XXX we again, previously, leveraging have and commitments. advertising been consumers. and ongoing reduce expense million fiscal now $X.X affiliate marketing, to

in quarter for fiscal Our year-to-date. merchant million were the and $X.X XXX,XXX fees

We as to and has we are now reductions. and matured industry continue expect processing negotiate fees getting reduced the

services as technology, investor were XXX,XXX relations, fiscal XXX,XXX approximately for we including and third-party professional quarter, certifications. items, media Our lab use third-party for the warehouse specialty information year-to-date, providers

of Our business accounting the approximately and all quarter legal to in to million $X.X million risk year-to-date. This quarter insurance Rents quarter and relating finally, our required and coverages cash and XXX,XXX filings stock to services our was XXX,XXX laboratory expense and for fiscal of SEC industry. warehouse compensation accounting non and have million and stock fiscal the for options fiscal and the corporate year-to-date $X.XX fees $X.X address for legal business the we includes insurance [ph] facilities. XXX,XXX year-to-date. the approximately exposure approximately was office, CBD for related our And

to is Our business. Development expense XXXX each Based of contingent end contingent the a of CBD income or liability revalued December at includes quarter. Cure and non-cash the large change related other liability acquisition is This

changes in million approximately of change working $XX the liability stock million contingent of sets sheet. $XX.X period. XXXX. on $XX price and quarter the capital to valuation million During The had balance at September expense value $X.X June common equivalents We the our approximately we in market working million XX This approximately the non-cash the and of the cash This a change in of result $XX.X of which compared cash the was for created cash period had million million, primarily to other $X.X about our an fiscal XX of is of in increase from approximately XXXX, value. capital and third at value approximately at XXXX.

and assets of Our in or and by XX, marketable June from of XXXX as reserve, or to partially XXXX accounts our increasing with current cash increased operations. in million, $XX.X current is other discontinued primary expenses our the which September receivable assets offset and driver decreases XX% increase prepaid XX merchant inventory, assets from securities,

of XX payable. financing of accounts the term of XXXX, which debt, of for approximately equipment current a $X.X June note As The company's XXX,XXX manufacturing facility. $X.X is is liabilities total made has company on million up were million, long which

other liquidity met with that among measures Specific indicated we've to several we've As and the sufficient environment, the the ensures adjust landlords for We vendors believe we months. as needed. the things receive COVID-XX, where to our facilities several support next our on us for allow following. payments to we measures our deposit. April temporary changing use defer included rent with work We to negotiated security will deferrals business with

and sponsorship as affiliate suspended renegotiated based current events, activities various and agreements well trends. have We on as agreements,

to fulfill the company allowing supply efforts growth for are We've levels wholesale technology initiatives we on growth cash successful control in our while happened. We the sales sales measures supporting focus online have our ensure orders not the impacted, to ability shifted operations. implemented consumer has with that align to our focus again a sales, with continued various inventory This is this point. sales the has focus sales while been been and sales are impacted. continues we in to our to say across business environment our our event happy And flow prioritized finally, bulked to a chains our positive We focus. online up reaching from cost which

having this all continue expenses those reduce of operating expenditures the to reduction As steps can with and reductions, business. without on and take these we've and impact our a fiscal in during continue XXXX. our taken prudent to uncertainty, we a navigate analyze we to we can of balance believe negative had third significant in the Because quarter, overall continue we we've expect to

Paycheck we loan of in to addition bolster working in Protection million capital, further a our XXXX the $X.X the under April received principal Program. amount In

this loan operations. the as in now, the back As And a the qualifying we on for by a navigate SBA, terms over will focus applying call we our primarily to normal have turn returning the to our payroll CARES help loan to business Marty. that business be I'd as defined from maintain we forgiveness used with the with the like SBA of accordance to With Act. of proceeds

Marty Sumichrast

the I'd that, like line now to With for open Mark. Q&A. Thanks,

Operator

take ahead, you. with Joseph Instructions] sir. we And will Please Paul question [Operator Thank our from go first Gunnar. Cooney

Paul Cooney

know, regard? to guys. Hey, park. guys I the on the to be more on not comment any you FDA You company. with we if there like this touched know quarter, the a you Great hurdles and expected Very that. a could out this little call. regulatory associated like Would or if bit see out happy Marty, anything in bit are know, blow what's of to about being going But you the environment

Marty Sumichrast

regulatory and for it comment you thanks affair, the us, Paul, Blundell. would could here charge think kind have would be our that great so in-house Lance Counsel me our with of you? I question. on Lance in if is Lance for of I

Lance Blundell

sure, no Paul. problem. Yeah, Hey,

now… right So,

Paul Cooney

How are you?

Lance Blundell

today. Doing well,

XXXX Health following it we're company rules and cannabinoids. products the that. regulatory essentially to So, two under of put Health Bill, Act. of extracted the committed we're framework dietary to the are We you supplement rules dietary hemp together, in fall anticipation compliance sets the and now cannabinoid those going those XXXX the for And well Education - established derived of Education believe when that with and Act supplement hemp Farm the those out

validate farmers. ensure standards, THC, stricter no even the based do chain components under detectable the And hemp Farm GMP which things we standard We than test material is adhere like quality our XXXX all an So our supply raw to our that hemp Bill. materials we to US way meet standards. raw that back there's all validate the to

by state regulations. hemp in the their level, compliant laws. these with extracts own individual each are state On I company's our And state believe state addressing operations is

FDA. in generally forward, the company's now new That's to a position to Moving dietary to by Should notification be submit our future? that the ingredient required with right FDA prepared regulatory. the the regards

Marty Sumichrast

That's it. Well, Appreciate you thank for your the support. question.

Lance Blundell

guys. Good Thanks, luck.

Operator

go Please to Aaron with ahead. line we Partners. Next the of Grey Global Alliance go

Aaron Grey

good Hi, evening. the also quarter. on the congrats and for Thanks questions

consumers So you of e-commerce, about first for obviously, brand in performance you your coming terms and mid-COVID. you you know guys, previously Thanks. or the an for the with new you like one me, type saw curious more e-commerce specifically you mid-COVID not of helped did are specifically guys you know buying know, you well you whether know, in others? exits mortar, know, thing cbdMD in consumers, or platform well have brand, you terms who e-commerce, be a those consumer or brick to compared worked any is, that idea dynamic One for onto the, were I'd of, which there's trends some know, not whether

Marty Sumichrast

talk handle Aaron. why don't you don't handle you, why Ken, Good that? to that? you Ken, to

Ken Cohn

thanks question. Aaron, the for Sure.

up XX%. X%. And up then stand take those retain average give visitors points from up, be that our value a then or customers know, actually our went among a we returning out our retention went So and XX% to our standpoint, for the order couple isolate site retention would me key went unique if customers, you

were we looking that standpoint. over at, were metrics the e-commerce know, from all an positive So QX, you QX

Aaron Grey

for That's Well, super that. helpful and great thanks commentary. a

the me. from Definitely more to brand. traction pet terms great one starting some Just possibility get of in

that you also appreciate of using how a CBD even , were of for wondering, and products CBD for I you be know, know, pets are coming their pets, know, you are buying might or you kind the using you CBD who so consumers about you themselves, you CBD that where where category human their see those Mark know, curious, consumers currently just Just evolving curious, was talking innings under category of then they consumers overall? finding who pet you new see not Thanks. is, and

Marty Sumichrast

know, of know, But kind really of it you really think digital in first you as good market huge get anything your hard speak. a know, we're and and both first just it? a I it. just think we're just, and the of you cross-selling, I like Yeah, I a now it, us starting, it's really thoughts want it's on touch on for we're on we're touch And, I'll from job shown combination the so Ken's such side to doing the you a Ken lot bottom inning, side to at as of on know, playing of traction the - been you of

Ken Cohn

Yeah, have CBD on the I our is seeing Sure. what data human of pets. just side a we're among add, consumers that things the base cbdMD couple would XX% also consumer mirrors that is the industry showing, which

in specifically, know, Marty banner audiences, I of we're cross segmentations know, really, like audience. a good terms a really conjunction position. you pet millennial a what in referenced email, our digital reaching buys of promotion, with based ad in feel terms our you in based, of, so, pod audiences, And lot and older

Aaron Grey

Awesome. guys, best for the color luck jump I'll the Thanks and queue. back in

Ken Cohn

Thanks, Aaron.

Operator

Wright, to private investor. Please ahead. Next Peter go we go

Unidentified Analyst

a do Yes, able question when the clearly and basis, communicate that total kind on you being you question how as on to enter you aren't do they'll costs you metrics that competitors thank do you broad think first light question relative my space? you game. regulations know, doing you market of and value, your changes my important and there think quarter is going for And on second taking TV the inefficiencies what customer spectrum clear your is your acquisition how purchase guys. think YCBD, average of in is to are making are think to impact be TV of efficacy you congratulations most competitor product great and the something guys in My

comfort are that or brands an can side R&D our there than maybe customers investors that is there? the how share with your to better what you out other So guys and find doing you us on going product

Marty Sumichrast

and are Peter, glad those I'm got I great Lance Ken ell, thanks, questions. here.

super I the just want I know, doing excited you think, are don't got we're we on plans. You overall, know, big we've to TV the side. of work ahead But ourselves. And about get

Bellator, in have - to we're into know, a industry CBD we've, the TV kind of know that path fortunate know, you has. the into partnership owned space I You a Viacom nobody who's by direct in that our

lot I now us, Ken, year, I and of excited that? to that spectrum, we're the want maybe well. I And the would can broad from say of as to that say then between the anything and you touch side do So end on do that You're would from this, the see tuned other add to a stay to going Lance

Ken Cohn

Perfect. Yeah.

we're doors scale, to a the we continue things what complement to as do more complement. opened to think bit name the think that of opportunity going a a the you currently it's perfect an us all category just think doing currently TV, are. open. add. take we've mainstream. manage people question is to but those what TV our We perfect advantage see excellent television, it's drive what but funnel. to at it, going got to it's to them to are you that socially, into we provides transitions little couple to to TV. relates We website. against drive But more Much Not excellent it to of doors are excellent We think look Just provides affiliate, already email, it And as an over being digitally, we're a

So like that's what Marty, to add. that's I'd

Marty Sumichrast

touch you Lance, to the on broad spectrum? want

Lance Blundell

that Sure. broad Hey, Peter, on good question spectrum.

the our is, specification more is marketing do we the as own hybrid we As which our spectrum. we manufacture reason is characterize best really to, you've seen we materials, is And have from broad specification that it. characterize that product because a our consistent way to probably a proprietary

formulations in As reach you patent we novel. announced methods a know, and filing processes are and and That space unique our we to that patent. ongoing further that of will relates recently of have that R&D the provisional

regard. apart to So for on through be always have set to the in intellectual property the superior us goal the that and going is market ourselves product

Marty Sumichrast

quarter. Great, much. very guys you Thank Great.

Lance Blundell

Thank you.

Operator

to with go line the ahead. Scott Please of Capital we Roth Next, go Fortune Partners.

Scott Fortune

quarter. Congrats good on a

shift of on you marketing kind we to marketing the seeing that away now you great Just targeting on come that, you of were spins going you content kind of limiting real the as and through want kind education specific and, want how forward and what the that here? marketing but that, mentioned sponsorships of step look us costs, or at from little bit you still, spend through job get the are kind know, to and get into a the of your growing more from can the call into quick side,

Marty Sumichrast

which done is and just Ken, - are we I'll brand big well on to know, it that. at the obviously one was profitability. we cost over but which costs it our beginning you, marketing is budget at we Scott have year turn get high our I've building are - to the and payroll And, now a of said, always now the said, year, marketing run beginning now. obviously, you And we of I and but look know successfully of other you a pause level, we of marketing we've lot then numbers. our look, the returned business, the And said money we that spent

know, you And crisis so, know, when COVID came up, brings you clarity.

we what was brand we but sound a to move. felt way. the could went And athletes, needed of fiscally that, we tuned a we took we found some like, right you high we And had do, wasn't know, so a into it what we point, and that know, build XX an and to decisions, easy do And in we and you down, it made do, thing do at it was we the something fundamentally through XXs. to continue had is

that so the turn it know, of specifics you kind you talk about the And was over marketing - side? the why Ken, that, direction on the team the on don't plans more would marketing I and Scott, gave we

Ken Cohn

was which go at what to little earlier, decisions. that data Sure. And leveraging said we our really I the want to back I make informed disposal a now have to

been we've bit, little Now with less. this we now on frankly, to that, that you do doing can know, you a more know, data lean

the to people drive we're television content more, still be even to it the that be that good website rooted are a and better bit? role and to is have a because of to email, And just - to want going of it, in for say segment, we've do say insight did revenue keep different critical Does that podcasts heard to called education. tonality wrong messaging. we some in even keen this, also a we're and thing answer you our taking the as help and we're of in to and podcasts driving we, promotional it's about not in do we the that can things know more then building messages, a terms to what educational same when even seeing thing in how question but and sense the real don't. role know, do those of that That, in what relates don't delineate instance, so, you audiences, right messaging display, versus innovator when with to higher for to And on CBD, the an know, And a still as education. some sense will to there's have particular, in leadership into we so on certainly learn but other this have to messages, we're the education. honed in TVs and of doing going us those and when and your really deliver what gaining going portion to consumers an And rooted based a kind frankly, of good percentage today. real more what The play how firmly terms

Scott Fortune

And little We're I Yeah, more said last inquisitive. consolidated real no, a Can you being quick are question. it's you seeing opportunity? appreciate a gone know, side one, competitors provide the or more kinds perfect. that. you wayside. As lot MN&A of then on insight

do area valuation or think build standpoint, bigger that a attractive think the acquisitions. to from What compares looking viewer into for Some guys you you potentially? of look a at brand might or segments this you that

Ken Cohn

had to Well, do stuck you me had year to do Scott, everybody last our to guns. to had We We integrate. told know, this. We vertically that. we

had we business We've plan. know, executed a it. You on

account came that Brightfield said sales. top CBD out companies for XX% and know, You of the the XX

a universe, more other mature top companies You it's the know XX way XX in plus around, the have, percent. you know,

they're I there's them because know, wouldn't even that and you have call XXXX CBD products. companies not. They're So, brands

it We to a go hard that. is share leading a twice to building share going we see we're X.X% grabs. doing and for is of In We share, We've think so see of like we're market to a we opportunity not brands. going regulation to And comes We're piece going brands. buy has you us. know how market leading going in. interested the continue successfully the what put in huge a cbdMD. brand. months, for to Brightfield to we're out, see comes - XX% brand. you're are know, to of market get got and you're that one other big to grab runway build as XX need competition that. know, at up one And Paw We're now it know, as you we going the done out And, is and You XX% this is us huge brand. out, don't other a

and are, we get So we're not sidetracked. do know stick we're to going We we know to what we who our going well, to business plan.

Scott Fortune

Okay, thanks, guys.

Ken Cohn

Sure.

Operator

go line we Cowen. to go of Please the Pascarelli ahead. Gerald Next with

Gerald Pascarelli

very Thanks taking much evening. good the for questions. Hi,

So have growth, encouraging. the in you this top particular, backdrop line, in XX% is in start certainly

if curious of online color Thanks. get quarter? to any saw mix to try pivoted mix you consumers over in course your more guys your the sales or some to Just understand business as shifts to the

Marty Sumichrast

we that done mean That's anywhere I fact of Yeah, some really, shift. we look, caused we've you are that because core marketing. really consumer competency. COVID, our better. business, in online online obviously ourselves of businesses positioned The I in our habits good the the saw, have mean, core

is Now, to stores we've a bread got months XX a our business. in go butter our online But is tremendous our impressive. but XXXX, and wholesale from business zero

three getting beat. at I an again, missed So, under so a I to the team the a to continue couldn't are amazing you just orders morning, out, every down we I it. of you the they and were our it's are prouder of we've single be and and on incredible and time we mean, came of gentlemen advantage know, country team, on conditions, months two the thousands this phone, We you it's manufacturing, and people, got every we dedicated., incredible. an we and know, our been was able them mean, had, you our know, I mean, lab if more take to really listen the distribution, been our logistics has growth center, sitting incredible know, out And you shut debt been for send day. never

been touch to if Ken, But that mean, I you of a that, all, you thoughts? it's want - environment And on type been far of us. as you Ken, would any you want I if thing, to have about over kind so it's know, additional for as consumer sort talk all of but any pretty say rising tide if

Ken Cohn

pop three our at for it's folks product being and about for continue and rise Yeah, it questions the but But, in solidifies those of basis. to as products the I really about a a really saw on gummies in I as surprise think seven, XX what areas. to solidification we month-by-month, a page of quarter-by-quarter the products, kind to and then that sleep kind really think popularity. know, heard And no of soft us gels jumped home maybe in us when and those It well our but kind that continue mix you gummies, search me. months products was of their our top things just was two, our at more you for things gummies at off those are

Marty Sumichrast

answer Does question. you that

Gerald Pascarelli

margin. how that I your history. company's Marty. what in was on because that helpful. was e-commerce one your think, robust. obvious And just equates - I the the it like what something I'm margin quarter, I the when mix XX%, your the was XX. look that's the highest Thanks, understand think margins to that I believe – super think on I I does. I that's It the just that's more just - at And to XX% interplay gross I'm between trying last mix have and very

on you so channel play that to gross any offer equates between and mix just guess inner could Thank the helpful. you And color how would be I your margin

Marty Sumichrast

higher I to mean, direct business. consumer to obviously margin a you you have know, Yeah, space,

to And keep so we you good a between margin of, you the you saw, know, try where high know, the stream steady in XXs. really

to to basically you - to have XX%. did try in We we because we logistics it know, that center foot keep always a is at square we our inventory charge had December. went and this was we that Our take, it goal is, get to goal switched, to XXX,XXX

And so, happened. you we - COVID to we know, had then and

quarter. looking to little were able our and bit So, in to that we weren't try to a we counts, the third It's inventory done. get get later

think of we do far we think don't to We that to that. that are I we any continue a consistent see Mark, if I strong. drop margins to as in in - as remain stay We feel remain continues don't We business add you north pretty strong, see XX%, concerned, to continue that. as XX% but business, our - want to So know, it. continues of our to margins anything yeah, online can mean, the

Mark Elliott

I going manufacturing really the like gotten the line. which had better at think We're is, as we've that product Paw the I certainly process the of an But That's mentioned, think impact. now adjustment the we somewhat sales well, is aspect have, efficiencies we're maturation aspects. we on you the we're on inventory our some that little lines, we've moved Yeah, on where through front, Marty, on pet a other cost that got the line. decrease I get that up the and the forward, side, that now extra cost the and doing We've retooled think want production have to moving will really the there's end, looking sales on on at what we've there.

soon. really that to think to think able for margins gross get and be we honestly, shoot said to as we're you here again, continue deliver we'll know, range to think the in I - high I continue to So I XX% XX% going

Marty Sumichrast

context. , and great. solid Thanks very much color quarter. on for helpful super really the That's a congratulations

Mark Elliott

Thanks.

Operator

signal our Private Cody line Please the go comes final Investor, Johnson. from ahead. of And

Unidentified Analyst

the Hi, great on quarter. and having congratulations Thanks me everyone. for

you to the to that guess, to policy think around cbdMD what enforcement like and to the I is hopefully back price policy turn for of wanted CBD looks submitted the by Just I the FDA. jump hemp really know, industry price as enforcement increased for that the for environment, the the in curious hemp for what hemp thoughts passed of lead margins sort cbdMD? kind along price your get so - on in does to get that Just Or in that. to with compressed an any does of way? consumer much. the Thanks looking increase

Marty Sumichrast

the the If change prices. the buyer, on will seeing I get we such that isolate big increase is because and prices best anything sources, from isolate we're and think in most seeing decrease a that importantly, the enforcement that going don't really I to in an we're that. a prices. see not do best We're FDA - And anything,

processed. a consistent. There's there such supply out people you huge lot I remaining being opportunity think price on that on a know, to our most it think actually we grown our that forecast isolate of a as go hemp an people of is down being certain think and has probably that's

as are think prices an to that don't an competitive. in think the - prices. impact. I we're So very We I maintaining We our try our were We stay don't competitive we marketplace. see as

very were basis. a competitive market think on we mass fact, In we

this I'll say the at little bit a call. and the news end make know, I'll of of You

now them had announcing and - GNC that start their of largest and a has lot come know, again, to decided really CBD, we are to other They call - they going because us and companies XX not they're line are we've of I and problems CBD a they've You said come with us had they CBD us lot them to call put us. in of We're brands, retailers brands, franchises. on products. to that don't

we're We to to - are going going perform.

about lot a think concerned that's these they're big performance. the of question the I retailers,

listen, hey we that that showing mind can So sells. our said, don't we product you we demonstrate

site, and group. And resonate that is, goal into on something online, think a is the go get retailers, your we let's let's so this - let's select is the will hey, all amongst go major

As corporate We with their which stores. to I be, because and XX XXX entire got we're in resonate seen ship - industry, the where go let's we throughout what starting other will them through. their it have back taking on sell believe our said, and going think doesn't for we're competitors a GNC, into successful, risk that brand, lot will then hey, with putting it it it a if it that's plus and doesn't suffer they're to stores, guess they which to a of provide we've then

So that. of Thanksgiving. between company that's now We one we that lot just Stay about we're of a things think have excited on just and for the schedule tuned.

of And so what's we're excited about in front us.

Unidentified Analyst

so Great, on and GMC new congratulations at much great. too. avenue Yeah, thanks the

Marty Sumichrast

you. Thank

Operator

no our conclude With so call questions today. you queue. conference does Thank for participation. much your the further in That for