Greenlane Holdings Inc Q1 2019 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Vivien Azer - Cowen and Company - Analyst : So, I wanted to start off with JUUL, which has obviously been incredibly [topful] given the fluid regulatory landscape. Can you comment at all, and I apologize if I missed it, but on how things are going in Canada? [Aldrich] certainly flagged it when they reported earnings and it seems like the market share momentum in stores where JUUL is available has been quite robust. Thanks.

Question: Vivien Azer - Cowen and Company - Analyst : Okay, that's fair. But suffice it to say that you are seeing similarly robust in-store market share consistent with what Aldrich has been disclosing? Is that fair?

Question: Vivien Azer - Cowen and Company - Analyst : Okay, perfect. Thank you. The second question on CBD -- really exciting some of the strategic partnerships that you've already been able to ink. On SLANG, can you expand on what that entails? Thanks.

Question: Vivien Azer - Cowen and Company - Analyst : Great. That's exciting. Taking a step back on CBD, and I know you guys probably aren't going to be doing annual guidance, but just rough sizing, how big of a contributor do you think that CBD could be to your full-year revenues? And when should we expect those revenues to start kicking in? Thanks.

Question: Vivien Azer - Cowen and Company - Analyst : That's great. And last one from me and then I'll hop back in the queue. Just on the salary and employee expenses, I heard loud and clear on the close to $3 million in terms of the one-time expense in calendar 1Q. But given all the new hiring activity, how should we think about that expense line item for the remainder of 2019? Thanks. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 09, 2019 / 9:00PM, GNLN.OQ - Q1 2019 Greenlane Holdings Inc Earnings Call

Question: Derek Dley - Canaccord Genuity - Analyst : First of all, congratulations on the successful IPO.

Question: Derek Dley - Canaccord Genuity - Analyst : Just wondering, in terms of the launch of Vapor.com -- I know it's early days, but can you just talk about the initial customer response and how that has played out in terms of your expectations?

Question: Derek Dley - Canaccord Genuity - Analyst : And when you mention off-line marketing, can you just give us a little bit more color on some of the initiatives you've got there to drive traffic?

Question: Derek Dley - Canaccord Genuity - Analyst : Okay, switching gears a little bit, 2018 was a more heavy capital expenditure year for you guys. Can you just comment on your distribution infrastructure? Are you comfortable with where you are at in the face of what looks like to be some very robust growth upcoming in 2019 and 2020?

Question: Derek Dley - Canaccord Genuity - Analyst : Right, okay. And I guess just kind of circling back a little just on that, given the successful IPO, you guys obviously have a very healthy balance sheet now, minimal CapEx. Can you just talk about some of your capital allocation plans going forward?

Question: Derek Dley - Canaccord Genuity - Analyst : And the last one for me -- I guess sort of following up on the capital allocation. I get that geographic expansion is important, but can you talk a little bit about your plans in terms of owned brands and increasing the penetration that you do have with your own brands going forward?

Question: Derek Dley - Canaccord Genuity - Analyst : Terrific, thank you very much. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 09, 2019 / 9:00PM, GNLN.OQ - Q1 2019 Greenlane Holdings Inc Earnings Call

Question: Glenn Mattson - Ladenburg Thalmann - Analyst : Curious about the early results or returns on the second Higher Standards store and if your outlook is still the same for about three to five new stores in 2019.

Question: Glenn Mattson - Ladenburg Thalmann - Analyst : Okay, great. That's helpful. And on a different note, with some of the relationships you have, I know some are exclusive and some aren't, but there's a lot of M&A activity in the space. And so, I guess maybe can you talk about what happens when some of the brands you are associated with get acquired, like STORZ & BICKEL did by Canopy? Or I believe Select got acquired or was announced to be acquired just recently. Can you just give us some color as to the background of the dynamics of what happens in those kinds of situations?

Question: Glenn Mattson - Ladenburg Thalmann - Analyst : Okay, great. That's helpful, thanks. And then lastly, I missed the greatest margin target. Could you just repeat what you said there?

Question: Scott Fortune - ROTH Capital Partners - Analyst : Hey, good afternoon. Thank you. I want to expand upon the proprietary in-house brands and the different areas that you guys look to target. And is CBD platform on that opportunity for you guys from an in-house type of offering?

Question: Scott Fortune - ROTH Capital Partners - Analyst : Okay, and to follow on that, with your CBD exclusive agreements, is that opening you up to new potential distribution, new potential stores and retailers from that side of things?

Question: Scott Fortune - ROTH Capital Partners - Analyst : Okay, great. And then kind of focus on the packaging (technical difficulty) product side. (Inaudible) on kind of Pollen Gear and how that -- are you able to achieve some new customers from that side and new products within that category were you looking at?

Question: Scott Fortune - ROTH Capital Partners - Analyst : Okay, and last question from an international standpoint. I know Europe is new. Can we expect anything much from a revenue standpoint towards the second half of the year from Europe? And then kind of expectation that Canada comes on board with cannabis 2.0 and the edible vape market going forward here? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 09, 2019 / 9:00PM, GNLN.OQ - Q1 2019 Greenlane Holdings Inc Earnings Call

Question: Mike Pochucha - Northland Capital Markets - Analyst : Hi. This is Mike Pochucha on for Mike Grondahl. Thanks for taking our questions. Maybe just first going back to Higher Standards, is there any product or category to really call out in the quarter that was trending positively?

Question: Mike Pochucha - Northland Capital Markets - Analyst : Just as a store. It seemed like the full transaction down to the end consumer.

Question: Mike Pochucha - Northland Capital Markets - Analyst : And then maybe just on -- a couple weeks ago some positive news of the Philip Morris -- their IQOS system. Any thoughts on that, how that fits the market?

Question: Vivien Azer - Cowen and Company - Analyst : Thanks for the follow-up. Given your presence in Canada on the cannabis side, I was just wondering if you'd comment at all around the state of that category development and how that is impacting your discussions with LPs in terms of their resource requirements. It seems from the publicly available data that perhaps the category is getting off to a bit of a slower start than had been anticipated. Do you think that that is adequately reflected in your internal planning?

Question: Rohan Abrol - Cedar Holdings - Analyst : A question for you on Vapor.com. I guess I've been pondering whether you guys have any plans to roll out a direct-to-consumer subscription service there. And if so whether you might go at it alone organically or do that via partnership.

Question: Rohan Abrol - Cedar Holdings - Analyst : Okay, understandable. And I guess with respect to your long-term targets, do you have a rough figure in mind for where you'd like to see that 5.25% contribution from house brands trend over the next few years? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 09, 2019 / 9:00PM, GNLN.OQ - Q1 2019 Greenlane Holdings Inc Earnings Call

Question: Rohan Abrol - Cedar Holdings - Analyst : Got you, got you. And then, are there any nuances we should be considering now when modeling for seasonality here?

Question: Rohan Abrol - Cedar Holdings - Analyst : Makes sense. Do you happen to have any relationship with Walmart? And I ask in light of their recent comments around voluntarily raising the age there to purchase e-cigarettes?

Question: Rohan Abrol - Cedar Holdings - Analyst : Okay, and you aren't disclosing Canadian revenue contribution as a proportion of 1Q, right?

Question: Rohan Abrol - Cedar Holdings - Analyst : Got you. And the $19.1 million figure you threw out there earlier on JUUL-related revenue contribution was pretty strong, at least from how I was modeling you guys performing in 1Q. So just curious, as I think about devices, your general mint, menthol and tobacco pod sales and then your flavored pod sales, is there any one specific category there that surpassed your internal expectations or was driving that figure? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 09, 2019 / 9:00PM, GNLN.OQ - Q1 2019 Greenlane Holdings Inc Earnings Call

Question: Rohan Abrol - Cedar Holdings - Analyst : Got you. And in terms of the call it $1 million increase in year-over-year sales related to vaporizers and vaporizer accessory products, is that largely PAX derived sales? How should I be thinking about that?