cbdMD Inc Q3 2025 Earnings Call Transcript

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

Question: Adam Waldo - Lismore Partners LLC - Analyst : I want to start on the strategic side. With the capital structure cleaned up from the preferred stock conversion of common, you offered commentary on last quarter's call about the kinds of strategic activity the Board of management might find to be attractive going forward. Can you offer any updates today on the Board's thinking and strategic activities progress over the last quarter?

Question: Adam Waldo - Lismore Partners LLC - Analyst : Fair enough. But basically, the profile of the right strategic partners is pretty much unchanged from what you articulate last quarter. Is that fair?

Question: Adam Waldo - Lismore Partners LLC - Analyst : Okay. Switching gears on the financial side, can you all provide any more specificity around the drivers of the 500-basis point year-over-year decline in the gross margin in the latest quarter? And then you had a bit of an uptick, about $200,000 in the SG&A expense in the latest quarter relative to $3.5 million that had prevailed over the prior three quarters. And any color on that would also be helpful. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 14, 2025 / 8:20PM, YCBD.A - Q3 2025 cbdMD Inc Earnings Call

Question: Adam Waldo - Lismore Partners LLC - Analyst : Okay. And so going forward, can you give any sort of guidance range for gross margin over the next couple of quarters as Oasis scales? I know it's a little hard because it's scaling quickly and you're gaining a lot of distribution. But should we expect a low 60% gross margin going forward or might it pick back up a little bit as some of the issues from the last fiscal quarter around regulatory whiplash hopefully would dissipate?

Question: Tom McGovern - Maxim Group LLC - Analyst : Yeah, so let's start with the wholesale channel. You guys mentioned how the shifting state regulations has caused a little bit of uncertainty and maybe a decline in confidence among your partners. Just curious how you guys are adjusting your wholesale strategy moving forward. Ronan, you included that as one of your key drivers or growth or key focus at the end of the call. So I just want to know if you could provide any color on how you expect to stabilize that in the back half of the year or maybe target more specific markets where regulation's a little bit more friendly for you guys.

Question: Tom McGovern - Maxim Group LLC - Analyst : Understood. I appreciate that insight. So just kind of to tie it up better, as you guys look at this, is this -- you had 26 states. You gave Georgia as the example. But in terms of stability as we return to maybe a more normal wholesale trajectory, is that something you see as a second half '25 event or something that we'll have to wait until '26 to really kind of see flesh out?

Question: Tom McGovern - Maxim Group LLC - Analyst : Got it. I appreciate that. So moving on to the marketing, you guys discussed the marketing overhaul, contributed to that uptick in SG&A. You also mentioned that there were some signs of improvement with your digital marketing team or digital marketing strategy rather than your marketing team. Just curious if you could elaborate a little bit more maybe some key KPIs you guys are looking at, or any consumer behavior trends that you guys have identified that'll kind of support your confidence in your revised marketing team and strategy.

Question: Tom McGovern - Maxim Group LLC - Analyst : Understood. And then final question for me is on Herbal Oasis. So congrats on expanding it into seven states now with those shipments coming out in August and retail availability in September. That's really exciting for you guys. Just curious what we should be expecting in the back half of the year. Are you guys looking at, continuing kind of what I would describe as a somewhat aggressive expansion strategy for this getting into more markets in more states? Or is it kind of similar to maybe the marketing strategy that you guys need to be prudent about where you're spending, what states you're trying to get into, particularly as regulators -- regulatory agencies on a state level continue to propose legislation that that might present challenges or hurdles to you guys as you enter new markets. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 14, 2025 / 8:20PM, YCBD.A - Q3 2025 cbdMD Inc Earnings Call

Question: Adam Waldo - Lismore Partners LLC - Analyst : Just a couple quick clean up items. You all have seen a $700,000 increase in your inventory so far this fiscal year; $300,000 just over the last quarter on a [length] quarter basis. Can you give us a little more color? Is that highly driven by the Oasis product line? Or are you building inventory in the traditional business as well? And do we think we've now reached kind of a plateau in the inventory build that's going to be needed to support both businesses?

Question: Adam Waldo - Lismore Partners LLC - Analyst : Okay. And then final thing for me is just as it relates to the Herbal Oasis pipeline, while Thomas was asking his questions, I finished skimming through the 10-Q that you just filed this afternoon, and I didn't see any mention of that business in terms of breaking it out in any kind of segment reporting having crossed the materiality threshold. Last quarter, Ronan, you said you hoped it would cross the materiality threshold in the current quarter, i.e., fiscal fourth quarter of '25. Do you still expect it will cross the materiality threshold in the current quarter?

Question: Adam Waldo - Lismore Partners LLC - Analyst : Okay, fair. So unclear in the current quarter whether we'll hit the materiality threshold. If we don't, will you start to provide some additional disclosure on it anyway in your financial reporting, with the fiscal fourth-quarter report in November? Or might it be until fiscal 2026 before we get a look at that segment or that business's economics?