KushCo’s Revenues Rose 186% in Q1 2019



KushCo Holdings

On January 9, KushCo Holdings (KSHB) stock fell 2.5% after rising 5.5% on January 8. KushCo Holdings is one of the key packaging supplies providers to the cannabis industry. In the fourth quarter, the stock fell 9%. As of the closing price on January 9, the stock was trading with 15.1% month-to-date gains. KushCo released its first-quarter results for fiscal 2019 (ending November 30, 2018) at the market close on January 8.

Article continues below advertisement

Solid first-quarter revenues

In the first quarter of fiscal 2019, KushCo’s revenues rose 186.2% YoY (year-over-year) and 26% sequentially to $25.3 million. The company reported its highest revenues ever. Commenting on the solid revenue growth, KushCo’s chairman and CEO, Nick Kovacevich, said, “This strong performance reflects the strength of our business model, which leverages our ecosystem of diverse business units and product categories to cross sell product classes, reinforce the sticky nature of our business and support stable revenue growth.”

However, KushCo’s adjusted loss was $0.10 per share in the first quarter, which was worse than analysts’ estimate of a loss of $0.03 per share. In the same quarter the previous fiscal year, the company reported an EPS of $0.01.

KushCo’s gross margin on a GAAP basis fell to 12.8% in the first quarter—compared to 34.8% the previous year. The company blamed supply chain capacity challenges for its weaker gross margins, which led to higher freight costs. The company had to import products by air.

Despite KushCo’s solid revenue growth, its first-quarter earnings estimate miss could be the main reason why its stock fell on January 9 after rising the previous day.

On January 8, two of MedMen’s (MMNFF) big investors sued the company, which drove its stock 6.8% lower on January 9. In 2018, MedMen partnered with Cronos Group (CRON) in Canada to form a joint venture called “MedMen Canada.” Read Why MedMen, ‘The Apple of Cannabis,’ Tanked ~7% on Wednesday to learn more.


More From Market Realist