Q2 2021 KushCo Holdings Inc Earnings Call
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greetings and welcome to the kis KO Holdings fiscal second-quarter 2021 earnings conference call at this time. All participants are in a listen-only mode a question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad, please note. This conference is being recorded. I will now turn the conference over to your host mister najim and crash course director of investor relations. Mr. Mazda, man, you may begin
All right. Thank you operator. Good afternoon, and welcome to the Kosciuszko Holdings fiscal second-quarter 2021 earnings conference call a replay of this call as well. As a copy of this supplemental learning slides will be archived on the investor relations section of the Kosciusko Holdings website. IR before we begin please let me remind you that during the course of this conference call may may make forward-looking statements. These forward-looking statements are based on current expectations that are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. These risks are outlined in the risk factors section of our SEC filings. Any forward-looking statements should be considered in light of these factors, please also took the Safe Harbor any Outlook we present is as of today and management does not undertake any obligation to revise any forward-looking statements in the future with me on the call today are are co-founder wage.
chairman and CEO
Nickel Bostitch and our CFO Steven Christopherson what that I would now like to hand to call over to Nick Nick and thank you all for attending our fiscal second-quarter 2021 earnings call. I know many of you tuned in last week to listen to the exciting news of our announced merger with green light. You certainly have been receiving a lot of positive feedback and congratulatory messages sent that announcement and we look forward to continuing to provide updates and more information as we move closer toward the expected closing date, which is targeted for late Thursday or early Q3 in calendar 2021.
But of course, this is our earnings call and I want to shift gears and focus on our financial results for fiscal Q2 before opening it up for Q&A. So with that wage turn to slide five of the supplemental learning slides where we go over our financial highlights for the quarter.
Starting at the top of the slide. We generated 32.9 million dollars in revenue for fiscal Q2 representing 23% growth over fiscal q1, even if you exclude the roughly $3,000, we estimate slipped from fiscal q12 fiscal cute to do primarily to the shipping delays at the ports. We still experienced strong her over quarter growth as we continue to make progress on our strategy of aligning deeper with the top msos LPS and leading brand customers more importantly fiscal a return to year-over-year revenue growth after several quarters demonstrating acceleration of our Top Line following nearly a year of disciplined execution and cost-cutting.
What we're perhaps most excited by with this significant growth is the fact that an increasingly larger portion of it is coming from an elite customer group that we have been nurturing for the last two years. Now, in fact more than three-fourths of our total revenue for Q2 came from our top 25 customers up from 61% off same. A year ago. We believe this validates our strategy to deepen our relationships with these customers as they continue to rapidly scale and consolidate the industry wage part of the strategy is blocking in these customers to long-term Supply contracts where we can become stickier with them and where we can have more predictable and steadier streams of Revenue lack an ounce securing a large top five publicly traded MSO into a long-term Supply contract and during Q2. We locked in a leading West Coast operator bringing the tone. No,
Two five contracts signed to date with several more in the pipeline and our efforts to secure long-term contracts with our customers do not just end with our Vape juice and custom packaging Solutions, but also extends to our Energy Solutions as well. As of today. We have 38 executed contracts for our stainless steel tanks up from 22 at the start of the year.
revenue for
221 would have been slightly higher than 32.9 million, but we did continue to experience the uncontrollable shipping delays. We experienced in fiscal q1 due to record shipments in the US port and not enough people at these ports to offload all of the shipping containers as well as a shipping container shortage globally as a result some of the revenue that we were expecting to land. Thank you too will be pushed out into Q3. It's worth reminding that these delays have impacted virtually all importers of goods and have been exacerbated by the COVID-19 Restrepo in addition. They continue to increase freight costs putting pressure on our gross margins, which brings me to the next item on the slide on a gaap basis. We generated 50% gross margins for the quarter which is down from the 21% We generated in fiscal Q121
Decrease was due to the shipping delays. I mentioned earlier but fortunately we are starting to see these delays slowly clear up. In the meantime. We are doing the best we can to preserve margins am still getting products to our customers on time as mentioned on the last call. We are working diligently with our network of providers and suppliers to expedite shipments and provide solutions that can reduce the impact to our customers. It's uncertain when the backlog will be completely cleared but we are starting to see some progress which should only be accelerated by the continued COVID-19 vaccine rollout and the overall relaxing of the restrictions at the ports as the backlog gets cleared. We do expect these margin headwinds to stabilize should help us get back to the mid 20% gross. Margin Target. We've been tracking internally moving on to cash sg&a. We did see an increase this quarter sequentially largely related to item. Yep.
That we believe or one-time in nature including expenses related to our proxy, you know Insurance Warehouse transfers out of our soon-to-be closed Washington and Michigan warehouses and the opening of our new home 130,000 square foot West Coast warehouse in Moreno Valley, California. This new facility is almost three times bigger than our current Garden Grove facility Thursday. We believe it will enable us to increase our speed to fulfill orders reduce our transfer costs and ultimately better serve our customers with this new facility going live last week. We now have substantially completed our warehouse consolidation strategy going from a peak of seven major warehouses at the start of the pandemic to just to operating warehouses here in the next couple of weeks.
Entire effort has allowed us to reap in aggregate 1.3 million dollars in annual cost savings do to lower rent expense and inventory transfers between our houses while still providing exceptional service to our customers, even though we are pleased to see the revenue growth returning nicely. We are not taking our eyes off the ball when it comes to maintaining our cost structure to ensure a solid platform for profitable growth and although we weren't able to continue our streak of positive adjusted ebitda this quarter due to them and headwinds and increase one-time cost that we talked about. We are encouraged by the overall work. We have done to support profitable growth going forward. All righty completed it twice in the last three quarters and we and as we expect revenues to continue to climb higher both as a result of our own sales efforts as well as industry Tailwinds, we should yep.
Getting back and do positive adjusted ebitda territory.
Very soon with that. I'd like to now turn to slide six where we break out our sales by our top 25 customers versus the rest of our customer base.
Notice that we are now providing metrics on our top 25 customers rather than the top 100 customers which we have done historically this is because we really want to highlight and focus on how the vast majority of a growth is being driven by the leading operators in our industry today the folks who are continuing to expand open new locations require competitors, raise significant capital and repeat the success.
Sales to these Elite top 25 customers were up 35% Sequentially it made up 61% of our revenue and fiscal Q2 of last year and have been climbing ever sent to now make up 77% of our total revenue for fiscal Q2 of this year. We really believe we are hitching our wagon to the right courses and you can see this through the financial results of many of The publicly-traded multi-state Operators and Canadian LPS who are aggressively securing new licenses opening new stores and acquiring competitive or
X will look at slide 7 where we break out our sales by Geographic Market adult recreational and medical markets experienced strong healthy growth in fiscal Q2 with a few notable call-outs first, you can see that California rebounded again after a dip in fiscal q1. We have been focusing a lot more on our Homestead and investing in our sales force to capture. The Resurgence that is occurring in the state more and more operators including several news facts are now beginning to enter the world's largest cannabis market and we are positioning ourselves to capture this growth, especially with our new California warehouse.
Illinois was a hands-down best performing market for us during the quarter as we saw Revenue more than double sequentially the 3.3 million dollars as we mentioned Thursday last call we had more Revenue in Illinois and just the first month of fiscal Q2 than we did in all of fiscal q1. This was largely a result of our strong relationships with the key operators in this state may work to increasingly fulfill the significant demand in this market Massachusetts is also another important Market, especially as we are starting to see more msos deepen their faith in that state. We generated revenue of 2.4 million dollars in fiscal Q2 the highest ever in company history as our customers continue to expand operations particular Wholesale in this very key East Coast Market,
And even more encouraging is the fact that some of our Legacy markets such as Washington, Nevada and Oregon saw a healthy, rebounding Q2 suggesting a stabilization of Revenue as these markets open up further following a challenging year of COVID-19 restrictions.
hunting out or
Medical markets where we had one of our strongest quarters ever in Q2 with 12.6 million dollars in Revenue. This was driven by a record quarter in Florida, Ohio and Pennsylvania as well as a strong quarters in Maryland, New York and Arizona, which we are classifying here as a medical Market, but will separate out as an adult Rec Market going forward given the adult used program went live in January. And finally, we reached over three million dollars in sales in Canada for the second time and Company history representing 30% sequential growth as our customers continue to expand their wreck 2.0 offerings and more retail stores open up and different provinces despite some of the recent COVID-19 related lockdowns.
Next I'd like to dive into slide 8 which is our Revenue by product mix following a flat q1 Vape grew nearly 30% to 23.3 million dollars in sales for Q2. We're starting to secure some large Vape orders with our new MSO customers including a $1000000 vape order that landed in Q2 with a new customer of kis KO who happens to be a publicly-traded MSL going forward were excited to continue selling higher-margin pod systems by Cecil but the real game-changer will happen. When once I get dissipated Green Lane merger closes as we not only will leverage our deep relationship with these Health, but also green Lanes premium third-party Brands and wide customer based off from a formidable player across the board in the Vape Market.
Same goes for packaging is closed. We will be combining two premier and complementary packaging platforms led by Green Lanes Innovative pollen gear and our expertise in delivering a highly custom solutions for a premier msol p and leading brand customers with over two hundred plus articles of intellectual property. The combined company will have a strong Innovation a platform to enhance value for our customers and deliver. The product lines their consumers are seeking but as it relates to our business today packaging papers and supplies another Choice wrong quarter of sequential growth as we continue to recognize the revenue of some of our higher-value custom packaging projects. This pipeline of projects is continuing to build em, especially as other customers who are not currently taking advantage of our capabilities are starting to see what we can do when these products at the market in fact dead.
Just to name one prominent example, which is all public for everyone to check out is gti's brand new Rhythm packaging this highly Innovative product line utilizes a custom packaging expertise to create something sleek and truly differentiated that also works with high volume automation equipment. We have been building on this momentum buying a new packaging innovations that are thoughtfully tailored to specific customer needs. This includes a line of patent pending certified child-resistant compatible bags Thursday. Well as certified child-resistant compatible Vape packaging it goes without saying that we are continuing to make the Investments necessary to ensure a robust pipeline of innovative new products and we are very excited to marry kis, KO and green lines distinct yet complementary packaging capabilities once the merger closes.
and last one
To take a brief look at our energy and natural products bucket, which generated 1.5 million dollars of revenue for the quarter slightly down from last quarter as we shared on our last call energy has been an area of focus public school year not just on the ethanol side where we have seen some meaningful traction with Ms. OS but also on the butane front as well, which is higher margin and bought a key stepping stone to cross selling our customers into some of our other offerings, of course our key differentiated offering in the butane Market is are stainless steel tank for which we've been seen a strong adoption from our customers today. We have just shy of forty Supply contracts executed for these tanks and we're on track to hit our internal goal of getting 100 contracts execution by the end of our fiscal year. These tanks are not only great for our customers who like the fact that they are considered a cleaner vessel, but they're also great for us as they create an attractive razor-edged.
razor blade model with strong Revenue economics
And with that I'd like to turn the call over to Steven will walk us through our Q2 Financial summary.
Thanks, Nick. I'll now turn to slide ten which displays the snapshot of our income statement for the quarter totaled that Revenue increase 9% year-over-year and 23% quarter-over-quarter 32.9 million as Nic mentioned. We're seeing stronger growth from our m s o n l p customers as part of our strategy to align with the industry's leading operators on a gaap basis gross profit for the quarter was 6.4 million or 20% gaap gross margins as Nic mentioned gross margins were down sequentially primarily due to an increase in shipping charges. But looking ahead. We believe that these shipping charges will normalize and we will continue to ship more product on boat, which should help drive a rebound and gross margin in future periods.
On a non-gaap basis excluding the impact of the China trade tariffs gross profit was approximately 6.9 million or 23% of revenue for a complete reconciliation of gaps non-gaap financial information. Please visit the reconciliation table at the end of this presentation or in our fiscal Q2 earnings release.
Sales General and administration expense for fiscal Q2 2021 was approximately 10.9 million which was down from 27.2 million in fiscal Q2, 2012. The big drivers year-over-year were reduced headcount bad debt expense Consulting spend and travel and entertainment expenses as a result of the COVID-19 pandemic and as well as Thursday of our twenty-twenty plan to right-size our business and align with the leading operators in the Cannabis industry.
Cash STNA which excludes non-cash expenses such as bad debt stock-based compensation depreciation and amortization was 8.4 million, which was up sequentially, but Jeff from thirteen point six million in fiscal Q2 twenty-twenty the big drivers you're over a year were reduced Consulting spend and lower facilities costs turn to the next song on a gaap basis net loss for fiscal Q2, 20-21 was five million dollars or negative $0.04 per share with which represents an improvement from the net loss of approximately 44.4 million or -40 cents per basic share in Q2 twenty-twenty the significant year of your improvement was driven by a restructure and an issue which led to a pre-paid inventory right off of 3.3 million as well as excess and obsolete inventory charges of 11.9 million in fiscal Q2, 2012.
on a non-gaap basis
Excluding the impact of certain non reoccurring charges our net loss for the quarter was approximately 3.1 million or -2 cents per share compared to a net loss of 17.5 million or -16 cents per share in fiscal Q2 twenty-twenty and finally adjusted ebitda for the quarter was -7 million dollars compared with two point five million positive in q1, 20 21 and the -14.8 in Q2 twenty-twenty. The decrease was due to lower gross margins and increase cash sg&a is Nick touched on earlier while the Improvement were over year was driven by the aforementioned cost reductions.
As you can see on the next slide slide 11, we're starting to realize meaningful growth in the business and if returned to your over your top-line growth while we did not achieve positive adjusted ebitda in fiscal Q2 Thursday. We are right on the cusp of profitability and expect to return to positive adjusted either one. Some of the shipping related delays resolved as we continue to grow Revenue.
As we have said before our goal is to continue growing the business profitably and we believe we have a nice Foundation to do so.
Turning out to slide twelve which provides a snapshot of our balance sheet as of the end of fiscal Q2 RAR for Q2 decreased sequentially from 12 million in fiscal Q1 to ten point five million in fiscal Q2 do the strong collections activity including from some of our smaller customers total inventory as of the end of Q2 increased sequentially from 34.7 million to 1 to 50.8 million in fiscal Q2.
As we shared on the last call be ramped up our purchases during fiscal keyone and even in fiscal Q2 ahead of Chinese New Year and to do our best of what in in order to avoid Supply disruptions caused by the COVID-19 demek, but that being said we are encouraged by the fact that a sizable portion of these products are linked to custom projects for some of our larger MSO NLP customers who have the financial wherewithal the paper these products and are eager to differentiate their brands.
Cash during fiscal Q2 was up significantly quarter-over-quarter due to the late February Capital raised where we raised $40 in a highly oversubscribed offering anchored by some key and long-term institutional investors as we announced via press release in late March. We have used a portion of the proceeds from that offering to completely pay down the 17 million term note that was due at the end of this month and I've also used a portion of the proceeds to pay down our entire line of credit leaving us with virtually, no debt and a healthy amount of working capital to support our continued growth with that. I'll turn it back now to Nick
All right. Thanks Steven. Now just to quickly wrap up. We're pleased with how the quarter finished especially given some of the shipping related headwinds. We continue to face looking ahead. We remain encouraged the rapid pace of new States legalizing cannabis as we've already seen this year with Virginia, New Jersey New York and New Mexico leaving only one State starting with the word knew that has yet to legalize cannabis in the US these catalysts along with a meaningful momentum at the federal level for cannabis reform coincide nicely with our anticipated strategic merger with Green Lane. Once the transaction is closed. The combined company will be well positioned to capitalize on these macro. Te'o drawer enhance scale differentiated customer offering and significant cross-selling opportunities.
Due to the penny merger, which we expect to close.
In late second quarter or early third quarter of calendar 2021. We are retracting our net revenue and adjusted ebitda guidance for fiscal 2021.
That being said we could not be more excited for the attractive opportunities that lie ahead as we joined forces with another industry Pioneer to create the leading and sell cannabis products and services company. And with that I'd like to turn it over to the operator for Q&A session.
Thank you. At this time. We will be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad a confirmation total indicate. Your line is in the office. Thank you. You may press star to if you would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key. Our first question is from oh along with Jeffrey. Please proceed with your question.
Afternoon, guys, how are you? Hey, and thank you and it's the quick one for me. So you're getting them strong momentum on the stainless steel tanks. I just wanted to do understand how incremental growth can be here. If you hit your target over a hundred contracts. I think you said can you mind is what I look like on the solvent specifically and what's the average sales contribution for contract? And what are the gross margins? Although the call? I think margins on solvents overall wage was around 40% So would it be fair to assume that butane is somewhat higher than the 40 and that's an old is below. Thank you.
Exxon great question. I'll let Steven give some color but first on the margins, but at first at a high level the way you should be thinking about the black stainless steel tanks and the butane business is not going to be so much of a of a driver of top-line Revenue growth, but I think a lot of people have said, you know, what you know, what what is Cusco going to be doing when you know other companies come into the sector that are larger that that are maybe from outside Industries. And so we're showing people what we do to protect against that right? Obviously, we feel that we have a unique product portfolio. We can get very sticky by by selling across multiple categories we go. We have intellectual property that will protect us. However, these are some additional things that we're doing, right we we've innovated with these stainless steel tanks. Nobody else is is in the market to our knowledge with them.
Thanks, and then we're going out and signing contracts which are are typically one year with auto renew. But if somebody loves the vessel that they're in they're not just going to change to a carbon steel vessel, right? These are superior vessels. So once they become accustomed to it, they're likely to stay in it for the long haul. So we like to think people to think of this business has just totally reoccuring highly sticky something that's under contract and does have very good margin profile. It's not going to be the revenue growth driver, but it's a very nice anchor to pill and just continue to churn and then where we also can drive some Revenue off of this is via cross-selling. We know that everybody's buying butane is either making oils or concentrate. They're likely going to need vape pens and concentrate containers and they packaging to go along with it. So for those reasons, it's very strategic. But again, I would caution people as to home.
Looking at this is something that's going to significantly move.
Neo from the Top Line perspective, I mean then Steve and why don't you go ahead and give some additional color on the the margin profile there is no one was asking sure Halen. Thanks for the question. So I'm yeah he dead on on the material margin so butane is higher obviously than ethanol. So I'm a direct material. Margin that category is running right around 46% you know factoring in Freight to me cuz we basically keep a we keep the the driver up there and cogs as well. You get sort of call it a landed margin, you know, you know 39% 40% off for that category and then the sales person, you know, there's a really small sales team out there that can kind of sits underneath the product team and and can and can scale across the across the Enterprise. I just wanted to get one call out. You know it obviously it looks like the the sequential Decline and it looks like a sequential decline energy. You know the previously we're dead.
We include energy and natural products in this bucket. So there was a fair amount of terpene business that was being captured in this bucket. So two things happened in the chirping category, you know, number one on the back of the Vape crisis that the demand for Botanical terpenes drops significantly. Obviously, we're you know, this is a non cannabis drive to Europeans Botanical terpenes drop off. So we saw that impact in the bucket bucket and then we also changed the accounting methodology where you know, we basically reworked her contract with abstracts. Who's who's our vendor their life. It's it's basically just capturing the the the margin as Revenue whereas previously we were sort of transferring the product and in recognizing revenue on the full amount. So I'm just a little bit of accounting noise in the way that we are accounting for that Apple products bucket, but that's that's really what's driving the decline in the overall energy bucket.
Okay. Well, that was really helpful. Thanks guys.
Excellent. Thank you. Our next question is from Erin Gray with Alliance Global Partners. Please proceed with your question.
Hey guys. Thanks for the question. First. One out for me is on the state of Illinois. Saw a nice jump quarter-over-quarter. So just wanted to get some more color there whether or not those anything else I mean going on there cuz I know there's some big operators there that might have had an impact for the big step up or whether or not that represents kind of a good run rate kind of going forward and also how much that might be tied to an additional 75 social Equity licenses being opened up and kind of see more growth or continued growth. I guess at the state level there in Illinois. Thanks.
Yeah, you know look I think just at eye level you know, we're seeing the same day to everyone else is Illinois seems to be really growing cannabis consumption is is up significant a seemingly like every single month right that they report the data. So that's great. Obviously more access is going to drive the growth. We're seeing that in California been talking about that forever. But as more retail stores open up we're going to see higher cannabis consumption numbers. So, you know, I think it's just a healthy Market we happen to be positioned with them a few of the leading mso's that are well set up in Illinois. So, you know, we're benefiting from the fact that we're with the right customers. I don't I won't say that specifically I don't believe that the additional social Equity licenses are contributing factor to this to this number. I'm at least at this point, but I do think it's great for the market just on a personal note. So wage.
Look, I think this is going to be a market that continues to grow.
And certainly with more access it will only grow faster. I mean, this is a market where the economics are making sense or large mso's to invest resources in two thousand and so as a company that's trying to align with those mso's. We should continue to track very well in this, Illinois Market.
All right, great. Thanks. That's helpful. And the second question for me. So I know you guys still had some issues, you know during the cord that impacted the gross margins looking to get to you know, Midtown kind of overtime any color that you could kind of offer in terms of I think prior we're talking about fiscal four Q is that potentially going to get pushed out a little bit now? I'm still uncertain just because you're still having some impact, you know at the freight level or or any kind of color in terms of the timing of when you get to that kind of mid-twenties Target. Thanks.
Yeah, you know look good.
Yeah, sorry, I'll give the the high-level. So and then I'll let Steven jump in but you know the high-level ultimately, you know, we feel that we have the direct material margin or or or, you know direct product margin to hit the mid-20s. Um, even today although Freight and other issues could have dragged that down tariffs alone, right? We estimate cost of between two and three points of margin. So again, if the terrorists were to go away we would jump up, you know considerably so, you know, there's those factors but still with that. Yeah. I mean, I think we we feel confident. We don't know how the Freights going to clear up but then the bigger point that I wanted to drive home before she even the floor is that that's one of the also the one of the driving factors with the Green Lane merger is a path to significantly higher margins cuz of the fact that they have company owned brands.
The demand a margin premium and they're going through direct-to-consumer channels, which are typically higher margin than the Enterprise channels that we serve as so the Crisco business office certainly can execute on the mid-20s, but combined Greenland Cusco business has has a higher ceiling for margins, especially as green line continues to gain tracker on their their company owned Brands. Go ahead Steve.
Yeah, I was just going to make a point, you know while we are starting to see some of the freight had wins, you know get a little bit better, you know in that might sort of materialized certainly before or end of our fiscal year. I keep in mind Aaron, you know, the the inventory that we purchased, you know, we capitalize a lot of those great and terrible costs on the balance sheet, right? So we've already spent you know, a lot of that money, right? So I'm sort of sell-through that inventory where I'm going to be think about it. The freight had ones are going to have a little bit of a lag. Um, so I just want to be if you're thinking about your model, you know, sort of taking those in a situation, but we certainly do start to see it normal eyes and and, you know get back to that, you know, mid-twenties gaap gross margin, but obviously is is Nick alluded to a Big Driver big selling point for us at a management team for the Green Lane merger was, you know a path to significantly higher gross gross margins for the combined profile and Company.
All right, great. Thanks, and I'll drive back into you.
Thank you. Our final question is from Scott Fortune with Ross Capital Partners. Please proceed with your question.
Good afternoon. Thank you for taking questions. Just a little bit of clarity here since seventy-seven percent of revenues come from the top 25 mso's. Are you seeing longer-term Supply wage? Um orders out there larger purchasing orders ahead of as he's in the sales or ramping up into the states in the second half point one here just kind of incremental look on the kind of second half as your order purchasing the coming through the head of that.
Yeah. Yeah, we we are good question. You know, we're seeing the mso's planning for growth getting some orders, you know either forecasted or actually put up and um that are that are larger as as they're growing. We're also seeing some of the mso's managing Acquisitions and obviously that's hard not knowing exactly when those are going to close off. Um, but we've even had scenarios where you know again factoring into the freight and where we helped out some of the mso's that were in a jam because of the fact that you know Acquisitions Club volumes, you know, kind of spiked ahead of empty and ready from an inventory Supply standpoint. Also some other vendors that have dropped the ball. So, you know again, we'll we'll go ahead and Page are afraid in some some vape pens for them. But I'm kind of setting the expectation that going forward in a more normal Cadence will be receiving forecasts will be planning against those and we'll be able to vote Freight in, Georgia.
Goods um, and and you know preserve margins so some of the some of the margin stuff was was one time it just in terms of a customer Dynamics as well. Uh, so that's an important job. But yeah, I mean we're seeing the ramp, you know, there was some COVID-19 lockdowns that you know, I think suppress Canada and you know, they're coming out of those so, you know, it's a little bit different. But yeah for the most part we're tracking that growth with our with our key MSO clients and you know, that's why we're not concerned about growing our business. We know will grow Thursdays. We take care of our of our top clients and then ultimately, you know, like I told my sales team almost every day is
You know if we can add another client it's of the same, you know profile of these top 25, it can really move the needle. So in addition to maintaining across selling our current client base wage, we want to be able to add a meaningful client, you know or two every single quarter going forward.
Okay, I appreciate that. And then on the international side, you know Canada's up pretty significantly quarter of a quarter. Are you called out a little bit 2.0 products and more stores are coming on board kind of Step it through even in its October the environment right? But kind of kept us to the international side and the opportunity you bring on Green Lane have going into a potentially as a strategy going forward but kind of mechanic side you see upside there.
Yeah, you know I think you know Canada's a a good Market. It's going to get better. There's consolidation taking place as we expected. There's you know 2.0 I think was you know, obviously it was brand new when it hit and I think there were decisions made in terms of supply chain based on you know, historical relationships may be based on price whereas, you know, I think the US had already gone through a lot of that maturation in terms of understanding which Vape Hardware can lead to the best performance and ultimately win market share with the in consumer and I think people operators in Canada are now switching to see sell for that reason so that you know, that's a good sign and again, I think will help the the 2.0 Market there which is better quality based devices in the in the field. Um, so that's good. And then that's a launching point for for glass.
us we know that
Canadian LPS have the ability to ship their product and also expand globally into Europe and Australia and so, you know life will allow for for our Global expansion on the Cusco side, but we've always looked at, you know Global expansion for Crisco alone as as maybe something later down the road and simply because the Enterprise clients aren't as aren't as large and and the markets aren't as concentrated of you just don't have the ability to drive the volume that you do here or North America. However with the Green Lane business model, it's it's different they're able to go directly after consumers and we know cannabis consumption globally Still Remains very high and and is growing only only hire right? So having that ability to now go after consumers with cpg products and to ship company own.
Brian into traditional and Specialty retail that's a compelling argument to strengthen and and actually invest more in a global operation Europe being probably the main one given the population given the trajectory and also given the existing footprint and presents. The green line has also can a Green Lane has a a significant presence and we're going to actually be able to see in these federally legal markets like Canada how much adoption of the cpg products are going to be in mainstream retail. We know that in the US there's more adoption and Specialty retail and smoke shops. Today. We're expecting significant adoption into cannabis retail stores over the next few years, but at some point when are these products going to be sold in mainstream retail? Well, I think in a federally legal environment that's likely to happen sooner Thursday.
Of being one of them we're going to be closely monitoring how that market plays out as as sort of proxy to how future legal country markets are going to play out as well.
I appreciate it. Thanks for the color.
Frank Scott
Thank you. Ladies and gentlemen, we have reached the end of the question and answer session and I will now turn the call over to Nick kovacevic for closing remarks.
Okay, thank you. All appreciate you attending. We appreciate the topic questions as always and for you continue to be up to speed on the latest with the company. I know I just did the merger call last week. A lot of fun things going on. A lot of exciting things are both from an industry perspective, but perhaps more importantly from a company perspective as we are preparing to get all the necessary approvals to consummate this merger with Green Lane. It's truly a game changer as I mentioned earlier on the call last week. We believe it just makes sense makes a ton of sense first and foremost. It's coming together of two successful Pioneers in the industry wage, right 25 plus years of combined operating experience.
And bringing together.
Two complementary product portfolios and customer base has it also is effectively diversifying our business and giving us substantial cross-selling opportunities execute on together will achieve a level of size and scale and we can build a strong platform that will ensure profitable growth over the Long Haul and how long it would take arguably take much longer for us or or for them to do that on a stand-alone basis. We know these businesses need scale and this merger will generate that on top of that Crisco shareholders will benefit from the NASDAQ listing which many of you know has been a goal of ours for quite some time and we're now almost there. I'm doing it in this creative way that we believe is going to add incremental value for our shareholders together with Green Lane. We're creating ancillary Powerhouse dead.
Is anchored by the leading msos LPS and brand with a strong portfolio of company-owned Brands and Retail and consumer channels on closing we expect to Thursday. We get the recognition the market in the market that we believe kis KO deserves as more institutional investors will be able to invest in our stock and participate in our goal for Success. This is especially true given the likelihood that Federal legalization will not occur for the next several months. If not quarters given this scenario, investors that want to invest into top mso's us operators. Um, but don't want to own non exchange-listed or known nasdaq-listed stocks can now directly invest
In our combined company upon closing and by proxy received that meaningful exposure to the top cannabis operators. I'm overall we're incredibly excited by the opportunities in front of us. We both this merger and the industry in general and we look forward to providing more updates here in the coming months. So again, thank you all for listening. We hope you all take care stay safe and we'll see you on the next earnings call. Cheers.
Thank you. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.