cbdMD, Inc. Common Stock 2026 Q3 Earnings Call

Brad, please go ahead. Thank you, Tiffany, and thank you all for joining cbdMD's June 30, 2026, third quarter of fiscal 2026 earnings call and update.

On the call today, we also have Ronan Kennedy, our Chief Executive Officer and our Chief Financial Officer. We'd like to remind everyone that various remarks about future expectations, plans, and prospects constitute forward-looking statements for purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. cbdMD cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated, including risks described in the company's annual report on Form 10-Q for the third quarter ended June 30, 2026, and our other filings with the SEC, all of which can be reviewed on the company's website at www.cbdmd.com or on the SEC's website at www.sec.gov.

Any forward-looking statements made on this conference call speak only as of today's date, Thursday, August 13, 2026, and cbdMD does not intend to update any of these forward-looking statements to reflect events or circumstances that would occur after today's date, except as may be required by federal securities laws. With that, I'd like to turn the call over to Ronan.

Thanks, Brad. Good afternoon, everyone, and thank you for joining us. The third quarter of fiscal 2026 was another quarter of top-line growth and one of the most active periods we've had, both in our own business and across the regulatory landscape we operate in. Let me start with the headline. Net sales grew 20% year-over-year to $5.6 million. For the first nine months of the fiscal year, the revenue is up 12% to $16.2 million. That growth was led by our wholesale channel, which is up 61% year-over-year, reflecting continued momentum in Oasis and ongoing execution in our core cbdMD brand in the first full quarter of contribution from Bluebird Botanicals. Excluding revenue from Bluebird, our business grew approximately 10% year-over-year during the third quarter, something we're proud of, especially considering the regulatory headlines.

I want to be direct with you about the quarter because transparency matters. We grew top line, but we were not satisfied with our bottom line. Our operating loss was wider than a year ago, and that was largely by design. We made a series of deliberate investments and absorbed some one-time costs that I will walk through. But underneath those items, the business is healthier, and importantly, our adjusted EBITDA loss actually narrowed year-over-year. Brad will take you through the detail. Let me spend a few minutes on parts of our business that are working well. Oasis, our hemp-derived THC brand, continues to accelerate. We recently added distribution in South Carolina and transitioned to a new distribution partner in Texas.

A change that more than quadrupled the number of stores where Oasis has access to in the market, and we are already seeing that translate into market growth in the fourth quarter. Our recently launched Oasis Mixer has been very well received and is contributing to brand growth as well. The fourth quarter is off to a strong start. Depletions from distributors, which is unit sales from our distribution, hit record in July, up 35% over the third quarter average, and August is on pace to more than double. We continue to monitor shelf space, ordering patterns, and tracking inventory carefully going into the end of the year. Today, we are also excited to announce the launch of our zero-proof Kava Oasis beverage. I want to be clear why it matters strategically.

As we move closer to the regulatory deadlines, we are seeing real gaps begin to open on the THC beverage shelf, and we believe those gaps represent a meaningful opportunity to capture shelf space with compliant, great-tasting product that retailers and consumers still want. Kava is a natural fit for that opening. Unlike many functional and botanical beverages that promise calm but deliver little, Kava produces a real fast-acting sense of ease and a gentle lift, yet it carries none of the impairment or regulatory complexities that come with THC and other cannabinoids. That lets us keep our partner shelves productive regardless of how the THC rules ultimately evolve. Kava is one of several botanicals we are building line extensions around, specifically to create revenue visibility into 2027 and to help mitigate the regulatory uncertainty.

Functional non-alcoholic products that help people relax and unwind are one of the clearest growth vectors we have. Oasis is increasingly the tip of the spear. Turning to Bluebird, this was Bluebird's first full quarter as part of cbdMD, and it contributed more than a half a million in revenue. You will recall the acquisition was an earnings drag last quarter, and we absorbed transition and integration costs. This quarter drove additional revenue, and we expect Bluebird to contribute both revenue and earnings going forward as we roll out additional products and capture cost synergies. Just as importantly, Bluebird validates our M&A thesis. A loyal customer base, a brand not defined solely by CBD, meaningful SG&A synergies and self-GRAS status on its full spectrum products. We continue to evaluate additional discipline acquisitions where we can use our infrastructure, marketing engine, and NYSE American listing to unlock value.

Now, let me address the costs directly, because I don't want to gloss over them. During the quarter, we incurred legal and due diligence expense pursuing additional M&A opportunities that would further diversify our revenue and reduce regulatory exposure. We continue to invest in new product development, the cannabis beverage innovation I just described. We worked through supply chain and state-level compliance issues, including repacking and testing costs, and an increase in inventory reserves as we prepare for pending regulatory changes. We continue to invest behind our clinical healthcare initiatives, including our GRAS for our broad-spectrum CBD formulations. Those are choices, but we've also taken hard action on costs.

Beginning the fourth fiscal quarter, we implemented a cost reduction program targeting $100,000-$150,000 in monthly savings through payroll reductions, renegotiation of warehouse leases, renegotiating exit vendor contracts, and we've identified additional supply chain savings, which we expect to begin to realize later this quarter. The goal is straightforward, improve EBITDA and contribution margins and make sure we enter a post-regulation world leaner and more flexible than we are today. Let me turn to the regulatory environment, which has been remarkably dynamic. As a reminder, Section 781 of H.R.5371, signed into law last November, is currently scheduled to take effect this November 12, 2026. It would narrow the federal definition of hemp and impose strict per-container THC limits. The single most important recent development is the Senate stopgap appropriations proposal would, through December 11, 2026, temporarily exempt natural occurring cannabinoids from those revised restrictions.

The point that I want to stress is that it's not just about buying time to comply. The greater value is the extension is the procedural runway it creates for Congress to put a durable industry-wide framework in place so that the fix is permanent rather than temporary. The continuing resolution, H.R.6500, now moves to the House of Representatives for a vote by the end of September, and we are engaged constructively to help advance a lasting solution. The activity to build durable framework is growing. There is now a meaningful and growing number of bipartisan bills aimed at repealing, delaying or replacing Section 781. In July, Representative Barr and Craig introduced the White House-supported Lawful Hemp Protection Act, which would establish a permanent federal framework.

Just this week, on August 10, Representatives Van Duyne and Landsman introduced the bipartisan Beverage Regulatory Parity Act, which would regulate hemp-derived beverages, much like alcohol, with age restrictions, testing, permits, and federal excise framework. That bill is directly relevant to Oasis and reflects the kind of sensible regulation we've been advocating for on Capitol Hill. cbdMD believes a ban on full-spectrum hemp-derived Delta-9 would be bad for public health. Demand exists, and as the saying goes, you can't put the toothpaste back in the tube. If the legitimate industry is banned, consumers will be driven to unregulated black market products, especially in areas where no legal cannabis access exists. We applaud Washington, D.C. leadership focused on finding sensible ways to continue to permit full-spectrum hemp products millions of Americans use on a regular basis. Our view has not changed.

As regulatory clarity emerges, it favors operators built for it. Well-capitalized, compliance-focused, with strong quality, safety, and clinical standards. That is the company we've built, and we are actively engaged in Washington to help shape the outcome. At the same time, I'd be remiss not to flag state-level environment, which remains a genuine headwind. Changing rules across multiple states continue to drive packaging changes, repacking, new testing requirements, and they continue to narrow what we can sell and where. During the quarter, state-level shipping restrictions, label changes and other rules impacted both wholesale and, more tangibly, our direct-to-consumer revenues. We're managing through it, but it's a real cost of operating in the category today, and it's part of what makes the federal pathway I've described so important. With that, I'll turn the call back over to Brad.