KushCo Holdings Inc (OTCMKTS:KSHB) reported a sequential growth of 23% to $32.9 million in Q2 2021. It is on the backdrop of enhanced sales to licensed producers and multi-state operators. The company bagged 38 contracts for the supply of stainless steel tanks.
KushCo posted a growth of 20% in profitability in Q2 2021. The company took several measures like write off of inventory worth $3.3 million and $11.9 million in E&O inventory charges.
Chairman of KushCo, Nick Kovacevich, said the company is excited to post sequential revenue growth in Q2 2021. It also becomes a robust revenue-generating company by entering deeper pacts with MSOs, leading brands, and LPs. The company garnered around 77% of its revenues from the top 25 customers.
Nick further said the company won several long-term contracts from a leading operator. The company also maintained the same momentum and received additional contracts for the supply of stainless steel tanks.
KushCo put in several efforts by collaborating with customers to improve their brand offering. The company started recognizing revenues from special-purpose packaging projects.
Merges with Greenlane
KushCo will merge with Greenlane Holdings Inc (NASDAQ:GNLN) in Q2 2021. It is an all-stock deal. As a result, the company retracted its previously issued guidance of $130 million for this year.
Following the integration, KushCo will become a subsidiary of Greenlane. As per the terms of the deal, Greenlane shareholders will receive 0.2546 shares of Greenlane for each of their shares. Greenlane shareholders will hold a 50.1% stake in the combined company, and investors of KushCo will own the remaining stake. Nick will become the CEO of the combined company.
The combined firm will appoint Bill Mote of Greenlane as CFO. In the director board, KushCo will nominate three members, and Greenlane will appoint four members.
The merger expects to improve value to the customers, LPs, MSOs, and smoke stores. It can achieve cost savings of up to $20 million in two years. Also, the combined company will generate revenues of $330 million in the year 2021.
KushCo paid a sum of $17 million to retire the unsecured senior debt. The company also closed a registered direct offering of $40 million.