Adam Waldo

Adam Waldo from Lismore Partners, LLC, sought clarification on a press release typo regarding Medicare versus Medicaid patients in the context of the executive order. He then asked how cbdMD is prioritizing growth investment for the balance of fiscal 2026 between the traditional core business and Herbal Oasis, given the regulatory fluidity. Finally, he inquired about the fully diluted share count pro forma for recent financings and any new executive compensation plans.

Answer

Ronan Kennedy, CEO and CFO of cbdMD Inc, confirmed the typo, stating the executive order explicitly addresses Medicare, with potential future expansion to Medicaid. Regarding growth investment, he indicated that for the next quarter, it would be slightly more weighted towards the Oasis brand, with constant evaluation of regulatory movements to readjust. Kennedy discussed the conflicting regulations from November's bill and the recent executive order, expressing optimism for resolution on THC limits. He provided the fully diluted share count, noting approximately 8.9 million common shares outstanding, 1.7 million in Series B, and 1 million in Series C, and mentioned a new 2025 employee compensation plan approved by the board, subject to shareholder vote.

Adam Waldo asked for clarification on a potential typo in the press release regarding the executive order, specifically whether it addresses both Medicare and Medicaid patients. He then inquired about cbdMD's prioritization of growth investment for the balance of fiscal 2026, balancing the traditional core business with Herbal Oasis, given the regulatory fluidity. Finally, Waldo requested the fully diluted share count pro forma for the Series C preferred closing and details on any new executive compensation plans impacting common shares.

Answer

Ronan Kennedy, CEO and CFO of cbdMD Inc, confirmed the typo, stating the executive order explicitly addresses Medicare, with potential future expansion to Medicaid. Regarding investment prioritization, Kennedy indicated that for the next quarter, investment would be more weighted towards the Oasis brand, with constant evaluation of regulatory changes to adjust. He reiterated the conflicting regulations but expressed optimism for resolution on THC limits. For share count, Kennedy stated approximately 8.9 million shares outstanding, plus 1.7 million in Series B and 1 million in Series C. He added that a new 2025 employee compensation plan, subject to shareholder vote, was approved by the board in November and 8-K'd.

Asked about the company's working capital, cash burn, and liquidity runway through fiscal 2026. Also inquired about the types of strategic M&A activities the company finds attractive, and requested specific performance metrics for the new Herbal Oasis product line.

Answer

The company reaffirmed its guidance that its liquidity is sufficient through the end of fiscal 2026. For M&A, they are looking for opportunities with cost synergies and new channel access, both inside and outside the cannabinoid space. They noted that Herbal Oasis revenue began at the very end of Q2 and is ramping up in Q3, with lower gross margins than the core business but viewed as an incremental volume play.

Adam Waldo asked for an update on the company's working capital, cash burn, and liquidity runway, seeking confirmation of the outlook through fiscal 2026. He also questioned which types of M&A the company finds most attractive and requested any available performance metrics for the new Herbal Oasis brand.

Answer

CEO and CFO Ronan Kennedy reaffirmed that the company's liquidity runway is sufficient through the end of fiscal 2026, based on current models. Regarding M&A, Kennedy noted they are evaluating opportunities with strong cost synergies, new channel access, or customer acquisition, both within and outside the cannabinoid industry. For Herbal Oasis, he stated that revenue impact was minimal in Q2 but is increasing in Q3, and it is viewed as a volume play with incremental contribution dollars despite having lower gross margins than the core business.

Adam Waldo inquired about the progress of the Herbal Oasis Social Tonic line, including its prospective revenue, margin structure, and working capital impact. He also asked about its direct-to-consumer margins, whether it generated revenue in the December quarter, the pro forma share count after recent note conversions, and the company's liquidity outlook.

Answer

CEO and CFO T. Kennedy acknowledged that while wholesale distribution for Oasis is progressing slower than hoped, it represents incremental revenue, albeit with tighter margins than core products. He confirmed some revenue was booked in the December quarter but did not disclose the amount. Kennedy stated the pro forma share count is just over 6.2 million and reaffirmed the company's strong liquidity position, expecting normal working capital needs in upcoming quarters.

Adam Waldo of Lismore Partners, LLC inquired about cbdMD's future SG&A expense baseline, the likelihood of achieving positive free cash flow in Q1 2025, the remaining principal on convertible notes, and the potential revenue and margin profile of the new Oasis Social Tonics. He later followed up on the total number of shares issued from note conversions.

Answer

CEO Ronan Kennedy clarified that the Q4 SG&A baseline is closer to $3.5 million after adjusting for a one-time gain. While the goal is EBITDA positivity, he noted some working capital cash consumption is expected in Q1. For the new Oasis beverage line, Kennedy highlighted it as an incremental growth opportunity in a rapidly expanding market, though with tighter wholesale margins than legacy products, and declined to provide a specific 2025 revenue target. He also confirmed the remaining note principal is minimal. Regarding share dilution, Kennedy and CFO Bradley Whitford estimated that between 1.6 million and just over 2 million shares have been issued from note conversions to date.

Adam Waldo of Lismore Partners inquired about Ascent's long-term growth strategy, asking about the revenue required to meet the 2030 adjusted EBITDA target, the potential to achieve this within the existing footprint, and the size of the near-term new business pipeline. He also followed up on the status of an executive equity compensation plan and the rationale behind recent share repurchases, as well as the M&A valuation multiples the company would consider.

Answer

CEO J. Bryan Kitchen stated that Ascent can reach $120-$130 million in revenue with its current assets, targeting a 15% adjusted EBITDA margin. He noted a recent $25 million increase in the selling project pipeline. Kitchen clarified that the Q2 share buyback was driven by the stock's undervaluation, not an equity plan, and that a broader equity program is being finalized. CFO Ryan Kavalauskas added that for M&A, the company targets assets in the 6-8x EBITDA range, aiming for post-synergy multiples of 6-7x and would not likely pay more than 8-9x pre-synergy.

Asked about the revenue target required to achieve the 2030 adjusted EBITDA margin goal, the size of the new business pipeline, the status of an executive equity compensation plan, and the company's philosophy on M&A valuation multiples versus share repurchases.

Answer

The company can achieve $120M-$130M in revenue with existing assets to reach its 15% adjusted EBITDA margin target. The new business pipeline grew by $25M in the last quarter. Share buybacks were driven by the stock's undervaluation, separate from the equity plan which is being finalized. For M&A, the company targets pre-synergy multiples under 8-9x EBITDA and post-synergy multiples of 6-7x, emphasizing a disciplined approach with smaller deals first.

Adam Waldo of Lismore Partners inquired about several financial reporting items, including the 10-Q filing date, the latest annual recurring revenue (ARR) run-rate, remaining contract value, and services revenue growth excluding equipment sales. He also pressed management on the specific strategic alternatives being considered to address the stock's valuation disconnect and whether the company would institute formal financial guidance.

Answer

CFO Chris Panagiotakos confirmed the 10-Q would be filed that day and reported the new estimated ARR is just over $22 million. While not providing a specific remaining contract value, he noted the total value of existing contracts at signing was over $41 million. CEO Charles Piluso expressed frustration with the stock's valuation and confirmed the board is evaluating all options, such as buybacks or a sale, to enhance shareholder value. Regarding formal guidance, Piluso stated that despite encouragement, the company has been advised against it and is following that advice.

Adam Waldo inquired about the strategy for value creation at comScore, the investor relations approach at Intevac, and potential governance issues at Hudson.

Answer

CEO Kevin Rendino addressed the comScore situation, expressing frustration with the board but highlighting a significant valuation gap and committing to continued pressure. For Intevac, President and Portfolio Manager Daniel Wolfe and CEO Kevin Rendino discussed the company's solid downside protection via its hard disk drive business and cash, with upside from its TRIO platform. They also committed to pressuring Intevac to improve its investor communications. Regarding Hudson, Daniel Wolfe stated there were no governance concerns and noted the new CFO and favorable inventory cost dynamics in 2025 as positives.