SLANG Worldwide Inc.

Revenue from continuing operations was $7.03 million in Q1 2024, down 35% from $10.82 million in Q1 2023. Gross profit was $3.36 million versus $5.72 million a year ago, with gross margin of 48% compared with 53%; adjusted gross profit was $3.65 million with a 52% adjusted gross margin, versus $5.68 million and 52% last year. Total operating expenses were $5.54 million, down 4% year over year from $5.78 million, and adjusted EBITDA was a loss of $1.06 million versus a profit of $740,000 in Q1 2023. Cash and restricted cash were $8.32 million at March 31, 2024, down from $9.04 million at December 31, 2023. The company did not provide formal next-quarter or full-year financial guidance on the call.

John Moynan said the company entered 2024 with a streamlined infrastructure and a more diversified revenue profile, but Q1 fell below expectations because of continued softness in Colorado and rising saturation in Vermont. He emphasized that brand performance remained strong, higher-margin channels are growing, and the company’s lean cost structure supports long-term viability. He also framed strategic alternatives as a way to potentially reduce public-company overhead, increase scale, and expand the business.

Mike Rutherford focused on the decline in revenue and profitability alongside the company’s cost discipline. He broke down the $7.03 million revenue figure as being hurt mainly by a $4.0 million drop in core market sales and a $0.25 million decline in distribution, partially offset by a $0.26 million increase in e-commerce and a $0.2 million increase in emerging markets. He highlighted 52% adjusted gross margin, a 4% decline in operating expenses to $5.54 million, and cash and restricted cash of $8.32 million, while saying the company will continue to reduce costs in the near term.

There was no real analyst Q&A in the transcript, so the main management commentary centered on the prepared remarks. The most notable themes were the softness in Colorado and Vermont, the growth in Vermont wholesale and e-commerce, and the ongoing review of strategic alternatives with PGP Capital Advisors. Management also pointed to the DEA’s proposed move to Schedule III as a potentially meaningful industry-wide positive because of the possible removal of 280E tax burdens.