Operating Expenses improved 38%
Cash
increase over Q2 of 2022
DENVER, Nov. 14,
2022 /CNW/ - (TSX: CWEB) (OTCQX: CWBHF),
Charlotte's Web Holdings, Inc. ("Charlotte's Web" or the
"Company"), the market leader in full-spectrum hemp extract
wellness products, today reported financial results for the third
quarter ended September 30, 2022.
"We've made significant progress this year realigning resources
to strengthen Charlotte's Web for long-term growth by executing on
our strategic imperatives around innovation, expanding channels and
distribution, growing our international presence, and furthering
potential FDA pathways," Jacques
Tortoroli, Chief Executive Officer of Charlotte's Web, said.
"Importantly, we have also restructured our sales organization and
streamlined operations, which reduced expenses by 38%, now below
$70 million on an annualized run
rate. We believe this positions us for sustained improvement in
topline growth and profitability as our key initiatives continue to
gain traction."
Business highlights
Charlotte's Web significantly expanded its U.S. coverage, adding
several new distributors and entering new channels:
- SBM LLC: A new vertical and industry first for CBD,
through this employer-sponsored benefit plan, US employers can now
confidently provide employees and their pets with coverage and
access to Charlotte's Web products as an alternative health and
wellness therapy.
- Cardinal Health: Wholesale distribution agreement covering
thousands of pharmacies and retail chain customers.
- Hanson Faso Sales and Marketing:
Leading brokers across the Central U.S. with thousands of retail
customer locations across specialty, grocery, natural, specialty,
food service, and alternate channels.
- Southern Glazer: CW product line added to America's leading
wine and spirits distribution company in 44 states.
- Stark Foods: A chief distributor of European specialty food and
beauty products to grocery and retail in the US servicing almost
15,000 doors through its multi-broker network.
During the third quarter, Charlotte's Web announced a new
product line for the sports channel and in October, unveiled the
first product "Charlotte's Web Sport – Daily Edge™" broad spectrum
oil tincture – the first and only broad spectrum CBD oil to be
certified NSF for Sport®. The line provides athletes and
consumers with safe, natural options to support recovery, help keep
calm under pressure, and maintain healthy sleep cycles and
focus.
Charlotte's Web was named the "Official CBD of Major League
Baseball" on October 12, 2022, which
coincided with the launch of Daily Edge. This marked the first
major professional sports league to form a strategic partnership
agreement with a CBD company. Charlotte's Web commends MLB's
recognition of the broad interest and value of CBD for supporting
the daily health and wellness of its players and fans.
"The MLB partnership is a home run for Charlotte's Web and CBD.
We expect its well established and trusted profile to
positively influence consumers, government regulators and
Congressional leadership. The partnership has already paid
significant dividends through the awareness and education enabled
by the enormous exposure that MLB provides through its base of 180
million fans throughout the year. This partnership can be the first
domino in a series of high profile moves within the CBD category
among leading organizations," added Mr. Tortoroli.
Executing on its asset-light model for international markets by
partnering with leading local market partners, on November 2, 2022, Charlotte's Web announced a
strategic alliance with Tilray Brands for manufacturing and
distribution in Canada. For the
first time, Canadians will have the ease of nationwide availability
of Charlotte's Web full spectrum CBD products through Tilray's
distribution network. First availability is expected in early 2023
for hemp extract oil tinctures, followed by gummies and
topicals.
Q3-2022 Financial Review
For the three-month period ended September 30, 2022, net revenue was $17.0 million, a decrease of 28.1% versus
$23.7 million in Q3-2021. The
decrease was primarily due to lower comparable customer shipments,
ongoing consumer shifts from tinctures to lower-priced gummies and
formats, and lower relative traffic to the Company's e-commerce
store.
Direct-to-consumer e-commerce net revenue was $11.8 million, a decrease of $3.4 million or 22.5% due to lower year-over-year
traffic. Charlotte's Web maintains the largest e-commerce business
in the CBD industry and e-commerce represents the largest channel
in the industry with an approximate 40% industry market share
according to the Brightfield Group.
Business-to-business net revenue was $5.3
million, a decrease of $3.3
million, or 38.1%, lower year-over-year primarily due to
lower comparable shipments to some of the Company's largest retail
customers. Several new distributors were added during the quarter
as a result of a strategic transition from direct-sales to a
distributor model, however, these take time to develop and did not
materially impact sales in the quarter. Charlotte's Web holds the
number one share position across major retail channels including
food/drug/mass retail, and natural grocery & vitamin retailers,
based on market share data from leading third-party analysts such
as The Nielsen Company (total xAOC), SPINS (SPINS Total US), and
Brightfield Group, respectively.
Gross profit was $8.9 million, or
52.5% of revenue versus $14.9 million
and 62.9% of revenue respectively in Q3-2021. The decrease was
primarily related to lower net revenue and sales mix with consumer
trend shift from oil tinctures to lower-cost gummies.
Total selling, general and administrative ("SG&A") expenses
were $11.0 million, including an
Employee Retention Credit ("ERC") tax benefit of $4.1 million, due from the U.S. Internal Revenue
Service, recorded in the third quarter of 2022. Excluding the ERC,
SG&A expenses were $15.1 million,
a 37.7% year-over-year reduction as compared to SG&A expense of
$24.3 million in Q3-2021. The net
improvement reflects restructuring activities earlier this year
lowering personnel costs, a decrease in media marketing spend, and
increased operating efficiencies resulting from actions implemented
year-to-date. The recently signed MLB sponsorship agreement did not
impact SG&A during the third quarter and will not have a
significant impact on a full-year basis.
An operating loss of $3.9 million
in the third quarter of 2022 improved by $5.5 million, or 58.3%, as compared to an
operating loss of $9.4 million in
Q3-2021. The improvement, despite lower revenue, was primarily
attributable to reduced operating expenses and the ERC. The net
loss for the quarter was $7.6
million, or ($0.05) per share
on a basic and diluted basis, compared to a net loss of
$0.8 million, or ($0.01) per share, on a basic and diluted basis,
in Q3-2021. Q3-2022 included a negative change in the fair value of
the Company's SBH Purchase Option of $4.0
million, versus a positive change of $5.7 million in Q3-2021, for a non-cash net
difference of $9.7 million
year-over-year for the period. In addition, the Company's warrant
liabilities were revalued in Q3-2021 resulting in a non-cash gain
of $2.6 million.
Adjusted EBITDA1 for the third quarter of 2022 was
positive $0.6 million, an improvement
of $5.5 million as compared to
Adjusted EBITDA of negative $4.8
million in Q3-2021.
Balance Sheet and Cash Flow
Net cash used from operations for the nine-month period ended
September 30, 2022, was $2.6 million as compared to $23.3 million for the same period in 2021. The
Company's cash and working capital at September 30, 2022, were $16.5 million and $61.0
million, respectively, compared to $19.5 million and $75.6
million at December 31, 2021,
and $14.8 million and $64.6 million at June 30,
2022.
Consolidated Financial Statements and Management's Discussion
and Analysis
The Company's unaudited condensed consolidated Balance Sheets as
of September 30, 2022 and
December 31, 2021 and the unaudited
condensed consolidated Statements of Operations, Shareholders'
Equity, and Cash Flows and accompanying notes for the three and
nine months ended September 30, 2022
and 2021 and related management's discussion and analysis of
financial condition and results of operations ("MD&A") are
reported in the Company's 10Q filing on the Securities and Exchange
Commission website at www.sec.gov and on SEDAR at www.sedar.com,
and will be available on the Investor Relations section of the
Company's website at https://investors.charlottesweb.com.
Conference Call
Management will host a conference call to discuss the results on
November 15, 2022, at 10:00 a.m. Eastern Standard Time. To participate
in the call, please dial 1-416-764-8659 or 1-888-664-6392
approximately 10 minutes before the conference call and provide
confirmation number 24797121 or listen to the live
webcast online.
A recording of the call will be available through November 22, 2022. To listen to a replay of the
earnings call please dial 1-416-764-8677 or 1-888-390-0541 and
provide conference replay ID 797121. A webcast of the call will
also be accessible through the investor relations section of
the Company's website for an extended period of
time.
About Charlotte's Web Holdings, Inc.
Charlotte's Web Holdings, Inc., a Certified B Corporation
headquartered in Denver, is the
market leader in innovative hemp extract wellness products under a
family of brands that includes Charlotte's Web™, CBD Medic™, and
CBD Clinic™. Charlotte's Web whole-plant CBD extracts come in
full-spectrum and broad-spectrum (THC-free) options, including the
world's only broad-spectrum CBD certified NSF for Sport®, which is
the official CBD of Major League Baseball©. Founded by the seven
Stanley Brothers, ignited the CBD
industry when they came to global prominence with the coverage of a
young girl's astounding reaction to their hemp extract. Their
advocacy changed laws, public perception, and research around the
vast health potential of plant-based solutions. The Stanleys built
their business with the mission to bring safe, botanical options to
health seekers worldwide. Charlotte's Web branded premium quality
products start with proprietary hemp genetics that are American
farm-grown using organic and regenerative cultivation practices.
The Company's hemp extracts have naturally occurring botanical
compounds including cannabidiol ("CBD"), CBC, CBG, terpenes,
flavonoids, and other beneficial compounds. The Company's CW Labs
R&D division advances hemp science at a center of excellence in
Louisville, Colorado. Charlotte's
Web product categories include CBD oil tinctures (liquid products)
CBD gummies (sleep, stress, exercise recovery), CBD capsules, CBD
topical creams and lotions, as well as CBD pet products for dogs.
Through its vertically integrated business model, Charlotte's Web
maintains stringent control over product quality and consistency
with 20+ product lot testing for quality assurance. Charlotte's Web
products are distributed to more than 15,000 retailers, over 8,000
health care practitioners, and online through the Company's website
at www.charlottesweb.com.
Charlotte's Web was founded by the seven Stanley Brothers with a mission to unleash the
healing powers of botanicals through compassion and science,
benefiting the planet and all who live upon it. Charlotte's
Web is a socially and environmentally conscious company and is
committed to using business as a force for good and a catalyst for
innovation. The Company weighs sound business decisions with
consideration for how its efforts affect employees, customers, the
environment, and diverse communities. The rate the Company pays for
agricultural products reflects a fair and sustainable rate driving
higher quality yield, encouraging regenerative farming practices,
and supporting U.S. farming communities. Management believes that
its socially oriented and environmentally responsible actions have
a positive impact on its customers, suppliers, employees and
stakeholders. Charlotte's Web donates a portion of its pre-tax
earnings to charitable organizations.
Shares of Charlotte's Web trade on the Toronto Stock Exchange
(TSX) under the symbol "CWEB" and are quoted in U.S. Dollars in
the United States on the OTCQX
under the symbol "CWBHF". As of November 10,
2022, Charlotte's Web had 151,628,652 Common Shares
outstanding.
© Major League Baseball trademarks and copyrights are used with
permission of Major League Baseball. Visit MLB.com.
Forward-Looking Information
In the interest of providing the shareholders and potential
investors of Charlotte's Web Holdings, Inc. with information about
the Company, certain information provided herein constitutes
forward-looking statements or information (collectively,
"forward-looking statements") within the meaning of the Private
Securities Litigation Reform Act of 1995 and other applicable
securities laws. Forward-looking statements are typically
identified by words such as "may", "will", "should", "could",
"anticipate", "expect", "project", "estimate", "forecast", "plan",
"intend", "target", "believe" and similar words suggesting future
outcomes or statements regarding an outlook. Although these
forward-looking statements are based on assumptions the Company
considers to be reasonable based on the information available on
the date such statements are made, such statements are not
guarantees of future performance and readers are cautioned against
placing undue reliance on forward-looking statements. By their
nature, these statements involve a variety of assumptions, known
and unknown risks and uncertainties, and other factors which may
cause actual results, levels of activity, and achievements to
differ materially from those expressed or implied by such
statements. The forward-looking statements contained in this press
release are based on certain assumptions and analysis by the
management of the Company in light of its experience and perception
of historical trends, current conditions and expected future
development and other factors that it believes are
appropriate.
Specifically, this press release contains forward-looking
statements relating to, but not limited to: : our beliefs that we
are positioned for sustained improvement in growth and
profitability beginning in 2023; our expectations regarding the
positive influence of our MLB partnership on consumers, regulators
and government officials and as a first domino in endorsements of
CBD products by high profile organizations; our expectations
regarding the availability of our products in Canada through the Tilray relationship;
rebuilding online traffic and conversion; progress continuing in
key international markets; our products continuing
being allowed to be sold in the
UK; the expectation that we will have our first
bulk product shipment in the second half of the year; that we
continue to steward use of cash while furthering our product
rationalization to lower complexity and costs across our
operations; anticipated consumer trends and corresponding product
innovation; anticipated future financial results; international
expansion activities and strategy, including partnerships in
Greater China, harvest and planned
product sales in Canada, and
expansion in UK and EU; sales volume, product, channel and
international expansion plans; growth of the Company's market share
position; that the reorganization right-sized our operating
expenses to our revenue; the impact of certain activities on the
Company's business and financial condition; suggested regulatory
developments; and the Company's anticipated trajectory, long-term
growth expectations and shareholder value creation.
The material factors and assumptions used to develop the
forward-looking statements herein include, but are not limited to,
the following: the impact of the COVID-19 pandemic; the regulatory
climate in which the Company currently operates and may in the
future operate; successful sales of the Company's products; the
success of sales and marketing activities; there will be no
significant delays in the development and commercialization of the
Company's products, including in relation to supply chain
disruptions; outcomes from R&D activities; ability for the
Company to leverage R&D and brand recognition for product
sales; the Company's ability to deal with adverse growing
conditions (due to pests, disease, fungus, climate or other
factors) in a timely and cost-effective manner; there will be no
significant reduction in the availability of qualified and
cost-effective human resources; new products will continue to be
added to the Company's portfolio; demand for the Company's products
will grow in the foreseeable future; there will be no significant
barriers to the acceptance of the Company's products in the market,
including in international markets; the Company will be able to
maintain compliance with applicable contractual and regulatory
obligations and requirements; there will be adequate liquidity
available to the Company to carry out its operations and business
plans; the Company will have sufficient capital to pursue its sales
volume, product, channel and international expansion; and products
do not develop that would render the Company's current and future
product offerings undesirable and the Company is otherwise able to
minimize the impact of competition and keep pace with changing
consumer preferences.
The Company's forward-looking statements are subject to risks
and uncertainties pertaining to, among other things, the adverse
impact of the COVID-19 pandemic to the Company's operations, supply
chain, distribution chain, and to the broader market for the
Company's products; revenue fluctuations; nature of government
regulations (both domestic and foreign); economic conditions; loss
of key customers; retention and availability of executive talent;
competing products; common share price volatility; loss of
proprietary information; product acceptance; internet and system
infrastructure functionality; information technology security;
available capital to fund operations and business plans; crop risk;
international and political considerations; regulatory changes; and
including but not limited to those risks and uncertainties
discussed under the heading "Risk Factors" in the Company's Annual
Report on Form 10-K for the year ending December 31, 2021
available on www.sec.gov and
www.sedar.com, and other risk factors contained in other
filings with the Securities and Exchange Commission available
on www.sec.gov and filings with Canadian
securities regulatory authorities available on
www.sedar.com. The impact of any one risk,
uncertainty, or factor on a particular forward-looking statement is
not determinable with certainty as these are interdependent, and
the Company's future course of action depends on management's
assessment of all information available at the relevant
time.
Except as required by applicable law, the Company assumes no
obligation to publicly update or revise any forward-looking
statements made, whether as a result of new information, future
events, or otherwise. All forward-looking statements, whether
written or oral, attributable to the Company or persons acting on
the Company's behalf, are expressly qualified in their entirety by
these cautionary statements.
(1) Non-GAAP Measures
The press release contains
non-GAAP measures, including EBITDA and Adjusted EBITDA.
Please refer to the section in the tables captioned "Non-GAAP
Measures" below for additional information and a reconciliation to
GAAP for all Non-GAAP metrics.
CHARLOTTE'S WEB
HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share
amounts)
|
|
September
30,
|
|
December
31,
|
|
2022
(unaudited)
|
|
2021
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
16,513
|
|
$
19,494
|
Accounts receivable,
net
|
2,044
|
|
4,882
|
Notes receivable -
current
|
495
|
|
495
|
Inventories,
net
|
50,599
|
|
52,077
|
Prepaid expenses and
other current assets
|
4,530
|
|
8,095
|
Income taxes
receivable
|
—
|
|
10,764
|
Total current
assets
|
74,181
|
|
95,807
|
Property and equipment,
net
|
31,087
|
|
36,085
|
Operating lease
right-of-use assets, net
|
17,079
|
|
20,679
|
Intangible assets,
net
|
2,018
|
|
2,843
|
Stanley Brothers USA
Holdings purchase option
|
9,100
|
|
13,000
|
Notes receivable -
noncurrent
|
1,037
|
|
1,037
|
Other long-term
assets
|
6,016
|
|
2,062
|
Total assets
|
$
140,518
|
|
$
171,513
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
2,584
|
|
$
5,049
|
Accrued and other
current liabilities
|
7,435
|
|
9,570
|
Cultivation
liabilities – current
|
812
|
|
3,448
|
Lease obligations –
current
|
2,316
|
|
2,103
|
Total current
liabilities
|
13,147
|
|
20,170
|
Cultivation liabilities
– noncurrent
|
—
|
|
385
|
Lease obligations –
noncurrent
|
18,507
|
|
20,500
|
Other long-term
liabilities
|
2
|
|
12
|
Total
liabilities
|
31,656
|
|
41,067
|
Commitments and
contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common shares, nil par
value; unlimited shares authorized as of
September 30, 2022 and December 31, 2021, respectively;
145,509,372
and 144,659,964 shares issued and outstanding as of
September 30,
2022 and December 31, 2021
|
1
|
|
1
|
Proportionate voting
shares, nil par value; nil shares authorized as of
September 30, 2022 and December 31, 2021, respectively; nil
shares
issued and outstanding as of September 30, 2022 and December
31,
2021, respectively
|
—
|
|
—
|
Additional paid-in
capital
|
321,559
|
|
319,059
|
Accumulated
deficit
|
(212,698)
|
|
(188,614)
|
Total shareholders'
equity
|
108,862
|
|
130,446
|
Total liabilities and
shareholders' equity
|
$
140,518
|
|
$
171,513
|
CHARLOTTE'S WEB
HOLDINGS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
|
|
Three Months
Ended September 30,
(unaudited)
|
|
Nine months
ended September 30,
(unaudited)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenue
|
$
17,037
|
|
$
23,704
|
|
$
55,271
|
|
$
71,263
|
Cost of goods
sold
|
8,092
|
|
8,789
|
|
25,291
|
|
26,884
|
Gross profit
|
8,945
|
|
14,915
|
|
29,980
|
|
44,379
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
expenses
|
11,032
|
|
24,299
|
|
48,646
|
|
73,263
|
Asset
impairment
|
1,822
|
|
—
|
|
1,822
|
|
—
|
Operating
loss
|
(3,909)
|
|
(9,384)
|
|
(20,488)
|
|
(28,884)
|
|
|
|
|
|
|
|
|
Other income,
net
|
321
|
|
110
|
|
304
|
|
320
|
Change in fair value
of financial
instruments and other
|
(4,000)
|
|
8,459
|
|
(3,900)
|
|
9,082
|
Loss before provision
for income taxes
|
(7,588)
|
|
(815)
|
|
(24,084)
|
|
(19,482)
|
|
|
|
|
|
|
|
|
Income tax
benefit
|
—
|
|
38
|
|
—
|
|
8
|
Net loss
|
$
(7,588)
|
|
$
(777)
|
|
$
(24,084)
|
|
$
(19,474)
|
|
|
|
|
|
|
|
|
Net loss per common
share, basic and
diluted
|
$
(0.05)
|
|
$
(0.01)
|
|
$
(0.17)
|
|
$
(0.14)
|
Weighted-average shares
used in computing
net loss per share, basic and diluted
|
145,334,992
|
|
140,521,244
|
|
145,203,515
|
|
140,054,738
|
CHARLOTTE'S WEB
HOLDINGS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands, except share amounts)
(unaudited)
|
|
Proportionate
Voting Shares
|
|
Common
Shares
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Total
Shareholders'
Equity
|
|
Shares
|
|
Shares
|
|
Amount
|
|
|
|
Balance—December 31, 2021
|
—
|
|
144,659,964
|
|
$
1
|
|
$
319,059
|
|
$
(188,614)
|
|
$
130,446
|
Common shares issued
upon vesting of restricted
share units, net of withholding
|
—
|
|
77,193
|
|
—
|
|
(45)
|
|
—
|
|
(45)
|
Harmony Hemp
contingent equity compensation
|
—
|
|
169,045
|
|
—
|
|
165
|
|
—
|
|
165
|
ATM program issuance
costs
|
—
|
|
239,500
|
|
—
|
|
(2)
|
|
—
|
|
(2)
|
Share-based
compensation
|
—
|
|
—
|
|
—
|
|
1,214
|
|
—
|
|
1,214
|
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(8,626)
|
|
(8,626)
|
Balance— March 31,
2022
|
—
|
|
145,145,702
|
|
$
1
|
|
$
320,391
|
|
$
(197,240)
|
|
$
123,152
|
Common shares issued
upon vesting of restricted
share units, net of withholding
|
—
|
|
132,463
|
|
—
|
|
(13)
|
|
—
|
|
(13)
|
Share-based
compensation
|
—
|
|
—
|
|
—
|
|
643
|
|
—
|
|
643
|
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(7,870)
|
|
(7,870)
|
Balance—June 30,
2022
|
—
|
|
145,278,165
|
|
$
1
|
|
$
321,021
|
|
$
(205,110)
|
|
$
115,912
|
Common shares issued
upon vesting of restricted
share units, net of withholding
|
—
|
|
231,207
|
|
—
|
|
(67)
|
|
—
|
|
(67)
|
ATM program issuance
costs
|
—
|
|
—
|
|
—
|
|
(59)
|
|
—
|
|
(59)
|
Share-based
compensation
|
—
|
|
—
|
|
—
|
|
664
|
|
—
|
|
664
|
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(7,588)
|
|
(7,588)
|
Balance—September 30, 2022
|
—
|
|
145,509,372
|
|
$
1
|
|
$
321,559
|
|
$
(212,698)
|
|
$
108,862
|
CHARLOTTE'S WEB HOLDINGS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands, except share amounts)
(unaudited)
|
|
Proportionate
Voting Shares
|
|
Common
Shares
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Total
Shareholders'
Equity
|
|
Shares
|
|
Shares
|
|
Amount
|
|
|
|
Balance—December 31, 2020
|
81,177
|
|
107,060,237
|
|
$
1
|
|
$
305,133
|
|
$
(50,892)
|
|
$
254,242
|
Exercise of stock
options
|
—
|
|
8,261
|
|
—
|
|
30
|
|
—
|
|
30
|
Conversion to common
shares
|
(3,961)
|
|
1,584,410
|
|
—
|
|
—
|
|
—
|
|
—
|
Common shares issued
upon vesting of restricted
share units, net of withholding
|
—
|
|
61,548
|
|
—
|
|
(112)
|
|
—
|
|
(112)
|
Exercise of common
stock warrants
|
—
|
|
98,788
|
|
—
|
|
441
|
|
—
|
|
441
|
Share-based
compensation
|
—
|
|
—
|
|
—
|
|
832
|
|
—
|
|
832
|
Harmony Hemp
contingent equity compensation
|
—
|
|
169,046
|
|
—
|
|
360
|
|
—
|
|
360
|
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(12,774)
|
|
(12,774)
|
Balance—March 31,
2021
|
77,216
|
|
108,982,290
|
|
$
1
|
|
$
306,684
|
|
$
(63,666)
|
|
$
243,019
|
Conversion to common
shares
|
(1,327)
|
|
530,900
|
|
—
|
|
—
|
|
—
|
|
—
|
Withholding of common
stock upon vesting of
restricted share awards
|
—
|
|
16,559
|
|
—
|
|
(26)
|
|
—
|
|
(26)
|
Harmony Hemp
contingent equity compensation
|
—
|
|
—
|
|
—
|
|
363
|
|
—
|
|
363
|
ATM Offering, net of
share issuance costs
|
—
|
|
278,200
|
|
—
|
|
839
|
|
—
|
|
839
|
Share-based
compensation
|
—
|
|
—
|
|
—
|
|
994
|
|
—
|
|
994
|
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(5,923)
|
|
(5,923)
|
Balance—June 30,
2021
|
75,889
|
|
109,807,949
|
|
$
1
|
|
$
308,854
|
|
$
(69,589)
|
|
$
239,266
|
Conversion to common
shares
|
(38,675)
|
|
15,469,990
|
|
—
|
|
—
|
|
—
|
|
—
|
Withholding of common
stock upon vesting of
restricted share awards
|
—
|
|
103,074
|
|
—
|
|
(5)
|
|
—
|
|
(5)
|
Harmony Hemp
contingent equity compensation
|
—
|
|
169,045
|
|
—
|
|
196
|
|
—
|
|
196
|
ATM Offering, net of
share issuance costs
|
—
|
|
740,000
|
|
—
|
|
1,918
|
|
—
|
|
1,918
|
Share-based
compensation
|
—
|
|
—
|
|
—
|
|
1,383
|
|
—
|
|
1,383
|
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(777)
|
|
(777)
|
Balance—September 30, 2021
|
37,214
|
|
126,290,058
|
|
$
1
|
|
$
312,346
|
|
$
(70,366)
|
|
$
241,981
|
CHARLOTTE'S WEB
HOLDINGS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
Nine months ended
September 30,
(unaudited)
|
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
Net loss
|
$
(24,084)
|
|
$
(19,474)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
5,762
|
|
8,228
|
Asset
impairment
|
1,822
|
|
—
|
Change in fair value
of financial instruments
|
3,900
|
|
(9,082)
|
Allowance for credit
losses
|
(89)
|
|
590
|
Inventory
provision
|
1,857
|
|
178
|
Share-based
compensation
|
2,686
|
|
4,128
|
(Gain)/Loss on
disposal of assets
|
(97)
|
|
267
|
Cultivation settlement
reduction
|
(582)
|
|
—
|
Changes in
right-of-use assets
|
1,877
|
|
—
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net
|
2,928
|
|
(226)
|
Inventories,
net
|
112
|
|
(876)
|
Prepaid expenses and
other current assets
|
3,086
|
|
112
|
Operating lease
obligations
|
(1,665)
|
|
(81)
|
Accounts payable,
accrued and other liabilities
|
(4,238)
|
|
(439)
|
Income taxes
receivable
|
10,764
|
|
523
|
Cultivation
liabilities
|
(2,471)
|
|
(7,166)
|
Other operating assets
and liabilities, net
|
(4,167)
|
|
(6)
|
Net cash used in
operating activities
|
(2,599)
|
|
(23,324)
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property
and equipment and intangible assets
|
(411)
|
|
(4,088)
|
Proceeds from sale of
assets
|
354
|
|
9
|
Issuance of notes
receivable, net of collections
|
—
|
|
468
|
Investment in Stanley
Brothers USA Holdings purchase option
|
—
|
|
(8,000)
|
Other investing
activities
|
—
|
|
521
|
Net cash used in
investing activities
|
(57)
|
|
(11,090)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from sale of
public offering, net of issuance costs
|
(61)
|
|
2,896
|
Proceeds from stock
option exercises
|
—
|
|
30
|
Other financing
activities
|
(264)
|
|
(246)
|
Net cash (used)
provided in financing activities
|
(325)
|
|
2,680
|
Net decrease in cash
and cash equivalents
|
(2,981)
|
|
(31,734)
|
Cash and cash
equivalents —beginning of period
|
19,494
|
|
52,803
|
Cash and cash
equivalents —end of period
|
$
16,513
|
|
$
21,069
|
Non-cash
activities:
|
|
|
|
Non-cash purchases of
property and equipment
|
$
—
|
|
$
(2,490)
|
(1) Non-GAAP Measures– Adjusted EBITDA
Earnings before interest, taxes, depreciation, and amortization
("EBITDA") is not a recognized performance measure under U.S.
GAAP. The term EBITDA consists of net loss and excludes
interest, taxes, depreciation, and amortization. Adjusted
EBITDA also excludes other non-cash items such as changes in fair
value of financial instruments (Mark-to-Market), Share-based
compensation, and impairment of assets. These non-GAAP financial
measures should be considered supplemental to, and not a substitute
for, our reported financial results prepared in accordance with
GAAP. The non-GAAP financials measures do not have a
standardized meaning prescribed under U.S. GAAP and therefore may
not be comparable to similar measures presented by other
issuers. The primary purpose of using non-GAAP financial
measures is to provide supplemental information that we believe may
be useful to investors and to enable investors to evaluate our
results in the same way we do. We also present the non-GAAP
financial measures because we believe they assist investors in
comparing our performance across reporting periods on a consistent
basis, as well as comparing our results against the results of
other companies, by excluding items that we do not believe are
indicative of our core operating performance. Specifically, we use
these non-GAAP measures as measures of operating performance; to
prepare our annual operating budget; to allocate resources to
enhance the financial performance of our business; to evaluate the
effectiveness of our business strategies; to provide consistency
and comparability with past financial performance; to facilitate a
comparison of our results with those of other companies, many of
which use similar non-GAAP financial measures to supplement their
GAAP results; and in communications with our board of directors
concerning our financial performance. Investors should be aware,
however, that not all companies define these non-GAAP measures
consistently.
(1)
|
EBITDA and Adjusted
EBITDA are non-GAAP financial measures with reconciliations
provided in the table below.
|
|
Three-months ended
September 30,
(unaudited)
|
Nine-months ended
September 30,
(unaudited)
|
U.S. $
Thousands
|
2022
|
2021*
|
2022
|
2021*
|
|
|
|
|
|
Net loss
|
$
(7,588)
|
$ (777)
|
$
(24,084)
|
$
(19,474)
|
|
|
|
|
|
Depreciation of
property and
equipment and amortization of
intangibles
|
1,822
|
2,763
|
|
5,762
|
8,228
|
Financing
costs
|
-
|
-
|
-
|
-
|
Interest (income)
expense
|
(88)
|
9
|
(69)
|
18
|
Income tax
|
-
|
38
|
-
|
8
|
|
|
|
|
|
EBITDA
|
(5,854)
|
2033
|
(18,391)
|
(11,220)
|
|
|
|
|
|
|
|
|
|
|
Stock Comp
|
664
|
1,579
|
2,686
|
4,128
|
Mark-to-market
financial
instruments
|
4,000
|
(8,459)
|
3,900
|
(9,082)
|
Impairment
|
1,822
|
-
|
1,822
|
-
|
Adjusted
EBITDA
|
$
632
|
$
(4,847)
|
$
(9,983)
|
$
(16,174)
|
*
|
Certain prior year
amounts in the table above have been conformed to the current year
presentation in accordance with how the Company is defining the
EBITDA and Adjusted EBITDA calculation as of September 30,
2022.
|
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SOURCE Charlotte's Web Holdings, Inc.