CVSI - Earnings call transcript Q2 2018

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Operator

Greetings and welcome to the CV Sciences' 2018 Second Quarter Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. It is now my pleasure to introduce Debra Chen, Director of Client Communications at IRTH Communications. Ms. begin. may you Chen,

Debra Chen

Dowling. I Sciences' to call. second CV Officer, today everyone. you With all to is Joseph Executive Chief CV quarter Sciences would afternoon, welcome like of us Good XXXX conference

forward-looking such, this potential, like Q&A forward-looking Before I turn statements are cautioned are all prepared anticipate, and you make will, call statements from And in over which as management's forward-looking actual Session. statement. could, are forward-looking in believe, and call during that risk by contain and differ risk time. additional to to and statements differ management project, cause risk intend, those I as this similar uncertainties. Sciences to may expressions to that expect, anticipated remarks CV and words uncertainties CV remind a the should, this results management, actual results the These to materially. would the forward-looking which they subject Investors used enable, statements When subject call, relate to may involve uncertainties, estimate, are, at Sciences, might

can U.S. fully and addition, with risks filings CV Exchange the at reviewed In Sciences other Commission, public in described www.sec.gov. more are which be Securities

its to the issued the the afterwards performance financial comparable reconciliation SEC results. of today's refer non-GAAP management Xst, CV with announcing financial XX-Q to from to please company This press which measures its note XX-Q August Finally, CV that on measures Please release full results. a financial financial its non-GAAP most expenses GAAP measures. for filed GAAP call, its in will refer Sciences morning, and certain Sciences excludes

for results may look the this CV business may call. this would to an the done second provide already those as provides I of a Mr. wish developments Executive on XXXX. the call, activities overview Dowling company's of over of documents not have turn participants this Officer, Chief company like the So who and now on to summary Sciences' to at Joseph who will so, quarter

Q&A. We then open up for will Joe?

Joseph Dowling

thanks announce call. filed Thank and to release, and are afternoon, QX we XXXX. financial proud XX-Q for our you, and results earnings Debra. for today, Good record Earlier press joining second we everyone quarter our

For of momentum quarter, cash and significant trusted great XXXX. achieved have revenue, Through fastest and to gross we record The and of the income most second momentum CBD growing the products, adjusted to achieved providing first-half off in strong flow, from we has CBD straight XXXX for our commitment and resulting and we sales profit, QX brand net of shareholders. in hemp are EBITDA continued, dedication product brand recognition line. plus our a

include for new new recognition, sales to growing category strengthening and Our in product the penetrating XXXX the continuing expand relevance reach, channels our products, our growing supplement brand developing and distribution of industry. strategic priorities channel market vertical fastest nutritional the

greater than channel important Our treat at annually segment drug provides company. FDA addiction. market plan $X develop continues to only to for billion use approved drug This to has been another treatment and on our our smokeless growth execute the tobacco development estimated and

Web our investor Debra relations XX-Q slide access to encourage quarter earnings this of you earlier second site, to quarter visit filed press in introduction, metrics we second this we release. information. morning, to the we As for deck which mentioned today, of and our posted Also XXXX all the section company QX our performance

turn to segment. product let's results consumer for Now our

operating record XXXX, consumer our of performance financial the across product second quarter segment metric. operating every and During achieved

product to in products line aggregator be retail Our selling plus one CBD according natural brand channel spends. continues number the data CBD the to the hemp

in the quarterly same natural And $X.X QX of second product the organic $X.X second wholesale, retail. number to XXXX company's XXXX. compared achieved not quarter sequential for increase profitable just Sales direct-to-consumer In totaled sales we for of million income to QX all is a XXXX This totaled CBD, This XXXX product compared across for the million retail brand natural of million. and selling to addition, the two sales net growth $XX.X net and loss growth GAAP compared channels, quarter categories $X.X now compared for of XX% we improvement million. consecutive XXXX. $X.X channel. quarter an GAAP are QX sales second of Again, QX XXX% represents products $XXX,XXX million. is XXXX to the

to second gross quarter XX% compared QX million, of an XXXX. XXXX. profit XXXX a increase for $X.X margin represents was This XXX% gross of Our QX the for

performance. key We our from ability measure we measure while performance flow demonstrate indicators to operating to and are expand flow maintain our that continue we Other sales. track we ability evaluating margins adjusted cash in generate our to to EBITDA, key is cash non-GAAP metric strong a a activities believe

six from positive million ended June XXXX, the million our $X.X XXXX. was $X.X increased by months we position flow operating cash QX cash activities for Our and during XX,

was QX for an $X.X quarter million improvement XXXX. of $X.X EBITDA when XXXX adjusted second Our the million, compared to

balance to expand. footprint distribution operating our performance XXXX. QX resulted retail XXXX. channel to in distribution XX, June We to sequential of A as of sheet. a increase increased XX% has The Our XXXX stronger continues stores compared company's

million QX is XXXX cash at June million ago for XXXX. just compared Our in was by $X.X $X.X increase quarter position balance an cash million $X.X our one XXXX, to XX, XX, March at which

We are efficiently. cash using our

XXXX, quarter debt totaling all dilution. During second convertible the $XXX,XXX remaining any avoided fully repaid thereby and shareholder we further

months due is totaling convertible to repay we $XXX,XXX, flow and expect is balance nine an debt not this cash XXXX. in from over if the debt May next Our obligation this remaining loan sooner. is which debt not unsecured

about for Industry forecasts nearly Going forward, billion hemp the $X.X by category product very estimate hemp will CBD we optimistic are product CBD category. that the potential XXXX. the growth reach

category believe expand and generate to cash sales is will including We ability specific not guidance, to our grow and product strong to our ability will leader market profitable providing flow. growth While continue CBD our as the hemp we believe well-positioned. continue, the

for the ability second-half year we company that beyond. to believe XXXX The have great are continue XXXX of months to and strong to our we our first this a six a deliver can in in growth and start and XXXX confident momentum been

and on the some both chambers' farm to like was legislative recent highlights impact would would The our of this to increasing law XX, consumer would I industry sent and in passed companies cannabidiol. for The been bipartisan current strong bills. hemp ingredients has of CV being be legal legislation by clarify which the XXXX. into Now, This farmers, support, to the signed our Senate for and including for impacting the conference this cover matter Sciences. including the legislation crop XXXX expand two derived bill framework has XXXX differences between resolve and significant significant legislative product important is segment. and the like This the House processors, committee and July most passing bill likelihood its industry,

our the our in We and the others. this process work leadership in will will long-term legislative shareholders. this significant and with our through U.S. dividends We for investment pay short role continue strong believe hemp roundtable

of progress drug development program believes on make drug candidate the in combining and dollar developmental nicotine operating and for treatment segment, Now to cannabidiol addiction product potential a of unmet development need our we CVSI-XXX, drug update brief use steady massive lead for smokeless our our a our nicotine a strongly on drug pre-clinical market. program CVSI the treating in tobacco of addiction. use multi-billion and continue

updates. our quarters, on expect drug development filed application As next will we to last have Late and announced the have our updates for with we to several NASDAQ. more such data that we for to uplisting provide month, investors present notice over program we appropriate

thank is have development a purpose San XXXX the for an summary, increase We national we the believe to of to application this will our potential if $X estimates Street the position Company our legal listed and cannabis market as further and only stock drug exponential landscape CVSI-XXX. drug in the medical grow treating the We during exchanges encourage there uplisting our six, market sales This demand its approximately big two, and five, $X.X important market accelerate and market term Our everyone the Investor participate time look as of and reverse has for operating maintain this scale segment providing operating to levels to the we as would our the annual these that future candidates, sharing forward debt and and has extremely program. are believe opportunity. is XXXX major three, which for markets split intend Revenue development shareholders. And broader segments, of and of significant were increase investors segment, could all like Saturday Relations $XX Wall information. Epidiolex product and open the believe stock this overall significantly flow. the And clearing Again, with products roughly and and billion meeting already in drug consumer states I We In to you acceptance. number and capital is could've Cowen is banks rapidly, operating at effectuate in becoming community institutionally industry billion a de-leveraged relationship traded we Number sales one, our growing that investment company in this Bill visit cash recent board Number by meet forward potential the CBD is performance change for continue potential is fundamentals our and growth science the to CBD's to call. CBD longer Farm our increasing in our increasing, are CBD a on shareholder have investors. our in fully fully and attention of the this legal drug our of connection XXXX. we split to create hemp-based could company been years. to outstanding. shareholders. top by section of of XXXX. pathway coming expected Diego profitable, company for updates. approval short our attract in opportune If industry Web the forward caused billion the of and will consumer FDA's outstanding and we market financial by for We more factors dilution. our combination being at company. that look convertible approved including approved goals. will our Number validation look detailed joining four, believe uplist to positive more various information on two our I to directors for the for the further industry financial value company stockholders as require the we some indications operating which consider and Number to NASDAQ reverse by our Number held strong research, positively certain repaid is for and the a tremendous for to attracting headquarters, advance listing relevant. development sole seven, Number only proposal site necessary. understand own in will key and

now be taking will online We questions.

Operator

Dowling. you, Thank Thank online Dowling we'll it Mr. your I to our session. this Instructions] be Mr. turn [Operator questions. question-and-answer time to back will respond you. At to not conducting

Joseph Dowling

Diego. you, Thank

I you'll go as I can. And get questions many here. I'll with me patient as reading to I'm If possibly as them be

Unidentified Analyst

expect you continue? The revenue do first question growth is your to

Joseph Dowling

I'll conditions. about of and the banks all start growth are industry. investment agreement virtually this in the potential organizations macro research with Bigger

just ago. then You micro level a at the just forecast mention entire by XXXX on billion-plus sort XXXX the for Cowen's the is market, heard cannabis for year of and times CBD perhaps from XX $X.X which subsector, more forecast our billion And growing sector. $XX me for a

as as gain yes, are for by in this investment prominent one houses the Wall of CBD significant growing we believe companies sure. that banks. as well research the forecast we And market, we subsector Street a So will of share

Unidentified Analyst

your think you that XXXX company? You have What on Farm mentioned will Bill. do the impact

Joseph Dowling

research farmers, commodity, many impact the really agricultural but Sciences, CV sure A will farmers, and legal And a just but able company. farmers. the retain framework techniques, that seem consumers. processing all rights way be benefit including passage and flows And impactful Bill this step everywhere, felt few making passage of with for by for growing for to us our crop it the industry to mentioning advance harvesting of when benefits genetics, that of an this insurance certainly an ways, in will outcomes a Farm from our is These to defining plant crop, for banking Farm I to better this start will be legislation. water to hemp farmers it lot not XXXX is conditions, and name the Bill expanding really is benefits, clarifying the just into as important growing

And and to and so impactful be beneficial our shareholders. our very will very think it I company to

Unidentified Analyst

So, approval you question end being remarks Sciences. toward your explain Epidiolex you further? next the is CV of talked Can about the the positive for prepared

Joseph Dowling

treat a disorder. in think neurological prescription XX to a it of one said context. Well, me difficult let a no that. if that Think cannabis, of the marijuana in June to FDA minute. with you very treatment start of drug cannabidiol, ago want contained very the CBD, this way, years as XXXX, or some about approved really serious, would've In for XX-plus chemical one

it XX research including again, will toxicology that about will might So ago commissioner, I clearly in Gottlieb, ago day we data area the of approved Epidiolex. a and is is become exactly about stated recent the now month not FDA are either. to have now our the And soon that immensely, think believe that the agency, on should with And you see more of very supportive what cannabis years we're going heard research, Epidiolex which approval, that soon other to that ours. very FDA the context Epidiolex the doing from of program. be public, now, certainly in approval help on you have drug data,

[technical efficacy, approval many, this has or research, outcomes company as many science, advancement beneficial it's industry, our safety it's for to well. We beneficial. very, of for beneficial for the the it's difficulty] so whether And but very think

Unidentified Analyst

process. So of we questions about about number the there's and are to company's in timing, the And where a about up-list NASDAQ.

Joseph Dowling

add X-K, our than I And and what release anything have to press in have really other we stated don't process. we the that related begun

through with And we the available we and appropriate. are that information will public going as engaged NASDAQ information have is We more certainly make application as process.

Unidentified Analyst

questions of be I current facility there will the able of new new number expanded And a are a see into questions, them again about your to there's growth? you are, and So -- your have that facility. several handle

Joseph Dowling

we area We marketing, every our mentioned prepared are take area, this And increasing in as scale including functional the to our well. continuing every as internal and we organization own invest this opportunity I very our company positioning various scale take in a my could we industry. in stated that, remarks, our maintain sales, in seriously throughout by manufacturing, production, of be other market, research organizations increasing we ourselves leadership And advantage sure and of about to growing and our that poised and that, by position. billion by XXXX, are $X.X make operating

Unidentified Analyst

about are questions questions mentioned. A the lot process. similar other to development just of the several that There's questions very I drug our

Joseph Dowling

progress And thoughtful this are on for those a to that carefully. position very making are it have far. not in process. so we provide have preclinical area, in through any our experience is a we than that we're information very process done And And what But we going further program.

We will provide appropriate. updates as

would of questions I are very I've to say questions other similar answered. most the So that basic just the

to so I again, conclude want our that thoughtful be to And last I with participating call. I everyone's And call for think, in you Diego? about will thank time, the response.

Operator

disconnect. day. may Have parties All webcast. today's concludes This sir. you, Thank a great

CV Sciences (CVSI) 1 Aug 182018 Q2 Earnings call transcript