CWEB.TO - Earnings call transcript Q3 2021 | Charlotte's Web Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, ladies and gentlemen, and welcome to Charlotte's Web Holdings Inc.

Third Quarter Conference Call. [Operator Instructions] Note that this call is being recorded on Monday, November 15, 2021.And now, I would like to turn the conference over to Cory Pala, Investor Relations. Please go ahead.

Cory Pala

Thank you, Sylvie. everyone. afternoon, Good joining for our earnings QX Thank us call. conference you for Elsner; of Cory is and Deanie Booysen. is name Investor Charlotte's CFO, Pala, CEO, morning My this Director Relations, Wes call leading Web's and the

results will earnings on been statements MD&A an Relations the filed today's financial with section on Our and our the website, the Deanie found and was sedar.com.On details market can Wes issued the close, share release of on and comments our business on category, of financials. CBD be financial will some Investor high-level at the they highlight update call, our have and and

section Officer, in filed through from as period A as this accessible Elsner. IFRS. that, for the Go the detail We accounting questions our which extended time, charlottesweb.com.A IR implied factors, to of uncertainties do now some during which will website our in refer on remarks. could prescribed company's our hand on to Such at is the adjusted details our Chief risks, certain replay the in measures, risks expectations. Adjusted call, provided may performance this from the call, made the ahead. answers take not our release. have therefore through of call end forward-looking by and to cause including other questions, that including we replay for meaning at EBITDA, Executive nature, as Web in or defined surrounding are supplemental this differ A this content well subject Charlotte's results will provide sedar.com.In therefore, reminder actual outlined standardized webcast accessible available within SEDAR.With an call prepared future available regulatory certain forward-looking to that over next include Deanie on of I we statements MDA all and EBITDA non-IFRS to to release of earnings statements the on call week, analysts be press company be will may our in addition, any is will listeners filings

Adrienne D. Elsner

Thanks, reviewing Cory. key I results, the our QX to share Colorado, joining you year-to-date. and thank Denver, for takeaways to our Good call.Prior afternoon for and want quarter from X

being within lower with X.X%.According First, this grow at segment than as by the across and lower-priced Web adoption points shift XX% a of companies greater masking are priced to growth which Brightfield or expands, to industry prior gummies segments driven estimated is pet, many experiencing growth higher in has relative from has average $X.X a consumer year-end, become usage the volume will from price to impact a U.S. even XX% lower which products I push is shift, Group, quote, equal the as billion sold CBD. growing The topicals industry product the to tinctures. CBD a The Charlotte's results, gummies, to We pull. by revenues CBD to category on and category of are lower mix years.” our a formats and toward of such X.X%. evolving this and Because sold these is are to meant the which significant of drinks, overall, competes increased in to grow our by CBD “There year-end up like manufacturer away evolve. CBD tinctures billion items $X up continues from XXXX, to ticket the and

U.S. FDM due is XX% development requires sales, different CBD is represent for channel industry to about evolving regulation, is FDM the CBD especially e-commerce, This portfolio and about CBD channels of e-commerce perspective being sales, represents that where focus.Finally, to shifting are Consumers XX% while sales. approach.Second, healthcare represent of our vitamin CBD represent that e-commerce increasingly about of while we offerings total sold of X% forecasted. shops where growth, in impacts, than sales. category is the going there practitioners, are forecasted dispensaries, establishing was substantial for manage CBD are lens mix current to country despite the The and of CBD a it consumer XX% regulators was establish country originally evolving categories. globally. consumer-centric science the cannabis guidelines lack room forecasted by to with but Today, become an our CBD a Our of near-term globally increasing aligns is of the channel the new to has acceptance behaviors. regulation, hemp to landscape these rapidly and a There's a hemp need category lot regulatory due cannabis ample for to regulatory in and the in

global a the have credentials the finance environments. brands the from ambitions. products for the usage So requirement science important increasingly effects competitive in on navigating global with with regulatory plant, research are the Respected companies an advantage and

by to some Our these like a $X.X mix from as lower is of unit consumer demonstrates sales impact year revenue about revenue decline Charlotte's ago, I'll down to number shift share formats resolved roadmap across expanding our a to unit actually versus every long-term in the supply and quarter million. disruption due market results. third developed revenue We approximately unit, products prefer.Our in macro revenue products million.Although challenges, well across lower-priced in our speak $X of momentarily.Now which disruptions. million, increase. sales by global primarily sector. to the total supply success shifting estimate of this for footprint have were October. continue to Web and was X.X% mix we our has challenges were channel portfolio gummies, to net chain upon to within more gains QX net and consumers chain substantially advancing follows segments the strategically science shift supply volume year the These QX was $XX.X our key was per temporary compete average we mix versus impacted topicals chain higher product pet. related results the supply consumer a approximately built each that new ago chain total revenue, and driven the QX channel Despite as of a that needs

share Excluding down supply chain revenue, and while would on revenue have distribution XX% BXB year increases. ago in XX% mix splits, competitors velocity year-on-year increases revenue. Web during total up the of pandemic, QX, outperformed our during to of in our terms XX% segment Charlotte's increased quarter increases, slightly and in key of the represented been basis.Regarding net about total a from DTC

gummies. more during on on sales we resulting direct revenue year-on-year topicals versus in metrics, -- and addition, adjusted chain distribution my shipments mix improvements product and across channel will financial BXB some increase segment, this to and The QX detail expense margin, P&L higher our unit In operating key modest cover ago Wes increased including delivered new was QX. percent in shifting in on out-of-stocks review.Within a and following delays QX gross net X.X% supply pet EBITDA. customer and revenue year a in basis due product into

higher ingestible and is consumer unit products, natural affected versus to carries tinctures. Our sales transition the of gummies channel by

XX% was a the natural year revenue ago. versus down channel net in Our

we However, channel, which natural the was outperformed total down XX%.

channel a channel revenue new pet driven new added versus terms the BXB share inventory following our to including health care in new against we in set result, are we softer share taking a total year spend. replenishment new alternate FDM. QX, strong according velocities, increased a in pet, was up Year-to-date, The competitive to practitioner XXX distribution the launches.In a in total As in expansion, retail channels of quarter but build FDM we've and across XXX% gained and see QX, According expansion and of market X,XXX XX% doors. increased QX to The doors practices in points carries doors a XXX doors the ago our year-on-year. by which reopening.In continue doors year orders in topical Nielsen, channel, percentage increased versus XX.X%. primarily increased ago, XXX we to more new XXX FDM added most, distribution products, revenue product X

the distribution DTC. a legalization and California in Assembly recent Bill Further, the in channel, retail year-to-date. CBD we of the a following are QX this BXB planning XX% represents nationally XX.Shifting to Excluding and importantly, through in significant our in practitioner healthcare increase doors increase

Our competitive DTC down a discounting sales X.X% as market were mix and net year-over-year, in to transition e-commerce higher due bricks back to consumers product mortar. and

average respectively, In down terms and KPIs, year traffic and ago. XX% order of value QX versus were down a X%,

at our subscriptions and and key These consumer the up conversion were drove and XX% which increase demonstrate forward.Looking user capitalize consumers brand, XX%, year X.X% higher year-over-year months the Total engagement Charlotte's lifetime year-to-date are our strong DTC will business ago. versus which was X e-commerce channel competitors value revenues the base on net with a across significantly subscriber drive going for a year for a versus loyal to up our on ago, subscription and category our Web outperforming a BXB. However, total XX% first total up outpacing basis.

products Charlotte's We've head call at in U.S. adjusted expect market launched distribution of we're to dynamic category expanding QX. provide the improvements end details to in that California our our of evolve, gummies taking share financial year-to-date. channels topline sprays. addition innovation to dispensary operating to retail we and continue CBN continues for revenues year.Now, our our Web CBG is Going and with increasing leadership to new the in and in Wes has and organization to in distribution distribution fit also as of the back In QX, QX, that to pet towards in expenses we new-to-the-market the forward, oral to a addition sequential expand the our purpose end specialty EBITDA we turn been EBITDA on our I'll our grow to behind alignment are breakeven in expansion. ABXX.In ensure build quarterly and the At delivered actions for adjusted over the

Wessel Booysen

afternoon, Good you us and today. everyone, for thank joining again

mix I'm a disruptions, as supply and partially operating became result comp higher Deanie was efficiencies profit mentioned, as well QX of as chain increased volumes pleased report sales. to year-over-year performance unit operational. As improved offset by our that production center shift and impacted and as margins by revenue our volume

past we infrastructure of achieved and terms in will benefit much and to we continue as our grow. in have the operations, year improvements We streamlining

XX.X% gross for from third the to quarter in profit. quarter previously mix.Turning margins in continued In X.X% we improvements by ago. year. half in margin we gross $XX.X Gross to to to of QX XX.X% XX.X% with down have and million the in gross low-XXs Total as margin $XX.X improve profit product of was numbers depending improved the adjusted general, operating projected, quarter-over-quarter OpEx EBITDA.Turning the million last year-over-year year-over-year an to channel gross on Our and increased on back margin expect expenses. compared consolidated a operating $XX.X year million, and

margin reducing our As QX a run expenses P&L improved a our due and volume XX% the OpEx of increased loss million on XX% disruptions, sales. facility. million. we chain mix gross reduce distribution exceeded recorded our prior improvement We completing million, $X.X $X.X both year of and and million CapEx quarter, to $X.X sequential at for an plan XXXX, a compared to we a a losses R&D, year-over-year QX the a and XX% XX% adjusted loss to year-to-date $X.X We an production reduced was and by expanded the loss and net primarily We basis, the supply to summarize a This is basis.Total EBITDA of to for have by ago. declined phase year was EBITDA our macro a versus revenue a related goal. of by unit of the versus of million, On reminder, least from on offset loss adjusted quarter, rate year-over-year net partially $X.X improvement, and sequentially net basis. final XXXX.So recorded our improvement

between months year investment to for $X expect in to of approximately CapEx was the bringing the million, to million $X X Total to of We million million. expected this used liquidity. $X $XX.X year QX for CapEx $X cash million.Turning total first our

of used non-recurring. For the was during $XX.X $XX.X period approximately million. QX of cash at million, this not refund end a of was including near-term tax X/X context, Cash IRS

the have sufficiently JPMorgan credit so, we debt deliver plan. we long-term as have breakeven of to adjusted with are access to that million.And are extend approaching addition, we on a believe to we $XX EBITDA, line and In no with $XX million potential to our capitalized

turn end the stated, to of her under adjusted year.I revenues now this market expand Deanie we remarks. the Deanie share for continue expect will call As grow to we as head our our at EBITDA to IFRS and back breakeven towards over closing

Adrienne D. Elsner

our and and Assembly Thanks, We're I advancements science.On Wes. you California regulatory in to we the movement shape. international see front, passing at with update on pleased to To we the federal of which to legislative call continue regulatory, both levels. state want Bill actively today, XX, close the the help very

the intent the partners H.R.XXX the bill retail legislative end government establish process through House it expenses congressional more CBD. support to and legislation in a the name Senate, morning, we a this federal offenses We're hearing has California, cannabis, CBD, we're planned look representative this FDA Mace able represent We in federal States bipartisan with South Reform legislation because current legislation than framework locations Our for state's before the working imposes coming excise introduced with the on ] the X,XXX [ by on new each our and which Nancy both of Ultimately, X% under This of year. would protects distribution the of will months.Finally, expect cannabis FDA support federal in be and forward existing in regulate. and Federal expanding quarter. tax. to in further current laws, in gained the the Act. cannabis cannabis encouraged Carolina, legislation non-violent the shows deschedules the a

it international, for some as gaps of and for the dosing partnering we up category, addresses this advancing dietary of farm approach. strong and asset-light forward it partnerships beverage CBD to XXXX, positions agenda to We on CBD look international within and also supplement our specifically, legislation.Regarding the Importantly, with opens bill a in the are support CBD food an rooted regulating FDA the safety.

crop This in hemp quarter, we Canada. harvested our international first-ever

plan, yield of Our we milligram XX% have Canada. CPD believe we produced some in ever and cost above achieved lowest per of was the

companies develop to exclusive of believe high-quality Israel of one per consumer ready Israel, partnership products cannabis be capita the in CBD highest the medical future. in have our Canndoc, will we world, the cannabis for and to outside by expect to one North market of America. we CBD with mid-XXXX.In We demand launch strong continue the fastest-growing of consumption maintains in there

the expand Israel regulatory XXXX.In U.K. further expect to available to products have will EU, in footprint current as We landscape the provide updates in and our we're and working develops.

Labs science Finally, the behind through we research our division. continue and cannabinoids advance CW to research

in business, as while with advantage the for As are we up to countries, competitive our critical built that, questions. summary, global expansion.In at we going for call fit other long-term organization enabler science communicate I'll and regulators open forward.With we and FDA we we've a are well global that's the see and positioned a growth an purpose, for expanding

Operator

question Cowen. [Operator from be Instructions] will your first Pascarelli And at Gerald

Gerald John Pascarelli

you're rate you expected in XQ? going hit fiscal some a opportunities certainly question on that or run 'XX. of a quarter forward provide are have had like just the meaningful XQ to out halfway if pushed if maybe be tailwinds through in don't relative now we're get sounds know into is your closed you would fiscal how that your Any topline, on the XQ here. color any can distribution color California. here I out to trends It you you the provide that running where to that I your on gets can to some helpful. But going way, incremental

Adrienne D. Elsner

absolutely. Gerald,

QX. we That and in end doors in distribution to nice -- to expand We're go into the California. are significantly distribution in of is expanding track footprint are track very we on It's nationally. go have will first, our on not will QX, before into QX. that a just So year. the distribution expanding our bump actually our It's

topline, QX. growth our a of in anticipating to we're return terms QX In

are So end just the the we We're next bullish around we we're will about excited really year. that how to we're the excited and going we about the about launched products of into QX end distribution have, wrap year. at new

nice And going so, tailwinds provides think some distribution forward. the I

Gerald John Pascarelli

Perfect.

on hear pets. just is loud mix on with and clear me revenue. things drivers gummies for your like and behind associated and negative one Next the the topicals you I

more is are trying pricing or whether price get comfortable for levels? with your I not I'm if gap products, As landscape, these is price to or you tinctures? guess environment to the lower-priced at factors or form what relative you're seeing price competition, these the because current look compression rational you're at

Adrienne D. Elsner

Yes.

given revenue a door. And think, in I the through seeing think of we're to DTC that fight Gerald, the growth get seeing that definitely in other we're the is heating category now, competition to compression channels, I is right primarily in everybody and DTC. some couple trying increased price the up,

as at or many for in topicals new the this, successfully look just who gummies the into there's of innovated we example, some as players frankly, these pet market. not in platforms, us, or we in For have have even

you So and that meet versus innovation that products. of innovations bit you new way, compression, the consumers' definitely think direct but a more less a newer as I drive competitive seeing in probably little on needs you in the of in have price you space.We're established competitors a reduce some some those advantage

a perspective, it's of a level, revenue take gross at for gross Just cell so this on basis. just with a grain

up Our gummy was business in QX XX%.

was X%, up business topical pet was up XX%. our Our and business

Now business down against tincture was that's that all XX%. a

how year. the for impacting been has us. stable the almost gummies That negatively mix level see said, the at relatively is throughout most you the So part, same entire

think, we're much mix think I dramatic going the forward. a hitting with less I of first of tier stabilization So drop,

Gerald John Pascarelli

hop queue. back I'll Perfect. the in

Operator

Fortune be will Scott Capital. from at ROTH Next question

Scott Thomas Fortune

the or the and Bill for legalizing And elaborate You I the little just retailers' kind shelves importantly, you exposure timing? in California FDM market? here? XXXX response can new as out on and that. injectable to your Deanie, similar overall quick. bit mentioned look and think Web California the in of potential the what's sense for drivers California California Real as of then more for CBD And a Assembly California to hemp adopting and the the of in from Charlotte's states XX other on the opportunity that regulations products what's we growth

Adrienne D. Elsner

I'll time. unpack bit Absolutely, Scott. a that of little

FDA mass first standpoint. know, part front drug go tailors of a that, from the our are they've to especially of been step a the as on We the number regulatory impact But and So opportunity you ABXX. talk and national to food, of the the in have receptive. finally to of hesitant retailers,

is So I push in we opening we tell already that on the didn't existing our to us California get California in California us for base. carry was reason continue environment. why exciting don't that see for it.I'll have are FDM X,XXX you customers necessarily in in will in although our California overnight, up they thing California ingestibles the The because of customers legal only does

already those on some to will see in those in retailers this the of close of you'll retailers big year, gap We of year. next of QX a part close begin but QX

I'll California the the state. XX that there's which the in in states. other about what's country do this is impact So get your getting terms our perspective. legalized for economy California XX% for sales of with of the total rest California bullish of in biggest of what states.Now us across of California in CBD in question, we're states us country the part third the and on have about the and is definitely for currently cannabis means the not country. represents helps to really California Currently, site

an CBD having an to ingestible standpoint, base think, goes those forward. from I move long legality economy way a California a endorsing So like help state and

lot and about be who on Florida definitely we have to helped California, in what category.So California California back of Florida. Just helping like these this states There's helped and We'll to accomplish what balance were now us to states see in a X we advance terms to going able we other and able go this currently Florida have X with us. or done in California begin forward. pattern

FDA to to regulate. at drop we be are have these think so, off time, where put they and And will the one states in position going a a

we it And bullish bullish the We're going impact XX% of for revenue a and California sales us us the so fact across could disproportionate means it means as have we're near love in about to cannabis what for forward. our that the what about very topline the today, And states. nice term.

Scott Thomas Fortune

little things. And second is housekeeping of a of bit then the question side a

You've production out built the here. facilities fulfillment and

a Curious with with business now initiatives to kind automation. of lot of of the you're limited kind added to here? you EBITDA growth how right the for the You've of the business? weighing at of profitability side are drive profitability size moving deploy the How needed the now CapEx looking kind forward

Wessel Booysen

the you Wes This for is question. Yes. Thank speaking.

combination Deanie we and positive year excited towards plans. mentioned, year. really move going against this As several next EBITDA end optimization adjusted the it's a And are back to at into executing of of

multiple new recently not know, will a you much So incurred expense facility. and our couple of into from an we've We've of CapEx, performance perspective, as locations be production most forward. consolidated our essentially going the needed

that have And we cost-effective the push we efficiencies what our offices the for from add office. to relocated a Boulder streamlining, Denver Deanie manufacturing operational would more continue Secondly, then is as ambition. fit-for-purpose referenced, I to corporate to lastly,

Operator

at be question Next from Pablo Cantor Fitzgerald. will Zuanic

Pablo Ernesto Zuanic

just Deanie, things. regulatory the question side a of on

I wait mean does either versus bigger that Or will can more the these you other So things. hard Nancy how hemp say, or Mace, build? But the work? its minute, views mean, no, separate the of a of have reforms, terms on or own? congressional the of Do H.R.XXX in that? and I being will to Schumer [indiscernible] bills, it's larger these draft part have part sponsors comprehensive be handicap to versus stand-alone on any know you CBD a I

Adrienne D. Elsner

question. the for thanks Pablo, Absolutely. Yes.

CBD over think I comes we all to cannabis. intent finish also these to point the the with as is That what mentioned, line. get is things congressional

mentioned you've got is can't can things Bill, alone, have, got all senators all They're get independently, -- -- partitions a you've stand. Mace's ones. one which stand regulate these only sector, couple to different what they're the and Congress, they they all Bill, all But XXX, other protect got trying group all coming you've consumer. want thing, Schumer's bipartisan so, the move behind won't at it.And of and were same the a you've is And and and category, they which you've them, the of from legalize you of got house this

think heard Mace's I'm that before really by I Bill representative this I her so, XXX. was about And and press -- encouraged I encouraged I'm by encouraged morning. way conference

And positive so, what bipartisan that's us, bills very, into CBD think I of it very support, without shows it's and very for really all regulatory cannabis, on can for them. is built move but positive cannabis are but advancing CBD CBD. curious that these with

So I'm that. excited about

Pablo Ernesto Zuanic

Just consumer? this new talk in and games other a When couple of that we tinctures, are formats, terms of same whether insures gummies, follow-ups. about consumers is different downgrade whether from understand the other these new categories Or [indiscernible] looking and the to to just different consumers? just just it's I'm states or same formats I'm sure but down? for people it's bringing trying need trading

Adrienne D. Elsner

bit a they segments like equally, leveraging we in of percent coming to as drive forms in those well purchase, actually for amazing said, adopt both consumer consumers we're once question it's base familiar well and unit bring of in that little the We're really can great we're almost how answer little into But little health younger and around a to grow consume and represent, total purchasing both. consumers they're than and a terms forms an value tend those and mix, in get topline individual in coming because those they purchasing, To gummies. to bit in in, bit witness in they're regime new That's per the buying terms current and offer insights they're CBD. the coming Yes, the contribution seeing the as of we're a more more of and to begin terms here, to our that sell be segments it's positioned this category.Now up question. to a seeing consumers our they from and consumer more. build current CBD with stabilize revenue But consumer we consumers. increase

of And into good so, our a build right a Web but Charlotte's really really, to we the short-term as see as we impact future. kind this for as tincture positioning really, look sizes

Pablo Ernesto Zuanic

last And one one, I if may.

a On or before, as in be the more subject can struggling you've of it brands, wished, second you and And would can guess there? From Abacus? we size, first all they terms part how much just question, describe factor this I forward. part of going COVID, would performance consumer with but that as you I And or blame lot know your delayed the you done talked idea about limiting it been Have brand plans for Charlotte's have of Web then the that's I or states? locations would how stretch I you done. in wonder the the of far with new keep had what you the either segments a if seems new

Adrienne D. Elsner

Absolutely.

the we the number terms by you first, it's and represented, which to chain that distribution. speed so, Abacus, we where could new we is supply we are wanted it's it the needs. of consumers' And an for that and pandemic, in Abacus meet it When of had knew with of or it no. I'll wasn't is? opportunities it saw way give bought the has of The challenges we answer And to to because and where we of portfolio it's because performed we happy different evolve because in example. channels a

go products channels.For those us it natural, as out to the opportunity in ingredient to develop we So We took example, saw had to we Unfortunately, streams. still do. significant. some longer into change cross-sell of the

we new ingredient streams streams, in to out had those get pilot changed to we testing. As ingredient do

slowed just the on and customers to move disruption slowed down. everything that chain their supply of and in categories, willingness COVID So down it non-essential terms

one excited now we a brand bring where really unified with not under and kick into pleased going of from are message. standpoint, half under front I'm portfolio we And are push the us lot as those that do because so, XXXX very to today, about brands architecture I'm but a see hard where you're we to

So I'm us. only one hold you advantage And far. think more job stretch excited this done stretch brand we've I terms Charlotte's how any ahead a our a opportunity of we to done a can stretch, than arena. far that just what's room research good together.In can about brand with agree Charlotte's hemp the you brand, of because is Web so and of there of. I Web, But a lot the to kind brand trust of tremendous of wellness like feel with We is That take of designation and have has in consumers. actually around cannabis lots it's

has brand adjacencies wellness lot CBD expand. a of across that and cannabis to So

brand trusted, We and for Web other after have can addition, can hemp consumer ingredient those after In inside you today. sector. where branded portfolio after our stream got to which have then brands we've that get a the brand that a set segments, ample we Brothers. Charlotte's Charlotte's opportunity to either is got or we've trust, portfolio Stanley growth that Charlotte's get in we segments, purchase and a me, go this whole Their consumer around build credible just a on beyond all of the means And with go for room into the us gives consumer have Web as different then portfolio unifying the we the organized tap that brands that, it. around for can't in different the brand Web really agreement set states.And segments option the can of of to get know new a ReCreate of these need so

Operator

from Piper will Sandler. Michael question Lavery be of Next

Michael Scott Lavery

going continue, can portfolio You the help gone that the momentum this you And talked XX% versus still look gummies. hasn't about mix from if is of You But have your just headwind away. XX% ahead? negative us mix to tinctures from the headwinds. understand

in are you're for about equation? this growth? the quarter it returning So to or for the much you next what of terms like How of it X, assuming talking account piece does

Adrienne D. Elsner

Absolutely.

year So about taken perspective I quarters we've and headwinds, the step talk and are to give of big of want when where of mix kind today. then we last a we over mix downs you just the

year, XXXX, about XX% the about from this we to XX% we've of same gummies our our QX watching last at our XX% time, was our including XX% quarters, of of on about So to In the today, of it's stabilized basis, portfolio tinctures of of portfolio. portfolio. QX XX%. last X go our through about kind from went to a At were what year, gummies percentage XX% of over percent

think holds. don't we tremendously If plateau hemp categories.So that revenue off those of gummies adjacent a vitamins here. an XX% of mix So XX%, represent and at look supplements, the in CBD and about look I I think that's outside at I category we're and

platform delivery mind that I consumers who best the is are condition control the address. delivery CBD, really how are in highest milligrams that whatever about of that the for trying to we think they're take in for of method thing that. many keep one they for looking have Tinctures a tinctures terms can they to

become somewhere stabilize. in we've to seen over continue tinctures bigger range. evolve, but I my will X would get percent that as of of is our way guess are a X into to guess you you'll think And so, XX-ish total one the points CBD portfolio, And the We in but the our will drop formats as consumers. gummies year the it next see percentage or so. format a but tinctures next portfolio. But part a

Michael Scott Lavery

or get That's a something and of hump in if you're was that -- think the it's guess another your the [ similar the can worse? quarter it for out plans? just think Or change shift. going million I you're just put way, way to it do from I XQ? Okay. you that ] helpful. and called headwind -- a it sense $X to some give Is you you it over modeling What's

Adrienne D. Elsner

our last of represented year gummies was about XX% business. of QX Yes.

on XX% about QX, similar our of seen in what we've [ to year expecting sales the So ].

You're to last year. point about or only see going X point increase was it versus where X

at will QX, of of it but broader -- going including there because terms that's as continue actually new a headwind, look nice come familiar. a all be portfolio, our We're expansion, segments. as our distribution on seeing So of consumers to uptick our on it's in we we're diminish to a format in more

the distribution percent going about right, about last year, of so a change, as of And XX% with XX% headwinds. about consistent of year portfolio a XX% this gains you with to year. some us I to in But are think change QX XX% gummies X-point help our will kind to see these in

Michael Scott Lavery

regulatory us There's latest relationship correctly the hear I map of on Congress. just you big evolve a just And in? ambitions road expect eye on read-through -- have But -- really kind of And look THC your how what little Bros guess, you gave also color the your the you some the might be? you I for might and, impact sense a CBD. would what Can or there from like? side, THC give the Okay. how some indirect that opportunity Stanley news just more bit your might that what it's how might on

Adrienne D. Elsner

Yes, absolutely.

the has opportunity federal legalization. to so, as purchase And if be an option of agreement activated

total to And for our we because a so, cannabis Xx total is that the available of us market. cannabis very the we side are available federal watching believe market wellness X in in closely the sector increase

million if the play mean of new is million $X million into. available tap wellness market could million, today, think market so $XX $XX can to And $XX cannabis that we a to a we

of ample we're watching are is, growth both in on there opportunity CBD, for have very important Equally, broader yes. what's there's we a us getting in us, is the most to but the so grow, intention closely. that after.And competing that also that segments think set today, -- at segments we room we So for

the yes. absolutely the can into that portfolio And third, this have we is that most our growth do across answer lets that beyond category to segments. important brands second tap And The then answer the we of even portfolio is there adjacencies us thing, further. expand those yes. the is think that And

So we're be pushing in while We're open Charlotte's for And this I a on about the on Web up for good watching both a and CBD, we're in legislation federal think front. this federal It's us. time what watching And the legislation federal could state to category. means I'm bullish cannabis. way. the really handsome

Operator

next will PI question your And Instructions] Financial. Jason Zandberg be from at [Operator

Jason Zandberg

to I sprays. about talk of just oral launch recent wanted your

Specifically, expectation in could direct-to-consumer well, product I it's about terms be of now. as other this relative your right would margin know your talk factors? profile the And form you What to initial of of terms into product what you'd doors terms number that you've previous in expect, your of product talks? rollouts? Or go given this any of had just could in whether

Adrienne D. Elsner

Yes, CBG. year. product CBN one One absolutely, Jason, new our this is and cannabinoids QX the is oral our launched in to of And with forefront. kind, is it's that brings spray its with first line the of first

it platform. So, We to can was about if to what new for our first and chose we're deliberately do channel in it see there DTC this on excited us. test foremost, interest consumer

to as accepted We believers to ways don't are got but oil a that away, potentially, big consumer do way to them. a Sprays is find go we've behavioral very more segment that. consume

first exceeding we the internal We as feedback on how from lean nice to it but really consumer the in hurdles I in into sure and also year. volume a love our going the early We've absorption behind, want is revenue something excited natural see that go and spray to our it, early like as we some has we it's forward. look so can benchmarks. sales channel you days, it our launch launch make we adopter been terms this model got opportunity really so we're channels about to really it's standpoint And next a clear positive.In going we will of tell is it expectation, quite but to far far, of

this In on question. unoptimized terms Again, the are and great about The margins a mid-XXs our of today. margins, unscaled. that's product it's

right this so we numbers to to today So bit business now, the prop if P&L. little mid-XXs, in to prove like margin revenue that and on we'll they're feel be complementary percent want gross the a the able see that that push we we out see our and scale further. But

Jason Zandberg

terms In terms might like? the and -- that get you key about hemp in to want line do just the your how of time you what market can aggressive of production, Canadian talk sort look into of

Adrienne D. Elsner

Absolutely.

be to intention by Canada mid-XXXX. Our is into launching products our

we've So, harvested now our cultivars.

us drying in is front the important from for in kind is we'll are year and extract of into half and market One cannabis start process for as turn a the Canada We midyear CBD. X and federally them, of Canada products to legal those is launch standpoints. a and year. of next next

into bit And so, an how do on out in run, you CBD beyond and pilot if enter a us will, it wellness. we to of opportunity cannabis gives expand a potentially

can export that Canada. The other thing of us for out does Canada positioned. is We it's strategically

gates. year, out for we've purpose We early our a feel the bred They're year that really harvest for had we got so, And cultivars Canada. been this first like nice of had maturing.

And being world environment countries we the as enter bit other us for regulatory around opens so, to a ground of Canada see as the a up. launching

Operator

be Next from at Derek question will Canaccord Dley Genuity.

Derek Dley

imagine sell topicals of whether up? Just wondering, topicals, the sales health would make be -- percentage capsules, What in do it product would different of more terms those but I natural it's stores, all types, stores et cetera. tinctures, in

Adrienne D. Elsner

great it's Boy, question. a

adopters. we if Derek, channel think the because natural So the about I talk early were those just stores,

channel you're else? so the that's think anything about, I talking right, natural more than

Derek Dley

Yes, correct.

Adrienne D. Elsner

about XX% topicals each channel the represent about in capsules XX% sales, and today, the represent the those that gummies -- XX% of about So represent sales. tinctures in of of sales, each

place is the about how channel is that's What's split where so, today. adopters And interesting are. it early that really the is our

the launching you channels. I broadest And And more portfolio in that so, into cutting innovation, channel. the see those think edge

why that's reason So the the like channel. we

I think new with we'd are consumers innovations. see like to where these

Derek Dley

some to So that expect what the forward, assume going ingestibles, of we is on kind were split would that in you the approval FDA to forward if market? at a point, gets going similar

Adrienne D. Elsner

the that topicals I bigger not. in I in But the becomes range, portfolio. total expect a probably XX% part probably think Probably of to XX% gummies would Yes. range.

in the And -- in somewhere range Tinctures dramatic. XX% be would range to guess, to XX% in guess, in FDM. XX% range. I going so, the the gummies XX% probably capsules, range. that in aren't splits somewhere XX% somewhere I Topicals to XX% would the XX%

it shift So see a bit. you'll little

category that think topicals. That's more FDM. consumers only are national carried I really that's using already today the in

And so, don't goes think I away. behavior that

is to gummies, about margins. and getting a the it be why is think integration advantage the improving for by of likely vertical after complemented we gets potential I that profile excited of take probably which we really going segment have more to for because are those And the more think opportunity segments. I consumer COGS acceptable some think base I

Derek Dley

then states in other of that's with in move terms you similar approach states view guess or helpful. discussions a retailers No, the California do allowed ruling to California, of And question, other I to expect within in be retailers and second take sort ingestibles states, to those to just allowing in Okay. your in of other or the stores?

Adrienne D. Elsner

what against a Yes. to educate what and as have legalized and York really today legalize they're category, We're definitely how is Florida to regulatory what have not around I state using states this New think, which a put nice other it. going legislators help done, California, leverage that to it platform and, constructive framework

so, other legislatures we're legislatures. with And using -- state it

explosive. brands, is of FDM retailers in why stay it's interested market smaller -- and when is the share are base, remain standpoint, up, on will while because are come From it's market you going because we that customer relationships the very of FDM a share call having XX little focused it, our very, leadership coming at portfolio the customers, more today, bit a very together. in regulates hold a up, growth the funny and channels those FDM with what we opens brands. through the in carrying the be we to category from all of interested not are FDM. that for terms growth nut FDA opens category so these brands, have growth, they're with and of the the But list the In conversations leadership so the almost time this will you absolutely top growth exclusively is push to be in FDM as forward in the when FDM.So we FDM fragmented

channels today yourself in ready and a revenue And the so, it's is with after where the is to the of going revenue kind tomorrow. getting forward be act balancing

Operator

the reached Mr. Pala. to of back like to now our turn would it I have We end call time.

Cory Pala

on today again our for We year. our to year-end you. QX to you, on results you Thanks, everyone, us thank next forward update Sylvie, call. Thank you when concludes look and speaking of we This call. joining March our in

Operator

thank indeed we conclude call ask attending. today. you does and your conference Once your that Ladies please you And gentlemen, disconnect do time, this for at lines. again, for this

Charlotte's Web (CWBHF) 15 Nov 212021 Q3 Earnings call transcript