CWEB.TO - Earnings call 2 2023 | Charlotte's Web Holdings, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Charlotte' Web Holdings 2023 Second Quarter Conference Call. [Operator's Instructions]. I would now like to turn the conference over to Cory Pala, Director of Investor Relations. Please go ahead.

Cory Pala

Thanks, Sergio, and good morning, everyone. us Charlotte XXXX Web joining Conference Quarter for for Call Holdings, you for Second our Earnings Thank Inc. with of Earnings morning press website section and this statements. along our posted on release the Investor was our financial issued Relations

of SEC. Our available is this Leading sedar.com Canada our and review XX-Q on strategic as on also Jessica CFO, as morning's CEO, filed and call XXXX well second financial been EDGAR report Jared the in Stanley. for quarter the has Tortoroli; with this quarter color morning will is On provide call, we second COO, Saxon; the for initiatives. results some Jacques and on the recent

take details webcast replay prepared for accessible the earnings available will end through an a from replay provided the release week, period IR and will charlottesweb.com. at of website remarks. section via accessible be on be We next our will available at extended our of the our the our of questions of analysts A this call this through call

held quarter, the the we of where -- the duly had second Meeting, Shareholder each our directors as Annual directors where company. were reelected of incumbent During we

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further due Also including around this particular that provide made A reminder including to in some and risks to content performance answers sec.gov process as determination of in actual to which promptly may or in and our Board's the company's include expectations. issue, the statements this today's results Such detail materially comments no company statements factors sedar.com we public course. outlined the in listeners, today's is we Q&A call. on call, will following Canada have surrounding the update implied be and United certain future from could final certain forward-looking questions, regulatory portion As forward-looking subject in will may further differ provided therefore, cause in uncertainties States. ongoing, to currently risks is a and filings are within on nature,

such most reconciliation supplemental by will Web over now In we measures the as including Please Charlotte's refer Tortoroli. of EBITDA addition, EBITDA, standardized earnings comparable the Executive with filed for financial Officer, of call, will description release And morning measures. this does that we a to directly hand their Chief GAAP. to the Jacques to a during meaning any have Jacques? well prescribed and adjusted non-GAAP respective adjusted which refer GAAP as to accounting not that, I measures, call

Jacques Tortoroli

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Jessica Saxton

Jacques. you, Thank

Our financial in and adjusted our results reviewed and detail EBITDA in XX-Q. are release earnings

this As such, all will them of go I through not on call.

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additional $X.X impacted million a a future we loss the We two noncash with income, MLB a quarter. comparable in $X.X the or payment added cash gain income for million and diluted lower offset for a of net this These As XXXX. expect loss QX of XXXX. result the to QX of period the which XXXX, interest will the million of XXXX XXXX. $XXX,XXX income or expenses million fair XXXX. positive in was collection our second be gain There license $X share than per for collected discussed and the $X to the on our minus year related this We to quarter, the a to million to of quarter flow on basic were as gains an SG&A million diluted management employee expense Notwithstanding of the and $X.X reflecting share increased per versus of including improvement This quarter second reported the quarter MLB. revenue $X.X EBITDA gains $X.X same million ago, second basic a loss receivables In fees resulting an year and $X.X assets, more was million as loss $X.XX million This expense, the and cash expense, $X.XX adjusted $X.X compared XXXX. value and convertible of net of reported net prior calls, include a offset the MLB ERC retention amortization the for collection compared $XX.X to the versus million credit DeFloria. positively in improvement MLB valuable for full tax derivatives in partnership. QX result the the X-year in of operating significant quarters of

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Jared Stanley

I you, update give will into a before the going Canada Thank regulatory brief federal landscape. on Jessica.

channel later launching in medical of Canadian set we'll recreational We and this be a quarter. have the partner, tinctures channel with launched Tilray, the our in

We to and follow. topicals, track are for capsules on gummies

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Jacques Tortoroli

Jared. Thanks,

said I that our we our on remarks my in assure and strategies. As want you I opening working in noted to release, executing and we're

well portfolio up like the opens revenue our during for us formats operations grow capital in second on. better Some NSF-certified League Major of new sport. to broad we others, panic Baseball, our for CBD in-sourcing for the Charlotte's to the new created official podcast ReCreate alternative League Baseball, we expect campaign innovation, the drive the term, co-man store the streams take the increase and in and to to actively first Major of brand Longer pursuing XXth, To digital sometime traffic further that and the market who quarter the for goal We of quality half lowering when Lacrosse activating being wellness in by All-Star itself. our insourcing that leveraged in co-mans, completed, activations, game strength and previous in Football team pages. examples across routes targets is in-sourcing including to launched the costs, operating launched launched formulations, leverage providing gummies Premier Web. a Run be May, stadiums, the a spectrum of media running an world-class on Becat be. up initiatives, with of topicals made capacity product XXXX. in on-site be fact, July marketing and our signage League first CBD who quarter, team lowering call formulations the and XXXX. gummy MLB investments our the in-sourcing half functional improve and Ferrari, Derby through This mental partnership new launched margins It's In millennials can we events, approximately We're City and up and levels. Home also mlb.com facility four included help Angel in Zers utilization, make CBD which benefiting facility, for today. the possible on These strategic working ReCreate weekend self-care Gen project we of the we our potential our the brand standards July, further combined will web and To with last Club. whole registrations, lifestyle because fan complexity all of All-Star ReCreate this

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know with against You that about we're we've progress along. strategy talking been all this it purpose. because and But executing

We We're in the a we retail haven't retain grown in turning corner half leadership. growth challenging sector confirmed by the for Brightfield market X believe, U.S. we that now, in

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So a like We us, and platform the our e-commerce support. right they actions for launching started that demo season for in-sourcing It bigger new the That up the brand, up in solid with the of that shelf, the This this growth. on retail. credit certification set the what tell most be same. the production to return but target with points also a to NSF initiatives importantly, you to come. bridge hitting along remains and still we're the to coming to team to with speaks right consumers tells reset The the does first Web a like matches to sales they challenge retail. they right MLP with fact innovation, we're on term XXXX price the winning on Charlotte's getting year, long far well it to like shoppers. it's just near you? that executing in pipeline the remains velocities It's the And sales game. the for highest MLB, in our leverage took liquidity And shelf company, ReCreate their with the the has process and to

So now or listening, take and - questions. calls your thanks we'll for

Cory Pala

Thank join mid-November. like for to our next look Thank report results you, thank today, you. in speaking you everybody to and following QX our time taking call I'd Sergio. forward to Well, and to we'll the

Operator

Thank and you, the mid-November. QX like for our look today, speaking report you in thank our Sergio. to following taking to join Well, time I'd you. we'll results next everybody to and forward to Thank call

Operator

will gentlemen, now Instruction]. first [Operator's your session. Thank Ladies for please, moment, the and we One begin you. and question. question answer

question MKM. comes from Roth from Your Fortune first Scott

Scott Fortune

we've pressure DTC able holding that to discounting Good through forward, Just channel, share. it trying Yes, a that the kind channel little as to price want come of maintain side heavy the seeing kind volumes looking to you've others shouldn't pricing little it ReCreateYou forward? channel there. continue just that pressures we've want kind channel seen that kind as come margins off do the of maintain versus kind just of on and to seen and in thank increasing things unpack channel, drive unpack Is a kind by of been DTC into that of going sales just Morning in that off. looking drive the a the you on whether I step MLB at of just for that and growth channel us questions.When bit, kind then in of layer that of of this online case some it's of and -- market that to you're transactional kind bit

Jacques Tortoroli

of where of we're pre-COVID levels shift of back revenue, partnerships years months by and about yes, answered has for The the funnel. and enough? QX questions. right? share essentially that world know market been to. consumer stay. period e-commerce in way of And buy. to here, I of If and for the But for issue that the other when would Scott, says course, bring -- of that to part which something into but to alluded the is the they only solution brand be Hey talked And the not Look, we've thanks MLB, MLB and the of going and couple the fact, a they're Jessica us consumers revenues, in issue really our growth here, we've because her channel, the in into revenue we've performance had We leadership, that our platform notwithstanding top the last in of the remarks. maybe consumers over and maintained we is e-comm

people that that's is more with be So what did premier audiences educate the driver a brands should exposure combination and isn't, the get we've activations for through into media now season is in the done partnerships and and support very And to why new be us, the in Events. bringing Juul partnership MLB understand earned audiences be we Web other it's with some relevant in into and through and to media conversations, the first able a and paid full we consumers MLB around the experience.So, are media Charlotte's and around much and MLB industry believe the brand. bringing that ReCreate CBD of with our exactly our we will why them in brand

So days, points where seeking, in into But well, target in by seeing we're promotions frequency here, headed. our competitive early year and in remarks. set, ecommerce, from but the Jessica MLB sure, significant point this towards.So, particularly only her where of we're not platform view ReCreate, enhance competitive consumer in to also for about price on we're both that's mentioned depth which here's as of gravitating And the marketplace from but seem again, experience, we given have and and the a of with the new year. around and with again, price with our the next optimistic tried we And the frequency ReCreate and think consumers proposition bring tying and early our demographic go to of encouraged later can brands. brand to we also reduce price really where retail, the the more value positioning and depth promotions be very but the fits we're we the in obviously,

Scott Fortune

Real quick that remind kind there. that it as coming just you Any did you effect partnership early through? to MLB metrics marketing and date of as and follow-up move kind halo that Obviously for potential on mentioned have it's there? update this color you on there. of kind Any that the forward And funnel but engagement or to all color here? mentioned, from continues us, media from ReCreate, the with appreciate an the Game All-Star I that. conversion of

Jacques Tortoroli

around photo activated All-Star dugout, MLB able events between, at with for come, if ticket Home the were events. no the gift, Game, home Seattle. in actually a to will, a because but there and take Look, printed we Run in as in co-branded ReCreate I and you the a tickets custom mean, the again, Derby very Fans all were early, take ReCreate the commemorative

different So this and it in with that a what was a how I think interested We way came it. think about was memento and what's do and that for the those to fans roughly data captured came fans, create understanding I from X,XXX this through visited, the through, about ReCreate is number really ReCreate fans.

had good gifting product And We and space opportunity so, to rooms. it coach in sponsorship VIP the a for podcasts in us did dugouts, in suites. partners. locker was educate.We dedicated We in the celebrity the player placement bullpens, had softball, with the

it activation. So, strong a was real

next We also took away differently some we'll learnings do what of time.

having Spanish important. is example, language collateral For

language. English So, many of particularly their the players professional and in sports first isn't MLB,

lend And input early can e-commerce but it's strong initial it's we our of as look the into The platform, the we okay. The for educating I quite signage leverage mound. the pitching would insertions digital days course, again, had learnings have on that consumer. as forward. we always liked, and conversionâ€™s go on we not stadium So, as

we much can but know encouraged, we're do we So, much, better.

Scott Fortune

one last probably quick one then And real for Jared.

different treatments additional of Remind X. you is JV go there Phase cannabinoids Are with. IP, ready looking Thanks. you cannabinoids the from that have launches their or product for side? working the you've as that is indications first plans here? And or that studies after been DeFloria us to minor to kind that far other then mentioned with first As targeted commence

Jared Stanley

minor innovation some got have We up. we've Yes, cannabinoids. do some lined Sure.

to rather also powders, coming multiple consumer -- point X opens Web for in disclose excited its off we're innovation. very excited board been on have new is company, Charlotte's need Marcel get but the and about I'd formats, working about driven Charlotte's delivery for options another trials by launching to gummies accessible that out with and have states a based our efficacious extremely which think up minor this in our approved, formulate in goes commence I'd products, And specifically of have cannabinoid is disclose able more on here what a white to Web. not a NSF But on the there's committee show, innovation it officially price chose clinical not some most that be to grab QX approval consumer. Bonn-Miller, be educate our new two ReCreate Phase unique either. the of ethics -- we'll we asset is be certain paper these and coming primary CSO able on to on why are call a We with we focus science Australia. minor We're DeFloria QX, an rather also to and that But call. and grow, are in to in, cannabinoids.We and of the

this this strategy. are and DeFloria milestone in We progress indication massive moment the a botanical not disclosing but at it's our wellness time, on for

Operator

Your from Islam ahead. next Please Najib from question comes Canaccord. go

Najib Islam

decision to question first Do to you the drive is, much anticipate require? you margin expect time? do insource higher this topical capital my And a this So the why production to how over platform? of

Jessica Saxton

this Thanks. the take question. one. I'll I appreciate

in decision payback really and potentially team maybe expecting the actually digit the approximately it's year, investments low is single was the CapEx. that a by right with the this May. very the And to Board we previous really millions the less. based made facility. So, the time calculating ROI that of minimal a due in was compelling It We're were was approved off

say but state additional that beautiful. gross steady the do of say terms quite those improvement. benefits, margin I We're we will bits not In the is return going there's believe what are, to

Jacques Tortoroli

simplification almost SKUs, that the last add, a co-mans of significant ago we half. also Najib, reducing of the a couple number in went -- reducing year, exercise years through number of Iâ€™d

is insourcing at levels ability in of at And a able capacity minimal to have the the being we increasing produce so the that and really facility next that to economics particularly ourselves, to the with Louisville and here operate logical is simplification strategy step leveraging investment of cash.

insourcing So, dependency portfolio early increased and we're and co-man goods and but capital the opportunity. we're of utilization about managing our an benefit of of only topicals the benefits the the and not to about the expect capital the days, excited from whole also finished obviously and will working insourcing down the about of margins level but products reducing excited continue path P&L, facility, less Little we're but not across working levels, like only also carrying and cash. excited

Najib Islam

you question call. the Sure. that something color. a on follow-up And Thanks for the mentioned to

promotional more that getting was mentioned the lot you So, intense. a environment

in seeing in space mind, are seeing operating So, you down? kind with the you companies are there? What wind to that beginning of

Jacques Tortoroli

the down ago it's or and I something you if what and over suggests of Brightfield X,XXX since saw these the when first were there then. roles, end Well, further has see something went at I so even in started like X,XXX a Jared guess, published, in last category, that I contracted year recently Brightfield to year brands

the So, I of set. do culling the competitive current expect

position of through overall take and think the regulations year out some at right does, quality a which set category articulated and I what beyond. Jared the along, look we share. that that's brands, have exacerbate growth of particularly the the set culling continue of to competitive a of us we've put to next the itself only go and and win You the capitalization of the that is path Regardless here, expected share, over the And will we'll plays all and that of as strengths to the selling. a what right in businesses, they're down

Najib Islam

Thanks the the kind towards within was over products? there? spending environment, have also there. And insight noticed consumer seeing of value-oriented you more I Sure. you any What are wondering, for shift

Jacques Tortoroli

seeing touched retail don't I We're for seeing on who the in remarks are the first this I'd value I consumers consumers time. affordable we the points, side say look if say we particularly particular. those price oriented, coming and on category Well, know the in what more is, are but into would I think for

is very are price that a price points we premium believe so Web that's index and consumers we other our under positioned the an still a product, and in why should well of products be And it deliberately, competitors.And at having point slightly Web brand with the above as product Charlotte's for where margins portfolio which to as it as Charlotte's at looking ReCreate, us. for attractive fits mainstream positioned

price and have that the have forward, points the consumers for price coming for to the we're we that So and in seeing sensitivity of of been products that's that we again, relative into the going portfolio importance the the are feel But strategy. some growth sure new marketplace, brand. we right at

Najib Islam

you, it. Thank got

as discussions last question, space Sorry you my it the you with looking questions, for the discuss all enter with going there? of discussions What's landscape legislative kind more to retailers but Are maybe the to for on retailers? now? relates having could potential

Jared Stanley

one. that take Iâ€™ll Yes.

had have We discussions.

stakeholder We're on We biweekly going weekly, targets. a news XX-plus to we're good the be We But groups -- deck. go we're of is kind we after. big ready have they're are refreshed encouraged. the deck these have mentioned industry sometimes we going our and the retailers, When where and pitch who that all know coming to calls. together, are

distributors. retailers are or Some those major the of

they're disclose as listening, we come we've meeting, more landscape. progress action one who had to we'd through the they're with, they're So, not while there, met but And do expect waiting. we've we

Jacques Tortoroli

Iâ€™d And can opens I just as and is in that of channels. new that not natural open we well mean, as today, every the is But nor are the regulation the FDM in about sort FDM like are into a the CBD store, on not all we're in we add XX well. up. markets Natural, as color industry reality market of retail talk coming verticals all

grab customers particularly just expand land in the channels us not want in to the of leisure, for. minimal other and of be looking to inventory, of think do, within as pulled number take and that shelf verticals, opportunities industry, incremental but to bodes open CBD competitively is shelf facings and doors, of want retail, stores in get us industry the velocity hospitality, in as really advantage time carry up over then that obviously well highest because have don't, verticals think take by that the there's travel are consumers the spacings regulations industry verticals the our today, in they velocity and that what any will So, inventory shelf, stores those more in which strength that on to well. for already for those brands, CBD of on They

against. the be So, in lot navigated market of opportunity to a

Najib Islam

it. the queue. everyone, Got I'll Thanks hope of

Operator

Thank questions you. Mr. this no time. There at further may proceed. are Pala, you

Charlotte's Web (CWBHF) 10 Aug 232023 Q2 Earnings call transcript