Q1 2022 Charlotte's Web Holdings Inc Earnings Call

May 17, 2022

Operator: --call you require need assistance, please press zero for an operator. Also note that the call is being recorded on Tuesday, May 17th 2022. And I would like to turn the conference over to Cory Pala, Director of Investor Relations. Please go ahead.

Operator: --require assistance, please press star zero for an operator. Also, note that the call is being recorded on Tuesday, May 17th, 2022. And I would like to turn the conference over to Cory Pala, Director of Investor Relations. Please go ahead.

Cory Pala: Thanks, Sylvie. Good morning everyone. Thank you for joining us for 2022 first quarter earnings conference call for Charlotte's Web Holding Inc.

Cory Pala: Thanks, Sylvie. Good morning everyone. Thank you for joining us for our 2022 first quarter earnings conference call for Charlotte's Web Holdings Inc.

Cory Pala: Our earnings press release and financial statements for the first quarter have been posted on the Investor Relations section of our website and filed on sedar.com in Canada, as well as in the US with the SEC as a Form 8-K, including exhibits. Our 10-k has been filed in the US on Edgar which may be accessed on the SEC's website.

Cory Pala: Our earnings press release and financial statements for the first quarter have been posted on the investor relations section of our website and filed on sedar.com in Canada as well as in the US with the SEC as a Form 8-K, including exhibits. Our 10-K has been filed in the US on Edgar which may be accessed on the SEC's website.

Cory Pala: Our 10-k has been filed in the US on Edgar which may be accessed on the SEC's website.

Cory Pala: On today's call, we will share some high-level comments on the quarter and an update on the business initiatives for 2022 and beyond. We'll take our questions from our analysts at the end of our prepared remarks.

Speaker 2: Our 10 -k has been filed in the us on editor which may be accessed on the SEC's website.

Cory Pala: A replay of this call will be available through the next week, accessible for the details provided in our earnings release, and a webcast replay of this call will be available for an extended period of time, accessible through the IR section on our website at charlottesweb.com.

Cory Pala: A replay of this call will be available through the next week, accessible for the details providing our earnings release and a webcast replay of this call will be available for an extended period of time, accessible through the IR section on our website at charlottesweb.com.

Cory Pala: And finally, a reminder to our listeners that certain statements made on today's call, including some answers we may provide to certain questions may include content that is forward-looking in nature and therefore subject to risks and uncertainties and factors which could cause actual future results or company performance to differ materially from implied expectations.

Cory Pala: And finally, a reminder to our listeners, as certain statements made on today's call, including some answers we may provide certain questions may include content that is forward-looking in nature and therefore subject to risks and uncertainties and factors which could cause actual future results or company performance to differ materially from implied expectations.

Cory Pala: Such risks surrounding forward-looking statements are outlined in detail within the company's regulatory filings on sedar.com in Canada and sec.gov in the United States.

Cory Pala: In addition, during the call, we will refer to supplemental non-GAAP accounting measures, including adjusted EBITDA, which does not have any standardized meaning prescribed by GAAP.

Cory Pala: Please refer to the earnings release contained in the Form 8-K that we filed yesterday for a description of adjusted EBITDA and other non-GAAP accounting measures, as well as a reconciliation of such measures to the respective most directly comparable GAAP financial measures.

Speaker 3: For a description of adjusted EBITDA and other non-GAAP accounting measures, as well as a reconciliation of such measures to the respective most directly comparable GAAP financial measure.

Cory Pala: With that, I will now hand over the call to Charlotte's Web Chief Executive Officer, Jacques Tortoroli. Jacques?

Jacques Tortoroli: Morning from Colorado and thank you all for joining our call this morning. I'm pleased to be joined this morning by Lindsay Jensen, who joined the company in 2019 and was recently promoted to Chief Financial Officer.

Speaker 5: I'm pleased to be joined this morning by lyindy Jensen, who joined the company in 2019, was recently promoted the Chief Financial Officer.

Jacques Tortoroli: Morning from Colorado and thank you all for joining our call this morning. I'm pleased to be joined this morning by Lindsey Jensen, who joined the company in 2019 and was recently promoted to Chief Financial Officer.

Jacques Tortoroli: Also on the call is Jared Stanley, one of the company's co-founders, who was recently appointed Chief Operating Officer after previously serving as Chief Cultivation and Innovation Officer.

Jacques Tortoroli: I know it's been hard for shareholders this past week with market volatility trading and the price of our stock. Last week it appears we had a large institutional investor exit their position as part of a portfolio rebalancing.

Jacques Tortoroli: It was done in a disorderly manner. We were not given notice and were equally confused by the trading last Thursday and Friday. While the CBD sector has ongoing headwinds, we don't believe the fund's decision or our recent share price accurately reflects our long-term opportunity and value.

Jacques Tortoroli: It was done in a disorderly manner. We were not given notice [inaudible] we're confused by the trading last Thursday and Friday. While the CBD sector has ongoing headwinds, we don't believe the fund's decision or our recent share price accurately reflects our long-term opportunity and value.

Jacques Tortoroli: On today's call, Lindsay will go into more detail on our financial results and Jared will share some insights on why Charlotte's Web is uniquely positioned for growth over the long term with our vertical integration, science credentials, innovation pipeline, and select international market penetration.

Jacques Tortoroli: On today's call, Lindsay will go into more detail on our financial results and Jared will share some insights on why Charlotte's Web is uniquely positioned for growth over the long-term, with our vertical integration science credentials, innovation pipeline, and select international market penetration.

Jacques Tortoroli: I'll close on our progress against key initiatives we outlined in our last earnings call before opening up for your questions.

Jacques Tortoroli: Before handing the call to Lindsay and Jared, let me set the context for our Q1 results.

Jacques Tortoroli: I'll close on our progress against key initiatives we outlined our last earnings call before opening up for your questions.

Jacques Tortoroli: Q1 was not the quarter we had planned for, but I do want to be clear, it will be our worst quarter of the year. Why? In January, we had to close our production and fulfillment facility in Louisville after a wild four fire occurred in the area. It was Colorado's most destructive fire on record in terms of property loss, destroying more than 1000 homes.

Jacques Tortoroli: Before handing the call to Lindsay and Jared, let me set the context for our Q1 results.

Jacques Tortoroli: Q1 was not the quarter we had planned for, but I do want to be clear, it will be our worst quarter of the year. Why? In January, we had to close our production of [inaudible] facility in Louisville after a wildfire occurred in the area. It was Colorado's most destructive fire on record in terms of property loss, destroying more than one thousand homes.

Speaker 5: It was Colorado's most destructive fire on record in terms of property loss, destroying more than 1000 homes.

Jacques Tortoroli: Thankfully, our facility was not directly harmed, but we were unable to properly run the facility for nearly two weeks, negatively impacting revenues by more than a billion dollars in the quarter.

Jacques Tortoroli: Also in January, we pulled back on the frequency and depth of promotions, particularly in e-commerce, but we didn't fully offset the result in volume loss in the month with higher value sales. We cost corrected in February and March to better results.

Jacques Tortoroli: Also in January, we pulled back on the frequency and depth of promotions, particularly e-commerce, but we didn't fully offset the resulting volume loss in the month with higher-value sales. We cost corrected in February and March for better results.

Jacques Tortoroli: In April, we made changes to our B2B retail sales organization, obviously not impacting Q1. These changes, including new leadership and the implementation of a motivating sales incentive plan rewarding growth beginning in July, we expect will contribute to subsequent sequential improvements in B2B revenue over the balance of the year and beyond.

Jacques Tortoroli: In April, we made changes to our B2B retail sales organization, obviously not impacting Q1. These changes, including new leadership and the implementation of the motivating sales incentive plan, rewarding growth, beginning in July, we expect will contribute to subsequent sequential improvements in B2B revenue over the balance of the year and beyond.

Jacques Tortoroli: Reversing the traffic declines to any e-commerce site takes some time. However, in March we saw record revenue on pie day due to more compelling content and effective paid in earned media marketing. March subsequently demonstrated the highest gain being customer acquisition metrics since December of 2021 and a 9% gain in revenues during the primary promotional period in the month.

Jacques Tortoroli: Reversing the traffic declines to any e-commerce site takes some time. However, in March we saw record revenue on pie day due to more compelling content and effective paid and earned media marketing. March subsequently demonstrated the highest gains in customer acquisition metrics since December of 2021 and a 9% gain in revenues during the primary promotional period in the month.

Jacques Tortoroli: So importantly, consolidated monthly revenues recovered sequentially through February and March, with the March quarterly revenue run rate consistent with last year's quarter.

Jacques Tortoroli: Considering the slow start that we had in Q1 to the aforementioned items, we'll have some ground to make up for the full year. We recognize everything we are doing to grow the top line takes time, but we do expect it to show up on the top line this year. Where we land for the full year is likely going to be somewhere between flat to modest growth. Most importantly though, we stabilize cash flow to be neutral or positive for the year.

Jacques Tortoroli: Considering a slow start that we had in Q1 through the aforementioned items, we'll have some ground to make up for the full year. We recognize everything we are doing to grow the top line takes time, but we do expect it to show up on the top line this year. Where we land for the full year is likely going to be somewhere between flat to modest growth. Most importantly though, we stabilized cash flow to be neutral or positive for the year.

Jacques Tortoroli: The actions implemented in early January lowered our cash operating cost by more than $20 million, or 20% on an annualized basis. However, the impact wasn't fully realized in the first quarter, given the timing of some headcount reductions and related severance charges.

Speaker 5: However the impact wasn't fully realized in the first quarter, given the timing of some headcount reductions and related severage charges.

Speaker 3: However the impact wasn't fully realized in the first quarter, given the timing of some headcount reductions and related severage charges.

Jacques Tortoroli: In the quarter, we use 4.7 million in cash from operations, almost all of it in January. The use of cash from operations for the quarter reflects improvements of $4 million versus last year's quarter and $9 million compared to the recent 2021 December quarter.

Speaker 5: The use of cash from operations for the quarter reflects improvements of $4 million versus last year's quarter and $9 million compared to the recent 2021 December quarter.

Jacques Tortoroli: In the quarter, we used $4.7 million in cash from operations, almost all of it in January. The use of cash from operations for the quarter reflects improvements of $4 million versus last year's quarter and $9 million compared to the recent 2021 December quarter.

Speaker 3: The use of cash from operations for the quarter reflects improvements of $4 million versus last year's quarter and $9 million compared to the recent 2021 December quarter.

Jacques Tortoroli: Since the quarter ended, we have essentially been cash neutral and have collected approximately $2.7 million from an IRS tax refund, with another approximately $7 million expected to be collected during the balance of the year.

Jacques Tortoroli: Before turning the call over to Lindsay, I want to make an important point when. Lindsay is exactly what we need in a CFO in these times. She understands our economics, she has the experience and respect of our extended leadership team and throughout the company.

Jacques Tortoroli: Before turning the call over to Lindsay, I want to make an important point. Lindsay is exactly what we need in the CFO in these times. She understands our economics. She has the experience and respect of our extended leadership team and throughout the company. I'm delighted to work more closely with Lindsay in our new expanded role. And importantly, Lindsay is but one of the many women in leadership roles in this organization. And with that, I'll turn it over to Lindsay.

Jacques Tortoroli: We're delighted to work more closely with Lindsay in her new expanded role. And importantly, Lindsay is but one of the many women in leadership roles in this organization. With that, I'll turn it over to Lindsay.

Speaker 5: And importantly, lindsesay is but one of the many women in leadership roles in this organization.

Speaker 3: I'm delighted to work more closely with Lindsay in our new expanded role. And importantly, Lindsay is but one of the many women in leadership roles in this organization. And with that, I'll turn it over to Lindsay.

Speaker 5: With that, I'll turn it over to lyindthy.

Speaker 3: And importantly, Lindsay is but one of the many women in leadership roles in this organization.

Lindsay Jensen: Thank you, Jack's good morning. I trust you have had a chance to review our first quarter financial results.

Speaker 3: Do with that. I'll turn it over to Lindsay.

Lindsay Jensen: As Jack stated, we had a slow start to the quarter, partly due to a wild fire in January, and we experienced a delayed reopening of our production and fulfillment center for nearly two weeks.

Lindsay Jensen: Thank you, Jack. Good morning. I trust you had a chance to review our first quarter financial results.

Lindsay Jensen: As Jack stated, we had a slow start to the quarter, partly due to a wildfire in January, and we experienced a delayed reopening of our production and fulfillment center for nearly two weeks.

Lindsay Jensen: Total D2C was 13.1 million, down 18% year-over-year, and B2B revenue of 6.2 million decreased by 14.6%.

Lindsay Jensen: Total B2C was 13.1 million, down 18.5% year-over-year, and B2B revenue of $6.2 million decreased by 14.6%.

Lindsay Jensen: Q1 consolidated net revenue of 19.4 million decreased 17.3% versus 23.4 million a year ago.

Lindsay Jensen: In our e-commerce business, revenues were three million below last year, attributable to lower traffic, the shipping delays, and reduced promotional offerings, particularly in January.

Lindsay Jensen: This was partially offset by stronger subscriptions and higher conversion rates. In fact, subscriptions increased 107% year-over-year and e-commerce conversion rates were a strong 14.2%.

Lindsay Jensen: This was partially offset by stronger subscriptions and higher conversion rates. In fact, subscriptions increased 107% year-over-year, and e-commerce conversion rates were a strong 14.2%.

Lindsay Jensen: The highest online sales day in the quarter was tied to promotions for Pie Day on March 14th.

Lindsay Jensen: Charlotte's web maintains the largest e-commerce business in the CBD industry, and increasing our online traffic and conversions are key priorities for us.

Lindsay Jensen: The highest online sales day in the quarter was tied to promotions for pie day on March 14th.

Lindsay Jensen: Charlotte's Web maintains the largest e-commerce business in the CBD industry, and increasing our online traffic and conversions are key priorities for us.

Lindsay Jensen: This is our largest book revenue channel, contributing 68% of the company's total net revenue in the quarter. In our B2B business, revenues were 1.1 million below last year, reflecting lower sales of some of our larger customers.

Lindsay Jensen: This is our largest revenue channel, contributing 68% of the company's total net revenue in the quarter. In our B2B business, revenues were $1.1 million below last year, reflecting lower sales to some of our larger customers.

Speaker 7: And our B two B business revenues were one point one million below last year, reflecting lower sales of some of our larger customers.

Speaker 4: And our B two B business revenues were one point one million below last year, reflecting lower sales to some of our larger customers.

Lindsay Jensen: These customers were impacted by the slower reopening of our shipping facility, as well as supply challenges affecting some of our best-selling products in the CBD clinic portfolio. These items were back in stock by the end of the quarter.

Speaker 7: These items were back in stock by the end of the quarter.

Lindsay Jensen: These temporary setbacks were partially offset by lower spoils and return versus last year and distribution gains, including some doors in California following the passing of assembly bill 45 last December. We anticipate further expansion in California over the balance of the year.

Lindsay Jensen: These temporary setbacks were partially offset by lower spoils and returns versus last year and distribution gains, including some doors in California following the passing of assembly Bill 45 last December. We anticipate further expansion in California over the balance of the year.

Speaker 7: We anticipate further expansion in California over the balance of the year.

Lindsay Jensen: We added approximately 564 new doors within the grocery, natural, and pet channels during the first quarter. In addition, we welcomed GNC as a customer, contributing over 800 new doors in 24 States after the initial shipment in the last week of December 2021.

Speaker 4: We anticipate further expansion in California over the balance of the year.

Lindsay Jensen: We added approximately 564 new doors within the grocery, natural, and pet channels during the first quarter. In addition, we welcomed GNC as a customer contributing over 800 new doors in 24 States after the initial shipment in the last week of December 2021.

Lindsay Jensen: Importantly, the balance of the year will benefit from reorders and more doors and additional markets. These gains were partially offset by distribution losses at CVS following their Q4 announcement to close 900 locations.

Speaker 7: These gains were partially offset by distribution losses at CVS following their Q4 announcement to close 900 location.

Speaker 4: These gains were partially offset by distribution losses at CVS following their Q4 announcement to close 900 location.

Lindsay Jensen: We maintain our leading market share position in total food and drug and natural specialty retail. Revenues in our B2B channel contributed 32% of total revenue in the quarter.

Lindsay Jensen: As of March 20th Charlotte's Web market share and food-drug mass retail was 14.9%, up 1.3 share points versus Q1 2021.

Lindsay Jensen: As of March 20th, Charlotte's Web market share and food-drug mass retail was 14.9%, up 1.3 share points versus Q1 2021.

Lindsay Jensen: We also made share gains in the natural specialty channel, gaining just over one percentage point to 20.3%, according to [inaudible] data.

Lindsay Jensen: We also made share gains in the natural specialty channel, gaining just over one percentage point to 20.3%, according to spend's data.

Lindsay Jensen: Gross margin in the quarter was 60.5%. This was an increase of 22 basis points from Q1 of last year.

Lindsay Jensen: As a result of our organizational and cost actions mentioned earlier, SGNA expenses were $20 million for the quarter, a 3.4 million or 14% reduction from a year ago. At an implied $80 million full year run rate, we are confident that our actual full year OpEx will be below that.

Lindsay Jensen: As a result of our organizational and cost actions mentioned earlier, SGNA expenses were $20 million for the quarter, a $3.4 million or 14% reduction from a year ago.

Lindsay Jensen: Despite lower revenues, net loss for the quarter was reduced to 8.6 million versus 10.1 million a year ago.

Lindsay Jensen: At an implied $80 million fully ear run rate, we are confident that our actual full year OpEx will be below that.

Lindsay Jensen: Despite lower revenues, net loss for the quarter was reduced to $8.6 million versus $10.1 million a year ago.

Lindsay Jensen: Adjusted EBITDA was a loss of 5.3 million. This represents an improvement of approximately one million or 15% year-over-year.

Lindsay Jensen: Adjusted EBITDA was a loss of $5.3 million. This represents an improvement of approximately one million or 15% year-over-year.

Lindsay Jensen: Total cash used in the first quarter of 2022 was $5 million, of which approximately $4.8 million was in January.

Lindsay Jensen: February and March were essentially cash neutral, reflecting sequentially higher collections and lower SGNA cash costs.

Lindsay Jensen: Cash and working capital at March 31st were $14.5 million and $69.9 million respectively, compared with $19.5 million and $76 million at December end.

Lindsay Jensen: We have no long-term debt and, subsequent to March 31st, collected 2.7 million from the IRS. We still have a remaining balance of 7.6 which we expect to fully receive in the balance of the year. I will now turn the call back over to Jack.

Lindsay Jensen: We have no long-term debt and subsequent to March 31st, collected $2.7 million from the IRS. We still have a remaining balance of $7.6 which we expect to fully receive in the balance of the year. I will now turn the call back over to Jacques.

Cory Pala: Jack, are you on mute?

Jacques Tortoroli: Thank you, Lindsay. I want to say a few things about Jared.

Cory Pala: Jack, are you on mute?

Jacques Tortoroli: He's a Co-Founder of this company and has been a key part of the company ever since. Jared has played an enormous role in our vertical integration, seed-to-shelf product quality, and standing up our Lewisville facility, with its over 40 million multiyear investment now completed.

Jacques Tortoroli: Thank you, Lindsay. I want to say a few things about Jared. He's a Co-Founder of this company and has been a key part of the company ever since. Jared has played an enormous role in our vertical integration seed-to-shelf product quality and setting up our Lewisville facility with its over four million multiyear investment now completed.

Speaker 5: Jared has played an enormous role in our vertical integration seat, the shelf, product quality and standing up our lewisvil facility, with its over four million multiyear investment, now completed.

Speaker 6: He's a Co-Founder of this company has been a key part of the company ever since.

Speaker 6: Jared has played an enormous role in our vertical integration seat to shelf product quality and standing up our Lewis facility with its over four million multiyear investment now completed.

Jacques Tortoroli: From our first cultivation in Canada last year to operation, quality, and regulatory, Jared has done and overseen it all. Every day, Jared brings a unique founded energy with him and no one cares more deeply about the company's purpose and its future. More than that, he has a keen business sense and led our recent work on our strategy. We're fortunate to have him at our side.

Jacques Tortoroli: From my first cultivation in Canada last year to operations, quality, and regulatory, Jared has done and overseen it all. Every day, Jared brings a unique founder's energy with him and no one cares more deeply about the company's purpose and its future. More than that, he has a keen business sense and led our recent work on our strategy. We're fortunate to have him at our side. With that, I'll turn the call over to Jared.

Jacques Tortoroli: With that, I'll turn the call over to Jared.

Jared Stanley: Thanks, Jack. I want to attempt a little on Canada, discuss some key initiatives we will be focusing on and give an overview on our vertical integration and how it bodes well to our regulatory advantage.

Jared Stanley: Thanks, Jack. I want to touch a little on Canada to discuss some key initiatives we will be focusing on and give an overview on our vertical integration and how it bodes well to our regulatory advantage.

Jared Stanley: First in Canada, we are close to finalizing our Canadian partnership, having harvested more than 5000 kilos of quality of hemp biomass. We plan to execute with the right partner, aligned vision of where Charlotte's Web portfolio plays.

Jared Stanley: First in Canada, we are close to finalizing our Canadian partnership having harvested more than 5000 kilos of quality [inaudible] biomass. We plan to execute with the right partner, aligned vision of where Charlotte's web portfolio plays. The mature Canadian [inaudible] and medical market are much different than the US CBD category and it has been essential for us to build a portfolio more tailored for retail stores in Canada.

Speaker 10: We plan to execute with the right partner, aligned vision of where Charlotte web portfolio plays.

Speaker 8: We plan to execute with the right partner, aligned vision of where Charlotte's web portfolio plays.

Jared Stanley: The mature Canadian [inaudible] and medical market are much different than the US CBD category and it has been essential for us to build a portfolio more tailored for retail stores in Canada.

Speaker 8: The mature Canadian reck and medical market are much different than the? U scbd category and it has been essential for us to build a portfolio more tailored for retail stores in Canada.

Speaker 12: Beverages and cosmoaceuticals are currently the two fastest-growing CBD segments.

Jared Stanley: To transition a little to product innovation, beverages and cosmeceuticals are currently the two fastest-growing CBD segments. Combined, these segments will represent about 500 to 700 million industry sales for 2022. Charlotte's Web vast experience in topical formulations and aligning are focused and incentivized driven sales team make cosmeceuticals an easy target for CW to execute against. Just 3% share in cosmeceuticals alone would add $10 million to our top line in 2023.

Speaker 13: Combined, these segments will represent about 500 to seven million in industry sales for 2020 -two.

Speaker 8: Combined, these segments will represent about 500 to seven million industry sales for 2022. Charlotte's Webs vast experience in topical formulations and aligning are focused and incentivizede-driven sales team make cosmoaceuticals an easy target for CW to execute against. Just 3% share in cosmoaceuticals alone would add one million to our top line in 2020 three

Jared Stanley: Charlotte's Web's vast experience in topical formulations and aligning our focused and incentivize-driven sales team make cosmeceuticals an easy target for CW to execute against. Just 3% share in cosmeceuticals alone would add 10 million to our top line in 2023.

Speaker 11: Just 3% share in cosmoaceuticals alone would add one million to our top line in 2020. -three.

Speaker 9: I also want to add some comments around the direction we can take our business forward by leveraging the assets we have built.

Jared Stanley: But I want to talk a little bit about our foundation of consistency. I also want to add some comments around the direction we can take our business forward by leveraging the assets we have built. When we founded Charlotte's web in 2013, we launched the company on a mission to end a 15,000 client waiting list to access Charlotte's Web products. We ended that waiting list with our first crop and still today served thousands of consumers like Charlotte. For this reason, our product not only has to be safe but most importantly it has to be consistent year after year, bottle after bottle.

Speaker 8: I also want to add some comments around the direction we can take our business forward by leveraging the assets we have built.

Jared Stanley: When we founded Charlotte's Web in 2013, we launched the company on a mission to end a 15,000 client waiting list to access Charlotte's Web products. We ended that waiting list with our first crop and still today serve thousands of consumers like Charlotte. For this reason, our product not only has to be safe but most importantly it has to be consistent year after year, bottle after bottle.

Speaker 8: When we founded Charlotte's web in 2013, we launched the company on a mission: the end of 15 thousand client waiting this to access Charlotte's web products.

Speaker 10: We ended that waiting list with our first crop and still today served thousands of consumers like Charlotte.

Speaker 9: For this reason our product not only has to be safe but most importantly it has to be consistent year after year botle. After botle.

Speaker 8: We ended that waiting list with our first crop and still today served thousands of consumers like Charlotte.

Speaker 8: For this reason our product not only has to be safe but most importantly it has to be consistent year after year botle. After botle.

Jared Stanley: We compete in an industry that consists with more than 2000 competitors, the vast majority of which are very small and none of these businesses have what we have in terms of quality, consistency, and efficacy.

Speaker 9: The vast majority of which are very small and none of these businesses have. But we have in terms of quality, consistency and efficacy.

Jared Stanley: We compete in an industry that consists of more than 2000 competitors, the vast majority of which are very small and none of these businesses have what we have in terms of quality, consistency, and efficacy. There is no other hemp CBP company like Charlotte's Web. With a fully integrated breeding program, five US hemp patents, one Canadian patent, full traceability and control across our supply chain is likely our greatest asset. And this is important because creating consistent consumer experience is not only the right thing to do for our consumers who rely on Charlotte's web products, but it has become the foundation to our regulatory advantage. It is this capability that resulted in successfully having our novel foods application validated in the UK this year, one of only a few to have done so for full spectrum extracts.

Jared Stanley: There is no other hemp CBD company like Charlotte's Web. With a fully integrated breeding program. five US hemp patents, one Canadian patent, full traceability and control across our supply chain is likely our greatest asset. And this is important because creating consistent consumer experience is not only the right thing to do for our consumers who rely on Charlotte's Web products but it has become the foundation to our regulatory advantage.

Speaker 9: With a fully integrated breeding program.

Speaker 8: There is no other hecbd company like charlottte's web with a fully integrated breeding program.

Speaker 9: five U's ppatents one Canadian patent. Full traceability and control across our supply chain is likely our greatest asset.

Speaker 8: five US hemp patents, one Canadian patent, full traceability and control across our supply chain is likely our greatest asset. And this is important because creating consistent consumer experience is not only the right thing to do for our consumers who rely on Charlotte's web products,

Speaker 9: And this is important because creating consistent consumer experience is not only the right thing to do for our consumers who rely on Charlotte's web products.

Speaker 9: but it has become the foundation to our regulatory advantage.

Jared Stanley: It is this capability that resulted in successfully having our novel foods application validated in the UK this year, one of only a few to have done so for full spectrum extracts. It is also why we could thank the FDA through multiple meetings. We have five years, and shared with them five years, of consistency data from cultivation, extract, and finished product.

Jared Stanley: but it has become the foundation to our regulatory advantage. It is this capability that resulted in successfully having our novel foods application validated in the UK this year, one of only a few to have done so for full spectrum extracts.

Speaker 9: It is also why we could thank the FDA through multiple meetings.

Speaker 9: We have five years, and shared with them five years, of consistency data from cultivation, extract and finished product.

Jared Stanley: It is also why we could take the FDA through multiple meetings. We have five years and shared with them five years of consistency data from cultivation, extract, and finish product. Keep in mind and we expect that HR 841, the hemp derived CBD Consumer Protection and Market Stabilization Act will regulate hemp as a dietary supplement through the FDA's new dietary ingredient notification process, or NDI.

Jared Stanley: Keep in mind and we expect that HR 841, the hemp-derived CBD Consumer Protection and Market Stabilization Act, will regulate hemp as a dietary supplement through the FDA's new dietary ingredient notification process or NDI.

Jared Stanley: Charlotte's Web would not be able to achieve the required level of safety, consistency, and depth of our NDI application if not for our strategic vertical integration advantage.

Jared Stanley: Charlotte's web would not be able to achieve the required level of safety, consistency, and depth of our NDI application if not for our strategic vertical integration advantage.

Jared Stanley: In addition to our flagship cultivar, Charlotte's Web uses two other patents at cultivars in its supply chain. Once regulations are set, we will be preparing additional NDI applications to be prepared for DMS retail with a diversification of brands, including private and white label opportunities with partners.

Jared Stanley: In addition to our flagship Cultivar, Charlotte's web uses two other patents at Cultivar in its supply chain. Once regulations are set, we will be preparing additional NDI applications to be prepared for SDMS retail with a diversification of brands, including private and white label opportunities with partners.

Speaker 17: Once regulations are set, we will be preparing additional nd applications to be prepared for DMS retail with a diversification of brands, including private and white label opportunities with partners.

Speaker 8: Once regulations are set, we will be preparing additional ND applications to be prepared for DMS retail with a diversification of brands, including private and white label opportunities with partners.

Jared Stanley: Large FDM retailers require full traceability of the supply chain and there's no other company that can offer the level or transparency and trust that we do from our seed-to-shelf model.

Jared Stanley: Large FDM retailers require full traceability of the supply chain and there's no other company that can offer the level or transparency and trust that we do in our seed-to-shelf model.

Jared Stanley: Beyond trust is our ability to use our patented cultivars to create differentiated NDI, FDA-approved ingredients upon a regulated CBD category. And it goes further. To build upon CW's regulatory advantage, we have the best infrastructure in our category, capable of supporting one billion in annual sales. We have invested nearly $40 million in CapEx to date in our state-of-the-art extraction, manufacturing, and order fulfillment facility, and most importantly, that investment is behind us.

Jared Stanley: Beyond trust is our ability to use our patented cultivars to create differentiated ND FDA-approved ingredients upon a regulated CBD category. And it goes further. To build upon CW's regulatory advantage, we have the best infrastructure in our category, capable of supporting one billion in annual sales.

Speaker 11: And it goes further.

Speaker 9: To build upon CW's regulatory advantage. We have the best infrastructure in our category, capable of supporting one billion in annual sales.

Speaker 8: To build upon CW's regulatory advantage. We have the best infrastructure in our category, capable of supporting one billion in annual sales.

Speaker 17: We have invested nearly four million in CapEx to date in our stand-of-vart extraction manufacturing and order fulfillment facility and most importantly.

Jared Stanley: We have invested nearly $40 million in CapEx to date in our state-of-the-art extraction, manufacturing, and order fulfillment facility, and, most importantly, that investment is behind us.

Speaker 17: That investment is behind us.

Jared Stanley: Charlotte's Web has the brand trust, science credentials, and necessary production capacity in place to truly leverage a regulated environment. But the opportunity in a regulated market extends far beyond our current business and customers today.

Speaker 9: But the opportunity in a regulated market extends far beyond our current business and customers today.

Speaker 8: But the opportunity in a regulated market extends far beyond our current business and customers today.

Jared Stanley: We have built the company for an FDA-ready business upon a clear regulatory pathway but it is imperative we extend our internal capabilities to an innovative cannabinoid company.

Jared Stanley: We have built the company for an FDA-ready business upon a clear regulatory pathway, but it is imperative we extend our internal capabilities to an innovative cannabinoid company. Our mission statement says, to unlock the healing powers of botanicals, and we are compelled to discover formulations and ratios of minor cannabinoids to support more Charlottes of the world.

Jared Stanley: Our mission statement says to unlock the healing powers of botanicals, and we are compelled to discover formulations and ratios of minor cannabinoids to support more Charlottes of the world.

Jared Stanley: Our commitment is not to launch me too minor cannabinoid products but to do preclinical work using minor cannabinoid formulations to determine the most efficacious products to meet specific consumer needs States.

Jared Stanley: Our commitment is not to launch me too minor cannabinoid products but to do pre-clinical work using minor cannabinoid formulations to determine the most efficacious products to meet specific consumer need states. CBN, CBDA, CBG, CBGA, and others we believe will align the right cannabinoid to the right need state. These can be leveraged to support innovations in our current portfolio and new industry verticals. We spent the past three years and significant investment to be able to support an eventual regulated mass retail market, which hasn't happened yet. We believe we will see regulations land within 12 to 18 months, potentially through legislation with HRA 41 or in the 2023 Farm Bill.

Jared Stanley: EBM, CBDA, CBG, CBGA, and others we believe will align the right cannabinoid to the right need state. These can be leveraged to support innovations in our current portfolio and new industry verticals.

Speaker 10: ebn CBDA CBG, cbgaa and others we believe will align the right cnabinoid to the right need state.

Speaker 17: These can be leveraged to support innovations in our current portfolio and new industry verticals.

Speaker 8: These can be leveraged to support innovations in our current portfolio and new industry verticalswe spent the past three years and significant investment to be able to support an eventual regulated mass retail market.

Jared Stanley: We spent the past three years and significant investment to be able to support an eventual regulated mass retail market, which hasn't happened yet. We believe we will see regulations land within 12 to 18 months, potentially through legislation with HR 841 or in the 2023 farm bill.

Speaker 17: Which hasn't happened yet. We believe we will see regulations land within 12 to 18 months, potentially through led legislation with HR 41 or in the 2023 farm bill.

Speaker 8: Which hasn't happened yet. We believe we will see regulations land within 12 to 18 months, potentially through led legislation with HRA 41 or in the 2023 Farm Bill.

Jared Stanley: We do not see a world where CBD would remain a four to five billion unregulated category with more than 2000 brands and manufacturers in perpetuity.

Jared Stanley: We do not see a world where CBD would remain a four to five billion unregulated category with more than 2000 brands and manufacturers in perpetuity. We are a company built on intellectual property at every step of our process. We did this in protection of and commitment to our first waiting list of consumers who built the foundation of this company.

Jared Stanley: We are a company built on intellectual property at every step of our process. We did this in protection of and commitment to our first waiting list of consumers who built the foundation of this company.

Speaker 18: We did this in protection of and commitment to our first waiting list of consumers who built the foundation of this company.

Speaker 9: We are a company built on intellectual property at every step of our process.

Speaker 9: We did this in protection of and commitment to our first waiting list of consumers who built the foundation of this company.

Jared Stanley: We are here for the long haul. We will stay loyal to the consumers that depend on us. We will be ready for FDA regulation and we will innovate and find more Charlottes of the world to support their wellness journey.

Jared Stanley: I look forward to joining you all again on the Q2 call and I'll hand the call back over to Jacques.

Jacques Tortoroli: Thanks, Jared. This leadership team and all the workforce are focused on what I call the long game. In our quarterly calls, we look forward to updating you on our progress against milestones that are reflective of the most important priorities.

Speaker 9: I look forward to joining you all again on the Q2 call and I'll hand the call back over to Jacques.

Speaker 5: This leadership team and all of work for us are focused on what I call the long game and our quarterly calls. We look forward to updating you on our progress against milestones that are reflective of the most important priorities.

Jacques Tortoroli: Thanks, Jared. This leadership team and all the work for us are focused on what I call the long game. In our quarterly calls, we look forward to updating you on our progress against milestones that are reflective of the most important priorities.

Jacques Tortoroli: In the near term, our 2022 goals are simple: improve our consumers' quality of life while returning the company to modest revenue growth and free cash flow. Execution, being choiceful in our priorities, and spending and staying the costs, are critical disciplines we have embraced.

Jacques Tortoroli: In the near term, our 2022 goals are simple; improve our consumers' quality of life while returning the company to modest revenue growth and free cash flow, execution, being choiceful in our priorities and spending, and staying the costs are critical disciplines we have embraced.

Speaker 5: Execution, being choiceful in our priorities, and spending and staying the costs, are critical disciplines we have embraced.

Speaker 6: Improve our consumers' quality of life while returning the company to modest revenue growth and free cash flow.

Speaker 5: In staying the costs, our critical disciplines, we have embraced.

Speaker 6: Execution, being choiceful in our priorities and spending and staying the costs are critical disciplines we have embraced.

Jacques Tortoroli: Let's not lose sight of the fact that CBD today is a $4 billion category in which CW is number one in market share by far. Our percentage market share is in the single digits, illustrating how fragmented the market remains, but also how much market share is available to us.

Jacques Tortoroli: Let's not lose sight the fact that CBD today is a $4 billion category in which CW is number one in market share by far. Our percentage market share is in the single digits illustrating how fragmented the market remains, but also how much market share is available to us. We are the only brand with number one ranking across all brand attributes, from unaided awareness to loyalty. The size of the prize remains enormous and keep in line with what Jared said earlier. We aren't yet represented in two of the fastest-growing categories, and that's just the US and that's before US regulations land.

Speaker 5: but also how much market share is available to us.

Jared Stanley: We are the only brand with a number one ranking across all brand attributes from unaided awareness to loyalty. The size of the prize remains enormous and keep in mind what Jared said earlier, we aren't yet represented in two of the fastest-growing categories. And that's just the US, and that's before US regulation plans. So we're executing on a few key pillars, all of which we introduced in our last call.

Speaker 6: But also how much market share is available to us. We had the only brand with number one ranking across all brand attributes, from unaed awareness to loyalty.

Speaker 5: The size of the prize remains enormous and keep in line with jeffard said earlier. We aren't yet represented in two of the fastest-growing categories.

Speaker 6: The size of the prize remains enormous and keep in line with jffard said earlier. We are yet represented in two of the fastest-growing categories.

Speaker 5: And that's just the S.

Speaker 5: And that's before U's regulation plans.

Speaker 5: So we're executing on a few key pillars, all of which we introduced in our last call.

Speaker 6: And that's just the U's and that's before U's regulations land.

Jacques Tortoroli: First, we want to grow retail revenues through more doors and higher consumer pull in our existing customer base, add new customers in existing channels and expand into new industry verticals.

Jacques Tortoroli: So we're executing on a few key pillars, all of which we introduced in our last call. First, we want to grow retail revenues through more doors and higher consumer pull in our existing customer base, add new customers in existing channels, and expand into new industry verticals. We want to grow our distributor base, particularly servicing channels where we're unrepresented in today. We expect to have announcements in the coming weeks on these priorities. We recently made changes to the sales team and leadership, which will benefit our revenue performance as we move through the year and beyond.

Speaker 5: Add new customers in existing channels and expand into new industry verticals.

Speaker 6: First we want to grow retail revenues through more doors and higher consumer pull in our existing customer base.

Jacques Tortoroli: We want to grow our distributor base, particularly servicing channels where we're unrepresented in today. We expect to have announcements in the coming weeks on these priorities. We recently made changes to the sales team and leadership, which will benefit our revenue performance as we move through the year and beyond.

Speaker 6: Add new customers and existing channels and expand into new industry verticals. We want to grow our distributor base, particularly servicing channels we were unrepresented in today. We expect to have announcements in the coming weeks on these priorities.

Speaker 5: We recently made changes to the sales team and leadership, which will benefit our revenue performance as we move through the year and beyond.

Speaker 6: We recently made changes to the sales team and leadership, which will benefit our revenue performance as we move through the year and beyond.

Jacques Tortoroli: Secondly, turning around the loss in traffic to cw.com is an important priority. We're making progress on investments in social, paid and earned media across key platforms and partners to drive awareness, relevancy, and sessions on our site. Turning to [inaudible] loss will take time, but we are seeing early positives in measures such as promotional effectiveness in March. None of our competitors have the scale in e-commerce that we have today and this remains a significant growth opportunity for the company.

Jacques Tortoroli: Turning loss will take time, but we are seeing early positives in measures such as promotional effectiveness in March. None of our competitors have the scale in e-commerce that we have today, and this remains a significant growth opportunity for the company.

Speaker 5: None of our competitors have the scale in e-commerce that we have today, and this remains a significant growth opportunity for the company.

Jacques Tortoroli: Thirdly, we have an asset light route to market for international penetration. We've seen positive regulatory movements in the UK where we're only one of several brands approved by novel foods for full spectrum extract versus CBD isolates, and we have an existing distributor.

Jacques Tortoroli: Thirdly, we have an asset light route to market for international penetrations. We've seen positive regulatory movement in the UK where we're only one of several brands approved by novel foods for full spectrum extract versus CBD isolates, and we have an existing distributor.

Speaker 5: And we have an existing distributor.

Jacques Tortoroli: Similarly in Israel, where we expect the market to open later this year and are ready to capitalize through our distributor partner in secure [inaudible].

Jacques Tortoroli: Similarly in Israel where we expect the market to open later this year and are ready to capitalize through our distributor partner in secure [inaudible.] Our [inaudible] brand awareness in multiple international markets is evidence that our brand story resonates and travels well ahead of our entering a market.

Jared Stanley: Our unaided brand awareness in multiple international markets is evidence that our brand story resonates and travels well ahead of our entering a market. Unlike other brands in CBD or cannabis, our brand is essentially already established in key markets outside the US.

Speaker 6: Our runated brand awareness in multiple international markets evidences that our brand story resonates and travels well ahead of our enteringa market.

Speaker 5: Unlike other brands in CBD or cannabis, our brand is essentially already established in key markets outside the US.

Jacques Tortoroli: Unlike other brands in CBD or cannabis, our brand is essentially already established in key markets outside the US. We're reducing complexity in our ways of working and continually assessing our product portfolio for optimization with a 'less is more' approach, always seeking to leverage capacity in our facility by constantly assessing insourcing and outsourcing opportunities to capture cost savings.

Jacques Tortoroli: [inaudible] we're reducing complexity in our ways of working, continually assessing our product portfolio for optimization with the less is more approach, always seeking to leverage capacity in our facility by constantly assessing insourcing and outsourcing opportunities to capture cost savings.

Speaker 5: Always seeking to leverage capacity in our facility by constantly assessing insourcing and outsourcing opportunities to capture cost savings.

Speaker 6: Always seeking to leverage capacity in our facility by constantly assessing insourcing and outsourcing opportunities to capture cost savings.

Jacques Tortoroli: In January we took out, and will keep off, approximately $20 million in annualized operating costs, and we'll continue to assess areas for operational efficiencies and discretionary spending allocation.

Speaker 5: And we'll continue to assess areas for operational efficiencies and discretionary spending allocation.

Jacques Tortoroli: In January we took out and will keep off, approximately $20 million in annualized operating costs and we'll continue to assess areas for operational efficiencies and discretionary spending allocation.

Jacques Tortoroli: Lastly, we'll selectively innovate for growth and Jared talked about this in his remarks, cosmeceuticals and beverages for 2023.

Jacques Tortoroli: Lastly, we'll selectively innovate for growth and Jared talked about this in his remarks on cosmeceuticals and beverages for 2023.

Jacques Tortoroli: Lastly, I want to speak directly to our shareholders. For our long-term shareholders, we want to see your value restore and create returns. For new investors, welcome, your timing is right. Our commitment is to execute against our immediate and forward plans. That's all we directly control. That is what we believe will change the valuation of this company and expand our purpose to more consumers and geographies. We're not managing quarters. Our eyes are on today, with a line of sight to tomorrow. We ask you to stay the course with us. We're executing to grow our market share and revenues. To selectively innovate the categories who are represented today and move our botanical wellness company forward. With that operator, I'll open the lines for questions,

Speaker 19: For our long-term shareholders. We want to see your value restore and create returns.

Jacques Tortoroli: Lastly, I want to speak directly to our shareholders. For our long-term shareholders, we want to see your value restored and create returns. For new investors, welcome, your timing is right. Our commitment is to execute against our immediate and forward plans. That's all we directly control. That is what we believe will change the valuation of this company and expand our purpose to more consumers and geographies. We're not managing quarters. Our eyes are on today with a line of sight to tomorrow. We ask you to stay the course with us. We're executing to grow our market share and revenues, to selectively innovate into categories represented today, and move our botanical wellness company forward. With that, operator, I'll open the lines for questions.

Speaker 19: For new investors. Welcome your timing' right.

Speaker 3: For our long-term shareholders. We want to see your value restore and create returns.

Speaker 5: Our commitment is to execute against our immediate and forward plans.

Speaker 6: For new investors. Welcome your timing right. Our commitment is to execute against our immediate and forward plans.

Speaker 5: That's all we directly control. That is what we believe will change the valuation of this company and expand our purpose to more consumers and geographies.

Speaker 6: That's all we directly control. That is what we believe will change the valuation of this company and expand our purpose to more consumers and geographies. We're not managing quarers. Our eyes are on today with a line of sight to tomorrow.

Speaker 19: We're not managing quarters. Our eyes are on today, with a line of sight to tomorrow.

Speaker 19: We ask you to stay the course with us. We're executing to grow our market share and revenues.

Speaker 19: To selectively innovative the categories who are represented today and move ourbotana wellness company forward.

Speaker 3: We ask you to stay the course with us. We're executing to grow our market share and revenues, to selectively innovate into categories or represented today and move our botanica wellness company forward.

Speaker 19: With that operator, I'll open the lines.

Operator: Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please slowly press star followed by one on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. And if you would like to remove yourself from the question queue, please press star followed by two. And if you're using a speakerphone, we do ask that you please lift the hands set before pressing any keys. Please go ahead and slowly press star one now if you have a question. And your first question will be for Harrison [inaudible] at Cohen. Please go ahead.

Operator: Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please slowly press star, followed by one on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. And if you would like to remove yourself from the question queue, please press star followed by two. And if you're using a speakerphone, we do ask that you please lift the handset before pressing any keys. Please go ahead and slowly press star one now if you have a question.

Speaker 20: And if you would like to remove yourself from the question Q, Please P Star, followed by two.

Speaker 1: And if you're using a speakerphone, we ve do ask that you please lift the hands set before pressing any keys.

Speaker 20: Please go ahead and slowly press star one now if you have a question.

Speaker 1: And if you're using a speakophone, wease do ask that you please lift the handsset before pressing any keys. Please go ahead and slowly press star one now, if you have a question.

Speaker 20: And your first question will be for Harrison DS at Cohen. Please go ahead.

Unknown Speaker: Great. Thanks so much for taking the questions and congratulations Lindsay on the new role. First, I wanted to touch on HR 841, on your last call it seemed like there was some more movement or momentum in the house, I guess. What are you seeing now and are there any levers on your control that you can maybe used to coax Congress people to maybe move more quickly or how are you viewing the movement of HR 841?

Operator: And your first question will be from Harrison [inaudible] at Cohen. Please go ahead.

Multiple speakers: Great, thanks so much for taking the questions, and congratulations Lindsey on the new role. First, just wanted to touch on HR 841. On your last call it seemed like there was some more movement or momentum in the house, I guess what are you seeing now and other any levers under your control that you can maybe use to coax Congress people to maybe move more quickly, or how are you viewing the movement of HR 841. Thanks. Hey, Harrison. Thanks for the call. I think it's best to turn it over to Jared to give you an update and some thoughts in that regard.

Speaker 21: You know in the house, I guess what are you seeing now and other any levers on your control? But you can maybe used to coax Congress people to the maybe move more quickly. Or how are you viewing, how are you viewing the movement of of H R a forty one?

Speaker 11: You know in the house, I guess what are you seeing now and other any levers in up to your control? But you can maybe used to to to coax Congress people to the baby group more quickly, or how are you doinging? You know, how are you viewing a movement of of H? R a 41. Thank, harison. Thanks for the call. I think best's alturnnative over the Jar to give you an update. Some thoughts in that regard.

Jacques Tortoroli: Harrison, thanks for the call. I think it's best to turn it over to Jared to give you an update and some thoughts in that regard.

Jared Stanley: Yes look, it feels like it's kind of sitting and waiting at the moment. What we believe is that consumers, it's going to take consumers' voices to act and push. So what we're starting is--we're going to be engaging our consumers in each state to contact their constituents to start picking up co-sponsors on HR 841. As of now, it's still sitting at the same position that it was on our last call.

Multiple speakers: Yes look, it feels like it's kind of sitting and waiting at the moment. What we believe is that consumers, it's going to take consumers' voices to act and push. So what we're starting is--we're going to be engaging our consumers in each state to contact their constituents, to start picking up co-sponsors on HR841. As of now, it's still sitting at the same position that it was on our last call. Understood. Ok, that's helpful. And then I just turn to DTC, one quick clarifier, can you quantify how much of that one million dollar impact for the [inaudible] wildfire impacted DTC? And then, specifically within understanding there's the industry-wide shift towards lower price products, just within [inaudible] and topical, what do you think in terms of the pricing of those two categories and how is the competitive dynamic playing out currently? Thanks. Yeah, Harrison, thanks for the question. I'll answer the pricing one and I'll let Lindsey answer Q1 impact on DTC.

Speaker 22: A.

Speaker 17: We're going to be engaging our consumers in each state to contact their constituents. To start picking up co-sponsors on ha 41 as of now, it's still sitting at the same position that it was on our last call.

Speaker 8: We're going to be engaging our consumers in each state to contact their constituents, to start picking up co sponsors on H R a 41, as of now it's still sitting at the same position that it was on our last call, but understand. Ok, that's helpful. And then I just turn to D T C. one we qu clarify. Do you quantify how much of that one million dollars impact for for the booulder wildbuire impact D T C and then, or specifically within understanding, but there's the industry wide shift, you know, towards lower price products, just within gummy topical, what do you think in terms of the pricing of those two categories? You know kind of how, how the competive D had IC playing out currentlythank Harrison. Thanks for the question. All ll answer the pricing going in the answer, that which you want T impact to D to see.

Unknown Speaker: Okay, that's helpful. And then just turning to D2C, one quick clarifier, can you quantify how much of that one million dollar impact from the wildfire impacted D2C? And then, more specifically, within understanding that there's the industry-wide shift towards lower price products just within gummies and topical, what are you seeing in terms of the pricing of those two categories and kind of how is the competitive dynamic playing out currently? Thanks.

Jacques Tortoroli: Yeah, Harrison, thanks for the question. I'll answer the pricing point then I'll let Lindsay answer the Q1 impact on D2C. The reality is this industry has trained consumers to buy on promotion and across the industry players, you see, on average something between 45% to 65% of their volume, all volume done on deals. So for us, as a premium brand and premium price positioning, we're constantly looking at our index, our premium index, to our closest competitors, both in terms of milligrams as well as in absolute dollars.

Jacques Tortoroli: The reality is this industry has trained consumers to buy on promotion and across the industry players, as you see, on average as something between 45% to 65% of their volume, all volume done on deal. So for us, as a premium brand and premium price positioning, we're constantly looking at our premium index to our closest competitors, both in terms of milligrams as well as in absolute dollars.

Jacques Tortoroli: For us it comes down to what I've been saying internally and externally- is that we have to have strategies that ensure we have the right product at the right account and at the right pricing, right? And by that I mean we need to be conscious of the consumer shopping basket in a particular customer and having [inaudible] and smoke shops is not a way to drive volume. So we're really focused on making sure that we're working on our pricing, we're working on pricing by channel, by customer, and by queue, and we think that's the best way to optimize pricing and ultimately, take the consumers off of price promotion as a trigger for purchase. And that's where our D2C platform comes in because we can effectively and efficiently test and learn different elasticity points with our consumers on the effectiveness of our promotions, both in terms of frequency and depth. And ultimately, as we continue to build relevance, as we continue to build awareness and bring people into our brand, those consumers are less subject obviously, to having promotional pricing. They have an Act, and so, as we bring new customers on to e-commerce, we'll be able to adjust pricing accordingly. And I'll let Lindsay answer the question on Q1.

Jacques Tortoroli: For us it comes down to what I've been saying internally and externally- is that we have to have strategies that ensure we have the right product at the right account and at the right pricing. And by that I mean we need to be conscious of the consumer shopping basket in a particular customer, and having tonsures and smoke shops is not a way to drive volume. So we're really focused on making sure that we're working on our pricing, we're working on pricing by channel, by customer, and by skew, and we think that's the best way to optimize pricing and ultimately take the consumers off of price promotion as a trigger for purchase. And that's where our DTC platform comes in, because we can effectively and efficiently test and learn different elasticity points with our consumers on the effectiveness of our promotions, both in terms of frequency and depth and ultimately, as we continue to build relevance, as we continue to build awareness and bring people into our brand, those consumers are less subjected obviously, to having promotional pricing [inaudible]. So as we bring new customers on to e-commerce, we'll be able to adjust pricing accordingly. And I'll let Lindsey answer the question on Q1.

Multiple speakers: Sure thanks, Jack, and thanks Harrison for the question. In DTC we would estimate approximately half a million dollars right around there that was impacted for the wildfires, B2B absorbing the remainder of that as we kind of missed that one purchase cycle at the beginning of January, that was difficult to make back up in the quarter, versus absorbing some of those orders that were just shipped out a little bit later in DTC. Harrison, I'd come back and add one other point on pricing. One of the things with the new sales team and our new focus on customer relationships and joint business planning with customers as we move forward is it really- and we're probably the only company that can do this sufficiently- is to make sure that we're activating in retail, and so it's just not using price promotion as a lever, but we're working with customers on how best to educate and articulate the reasons why our brand is streaming and the reasons why that price point is deserved. That's very helpful. I appreciate the color. I'll pass it on, thank you. Thank you. The next question will be from Scott Fortune at Ross Capital Partners. Please go ahead.

Speaker 5: And I'll let Lindsay answer the question on Q1.

Lindsay Jensen: Sure thanks Jacques and thanks Harrison for the question. In D2C, we would estimate approximately half a million dollars right around there that was impacted for the wildfires, B2B absorbing the remainder of that as we kind of missed that one purchase cycle at the beginning of January, that was difficult to make a back up in the quarter versus absorbing some of those orders that were just shipped out a little bit later in D2C.

Jacques Tortoroli: You know, Harrison I'd come back and add one other point on pricing. One of the things with the new sales team and our new focus on customer relationships, and joint business planning with customers as we move forward is that really- and we're probably the only company that can do this efficiently- is to make sure that we're activating in retail, and so it's just not using price promotion as a lever, but we're working with customers on how best to educate and articulate the reasons why our brands is streaming and the reasons why a price point is deserved.

Multiple speakers: is it really- and we're probably the only company that can do this sufficiently- is to make sure that we're activating in retail, and so it's just not using price promotion as a lever, but we're working with customers on how best to educate and articulate the reasons why our brand is streaming and the reasons why that price point is deserved. That's very helpful. I appreciate the color. I'll pass it on, thank you. Thank you. The next question will be from Scot Fortune at Ross Capital Partners. Please go ahead.

Unknown Speaker: That's very helpful. I appreciate the color. I'll pass it on. Thank you.

Operator: Thank you. The next question will be from Scott Fortune at Ross Capital Partners. Please go ahead.

Scott Thomas Fortune: Good morning and thanks for the question. Real quickly I want to focus on the top line. Obviously, given one Q is obviously usually seasonally slower too and you mentioned one million, kind of hit from the fireside of things. But can you unpack seemingly the little bit softer one Q here with regard to different product mix, shift, and channels you're selling into kind of the biggest drop there. But then a follow on that is now that we're halfway through two Q, you mentioned March metrics being a lot stronger, how are revenues trending in generally kind of a stronger two Q historically from the seasonal standpoint. Provide a little more color on two Q, the recovery then [inaudible].

Scott Thomas Fortune: Good morning and thanks for the question. Real quickly, I want focus on on the top line obviously, given one Q is obviously usually seasonally slower too and you mentioned the one million kind of hit from the fireside of things. But can you unpack seemingly the little bit softer one Q here with regard to different product mix shift and channels you're selling into kind of the biggest drop there. And then to follow on that is now that we're halfway through two Q you mentioned March metrics being a lot stronger, how are revenues trending in generally kind of a stronger two Q historically from the seasonal stand point, provide a little more color on two Q recovery there. Thank you.

Jacques Tortoroli: Thanks Scott for the question. I did say I didn't want to focus on quarters and what we are going to continue to do is guide against the full year objectives that we set out. Having said that, as I said in the prepared remarks, we believe the first quarter will be our worst performing quarter, including top-line growth, and what we're seeing and expecting is sequential improvement in revenues in each of our quarters, particularly in the back half of the year. I will tell you that our expectation is that Q2 revenues will be better than they were in Q1. I'll let Lindsay talk about sort of the mix shift on products in the quarter.

Jacques Tortoroli: Thanks Scott for the question. I did say I didn't want to focus on quarters and what we are going to continually do is guide against the full year objectives that we set out. Having said that, as I said in the prepared remarks, we believe the first quarter will be our worst performing quarter, including top line growth, and what we're seeing and expecting is sequential improvements in revenues in each of our quarters, particularly in the back half of the year. I will tell you that our expectation is that Q2 revenues will be better than they were in Q1. I'll let Lindsey talk about sort of the mix shift on products in the quarter.

Speaker 5: I'll let Lindsay talk about sort of the mix shift on products in the quarter.

Lindsay Jensen: Yes, absolutely. So within the quarter Scott we actually, versus the fourth quarter, our mix held relatively constant and consistent. We did not see, versus the fourth quarter, a large drop from, [inaudible] to gummies. It was relatively held flat. However, versus last year, Q1 we did see that decline that we've consistently talked about where [inaudible] declined and gummy kind of increased. And so far as channels, we had a strong quarter in pet and we have some continued expansion that we expect to see indoors in pet with those products. We also continue to see a really strong medical channel. It was impacted a bit in Q1 with those clinic out of stocks that we discussed earlier. And then the other channels FDM and natural are kind of where we've seen a little bit slower growth than we would like and the reality is though is that while we're growing market share, with some of those kind of mixed shifts year over year, is not translating to the dollar growth even though we are gaining market share.

Lindsay Jensen: Yes, absolutely. So within the quarter Scott we actually, versus the fourth quarter, our mix held relatively constant and consistent with-- and we did not see versus the fourth quarter large drop from [inaudible], it was relatively held flat. However, versus last year Q1, we did see that decline that we've consistently talked about where [inaudible] declined, and gummies kind of increased. And so far channels: we had a strong quarter in pet and we have some continued expansion that we expect to see indoors in pet with those products. We also continue to see a really strong medical channel. It was impacted a bit in Q1 with those clinic out of stocks that we discussed earlier. And then the other channels FDM and natural are where we've seen a little bit slower growth than we would like and the reality is that while we're growing market share with some of those kind of mixed shifts year-over-year, it's not translating to the dollar growth even though we are gaining market share.

Multiple speakers: [inaudible] Sorry, Scott, I was just going to say I think to amplify on your question, what we talked about before which is in B2B, we have specific initiatives and we expect to see growth in the town number of doors we have in California, particularly across Petco and pet warehouse for example. And then keep in mind, one of the things that we're doing beyond trying to grow our existing velocity in our existing customer base is really start to penetrate some new verticals, be those travel, be those leisure and massage salons and gyms, be those sports-related. And of course, the other thing we think we have a big opportunity in is expanding our distributor base particularly, with distributors that are servicing channels and customers that we're not really tackling today or taking advantage of today. So we think each of those initiatives will take some time, but we do expect to have some impact from that in Q2 and certainly over the balance of the year from there.

Multiple speakers: Got it. Sorry Scott, I was just going to say, I think to amplify on your question, what we talked about before, which is in B2B, we have specific initiatives and we expect to see growth in the number of doors we have in California particularly, across pet co and pet warehouse, for example. And then keep in mind, one of the things that we're doing beyond trying to grow our existing velocity in our existing customer base is really start to penetrate some new verticals, be those travel, be those leisure, and massage salons and gyms, be they sports-related. And, of course, the other thing we think we have a big opportunity is to expand our distributor base, particularly with the distributors that are servicing channels and customers that were not really tackling today or taking advantage of today. So we think each of those initiatives will take some time but we do expect to have some impact from that in Q2 and certainly over the balance of the year from there.

Speaker 3: Channels and customers that were not really tackling today or taking advantage of today. So we think each of those initiatives will take some time, but we do expect to have some impact from that in Q2 and certainly over the balance of the year from there.

Scott Thomas Fortune: I appreciate the color there. And just a real quick follow-up on that, how are you looking around the gross margins, giving the mix shift we just talked about, the consumers, and the challenging environment trading products away from the higher price and [inaudible] from those things. But how are you looking kind of long term, you take gross margins around 60%. How can we kind of look out as we look after to the year, I guess from a revenue standpoint on that growth but from how it translates on the gross margin side? Can you help unpack kind of your thoughts around longer term gross margins here?

Multiple speakers: I appreciate the color and detail there. And just a real quick follow up on that, how are you looking around the gross margins, giving the mix shift we just talked about, the consumers challenging environment, trading products away from the higher price [inaudible], but how are you looking kind of long term? You take gross margins around sixty percent. How should we kind of look out as we near the end of the year, I guess from a revenue standpoint on that growth, how does it translate from the gross margins side, unpack kind of your thoughts around longer term gross margins. I'll start and let Lindsey give you her perspective Scott on margins. I've said this to you, I've said it to other.--What I'm most focused on is driving incremental dollars to gross profit and the percentage will take care of itself in two ways or three ways.

Jacques Tortoroli: Yeah, I'll start then let Lindsay give you her perspective on margins. And I I've said this to you, I've said it to others- what I'm most focused on is driving incremental dollars to gross profit and the percentage will take care of itself in two ways or three ways. One is as we continue to see mix shift to lower individual profit skews, we believe we have enough initiatives in how we're approaching our manufacturing and distribution where we could offset some of that margin compression with incremental saving on our cost of goods. The other thing we're doing- and we've touched on it in the remarks is focusing on the skews that really matter, so less is more and we think by focusing on the skews that have the highest velocity, ultimately that will allow us to re-examine our price points, certainly within the index competitive set, but also on an absolute basis with consumers. So again, I'm more focused on growing top-line and growing dollars and I believe the margin will be in and around where it is today for certainly the medium term and we'll go from there. Lindsey, if you want to add any color in your own--

Multiple speakers: One is, as we continue to see mid-shift to lower individual profit skews, we believe we have enough initiatives in how we're approaching our manufacturing and distribution where we could offset some of that margin compression with incremental savings on our cost of goods. The other thing we're doing and we've touched on it in the remarks is focusing on the skews that really matter, so less is more and we think by focusing on the skews that have the highest velocity ultimately that will allow us to reexamine our price points certainly within the index to competitive set but also on an absolute basis with consumers. So again, I'm more focused on growing top line and growing dollars and I believe the margin will be in and around where it is today for certainly the medium term and go from there. Lindsey, if you want to add any color and your own thoughts. Yeah, absolutely. So as we mentioned as well, with kind of some of the price compression that we had seen we've gotten much smarter about our promotional effectiveness

Lindsay Jensen: Yes, absolutely. So as we mentioned as well, with kind of some of the price compression that we had seen, we've gotten much smarter about our promotional effectiveness, which is allowing us to kind of hold strong on that margin in our largest channel of D2C, and while we do see increased volume opportunities in B2B, that actually helps margin in some ways through volume leverage. At the same time, with the loss that we have online, we have other efficiencies available and capabilities. So we continue to Jack's point, focus on savings and leveraging those efficiencies and continue to see that in the year we're holding to the high 50s, low 60s for a full year gross margin.

Scott Thomas Fortune: Thanks, that is it for me, I'll pass it on.

Operator: Thank you. The next question will be from Derek Dlay at Canaccord Capital. Please go ahead, Derek.

Derek Dley: Yes, hi. Just wondering: are you guys seeing any incremental movement from perhaps some of the new retailers that you signed on to sell more than what is predominantly the topical product? Like are you seeing more movement to sell some of the adjustable products?

Speaker 28: What is predominantly the topical product. Are you seeing more movement to sell some of the adjustable products?

Speaker 15: That you CED on to sell more than you know what is predominy that the topical product? Are you ING more movement to sell the adestable product? Yeah direk, thanks for the question. So you know we have a customer and new customer that will be announcing some time in the next few weeks and you know interesting, there we let with topicalles and we now have interest from that customer to take inadestables as well, whether it's in a display you know for purchase or want to their own influencers in their own location. So we do see that that that's becoming an opportunity for certain retailers and different B to B businesses to to start with topicles and potentially have an opportunity to come behind that with with injustables.

Jacques Tortoroli: Yeah, Derek, thanks for the question. So we have a new customer that we'll be announcing some time in the next few weeks and interesting there we led with topicals and we now have interest from that customer to take ingestibles as well, whether it's in a display for purchase their own influencers in their own locations. So we do see that becoming an opportunity for certain retailers and different B2B businesses to start with topicals and potentially have an opportunity to come behind that with ingestibles.

Derek Dley: Ok, great. And just in terms of CapEx, I suppose for the remainder of this year, should we expect a similar run rate to what we saw this quarter? Or, given that many of your larger projects are behind you like you mentioned?

Speaker 30: And just in terms of Cape xcess, suposted for the remainder of this year, should we expect a similar run rate to what we saw this quarter? Or, given that many of your larger projects are behind you, like you mentioned?

Speaker 15: Okay greatand just in terms of CapEx, as supposed for the remainder of this year, should we expect a similar run rate to what we saw this quarter? Or, given that you know many of your larger projects are behind you, like you mentioned? Yes K, we're. You know our CapEx is really maintenance CapEx. At this point we don't have plans for significant capital expenditures in the year as we, as we move forward, you should expect that we at about the same run rate, but it'll be relatively really mataterial to the cash use for the full yearokay great, Thank you very much welcome.

Jacques Tortoroli: Yeah, Derek. we're. Our CapEx is really maintenance CapEx at this point. We don't have plans for significant capital expenditures in the year. As we move forward, you should just expect that we are at about the same run rate but it'll be relatively material to the cash use for the full year.

Derek Dley: Ok, great. Thank you very much.

Jacques Tortoroli: You're welcome.

Operator: Thank you. As a reminder, ladies and gentlemen, if you would like to ask a question, please slowly press star, followed by one on your touchtone phone.

Speaker 1: Thank you as a reminder. Ladies and gentlemen, if you would like to ask a question, Please slowly press star, followed by 1, on your touched home phoneand your next question will be from pabloonic at kanttor Fitzgerald. Please go ahead.

Operator: And your next question will be from Pablo Zuanic from [inaudible] Fitzgerald. Please go ahead.

Matthew Baker: Hi, this is Matthew Baker on for Pablo. We have two questions. In our view, given the need for promos online and in brick and mortar, and a fragmented market, we've started to wonder about the true brand strength of Charlotte's Web, any comments on this? And then for our second question, of the untapped channels which ones have you realistically make a push in the year ahead? We assume smokeshops do not make sense for your brand. Thank you.

Speaker 16: Hi this is Matthew Baker on for Pablo. We have two questions in our view, given the need for promos online and in brick and mortar and a and a fragmented market, we have started to wonder about the, the true brand strength of Charlotte's web and any comments on this. And then for our second question, of the of the untap channels which, which ones have you realistically make a push in the year ahead? We assume snowshops do not make sense for your brand. Thank youyes, thanks for the question you. You might recall I had this question from Paulo in your conference, if you, I guess, a month or so back. I think it's most important.

Jacques Tortoroli: Yes, thanks for the question Matthew, and you might recall I had this question from Tallo in your conference, I guess, a month or so back. I think it's most important that brand equity is--that's what's going to ultimately drive sustainable growth and that's what's also ultimately going to drive consumers to coalesce around brands that have real credentials, right, and have science behind them. And we're the only brand in the industry as Jared had mentioned earlier that has that brand equity. I mean, we're number one in all key brand metrics, not only in the US but, as I mentioned earlier, in certain international markets where we're not actually selling products today. So we think, particularly in a fragmented industry, brand recognition, brand value, is what is ultimately going to win and increasing the amount of market share. And these other CBD brands that are out there- some of which say their CBD, but aren't actually CBD- are going to disappear. And so brands that matter, brands that have an opportunity to be global, as CW is and will, those are the ones that are going to win and it's not going to be, market skew with CBD that's going to carry the category over the long term. So we're excited about our brand position, our brand awareness, and the loyalty that we get from consumers once they're into the brand and ultimately that will drive pricing ability and that will drive, so-called competitors out of the market.

Speaker 19: That brand equity is.

Speaker 12: You know that that that's what's going to ultimately drive sustainable growth and that's what's also ultimately going to drive consumers to coalesce around brands that have real credentials right and have science behind them. And we're the only brand in the industry- is Jared had mentioned earlier- that has that brand equity. I mean we're number one in all key brand metr ex only in the U's but, as I mentioned earlier, in certain international markets. So we're not actually selling product today. So we think, particularly a fragmented industry, brand recognition, brand value, is what is ultimately going to win and increasing their amount of market share. And these other, you know, C B D brands that are out there- some of which say their C D, but I aren't actually C B D is- are going to disappear. And so brands that matter, brands that have a an opportunity to be global, as C W is and will, those are the ones are going to win and it's not going to be, you know, marketts ste C D that's going to carry the category over the long term. So So we're excited about our brand position, or brand awareness, and the loyalty that we get from consumers once they're into the brand and ultimately that will drive pricing ability and that will drive, you know, So called competitors out of the market.

Speaker 6: That brand equity is. You know, that's what's going to timately drive sustainable growth and that's what's also ultimately going to drive consumers to coalesce around brands that have real credentials and have science behind them. And we're the only brand in the industry- is Jared had mentioned earlier- that has that brand equity. I mean, we're number one in all key brand metrics, not only in the? U's but, as I mentioned earlier, in certain international markets. So we're not actually selling product today, So we think particularly a fragmented industry, brand recognition, brand value, is what is ultimately going to win and increasing our amount of market share. And these other you know C B D brands that are out there- some of which say their C B D, but I aren't actually C B D is- are going to disappear right, and so brands that matter, brands that have an opportunity to be global, as C? W is and will.

Speaker 6: Those of the ones are going to win, and it's not going to be, you know, Mark to Stewart C V that's going to carry the category over the long term. So So we're excited about our brand position, or brand awareness, and the loyalty that we get from consumers once they're into the brand, and ultimately that will drive pricing ability and that will drive, you know, So called competitors out of the market. Then John , can I add just a little bit of color on that?

Jared Stanley: And Jacques, can I add just a little bit of color on that? Really it's a great question and an example here is whenever we decided to pull the promotions in the month of January and our sales dipped significantly. So we brought them back up in February and March and from our perspective, that's not something we want to do. We don't want to continually sell our brand on promotion and potentially tarnish the value of the brand. But that's where the category is today and what we see in our marketing is that we see that we have to go back to becoming a brand. Charlotte's Web was always a brand that was a conversation starter. It was in front of problems and then it got press recognition and earned media by fixing problems with them. Our story, for example, what we have to do with the brand will be that conversation starter again and we can't do marketing that just allows us to go out and say things for what they were. So you'll see a shift in our brand and our content and once we change that content and change the marketing of our branding, then we can slowly pull back on promotions, but it's not going to happen in one quarter.

Speaker 32: S it's a's A. it's really it's a great question and you know. An example here is whenever we decided to pull the promotions in the month of January and our sales, you know, significantly. So we brought them back up in February and March and from our perspective, that's not something we want to do. We don't want to continually sell our brand on promotion and potentially tarnish the value of the brand. But that's where the category is today and what we see in our marketing is that we see that we have to go back to becoming a brand. charlottet's welove was always a brand that was a conversation starter. It was in front of problems and then it got press recognition and earned media by by by fixing problems with them. You know.

Speaker 9: It's a it's a it's really. It's a great question and you know an example here is whenever we decided to pull the promotions in the month of January and our sales you know significantly. So we brought them back up in February and March and from our perspective that's not something we want to do. We don't want to continually sell our brand on promotion and potentially know tarnish the value of the brand. But that's where the category is today and what we see in our marketing is that we see that we have to go back to becoming a brand. charlott's we was always a brand that was a conversation starter. It was in front of problems and then it it got press recognition and earned media by by by fixing problems. With them. You know like our just our story. For example what we have to do with the brand is be that conversation starter again and we CAn't do marketing that just allows us to go out and.

Speaker 11: She like to our story. For example what we have to do with the brand is be that conversation starter again and we CAn't do marketing that just allows us to go out and.

Speaker 33: And say things for what they were. So you'll see a shift in our brand and our content and once we change that content and change the marketing of our branding, then we can slowly pull back on promotions. But it's not going to happen in one quarter.

Speaker 17: And say things for what they were. So you'll see a shift in our brand, in our content, and once we change that content and change the marketing of our branding, then we can slowly pull back on promotions. But it's not going to happen in one quarter. Thank you for the color and we have two follow-up questions. I'm firstly, what is your best estimate of the total CBD industry growth in 2021 and your forecast for 2020 2, assuming no regulatory changes? And then lastly, sorry to ask this, but is there a search for a permanent CEO or Jack been appointed on a permanent basis? Thank you.

Matthew Baker: Thank you for the color, and we have two follow-up questions. Firstly, what is your best estimate of the total CBD industry growth in 2021 and your forecast for 2022, assuming no regulatory changes? And then lastly, sorry to ask this, but is there a search for a permanent CEO or has Jacques been appointed on a permanent basis? Thank you.

Jacques Tortoroli: Well, there isn't a search for CEO. I've been appointed on a permanent basis and I'm happy to be the CEO of the company. I'm happy to be able to change the trajectory of our company and the valuation and the implications of all of our investors, so I'm here.

Speaker 6: Well there isn't a search for CEO . I've been appointed on a permanent basis and I'm happy to be the CEO of the company. I'm happy to be able to change a trajectory of our- our company- and the valuation and the implications of that, or our investors. So So I'm here.

Jacques Tortoroli: What was the second part of your question? Sorry.

Matthew Baker: Just regarding your best estimate for the total CBD industry growth in 2021 and the forecast for 2022.

Speaker 18: On what was the second party of a question. sorrydisregarding the estimate for your best estimate for the total C B D industry thousand and 21 and COUR CS for 22. you know here's my view on you know I'll let Lindsey your Jar in their own view. I really don't care what the industry prognosticators say about growth. The end of the day, you know we have a single, single digit market share in the category we have today and I think the opportunity to take share from C B D players that are going to then to basically disappear over the next months in the year is going to provide as a real opportunity to step into that volume. So you know, I think.

Jacques Tortoroli: Here's my view on it. I'll let Lindsay and Jared add in their own views. I really don't care what the industry prognosticators say about growth. At the end of the day, we have single-digit market share in the category we have today and I think the opportunity to take shares from CBD players that are going to then basically disappear over the next months and year is going to provide us a real opportunity to step into that volume. So I think, I don't really care what the market does. I believe we have an opportunity to grow similarly to what I said earlier, which is our plan is to grow notwithstanding the regulatory environment we're in today. I think when that's clear then we'll see real growth in the category, but right now I think the category is large enough.

Speaker 12: I don't really care what the market. I believe we have an opportunity to grow similarly to what I but earlier, which is our plan is to grow notwithstanding the regulatory environment we're in. Today I think we're not clear. Then we'll see, you know, we'll see real thillth in the category, But right now I think the category is large enough.

Speaker 3: I don't really care what the market does. I believe we have an opportunity to grow, similarly to what I said earlier, which is our plan is to grow notwithstanding the regulatory environment. we'rein today I think we're not clears. Then we'll see, you know, we'll see real growth in the category, But right now I think the category is large enough.

Jacques Tortoroli: It does enough for some communication to be had in sort of low value, low product, low quality brand that our job is to take share and grow this business, notwithstanding with what prognosticators talk about in industry growth. That being said, we went back and looked at what Bright Field thought the growth was last year and applied revenues to Charlotte's Web and they were pretty close but I think they do a good job of looking in the rear view mirror. I'm not so sure that they do a great job in forward-looking sort of expectations around growth for the industry, but I'm confirmed in my thinking that we can grow this company over time, obviously to start and then significantly more down the timeline as FDA regulations open up, as more international opportunities open up as well, and we're prepared to take advantage of those and in smart, asset light to low investment ways. So we're focused on ourselves and executing against our plans and that execution will deliver our expectations around the financial level to the company going forward and it doesn't impact me very much in terms of what people think the category is going to.

Speaker 3: There's enough to intermediation to be had in sort of low value low product low quality brands that our job is to is to take share and grow this business. Notwithstanding with what you know prognosticat ORs talk about in industry growth. You know that being said we went back and look at you know. What bright deal thought the growth was last year and implied revenues charlotteess web and they were they were pretty close. So I think they do a good job of looking in the review mirror. I'm not so sure that they do a great job and you know forward looking sort of expectations around growth for the industry. But I'm confirmed you know in might thinking that we can grow this company over time obviously to start and then significantly more down down. You know timeline as F D a regulations open up as more international opportunities open up as well and we're prepared to take advantage of those and.

Speaker 3: In smart asset light low investment ways So So we're focused on ourselves and executing against our plans and that execution will deliver you know our expectations around the financial level for the company going forward and and it doesn't impact me very much in terms of what people think the category is going into.

Jared Stanley: Alright Jacques, a couple things to that real quick. Bright Field stated that we had 2.3% market share in 2021 in topicals and 5.1% market share in gummies, so when you sum out all the categories that we're playing in, we're around a 3% market share. And to think that if we grow each category that we play in today and if we assume in 2023 that we're in beverages and cosmeceuticals, just one point of market share in the categories that we'll be in in 2023 adds $35 million to our top-line. So to think that we can't grow this business based off of building the brand and being present to consumers and really just the authenticity of our brand and being cultural again, without e-mail promos and that part being our marketing, we have tremendous upside and that's the upside that Jacques is pointing to.

Speaker 9: brightfield stated that we had 2% market share in 2021 in tops and 5% market share in gami. So when you sum out all the categories that we're playing in, they we're around a 3% market share.

Speaker 17: And our couple things to that real quick Brightfield stated that we had 2% market share in 2021 in topicals and 5% market share in gami. So when you sum out all the categories that we're playing in, they we're around a 3% market share. And to think that if we grow each categories that that we play in today and if we assume in 2000 and Y three that we're in beverages and cosmoaceuticals, just one point of market share in the categories we ll be in 2000 and twenty-three add $35 million to our top line.

Speaker 36: And to think that if we grow each category that that we play in today and if we assume in two thousandandtwenty-three that we're in beverages and cosmoaceuticals, just one point of market share in the categories that we'll be in in 2020 -three adds $35 million to our top line.

Speaker 9: So to think that we CAn't grow this business based off of building the brand and being present to consumers in.

Speaker 9: So to think that we CAn't grow this business based off of building the brand and being present to consumers in really just the authentic, the authenticity of our brand and being cultural again, without E mail promos, in that part being our marketing, we have tremendous upside and that'stheupside that job is. Pointing took, got it and congratulations on being appointed Jack, and thank you for the color on that. I just want to follow up on part of our first question, because you got to get over of the untapped channels, which ones can you realistly make a push in the year ahead- we assume smokeshops- to oughreally make sense for your brand? Thank you. Well, this said before, we're focused on on three new verticals: travel, leisure and sports. We're having conversations with customers, potential customers, marketing and strategic partners and all of those verticals.

Speaker 17: Really just the ticity of our brand and being cultural again, without e-mail promos and that part being our marketing, we have tremendous upside and that's the upside that jock is pointing to.

Matthew Baker: Okay, got it and congratulations on being appointed Jacques, and thank you for the color on that. I just want to follow up on part of our first question, because [inaudible] over. Of the untapped channels, which ones can you realistically make a push for in the year ahead? We assume smoke shops don't really make sense for your brand. Thank you.

Jacques Tortoroli: Well, as I said before, we're focused on three new verticals: travel, leisure, and sports. We're having conversations with customers, potential customers, marketing and strategic partners in all of those verticals, and we're also having conversations about new distributors and new distributor reach in terms of again, some of the verticals that we're not in today. So again, new business takes a little bit longer than growing existing business, but we're optimistic that we will see penetration into these new channels from this year and in the years to come.

Speaker 3: And we're also having conversations about new distributors and new distributor reach in terms of again, some of the verticals that that we're not in today. So again, new business takes a little bit longer than than growing existing business, but we're optimistic and that we'll see penetration into these new channels, some this year and in the years toago. allright, Thank you.

Matthew Baker: Alright, thank you.

Jacques Tortoroli: You're welcome.

Operator: Thank you. And at this time, I would like to turn the call back over to Cory Pala.

Speaker 19: hokl. Thank you, and at this time I would like to turn the call back over to Cora pallawell. Thank you everyone for participating in today's call and for your ongoing questions, and we will look forward to speaking to you again in August , following the report of our second quarter results.

Cory Pala: Well, thank you everyone for participating in today's call and for your ongoing questions, and we will look forward to speaking to you again in August following the report of our second quarter results.

Operator: Thank you. Ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.

Q1 2022 Charlotte's Web Holdings Inc Earnings Call

Request a DemoDemo

CWE

Charlotte's Web

Earnings