Charlotte's Web Holdings, Inc. Reports 2018 Q4 and Year-End Earnings
Q4 revenue increases 21% QoQ to US$21.5 million
Full year revenue grew 74% to US$69.5M with 30% Adjusted EBITDA and US$0.14 EPS
BOULDER, CO, March 28, 2019 /PRNewswire/ - Charlotte's Web Holdings, Inc. ("Charlotte's Web" or the "Company") (CSE:CWEB, OTCQX:CWBHF), the market share leader in hemp-derived CBD extract products, today reported financial results for the fourth quarter and year ended December 31, 2018. All amounts are expressed in United States dollars. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures.
Highlights of Fourth Quarter 2018 Results versus Fourth Quarter 2017 Results
- Organic consolidated revenue growth of 71% to $21.5 million (up 21% QoQ)
- Gross profit increased 63% to $16.3 million, or 76% of consolidated revenue
- Adjusted EBITDA decreased from 37% to 20% of consolidated revenue, due to extraordinary items
- Retail doors increased more than 80% to 3,680 at December 31, 2018
- 57% of revenue from eCommerce
- 2018 Farm Bill passed on December 20, 2018 removing hemp from the Federal CSA and designating it as an agricultural commodity governed by the USDA and FDA
Highlights of 2018 Full Year Results versus Full Year 2017 Results
- Organic revenue growth of 74% to $69.5 million
- Gross profit increased 75% to $52.3 million, or 75% of consolidated revenue
- Adjusted EBITDA decreased from 36% to 30% of consolidated revenue
Highlights Subsequent to December 31, 2018
- Executive leadership expansion with COO and CGO additions
- Record harvest of 675,000 pounds securing inventory to meet future demand
- Hemp Authority Certification received
- FDA commits to working with hemp industry on hemp product regulations
- First product orders shipped to three national retail grocery and drug chains in select locations
At the end of the fourth quarter the 2018 Farm Bill was successfully passed by U.S. Congress, providing the needed clarity and catalyst for expansion of the hemp industry. "We believe this important legislation will have a positive impact on consumer access to hemp-derived CBD products and for our valuable farming communities throughout the country," said Hess Moallem, President and Chief Executive Officer.
"During the fourth quarter we concentrated our efforts on completing the 2018 harvest and building product inventory to support growing consumer demand," said Mr. Moallem. "Our 2018 harvest resulted in 675,000 pounds of raw hemp compared to 63,000 pounds in 2017. The record harvest benefited from excellent growing conditions and the unique expertise we've accumulated over the past five years of cultivating the complex hemp plant. This inventory build ensures we are able to meet growing demand and supply the large national retail chains that are beginning to carry our products."
Product sales increased year-over-year with human nutrition products, topicals and animal nutrition products growing by 76%, 1085% and 189%, respectively. (The canine line is growing from a smaller base as it was launched in February of 2018.) "In general, broader consumer awareness of the benefits of cannabinoids, namely cannabidiol (CBD) from hemp extract, is driving increased uptake in all product categories in our retail channels and e-commerce platform," added Mr. Moallem.
The Company has been actively adding additional retail distribution customers and locations. Initially available in natural health stores throughout the United States, increased education and understanding of hemp extract has been driving demand for Charlotte's Web products through ever larger retail chains. The Company recently surpassed 4,000 locations after national retail chains began carrying Charlotte's Web products. Today, Charlotte's Web can be found on the shelves at a growing number of national brand grocery and drug chains in select stores and states.
Charlotte's Web is the market leader in the
rapidly expanding hemp-derived CBD wellness markets, dedicated to
producing the highest quality products and efficacy. Several new
products and formats are planned for 2019 in animal nutrition,
wellness topicals and human consumables.
Fourth Quarter and Year-to-Date 2018 Results
The following table sets forth selected financial information for the periods indicated.
|
Three months ended |
Twelve months ended |
|||||||||||
|
December 31, |
December 31, |
|||||||||||
|
U.S. $ millions, except per share data |
2018 |
2017 |
2018 |
2017 |
||||||||
|
Revenue |
$ |
21.5 |
$ |
12.6 |
$ |
69.5 |
$ |
40.0 |
||||
|
Gross profit before biological assets adjustment |
15.4 |
10.2 |
52.5 |
30.8 |
||||||||
|
Net impact, fair value of biological assets |
0.8 |
(0.2) |
(0.2) |
(1.0) |
||||||||
|
Gross profit |
16.3 |
10.0 |
52.3 |
29.9 |
||||||||
|
Operating |
13.0 |
6.0 |
36.0 |
17.9 |
||||||||
|
IPO related costs expensed |
- |
- |
1.3 |
- |
||||||||
|
Income before taxes |
3.6 |
3.9 |
15.5 |
11.8 |
||||||||
|
Net income |
$ |
3.2 |
$ |
2.4 |
$ |
11.8 |
$ |
7.5 |
||||
|
EPS basic |
$ |
0.03 |
$ |
0.03 |
$ |
0.14 |
$ |
0.09 |
||||
|
EPS diluted |
$ |
0.02 |
$ |
0.03 |
$ |
0.12 |
$ |
0.09 |
||||
|
Adjusted EBITDA |
$ |
4.3 |
$ |
4.7 |
$ |
21.1 |
$ |
14.3 |
||||
|
Assets: |
Dec 31, 2018 |
Dec 31, 2017 |
||||||||||
|
Cash and cash equivalents |
$ |
73.4 |
$ |
7.1 |
||||||||
|
Total assets |
$ |
139.1 |
$ |
19.5 |
||||||||
|
Liabilities: |
||||||||||||
|
Long-term liabilities |
$ |
3.5 |
$ |
0.5 |
||||||||
|
Total liabilities |
$ |
17.6 |
$ |
6.8 |
||||||||
The following information sets forth selected quarterly revenue information for the Company's eight most recent fiscal quarters.
|
Q4 |
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
|||||||||
|
U.S. $ millions |
2018 |
2018 |
2018 |
2018 |
2017 |
2017 |
2017 |
2017 |
||||||||
|
Total revenue |
$ |
21.5 |
$ |
17.7 |
$ |
17.2 |
$ |
13.1 |
$ |
12.5 |
$ |
11.3 |
$ |
9.1 |
$ |
7.1 |
Revenue for the quarter ended December 31, 2018 (Q4-2018) totaled $21.5 million, compared to $12.6 million for the same period in 2017, representing a 71% increase. On a year-over-year basis for Q4-2018, e-commerce revenue grew by 58% and wholesale, distributor and retail revenue grew by 76%. During Q4 2018 and 2017, e-commerce sales accounted for 57% and 59% of total sales, respectively. Revenue from human nutrition products, topicals and animal nutrition products grew by 73%, 373% and 126%, respectively (the Company's canine products were introduced in February of 2017).
Revenue for the year 2018 totaled $69.5 million, compared to $40.0 million for 2017, representing a 74% increase. On a year-over-year basis for 2018, e-commerce revenue grew by 51% and wholesale, distributor and retail revenue grew by 126%. For 2018, revenue from human nutrition, topical and canine products grew by 76%, 1085% and 189%, respectively. The Company's topical and canine products each accounted for approximately 4% of total revenue during 2018.
Gross profit totaled $16.3 million for Q4- 2018, compared to $10.0 million for the same period in 2017, a year-over-year increase of 63%. As a percent of total revenue, gross profit in Q4-2018 was 76%, compared to 80% for the same period in 2017.
Gross profit totaled $52.3 million for 2018, compared to $29.9 million for the same period in 2017, a year-over-year increase of 75%. As a percent of total revenue, gross profit for 2018 and 2017 was 75%.
For Q4-2018 and Q4-2017, sales and marketing expenses were $4.4 million and $1.7 million, respectively (year-to-date $12.8 million and $5.9 million, respectively). As a percent of revenue, sales and marketing expenses for the quarters ending Q4-2018 and Q4-2017 were 20.6% and 13.5%, respectively (year-to-date 18.4% and 14.8%, respectively).