- 2021 Revenue grew 1% to $96.1M
- Adjusted EBITDA1 Loss improved $5M to ($18.6M)
- $19.5M cash at December 31, 2021
DENVER,
March 24, 2022 /CNW/ -
(TSX: CWEB) (OTCQX: CWBHF), Charlotte's Web Holdings, Inc. ("Charlotte's Web" or the "Company"), the market
leader in full spectrum hemp extract wellness products, today
reported financial results for the fourth quarter and year ended
December 31, 2021.
Effective January 4, 2022,
Charlotte's Web became a
registrant of the U.S. Securities and Exchange Commission and
subject to U.S. reporting requirements including the Company's
financial statements and financial data to be presented in
accordance with accounting principles generally accepted in
the United States of America
("U.S. GAAP"). Amounts are presented in United States' dollars, unless otherwise
indicated.
"At the beginning of 2022 we took organizational actions, better
aligned leadership and employees with shareholder interests, and
simplified our business for focus, speed, and executional
excellence. Our organization is fully engaged and we intend to grow
our business," said Jacques
Tortoroli, Chief Executive Officer of Charlotte's Web. "We have substantially
completed our multi-year investment in our production capacity to
effectively service a sophisticated mass retail channel when
federal regulations are set for the CBD wellness category in the
U.S. In the interim, regardless of regulatory actions, we are
focused on developing sustainable revenue growth with our current
customers and through new customer acquisitions, and new channels,
as well as selective innovation in new products, and international
market expansion."
2021 Revenue Growth
For the twelve-month period ended December 31, 2021, net revenue grew 1.0%, to
$96.1 million. Growth for 2021
from increased unit sales volumes was largely offset by an
industry-wide consumer shift to lower priced CBD products;
primarily gummies and topical products, where Charlotte's Web is the market share
leader.
Direct-to-consumer ("DTC") e-commerce revenue decreased 2.3%
year-over-year to $62.3 million while
business-to-business ("B2B") revenue grew 7.5%, to $33.8 million, increasing the
Company's leading market share position in total
food/drug/mass retail ("F/D/M"), and U.S. natural specialty retail.
Charlotte's Web maintains the
largest e-commerce business in the CBD industry and outperformed
the overall DTC category. Gummies and topical products
represented 31% and 19% of gross sales for the Company in 2021
respectively, versus 22% and 14% in 2020. DTC sales contributed 65%
of the Company's total net revenue in 2021 and B2B retail
contributed 35%, versus 67% and 33% in 2020.
2021 Operations
Gross profit was $48.6M, or 50.6%
of consolidated revenue, with gross profit excluding inventory
provisions of $58.3 million, or
60.7% of consolidated revenue. A twelve-month net loss of
$137.7 million for 2021 included
$107.7 million of non-cash
impairments in goodwill, customer relationships, trade names,
inventory provisions, and other long-lived assets, compared to a
net loss of $30.7 million in 2020.
Adjusted EBITDA1 improved by $5.0
million versus 2020, resulting in a smaller adjusted EBITDA
loss of $18.6 million*. The
improvement reflects a $6.0 million
reduction in selling, general and administrative ("SG&A")
expenses to $97.6 million, partially
offset by lower gross profit due to channel and product mix
shifts.
____________________
|
* Certain metrics,
including those expressed on an adjusted basis, are non-GAAP
measures, see "Non-GAAP Measures" below for additional information
and a reconciliation to GAAP for all Non-GAAP metrics.
|
2021 Milestones
Charlotte's Web continues to
support federal and state legislative actions to help advance
a comprehensive U.S. CBD regulatory framework, including the
successful passing of state Assembly Bill 45 legalizing hemp CBD in
California, and expanded
bi-partisan sponsorship of Federal Bill H.R. 841. The Company also
completed a clinical study reaffirming the liver health safety of
Charlotte's Web™ hemp derived CBD
extracts and shared the quantitative data study results with the
U.S. Food and Drug Administration.
Charlotte's Web achieved USDA
organic certification on select products and secured three new U.S.
Patents for proprietary hemp cultivars, bringing its total to five.
To secure future optionality to enter the U.S. cannabis wellness
category, Charlotte's Web
purchased an option agreement to acquire Stanley Brothers cannabis business pending US
federal legalization of cannabis.
International expansion initiatives progress in Canada where the Company completed the first
international harvest of Charlotte's Web's proprietary patented hemp
cultivars, with product planned for late 2022 availability. In the
U.K., the Company's applications were accepted and being processed
for Novel Foods authorization. Charlotte's Web recently appointed Savage
Cabbage as the Company's exclusive distributor in the U.K. The
founder and CEO of Savage Cabbage, Jade
Proudman, was also named the Company's Global Brand
Ambassador. In Israel Charlotte's Web is preparing for product
availability through its exclusive distribution partnership with
Israel-based Intercure, pending
Ministry of Health legalization of CBD.
"Internationally, our asset-light approach through partnerships
provides efficient and cost-effective global expansion routes to
market," said Wes Booysen, Chief
Financial Officer of Charlotte's
Web. "Additionally, as part of our recent reorganization, we
believe we have right-sized our operating expenses to our current
revenue."
Balance Sheet and Cash Flow
Total cash use for 2021 was $33.3
million of which approximately $22
million was non-recurring payments including an $8 million strategic purchase option for Stanley
Brothers USA Holdings, Inc.'s
cannabis business. During the year, the Company added
$8.3 million through its
At-the-Market equity program. The Company's cash and working
capital at December 31, 2021 were
$19.5 million and $75.6 million, respectively, compared to
$52.8 million and $114.9 million at December
31, 2020. The current cash position does not reflect
collection of an outstanding IRS tax refund of $10.8 million, which may be partially or fully
collected in 2022. The Company maintains an unused $10 million line of credit with JPMorgan that has
been put on hold due to the Company failing to meet required
covenants in Q4 that were not waived.
Q4-2021 Financial Review
Fourth quarter impairment of intangible assets, long-lived
assets and goodwill
The Company recognized impairments of $76M related to goodwill and $22M related to customer relationships, trade
names and other long-lived assets. The impairments were primarily
triggered as result of the decrease in the Company's market
capitalization in the fourth quarter of 2021. This resulted in
impairment charges of $98M which are
factored into our net loss for Q4 and the full year. These
are non-cash charges.
The following table sets forth selected financial information
for the periods indicated.
|
|
Three Months Ended
December 31,
|
U.S. $ millions, except
per share data
|
|
2021
|
|
2020
|
|
|
|
|
|
Revenue
|
|
$
|
24.8
|
|
$
|
26.9
|
Cost of goods
sold
|
|
20.6
|
|
16.4
|
Gross profit
|
|
4.2
|
|
10.6
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
24.4
|
|
23.3
|
Goodwill and asset
impairments
|
|
98.0
|
|
—
|
Operating
loss
|
|
(118.2)
|
|
(12.7)
|
|
|
|
|
|
Other income,
net
|
|
(0.3)
|
|
0.3
|
Change in fair value
of financial instruments and other
|
|
0.3
|
|
(2.0)
|
Income tax (expense)
benefit
|
|
(0.2)
|
|
0.1
|
Net loss and
comprehensive loss
|
|
$
|
(118.2)
|
|
$
|
(14.3)
|
Net loss per common
share, basic and diluted
|
|
$
|
(0.86)
|
|
$
|
(0.10)
|
Consolidated net revenue for the fourth quarter ended
December 31, 2021 was $24.8 million, an increase of 4.7% versus
Q3-2021, and a decrease of 7.8% versus Q4-2020, due to sales and
channel mixes and competitive DTC pricing.
Fourth quarter DTC net revenue was 12.1% lower year-over-year
due to product mix and lower-than-expected online sales during the
December holiday season. New DTC subscriptions increased 116%
year-over-year and ecommerce conversion rates were strong at 11.8%.
DTC accounted for 62% of total revenue in the fourth quarter of
2021 versus 65% for the same period in 2020.
Fourth quarter B2B revenue growth was flat year-over-year at
$9.5 million on higher unit sales
volume of new pet, topicals, and gummy products which carry lower
average unit pricing. During the fourth quarter of 2021,
Charlotte's Web expanded its
retail B2B distribution by more than 1000 doors in grocery,
natural, and pet retail following the passing of Assembly Bill 45
in California, including nearly
800 GNC locations in 24 states. B2B contributed 38% of revenue in
Q4-2021.
|
|
Three Months
Ended
|
|
|
|
|
December
31,
|
|
% Increase
(Decrease)
|
|
|
2021
|
|
2020
|
|
Total revenue - U.S. $
millions
|
|
$
|
24.8
|
|
$
|
26.9
|
|
(7.8)
|
%
|
Direct-to-consumer
("DTC") net revenue
|
|
$
|
15.3
|
|
$
|
17.4
|
|
(12.1)
|
%
|
Business-to-business
("B2B") net revenue
|
|
$
|
9.5
|
|
$
|
9.5
|
|
—
|
%
|
Higher retail volumes and brand leadership produced market share
gains at B2B retail across core retail channels. Charlotte's Web holds the number one market
share position across major retail channels including total U.S.
F/D/M, total U.S. natural specialty retail, and e-commerce, based
on market share data from leading third-party analysts such as
Nielsen, SPINS, and Brightfield Group, respectively.
Gross profit of $4.2 million, or
16.9% of consolidated revenue, was negatively impacted by non-cash
inventory provisions of $9.6 million
for Q4-2021. Gross profit for Q4-2020 of $10.6 million was negatively impacted by non-cash
inventory provisions of $5.8 million.
Gross profit in the Q4-2020 quarter was also negatively impacted by
lower net revenue and product and channel mixes.
Total SG&A expenses increased 4.7% to $24.4 million year-over-year from $23.3 million due to professional fees related to
a transition to U.S. GAAP reporting and becoming an SEC registrant,
as well as increased marketing spend including new retail displays
and activations for recent large customer wins.
Net loss was $118.2 million for
the fourth quarter as compared to net loss and comprehensive loss
of $12.2 million in the fourth
quarter of 2020. Adjusted EBITDA loss for the fourth quarter
was $4.5 million, or 18.1% of net
revenue, as compared to Adjusted EBITDA loss of $3.1 million, or 11.5% of consolidated revenue,
for the fourth quarter of 2020. The higher loss is primarily due to
lower gross profit as well as lower net revenue.*
Consolidated Financial Statements and Management's Discussion
and Analysis
The Company's audited consolidated financial statements and
accompanying notes for the year ended December 31, 2021 and 2020 and related
management's discussion and analysis of financial condition and
results of operations ("MD&A") are reported in the Company's
10K filing on the Securities and
Exchange Commission website at www.sec.gov and on SEDAR at
www.sedar.com, and will be available on the Investor Relations
section of the Company's website at
https://investors.charlottesweb.com.
Conference Call
Management will host a conference call to discuss the Company's
2021 fourth quarter and year-end results at 8:30 a.m. ET on March 24,
2022. To participate in the call, please dial 1-416-764-8659
approximately 10 minutes before the conference call. A recording of
the call will be available through March 31,
2022. To listen to the rebroadcast please dial
1-416-764-8677 and provide conference ID 231528. A webcast of the
call can be accessed through the investor relations section of the
Charlotte's Web website.
About Charlotte's Web
Holdings, Inc.
Charlotte's Web Holdings, Inc.,
a Certified B Corporation headquartered in Denver, is the market leader in innovative
hemp extract wellness products under a family of brands which
includes Charlotte's Web™, CBD
Medic™, CBD Clinic™, and Harmony Hemp™. Charlotte's Web branded premium quality
products start with proprietary hemp genetics that are 100-percent
American farm grown and manufactured into hemp
extracts containing naturally
occurring phytocannabinoids including cannabidiol
("CBD"), CBC, CBG, terpenes, flavonoids, and other
beneficial hemp compounds. The Company's CW Labs R&D
division, advances hemp science at two centers of excellence in
Louisville, Colorado, and the
Hauptmann Woodward Research Institute at the University at Buffalo, part of the State University of New York (SUNY) network. Charlotte's Web product categories include
full-spectrum hemp CBD oil tinctures (liquid products), CBD gummies
(sleep, stress, exercise recovery), CBD capsules, CBD topical
creams and lotions, as well as CBD pet products for dogs.
Through its vertically integrated business model, Charlotte's Web maintains stringent control
over product quality and consistency. Charlotte's Web products are distributed to
more than 15,000 retail, over 8,000 health care practitioners, and
online through the Company's website at www.CharlottesWeb.com.
Charlotte's Web was founded by
the seven Stanley Brothers with a
mission to unleash the healing powers of botanicals through
compassion and science, benefiting the planet and all who live upon
it. Charlotte's Web is a
socially and environmentally conscious company and is committed to
using business as a force for good and a catalyst for innovation.
The Company weighs sound business decisions with consideration for
how its efforts affect employees, customers, the environment, and
diverse communities. The rate the Company pays for agricultural
products reflects a fair and sustainable rate driving higher
quality yield, encouraging regenerative farming practices, and
supporting U.S. farming communities. Management believes that its
socially oriented and environmentally responsible actions have a
positive impact on its customers, suppliers, employees and
stakeholders. Charlotte's Web
donates a portion of its pre-tax earnings to charitable
organizations.
Shares of Charlotte's Web trade
on the Toronto Stock Exchange (TSX) under the symbol "CWEB" and are
quoted in U.S. Dollars in the United
States on the OTCQX under the symbol "CWBHF". As of
March 22, 2021, Charlotte's Web had 145,110,106 Common Shares
outstanding.
Forward-Looking Information
In the interest of providing the shareholders and potential
investors of Charlotte's Web
Holdings, Inc. with information about the Company, certain
information provided herein constitutes forward-looking statements
or information (collectively, "forward-looking statements") within
the meaning of applicable securities laws. Forward-looking
statements are typically identified by words such as "may", "will",
"should", "could", "anticipate", "expect", "project", "estimate",
"forecast", "plan", "intend", "target", "believe" and similar words
suggesting future outcomes or statements regarding an outlook.
Although these forward-looking statements are based on assumptions
the Company considers to be reasonable based on the information
available on the date such statements are made, such statements are
not guarantees of future performance and readers are cautioned
against placing undue reliance on forward-looking statements. By
their nature, these statements involve a variety of assumptions,
known and unknown risks and uncertainties, and other factors which
may cause actual results, levels of activity, and achievements to
differ materially from those expressed or implied by such
statements. The forward-looking statements contained in this press
release are based on certain assumptions and analysis by management
of the Company in light of its experience and perception of
historical trends, current conditions and expected future
development and other factors that it believes are
appropriate.
Specifically, this press release contains forward-looking
statements relating to, but not limited to: activities relating to,
and sponsorship of, legislation to advance regulatory framework;
future optionality to enter the U.S. cannabis wellness category
through purchase option agreement with Stanley Brothers; anticipated consumer trends
and corresponding product innovation; anticipated future financial
results; international expansion activities and strategy, including
Israel product launch, harvest and
planned product sales in Canada,
and expansion in UK and EU; sales volume, product, channel and
international expansion plans; growth of the Company's market share
position; collection of a near-term IRS tax refund; that the
reorganization right sized our operating expenses to our revenue;
the impact of certain activities on the Company's business and
financial condition; suggested regulatory developments; and the
Company's anticipated trajectory, long-term growth expectations and
shareholder value creation.
The material factors and assumptions used to develop the
forward-looking statements herein include, but are not limited to,
the following: the impact of the COVID-19 pandemic; the regulatory
climate in which the Company currently operates and may in the
future operate; successful sales of the Company's products; the
success of sales and marketing activities; there will be no
significant delays in the development and commercialization of the
Company's products, including in relation to supply chain
disruptions; outcomes from R&D activities; ability for the
Company to leverage R&D and brand recognition for product
sales; the Company's ability to deal with adverse growing
conditions (due to pests, disease, fungus, climate or other
factors) in a timely and cost-effective manner; there will be no
significant reduction in the availability of qualified and
cost-effective human resources; new products will continue to be
added to the Company's portfolio; demand for the Company's products
will grow in the foreseeable future; there will be no significant
barriers to the acceptance of the Company's products in the market,
including in international markets; the Company will be able to
maintain compliance with applicable contractual and regulatory
obligations and requirements; there will be adequate liquidity
available to the Company to carry out its operations and business
plans; the Company will have sufficient capital to pursue its sales
volume, product, channel and international expansion; and products
do not develop that would render the Company's current and future
product offerings undesirable and the Company is otherwise able to
minimize the impact of competition and keep pace with changing
consumer preferences.
The Company's forward-looking statements are subject to risks
and uncertainties pertaining to, among other things, the adverse
impact of the COVID-19 pandemic to the Company's operations, supply
chain, distribution chain, and to the broader market for the
Company's products; revenue fluctuations; nature of government
regulations (both domestic and foreign); economic conditions; loss
of key customers; retention and availability of executive talent;
competing products; common share price volatility; loss of
proprietary information; product acceptance; internet and system
infrastructure functionality; information technology security;
available capital to fund operations and business plans; crop risk;
international and political considerations; regulatory changes; and
including but not limited to those risks and uncertainties
discussed under the heading "Risk Factors" in the Company's Annual
Report on Form 10-K for the year ending December 31, 2021 available on www.sec.gov
and www.sedar.com, and other risk factors
contained in other filings with the Securities and Exchange
Commission available on www.sec.gov and filings with Canadian
securities regulatory authorities available on
www.sedar.com. The impact of any one risk, uncertainty, or
factor on a particular forward-looking statement is not
determinable with certainty as these are interdependent, and the
Company's future course of action depends on management's
assessment of all information available at the relevant
time.
Except as required by applicable law, the Company assumes no
obligation to publicly update or revise any forward-looking
statements made, whether as a result of new information, future
events, or otherwise. All forward-looking statements, whether
written or oral, attributable to the Company or persons acting on
the Company's behalf, are expressly qualified in their entirety by
these cautionary statements.
CHARLOTTE'S WEB
HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
|
|
|
December
31,
|
|
2021
|
|
2020
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
19,494
|
|
$
|
52,803
|
Accounts receivable,
net
|
4,882
|
|
4,793
|
Notes receivable -
current
|
495
|
|
2,757
|
Inventories,
net
|
52,077
|
|
63,157
|
Prepaid expenses and
other current assets
|
8,095
|
|
8,845
|
Income taxes
receivable
|
10,764
|
|
11,440
|
Total current
assets
|
95,807
|
|
143,795
|
Property and equipment,
net
|
36,085
|
|
39,363
|
Operating lease
right-of-use assets, net
|
20,679
|
|
21,037
|
Intangible assets,
net
|
2,843
|
|
25,376
|
Goodwill
|
—
|
|
76,039
|
Stanley Brothers USA
Holdings purchase option
|
13,000
|
|
—
|
Notes receivable -
noncurrent
|
1,037
|
|
—
|
Other long-term
assets
|
2,062
|
|
5,177
|
Total assets
|
$
|
171,513
|
|
$
|
310,787
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
5,049
|
|
$
|
4,891
|
Accrued and other
current liabilities
|
9,570
|
|
12,763
|
Cultivation
liabilities – current
|
3,448
|
|
9,304
|
Lease obligations –
current
|
2,103
|
|
1,916
|
Total current
liabilities
|
20,170
|
|
28,874
|
Cultivation liabilities
– noncurrent
|
385
|
|
2,513
|
Lease obligations –
noncurrent
|
20,500
|
|
20,567
|
Warrant and other
long-term liabilities
|
12
|
|
4,591
|
Total
liabilities
|
41,067
|
|
56,545
|
Commitments and
contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common shares, nil par
value; unlimited shares authorized as of December 31, 2021 and
2020, respectively; 144,659,964 and 107,060,237 shares issued and
outstanding as of December 31, 2021 and 2020
|
1
|
|
1
|
Proportionate voting
shares, nil par value; nil shares authorized as of
December 31, 2021 and unlimited shares authorized as of
December 31, 2020, respectively; nil and 81,177 outstanding as
of December 31, 2021 and December 31, 2020,
respectively
|
—
|
|
—
|
Additional paid-in
capital
|
319,059
|
|
305,133
|
Accumulated
deficit
|
(188,614)
|
|
(50,892)
|
Total shareholders'
equity
|
130,446
|
|
254,242
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
171,513
|
|
$
|
310,787
|
CHARLOTTE'S WEB
HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)
|
|
|
Year Ended
December 31,
|
|
2021
|
|
2020
|
|
|
|
|
Revenue
|
$
|
96,092
|
|
$
|
95,226
|
Cost of goods
sold
|
47,507
|
|
42,937
|
Gross profit
|
48,585
|
|
52,289
|
|
|
|
|
Selling, general and
administrative expenses
|
97,641
|
|
103,631
|
Goodwill and asset
impairments
|
98,003
|
|
—
|
Operating
loss
|
(147,059)
|
|
(51,342)
|
|
|
|
|
Other income,
net
|
51
|
|
1,330
|
Change in fair value
of financial instruments and other
|
9,429
|
|
11,317
|
Loss before provision
for income taxes
|
$
|
(137,579)
|
|
$
|
(38,695)
|
Income tax (expense)
benefit
|
(143)
|
|
8,014
|
Net loss and
comprehensive loss
|
$
|
(137,722)
|
|
$
|
(30,681)
|
Net loss per common
share, basic and diluted
|
$
|
(0.98)
|
|
$
|
(0.25)
|
Weighted-average shares
used in computing net loss per share, basic and diluted
|
140,769,247
|
|
125,012,249
|
CHARLOTTE'S WEB
HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands, except share amounts
|
|
|
Proportionate
Voting Shares
|
|
Common
Shares
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Total
Shareholders'
Equity
|
|
Shares
|
|
Shares
|
|
Amount
|
|
|
|
Balance—December 31, 2019
|
95,342
|
|
67,418,174
|
|
$
|
1
|
|
$
|
144,206
|
|
$
|
(20,211)
|
|
$
|
123,996
|
Exercise of stock
options
|
—
|
|
3,987,035
|
|
—
|
|
2,467
|
|
—
|
|
2,467
|
Conversion to common
shares
|
(16,140)
|
|
6,455,826
|
|
—
|
|
—
|
|
—
|
|
—
|
Withholding of common
shares upon vesting of restricted share units
|
—
|
|
32,801
|
|
—
|
|
(19)
|
|
—
|
|
(19)
|
Share-based
compensation
|
—
|
|
—
|
|
—
|
|
3,149
|
|
—
|
|
3,149
|
Harmony Hemp contingent
equity compensation
|
—
|
|
114,696
|
|
—
|
|
1,177
|
|
—
|
|
1,177
|
2020 Share offering,
net of warrants and issuance costs
|
—
|
|
11,500,000
|
|
—
|
|
44,591
|
|
—
|
|
44,591
|
Abacus
acquisition
|
1,975
|
|
17,551,705
|
|
—
|
|
109,562
|
|
—
|
|
109,562
|
Net loss and
comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(30,681)
|
|
(30,681)
|
Balance—December 31, 2020
|
81,177
|
|
107,060,237
|
|
$
|
1
|
|
$
|
305,133
|
|
$
|
(50,892)
|
|
$
|
254,242
|
Exercise of stock
options
|
—
|
|
8,261
|
|
$
|
—
|
|
$
|
30
|
|
$
|
—
|
|
$
|
30
|
Conversion to common
shares
|
(81,177)
|
|
32,471,060
|
|
—
|
|
—
|
|
—
|
|
—
|
Exercise of
warrants
|
—
|
|
98,788
|
|
—
|
|
441
|
|
—
|
|
441
|
Withholding of common
shares upon vesting of restricted share units
|
—
|
|
182,727
|
|
—
|
|
(146)
|
|
—
|
|
(146)
|
Harmony Hemp contingent
equity compensation
|
—
|
|
338,091
|
|
—
|
|
1,460
|
|
—
|
|
1,460
|
ATM Program, net of
share issuance costs
|
—
|
|
4,500,800
|
|
—
|
|
8,118
|
|
—
|
|
8,118
|
Share-based
compensation
|
—
|
|
—
|
|
—
|
|
4,023
|
|
—
|
|
4,023
|
Net loss and
comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(137,722)
|
|
(137,722)
|
Balance—December 31, 2021
|
—
|
|
144,659,964
|
|
$
|
1
|
|
$
|
319,059
|
|
$
|
(188,614)
|
|
$
|
130,446
|
CHARLOTTE'S WEB
HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
|
Year Ended
December 31,
|
|
2021
|
|
2020
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
Net loss and
comprehensive loss
|
$
|
(137,722)
|
|
$
|
(30,681)
|
Adjustments to
reconcile net loss and comprehensive loss to net cash used in
operating activities:
|
|
|
|
Depreciation and
amortization
|
11,025
|
|
6,847
|
Goodwill and asset
impairments
|
98,003
|
|
—
|
Change in fair value
of financial instruments
|
(9,305)
|
|
(11,167)
|
Allowance for credit
losses
|
1,509
|
|
834
|
Inventory
provision
|
9,729
|
|
8,025
|
Share-based
compensation
|
5,483
|
|
4,326
|
Loss (gain) on
disposal of assets
|
390
|
|
(5)
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net
|
(948)
|
|
1,470
|
Inventories
|
1,023
|
|
(1,782)
|
Prepaid expenses and
other current assets
|
694
|
|
(2,867)
|
Operating lease
right-of-use assets and lease obligations
|
138
|
|
569
|
Accounts payable,
accrued and other liabilities
|
(2,911)
|
|
(8,075)
|
Income
taxes
|
676
|
|
(8,133)
|
Cultivation
liabilities
|
(7,166)
|
|
(11,289)
|
Other operating assets
and liabilities, net
|
(177)
|
|
(101)
|
Net cash used in
operating activities
|
(29,559)
|
|
(52,029)
|
Cash flows from
investing activities:
|
|
|
|
Acquisition of
business, net of cash acquired
|
—
|
|
11,181
|
Purchases of property
and equipment and intangible assets
|
(4,918)
|
|
(28,257)
|
Proceeds from sale of
assets
|
13
|
|
91
|
Issuance of notes
receivable, net of collections
|
510
|
|
(1,275)
|
Investment in Stanley
Brothers USA Holdings purchase option
|
(8,000)
|
—
|
—
|
Other investing
activities
|
606
|
|
(897)
|
Net cash used in
investing activities
|
(11,789)
|
|
(19,157)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from public
offerings, net of issuance costs
|
8,257
|
|
53,797
|
Proceeds from stock
option exercises
|
30
|
|
2,467
|
Other financing
activities
|
(248)
|
|
(828)
|
Net cash provided by
financing activities
|
8,039
|
|
55,436
|
Net decrease in cash
and cash equivalents
|
(33,309)
|
|
(15,750)
|
Cash and cash
equivalents —beginning of year
|
52,803
|
|
68,553
|
|
|
|
|
Cash and cash
equivalents —end of year
|
$
|
19,494
|
|
$
|
52,803
|
|
|
|
|
Non-cash
activities:
|
|
|
|
Equity instruments
issued in business combinations
|
$
|
—
|
|
$
|
109,562
|
Non-cash purchases of
property and equipment
|
(2,500)
|
|
(1,291)
|
Non-cash inventory
provision
|
(543)
|
|
(2,073)
|
(1) Non-GAAP Measures
Adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") and gross profit excluding
inventory provision are not recognized performance measures under
U.S. GAAP. These non-GAAP financial measures should be considered
supplemental to, and not a substitute for, our reported financial
results prepared in accordance with GAAP. Adjusted EBITDA does not
have a standardized meaning prescribed under U.S. GAAP and
therefore may not be comparable to similar measures presented by
other issuers. The term EBITDA consists of net loss and excludes
interest, taxes, depreciation and amortization. Adjusted EBITDA
also excludes share-based compensation, impairment of assets,
transaction costs, legal settlement costs, restructuring charges,
and adjustments for fair value. Adjusted EBITDA is included as a
supplemental disclosure because management of the Company believes
that such measurement provides a more meaningful assessment of the
Company's operations on a continuing basis by eliminating certain
non-cash charges and charges or gains that are infrequent. The most
directly comparable measure to Adjusted EBITDA calculated in
accordance with U.S. GAAP is net loss. See "Adjusted EBITDA" below
for a reconciliation of Adjusted EBITDA to net loss, the most
directly comparable U.S. GAAP measure. Gross profit,
excluding inventory provisions, is gross profit as stated in the
Company's Consolidated Statements of Operations and Comprehensive
Loss adjusted to exclude the non-cash inventory provisions of
$9,551 and $9,729 for Q4 and for 2021, respectively.
The Company believes such measurement provides a more meaningful
assessment of the Company's gross profit on a continuing basis by
eliminating non-cash inventory provisions.
|
|
Three months
ended
|
Twelve months
ended
|
|
|
December
31,
|
December
31,
|
U.S. $
millions
|
|
2021
|
|
2020
|
2021
|
2020
|
Net loss and
comprehensive loss
|
|
$
|
(118.2)
|
|
$
|
(14.3)
|
$
|
(137.7)
|
$
|
(30.7)
|
Depreciation of
property and equipment and amortization of intangibles
|
|
2.8
|
|
2.2
|
11.0
|
6.8
|
Financing
costs
|
|
0.1
|
|
(0.1)
|
0.1
|
0.1
|
Interest
income
|
|
—
|
|
—
|
—
|
(0.1)
|
Income tax
|
|
0.1
|
|
(0.1)
|
0.1
|
(8.0)
|
EBITDA
|
|
$
|
(115.2)
|
|
$
|
(12.3)
|
(126.5)
|
(31.9)
|
Mark-to-market
financial instruments
|
|
(0.3)
|
|
2.0
|
(9.4)
|
(11.3)
|
Share-based
compensation
|
|
1.4
|
|
1.0
|
5.5
|
4.3
|
Impairment of
assets
|
|
107.6
|
|
5.8
|
107.7
|
8.0
|
SEC registration and
other transaction costs
|
|
1.0
|
|
0.2
|
1.9
|
5.9
|
Restructuring
charges
|
|
1.0
|
|
0.2
|
2.2
|
1.4
|
Adjusted
EBITDA(1)
|
|
$
|
(4.5)
|
|
$
|
(3.1)
|
(18.6)
|
(23.6)
|
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SOURCE Charlotte's Web
Holdings, Inc.