Charlotte's Web Holdings Inc. (CWBHF), the market leader in the production and distribution of innovative hemp-derived cannabidiol ("CBD") wellness products announced its Q2 financial results today for the period ended June 30, 2020, and they reflected the negative impact of the COVID-19 pandemic on its sales and operation.

Q2 Financial Highlights  (Unless otherwise noted, all results are presented in U.S. dollars and compared to the previous quarter.)

• Revenue: +0.5% to $21.6M
  • Direct-to-Consumer: +9.9% to 71.8% of total
  • Business-to-Business: -17.6% to 28.2% of total
• Gross Profit: -23.8% to $11.5M
• Operating Expenses: +26.6% to 29.5%
• Net Loss: +25.2% to $(14.4M)
• Loss/Share: +30% to $(0.13)
• Adj. EBITDA: Unchanged at $(5.7M)
• Cash Balance: +88% to $99.8M

Operational Highlights For Q2

• Completed acquisition of Abacus Health Products, Inc.
• Commenced Abacus product cross-selling though Charlotte's Web leading DTC channel
• Moved warehousing and fulfillment operations into new 137,000 sq ft facility
• Surpassed 21,000 unique retail doors
• Completed $54 million financing for expansion and working capital
• Awarded B Corp™ certification for excellence in ESG to become the only publicly traded CBD B-Corp certified company

Management Commentary

Deanie Elsner, CEO, had the following comments:

• "Second-quarter revenue was below expectations due to the impact of COVID-19 on retail sales...[although] Direct-to-Consumer sales increased largely offsetting declines in Business-to-Business retail sales. 
• We made excellent progress building out our infrastructure and expanding our products portfolio with the closing of the Abacus acquisition...
• We look forward to realizing  more cross-selling revenue synergies with Abacus through our FDM partners." 

Added Russ Hammer, Chief Financial Officer:

• "..Without a meaningful opening up of the economy and health practitioner channel we expect only flat to modest consolidated net revenue growth for 2020.
• Our long view market opportunity remains intact and we continue to add new customers, doors, and products.
• Our Q3 revenues are trending ahead of Q2 sales levels and we anticipate reopening of retail locations in the U.S. will support a positive growth trend.
• As we see resolutions in COVID-19 and hemp CBD regulations or legislation we can see the category build towards its full potential." 

Stock Performance

Charlotte's Web is one of the 25 pure-play stocks in the munKNEE Pure-Play Pot Stock Portfolio that trades for at least US$1/share.

• While the 14 multi-state operators (MSOs) in the portfolio are UP 13.8%, on average, YTD, Charlotte's Web is DOWN 60.8% YTD.
• Furthermore, while the MSO constituents in the portfolio are UP 43.7%, on average, in the last 2.5 months (i.e. since June 30th) Charlotte's Web stock price is DOWN 21.2% as illustrated in the chart below:

(Click on image to enlarge)