Charlotte's Web Holdings, Inc. · TSX:CWEB
Charlotte's Web — Investor Presentation (September 2019)
26 slides from Charlotte's Web's investor presentation, September 2019
Slide 1: Building a Global CPG Company
BUILDING A GLOBAL CPG COMPANY TSX: CWEB | OTCQX: CWBHF September 2019
Slide 2: Disclaimers
DISCLAIMERS Forward-Looking Information Certain statements contained in this presentation constitute forward-looking statements and forward-looking information (collectively, “forward-looking statements”). Such forward-looking statements relate to possible events, conditions or financial performance
Slide 3: Brand Power, Product Quality, Financial Strength
BRAND P RO D U C T FINANCIAL P OW E R Q UA L I T Y ST R E N G T H 3
Slide 4: The Stanley Brothers
Founded in 2013 The Stanley Brothers Boulder, Colorado CHARLOT TE’S WEB WAS NOT Our dedication to creating the best hemp extracts makes us an STARTED AS A COMPANY, industry leader for product quality, safety and consistency. Our high-quality hemp extract harnesses powerful botanical IT WAS STARTED A
Slide 5: Charlotte Is Our Inspiration
CHARLOT TE IS OUR INSPIRATION In August 2013, CNN aired a documentary featuring Charlotte Figi, whose well- being had significantly improved after the use of the Stanley brothers’ customized extract 5
Slide 6: How Hemp Works
HOW HEMP WORKS The Company believes that CBD and the 80+ phytocannabinoids in Charlotte’s Web stimulate these receptors and support the function of the ECS. These receptors are located throughout the body. THE ENDOCANNABINOID SYST E M ( EC S ) A physiological system in the body made of a vast and vi
Slide 7: #1 Brand in the Total Hemp-Derived CBD Market
#1 BRAND IN THE TOTAL HEMP - DERIVED CBD MARKET CHARLOTTE’s WEB Revenue ($MM) 69.5 OUTPACING THE INDUSTRY WITH 2018 REVENUE GROWTH OF 74% 40.0 year-over-year1 14.7 2016 2017 2018 (1) Represents 2018 growth over 2017 7
Slide 8: Charlotte's Web Supports Americans with a Variety of Needs
CHARLOT TE’S WEB SUPPORTS AMERICANS WITH A VARIETY OF NEEDS SUPPORT FOR SUPPORT FOR SUPPORT FOR SUPPORT FOR A SENSE EXERCISE INDUCED HEALTHY SLEEP STRESS OF CALM AND FOCUS INFLAMMATION CYCLES 11% or 24.4 Million 52% or 183 Million 30% or 66.7 Million 18 % or 40 Million Americans diagnosed Americans
Slide 9: Vertically Integrated Supply Chain
VERTICALLY INTEGRATED SUPPLY CHAIN PROPRIETARY GENETICS LONG-TERM CULTIVATION • Grown in the U. S. A. PARTNERSHIPS • Traceability of ingredient streams HARVEST & PROCESS BIOMASS • Transparency of the manufacturing process IN-HOUSE EXTRACTION • Quality test at every step of the supply chain PRODUCTIO
Slide 10: Expanded Product Portfolio
EXPANDED PRODUCT PORTFOLIO 12 Liquid Products 4 Capsule Products 4 Topical Products 12 Canine Products – 11 New! 3 Gummies – NEW! Note: Product offering as of August 1, 2019 10
Slide 11: Strong Financial Performance
STRO NG FINANCIAL PERFO RMANCE Revenue and Growth Gross Profit and Margin Adjusted EBITDA and Margin1 69.5 75% 75% 65% 35% 30% 52.3 14% 21.1 29.9 40.0 14.1 14.7 9.6 2.0 2016 2017 2018 2016 2017 2018 2016 2017 2018 All revenue in USD $MM 11 (1) Adjusted EBITDA is not recognized measures under Interna
Slide 12: Performance 1H 2019
PERFO RMANCE 1H 2019 30 Revenue Growth ($MM) Q2 Financial Highlights 25 25 • $25M revenue +45% vs YA, +15% vs Q1 21.5 21.3 ➢ 75% gross margin 20 ➢ 16% adjusted EBITDA of $3.9 million 17.2 17.7 ➢ 9% net income of $2.2 million 15 ➢ 47% revenue from e-commerce 13.1 12.5 ➢ 53% revenue from retail outlet
Slide 13: Select Balance Sheet Information
SELEC T BALANCE SHEET INFORMATION All figures shown in millions, US$ JUNE 30, 2019 CASH $51.4 WORKING CAPITAL $97.0 CURRENT ASSETS $157.2 TOTAL LIABILITIES $22.3 SHAREHOLDER’S EQUITY $134.9 13
Slide 14: Category Growth
CATEGO RY GROWTH US Hemp Market, $25b (2018 - 2022F) Aggressive Scenario $21.9b ► US Hemp market is estimated to be $21.9b in 2022 from $0.6b in 2018 $20b ► Broad consumer acceptance across all segments ► FDA sets a regulatory environment for ingestibles $17.0b $15b $11.2b $10b Conservative Scenario
Slide 15: Competitive Expansion
CO MPETITIVE EXPANSIO N CBD Category – Competitive Landscape 2500 90% 81% 80% 2000 2000 70% 60% 60% 1500 50% 40% 1000 30% 30% 650 500 20% 200 10% 0 0% 2017 2018 2019 Brands Top 20 2017 2018 2019 Q1 200 Brands 650+ Brands 2000+ Brands 15 15 Source: Brightfield Group, Q1 2019
Slide 16: Channel Growth
CHANNEL GROWT H US Hemp Market by Retail Format (2018 - 2022F) CAGR (‘18-’22) $0.6b $11.2b $21.9b 147% 100% 82% 90% 80% Chained Retailers estimated to 70% 60% n/a represent of Total Hemp64% 50% 40% Sales by 2022 30% 103% 6% % 20% 95% 10% 97% 0% Every company must shift to become a 2018 2020F 2022F O
Slide 17: Segment Growth
SEGMENT GROWTH US Hemp Market Product Segments* (2018 - 2022F) 100% 90% 80% • Tinctures, Topicals, Capsules and Other Edibles grow to ≈ 80%+ Share of CBD 70% 60% 50% 40% 30% • Topicals, Capsules, Other Edibles Greatest 20% Growth 10% 0% 2018 2020F 2022F Other Other Edibles Capsules Smoke Gummies Top
Slide 18: Build a Global CPG Company
BUILD A GLOBAL CPG COMPANY BUILD OUT of CPG leadership team and top tier CPG sales organization DEVELOP OPERATIONAL EXCELLENCE EXPAND cultivation, extraction, production and distribution EXTEND ACROSS CHANNELS LAUNCH INNOVATION to expand market leading product portfolio SCALE DOMESTIC AND INTERNATIO
Slide 19: Build a CPG-Centric Leadership Team
Deanie Elsner Russ Hammer Stephen Lermer Tony True Eugenio Mendez CEO CFO COO CCO CGO BUILD A CPG - CENTRIC LEAD ERSHIP TEAM Paul Lanham Jared Stanley Nathan Gerhardt Tamarah Saif Cory Pala CIO CULTIVATION REGULATORY TALENT CAPITAL MARKETS 19
Slide 20: Board of Directors
BOARD OF D IREC TORS Joel Stanley, Chairman Former CEO of CWB Holdings, Inc. (“CWB”) and Chairman of Charlotte’s Web Holdings, Inc. since 2013 Co-founded CWB with his six brothers, which was incorporated in December 2013 Leading professional in the cannabis industry, actively educating decision make
Slide 21: Expand Cultivation
EXPAND CULTIVATION Cultivation Operations Hemp Production (Lbs) • Over 6 years of experience in hemp plant cultivation 2019 Harvest • Colorado, Kentucky and Oregon Projection • Transitioning towards organic hemp Strategic Partnerships Rodale Institute and Natural Care 675,000 To pioneer regenerative
Slide 22: Expand Production & Distribution
EXPAND PRODUCTION & DISTRIBUTION In-House Production • New 137,000 sq ft cGMP grade manufacturing and R&D facility in addition to current 40,000 ft2 facility • Extraction, production, distribution and R&D expansion • Required to support high volume national retailers and additional new sales channel
Slide 23: Extend Across Channels
EXTEND ACROSS CHANNELS CHARLOTTE’S WEB TOTAL RETAIL DOORS (EOY) 9000 8000+ 8000 7000 6000 5000 4000 3000 2000 1000 • Mass retailers enter the category 0 2016 2017 2018 2019 YTD • Regulatory uncertainty causing tempered uptake • Most national retailers taking topicals only CPG infrastructure buildout
Slide 24: Legalization & Regulation of Hemp Ingestibles
LEGALIZATION & REGULATION OF HEMP INGESTIBLES FDA Regulating Hemp CBD Ingestibles • 2018 Farm Bill preserved FDA’s authorities over hemp products • FDA is considering the possibility of new legal pathways for CBD products • FDA has formed a high-level CBD Policy Working Group committed to evaluating
Slide 25: Capitalization
CAPITALIZAT ION CAPITALIZATION August 12, 2019 Basic Common Shares Outstanding 49,253,934 Proportional Voting Shares (400:1) 120,529.07 (400:1 = 48,211,625) Effective Basic Common Shares Outstanding 97,465,559 Options & Warrants 9,264,205 Fully Diluted Shares Outstanding 106,729,764 25
Slide 26: Charlotte's Web Holdings, Inc.
TSX:CWEB | OTCQX:CWBHF Charlotte’s Web Holdings, Inc. 1600 Pearl Street Boulder, Colorado USA www.charlottesweb.com Cory Pala Director of Investor Relations (720) 484-8930 26 [email protected]
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