Charlotte's Web Holdings Inc Q1 2019 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Derek Dley - Canaccord Genuity - Analyst : Just wondering if you can start off with just discussing the initial new retail -- and by new retail, I mean the mass-market retailers that you are shipping products to. Acceptance of new products and the initial sellthrough versus your expectations.

Question: Derek Dley - Canaccord Genuity - Analyst : Good. And then how about on the -- and I know it's very early days here, but in terms of the online performance. It sounds like you've got some agreements with Google and Amazon. What do those consist of and how have they been performing?

Question: Derek Dley - Canaccord Genuity - Analyst : Okay. And Rich, maybe this is a question for you. Just in terms of the investment in, one, the new hemp harvest acres, and two, the new production capacity, can you give us an update on your expected capital expenditures for 2019?

Question: Derek Dley - Canaccord Genuity - Analyst : Okay. And then I guess just finally in terms of the strong harvest that you guys did have in the November period, it was double your initial expectations for 2018. What are your intentions with that inventory? And is there any new business lines or product lines that we can expect as you've got a bigger supply than you initially had intended for?

Question: Derek Dley - Canaccord Genuity - Analyst : Great. Thank you very much.

Question: Scott Fortune - ROTH Capital Partners - Analyst : Congratulations. Real quick [follow-on] on a little color on the large retail accounts. You have one account that's supplying a lot of your products, from oils and tinctures to topicals and others that are just topicals. What are the discussions with these retailers about expanding the doors and expanding the product set within each of those large retailers?

Question: Scott Fortune - ROTH Capital Partners - Analyst : Thank you. That provides good color. Can you provide a little more color on the pet line products, the 12 SKUs that you've rolled out, retail versus e-comm. And the strategy in the large pet retail market here, whether it's large retail stores or independent pet stores or primarily e-comm type of offering. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 29, 2019 / 12:00PM, CWEB.TO - Q1 2019 Charlotte's Web Holdings Inc Earnings Call

Question: Scott Fortune - ROTH Capital Partners - Analyst : Okay, great. And then real quick from Deanie, the strategy from a sales and marketing standpoint. With your background coming from Kellogg and such, what are you kind of -- first initiatives or where are the next levels of the marketing side to continue to bring CWEB in front of the brand and consumers out there?

Question: Scott Fortune - ROTH Capital Partners - Analyst : Thank you. I'll jump back in the queue.

Question: Jason Zandberg - PI Financial Corp. - Analyst : Thanks for taking my questions. Just wanted to get some more color on the planted acreage this year. Obviously we've got a -- you've done a significant job of increasing that overall acreage. Can you break out what that acreage looks like by state, just to see where the incremental add is?

Question: Jason Zandberg - PI Financial Corp. - Analyst : And as we see the planted acreage increase significantly across the US, with the -- after the Farm Bill was signed, what is your expectation of the price of hemp biomass moving forward? Do you expect to see a steep decline in price? Are prices holding steady this year? Any color would be helpful.

Question: Jason Zandberg - PI Financial Corp. - Analyst : Okay. No, that's helpful. Then just lastly on your pet products, of the 6,000 doors that you are selling Charlotte's Web products through, do you have a number in terms of how many of those are carrying pet products? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 29, 2019 / 12:00PM, CWEB.TO - Q1 2019 Charlotte's Web Holdings Inc Earnings Call

Question: Jason Zandberg - PI Financial Corp. - Analyst : Okay, thanks very much.

Question: Kyle McPhee - Cormark Securities - Analyst : On the B2B Channel, it was up 20% quarter over quarter in Q1. I'm hoping you can give some color on the growth breakdown. Specifically, how much of that would have been from the national retailers that started to hit the numbers in March? Then obviously, that would have implications for what's going on in the income and retail channels, like natural wellness, whether or not that's still growing.

Question: Kyle McPhee - Cormark Securities - Analyst : 10% of the growth rate or 10% of the dollar sales in that channel?

Question: Kyle McPhee - Cormark Securities - Analyst : Okay. Got it. Okay, and then a last question for me. On the penetration of these national retailers, just hoping to get some color on your strategy, mainly with respect to who you want as your customers in that channel. Are you pursuing deals with anyone and everyone? Or are you trying to handpick the retailers that you think are a good fit for you? Just any color would be appreciated so we can handicap your success as headlines roll in throughout the rest of the year with new retailers adopting the products.

Question: Kyle McPhee - Cormark Securities - Analyst : Okay, thank you. That's it for me.

Question: Jenny Wang - Eight Capital Partners plc - Analyst : Thank you for taking my questions. Could you talk about what portion of your 700 acres is contract farming versus Company-owned?

Question: Jenny Wang - Eight Capital Partners plc - Analyst : Okay, thank you. And I was wondering in terms of -- could you provide us a little bit of an update on the timing and the status of your US cross-listing? Is that still similar to what you guys mentioned in the last earnings call? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 29, 2019 / 12:00PM, CWEB.TO - Q1 2019 Charlotte's Web Holdings Inc Earnings Call

Question: Jenny Wang - Eight Capital Partners plc - Analyst : Okay, thank you. And my last question, in terms your -- you mentioned your expansion in manufacturing or extraction capabilities. Are there plans to make acquisitions in this area or are most of these organic buildouts?

Question: Jenny Wang - Eight Capital Partners plc - Analyst : Okay, thank you. That's it for me.