Good morning, ladies and gentlemen, and welcome to the Charlotte's Web Holdings, Inc. 2023 Q4 conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a Q&A session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, March 21st, 2024. I would now like to turn the conference over to Cory Pala, Head of Investor Relations. Please go ahead. Thank you, and good morning, everyone. Thank you for joining us for our 2023 Q4 and year-end conference call for Charlotte's Web Holdings, Inc. Our earnings press release was issued this morning and posted on the investor relations section of our website, along with our financial statements. Our 10-K report for the 2023 year is also available and has been filed on SEDAR+.com in Canada and in the United States on EDGAR with the SEC. CEO Bill Morachnick and CFO Jessica Saxton are leading our call this morning. Jared Stanley, Co-founder and Chief Commercial Officer, is also with us for the Q&A portion of our call. On this morning's call, we will review the financial results for the period and provide some color around the business and outlook. We will take some questions from our analysts at the end of our prepared remarks. A replay of this call will be available through the next week, accessible via the details provided in our earnings release. Additionally, a webcast replay of this call will be available for an extended period, accessible through the IR section of our website at charlottesweb.com. As a reminder to our listeners, certain statements made on today's call, including answers we may provide, certain questions may include content that is forward-looking in nature and therefore subject to risks and uncertainties and factors which could cause actual future results or company performance to differ materially from implied expectations. Such risks surrounding forward-looking statements are outlined in detail within the company's regulatory filings. In addition, during the call, we will refer to supplemental non-GAAP accounting measures, including adjusted gross profit and adjusted EBITDA, which do not have any standardized meaning prescribed by GAAP. Please refer to the earnings release that we filed this morning for a description of these non-GAAP measures, as well as a reconciliation of such measures to the respective and most directly comparable GAAP financial measures. I'll now hand over the call to Charlotte's Web Chief Executive Officer, Bill Morachnick. Thanks, Cory, and good morning, everyone. Let's jump right in. I've been with the company for almost seven months now, and there are four key things that we've been focused on. One, deploying our resources to reverse our trends and return to revenue growth. Two, vastly improving the overall consumer journey. Three, identifying the key data and analytics that should be driving our business decisions. And four, kickstarting the groundwork to profitably scale the business. Michael Jordan once said, "The talent wins games, but teams win championships." We have not wasted any time restructuring our teams, recalibrating our shared goals, and strategically planning how we reach them. All of this is fueled by a clear purpose: our commitment to education, advocacy, and innovation, which has never wavered. With this, we realized it was time to update our mission, to reinforce our legacy and leadership position, and to define our path for tomorrow. I'm excited to announce that we've updated our mission, which is to unearth the science of nature to revolutionize wellness. So what does that mean for our shareholders? It means Charlotte's Web is more than just CBD. We'll talk about that in just a little bit. Let's first start by laying out the foundation of our business vision. With all the changes we are implementing, what better way to describe where we're going than calling our reimagined business vision True North? This is a company-wide turnaround initiative that every employee has a stake in, working as one unified team. So why are we calling our turnaround True North? Because we know our direction, and moreover, we know our destination: long-term growth. As referenced in our previous quarter, True North's high-level goals are first to transform the consumer experience end-to-end. Central to our mission is building stronger connections with our consumers by understanding their needs and preferences through data and analytics. That requires agility through the right tech stack and marketing strategy. We are achieving this by a multifaceted approach to amplify consumer engagement, acquisition, and loyalty. We aim to propel growth through meaningful customer interactions and ultimately inspire consumers to return to CW time and time again. Second is to be the most trusted and valued partner among our retailers and distributors. By optimizing our partner onboarding and shopper marketing strategies, we reinforce Charlotte's Web status as a preferred brand, resulting in heightened store traffic and accelerated sales velocity as the top CBD choice for consumers and partners. Third, reinforce and amplify CW's influential voice. Charlotte's Web has been the undisputed thought leader in the CBD market since its inception. Now it's time to cut through the noise of this oversaturated market and put more space between us and our competitors. We are doing this through new content strategies that put bolder messaging, education, science, and consumer advocacy at the forefront of our brand communications. Lastly, continue to identify costs and operating efficiencies. We are continuing to use data and analytics to drive decision-making, arm in arm with finance embedded in every corner of the company to ensure stringent cost management and operational performance. So what is our ultimate goal? It's increased value for our customers, partners, shareholders, and employees. We know that aspects of these goals are long-term, while others are short-term. With True North as our touchstone, we will be using our call today, as well as future calls, to report on both. Before I share some of the progress we have made in our top priorities, I will turn the call over to our Chief Financial Officer, Jessica Saxton, to speak more on our 2023 financial results. Thank you, Bill. I am excited to kick off the call with a True North initiative that intersects finance, operations, and our B Corp values. In February, we unveiled a significant price recalibration of our leading CBD oils on our e-commerce website, followed by a full retail rollout in B2B starting March 1st. This was accomplished with a steadfast commitment to data, analytics, and strategy. Remember, these are the products that helped Charlotte Figi and ignited a movement that has benefited millions since. How were we able to achieve a competitive price recalibration? First, we conducted a thorough competitive analysis of the CBD industry, broadening our scope to encompass pertinent sectors within consumer packaged goods. Then we completed a comprehensive analysis of market data, including quantitative, qualitative, and proprietary data points. These data points informed our approach so we could quickly and effectively adapt to meet market and consumer demand using leaner solutions and eliminate expensive tertiary processes. This True North initiative resulted in a flow-through of improved operational efficiencies with minimal gross margin impact expected to be offset with additional volume, increased competitiveness, improved consumer accessibility by creating affordable products which widens our consumer reach, and most importantly, passing savings onto our customers without compromising on quality. The overall short and long-term benefits for shareholders include increasing top-of-the-funnel by attracting new customers, the use of continued data analytics for new product launches, and building a competitive position that increases shareholder value. I am proud to say this cross-functional project underscores our company's commitment to make CBD more accessible to those that need it in an inflationary period when affordability can be more challenging. This is the first of many initiatives underway that utilizes data strategy to deliver long-term benefits for Charlotte's Web consumers and our shareholders. Now, turning to our financial results. For the full year 2023, net revenue was $63.2 million, down 14.8% year-over-year. On a segmented basis, e-commerce revenue was $42.6 million, down 15.9%, primarily due to lower traffic to our web store and competitive online discounting pressures. B2B net revenue was $20.6 million, down 12.4% for the year. Retail sales continue to be impacted by lower shipments to certain retail customers who closed locations, exited the CBD category, or reduced total shelf space for CBD products in 2023. With regards to the reduced retail shelf space, we were impacted less than the overall CBD category and maintained more items per store with higher sales velocities than the category average. When excluding inventory provisions, our gross margin remained healthy at 57.9% in the Q4 and 58% for the full year 2023, despite lower year-over-year revenue growth. To this end, as stated in previous quarters, we are currently under construction to bring production in-house for topicals and gummies, which improves operational efficiency and therein boosts margins. I'll speak more about this shortly. Turning to the Q4 revenue, sales trends were consistent with the rest of 2023, showing lower year-over-year revenue in both our e-commerce and retail channels, primarily due to ongoing industry-wide headwinds. Q4 e-commerce revenue was $11.2 million, down 10.4% on lower year-over-year traffic. However, on a consecutive quarterly basis, this was a 19.1% increase over Q3 2023, driven by the success of our online Black Friday and Cyber Monday campaigns. These campaigns gained traction by enhancing our marketing and focusing on personalized, relevant, and timely cohort messaging. Additionally, we simplified user flows and engaged real-time testing and analysis to confirm tracking success. E-commerce continues to represent approximately two-thirds of our revenue, and we are in the process of executing a robust revamping of our online marketing and consumer experience in 2024. This includes web store and subscription platform migrations, resulting in increased functionality, effectiveness, and most importantly, lower operating costs. Bill will speak more about this in detail shortly. Turning to our B2B retail channel, Q4 net revenue was $4.7 million, a year-over-year decrease of $1.7 million. As discussed previously, the decrease reflects some of the retail shelf reductions. Despite lower retail sales, Charlotte's Web remains the market share leader in combined SPINS and IRI data measurements of total retail for 2023, and we maintain our key brand leadership metrics according to the latest data from the Brightfield Group. The number of CBD competitors continues to decline, now well below 2,000, which is approximately half of the competitors in 2020, according to Brightfield. This is a necessary industry shakeout and benefits our market share measurements. Turning to expenses, our Q4 SG&A decreased 13.1% year-over-year from $21.4 million to $18.6 million as we continue to tighten expense controls to better align with our revenue vision. For 2024, we also introduced zero-based budgeting to further reduce expenses, knowing exactly how each dollar is being spent. Our Q4 operating loss of $10.3 million was a significant improvement from a net loss of $32 million in Q4 2022. The improvement primarily resulted from inventory provisions that were $21.2 million lower this year and a net $2.8 million improvement in SG&A, which were partially offset by a reduction in gross profit due to lower revenue. For 2024, we expect further SG&A efficiency gains versus full year 2023. Net loss for the quarter was $8.5 million or -$0.06 per share compared to a net loss of $35.2 million or -$0.23 per share last year. Q4 cash flow was -$3.2 million, of which $1 million was CapEx related to our production insourcing and $2 million was related to the MLB licensing fees. Excluding these items, Q4 cash burn was $0.2 million, with cash ending the year at $47.8 million. Until revenue growth positively impacts cash flow, we are taking multiple actions that present meaningful upside to improving cash flow. We completed a comprehensive three-year financial plan, a critical step in our long-term planning, providing a clear roadmap for our strategy, cash flow management, and operational objectives. We completed our first zero-based budget to manage resources and optimize cost structures, evaluating every facet of our expenditures to ensure each cost can be justified and aligned with our strategic objectives. It empowers us to allocate resources more effectively, supporting areas of growth and innovation while maintaining strict financial discipline. Lastly, we continue to integrate commercial finance into both e-commerce and B2B, bringing strategic review and analysis to everyday business decisions. We recently extended the term of our partnership with MLB by two years, spreading the total remaining sponsorship fees over a longer period, therein improving cash flow management. Further, MLB remains an important partner, providing significant credibility and exposure, as well as enabling new opportunities. Now, I want to discuss our progress on the insourcing of our topicals and gummy manufacturing. Since the start of 2024, we have made considerable progress with construction and equipment installation. Commercial runs are anticipated to begin in Q4. However, we will maintain our co-manufacturing relationships for certain products in order to have dual-source capability and mitigate supply chain risk. In closing, we are poised for growth and with a stable financial position. Our finance team is dedicated to improving cash flow, ensuring our investments are both sustainable and focused on areas with a clear, positive ROI. I will now turn the call back over to Bill. Thank you, Jessica. Okay, so now that we've laid a foundation for our 2024 top business priorities, let's dig into a True North goal: enhancing the consumer experience. Our e-commerce strategy goes beyond improvement. It's really about transformation. As a cornerstone of our business, it's essential to expand its reach, capitalize on every consumer touchpoint, and maximize consumer satisfaction. This will be the key driver for sustained growth. We seek to grow our revenue through increased traffic, consumer acquisition, and subscriptions. To this end, we're upgrading our e-commerce platform to provide a more engaging and satisfying experience that consumers will be excited to come back to over and over. This also includes leveraging an improved CRM IT stack that can tailor content for very specific demographic and psychographic profiles. That means providing compelling educational and lifestyle content that will be more relevant to our consumer segments. This approach also includes integration with retail partners to broaden our reach and accessibility. These tools will allow us to track customer engagement and respond to consumer needs and trends like we've never been able to before. Improvements are being supported by substantial refinements to our IT infrastructure for a more integrated operational environment, where we are making great progress. Specifically, customer service also gained increased cross-channel integration using our new CRM platform. Year-to-date 2023, our customer care team has seen meaningful improvements to their core KPIs. As we execute on these operational efficiencies, we will also gain better monetization of our overall marketing efforts. Our second priority in enhancing the consumer experience is to restructure our brand architecture. Charlotte's Web is number one in consideration, purchase intent, and loyalty in CBD, according to the latest survey by the Brightfield Group. It's critical to streamline our universe of products and brands for easier navigation and take advantage of our leading brand equity under a unified brand presence. We've engaged a brand agency partner to work with our team on refreshing the brand so that we can update our look and feel to meet the market where it's at and create consistent packaging across our family of products, including Charlotte's Web, CBDMEDIC, CBD CLINIC, and ReCreate. Specific to our ReCreate broad-spectrum brand, as a part of our brand consolidation, it includes a shift that we have undertaken to absorb ReCreate as part of the Charlotte's Web brand family. Our experience with the ReCreate brand, coupled with insights from our marketing initiatives, has guided this decision. This leverages our leading brand recognition and trust for more effective penetration into the active lifestyles market segments. This also leverages the valuable sporting partnerships we have with the Premier Lacrosse League, Major League Baseball, and Angel City FC for marketing NSF-certified for sports products. Let's touch base on another True North goal: reinforcing and growing brand partnerships. To grow our existing B2B partnerships, we are prioritizing the right mix of stores and adopting a similar approach to guide the consumer retail experience. Our strategy will include paid media and email campaigns while also focusing on content marketing, socials, and SEO. This approach will be tailored to meet the unique needs of each retail partner while maintaining brand consistency across the product portfolios. In addition, we're proud to have partnered with two powerful veterans organizations that are passionate about bringing CBD to their community. We look forward to reporting on our initiatives with first, the Grunt Style Foundation, the nonprofit arm of their major apparel company that serves the active military and veteran community. Through their programs, they are committed to mental health and wellness, transition, and sustainment to help veterans deal with pain and PTSD. And secondly, Irreverent Warriors, a Grunt Style Foundation program whose mission is to bring veterans together through humor and camaraderie to improve mental health and suicide prevention. Millions of veterans are demanding natural options to support well-being for pain management, mental health, and overall quality of life. Non-intoxicating hemp CBD has become a real-life-changing tool for so many of them. The last True North pillar I'm going to talk about today is reinforcing and amplifying CW's influential voice. Through a new, exciting e-commerce and marketing initiative, Charlotte's Web is showing up in millions of American homes through connected TV commercials, which is known as CTV. Thus far, our commercials have reached more than 1.4 million households. By targeting consumer segments across the country on top broadcast and cable streaming platforms, we are already seeing positive returns on CTV ad spend. Many of these segments are experiencing CBD content for the very first time. And this top-of-funnel activity has triggered an increase in daily web traffic, and we are just getting started. And finally, this month, we have launched a new innovative product for an in-demand consumer need: the Stay Asleep CBN Gummies. It's the first CBN product backed by peer-reviewed research for superior efficacy, featuring a 20 mg dose of CBN, a sleep-enhancing cannabinoid. This demonstrates how we are leveraging our brand trust to go beyond CBD. Our goal is not only to lead in health and wellness but also to become a key player in the broader botanical wellness sector over time. We will continue to expand our business into other botanical wellness products and even life-changing botanical drug development, which is currently underway through our partnership in DeFloria, as we've mentioned on previous calls. So in closing, True North is built for a turnaround in growth and profitability. Internally, we have shaken things up and turned strategy into action. As we steer the business back on track, this upcoming phase marks a crucial moment for Charlotte's Web. All of us extend our deep gratitude to our shareholders for their steadfast patience and backing. With the True North strategy in place, I'm energized by the opportunities on the horizon and will now take questions from our analysts. Thank you. Ladies and gentlemen, we will now begin the Q&A session. Should you have a question, please press star one on your telephone. You will hear a three-tone prompt acknowledging your request and your questions will be pulled in the order they are received. Should you wish to decline from the pulling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Luke Hannan with Canaccord Genuity. Please go ahead. Thanks, and good morning, everyone. We'll start with, can you give us a sense of the magnitude of the price reduction that you took across the portfolio in Q1 of this year? Was it similar across all price points, or were there some SKUs or channels maybe that were more impacted than others? Hey, Luke. It's Jessica. I can take that one. The price decrease was an approximate 25% cut across the tinctures. It ranged anywhere from a $2 decrease to a $75 decrease, depending on both the strength and size. It was completed to position us competitively, drive value, and really maintain quality as well. We positioned the lower ML per milligram to be highly competitive to drive every price point, trial, and accessibility. Specifically, just getting into the details, we did a really deep dive analysis in both e-commerce and B2B against CW and our competitors with the purpose of empowering the consumers to get the actual wellness that they deserve. It's important to note that tinctures still hold the number two spot outside of gummies, with the overall product segment about 16% of the share. That's great. Thanks for that. And maybe if we'll shift gears a little bit, the upgrading of the e-commerce platform. It sounds like there's a lot of good stuff going along there. How far along is that process, I guess? When might we expect that to be completed? And I'm not sure if it's concurrent or if it's sort of an all-at-once situation, but to the extent that it's the former, any notable trends that you're noticing with some of the changes that you've made to the platform so far? Yeah, great question. So again, this only launched about mid-February for D2C and the beginning of March for B2B. What I can say is the initial reaction is really positive. We have seen an uptick in terms of volume. However, I'd say it's probably too soon to give it any more than that. We're closely monitoring it. My team's working really closely with the sales guys. In terms of kind of where we're going, though, we're actively evaluating everything, not only for price competitiveness, but also we're looking at the milligrams per serving and line prices as we continue to innovate and launch new product lines that Bill kind of talked about. Great. Last one for me, and then I'll pass the line. Just on your cost base here, where else within your cost base do you see potential to take dollars out? I'll take that one. I want to level set us here just a little bit. I think it's important for us to note that we're not in purely cost-cutting mode. There are ways, I'm fully transparent, that we can deploy our cash better and increase our return on investment. But specifically, we are in the process of doing deep dives on our ROI associated with pretty much all of our discretionary spend. We've made a big focus right now on our marketing, starting with paid media because it's a big chunk of the dollars that we spend. We do have the opportunity, Bill and I have seen, to leverage the highest ROI marketing and invest our dollars specifically there. Additionally, the CTV that Bill mentioned earlier, it's generating such positive returns. It's literally growing every single week. To give kind of a little bit of a cookie crumb on that one, the last six weeks, we've seen the ROAS 6x increase. That's phenomenal. It gives us the opportunity to leverage and expand that top of the funnel and bring in new consumers, which is our overarching goal, and generate revenue growth for our shareholders. So all in all, do I believe that there's better uses of capital? Yes. But I don't want to say that we're strictly cost-cutting, but we are cost-cutting at the same time. We've kind of mentioned it a couple of times between Bill and myself, but the IT stack, it's extremely complicated. There's a strong opportunity for cost reduction due to the inefficiencies within that IT stack specifically. Those cost reductions could be anything from software subscriptions, optimizing our contracts, and exiting software platforms that we could utilize better. I think there's a balance between the two, and we're approaching both in the same light. Got it. Makes sense. Thank you very much. Thank you. Your next question comes from Scott Fortune with ROTH MKM. Please go ahead. Good morning, and thank you for the questions. Just want to follow up. Lots of initiatives and priorities, obviously, with True North, but I want to dig into kind of sequential, correlate pickup in Q4. I get a sense how much of the top line, 11% growth, was seasonal versus kind of these initiatives you put in place to drive that incremental growth. Just get a sense of you spoke about a little bit on the e-commerce initiatives and the focus of increasing traffic and engagement there. But want to just kind of obviously, there's still challenges to remain in category, but are you seeing or expecting continued pickup, sequencing DTC, as you revamp this e-commerce platform in place here? Or was Q4 really strong because of the holidays and such that? Just provide additional color on the progress you guys are making and expectations as you move through 2024 here. Hey, Scott. It's Bill. Thanks for the question. Yeah, I mean, obviously, there's seasonality built into Q4. But just looking at the metrics that we can see as it relates to DTC, I feel very confident that we're taking all the right steps on DTC that are going to bear fruit for us as we move forward. Jessica was referring to the IT stack earlier. That's really at the nexus of where the prioritization is because until the IT stack is sorted out, you can't layer on top of that the marketing stack that you use to do all the things that were in the process of deploying for customer acquisition, generating loyalty, incremental sales, subscription, etc. So we have made really good headway on reconfiguring the IT stack initially so that we've been able to deploy a new CRM system, which candidly has been lacking. It's very difficult to do targeted marketing without a proper CRM infrastructure. So that's now in place. I'll call it the next big unlock is the Shopify platform, so a new e-commerce platform that will deploy in Q2. And with that comes a whole set of tools that allows us to do things that we're not able to do today. Great. No, I appreciate the color there. Real quick on the MLB extension through 2027, congrats on that. But can you provide any additional color there and kind of expectations with the partnership moving forward? That That does kind of smooth out your costs over the next four years from that standpoint, correct? Yeah, that's exactly right. So all of our partnerships, whether it be MLB, PLL, FC, or others, are multi-year partnerships that we engage in or attempt to engage in. So with MLB, let me first just say they are a fantastic partner, and their willingness to work with us to create win-wins is greatly, greatly appreciated by us. So by extending that out by a couple of years, our existing agreement, as you mentioned, it flattens out the cost structure associated with it, but it also gives us time to work together to come up with the type of activation that's in both parties' interest to really drive not only sales for us but great awareness for the MLB brand and associate it in a positive way. I would say potentially a nice improvement for 2024 is that we are not wasting a second, and our activations and our strategies begin with the first pitch thrown in March, and it'll end with the last out in October. So we're really, really dialed in on all of the things that we need to do to fully leverage the sponsorship fees associated with it. Got it. I'll follow up on that. Kind of, you're doing a lot of rebranding here or kind of rationalizing brands, whatever you call it, but kind of with ReCreate. But the overall product portfolio, you continue to expand that with the CBN and Sleep offering there. But you've always had high-quality products kind of really served the health and wellness. But more importantly, the healthcare practitioners channel. Kind of, step us through kind of the consolidation of CBDMEDIC and CBD CLINIC brands under CWEB. And are you looking to put more emphasis on the medical channel, looking to expand there, and just kind of follow up around the ReCreate and the strategy for that priced product now to further penetrate kind of the sports and lifestyle that you mentioned on MLB side of things? That'd be helpful. Yeah, sure, Scott. Let me break those apart a little bit because a couple of things in there. I just want to make sure I hit on them all kind of independently there. So on the branding, what we're referring to as two components, it's a redesign of the branding architecture, and it's a refresh of the brand look and feel. And they sometimes get conflated, but it's actually two different things that'll come together. So you mentioned CBDMEDIC, CBD CLINIC, ReCreate and our core brands. What we're in the process of doing and stay tuned. We're going to be talking about this very soon when we're able to show this to you. Our philosophy on this is we've kind of showed up with different looks and feels across those. We want that to have a common look and feel. So if you were to see it on a shelf, you'd say, "I got it. That's Charlotte's Web." I know them. There's common trade dress across it. Not that they all have to look alike, but it looks like a common brand family. So that's a big exercise that we're in the process of doing for a whole host of reasons. But as you can imagine, you get a much better return on marketing investment if you can leverage a singular brand across multiple products. So that's the spirit of why we're doing it. As it relates to ReCreate, what we're doing is we're pulling the ReCreate products into a Charlotte's Web branding architecture. Stay tuned for what that naming will look like, but think of it as the same products, same price points, same intentionality with it, but within a different look and feel. To your other question, I think around a bit of our channel strategy, we are continuing to refine our go-to-market strategies as it relates to B2B, so any of those retail partners. We believe that medical is a phenomenal opportunity, and we've got really great growth potential that we're going to lean into more and more in these coming quarters. So more to come on that. Well, good. We'll look forward to it. Thanks. Sure. Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one. There are no further questions at this time. I'll turn the call over back to Cory Pala. Okay. Well, I'd like to thank everybody for attending our call today, and we'll look forward to speaking to you again in May following the release of our Q1 results. Thank you. Ladies and gentlemen, this concludes our conference call for today. We thank you for participating, and ask that you please disconnect your line.