Charlotte’s Web Ends Year With Wider Loss After Taking In US$98 Million Impairment Losses

Charlotte’s Web Holdings (TSX: CWEB) shared this morning its financial results for Q4 and full-year 2021, highlighting a quarterly revenue of US$24.8 million. This is an increase from Q3 2021’s revenue of US$23.7 million but lower than Q4 2020’s revenue of US$26.9 million.

But what’s glaring in the company’s financials is the wider quarterly net loss of US$118.2 million, coming from the net losses of US$0.9 million last quarter and US$14.3 million last year. This is mainly due to recognized impairments of US$76 million related to goodwill and US$22 million of intangible assets.

This crashed down the loss per share to US$0.86, compared to US$0.10 loss per share from a year-ago period.

The Q4 2021 net loss contributed to the company’s US$137.7 million annual net loss for 2021, a huge decline from 2020’s net loss of US$30.7 million. This is despite the annual revenue marginally increasing to US$96.1 million in 2021 from US$95.2 million in 2020.

Corollary, the situation is also far cry from the firm’s status on the big board a year ago. Its shares during the year are currently trading at their lowest since debuting on the Toronto Stock Exchange.

Meanwhile, adjusted EBITDA for the year came in at a loss of US$18.6 million, an increase from last year’s loss of US$23.6 million.

Despite the impairment, CFO Wes Booysen said that the company’s “asset-light approach through partnerships provides efficient and cost-effective global expansion routes to market.”

“Additionally, as part of our recent reorganization, we believe we have right-sized our operating expenses to our current revenue,” Booysen said.

Due to the impairment, the firm ended the year with US$171.5 million in total assets coming from its 2020 balance of US$310.8 million. Cash and cash equivalents balance also shrunk to US$19.5 million from its starting balance at the beginning of the year at US$52.8 million.

But the firm is choosing to look forward, claiming that it is now “fully engaged and [intends to grow its] business.”

“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,” said newly appointed CEO Jacques Tortoroli.

Tortoroli also points to the federal regulations on CBD wellness category as part of the challenges the firm is facing, especially after completing its multi-year investment plan for its production capacity.

“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,” he added.

Charlotte’s Web Holdings last traded at $1.58 on the TSX.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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