LOUISVILLE, Colo., May 8, 2024 /CNW/ - (TSX:CWEB) (OTCQX:CWBHF), Charlotte's Web Holdings, Inc. ("Charlotte's Web" or the "Company"), the market leader in full-spectrum hemp extract wellness products, today reported financial results for the first quarter ended March 31, 2024. "The first quarter of 2024 started slowly in terms of sales volume. This is being addressed with solid progress in our 'True North' turnaround initiatives," said Bill Morachnick, Chief Executive Officer of Charlotte's Web. "For example, our legacy e-commerce platform limits our ability to be agile in executing marketing strategies and promotions quickly. In Q1, we pulled down spend on our paid media in order to evaluate each program and identify the highest performing campaigns moving forward. We are on schedule to launch our new e-commerce platform migration in Q2, enabling more effective tools and agility. Additionally, we are excited about our recent innovation launch, 'Stay Asleep' CBN gummies, which have received a positive response from consumers and showcase the importance of our R&D and innovation pipeline, which we expect to expand in the latter half of 2024." Business Review Charlotte's Web has made steady progress on its previously disclosed 'True North' pillars and the Company will be providing updates quarterly. Transforming the Consumer Experience End-to-End – The migration of the Company's e-commerce platform is on track for launch by the end of Q2 2024. This migration is designed to enhance the consumer journey and increase consumer engagement, acquisition, and subscriptions. This is being integrated with IT upgrades and Customer Relationship Management (CRM) tools for increased functionality and reduced costs. Improved loyalty programs and promotions introduced during the first quarter have increased new subscriber growth by approximately 25% quarter over quarter, with retention rates above 90%.  Be the Most Trusted and Valued Partner Among Retailers and Distributors – In the first quarter, the Company redesigned its business-to-business ("B2B") division from both an overall cash flow performance basis and a strategic perspective to better serve retailers within the current regulatory environment. As part of this evolution, the Company has redirected part of its focus to the opportunities within the Medical channel, which continues to show relative resilience. These actions modestly reduce revenue; but more importantly, aim to improve overall annual cash flow. New wellness products and formats are planned for 2024 following the successful Q1 launch of Charlotte's Web "Stay Asleep" Cannabinol (CBN) gummies. Since the launch, 48 of the Company's top 50 retail accounts have committed to carrying Stay Asleep, which is launching at retail across the country in Q2. Reinforce and Amplify CW's Influential Voice – At the beginning of the year, Charlotte's Web evolved its organic social and earned media strategies, complemented by new product innovation beyond CBD. The Stay Asleep campaign reignited Charlotte's Web's earned media presence, resulting in a 26 million media reach through consumer-facing press and earned social media influencer posts. Organic social media impressions were up 32% in the first quarter, while reach per post was up 55%. Continue to Identify Cost and Operating Efficiencies – Several actions were taken in the quarter to optimize the Company's cost structures and reduce expenses to be more reflective of current revenue levels. In addition to redesigning the overall B2B channel, the new e-commerce platform and IT upgrades are eliminating inefficiencies, such as unnecessary software subscriptions and contracts. Through prudent expense reductions, management targets a reduction in SG&A of approximately $15 million in 2024 versus prior year. In-house manufacturing of topicals and gummy products is scheduled to begin commercial production in Q4 2024, which will further enhance operational efficiency and cash flow.  "Given our current revenue challenges, we continue to act with agility to further optimize cost structures across the company, streamline operations, and eliminate inefficiencies," said Jessica Saxton, Chief Financial Officer. "We are optimistic about the impact of these initiatives and expect to see an improvement in our SG&A for the full year." DeFloria LLC ("DeFloria") Update In March 2024, DeFloria successfully completed all participant dosing for its Phase 1 clinical trial program. The resulting trial data is being processed and will be included in an IND (investigative new drug) submission to the FDA this year. Pending a positive outcome from the FDA regarding the IND submission, Phase 2 clinical trials are anticipated to commence shortly thereafter.  DeFloria (see April 6, 2023 press release), is a botanical drug development company formed in partnership with a subsidiary of British American Tobacco PLC (NYSE:BTI), and AJNA BioSciences PBC to pursue a botanical IND through the FDA drug development pathway for a botanical drug to target a neurological condition. Regulatory Update   Progress has been encouraging surrounding The Hemp Derived Consumer Protection and Market Stabilization Act of 2023, (H.R. 1629) which aims to regulate hemp extract products under the dietary supplement regulatory framework. Bill sponsors are updating their legislation to address issues raised during last year's Request for Information. Coalition for Access Now and the industry working group ONE HEMP are actively working towards committee hearings over the summer to potentially align H.R. 1629 with must-pass legislation.  Financial Review – Q1 2024  The following table sets forth selected financial information for the periods indicated.  Three Months Ended, March 31,  U.S. $ millions, except per share data  2024 2023 Revenue  $12.1 $17.0 Cost of goods sold  5.2 7.1 Gross profit  6.9 9.9 Selling, general and administrative expenses  15.3 17.5 Operating loss  (8.4) (7.6) Other income (expense), net  0.6 (0.7) Change in fair value of financial instruments and other  (1.9) 5.4 Income tax expense  - - Net loss  $(9.7) $(2.9) Net loss per common share, basic and diluted  $(0.06) $(0.02) Consolidated net revenue for the first quarter ended March 31, 2024, was $12.1 million, as compared to $17.0 million in the first quarter of 2023, with both retail and e-commerce revenues lower year-over-year.  Overall, CBD industry growth remains below expectations due to ongoing headwinds in the category, including regulatory ambiguities at the federal and state levels, associated consumer confusion, and competitive crowding and pricing pressures. Gross Profit was $6.9 million, or 57.0% of revenue, as compared to gross profit of $9.9 million, or 58.3% of revenue in the first quarter of 2023.  Maintaining healthy gross margins despite lower revenue was primarily supported by manufacturing efficiencies and improved cost of goods sold, despite lower year-over-year sales volume. Three Months Ended     Segmented Net Revenue March 31,  2024 2023 % Decrease Direct-to-consumer ("DTC") net revenue  $7.8 $11.3 (31.0) % Business-to-business ("B2B") net revenue $4.0 $5.7 (29.6) % Direct-to-consumer net revenue through the Company's web store was $7.8 million, a decrease of $3.5 million as compared to $11.3 million in Q1 2023, primarily driven by lower sales volume. This was attributable to lower organic traffic and consumer acquisitions partially due to competitive online discounting pressures. First quarter sales volumes are typically seasonally softer due to consumer stocking during fourth quarter holiday promotions. In the first quarter, the Company also reduced spend on paid media in order to update the attribution of each program and evaluate the highest performing campaigns. The Company plans to launch a new e-commerce platform during the second quarter of 2024 to transform the consumer experience. This will enable more effective paid media, improved search, navigation, and filtering capabilities and provide a more engaging experience to guide consumers to find the right products. Business-to-business retail net revenue was $4.0 million, as compared to $5.7 million in Q1 2023. The $1.7 million decrease was primarily due to the reductions in retail shelf space allocated to the CBD category that occurred in 2023. Some of the Company's mass retail partners fully exited the CBD category, increasing the year-over-year revenue decline. The decrease in retail revenue was partially offset by service revenue of $0.3 million. Charlotte's Web remains the market share leader in combined SPINs, LLC and IRI measurements of total retail, with the leading brand position in trust and loyalty according to the latest surveys by the Brightfield Group.  SG&A Expenses  Total selling, general, and administrative ("SG&A") expenses in the quarter were $15.3 million, a 12.8% improvement versus $17.5 million in Q1 2023. SG&A included MLB© license and media rights amortization of $1.0 million during the quarter, a decrease compared to $1.8 million in Q1 2023. To better align SG&A with current revenue levels, the Company has taken actions to significantly reduce expenses company-wide in 2024 by approximately $15 million versus prior year, through headcount reductions, operating efficiency improvements, and stringent cost controls. Net Income and Adjusted EBITDA1  Charlotte's Web reported a net loss of $9.7 million, or ($0.06) per share basic and diluted, for the first quarter of 2024, as compared to a net loss of $2.9 million, or ($0.02) per share basic and diluted, for the first quarter of 2023. Adjusted EBITDA1 loss for the first quarter of 2024 was $4.0 million, compared to Adjusted EBITDA loss of $3.3 million in the first quarter of 2023. Cash Flow and Balance Sheet  Net cash used for operations for the three months ended March 31, 2024, was $7.2 million. This included $2.5 million for MLB© license and media rights assets. The period also included $2.1 million of capital expenditures, mainly attributable to the transition to in-house production of topical and gummy products. "Excluding MLB and capex, our cash burn was approximately $4.7 million for the quarter," said Mrs. Saxton. "We continue to take actions to minimize cash burn, understanding it is the lifeblood of our business, maintaining a philosophy that 'cash is king.'  As we improve consumer satisfaction, eliminate inefficiencies and reduce overhead, we believe we have sufficient working capital to meet our near-term objectives."  The Company's cash and working capital as of March 31, 2024, were $38.5 million and $48.6 million, respectively, compared to $60.8 million and $78.5 million on March 31, 2023, respectively.  Consolidated Financial Statements and Management's Discussion and Analysis  The Company's unaudited consolidated financial statements and accompanying notes for the three months ended March 31, 2024, and 2023, and related management's discussion and analysis of financial condition and results of operations ("MD&A"), are reported in the Company's 10-Q filing on the Securities and Exchange Commission website at www.sec.gov and on SEDAR+ at www.sedarplus.ca and will be available on the Investor Relations section of the Company's website at