Charlotte's Web (CWBHF) investor relations material

Executive summary

• Revenue for Q2 2026 was $10.9M, down 15.2% year-over-year, reflecting a strategic shift to a distributor model and retail channel restructuring.

• Gross profit decreased 13.9% to $5.2M, but gross margin improved to 47.5% due to improved product and channel mix.

• Operating loss was $4.4M, with a net loss of $4.1M for the quarter, both improved from the prior year.

• Major transaction: On May 28, 2026, a C$75.3M convertible debenture and accrued interest were converted into 95.3M common shares, and a concurrent $10M equity investment was completed, resulting in BAT holding 40.6% of shares and eliminating the largest liability.

• The company continues to focus on cost containment, product innovation, healthcare integration, and expansion into new wellness categories.

Financial highlights

• Q2 2026 revenue: $10.9M (down 15.2% YoY); six-month revenue: $22.0M (down 12.2% YoY).

• Gross margin for Q2 2026: 47.5% (up 70 bps YoY); six-month gross margin: 47.1% (down 160 bps YoY).

• Operating loss Q2 2026: $4.4M; net loss Q2 2026: $4.1M ($0.02 per share).

• Cash and cash equivalents at June 30, 2026: $14.0M, up from $8.0M at year-end 2025.

• Total liabilities reduced by 74% to $20.3M; shareholders’ equity increased to $56.1M from a deficit.

Outlook and guidance

• Management expects continued cost containment, operating efficiency improvements, and gross margin expansion toward a 50% target as in-house manufacturing scales.

• Liquidity is considered sufficient for the next 12 months, with additional capital available if needed.

• Strategic focus remains on expanding medical channel initiatives, healthcare integration, and new product categories.

• SG&A expected to remain around $10M per quarter.

• Anticipates continued improvement in cash flow profile due to cost reductions and elimination of interest expense.