Charlotte's Web Holdings (OTC:CWBHF), Inc. (CWEB) reported its fourth-quarter and full-year financial results for 2023 during its earnings call on March 21, 2024. The company's CEO, Bill Morachnick, and CFO, Jessica Saxton, shared details on the company's strategic focuses and financial performance.
Despite a decrease in net revenue to $63.2 million, down 14.8% year-over-year, the company is implementing a turnaround effort named the True North initiative, aiming to transform consumer experience and improve cost efficiencies.
The net loss for the quarter improved to $8.5 million, or $0.06 per share, from a loss of $35.2 million, or $0.23 per share, in the previous year. Charlotte's Web is not solely focused on cost-cutting but is also looking to deploy cash more effectively to increase return on investment.
Key Takeaways
- Charlotte's Web Holdings reported a net revenue of $63.2 million for 2023, a 14.8% decrease from the previous year.
- The company introduced the True North initiative to improve consumer experience and identify cost efficiencies.
- E-commerce revenue decreased by 15.9% to $42.6 million, while B2B net revenue fell 12.4% to $20.6 million.
- Zero-based budgeting and commercial finance integration are part of the effort to reduce expenses and improve cash flow.
- The in-sourcing of topicals and gummy manufacturing is expected to begin commercial runs in Q4.
- A new product, the stay asleep CBN gummy, has been launched to meet consumer demand.
Company Outlook
- Charlotte's Web aims to enhance consumer experience, particularly through e-commerce.
- The company plans to leverage improved CRM and IT infrastructure and integrate with retail partners.
- A focus on the B2C segment is expected to drive growth with revamped e-commerce and marketing initiatives.
Bearish Highlights
- Net revenue declined by 14.8% year-over-year.
- E-commerce and B2B revenues saw a decrease in 2023, with e-commerce down by 15.9% and B2B by 12.4%.
Bullish Highlights
- The company is seeing a 6x increase in ROAS on CTV advertising over the past six weeks.
- The partnership with MLB has been extended through 2027, expected to help flatten costs and boost sales.
Misses
- The net loss for the quarter was $8.5 million, although this was an improvement from the previous year's $35.2 million loss.
Q&A Highlights
- The company is conducting deep dives into ROI for discretionary spending, focusing on marketing and paid media.
- Cost reduction opportunities, particularly in the IT stack, are being explored.
- Charlotte's Web is rebranding and consolidating its product portfolio under a common look and feel.
Charlotte's Web Holdings, Inc. is actively pursuing a strategy that balances cost reduction with strategic investments aimed at long-term growth. The company's updated mission and the True North initiative reflect a commitment to becoming a leading name in the wellness space, with a particular focus on enhancing the consumer journey and leveraging data analytics. The extension of the MLB partnership and the in-sourcing of manufacturing are steps towards a more streamlined and profitable operation. As Charlotte's Web continues to navigate the competitive wellness market, investors and consumers alike will be watching closely for the impacts of these strategic moves on the company's performance. The next update on the company's progress will be provided with the release of Q1 results in May.
InvestingPro Insights
Charlotte's Web Holdings, Inc. (CWEB) has made headlines with its latest earnings report, and investors are keen to understand the nuances behind the numbers. Here's a snapshot of the company's financial health, based on real-time data and insights from InvestingPro:
InvestingPro Data:
- Market Cap (Adjusted): 27.83M USD
- P/E Ratio (Adjusted) last twelve months as of Q3 2023: -0.5
- Revenue last twelve months as of Q3 2023: 66.18M USD
InvestingPro Tips:
- Charlotte's Web is currently trading at a low revenue valuation multiple, which could be an indicator of potential undervaluation relative to its peers.
- Despite recent challenges, the company has experienced a significant return over the last week, suggesting a possible turnaround in investor sentiment.
For investors looking to delve deeper into Charlotte's Web's financials and future prospects, there are additional InvestingPro Tips available. Currently, there are 12 more tips listed on InvestingPro, which can provide further guidance on whether Charlotte's Web stands as a prudent investment. To access these insights and more, visit https://www.investing.com/pro/CWBHF and remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Full transcript - Charlottes Web PK (CWBHF) Q4 2023:
Operator: Good morning, ladies and gentlemen and welcome to the Charlotte’s Web Holdings, Inc. 2023 Fourth Quarter Conference Call. [Operator Instructions] This call is being recorded on Thursday, March 21, 2024. I would now like to turn the conference over to Cory Pala, Head of Investor Relations. Please go ahead.
Cory Pala: Thank you and good morning, everyone. Thank you for joining us for our 2023 fourth quarter 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 sedarplus.ca 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 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. And 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 to 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.
Bill Morachnick: Thanks, Cory and good morning, everyone. So let’s jump right in. I’ve been with the company for almost 7 months now and there are four key things that we have 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. So we have not wasted any time restructuring our teams, recalibrating our shared goals and strategically planning how we reach them. And all of this is fueled by a clear purpose, our commitment to education, advocacy and innovation, which is never waver. With this, we realized it was time to update our mission to reinforce our legacy and leadership position and to find our path for tomorrow. I am 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 will 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’s better way to describe where we are going and calling our reimagined business vision, True North. This is a company-wide turnaround initiative that every employee has the 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 reinforced 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 and 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. So 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.
Jessica Saxton: 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 1. This was accomplished with a steadfast commitment to data analytics and strategy. Remember, these are the products that help Charlotte’s biggie and ignited a movement that has benefited millions. 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 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 on to 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 needed 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 fourth quarter 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 boost margins. I’ll speak more about this shortly. Turning to the fourth quarter 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’ve simplified user flows and engaged real-time testing and analysis to confirm tracking success. E-commerce continues to represent approximately 2/3 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 fourth quarter 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 mission. 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 minus $0.06 per share compared to a net loss of $35.2 million or minus $0.23 per share last year. Q4 cash flow was negative $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 3-year financial plan, a critical step in our long-term planning, providing a clear road map 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. And 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 2 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 in-sourcing 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. So 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.
Bill Morachnick: 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 the cornerstone of our business is essential to expand its reach capitalize in every consumer touch point 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. And 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 improved CRM IT SAC that can tailor content for very specific demographic and psychographic profiles. That means providing compelling educational 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 universe of products and brands for easier navigation and take advantage of our leading brand equity under a unified brand presence. We’ve engaged the brand agency partner to work with our team on refreshing the brand so 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, CBD Medic, CBD Clinic and Recreate. Specific to our Recreate Broad spectrum brand, as a part of our brand consolidation 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 lifestyle market segments. This also leverages the valuable sporting partnerships we have with the U.S. Premier Lacrosse League, Major League Baseball and Angel City FC from 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 e-mail 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 non-profit 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 comradery 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 some of them. The last True North pillar I’m going to talk about today is reinforcing and amplifying CW’s influential voice. 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 gummy. It’s the first CBN product backed by peer-reviewed research for superior efficacy featuring our 20-milligram 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 into 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 patients in backing. With the True North strategy in place, I’m energized by the opportunities on the horizon, and we’ll now take questions from our analysts.
Operator: Thank you. [Operator Instructions] Your first question comes from Luke Hannan with Canaccord Genuity. Please go ahead.
Luke Hannan: Thanks and good morning, everyone. Can you will 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 use or channels maybe that were more impacted than others?
Jessica Saxton: 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 $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 DWR 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.
Luke Hannan: That’s great. Thanks for that. And maybe we will shift gears a little bit. The upgrading of the e-commerce platform, it sounds like there is a lot of good stuff going on there. How far along is that process? I guess when might we expect that to be completed? And I am 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 are noticing with some of the changes that you have made to the platform so far.
Jessica Saxton: Yes. Great question. So again, this is only launched about mid-February for D2C, in 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 would say it’s probably too soon to give any more than that. We are closely monitoring it. My team is working really closely with the sales guys. In terms of kind of where we are going though, we are actively evaluating everything, not only for price competitiveness, but also we are 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.
Luke Hannan: Great. Last one for me, and then I will pass the line. But just on your cost base here, where else within your cost base, do you see potential to take dollars out?
Jessica Saxton: I will 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 are not in purely cost-cutting mode. There are ways, I am 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 have made a big focus right now in 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 have seen the ROAS [ph] 6x increase. That’s phenomenal. And it gives us the opportunity to lever 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 is better uses of capital, yes. But I don’t want to say that we are strictly cost cutting, but we are cost cutting at the same time. And we have kind of mentioned a couple of times between Bill and myself, but the IT stack, it’s extremely complicated. There is a strong opportunity for cost reduction due to the inefficiencies within the IT stack specifically. Those cost reductions could be anything from software subscriptions, optimizing our contracts and exiting software platforms that we could utilize better. So, I think there is a balance between the two, and we are approaching both in the same way.
Luke Hannan: Got it. It makes sense. Thank you very much.
Jessica Saxton: Thank you.
Operator: Your next question comes from Scott Fortune with ROTH MKM. Please go ahead.
Scott Fortune: 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 quarterly pickup in 4Q. I guess since how much of the top line of 11% growth was seasonal versus kind of the 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 I wanted to just kind of – obviously, there are still challenges to remain in category, but are you seeing or expecting continued pickup sequentially B2C as you revamp the e-commerce platform in place here, or was 4Q really strong because of the holidays and such that, just provide additional color on the progress you guys are making expectations as you move through 2024 here?
Bill Morachnick: Hey Scott, it’s Bill. Thanks for the question. Yes, I mean to – obviously, there is seasonality built into Q4. But just looking at the metrics that we can see as it relates to D2C, I feel very confident that we are taking all the right steps on D2C 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, etcetera. So, we have made really good headway on reconfiguring the IT stack initially so that we have 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. The next – I call it the next big unlock is the Shopify (NYSE:SHOP) platform, so a new e-commerce platform, that we will deploy in Q2 and with that comes a whole set of tools that allows us to do things that we are not able to do today.
Scott Fortune: Great. 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 does kind of smooth out your costs over the next 4 years from that standpoint, correct?
Bill Morachnick: Yes, that’s exactly right. So, all of our partnerships, whether it would be MLB, PLL, FC, or others, are multiyear 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 for – 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 associated 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 will end with the last out in October. So, we are really, really dialed in on all of the things that we need to do to fully leverage the sponsorship fees associated with it.
Scott Fortune: Got it. And a follow-up on that kind of you are doing a lot of rebranding here or kind of rationalize the brands, whatever you call, but kind of what ReCreate, but the overall product portfolio, you continue to expand that with the CBD and keep our offering there. But you have always had high-quality products and it really serves the health and wellness. But more importantly the healthcare practitioners channel, kind of step us through kind of consolidation of CBD Medic and CBD Clinic brands under CWEB, and are you looking to put more emphasis on medical channel, or can you expand there? And just kind of a follow-up around the ReCreate and the strategy for that price product now to further penetrate kind of the sports and lifestyle that you mentioned on MLB side that would be helpful.
Bill Morachnick: Yes. 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 are 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 some – they sometimes get conflated, but it’s actually two different things that will come together. So, as you mentioned CBD Medic, CBD Clinic, ReCreate and our core brands, what we are in the process of doing and stay tuned, we are going to be talking about this very soon when we are able to show this to you. Our philosophy on this is we have 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 would say, I got it, that’s Charlotte’s Web. I know then there is 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 are 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 are doing it. As it relates to ReCreate, what we are doing is we are pulling to ReCreate products into Charlotte’s Web branding architecture, stay tuned for what that naming will look like. But think of it as the same product, 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 have got really great growth potential that we are going to lean into more and more in these coming quarters, so more to come on that.
Scott Fortune: Good. We will look forward to it. Thanks.
Bill Morachnick: Sure.
Operator: [Operator Instructions] There are no further questions at this time. I will turn the call over back to Cory Pala.
Cory Pala: Okay. Well, I would like to thank everybody for attending our call today and we look forward to speaking to you again in May following the result of – the release of our Q1 results. Thank you.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Goodbye.
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