Charlie’s Holdings: 58% Revenue Growth First Half 2022

Charlie’s Holdings, parent to Charlie’s Chalk Dust e-liquids, says its best-selling e-liquids are in the substantive review phase of the U.S. Food and Drug Administration’s premarket tobacco product application (PMTA) process.

The company remains in the select minority of 2020 PMTA submissions that are still viable; the company also submitted PMTAs for more than 700 additional products prior to the May 14, 2022 FDA deadline, according to a press release. Prior to the FDA’s May 14 deadline, Charlie’s successfully filed new PMTAs for its synthetic nicotine Pacha Syn products.

“Charlie’s positive momentum continued in the second quarter and first half of 2022, highlighted by our 36 percent and 58 percent year-over-year revenue growth,” stated Matt Montesano, CFO for Charlie’s Holdings. “We continued to diversify and expand Charlie’s robust product line, as represented by our new 12ml Pacha Syn Disposable line and our refreshed Pacha Syn e-liquid line, both of which launched in the second quarter of 2022.

“At the same time, we continued to operate the business with tight fiscal controls, as demonstrated by our further reduction of operating expenses, as a percentage of revenue, to 46 percent during the second quarter.”

Financial Results for the Six Months Ended June 30, 2022:

• Revenue: For the six months ended June 30, 2022, revenue was $15.5 million, an increase of $5.7 million, or 58%, compared with $9.8 million for the same period last year. The increase in revenue was primarily due to a $4.8 million increase in sales of our nicotine-based vapor products and a $0.9 million increase in sales of our hemp derived products. The increase in our nicotine-based vapor product sales was driven by sales of our new 8ml Pacha Syn Disposable line, which launched in December 2021, as well as our 12ml Pacha Syn Disposable and refreshed Pacha Syn e-liquid lines, both of which launched in the second quarter of 2022.
• Gross Profit: For the six months ended June 30, 2022, gross profit was $6.5 million, an increase of $1.4 million, or 28%, compared with $5.1 million for the same period last year. The resulting gross margin was 41.9%, compared with 51.6% for the same period in 2021. The decrease in gross margin is primarily due to an increased percentage of our sales coming from Charlie’s Pacha Syn Disposable product line, which carries a lower unit margin relative to the Company’s other products, as well as comparatively higher freight and delivery expenses and a larger reserve for inventory obsolescence related to certain of our retired hemp-derived wellness products.
• Total Operating Expenses: For the six months ended June 30, 2022, total operating expense, including general and administrative, sales and marketing expense and research and development costs, were $6.7 million, an increase of $1.2 million, or 22%, compared with $5.5 million for the six months ended June 30, 2021. The increase in operating expenses was primarily attributable to sales and marketing costs related to enhanced trade-show activity during the quarter in furtherance of our plan to grow market share across the nicotine and hemp-derived product categories and $0.8 million in research and development costs associated with our 2022 PMTA submissions. Operating expenses as a percentage of revenue decreased to 43%, from 56%, for the periods compared.
• Operating Loss: For the six months ended June 30, 2022, operating loss was $0.2 million, a decrease of $0.2 million, or 51%, compared with an operating loss of $0.4 million for the six months ended June 30, 2021.
• Net Income/Loss: For the six months ended June 30, 2022, net income was $0.1 million, compared with a net loss of $0.4 million for the six months ended June 30, 2021.