Cv Sciences Inc

It is now my pleasure to introduce your host, Brendan Hawkins. Thank you, sir. You may begin.

Thank you, and good morning, everyone. With us today with prepared remarks are CV Sciences Chief Executive Officer Joseph Dowley and York Rasser Chief Financial Officer. After prepared remarks, we will take questions from the analyst community. I'd like to remind everyone that during this call, management's prepared remarks may contain forward-looking statements. These forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially from those anticipated by CV Sciences at this time. When used in this call, the words anticipate, should, could, estimate, intend, expect, believe, potential, will, project, and similar expressions as they relate to CV Sciences are as such forward-looking statements. Finally, please note that on today's call, management will refer to non-GAAP financial measures in which CV Sciences excludes certain expenses from its GAAP financial results. Please refer to CV Sciences' press release from earlier today for a full reconciliation of its non-GAAP performance measures to the most comparable GAAP financial measures. This morning, the company issued a press release announcing its financial results. Participants who are on this call who may not have already done so may wish to look at the press release as the company provides a summary of the results in this call. The press release may be found at cvsciences.com. I'd like to now turn the call over to CV Sciences' Chief Executive Officer, Mr. Joseph Dowling. Joe?

Good morning, everyone. Thank you for joining our call. This morning, we issued a press release reporting results from our fourth quarter and for the full year ended, December 31, 2024. We are pleased with our Q4 and full year results, especially given the very challenging market and regulatory conditions that our industry faces. In spite of the challenges, we continue to pursue our primary goals, which include increasing the scale of our business, achieving continuous cost efficiency improvement, and with, of course, all this leading to profitability, and positive cash flow for the company. We are very focused on our transition to a global health and wellness company and achieved several milestones in that effort during 2024. Yorg will cover our financial highlights in more detail, but some key points achieved during 2024 included. We generated revenue of 15.7 million for fiscal 2024 compared to 16 million for 2023, year-over-year revenue is slightly down in a very challenging environment. Our gross margin of 45.6% for fiscal year 2024 represents a significant improvement compared to 44.3% for 2023. During 2024, we reduced operating expenses by 5.4% to $9.4 million compared to $9.9 million for 2023. Cost reduction efforts are continuous, and we are constantly looking at areas for greater cost efficiency. We are the number one selling hemp extract brand in the natural product retail sales channel and continue to see market share of the top four brands in the 60% range according to SPINs. the leading provider of syndicated data and insights for the natural, organic and specialty products industry. Our primary goal as a company is to grow profitably. We recognize that greater scale is needed to achieve this goal. Our strategy to grow profitably starts with product innovation, which will include both product line extensions and brand extensions. The second part of our strategy is to grow profitably is to achieve greater cost efficiency, including production insourcing of select form factors. The third part of our growth strategy is to increase scale through M&A. Over the last 15 months, we have completed two acquisitions, cultured foods and elevated soft gels. and continue to evaluate synergistic acquisitions. Let me go into more detail on each of these strategic areas. First, product innovation. During 2024, we launched Plus Health, an all-new line of cannabinoid-free supplements, delivering targeted formulations for optimized health, improved performance, and increased vitality. The initial launch of our Plus Health brand includes three new innovative supplements. Our first new product is Clarity, a cognitive enhancer. Our second is Peace, for help with occasional stress. And third, Reshape, for metabolic support. Our Plus Health product line extension allows us to leverage our existing distribution and infrastructure in both our B2B and B2C channels. provides diversification alongside our traditional cannabinoid supplement and topical products. Consumers and retailers have responded extremely well to these new products, and we are evaluating additional product line extensions under our new Plus Health brand. We expanded our Plus CBD pet line during 2024 with the launch of our new CBD Choose tailored for pets. These new products include PlusCBD pet hip and joint health shoes and PlusCBD pet calming care shoes. These wellness treats are produced at the highest quality level and are supported by extensive research and are now further validated by a landmark study backed by the National Animal Supplement Council, NASC. The NASC is the leading trade association advocating for the health and wellness of companion animals that are given health supplements by their owners. Our distribution of CBD pet products is also increasing. In September 2024, we entered a strategic relationship with Chewy, the preeminent online source for pet products. This relationship has strengthened our pet offering and provides a robust online channel for further pet product innovation. Our acquisition of Cultured Foods over a year ago continues to make progress in its established EU market. One of our goals with this acquisition was to bring similar plant-based products to the US market, leveraging our distribution and infrastructure to increase sales with a brand extension tailored for the US market. Yesterday, We issued a press release announcing the US launch of our new plant-based company and product line, Lunar Fox, which will leverage our success with cultured foods in Europe. Our initial offering includes seven products that provide plant-based alternatives for traditional animal-based proteins, including vegan cheese, egg, and meat products. All Lunar Fox products are vegan, sustainable, and nutritious food alternatives addressing consumer needs for the growing vegan category. The global vegan food market is expected to grow five times by 2030 with millennials and flexitarians as the driving force behind soaring vegan food sales. Our Lunar Fox products are now available at select retailers throughout the U.S. and online at lunarfoxfoods.com. The launch of our Lunar Fox product line represents a key milestone in our transition to a global health and wellness company. The second focus area for achieving profitable growth is cost efficiency. During 2024, we made significant progress to improve cost efficiency, including by reducing our operating expenses by 5.4%, as I mentioned earlier. Also during 2024, we realigned our warehouse fulfillment operations, which resulted in much lower shipping costs during 2024. We continue to work diligently on both cost areas to achieve even greater savings moving forward. Our acquisition of elevated soft gels in May 2024 represents a major opportunity for savings and margin improvement. We have historically outsourced all product manufacturing, which has advantages, but can also result in higher costs and lower margins. Elevated Softgels provides us with not only a functioning contract manufacturing business, but also allows us to insource the company's softgel and tincture manufacturing. This acquisition provides us with operational flexibility, allowing low to large minimum order quantities, MOQs, for our customers and our internal production. This provides for an efficient use of capital and the ability to increase speed to market of new product development for our customers and for our own product innovation. Our strategy with elevated soft gels is twofold. First, to increase the CMO business opportunity, and second, to insource production of all of our soft gel and liquid tincture products. We hope to insource 100% of these form factors before the end of 2025, which we expect will significantly improve our cost structure and gross margins. The third focus area for us to increase scale and grow profitably is to continue our M&A activities. As mentioned during our Q3 earnings call, we retain the Maxim group as our advisor to provide strategic financial and investment banking services. Working with Maxim, we will continue to evaluate inbound and outbound transactions, merger, sale, acquisition, or other options for the company. A few comments on the regulatory front. Regulatory matters continue to be a challenge to our industry. We remain active with numerous advocacy groups, including the US Hemp Roundtable, to provide Congress, the FDA, and other federal and state agencies with data and the information needed to advance sensible legislation for both the hemp and cannabis industries. The absence of federal regulation has led many states to enact regulations that are extremely challenging and costly for companies to comply with. This creates confusion for both retailers and consumers and has established an environment where bad actors are allowed to proliferate. However, we will continue our active involvement at both the federal and state level and will remain persistent in pushing Congress, FDA, and other federal and state agencies to make progress. Many of the challenges in our industry continue, but we are positioning our company to diversify and grow profitably in the current environment. We continue to streamline our operations, increase cost efficiency, and realign the company for growth and profitability. We have made great progress in structuring a very lean, cost-efficient organization that is positioned to leverage our strengths. Let me pause now and I will turn the call over to Jörg.