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21% Increase in DehydraTECH Licensing Revenues vs. Same Quarter Year Ago
Added Major New DehydraTECH Licensing Deal with
Leading Multi-State Operator MariMed Inc. , the Result of Significant Product RD and Manufacturing Development Efforts in the Quarter5% Growth in Vin(Zero) Alcohol-Free Wine Depletions (Case Sales from Distributor to Canadian Retailers) for the Fiscal Year to Date vs. Same Period Year Ago
Secured
Major New Vin (Zero) Retail Distribution, Adding the Largest Grocery Retailer inWestern Canada -Save-On-Foods - to Our Base of Vin(Zero) CustomersNarrowed Net Loss for the Period by Almost Half, Improving a Full 49% vs. Same Quarter Year Ago
21% Increase in DehydraTECH Licensing Revenues vs. Same Quarter Year Ago
Our DehydraTECH licensing revenues (in USD) increased 21% in the quarter vs. year ago, as our strong ecosystem of licensees continued to drive sales in their existing state footprints and licensee 1906 expanded their DehydraTECH-powered ‘Drops’ products to
Subsequent to the quarter end, 1906 also launched an exciting new direct-to-consumer (DTC) initiative across a majority of US states, offering hemp-derived Delta-9 THC micro-dose versions of their popular ‘Drops’ products, which are also produced using DehydraTECH. This DTC launch expanded access of 1906 Drops varieties to a much broader footprint of consumers, adding DTC distribution across approximately 36 states to the current dispensary availability of the higher dose, marijuana-derived delta-9 THC 1906 Drops in
Added Major New DehydraTECH Licensing Deal with
The quarter was also a period of intensive R&D, product and commercial manufacturing development, culminating in the
Over the next few months, MariMed will roll out the improved DehydraTECH products, including‘Vibations™’all-natural, full-spectrum cannabis drink mix and ‘K Fusion™’ chewable tablets, in
This new addition to our DehydraTECH licensee ecosystem represents continued expansion by Hill on the key factors driving the growth agenda of our DehydraTECH licensing business:
new licensees– increasing our base of active licensees and brands;
new states– new state launches expanding the geographic coverage for active licensees or brands;
new product form factors– innovation to expand the number of DehydraTECH-powered consumer product forms and types in market to fill consumer needs and occasions; and
deeper penetration of products across operations– driving deeper penetration of the breadth of product forms and brands across current and new states.
The following chart shows the significant advances we have made year-over-year in the DehydraTECH licensing business, beginning from the
5% Growth in Vin(Zero) Alcohol-Free Wine Depletions (Case Sales from Distributor to Canadian Retailers) for the Fiscal Year to Date vs. Same Period Year Ago
As outlined in earlier communications, we transformed our Vin(Zero) alcohol-free wine business model at the end of FY 2022, with major adjustments across all the key areas of production planning, shipping and logistics, warehousing, sales and retail distribution. These changes have led to several key positive financial impacts:
shortened our order-to-cash cycle;
reduced the level of working capital that we hold in finished goods inventory;
reduced warehousing and transportation costs with streamlined distribution;
Reduced the need for more expensive temperature-controlled containers for our products as our forecasting, operations planning, and inventory logistics models create a more efficient shipping cycle.
As also previously communicated, this new streamlined commercial model creates a new and different cadence to the business. More dramatic periodic swings in both our inventory order patterns and our recognized revenues are planned based on more efficient supply chain logistics, and the business results must be looked at differently across longer time frames. We now place inventory procurement orders less frequently, but more rapidly convert those orders to revenues on the P&L and cash on the balance sheet.
As we expected, there were no major shipment arrivals nor their resulting recognized revenues in this quarter, reflecting the continued new cadence of the business. Last year in the same quarter we did receive a replenishment shipment of one of our SKUs that was reflected in Q1 revenues, so our recognized revenues this year are down 95% in the quarter. However, we have already receivedshipment of a large order that will be reflected in revenues for the FY2024 Q2 period ending
As we adapt to the new cadence of shipments and revenues, a key measure of the underlying business in this new model is our case depletions, which are the sales figures from our distributor to retailers. Case depletions have increased 5% for the fiscal year to date, recovering well from the price increase we implemented last summer that eliminated one of our key merchandising programs at a major retailer. The increase in depletions shows the continued core growth of the business, demonstrating two important sales trends for this business:
New IWSR data shows no/low-alcohol consumption will increase by a third in 10 markets including
Canada by 2026, spearheaded by the growth of no-alcohol products1; andVin(Zero) is the #1-selling brand of alcohol-free wine in the two largest grocery retailers in
Canada .
Secured
In addition to our core organic results in FY 2024 to date, we also secured a major new account in Q1, adding
Narrowed Net Loss for the Period by Almost Half, Improving a Full 49% vs. Same Quarter Year Ago
On a consolidated basis, net revenue declined 36% for the quarter vs. year ago, due as noted to the differing timing of alcohol-free wine shipments and revenue timing patterns between the two years. Despite this decline, gross profit for the quarter declined only 8% vs. year ago, clearly demonstrating the positive impact of the more profitable DehydraTECH licensing business on gross profit. These revenue results, combined with the significant cost reduction measures we have taken have resulted in the net loss for the period improving a full 50% vs. year ago, decreasing from
For the Company’s full financial statements and a comprehensive Company update by way of its Management Discussion and Analysis, please visit the Company’s profile atwww.sedarplus.com.
About
For more information on our business activities visitwww.hillincorporated.com, to learn more about our DehydraTECH cannabis biodelivery technology, go towww.dehydratech-thc.com, or to check out Hill Street Beverage’s award-winning alcohol-free wine line-up and order product to be delivered straight to your home, go towww.hillstreetbeverages.com.
If you wish to sign up for the
For more information, contact:
Email:craig@hillincorporated.com
Phone: 604-609-6154
FORWARD-LOOKING STATEMENTS
Statements in this press release may contain forward-looking information. Any statements in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as “may”, “should”, “would”, “anticipate”, “expects”, and similar expressions. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances, such as future availability of capital on favourable terms, may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The forward-looking statements contained in this press release are made as of the date of this press release. The Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities law.
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1 https://www.theiwsr.com/no-and-low-alcohol-category-value-surpasses-11bn-in-2022/
2 Source:
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