Late last night, Halo Labs (NEO: HALO) reported its Q1 2019 earnings, posting revenues of US$8.7mm. Halo, an extraction focused multi state operator, currently has operations within the states of California and Oregon, in addition to the state of Nevada via a partnership with Just Quality.
Total gross profit excluding fair value adjustments came in at US$2.44mm for the quarter, resulting in margins of 28%. Although a decent margin rate overall, the company revealed that certain subsidiaries are seeing margins as low as 3.9%, signalling that margin erosion may become a very real issue for other multi state operators in the near term.
Despite current revenue and gross margin figures, cash on hand was pegged at just $361,053. This is likely a result of receivables sitting at US$2.88mm, more than what the company booked as gross margins for the quarter. However, the firm has since closed an C$18mm 8% convertible debenture offering to bolster their cash position in addition to paying off US$2.2mm in debt. Total current liabilities for the three months ended March 31, 2019 came in at US$9.8mm, with US$3.96mm strictly being accounts payable and accrued liabilities.
Inventories currently stand at US$7.98mm for the firm, US$3.1mm of which is classified as finished goods ready to hit store shelves. Biological assets came in at nil for the quarter.
Halo Labs posted a comprehensive loss of US$3.04mm for the quarter, equivalent to (US$0.02) per share.
Looking forward, Halo provided several objectives for FY19, which includes completion of facilities within the state of California, as well as build outs in Nevada and Oregon. Additionally, Halo is focused on enhancing distribution within its target market of California wherein it has experienced the largest growth of sales over the last fiscal year.
Margin enhancement remains a key focus of Halo as well, across all markets in which it operates.
Commenting on the success that Halo has seen over the past year, the firm stated, “With the implementation of new, proprietary products (e.g. DabTab™ Dablets) as well as implementing existing contracts, the Company is now operating at an annualized production rate of approximately $25MM USD, which is in line with Halo’s previous guidance.”
Halo Labs closed at $0.67 in yesterdays session, down -$0.04, or -5.63%.
Information for this briefing was found via Sedar and Halo Labs. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.