Hexo Corp (TSX: HEXO) (NYSE: HEXO) this morning attempted to flex its muscles when it announced that they would not be filing a new base shelf prospectus at this time. This announcement follows the news that the firms previously outstanding $800 million base shelf prospectus had expired as of this morning.
Commenting on the matter, Hexo CFO Trent MacDonald stated, “In light of our solid financial position, and most notably our excellent liquidity and cashflow position, we do not see the need to conduct further rounds of financing in the near future.” His commentary comes despite the fact that the company as of yet is not operating cash flow positive, let alone profitable as a whole.
In the most recent quarter, Hexo managed to post negative operating cash flow of $6.1 million, while in 2020 the company as a whole saw negative operating cash flow of $94.6 million, with a net loss of $546.5 million. Drilling down more specifically, the most recent quarter saw net revenues of $29.5 million translate to a gross profit of $11.9 million before fair value adjustments, while selling, general and administrative expenses also amounted to $11.9 million.
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To the firms credit however, there’s currently $149.8 million in the bank as of October 31, 2020, which doesn’t include restricted funds of $31.4 million. If the firm is able to post continuous growth in terms of sales, it may be able to keep its losses low enough to negate the need for further funding, at least in the near term.
Hexo Corp last traded at $1.29 on the TSX.
Information for this briefing was found via Sedar and Hexo Corp. 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.
