Hexo Corp Reports Revenues Of $29.5 Million, Loss Of $4.2 Million For Q1 2021

Hexo Corp (TSX: HEXO) (NYSE: HEXO) reported its fiscal first quarter 2021 financial results this morning after announcing that it had seen its share consolidation approved earlier in the day. The quarterly was reportedly a record in terms of gross sales for the company, with gross figures hitting $41.3 million before excise taxes brought net revenue down to $29.5 million. Despite the record quarter however, the company still managed to post a net loss of $4.2 million.

Revenues were up on a quarterly basis, rising from $27.1 million to $29.5 million, an increase of 8.6% quarter over quarter. Net loss improved significantly as well, however that was largely a result in writedowns forcing a loss of $169.5 million in the fiscal fourth quarter of 2020. Revenues from the quarter on a gross basis saw $35.9 million derived from retail sales, while $3.3 million were a function of cannabis beverage sales. Medical revenues amounted to just $0.6 million, while wholesale came in at $0.4 million, and international sales totaled $1.1 million.

Following a cost of goods sold of $17.5 million along with associated excise taxes, the company managed to post a gross profit of $11.9 million before fair value adjustments. Operating expenses meanwhile came in at $20.8 million, meaning the company still has no reached profitability despite record sales. Selling, general and administrative expenses made up the bulk of operating expenditures at $11.9 million, followed by share based compensation of $3.0 million. Marketing and promotion accounts for $2.0 million, while R&D and depreciation each accounted for a little over $1.0 million in expenditures.

Other expenses extended the loss experienced this quarter, with interest and financing expenses of $2.3 million more than offsetting other income of $1.6 million. The company also posted a loss from its investment in associates and joint ventures of $1.1 million.

Looking to the balance sheet, Hexo saw its cash position slide from $184.2 million to $149.8 million, with the company seeing a sizable $23.2 million being shifted to restricted cash during the quarter, while also using $3.3 million in financing activities and $6.1 million in operating activities. Restricted funds as a result grew from $8.3 million to $31.4 million during the three month period ended October 31, 2020.

Trade receivables also grew, climbing from $19.4 million to $22.0 million, while taxes recoverable and other receivables declined from $16.7 million to $13.3 million. Inventory was final notable increase in terms of current assets, climbing from $65.0 million to $74.6 million. Total current assets overall increased somewhat marginally, climbing from $305.7 million to $308.3 million during the quarter.

Accounts payable also increased during the quarter, climbing from $32.5 million to $38.5 million, while excise taxes payable declined from $7.1 million to $4.1 million. The other notable mover here was the current term loans, falling from $29.9 million to $3.1 million. This however was not the result of a debt repayment, but rather certain debt going from current to long term once certain covenants were in compliance. Total current liabilities overall fell from $82.5 million to $58.0 million, largely a function of that term loan being transferred back to non-current liabilities.

Hexo Corp last traded at $1.28 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.

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