Hexo Surprises Market With Strong Revenue For Third Quarter - Grow Life 420

Hexo Surprises Market With Strong Revenue For Third Quarter

June 11, 2020

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HEXO Corp. (NYSE: HEXO) reported that its revenue increased 30% sequentially to $30.9 million in the third quarter fiscal 2020 ending April 30, 2020. A big jump over Hexo’s last year’s revenue of $15 million for the same time period. The strong showing caused the shares to pop over 16% in early trading. All figures in Canadian dollars.

The net losses fell to $19.5 million from the second quarter’s kitchen sink net losses of $298 million. The earnings per share were ($0.07), which missed analyst expectations by two cents. The Zacks Consensus Estimate had the cannabis producer for a quarterly loss of $0.05 per share. The revenue beat estimates by $1.68 million.

The operating expenses also dropped to $26.8 million versus the second quarter’s $281 million and from $46.9 million in the 2019 fourth-quarter.  The company attributed the change to a decrease in legal and professional fees, travel, and share-based compensation, as it keeps working to cut previous spending levels in an attempt to become adjusted EBITDA positive.  The company also said in a statement that the significant reduction since its peak in Q4’19 is also due to a reduction and refocusing of marketing-related expenditures.

“I’d like to take this opportunity to thank the HEXO team who has worked tirelessly during the COVID 19 pandemic to keep the doors open and ensure the safety of our employees and our customers.  We could not do this without you, we recognize and appreciate your efforts.  It’s thanks to your hard work that we closed the third quarter delivering on our financial goals, even in the face of adversity,” said Sebastien St-Louis, CEO, and co-founder of HEXO.

Despite the strong showing, Hexo gave itself some wiggle with regards to hitting its targets in its quest to become profitable. The company said in a statement, “While we continue to operate during a pandemic, we continue to be cautious about future expectations.  Our plans to achieve Adj. EBITDA positive in the first half of fiscal 2021 will depend on the growth of retail stores in our two largest markets, Ontario and Quebec.  It is difficult to determine the timing of new licenses for new retails stores in Ontario and the build out of additional stores in Quebec.  We await additional information from the authorities of each Province and Territory.”

The company did mention that it recorded a “$3 million realization as the result of an onerous contract which is currently the subject of litigation in Q2’20, nil in Q3’20.”

In addition to the earnings, Hexo announced an initial closing of its previously announced early conversion option in respect of $29.86 million aggregate principal amount of its outstanding $70 million aggregate principal amount of 8% unsecured convertible debentures maturing December 5, 2022. Under the initial closing, $23.595 million aggregate principal amount of Debentures was converted into ‎29,493,750 units of the company at a price of $0.80 per Conversion Unit.

 

The post Hexo Surprises Market With Strong Revenue For Third Quarter appeared first on Green Market Report.



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Debra Borchardt, KahliBuds, 420GrowLife

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