quinlash wrote: While many investors, or casual onlookers, of the Cannabis Sector may think that Cannabis is limited to smokable products, the more learned investor is looking into the future of the industry and out towards a time when Cannabis 2.0 products truly dominate. This next generation of products is being spearheaded by Cannabis infused Drinks but soon will include a diverse line of edibles, creams, body-care products and even wellness offerings for pets.
HEXO, without doubt, has made a name for itself in the smokable category with award winning Cannabis as well as taking the number one spot for the sale of Hash. HEXO has listened to the consumer and now offers Original Hash with the highest THC levels available on the market, guaranteeing a minimum of 20% THC in every batch.
HEXO, in partnership with Molson Coors, has rolled out 6 drinks to date with Little Victory recently being added to the lineup. Online Reviews have been positive with increasing sales numbers and articles coming out appearing to confirm that HEXO is rapidly taking the dominant position in the Canadian Cannabis infused drink market, despite rolling out drinks later than the industry leader, Canopy Growth.
Those new to HEXO should note that the development, marketing and sale of Infused drinks is being managed by a Joint Venture company formed by HEXO and Molson-Corors called Truss. The two companies formed one JV for the sale of drinks in Canada and well as a second JV to introduce drinks into the United States, this too has recently come online with drink sales commencing within Colorado.
While having 9 provincial sales agreements under it’s belt in Canada, including one with Quebec valued at 1 Billion Dollars, is impressive on it’s own, HEXO also secured a supply agreement overseas with Israel with initial top line sale of apx $1 Million dollars. HEXO reported early on that it had also partnered with another company to grow and distribute products within Greece however, for some time now, investors have not been provided much information on the progress of this endeavor, leaving many to believe this may have been set aside for the time being.
While operating at 40% (+/-) margin on its last number of Quarterly Reports, HEXO has steadily moved itself towards becoming EBITDA positive. Many HEXO longs hoped this milestone would be achieved in the 2021 Q1 report recently released however HEXO missed the mark by a mere $420k CDN (apx $328k USD) while posting the highest sales levels in the history of the company. With the CEO’s repeatedly commenting on the Company’s goal to meet EBITDA positive in the first half of the company’s fiscal 2021 reporting year, investors now have every reason to believe this is one target well within reach for the 2021 Q2 Report expected out in mid-March of 2021.
On Dec 23rd HEXO executed on it’s planned Share Consolidation in order to bring the shareprice back in line with the minimum listing requirement of the NYSE. The consolidation had been put to shareholder vote earlier at a ratio of 8 to 1 however, due to the increasing shareprice, the company opted for the lower consolidation ratio. Those currently holding shares (and unfamiliar with stock consolidations) are advised to review their online reports to ensure they are familiar with their new averages and sharecounts to avoid making any trades where they may accidently sell below their averages on the adjusted share basis.
With the new lower sharecount investors may also want to review their own projections for the upcoming 2021 Q2 report this March as HEXO is now likely to not only to report positive EBITDA but also have a report that contains a positive EPS number.
Supporting Links for Above Statements.
Recent News / Info:
Video HEXO Virtually Rolls out New Belleville Facility
https://youtu.be/nhTKnCRhzv4
Interview with HEXO CEO Regarding 2021 Q1 Earnings with Forward Looking Comments
https://finance.yahoo.com/video/hexo-ceo-earnings-cannabis-industry-153825537.html
HEXO NR Regarding No Near Term Need to Raise Additional Funds
https://www.globenewswire.com/news-release/2020/12/22/2149236/0/en/HEXO-Corp-Announces-Lapse-of-Base-Shelf-Prospectus.html
Dec 14th - 2021 Q1 QTR Report
https://staticproduction.s3.amazonaws.com/financial-statements/2021/Q1+FY21+Interim+Financial+Statements+FINAL.pdf
Dec 14th - 2021 Q1 - Earnings Call Transcript
https://news.alphastreet.com/hexo-corp-hexo-q1-2021-earnings-call-transcript/
Note: HEXO's report on Dec 14th showed an EBITDA gap of 420k and a record high for sales with their share of the drink market overtaking Canopy Growth despite only being on the market for a few months.
Link to News Regarding Canopy Growth Head of Drinks Departing and HEXO market share
https://420intel.com/articles/2020/12/11/canopy-growth-beverage-head-depart-amid-sluggish-drink-sales
Note: HEXO is Partnered with Molson-Coors to form a JV Company called Truss. They have two JVs with Molson now, one for Canada and one for the US. Molson has also partnered with Coke to rollout a Mexician drink into the US. No mention by Molson or HEXO if something more will develop with Coke for the Cannabis space.
Link to Molson / Coke Deal
https://www.msn.com/EN-US/money/companies/molson-coors-to-bring-coke-s-alcoholic-topo-chico-to-u-s/ar-BB19xmoa
Link to Additional Coke / HEXO Research
https://stockhouse.com/companies/bullboard?symbol=hexo&postid=31970015
Research Links:
HEXO - Price to Sales Ratio Data
https://ycharts.com/companies/HEXO.TO/ps_ratio
Note: While HEXO outpaces Canopy Growth in drink sales and is reported to be gaining market share for smokables, the market has yet to see the upward price adjustment in shareprice based on the P/S ratio when compared to Canopy Growth
HEXO - Daily Shareprice Data
https://ca.finance.yahoo.com/quote/HEXO.TO/history/
Note: Charts show the Golden Cross forming on Dec 3rd with upward gap forming
HEXO - Investor Relations Homepage - QTR Reports (Also see www.sedar.com for more details)
https://www.hexocorp.com/investors/
HEXO - Earnings Call Transcripts (2020 Year End / Q4 Not there yet)
https://ca.wallmine.com/nyse/hexo/transcripts
HEXO - 2020 Year End / Q4 Call Transcript
https://www.fool.com/earnings/call-transcripts/2020/10/30/hexo-corp-hexo-q4-2020-earnings-call-transcript/