HEXO Reports Q4'22 and FY22 Financial Results
Organizational reset strengthened the business and has positioned HEXO for long-term success
This news release constitutes a "designated news release" for the purposes of the Company's prospectus supplement dated May 2, 2022 to its short form base shelf prospectus dated May 7, 2021 and amended and restated on May 25, 2021.
GATINEAU, Qubec, Oct. 31, 2022 (GLOBE NEWSWIRE) -- HEXO Corp. (TSX: HEXO; NASDAQ: HEXO) ("HEXO" or the "Company"), a leading producer of high-quality cannabis products, today reported its financial results for the fourth quarter ("Q4'22") and fiscal year ended July 31, 2022 ("FY22"). All currency amounts are stated in Canadian thousands unless otherwise noted.
"The fourth quarter was a period of strategic realignment for HEXO," said Charlie Bowman, President and CEO of HEXO. "We focused on making the changes that will enable HEXO to maintain and expand our strong position within the Canadian cannabis market. By committing to three key priorities - aligning the Company for success, resetting the organization for profit and growth, and delivering a preferred cannabis experience for its customers and other stakeholders - we took the necessary steps to position the Company for long-term success and have come out stronger as a business."
"Re-financing of the senior secured convertible note deleverage the balance sheet and boosted cash reserves, allowing us to focus on profitable growth," said Julius Ivancsits, Acting Chief Financial Officer of HEXO. "We are hyper-focused on cash flow, and to this end, reduced our personnel cost by $65M, divested from businesses that do not offer HEXO a competitive advantage and focused on our quality of earnings, while also optimizing our working capital. We also rationalized to upgrade our product mix."
"With a solid foundation now in place, HEXO has moved to the second phase of our transformation -- focusing on producing the core brands and products that customers want, leading in innovation and reinforcing our market share," added Mr. Bowman. "We evolved our leadership across the organization and are benefiting from strong integration across our most successful brands. By concentrating on these products and ensuring that they do not compete against each other, we have built a loyal customer following and refined what truly sets HEXO apart from our peers."
Significant Financial Results
-- HEXO recorded net revenue in FY22 of $191.1 million, up from $123.8 million from the fiscal year ended July 31, 2021 ("FY21"). -- The Company recorded an Adjusted EBITDA loss of ($7,467) in Q4'22, an improvement of $10,870, from Q3'22, and an improvement of $3,281 from the fourth quarter of FY21 ("Q4'21"). -- HEXO closed the Tilray transaction, amending the terms of the Senior Secured Convertible Notes and reducing the associated liquidity and dilution pressures under the previous debt structure. -- HEXO recorded Q4'22 net revenue of $42.5 million, an increase of 10% compared to $38.8 million in Q4'21 and a decrease of 7% compared to $45.6 million net revenue in the third quarter of FY22 ("Q3'22"). -- Q4'22 general, administrative, R&D, selling, marketing and promotion costs as percentage of net sales improved by 43% and 32%, relative to Q3'22 and Q4'21 respectively. This key ratio remained flat FY22 vs. FY21, however the Company's size and scope increased significantly upon the acquisition of Redecan in the first quarter of FY22 ("Q1'22"). -- Total operating expenses reduced by 42%, quarter over quarter.