High-Level Summary of Current Status (May 29, 2021) HEXO is currently showing evidence of executing on its plan to enter the US Cannabis Market through the purchase of production space within Colorado. Expansion into the US also includes working directly with existing Multi-State-Operators (MSOs). HEXO has expanded production capacity and its branded product offerings through the acquisition of Zenabis. As noted by the CFO of HEXO plans are to address debts owing by Zenabis shortly.
May 17
th HEXO announced that it will be acquiring 48 North, a smaller Canadian Cannabis producer with a line of health and beauty products. On May 28th the company disclosed that it is now positioned to take over the Number 1 Spot in Canada with a planned purchase of Redecan. Redecan reported $58 Million for Sales in it’s most recent Quarter with margins north of 50% (Note: Redecan is privately owned / not publicly traded, refer to investor’s deck link below for details).
HEXO has filed a base shelf prospectus for 1.2 Billion dollars to address debts owing as well as fund merger and acquisition activity along with it’s US Expansion plans.
Company Presentations: (May 28, 2021) CNN Interview with HEXO CEO Regarding Redecan Acquisition (Video) https://www.youtube.com/watch?v=Z50nIYXQRwM&t=10s
(May 28, 2021) HEXO+ Redecan (Splash Video) https://www.youtube.com/watch?v=zHwI9ZnNCXY
(May 28, 2021) HEXO + Redecan Investors Deck https://staticproduction.s3.amazonaws.com/financial-statements/2021/Hexo+Redecan+Investors+Deck.pdf
(May 28, 2021) HEXO NOW #1 Video https://www.youtube.com/watch?v=zHwI9ZnNCXY
(May 20, 2021) BMO Capital Markets 16th Annual Farm to Market Conference – Interview with HEXO CEO https://www.youtube.com/watch?v=plKNIcTXD70&t=23s
(May 11, 2021) Canaccord Genuity’s 5th Annual Global Cannabis Conference – Interview with HEXO CEO https://www.youtube.com/watch?v=oFFW1D7ZMyk&t=171s
2021 ICR Video Presentation with HEXO CEO (discussion on US expansion into Colorado and beyond) https://icrinc.touchcast.com/showtime/icr-conference/embed/6a310d2c-3a67-6022-c73f-165d733a591a
Note: Starting from
minute marker 19:20 the CEO comments on how HEXO has access to Molson’s relationship with Coke and Dwayne Johnson (Dec 9th, 2020) - Video HEXO Virtually Rolls out New Belleville Facility https://youtu.be/nhTKnCRhzv4
<<<-- A Must Watch ----<<<<<< Link to HEXO Video Library Showing Inside the Operation https://www.hexocorp.com/videos/
Powered By HEXO Summary (HEXO Page) https://www.hexocorp.com/powered-by-hexo/?fbclid=IwAR1mcH41Fy_P3BnHaM3MXrops-atTYVY7mnRXBZIzYpbk_OZSOT2YmE4xT0
HEXO ( plus Zenabis / 48-North / Redecan ) Related News: (May 28, 2021) HEXO Corp announces acquisition of Redecan to create Canadian market leader in adult-use sales https://www.globenewswire.com/fr/news-release/2021/05/28/2238104/0/en/HEXO-Corp-announces-acquisition-of-Redecan-to-create-Canadian-market-leader-in-adult-use-sales.html
Taken From Above News Release “With today’s announcement, we believe that we are on the verge of surpassing that objective to become the no.1 licensed producer by recreational market share. Building on our strong market momentum, the combination of HEXO and Redecan reinforces our position as an industry leader and creates a robust foundation for growth, efficiency at scale and improved financial results.” (May 27, 2021) HEXO Corp Announces Public Offering of Senior Secured Convertible Notes https://www.globenewswire.com/news-release/2021/05/28/2237912/0/en/HEXO-Corp-Announces-Public-Offering-of-Senior-Secured-Convertible-Notes.html
Taken from Above News Release The Company expects to use substantially all of the net proceeds from the Offering to fund the acquisition (the “Potential Acquisition”), if it occurs, of a large Canadian licensed producer (the “Target Business”). The Company has not yet entered into a definitive agreement for the Potential Acquisition. (May 18, 2021) Zenabis Obtains Final Order Approving Plan of Arrangement with HEXO https://markets.businessinsider.com/news/stocks/zenabis-obtains-final-order-approving-plan-of-arrangement-with-hexo-1030443564
(May 17, 2021) HEXO Corp to acquire 48North Cannabis Corp. https://www.globenewswire.com/news-release/2021/05/17/2230497/0/en/HEXO-Corp-to-acquire-48North-Cannabis-Corp.html
(May 14, 2021) Zenabis Reports First Quarter 2021 Gross Revenue of C$16.2 Mln https://www.msn.com/en-us/money/companies/brief-zenabis-reports-first-quarter-2021-gross-revenue-of-cdollar162-mln/ar-BB1gKGmU
(May 14, 2021) HEXO Corp Announces Filing of Preliminary Base Shelf Prospectus for Debt and Planned Reduction in Previously Filed Shelf Prospectus for Equity https://www.globenewswire.com/news-release/2021/05/14/2230199/0/en/HEXO-Corp-Announces-Filing-of-Preliminary-Base-Shelf-Prospectus-for-Debt-and-Planned-Reduction-in-Previously-Filed-Shelf-Prospectus-for-Equity.html
(May 14, 2021) HEXO Corp announces US production facility in Colorado https://www.globenewswire.com/news-release/2021/05/14/2229789/0/en/HEXO-Corp-announces-US-production-facility-in-Colorado.html
Taken From Above News Release The ~50,000 sq. ft. facility, located in Northern Colorado, will provide US CPGs and consumers access to the Powered by HEXO® technology. HEXO’s first in the US, is zoned for production of a full range of cannabinoids and offers multiple operational capabilities. The site will support Powered by HEXO initiatives across the country, in compliance with all applicable laws and regulations. (May 14, 2021) ZENABIS MALTESE JOINT VENTURE PARTNER ZENPHARM RECEIVES LICENSE FOR PRODUCTION & DISTRIBUTION OF CANNABIS https://www.zenabis.com/zenabis-maltese-joint-venture-partner-zenpharm-receives-license-for-production-distribution-of-cannabis/
Taken from Above News Release The Medicinal Cannabis License allows ZenPharm to commence commercial shipments to the European Union, where Germany is ZenPharm’s most prominent target market. ZenPharm has an executed supply agreement with a German-based customer to supply a minimum volume of 500 kg per year. To that end, ZenPharm will be accepting shipments of up to 300kg from Zenabis Atholville through the end of this calendar year. “… launching finished cannabis products under its own brand for distribution within the Maltese medicinal cannabis market, with similar
entry into the Polish Market expected in the Q1 2022”
(May 13, 2021) Zenabis Obtains Shareholder Approval for Arrangement With HEXO Corp https://www.newswire.ca/news-releases/zenabis-obtains-shareholder-approval-for-arrangement-with-hexo-corp--879313350.html
(May 13, 2021) HEXO Corp and REQ Announce Brand Partnership for “Powered By HEXO®” Expansion into United States https://www.globenewswire.com/news-release/2021/05/13/2228927/0/en/HEXO-Corp-and-REQ-Announce-Brand-Partnership-for-Powered-By-HEXO-Expansion-into-United-States.html
Taken From Above News Release As U.S. Agency of Record, REQ will assist HEXO as it continues to expand its footprint in the U.S. and ramps up to support the growth initiatives of Truss CBD USA, its joint venture with Molson Coors, and for potential non-beverage CPG partners with whom the Company is in ongoing discussions. Direct Link to REQ Marketing Website https://req.co/work/featured-work
Note: REQ has worked with companies such as
Amazon, eBay, Disney, MasterCard and Stubhub (May 11, 2021) HEXO Corp Announces At-the-Market Offering of up to C$150,000,000 https://www.globenewswire.com/news-release/2021/05/11/2227270/0/en/HEXO-Corp-Announces-At-the-Market-Offering-of-up-to-C-150-000-000.html
Taken From Above News Release The Company expects to use the net proceeds from the ATM Program for general corporate purposes, which may include: (i) costs associated with the Company’s U.S. expansion plans including the contemplated acquisition of a facility in the State of Colorado and its subsequent retrofitting and improvement; (ii) capital expenditures, including potential capital expenditures to make additional improvements to the production lines at the Company’s Belleville, Ontario facility; (iii) potential future acquisitions; (iv) working capital, including replenishing existing cash resources and working capital which will be used to fund certain transaction and integration costs and minimum debt repayments related to the Company’s proposed acquisition of Zenabis Global Inc. (“Zenabis”); and (v) repayment of additional debts owed by Zenabis following the completion of the Zenabis acquisition. (May 3, 2021) - HEXO Corp Announces Repayment of Credit Facility https://www.globenewswire.com/news-release/2021/05/03/2221193/0/en/HEXO-Corp-Announces-Repayment-of-Credit-Facility.html
Taken From Above News Release “We believe repayment of the credit facility provides HEXO with flexibility as we continue to execute on our US expansion plans and our goal to become a top two Canadian LP by adult-use recreational cannabis sales,” said HEXO CEO and co-founder Sebastien St-Louis. “We would like to thank our lenders for their support, which has contributed to HEXO’s success to date.” (Apr 28, 2021) – HEXO Corp receives Control Union Medical Cannabis Standard GACP certification https://www.globenewswire.com/news-release/2021/04/28/2218430/0/en/HEXO-Corp-receives-Control-Union-Medical-Cannabis-Standard-GACP-certification.html
Taken From Above News Release: CUMCS-GACP certification represents a standard of quality and consistency for cannabis propagation, cultivation and post-harvest processes and is compliant with both the World Health Organization and European Medicines Agency Good Agricultural and Collection Practice guidelines (Apr 21, 2021) – HEXO Wins 2021 Atomic Award https://atomicawards.strategyonline.ca/winners/winner/2021/?e=110149&n=Veryvell
(Apr 15, 2021) - HEXO Corp Announces Filing of $1.2B Preliminary Base Shelf Prospectus https://www.globenewswire.com/news-release/2021/04/15/2211308/0/en/HEXO-Corp-Announces-Filing-of-1-2B-Preliminary-Base-Shelf-Prospectus.html
Taken From Above News Release: “We made the decision to file this new base shelf prospectus and registration statement to provide maximum flexibility as we continue to pursue strategic initiatives in both the United States and Canada,” said HEXO CEO and co-founder Sebastien St-Louis. “We have now started to deploy capital in the United States, are remaining active in M&A and are in ongoing discussions with potential non-beverage CPG partners which we expect will require additional capital as we continue to execute on our growth and expansion strategy.” (Apr 14, 2021 – HEXO / Molson JV – Truss Launch New Drinks for Summer https://www.benzinga.com/markets/cannabis/21/04/20621085/molson-coors-hexo-cannabis-jv-truss-beverage-to-launch-six-new-products-this-summer
(Apr 8, 2021) HEXO’s Partner Molson Coors Nominates Julia M. Brown as an Independent Director to Join Its Board of Directors https://ir.molsoncoors.com/news/press-release-details/2021/Molson-Coors-Nominates-Julia-M.-Brown-as-an-Independent-Director-to-Join-Its-Board-of-Directors/default.aspx
Note: As outlined in the news out from Molson, Mrs. Brown has been previously employed with
Mars-Wrigley as well as Kraft Foods. (Apr 6, 2021) – HEXO Launches Bake Sale – New Cannabis Baking Flower https://www.globenewswire.com/news-release/2021/04/06/2204803/0/en/HEXO-launches-first-of-its-kind-Bake-Sale-value-brand.html
(Mar 31, 2021) Zenabis 2020 Q4 Year End Quarter Report (Bloomberg) https://www.bloomberg.com/press-releases/2021-04-01/zenabis-announces-full-year-and-fourth-quarter-2020-financial-results
(Mar 26, 2021) – HEXO CFO Trent McDonald Hosts Reddit Ask-Me-Anything (AMA) Session https://www.reddit.com/r/TheCannalysts/comments/m8rljy/hi_this_is_trent_macdonald_cfo_of_hexo_corp_ill/
Note: Trent addressed a number of
topics from US Expansion to what a US Strategy would look like. He also noted
how undervalued the stock is in relation to others in the industry based on sales (this compares to sharecount vs sales dollars, PS-Ratio math helps explain what he is referring to) (Mar 18, 2021) – HEXO Reports 2021 Q2 Results https://www.globenewswire.com/news-release/2021/03/18/2195226/0/en/HEXO-Corp-announces-positive-adjusted-EBITDA-and-94-increase-in-net-revenue-from-prior-year.html
Note: HEXO Achieved positive adjusted EBITDA, along with the seventh consecutive quarter of adjusted EBITDA improvement. This is a milestone yet to be achieved by Canopy Growth or Aurora Cannabis (Mar 18th, 2021) HEXO - Earnings Call Transcripts (2021 Q2 Report) https://news.alphastreet.com/hexo-corp-hexo-q2-2021-earnings-call-transcript/
(Feb 22, 2021) – HEXO and Namaste Tech Sign Agreement for New Product Releases https://www.globenewswire.com/news-release/2021/02/22/2179988/0/en/Namaste-Technologies-Subsidiary-CannMart-Signs-National-Supply-Agreement-with-HEXO.html
(Feb 16, 2021) – HEXO to Acquire Zenabis https://www.globenewswire.com/news-release/2021/02/16/2176435/0/en/HEXO-Corp-to-acquire-Zenabis-Global-Inc.html
Note: The Zenabis deal is valued at $235 Million CDN however requires no cash outlay by HEXO to complete as it is being performed on a share conversion of .01772 of one HEXO share for each Zenabis Share. Post-merger Zenabis products, sales and debts owing will move to HEXO.
HEXO PowerPoint / PDF Summary Presentation Regarding Zenabis Deal https://www.zenabis.com/wp-content/uploads/slider/hexo-corp-project-zebra_2021-03-25_12_10_21/hexo_corp.pdf?fbclid=IwAR0FlnKRYtEoOPfI0y6BKEgGN04sNV8HMzc7zYYmF4_5w1zOdoWTe_Oxv1c
Note: Presentation compares
HEXO to other major players including the Aphria / Tilray combined operation and shows HEXO becoming a top three producer in the Canadian Market. Comparisons to the overall North American market are not included.
(Feb 2, 2021) - HEXO Book Launch Link to Book Released on Amazon.CA outlining the story of HEXO (listed as Top-Seller)
https://obj.ca/article/local/book-excerpt-billion-dollar-start
(Jan 13, 2021) Truss CBD USA, a HEXO Corp and Molson Coors joint venture, launches Veryvell sparkling CBD water in Colorado https://www.globenewswire.com/news-release/2021/01/13/2158006/0/en/Truss-CBD-USA-a-HEXO-Corp-and-Molson-Coors-joint-venture-launches-Veryvell-sparkling-CBD-water-in-Colorado.html
(Jan 1, 2021) Link to Molson / Dwyane Johnson "The Rock" Partnership https://www.msn.com/en-us/money/smallbusiness/dwayne-the-rock-johnson-partners-with-molson-coors-for-nonalcoholic-energy-drink/ar-BB1cEP6r
News from 2020 and Earlier (Dec 22, 2020) HEXO News Release Referencing the No Need to Raise Additional Capital (HEXO Corp Announces Lapse of Base Shelf Prospectus) https://www.globenewswire.com/news-release/2020/12/22/2149236/0/en/HEXO-Corp-Announces-Lapse-of-Base-Shelf-Prospectus.html Taken From Above News Release: “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.” (Dec 23, 2020) – HEXO Completes 4:1 Stock Consolidation. HEXO consolidated shares at a ratio of 4:1 on Dec 23, 2020 in order to comply with NYSE minimum listing requirements. Current outstanding shares is now apx 122 Million.
NOTE: HEXO now has one of the lowest outstanding share counts in the entire Cannabis Sector (July 2020) HEXO established a Medical Cannabis Supply contract with Israel Link to HEXO NR on Israel Supply Agreement https://www.globenewswire.com/news-release/2020/07/09/2059798/0/en/HEXO-launches-medical-cannabis-products-in-Israel.html
(Sept 9, 2020) 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
(Aug 1, 2018) Molson Coors Canada and HEXO Announce Agreement to Create Joint Venture Focused on Non-Alcoholic, Cannabis-Infused Beverages for the Canadian Market https://www.newswire.ca/news-releases/molson-coors-canada-and-hexo-announce-agreement-to-create-joint-venture-focused-on-non-alcoholic-cannabis-infused-beverages-for-the-canadian-market-689719921.html
Research Links: HEXO - Price to Sales Ratio Data https://ycharts.com/companies/HEXO.TO/ps_ratio Investopedia Link on How to use PS-Ratio https://www.investopedia.com/articles/fundamental/03/032603.asp NOTE: HEXO PS-Ratio is apx 1/3 of Canopy Growth. Both companies have the same product mix, international deals, offer Rec and Med products etc and the best comparison stock for HEXO. HEXO Daily Shareprice Data https://ca.finance.yahoo.com/quote/HEXO.TO/history/
HEXO - Investor Relations Homepage - Quarter Reports (Also see www.sedar.com for more details) https://www.hexocorp.com/investors/
Disclaimer: Stockhouse User Quinlash holds positions in HEXO and recommends HEXO as a BUY and HOLD stock for investors seeking a cannabis play with a minumum of 1 to 2 year hold time.