(TheNewswire)
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21% Increase inDehydraTECH Licensing Revenues vs. Same Quarter Year Ago
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Added Major New DehydraTECH Licensing Deal withLeading Multi-State Operator MariMed Inc., the Result of SignificantProduct RD and Manufacturing Development Efforts in theQuarter
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5% Growth inVin(Zero) Alcohol-Free Wine Depletions (Case Sales from Distributor toCanadian Retailers) for the Fiscal Year to Date vs. Same Period YearAgo
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Secured Major NewVin(Zero) Retail Distribution, Adding the Largest Grocery Retailer inWestern Canada - Save-On-Foods - to Our Base of Vin(Zero)Customers
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Narrowed Net Lossfor the Period by Almost Half, Improving a Full 49% vs. Same QuarterYear Ago
Toronto, ON - TheNewswire - November 29, 2023 - Hill Incorporated, formerly Hill StreetBeverage Company Inc. ( TSXV:HILL )( OTC:HSEEF ) (" Hill ” or the " Company "), ispleased to announce that it has released its financial results for thethree-month period ended September 30, 2023 (“ Q1 2024 ”), whichcan be found at www.sedarplus.com . Theprogressive bioscience implementation company is dedicated to buildingpathways to better and healthier living by leveraging deep CPGexpertise to commercialize leading-edge technologies, craftingsuperior cannabis solutions and non-alcoholic beverage productsglobally. The financial information summarized in this press releaseis based on data from Q1 2024.
21% Increase in DehydraTECH LicensingRevenues vs. Same Quarter Year Ago
Our DehydraTECH licensing revenues (in USD) increased21% in the quarter vs. year ago, as our strong ecosystem of licenseescontinued to drive sales in their existing state footprints andlicensee 1906 expanded their DehydraTECH-powered ‘Drops’ productsto New York.
Subsequent to the quarter end, 1906 also launched anexciting new direct-to-consumer (DTC) initiative across a majority ofUS states, offering hemp-derived Delta-9 THC micro-dose versions oftheir popular ‘Drops’ products, which arealso produced using DehydraTECH. This DTC launch expanded access of1906 Drops varieties to a much broader footprint of consumers, addingDTC distribution across approximately 36 states to the currentdispensary availability of the higher dose, marijuana-derived delta-9THC 1906 Drops in Colorado, Illinois, Massachusetts, Michigan,Missouri, New Jersey, New York, Oklahoma, and Pennsylvania. Moreinformation on 1906’s products can be found at https://1906.shop/.
Added Major New DehydraTECH LicensingDeal with Leading Multi-State Operator MariMed Inc., the Result ofSignificant Product R&D and Manufacturing Development Efforts inthe Quarter
The quarter was also a period of intensive R&D,product and commercial manufacturing development, culminating in theNovember 16, 2023 announcement that leading multi-state operator MariMed will use the patentedDehydraTECH biodelivery technology to power the next generation ofcannabis edibles sold under several of its award-winning brands.
Over the next few months, MariMed will roll out theimproved DehydraTECH products, including ‘ Vibations™ ’ all-natural, full-spectrum cannabis drink mix and‘ KFusion™ ’ chewable tablets, in Massachusetts, Maryland, Illinois, and Delaware.
This new addition to our DehydraTECH licensee ecosystemrepresents continued expansion by Hill on the key factors driving thegrowth agenda of our DehydraTECH licensing business:
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new licensees – increasing our base of active licensees andbrands;
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new states –new state launches expanding the geographic coverage for activelicensees or brands;
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new product form factors – innovation to expand the number of DehydraTECH-poweredconsumer product forms and types in market tofill consumer needs and occasions; and
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deeper penetration of products acrossoperations – driving deeper penetration of thebreadth of product forms and brands across current and newstates.
The following chart shows the significant advances wehave made year-over-year in the DehydraTECH licensing business,beginning from the December 2020 rights acquisition through December2023 (expected).
5% Growth in Vin(Zero) Alcohol-FreeWine Depletions (Case Sales from Distributor to Canadian Retailers)for the Fiscal Year to Date vs. Same Period Year Ago
As outlined in earlier communications, we transformedour Vin(Zero) alcohol-free wine business model at the end of FY 2022,with major adjustments across all the key areas of productionplanning, shipping and logistics, warehousing, sales and retaildistribution. These changes have led to several key positivefinancial impacts:
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shortened our order-to-cash cycle;
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reduced the level of working capital that we hold infinished goods inventory;
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reduced warehousing and transportation costs withstreamlined distribution;
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Reduced the need for more expensivetemperature-controlled containers for our products as our forecasting,operations planning, and inventory logistics models create a moreefficient shipping cycle.
As also previously communicated, this new streamlinedcommercial model creates a new and different cadence to the business. More dramatic periodic swings in both our inventory order patternsand our recognized revenues are planned based on more efficient supplychain logistics, and the business results must be looked atdifferently across longer time frames. We now place inventoryprocurement orders less frequently, but more rapidly convert thoseorders to revenues on the P&L and cash on the balance sheet.
As we expected, there were no major shipment arrivalsnor their resulting recognized revenues in this quarter, reflectingthe continued new cadence of the business. Last year in the samequarter we did receive a replenishment shipment of one of our SKUsthat was reflected in Q1 revenues, so our recognized revenues thisyear are down 95% in the quarter. However, we have already received shipment of a large order that will be reflectedin revenues for the FY2024 Q2 period ending December 31, 2023.
As we adapt to the new cadence of shipments andrevenues, a key measure of the underlying business in this new modelis our case depletions, which are the sales figures from ourdistributor to retailers. Case depletions have increased 5% for thefiscal year to date, recovering well from the price increase weimplemented last summer that eliminated one of our key merchandisingprograms at a major retailer. The increase in depletions shows thecontinued core growth of the business, demonstrating two importantsales trends for this business:
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New IWSR data shows no/low-alcohol consumption willincrease by a third in 10 markets including Canada by 2026,spearheaded by the growth of no-alcohol products 1 ; and
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Vin(Zero) is the #1-selling brand of alcohol-free winein the two largest grocery retailers in Canada.
Secured Major New Vin(Zero) RetailDistribution, Adding the Largest Grocery Retailer in Western Canada -Save-On-Foods - to Our Base of Vin(Zero) Customers
In addition to our core organic results in FY 2024 todate, we also secured a major new account in Q1, adding Save-On-Foodsto our customer base. Save-On-Foods is Western Canada’s largestgrocery retailer 2 , with a dynamic history dating back to 1915. TheirWholesale Division also services ChoiceMarkets , Quality Foods , Georgia Main , AG Foods , Buy-LowFoods & CalgaryCo-Op . In total, this placement provides newconsumer access to Vin(Zero) through approximately 165 Save-On-Foodsstores across British Columbia , Alberta , Saskatchewan , Manitoba and the YukonTerritory . We are excited about this newadditional new business and its impact in future quarters, on top ofour strong existing base of customers.
Narrowed Net Loss for the Period byAlmost Half, Improving a Full 49% vs. Same Quarter Year Ago
On a consolidated basis, net revenue declined 36% forthe quarter vs. year ago, due as noted to the differing timing ofalcohol-free wine shipments and revenue timing patterns between thetwo years. Despite this decline, gross profit for the quarter declinedonly 8% vs. year ago, clearly demonstrating the positive impact of themore profitable DehydraTECH licensing business on gross profit. These revenue results, combined with the significant cost reductionmeasures we have taken have resulted in the net loss for the periodimproving a full 50% vs. year ago, decreasing from $645,871 to$327,938.
For the Company’s full financial statements and acomprehensive Company update by way of its Management Discussion andAnalysis, please visit the Company’s profile at www.sedarplus.com .
About Hill Incorporated (TSXV: HILL)/ (OTCQB: HSEEF)
Hill Incorporated is a progressive bioscienceimplementation company that is dedicated to building pathways tobetter and healthier living by leveraging our deep CPG expertise tocommercialize leading-edge technologies to craft superior cannabissolutions and non-alcoholic beverage products globally. Our HillAvenue Cannabis business unit is pioneering the space where craftconsumer products meet bioscience by combining our deep CPGcommercialization expertise with our rights to use LexariaBioscience Corp’s ground-breaking DehydraTECH patentportfolio for product development, licensing and B2B and B2C salesof cannabis ingredients or products on a global scale. Our Hill StreetBeverages business unit represents the Company’s legacy alcohol-freeconsumer beverage marketing and distribution business.
For more information on our business activities visit www.hillincorporated.com , tolearn more about our DehydraTECH cannabis biodelivery technology, goto www.dehydratech-thc.com , orto check out Hill Street Beverage’s award-winning alcohol-free wineline-up and order product to be delivered straight to your home, go to www.hillstreetbeverages.com .
If you wish to sign up for the Hill Incorporatedmailing list, click HERE .
For more information, contact:
Craig Binkley, Chief Executive Officer
Email: craig@hillincorporated.com
Phone: 604-609-6154
FORWARD-LOOKING STATEMENTS
Statements in this press release may containforward-looking information. Any statements in this press release thatare not statements of historical fact may be deemed to beforward-looking statements. Forward-looking statements are oftenidentified by terms such as “may”, “should”, “would”,“anticipate”, “expects”, and similar expressions. The readeris cautioned that assumptions used in the preparation of anyforward-looking information may prove to be incorrect. Events orcircumstances, such as future availability of capital on favourableterms, may cause actual results to differ materially from thosepredicted, as a result of numerous known and unknown risks,uncertainties, and other factors, many of which are beyond the controlof the Company. The reader is cautioned not to place undue reliance onany forward-looking information. Such information, although consideredreasonable by management at the time of preparation, may prove to beincorrect and actual results may differ materially from thoseanticipated. Forward-looking statements contained in this pressrelease are expressly qualified by this cautionary statement. Theforward-looking statements contained in this press release are made asof the date of this press release. The Company does not undertake anyobligation to update publicly or to revise any of the includedforward-looking statements, whether as a result of new information,future events or otherwise, except as required by securitieslaw.
Neither TSXVenture Exchange nor its Regulation Services Provider (as that term isdefined in policies of the TSX Venture Exchange) acceptsresponsibility for the adequacy or accuracy of this release.
1 https://www.theiwsr.com/no-and-low-alcohol-category-value-surpasses-11bn-in-2022/
2 Source:Save-On-Foods
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