(TheNewswire)
Highlights for the Year:
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DehydraTECHLicensing Revenues Nearly Tripled vs. Year Ago (as Adjusted*) as NewLicensees and New Product Launches Continue to Hit the market
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FY 2023Consolidated Gross Profit Showed Strong Growth at +20% vs. YearAgo Buildingon the +37% Gross Profit Gain for Full-Year FY 2022
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We Continued toExecute the Transformed Vin(Zero) business Model
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Cash Flows fromOperations Improved Significantly With a 59% Improvement
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Completed OurBalance Sheet Transformation, Delivering More Streamlined Financialsand Eliminating Items Not Relevant for Our Focused Growth Agenda
Toronto, ON - TheNewswire - Oct 24, 2023 - Hill Incorporated, formerly Hill StreetBeverage Company Inc. ( TSXV:HILL )( OTC:HSEEF ) (" Hill ” or the " Company "), ispleased to announce today that it has released its audited financialresults for the three-month period and year ended June 30, 2023(“ FY 2023 ”), which can 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 audited data for FY 2023.
DehydraTECH Licensing Revenues NearlyTripled vs. Year Ago (as Adjusted * ) as New Licensees and New Product LaunchesContinue to Hit the Market
The continued growth of our DehydraTECH licensingbusiness is a function of four key factors:
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new licensees -increasing our base of active licensees and brands;
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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.
Following is a summary of the significant advances wehave made against these key factors since we acquired the exclusiveglobal rights to the DehydraTECH technology for use with THC productsat the end of 2020 until the close of FY 2023.
The thirteen states where we currently have activeoperating partners represent a total population of 150MM 1 and an addressablemarket of approximately $25.6B USD in estimated 2023 cannabissales 2 . That footprint covers states generating over two-thirds ofthe addressable market of $31.8B USD in projected total U.S. cannabissales for 2023 3 .
The following chart shows the growth in DehydraTECHlicensing revenues over the last 3 fiscal years:
*Licensing revenues have been adjusted to reflect baddebts recognized in subsequent periods related to the previousyear’s revenue.
Craig Binkley, CEO, comments: “Wecontinue to have success working with our ecosystem of DehydraTECHlicensees and commercialization partners. We have expanded each ofthe key operating factors that drive growth in our licensing revenues,as we expand the portfolio and presence of DehydraTECH-poweredconsumer products. Following on strong advances in FY 2023, we arelooking forward to the completion of extensive ongoing R&D andproduct development projects with LPs and MSOs that we anticipate willresult in important new DehydraTECH licensees and their productlaunches in the coming months.”
We Continued to Execute theTransformed Vin(Zero) Business Model
As outlined in previous communications, we transformedour Vin(Zero) business model at the end of FY 2022, with majoradjustments across all the key areas of production planning, shippingand logistics, warehousing, sales and retail distribution. Thesechanges have led to several key positive financial 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,where more dramatic periodic swings on the recognized revenues areplanned, and the business must be looked at across longer time frames.We now place procurement orders less frequently, but more rapidlyconvert those orders to revenues on the P&L and cash on thebalance sheet.
See below for an annual breakdown of key financialresults on the alcohol-free beverage business.
Consolidated Gross Profit ShowedStrong Growth at +20%, Building on the 37% Gain a Year Ago
While the results of the individual business unitsshould be considered separately on a quarterly basis and over time,consolidated gross profit increased +20% for FY 2023, building on thefull year FY 2022 growth of +37%. The growth in gross profit for thisyear shows the dramatic financial impact of the DehydraTECH businesson the consolidated financials and gross profit margins, despite arevenue decline on the alcohol-free beverage business driven primarilyby the ordering cadence of the new business model.
Cash Flows from Operations ImprovedSignificantly With a 59% Improvement
During the year ended June 30, 2023, Hill had asignificant 59% improvement in cash flows from operations, withnegative cash flow of $718,195 compared to negative cash flow of$1,748,980 during the year ended June 30, 2022. This significantimprovement over the previous year demonstrates that we are able togrow our consolidated gross profit without requiring commensurate costincreases and highlights the Company’s increased focus on overallcost and cash management.
We Have Completed Our Balance SheetTransformation, Delivering More Streamlined Financials and EliminatingItems Not Relevant for Our Focused Growth Agenda
Significant advanceshave been made to improve the overall financial operating health ofthe Company, reducing both receivables and payables and alsoeliminating items that are not relevant for our more focused growthagenda. Hill is pleased to provide a snapshot of its streamlinedbalance sheet below, with corresponding notes. For the Company’saudited financial statements and a comprehensive Company update by wayof its Management Discussion and Analysis, please visit theCompany’s profile at www.sedarplus.com .
Note 1 : The Company hasreduced its year-over-year trade payables by 66% while maintainingconsistent cash reserves.
Note 2 : As of Oct 23, 2023 , the Company has collectedover 80% of its receivables that were outstanding as at June 30, 2023. The remaining 20% is expected to be collected by Nov 30,2023.
Note 3 : As part of theCompany’s focused efforts on DehydraTECH expansion in the UnitedStates, Hill exited its lease of the Canadian Lucknow cannabis R&Dfacility in February 2023. This allowed the Company to eliminateunder-utilized assets while allocating additional resources to driveadditional growth in the US.
Matthew Jewell, CFO, comments: “FY2023 was a transformational year, both in terms of showing, by way oftremendous operating and financial growth, the potential of ourDehydraTECH licensing business and moving on from legacy initiativesand unprofitable business units. The Company’s objectives are nowclear, with an executive team that is laser-focused on the key actionsto drive the Company towards long term success.”
Shareholder Approval of Hill’sAmended Rolling Stock Option Plan and Amendments to its RestrictedShare Unit Plan
Further to the Company’s press release on May 4,2023 , the Company wishes to confirmthat at its Annual General and Special Meeting of Shareholders held onMay 2, 2023, shareholders of the Company approved (i) the Company’samended rolling 10% stock option plan; and (ii) certain amendments tothe restricted share unit (“ RSU ”) plan of the Company, which included anincrease of the fixed maximum number of RSUs that may be issued by theCompany from 175,616 to 323,520 common shares (on a post-shareconsolidation basis).
In accordance with the TSX’s new policy 4.4 governingsecurity-based compensation plans, certain amendments were made toboth the stock option plan and the RSU plan to ensure that the plansmet all regulatory requirements. The full text of both plans can befound in the Company's most recent management information circular, acopy of which can be found on the Corporation's SEDAR profile at www.sedarplus.ca .
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 Lexaria BioscienceCorp’s ground-breaking DehydraTECH patent portfolio for productdevelopment, licensing and B2B and B2C sales of cannabis ingredientsor products on a global scale. Our Hill Street Beverages business unitrepresents the Company’s legacy alcohol-free consumer beveragemarketing 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:
Matthew Jewell, Chief Financial Officer
matthew@hillincorporated.com
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.
* FY2022 licensingrevenues have been adjusted to reflect bad debts recognized insubsequent periods related to those revenues.
1 US Census Bureau, https://www.census.gov/quickfacts/fact/table/US/PST045221
2 MJBiz Factbook2023
3 MJBiz Factbook2023
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