BUSINESS HIGHLIGHTS FOR Q2 FY 2024
- We Continued to Expand the DehydraTECH Licensee Eco-System, As Leading Multi-State Operator MariMed Inc. Launched New DehydraTECH-Powered Products in Q2
- DehydraTECH Licensee 1906 Launched an Exciting New Direct-To-Consumer Product Line, Produced Using DehydraTECH, Across A Majority of US States During Q2, Adding to Their Existing Product Lines Already Sold in Licensed Dispensaries
- We Continued to Drive Marketplace Growth on Vin(Zero) Alcohol-Free Wine, Increasing Shipments to Retailers by 11% in Q2 vs. Year Ago and Adding the Largest Grocery Retailer in Western Canada – Save-On-Foods – to Our Base of Vin(Zero) Customers
FINANCIAL HIGHLIGHTS FOR Q2 FY 2024 AND THE SIX MONTHS ENDED DECEMBER 31, 2023
- We Delivered the Second-Highest Quarterly Gross Profit in Company History in Q2, Topping $500K For the Second Time
- We Narrowed the Net Loss for the Six-Month Period by 23% vs. Same Period Year Ago
Toronto, ON. — March 1, 2024 — Hill Incorporated, formerly Hill Street Beverage Company Inc. (TSXV: HILL) (OTCQB: HSEEF) (“Hill” or the “Company”), is pleased to announce that it has released its financial results for the three- and six-month periods ended December 31, 2023 (“Q2”), which can be found at www.sedarplus.com. The progressive bioscience implementation company is dedicated to building pathways to better and healthier living by leveraging deep CPG expertise to commercialize leading-edge technologies, crafting superior cannabis solutions and non-alcoholic beverage products globally. The financial information summarized in this press release is based on data from Q2 FY2024.
We Continued to Expand the DehydraTECH Licensee Eco-System, As Leading Multi-State Operator MariMed Inc. Launched New DehydraTECH-Powered Products in Q2
Intensive R&D, product and commercial manufacturing development led to our November 16, 2023 announcement that leading multi-state operator MariMed will use the patented DehydraTECH biodelivery technology to power the next generation of cannabis edibles sold under several of its award-winning brands.
MariMed has now rolled out improved DehydraTECH-powered products in Massachusetts, Maryland, and Delaware, with Illinois planned to launch in early 2024 as well. MariMed brands now powered by DehydraTECH include ‘Vibations™’ all-natural, full-spectrum cannabis drink mix, which recently won first place in the beverages category of the High Times Cannabis Cup in Massachusetts, ‘K Fusion™’ chewable tablets, and ‘InHouseTM’ gummies. More information on MariMed brands can be found at MariMed Brands.
We anticipate that this major new multi-state, multi-brand licensee will deliver strong incremental licensing revenues in 2024 as their launches reach full scale and expand across their state footprint.
The addition of MariMed to our DehydraTECH licensee ecosystem represents continued expansion by Hill on the key factors driving the growth agenda of our DehydraTECH licensing business:
- new licensees – increasing our base of active licensees and brands;
- new states – new state launches expanding the geographic coverage for active licensees or brands;
- new product form factors – innovation to expand the number of DehydraTECH-powered consumer product forms and types in market to fill consumer needs and occasions; and
- deeper penetration of products across operations – driving deeper penetration of the breadth of product forms and brands across current and new states.
The following chart shows the significant advances we have made in the DehydraTECH licensing business, beginning from the December 2020 rights acquisition through December 2023 at the close of Q2 FY 2024.
DehydraTECH Licensee 1906 Launched an Exciting New Direct-To-Consumer Product Line, Produced Using DehydraTECH, Across A Majority of US States During Q2, Adding to Their Existing Product Lines Already Sold in Licensed Dispensaries
1906 also launched an exciting new direct-to-consumer (DTC) product line across a majority of US states, offering hemp-derived Delta-9 THC micro-dose versions of their popular ‘Drops’ products, which are also produced using DehydraTECH. This DTC launch expanded access of 1906 Drops varieties to a much broader footprint of consumers, adding DTC distribution across approximately 36 states. This new initiative adds to the dispensary availability in several legal adult-use states of the higher dose, marijuana-derived delta-9 THC 1906 Drops. 1906 has announced that they will be streamlining the dispensary availability of the higher dose, marijuana-derived delta-9 THC 1906 Drops to Illinois, Massachusetts, Missouri, New Jersey, New York and Pennsylvania. More information on 1906’s products can be found at https://1906.shop/.
We Continued to Drive Marketplace Growth on Vin(Zero) Alcohol-Free Wine, Increasing Shipments to Retailers by 11% in Q2 vs. Year Ago and Adding the Largest Grocery Retailer in Western Canada – Save-On-Foods – to Our Base of Vin(Zero) Customers
As communicated, the new streamlined commercial model on our alcohol-free business creates a new and different cadence to the business, where dramatic quarter-to-quarter swings on the recognized revenues are planned based on inventory efficiencies. Therefore, the business must be looked at across longer time frames and through different operational lenses. As we adapt to the new cadence of supply shipments and recognized revenues, a key measure of the underlying business in this new model is our case depletions, which represents the shipment figures from our distributor to retailers. Our shipments from warehouses to retail customers increased by a strong 11% during the quarter vs. year ago, showing strength of support for the 2023 holiday period.
In addition, we secured a major new account during the period that added to the strong shipments to retail, adding Save-On-Foods to our customer base. Save-On-Foods is Western Canada’s largest grocery retailer, with a dynamic history dating back to 1915. Their Wholesale Division also services Choice Markets, Quality Foods, Georgia Main, AG Foods, Buy-Low Foods & Calgary Co-Op. In total, this placement provides new consumer access to Vin(Zero) through approximately 165 Save-On-Foods stores across British Columbia, Alberta, Saskatchewan, Manitoba and the Yukon Territory. We are excited about this new additional business and its impact in 2024, on top of our strong existing base of customers.
We Delivered the Second-Highest Quarterly Gross Profit in Company History, Topping $500K for the Second Time
Consolidated net revenue for Q2 was a very strong $982,773 – the third highest ever – and our Q2 gross profit of $537,218 was the second highest in history, trailing only the record Q2 year ago. The year ago quarter had extraordinarily high revenues for the Company due to significant inventory building on the alcohol-free wine business for the first winter of the new business model. Our subsequently improved forecasting and inventory efficiency planning, as we’ve executed the model, resulted in a less significant inventory build-up for this winter season; however, alcohol-free wine net revenue in Q2 was still a very strong $671,201.
We Narrowed the Net Loss for the Six-Month Period by 23% vs. Same Period Year Ago
As reported, gross profit of $537,218 was the second highest level reached in company history, trailing only the record year ago Q2. Yet, on a consolidated basis, gross profit declined 30% for the six-month period vs. year ago that included the record Q2. As discussed, the variance is due to the changes in alcohol-free wine inventory buildup and resulting recognized revenue between the two years. Despite this decline in consolidated revenue and gross profit for the six-month period, the significant cost reduction measures we have taken have resulted in the net loss for the period improving a full 23% vs. year ago, decreasing from $856,925 to $650,614.
For the Company’s full financial statements and a comprehensive Company update by way of its Management Discussion and Analysis, please visit the Company’s profile at www.sedarplus.com.
Company Returns to OTC Pink Markets
On or around March 1, 2024, the Company’s stock will return to the OTC Pink Market from the OTCQB Venture Market (“OTCQB”) where its shares are currently traded. In the past year since we listed on the OTCQB, we have observed that there is minimal trading volume on that marketplace of the Company’s common shares. As a result, we believe that the value in maintaining its OTCQB listing does not substantiate the cost. The ticker symbol will be unchanged and investors will still be able to purchase Hill common shares via its OTC Pink listing in the United States (under the symbol “HSEEF”) or under its TSX-V listing in Canada (under the symbol “HILL”).
About Hill Incorporated (TSXV: HILL) / (OTCQB: HSEEF)
Hill Incorporated is a progressive bioscience implementation company that is dedicated to building pathways to better and healthier living by leveraging our deep CPG expertise to commercialize leading-edge technologies to craft superior cannabis solutions and non-alcoholic beverage products globally. Our Hill Avenue Cannabis business unit is pioneering the space where craft consumer products meet bioscience by combining our deep CPG commercialization expertise with our rights to use Lexaria Bioscience Corp’s ground-breaking DehydraTECH patent portfolio for product development, licensing and B2B and B2C sales of cannabis ingredients or products on a global scale. Our Hill Street Beverages business unit represents the Company’s legacy alcohol-free consumer beverage marketing and distribution business.
For more information on our business activities visit www.hillincorporated.com, to learn more about our DehydraTECH cannabis biodelivery technology, go to www.dehydratech-thc.com, or to check out Hill Street Beverage’s award-winning alcohol-free wine line-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 Incorporated mailing 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 contain forward-looking information. Any statements in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as “may”, “should”, “would”, “anticipate”, “expects”, and similar expressions. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances, such as future availability of capital on favourable terms, may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The forward-looking statements contained in this press release are made as of the date of this press release. The Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities law.
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