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Revenue Skyrockets HEXO in its First Quarter Total of Recreational Pot Sales – Motley Fool



When a producer of Canadian marijuana

reported his fiscal results in the first quarter 2019 in December, the company's income was only two weeks of recreational marija sales. Investors did not get a full picture of how much HEXO would generate for the new market. But that picture is quite clear now.

HEXO announced the results from its second fiscal quarter 2019, which ended on January 31, before the market opened Thursday. Here are the highlights from the company's update. (All figures are in Canadian dollars.) [1409]] Image source: Getty Images.

Results HEXO: The numbers

Metric

Q2 201

9

Q2 2018

Year Changes Sales

CA $ 16.2 million CA $ 1.2 million

1,268.8%

Net income (loss)

(CA $ 4.3 million) (CA $ 8.9 million)

N / A

Adjusted earnings per share (EPS)

(CA $ 0.02) (CA $ 0.10)

N / A

Data source: HEXO. CA $ 1 = $ 0.75.

What happened to HEXO this quarter?

The growth of HEXO sales has not been surprising. More than 91% of the company's second quarter income, almost CA $ 14.8 million, came from the marijuana recreational market used by adults in Canada.

It is not surprising that HEXO made most of its sales. The company has a major supply agreement with the province of Quebec and generated 84% of its sales used by adults in the province in the second quarter. The rest of HEXO's adult use sales came from British Columbia and Ontario.

Most of HEXO's improvement arose from the previous quarter and from the previous year from volume growth. However, the company benefited from an increase of $ 0.38 per gram on the average selling price from the previous quarter.

Although there was at least a small surprise, however, that recreational marijuana sales HEXO increased by 185% over the previous quarter. This is definitely a big jump. But almost six times as many days of recreational sales in the second quarter were fiscal compared to the first quarter – 92 days to 16 days.

Cannabis medical sales increased by 17% year on year to CA $ 1.4 million. However, this was a decrease of 3.4% from the previous quarter.

What the management had to say

HEXO CEO and co-founder Sebastien St-Louis said, "This is an exciting time for HEXO as we continue to achieve milestones on the way to become the two best cannabis companies. " 19659002] St-Louis said:

This quarter saw not only an exponential increase in income and gross output, but we continued to deliver on our commitments including building and licensing milestones in relation to our 1,000,000 square feet greenhouse expansion and subscription to the NYSE-A. Just yesterday, we announced an agreement to acquire Newstrike Brands Limited. HEXO's future is very promising, I look forward to continuing to drive shareholder value and achieve milestones with our staff. in the third quarter. However, HEXO estimates that the net income in the fourth quarter will be double in the second quarter. What will make a big difference? Ability.

The company is expected to complete its initial harvest from its new 1 million square feet greenhouse in the third quarter. This expansion will increase HEXO's annual production capacity to approximately 108,000 kilograms. But better days should be ahead.

HEXO announced that Newstrike Brands, a market that will increase its annual production capacity to around 150,000 kilograms. The company's partnership with Molson Coors greatly enhances HEXO making profits from the expanded recreational market in Canada for cannabis drinks and edibles. HEXO is expected to open this market in the latter part of 2019.

Keith Speights has no position in any of the stocks mentioned. The shares of Molson Coors Brewing are owned by Motool Fool. Motley Fool recommends HEXO. Policy has been disclosed by Motley Fool


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