Hempco Reports Q2 2018 Results
Hempco Reports Q2 2018 Results |
[20-April-2018] |
Positive momentum from new initiatives TSX-V: HEMP VANCOUVER, April 20, 2018 /CNW/ - Hempco Food and Fiber Inc. ("Hempco" of the "Company") (TSX-V: HEMP) today announced its results for the second quarter fiscal 2018 period ended February 28, 2018. Q2 2018 and Subsequent Operational and Strategic Highlights
Management Commentary "While we continued to experience the effects of the temporary exit from the Korean market, as well as some customer transition in the U.S., our strategic initiatives are starting to generate strong positive momentum," said Diane Jang, CEO. "We are witnessing encouraging growth of our CPG brand PLANET HEMP, in part driven by greater consumer awareness of the benefits of hemp as a food supplement and as an important source of plant-based protein. The launch of PLANET HEMP on Amazon.com and Well.ca, as well as a growing number of highly visible and well-connected distributors are expected to drive continued growth into Q2 and beyond. The support from our strategic partner Aurora, the imminent completion of our Nisku facility, the pending change in legislation allowing Hempco to pursuit a whole plant utilization strategy and further product diversification, positions Hempco very well to pursue the many opportunities in our markets, and we look forward to reporting on our progress in the coming quarters." Financial Review A more detailed discussion of financial results is provided in the Company's Management Discussion and Analysis, filed on www.sedar.com Net loss for the 3-month period ended February 28, 2018 came in at $0.9 million, a $0.6 million increase due mainly to lower gross profit resulting from reduced sales volumes. Operating costs increased marginally by $0.1 million as the Company is investing in growth initiatives related to its new product lines and its new Nisku facility. Revenues Revenues of $0.3 million for the quarter ended February 28, 2018 decreased by $1.6 million, attributable to the Company's temporary exit from the Korean market and one major U.S. customer seeking alternative third-party supply, offset partially by strong early growth across the Company's new product lines PLANET HEMP and PRAISE. Hempco's product improvement initiatives, launched in 2017, will enable the Company to begin marketing its new SAFE quality assurance program once its Nisku facility is up and running. This will strengthen Hempco's brand positioning and product diversification, as well it will allow for the pursuit of larger customers. Cost of Sales and Gross Profit The cost of sales for the three-month period ended February 28, 2018 came in at $0.3 million, resulting in a slight negative gross profit of $0.1 million. In comparison, cost of sales for the same period in the prior year was $1.9 million with a profit recorded of $0.4 million. The negative gross profit in the current quarter is due to the lower sales not being sufficient to offset fixed costs and adjustments made for slower moving product. Expenses Overall operating expenses increased to $0.9 million for the three-month period ended February 28, 2018, as compared to $0.8 million for the same quarter in the prior year. Contracts related to investor relations and corporate development were not renewed. However, lease and personnel monitoring costs related to Nisku resulted in an increased contribution to selling, general and administrative expenses, as compared to the February 2017 quarter. Outlook Hempco continued executing on its strategy to reposition the Company in the three months ended February 28, 2018, by focusing on three key initiatives:
The PLANET HEMP CPG brand is growing steadily in Canada since its launch in fiscal 2017, with the product line currently carried in over 70 retail stores. Further retail expansion and new product innovations are expected in 2018, targeting natural/specialty food and grocery retailers. Implementation of the Company's CPG e-commerce strategy commence in 2018 with product launches on Amazon.com and Well.ca., two of the most heavily visited sales channels for natural health products. The Company continues to work on the completion of its new hemp hurd processing capacity. Once operational, this facility will extract fibers from the hemp "stalk" for sale into a ready market. Hurd processing is anticipated to provide an additional revenue stream for both the Company and the farmers Hempco deals with. One of the biggest recent developments for the hemp market is the anticipated ability under the new Cannabis Act, expected to be implanted in the summer of 2018, to start processing hemp for the extraction of CBD oils. The Company estimates it will be able to source in excess of 5 million pounds of chafe for potential sale through its farmer contacts, which would benefit the Company, as well as hemp farmers and the Company`s partners, Aurora and Aurora`s extraction partner Radient Technologies. The partnership with Aurora provides Hempco with a highly visible partner. Leveraging of Aurora`s expanding infrastructure and growing constellation of trusted partners, management expects it will contribute to the Company`s ability to accelerate its commercial development into new markets and revenue streams. The potential addition of hurd and chafe processing would move the Company toward its vision of whole plant utilization, to the benefit of consumers, farmers and shareholders. About Hempco For more than 12 years Hempco has been a trusted and respected pioneer, innovator and provider of premier hemp seed foods. Hempco is committed to developing hemp foods, hemp fiber and hemp nutraceuticals, a "tri-crop" opportunity for producers and processors. Hempco is expanding its processing ability to meet global demands in a 56,000sq. ft. facility located at Nisku, Alberta. Hempco's common shares trade on the TSX Venture Exchange under the symbol "HEMP". Hempco® has grown its business significantly and is generating value and profits for shareholders. On behalf of the Board of Directors Diane Jang This news release includes statements containing certain "forward-looking information" within the meaning of applicable securities law ("forward-looking statements"). Forward-looking statements are frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Hempco is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. Neither TSX-V, nor its Regulation Services Provider (as that term is defined in the policies of TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this release. SOURCE Hempco Food and Fiber Inc. | ||
Company Codes: TorontoVE:HEMP |
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