Canada NewsWire
VANCOUVER, July 26, 2018
Positive momentum from new initiatives results in doubling of quarterly revenues
TSX-V: HEMP
VANCOUVER, July 26, 2018 /CNW/ - Hempco Food and Fiber Inc. ("Hempco" of the "Company") (TSX-V: HEMP) today announced its results for the third quarter fiscal 2018 period ended May 31, 2018.
Q3 2018 and Subsequent Operational and Strategic Highlights
Management Commentary
"We are very encouraged by the early successes of our strategy to expand our product offering, access new revenue streams and develop additional distribution channels across the globe," said Diane Jang, CEO. "The momentum we are experiencing with our consumer packaged goods lines under the PLANET HEMP and PRAISE brands, we believe, will continue to strengthen throughout the year and contribute towards accelerated revenue growth. The shift in product mix towards product offerings with higher added value is starting to positively impact our margin profile. Completion of our Nisku facility, further diversification, differentiation, and channel development, as well as the implementation of the New Cannabis Act, we believe, positions Hempco well to deliver sustainable growth and profitability."
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 May 31, 2018 came in at $1.0 million, a $0.2 million increase related to organizational investments to support and deliver growth going forward, as well as construction of the Nisku facility.
Revenues
Revenues of $1.1 million for the quarter ended May 31, 2018 increased by $0.6 million compared to the quarter ended May 31, 2017, due mainly to growth of sales in the United States and strong early growth across the Company's new product lines PLANET HEMP and PRAISE.
Cost of Sales and Gross Profit
The cost of sales for the three-month period ended May 31, 2018 came in at $0.8 million, resulting in a gross profit of $0.3 million. In comparison, cost of sales for the same period in the prior year was $0.4 million with a gross profit of $0.1 million.
Expenses
Overall operating expenses increased to $1.3 million for the three-month period ended May 31, 2018, as compared to $0.9 million for the same quarter in the prior year, related predominantly to staffing increases to execute the Company's growth strategy and expenses related to the completion of Hempco's new Nisku processing facility. Non-cash stock-based compensation were higher, reflecting grants to incoming officers and directors.
Outlook
Hempco continued executing on its strategy to reposition the Company in the three months ended May 31, 2018, by focusing on three key initiatives:
The PLANET HEMP Consumer Packaged Goods (CPG) brand is growing steadily in Canada since its launch in fiscal 2017, with the product line currently carried by over 70 retail stores. Further retail expansion and new product innovations are expected in 2018. Expansion of distribution channels, targeting natural/specialty food and grocery retailers, is expected to deliver greater market penetration. Implementation of the Company's CPG e-commerce strategy, commenced in 2018 with product launches on Amazon.com and Well.ca, two of the most heavily visited sales channels for natural health products, is anticipated to be another revenue driver.
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 Actto start processing hemp for the extraction of CBD oils. The Act was granted Royal Assent in June 2018. The Company will be able to source 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 strategic partnership with Aurora provides Hempco with significantly increased visibility. Leveraging Aurora`s expanding infrastructure and growing constellation of trusted partners, management expects, will enable the Company to accelerate its commercial development by entering into new markets and generating new revenue streams.
The potential addition of hurd and chafe processing is part of Hempco's strategic vision for whole plant utilization, which the Company believes will benefit of consumers, farmers and shareholders.
Overall, the Company is well positioned to capitalize on the numerous opportunities present in the various bulk and consumer packaged goods segments of the hemp market. Hempco is well-capitalized to execute on its strategy, and management anticipates that continued positive momentum in its various markets will contribute towards accelerated revenue growth and positive margin development.
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 a sustainable future. 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
Chief Executive Officer
+1.604.431.8787
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.
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