Elixinol Global Limited (ASX: EXL) manufactures and distributes hemp dietary supplement and skincare products globally. The company enjoys its global presence in the cannabis industry which includes hemp-derived CBD dietary supplements, hemp food and wellness products.
The company today on 23 April 2019, has provided its quarterly business update. The company has reported unaudited group revenue of $8.2 million for Q1 FY2019, an increase of 21% over Q1 FY2018. It represents a strong quarter on quarter sales growth over the past four quarters since its IPO on ASX.
The sales however declined by 31% QoQ, primarily on the back of a strategic decision by EXL to reduce the focus on low margin private label business in the US. The reduction in private label sales provides EXL with expanded capacity for expected future growth across higher margin products and the ability to capture further market share.
The company’s global investment in top-line growth is on track. There is a significant opportunity to grow sales in Europe and the US via large retailers, with ongoing conversations expected to lead to the signing of distribution agreements over the coming quarters. Japan continues to provide significant export opportunities as the industry matures.
The CEO of the company, Paul Benhaim commented that the positive movement in legislation across industrial hemp markets, in combination with its investment into top-line growth during the March quarter, underpins EXL’s objective of becoming a global leader of CBD consumer products.
The company continued to diversify its business across a variety of channels and made significant investments into several key geographies globally, including its strong progress in Europe. The company is very confident in its future growth strategy as it continues to diversify its branded product mix with a focus on national retail sales as mentioned by the CEO.
The company continued to invest in key areas of the business to pursue its strategy and focus on increasing its distribution of branded products to grow revenues and capture further market share.
During Q1 FY2019, the company significantly increased its inventory levels as it anticipated an increase in consumer demand. Capital expenditure during Q1 FY2019 amounted to $5.4 million, which included the purchase of land in NSW for the Nunyara business ($2.6 million), funding the final instalment of the NCHPP joint venture equity contribution ($1.0 million) and fit out expenditure for the commissioning of the new Colorado production facility ($1.5 million).
On the financial front, the net cash outflow from operating activities stood at $~9.99 million for the quarter, with its net investing cash outflow at ~$5.40 million. The cash and cash equivalent for the end of the quarter, however, stood at ~$27.39 million.
At the time of writing (23 April 2019 AEST 01:03 PM), the stock of the company is trading at a price of A$4.985 (down 2.827% intraday), with the market capitalisation of ~A$638.94 million. The stock has generated significant YTD return of 90.71% and returns of 163.08%, 86.55% and 49.56% over the past six months, three months and one-month period, respectively. Its 52-week high price stands at $5.930, and 52-week low price stands at $1.350 with an average trading volume of 438,220.
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