Harvest One's Q2 Revenue Drops 10% YoY, Adjusted EBITDA Continues To Improve

Harvest One Cannabis Inc. HVT HRVOF announced its fiscal second quarter and year-to-date financial and operating results for the three and six months ended December 31, 2021.

Q2 2022 Financial Highlights

• Total net revenue from continued operations amounted to $1.74 million, representing a roughly 10% decrease from the $1.93 million reported in the same quarter of last year. The decrease is due to lower sales of Dream Water in US and lower LivRelief sales in Canada as a result of supply chain disruptions and labour shortages stemming from the Omicron wave of the COVID-19 pandemic.
• Gross profit totaled $0.64 million and a gross profit margin was 37% from continued operations as compared to $1 million or 52% in the second quarter of fiscal 2021. The decrease in gross margin is the result of a reduction in net sales, an inventory write-down of $0.16 million and the reversal of a write-down of $0.28 million in the prior year’s period.
• Expenses from continuing operations totaled $1.75 million as compared to $1.99 million in the prior year’s quarter, representing a 12% reduction. The decrease was driven by management's actions to reduce costs and overhead to improve profitability and such costs include, but are not limited to, salaries, fees for professional services and insurance.
• Adjusted EBITDA from continued operations came in negative at $0.95 million in the second quarter of fiscal 2022 compared to a $1.27 million loss in the prior year’s period, representing a $0.32 million or 25% quarter-over-quarter improvement.

Six-Month Period Ending Dec. 31

• Total net revenue from continued operations was $3.87 million - an approximately $0.12 million or 3% increase over $3.75 million reported in same period last year.
• Gross profit totaled $1.35 million and a gross profit margin was 35% from continued operations as compared to $1.44 million and 39% in same period last year.
• Expenses from continuing operations of $3.24 million, compared to $3.97 million in the same quarter of 2021, representing a 18% reduction.
• Adjusted EBITDA from continued operations came in negative at $1.73 million, compared to a $2.66 million loss in the prior year’s quarter, representing a $0.93 million or 35% year-to-date improvement.

Management Commentary & Outlook

"Our three- and six-months results continue to demonstrate steady progress towards our financial objectives of increasing adjusted earnings before interest, taxes, depreciation and amortization ('Adjusted EBITDA') while simultaneously reducing operating and overhead expenditures," Gord Davey, president and CEO of Harvest One, said. "Our strategic transition to a global leading health and wellness company that is uniquely positioned in the cannabis space has been beneficial

Management anticipates that sales volumes, net revenues, and Adjusted EBITDA will improve throughout the next quarter due to continued infused topical sales, expanded distribution coverage, product launch and branding initiatives, improvements in gross profit, a continued focus on reducing overhead costs, continued entry into the US market, the normalization of the supply chain, and a reduction in pricing pressures though market rationalization.

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