Halo Collective Inc. (NEO: HALO) (OTCQB: HCANF) posted mostly positive results with revenues ticking up over the quarter — illustrating the west-coast operator’s pursuit to shave losses and pay down debt. The company announced its financial results for the first quarter ending June 30, 2022.
Halo reported approximately $6.9 million in revenue during the period, a 24.9% gain versus the same period last year; and a gain of 9.7% sequentially.
The company also reported a second-quarter net loss of $11.4 million, down from $13.8 million sequentially; and a net income of $11.3 million in the same period last year. The earnings were a loss of $1.64 per share versus a loss of $0.28 cents per share in the previous quarter, according to SEDAR filings.
“During the quarter, we ramped up efforts in our brand sales business, specifically Hush and Budega which are resonating with West Coast consumers and continued the retail rollout in Los Angeles where we opened the second of three planned dispensaries,” said CEO Katie Field. “Meanwhile, we de-emphasized other areas such as bulk wholesale flower and trim sales which generated good revenue but yielded lower profitability. And, we have made the decision to walk away from other parts of the plan altogether such as the Ukiah Ventures buildout and Canadian retail.”
Total second-quarter sales were 2.0 million grams versus 5.0 million grams in the same period last year — a 59.4% decrease. Year-over-year, flower sales fell by 6.2%, sales of pre-rolls rose by 11.5%, oils and extract sales slumped by 68.3% and edibles sales fell by 88.8%.
Halo reported a gross profit of $2.1 million, or 31.9% gross margin, versus a gross profit of $2.2 million, or 24.1% gross margin, in the same period last year. Adjusted EBITDA loss of $4.1 million versus an adjusted EBITDA loss of $4.4 million in the same period last year.
The company said it repaid $7.7 million in debt financing and raised $8.0 million from convertible debentures. It had unrestricted cash available in the amount of $1.6 million at the end of the period.
“Our efforts to do more with less are already paying off,” Field said. “In the second quarter, we maintained steady gross margins despite the downward pressure on wholesale pricing and volumes across our markets. We have also made progress reducing Halo’s indebtedness through debt paydowns.”
“Importantly, we are transforming the Company into a focused West Coast operator amidst market conditions in California and Oregon that continue to be very challenging,” she added, “but longer-term, are expected to be fertile grounds for significant growth and profitability for well-positioned companies such as Halo. I am highly confident that Halo is on the right path as a leader in these attractive markets. The initiatives we are undertaking, including those in the second quarter, will strengthen the Company and ultimately enhance shareholder value.”