Elixinol Announces Strong Financial Earnings Largely Due to Demand For Hemp Cannabidiol (CBD)

Elixinol Global Limited (ASX: EXL, Group or the Company), a global company operating in the industrial hemp, dietary supplements and emerging medicinal cannabis sectors, has reported strong revenue growth for 1H FY2018 (December year end) of AU$14.9m, up 110% on 1H FY2017. Underlying EBITDA of $0.8m was up on 1H FY2017 of ($0.1m) resulting in a maiden profit for the Group.

The strong growth resulted from a notable increase in product sales, driven largely by EXL’s Colorado-based business, Elixinol.

Elixinol reported revenues for 1H FY2018 of AU$12.5m, up 119% on 1H FY2017. EBITDA for 1H FY2018 was AU$2.2m, up 100% on 1H FY2017. The EBITDA margin declined slightly for 1H FY2018 at 17.2% from 19.9% in 1H FY2017 due to strong volume growth in lower margin private label sales. Other segments: e-commerce, mid-market and bulk, were all strong performers. Investment has been made for future growth and production efficiencies, which are expected to show benefit in FY2019.

Elixinol is following a disciplined approach to driving growth, supported by investment in farming and production capabilities in Colorado. A channel sales strategy is in place to drive growth in the higher-margin e-commerce, national accounts, mid-market accounts and private label branded products segments. Key sales hires focused on national and mid-market distribution were made to drive future sales and higher margin growth. Additionally, investment was made by Elixinol to scale e-commerce in the US, Europe and Japan, and to support an increase in marketing activity during the period. A number of new products are expected to be launched in calendar 2019.

The Northern Colorado High Plains Producers (NCHPP) cultivation joint venture with Kersey Ag Company LLC entered into in April, will shore up supply of US domestic cannabidiol (CBD) hemp. The JV brings a cultivation capacity of 700+ acres, of which approximately 173 acres were planted in 1H FY2018.

The new vertically integrated operation in Colorado expects a new GMP certified production facility to be commissioned in late calendar 2018 which will more than double the usable capacity for processing, manufacturing and fulfillment operations, expanding capacity from a 8,700 sq. ft. facility by an additional 12,000 sq. ft., totaling 20,700 sq. ft.. Production capabilities will be 5,000 kg of alcohol-extracted hemp CBD and 3,125 kg of CO2 extracted CBD extract. Further expansion plans are underway in the medium term for an additional 20,000 square foot facility.

Elixinol has an existing export footprint with sales to 40 countries, which it plans to grow significantly in the near term with Europe and Japan seen as key markets. Major activities are underway to further develop localized marketing and sales activities in Europe and Japan to strengthen customer channels including optimizing existing distribution agreements and alliances.

In addition to the significant investments made to support the demand for Elixinol product internationally, Elixinol expects increased consumer reach pending favorable hemp legislation within the 2018 Farm Bill.

About EXL

EXL is publicly traded on the Australian Securities Exchange (ASX:EXL) and through its businesses has a global presence in the cannabis industry including hemp-derived CBD dietary supplements, food and wellness products, as well as the cultivation and manufacture of medicinal cannabis products. Elixinol Global’s businesses include:

• Elixinol, which was founded in 2014, is a manufacturer and global distributor of industrial hemp based dietary supplement and skincare products, with operations based out of Colorado, USA;
• Hemp Foods Australia, which was founded in 1999, is a leading hemp food wholesaler, retailer, manufacturer and exporter of bulk and branded raw materials, and finished products;
• Elixinol Australia, which was founded in 2014 to participate in the emerging Australian medicinal cannabis market and submitted licence applications for cultivation and manufacture to the Office of Drug Control in early CY 2018. These applications are currently pending approval.

 

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.