HEXO Corp (HEXO) 首席执行官 Sebastien St-Louis 于 2019年 第三季度业绩 - 收益电话会议记录

HEXO Corp. (NYSEMKT:HEXO) Q3 2019 Earnings Conference Call June 13, 2019 8:30 AM ET

HEXO Corp.(纽约证券交易所代码:[HEXO])2019年第3季度收益电话会议2019年6月13日美国东部时间上午8:30


Jennifer Smith – Director-Investor Relations
Sebastien St-Louis – Chief Executive Officer

  • Jennifer Smith - 投资者关系总监
  • Sebastien St-Louis - 首席执行官


Erica Eiler – Oppenheimer
Oliver Rowe – Scotiabank
Chris Carey – Bank-America
Brett Hundley – Seaport Global
Graeme Kreindler – Eight Capital
Matt Bottomley – Canaccord Genuity
Robert Fagan – GMP
David Kideckel – AltaCorp Capital
John Chu – Desjardins Capital Markets
Krishna Ruthnum – CIBC

  • Erica Eiler - 奥本海默
  • Oliver Rowe - Scotiabank
  • 克里斯凯瑞 - 银行 - 美国
  • Brett Hundley - 海港全球
  • Graeme Kreindler - 八大资本
  • Matt Bottomley - Canaccord Genuity
  • Robert Fagan - GMP
  • David Kideckel - AltaCorp Capital
  • John Chu - Desjardins资本市场
  • Krishna Ruthnum - CIBC


Good morning, and welcome to HEXO Corp's Third Quarter Fiscal 2019 Earnings Call. After the presentation, we will conduct a question-and-answer session. All lines have been placed on mute to prevent any background noise. [Operator Instructions] Please note that this call is being recorded today, June 13, 2019 at 8:30 a.m. Eastern Time.
I would now like to turn the call over to Jennifer Smith, Director of Investor Relations at HEXO Corp. Ms. Smith, you may proceed.

早上好,欢迎来到HEXO公司第三季度财政收入电话会议。 演讲结束后,我们将进行问答环节。 所有线路都已静音以防止任何背景噪音。 [操作员说明]请注意,此电话将于2019年6月13日美国东部时间上午8:30记录。

我现在想把这个电话转给HEXO公司投资者关系总监Jennifer Smith女士,你可以继续。


Good morning, everyone, and welcome to HEXO's fourth quarter earnings call. We will start with a presentation by our CEO, Sebastien St-Louis, who will recap the company's third quarter results, the recently completed acquisition of Newstrike Brands Limited and our financial outlook, before opening the floor to questions from financial analysts.
Before we begin, I would like to remind you that today's presentation contains forward-looking information that involves known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current expectations. These statements should not be read as assurances of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements.
A more complete discussion of the risks and uncertainties facing the company appears in the company's annual information form and the company's management discussion and analysis for the three and nine month periods ended April 30, 2019, which are available under the company's profile on SEDAR. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the presentation. The company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements as a result of new information, future events or for any other reason. Sebastien?

大家早上好,欢迎来到HEXO的第四季度财报电话会议。我们将首先介绍我们的首席执行官Sebastien St-Louis,他将重温公司的第三季度业绩,最近完成对Newstrike Brands Limited的收购以及我们的财务前景,然后开始讨论金融分析师提出的问题。



Sebastien St-Louis

Thank you, Jennifer. Q3 was a busy quarter. Our vision to become top three global cannabis company and top two in Canada is based on three pillars: operational scalability, product innovation and brand leadership. Our investments in our resources, technology, infrastructure and especially human capital is critical to achieving that goal and through this quarter we've made meaningful progress. Under the direction of our Chief Innovation Officer, Veronique Hamel, we're continuing to expand our R&D and innovation team with top scientists, chemists, who have extensive experience in CPG companies such as Kellogg's, Church & Dwight, Coca-Cola, Philip Morris, Campbell Soup, Smuckers that's just to name a few.
We now have 25 PhDs on staff. They're focused on developing new and innovative products for the market, best-in-class technology for our powered by HEXO experiences. Building on our innovative technology is critical in building brands. We believe that brand will be the final moat by which CPG cannabis companies are differentiated, but in the meantime, those products in that moth will be built on distribution and technology having consistent quick on and quick off cannabis experiences that includes sleep, sport, focus, diets, sex and fun, delivered through a full range of powered by HEXO products is what we're striving to create.
Developing these experiences and partnership with Fortune 500 partners through our hub and spoke is how we're going to achieve that goal. We've added three people to the team with extensive leadership and CPG experience including our new COO, Donald Courtney, notable experience at Mars, Pepsi Bottling Group and also as the head of MedReleaf. As well we've recently welcomed Michael Monahan as our newly appointed Chief Financial Officer. Michael’s guidance will help the company to drive our global strategy moving forward based out of the U.S. and he brings his wealth of experience from privately held and public companies such as Nutrisystem, where he had a very successful exit.
We recently secured about 200,000 kilograms of hemp supply for CBD and non-THC cannabinoid extraction in fiscal 2020 and a closer term we've done a secondary supply agreement of approximately 60,000 kilograms of hemp to be supplied in the next two quarters as we prepare for the upcoming demand in edibles and concentrates pending legalization in October in Canada. Our hemp supply chain is a critical element to our strategy to be an eight U.S. states in 2020 legally through traditional non-MJ channels. We're looking forward to the following month, so that we can elaborate on that strategy.
We've signed a multi-year extraction agreement with Valens to extract a minimum of 30,000 kilograms in year one and 50,000 kilograms in cannabis and hemp biomass in year two. So this helps to smooth out our operating ramp-up and curves as we expand our production to our near-term target of 150,000 kilograms and prepare for the legalization of edibles in October. Note that our Belleville site that I'll speak about later in the call will actually be built to support the extraction using all types of extraction technologies for about 375 tons of processing capacity annually.

谢谢你,珍妮弗。第三季度是一个繁忙的季度。我们成为全球三大大麻公司和加拿大前两大公司的愿景基于三大支柱:运营可扩展性,产品创新和品牌领导力。我们对资源,技术,基础设施尤其是人力资本的投资对实现这一目标至关重要,本季度我们取得了有意义的进展。在我们的首席创新官Veronique Hamel的指导下,我们将继续与顶级科学家,化学家一起拓展我们的研发和创新团队,他们在CPG公司拥有丰富的经验,如Kellogg's,Church&Dwight,可口可乐,菲利普莫里斯,坎贝尔汤,Smuckers,仅举几例。





We're the first cannabis company to join Food and Consumer Products of Canada, which is the largest voice of the Canadian food, beverage and consumer products industry. We welcome the addition of 374 new employees, which brings our headcount to 822 employees at the end of Q3, and today, I'm very proud to say that the team has grown to 1,100 and everyone is working very hard. I thank them very much.
We continue to expand our CSR initiatives, focused on being good corporate citizens. Our support has helped to ensure that those who depend on the services of Moisson-Outaouais and the Ottawa Food Bank will continue to receive the necessary access to fresh sustainable food using environmentally sound technology. Our customers remain our focus.
To date, we have sold over 7.5 million grams of adult-use in medical cannabis to Canadians who depend on our safe reputable and high quality products. Adult-use grams and grams equivalent sold increased 9% to 2,700 from last quarter as we continue to expand our distribution across Canada.
Q3 2019, we produced approximately 9.8 tons of dried gram equivalent, so 9,800 kilograms, a 98% increase from the previous quarter. That was due mainly to our increased yields in our 250,000 square foot B6 greenhouse and also our first harvest of 1 million square foot B9 greenhouse.
First harvest, I remind everyone, that happened five quarters out from us announcing that we would build that facility, one of the fastest build-outs of a large scale modern cannabis facility on the planet.
We're preparing for Phase two of the Canadian adult-use market with the legalization of edibles and concentrates, which is expected in October 2019, although there is some timing risk to that date, we may see a delay from a regulatory perspective of up to 60 days pushing us into December. We are developing gummies, a premium vape line and a line of cannabis-infused beverages with Truss, our joint venture with Molson Coors Canada. We remain focused on delivering net revenue in fiscal 2020 of over CAD400 million and that of course excludes Truss Beverages.
Subsequent to the end of Q3 2019, we completed the acquisition of Newstrike, providing us with the near-term increase in production to a 150,000 kilograms annually, expanding our cultivation to three campuses, giving us resiliency and redundancy and giving us access as well to nine provincial agreements, so now reaching over 95% of the Canadian population and increasing the HEXO family by approximately 250 employees.
I mentioned Bellville earlier on the call, very proud to say we are on track. Phase one was online in May as planned and we plan on having the building fully operational by the fall. That will include not only HEXO core operations in about 580,000 square feet but also the Truss, Molson Coors joint venture which we are expecting to have a full line of bottling and canning made available to be ready for October legalization should regulations allow.
A 1.5 million square foot facility will also allow future Fortune 500 partners a licensed, centrally-located facility optimized for their specific manufacturing requirements. Looking forward to sharing the future on our future partners.






我们正在为加拿大成人用途市场的第二阶段做准备,食品和浓缩物合法化,预计在2019年10月,虽然到目前为止存在一些时间风险,但我们可能会看到从监管角度出现延迟到了12月将我们推向了12月。我们与加拿大Molson Coors的合资公司Truss开发了gummies,优质vape系列和一系列大麻饮料。我们仍然专注于在2020财年实现超过4亿加元的净收入,当然这不包括桁架饮料。


我早些时候在电话会议上提到了贝尔维尔,非常自豪地说我们正在走上正轨。第一阶段按计划在5月上线,我们计划在秋季完全投入使用。这不仅包括HEXO在约580,000平方英尺的核心业务,还包括Truss,Molson Coors合资企业,我们期望拥有全系列的装瓶和罐装,以便在法规允许的情况下为10月合法化做好准备。


It was very exciting announcement this morning. We announced that HEXO was now officially international, licensed in multiple jurisdictions with our Greece update. So, we announced that HEXO MED has received its medical cannabis installation license in Europe and that's another step towards our plan of providing regulatory access to Fortune 500 companies, so that we can use their existing distribution networks in countries such as the UK, France and all supplied from a European domicile.
Financial results. Our total gross revenue was 15.9 million for the third quarter, an increase of 11.8 times over the same quarter in the prior year. As I guided, last quarter gross adult-use revenue remained flat at 14.6 million in comparison to the same period in 2018, it increased by almost a 1,000% which included only medical sales last year. We expect revenues to double this quarter with realized sales from the first harvest from B9 and our one million square-foot facility and also as we start to shift flower outside of Quebec, which we're very excited to do.
Sales volume increased 9% to 2,700 kilograms from 2,500 kilograms in Q2. Flower and dry products, accounted for about 84% of gram and gram equivalent sold during the quarter, oils accounting for the remaining 16%.
We achieved adult-use revenues per gram of CAD5.29, a CAD0.54 decrease over last quarter, due to a shift in product mix and 94% of our sales were done in Quebec, with 9% coming from Ontario and BC, reminding everyone that we had not begun selling flower in Ontario and BC.
Cost of sales remains consistent with the prior quarter, about CAD6.6 million including the cost of dry flower and the transformation costs related to oil and value-added products. The fair value adjustment on the sale of inventory was CAD4.7 million, which has increased from CAD572,000 in Q3 2018 due to an increase in sales, which was offset by lower fair value per gram on the adult-use market.
The fair value adjustment on biological assets was CAD20 million compared with CAD2.5 million in Q3 2018. This is due to an increase in the number of plants on hand, the result of bringing B6 and B9 fully online. So B9 is full of plants today, you can see that in a video that was publicized on Tuesday. I'd invite everyone on the call to go Google for that HEXO reel, you can see our staff hard at work and B9 full of plants. We also drove higher yields this quarter on a per plant and per square foot basis, and we expect that to continue meaningfully as we ramp through our 150-ton a year production capacity.
Our gross margin before fair value adjustment on biological assets was $6.4 million, yielding a 49% gross margin on net revenue. So holding towards the 50%, we do expect over the next 24 months as there is significant pricing compression that the flower might gradually gross margins towards the 40%. We do expect that as we introduce more and more advanced products, we'll be able to pull that gross margin back towards the 50%, but do expect some turbulence on gross margin in the short-term.

这是今天早上非常令人兴奋的消息。我们宣布HEXO现已正式国际化,并通过我们的希腊更新在多个司法管辖区获得许可。因此,我们宣布HEXO MED已在欧洲获得其医用大麻安装许可证,这是我们向财富500强公司提供监管访问计划的又一步,这样我们就可以在英国,法国等国家使用现有的分销网络。全部由欧洲住所提供。







Operating expenses, our G&A increased to $10.5 million in Q3 from $2 million in Q3 2018. This reflected the growth in operations as we continue to strengthen our general, finance, administrative staff an increase of $3 million. Rental expense increased by $790,000, related to rent on the Belleville facility.
Professional listing and legal expenses increased by $900,000 as a result of corporate development initiatives, and increased financial reporting and regulatory requirements from the TSX and the New York Stock Exchange American and insurance increased $1.8 million due to an increase in property plant and equipment being covered and D&O premium increased as a result of listing on the New York Stock Exchange. G&A is expecting to trend with revenues over the remaining quarter in 2019.
On marketing and promotion, we had an increase to $5.1 million in Q3 from $2.1 million in Q3 2018. And this reflects the implementation of our adult-use marketing and promotion events to build brand recognition and establish HEXO in the adult-use market. We expect this to trend with revenues in the final quarter of 2019. Our long-term goal on our marketing spend is to be roughly around 5% of revenue and we believe we're on target looking at forward revenue of $400 million or $20 million for the year, excluding sales and operations of course, so just on pure marketing spend.
Our stock-based compensation increased to $8.1 million in Q3 2019 from $783,000 in Q3 2018. This relates to an increase in the number of options outstanding and represents our increase in headcount as a result of a significant increase in the underlying market prices of those options, granted during the period.
Net loss from operations were $2.2 million in Q3 2019 compared with a $2.7 million loss in Q3 2018 and this was offset by higher revenues and increased biological fair value adjustments as our production increases. Net loss from operations decreased 61% over last quarter, due to an increase in fair market value adjustment on biological assets, based on increased scale of operations and the additional plants in our B9 greenhouse. Other income and expense of $5.5 million loss in Q3 2019 compared with $682,000 in Q3 2018, was due to re-evaluation of financial instruments of about $1.1 million and a fair value loss on a convertible note receivable of $4.1 million.
Now I'll turn it over to our analysts on the call, looking forward to taking your questions. Thanks for being here.




我们的股票薪酬在2019年第三季度从2018年第三季度的783,000美元增加到810万美元。这与未偿还期权数量的增加有关,并且由于这些期权的基本市场价格大幅上涨,我们的员工人数增加。 ,在此期间授予。

2019年第三季度的运营净亏损为220万美元,而2018年第三季度的亏损为270万美元,随着我们的产量增加,收入增加和生物公允价值调整增加抵消了这一损失。由于运营规模的扩大和B9温室中的额外工厂增加,生物资产的公平市场价值调整增加,因此运营净亏损较上季度减少61%。 2019年第三季度的其他收入和支出为550万美元,而2018年第三季度为682,000美元,这是由于重新评估金融工具约110万美元和应收可转换票据410万美元的公允价值损失。



Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Rupesh Parikh of Oppenheimer. Please go ahead.

谢谢。 女士们,先生们,我们现在开始问答环节。 [操作员说明]您的第一个问题来自奥本海默的Rupesh Parikh。 请继续。

Erica Eiler

Good morning. This is actually Erica Eiler on for Rupesh. Thanks for taking our questions. So, first I wanted to touch on the CAD400 million revenue target, we were just curious, the sensitivity and ability to hit this target if we do see the regulatory delays in advanced products. And also, maybe you could talk about some of the risks you see to potentially achieving this target?

早上好。 这实际上是Erica Eiler的Rupesh。 谢谢你提出我们的问题。 所以,首先我想谈谈4亿加元的收入目标,我们只是好奇,如果我们确实看到先进产品的监管延迟,那么达到这个目标的灵敏度和能力。 而且,也许您可以谈谈您认为可能实现此目标的一些风险?

Sebastien St-Louis

Thank you, Erica. Yes. There are two key risks to the CAD400 million. So the first one is of course the – as you pointed out, the regulatory risk. So, if we don't get the advanced products that would put – and I believe the risk of not getting it is negligible. I think the risk is really in delays. As I mentioned on the call, I think a delay to December would be prudent to expect a delay potentially in the December. But if it's further delayed that could put upwards of CAD100 million of that CAD400 million at risk as that that we're planning advanced products to be about 25% of that number.
The second risk is an execution risk, so much more in our control relating to our Belleville facility. So to achieve that CAD400 million target, we do need Belleville to be operational in the fall. And we are on track for that. But if something should happen outside of expectations, I would put that number at risk. We are confident we will deliver an operational facility in time.

谢谢Erica。 是。 4亿加元有两个主要风险。 所以第一个当然是 - 正如你所指出的那样,监管风险。 因此,如果我们没有获得可以提供的先进产品 - 我相信不能获得它的风险可以忽略不计。 我认为风险实际上是延误。 正如我在电话会议上提到的那样,我认为延迟到12月将是谨慎的,预计12月可能出现延迟。 但是,如果进一步推迟,可能会使4亿加元中的1亿加元处于风险之中,因为我们计划将先进产品提高到该数字的25%左右。

第二个风险是执行风险,我们对Belleville设施的控制更多。 因此,要实现4亿加元的目标,我们确实需要Belleville在秋季投入运营。 而且我们正在走上正轨。 但如果事情发生在预期之外,我会把这个数字置于危险之中。 我们相信我们将及时交付运营设施。

Erica Eiler

Okay, great. That's very helpful. And then I just also wanted to quickly touch on market share. Is there any update on your sense of what your market share is currently?

好,太棒了。 这非常有帮助。 然后我还想快速了解市场份额。 您对市场份额目前的看法有何更新?

Sebastien St-Louis

We believe that we're holding pretty strong as one of the top Canadian LPs. We're not sure exactly where, put us somewhere between top three and top five is probably a good guess. But we have some more work to do on those numbers.

我们相信,作为加拿大顶级LP之一,我们一直非常强大。 我们不确定究竟在哪里,把我们放在前三名和前五名之间可能是一个很好的猜测。 但我们还有更多工作要做这些数字。

Erica Eiler

Okay, great. Thank you so much.

好,太棒了。 非常感谢。


Your next question comes from Oliver Rowe of Scotiabank. Please go ahead.

您的下一个问题来自丰业银行的Oliver Rowe。 请继续。

Oliver Rowe

Hey, good morning. Thanks for taking my question. When I think about Quebec, which is obviously an important market for you, you're expecting 20,000 kilograms of sales to Quebec in the first year of REC. I think we're over halfway through that year now and sales within about 5,500 kilograms to that province. So it seems to me like it could be a bit challenging for the SQDC sales to triple over the remaining five months. Do you see a risk that the SQDC doesn't need that much product, but picks it anyway and that leads to significant inventory builds and maybe even impacts demand on your year two contract?

嗨,早安。 谢谢你提出我的问题。 当我想到魁北克这显然是一个重要的市场时,你预计在REC的第一年就会有2万公斤的销售给魁北克省。 我认为我们现在已经过了一半,而且该省的销售量在5,500公斤左右。 所以在我看来,SQDC的销售额在接下来的五个月内增加了三倍可能会有点挑战。 您是否看到SQDC不需要那么多产品的风险,但无论如何都会选择它并导致大量的库存构建,甚至可能影响您的第二年合同的需求?

Sebastien St-Louis

Yes. So definitely a risk, I think the demand is there in Quebec. I think the SQDC has been doing a fantastic job, but since there were inventory supply shortages on the early days from most LPs, so HEXO was delivering on its purchase orders, but the SQDC weren't getting fully supplied. They slowed their store ramps. So the original plan called for about 25 stores in Quebec by this day. And last quarter we were at about 13.
Now the good news is SQDC has now gone back to seven days of full time selling. So that adds significant demand. They've added more stores now. So we have a brand new store in Gatineau, right next to an Ottawa population center. I do think there could be some timing risk around a few of those tons – of those 20 tons. Now of course, as you pointed out, it is a take or pay contract, but we value our relationship with SQDC more than the few million dollars in revenue we could get this quarter.
So we're working very closely with them. We left our SKU mix to create more interesting products. We plan on launching a whole bunch of new products over the following couple quarters, which we think will help that but expect some timing risk whether it's an October, November, December timeline to hit the full 20 I think would be a reasonable assumption. We're confident we can completely offset that in more of course in other provinces.


现在好消息是SQDC现在又回到了七天的全职销售。因此增加了大量需求。他们现在增加了更多商店。所以我们在加蒂诺有一家全新的商店,紧邻渥太华人口中心。我认为这些吨中可能存在一些时间风险 - 这20吨。当然,正如你所指出的那样,这是一个收购或支付合同,但我们重视与SQDC的关系,而不是本季度我们可以获得的几百万美元收入。


Oliver Rowe

That's helpful. And just to follow-up on Quebec, I know the province recently added six more suppliers to the prior six. And I believe that you re targeting a 30% share in Quebec. So is that at risk as they increase supply or do you think 30% is a pretty sustainable number for you, no matter how many suppliers they have?

这很有帮助。 为了跟进魁北克省,我知道该省最近又增加了6家供应商。 我相信你的目标是在魁北克省占30%的份额。 那么它们会增加供应风险,或者您认为30%对您来说是一个非常可持续的数字,无论他们有多少供应商?

Sebastien St-Louis

It's always going to be a risk. I mean, people are going to be gunning for the top spots in Quebec. I mean, it's the second largest market in Canada and now people are finally realizing that. Thankfully, HEXO has a preferred supplier status, we have a great reputation in Quebec, our products are loved. So I think it's very feasible to defend our 30% market share. But of course we'll have to be very vigilant, we'll have to keep listening to our customers and responding to their needs.

这总是风险。 我的意思是,人们将会在魁北克的顶级地点开枪。 我的意思是,它是加拿大第二大市场,现在人们终于意识到了这一点。 值得庆幸的是,HEXO拥有首选的供应商地位,我们在魁北克享有盛誉,我们的产品深受喜爱。 所以我认为捍卫我们30%的市场份额是非常可行的。 但当然我们必须非常警惕,我们必须不断倾听客户的意见并回应他们的需求。

Oliver Rowe

Great. That's helpful. Thank you.

非常好。 这很有帮助。 谢谢。


Your next question comes from Chris Carey of Bank of America. Please go ahead. We have a question from Chris Carey.

您的下一个问题来自美国银行的Chris Carey。 请继续。 我们有一个来自Chris Carey的问题。


Hi. Can you hear me?

你好。 你能听到我吗?

Sebastien St-Louis

Yes, thank you, Chris.



Hi. So, just on your explication for the 40% gross margin in the near-term, I mean, how much of that is investment without getting kind of the requisite sales leverage and mix – and mix being flower and oils? It really – what I'm trying to get at is, what you think your capacity for a longer term margin is it is clearly expectations are for your gross margins to be a little bit higher over even the medium-term horizon. So I wonder if you could just talk to the near- and longer-term dynamics around the gross margin line.

你好。 那么,就你的短期40%毛利率的解释而言,我的意思是,在没有得到必要的销售杠杆和混合的情况下,投资中有多少 - 并且混合了花和油? 它真的 - 我想要得到的是,你认为你的长期利润率是多少,显然预期你的毛利率甚至会比中期更高一点。 所以我想知道你是否可以谈谈毛利率线附近的近期和长期动态。

Sebastien St-Louis

Yes, absolutely. Thank you. I think, so longer-term I think 50% is definitely doable. But that will be contingent on us building a brand more long-term. I think the 50% will be reserved to the top three or four global cannabis companies that are able to create brand pull. Otherwise, cannabis companies as a whole, not just HEXO, will be pushed towards the 30%, right, in the long-term.
I think in the short-term, the pressure is completely different. The pressure is because as we've mentioned in Quebec, new producers constantly coming online, coming to the provinces and we're talking right now about, for example, in Quebec, six new producers onlining, but remember that there's 150 companies in Canada that have licensing that want to start to sell flower. So what's going to happen in the next 18 months is that those companies are coming to the provinces saying I want to get my flower listed. These companies are not sophisticated. They're small scale. They have high cost and they need to get a listing, they need to get sales revenue.
So in turn, what we believe is going to happen is, the provinces are going to say, well, we have enough flower SKUs, we have trusted partners, we don't need your flowers. And then the smaller producers are going to have no other choice, but to drop their price. In consequence, what's going to happen is that the provinces will then call their preferred suppliers, HEXO and other major licensed producers in the country, and we'll say, well, guys, you can get to keep your listing, but you need to be competitive with these smaller guys.
What that will do is that will create a shakeup in the industry over the next 18 to 24 months. We believe there will be 80% of smaller licensed producers that will go bankrupt, because they will be unable to obtain significant listings and leverage. And as such their financing will also dry up. I think that'll be an incredible painful process and that'll put downward pressure on our ability to generate margin from flower in the short-term. That's what brings me to 40%.
Now the good news is less competition and nobody except the majors focused on advanced products and HEXO being at the top of the list as an advanced products company with great partners such as Molson Coors, we believe that we'll be able to introduce products that are in the 60% plus margin range, which helps to balance us out. So over time, as we shift from flower to advanced products, able to kind of stabilize in the 50% range.





现在好消息是竞争减少,除了主要专注于先进产品和HEXO作为Molson Coors等伟大合作伙伴的先进产品公司之外,没有其他人,我们相信我们能够推出的产品在60%以上的保证金范围内,这有助于平衡我们。因此,随着时间的推移,随着我们从花卉产品转向高级产品,能够稳定在50%的范围内。


Thanks for that. And so as the market stays along flower over a longer period of time, how quickly do you think your own product mix will shift towards new product form? So you’re 84%, I think in this quarter on flower. Will it stay at that level for the next six to nine months or do you envision being able to capitalize on these opportunities in the near-term both for things like your sprays and also obviously, you have the beverage lines coming at the end of the year?

感谢那。 因此,随着市场在较长一段时间内保持开花,您认为自己的产品组合将多快转向新的产品形式? 所以你是84%,我认为在这个季度的花。 它是否会在接下来的六到九个月内保持在这个水平,或者您是否能够在短期内利用这些机会,例如您的喷雾剂以及显然,您的饮料生产线即将到来 年?

Sebastien St-Louis

Yes. And that – well, the biggest question there, Chris is going to be the regulatory risk around the legalization. So if we're live in October, which is still very possible, but at risk, so if we were live on shelves in October and HEXO is ready. So we're ready for that date, we're going -- we're ready to load in, starting in September. So we're very excited with that. The Truss products are phenomenal. They taste great. They work super fast, so we think those are going to be a home run.
So if we launch in October, to your question on six or nine months, absolutely, I think that's going to move the needle. I don't expect the needle to move from 84% flower to 20% flower. It's not going to be that kind of seismic shift. It's going to be a month by month. People are going to try these new products. There will be some excitement, but look for a gradual move where flower takes less and less and less of our total sales.
Flower will not go away, and I believe that even long-term flower will remain about 35% of the total addressable cannabis market. And we plan on maintaining that position in Canada. I think for us to get there, if you look to Colorado, historicals could take about five years. So if you take us from 84% flower now and find a straight line down to 35% in five years, I think that’s a reasonable guess, taking into account certain regulatory risks. So if I don’t get my advanced products before December, for example, then I think expect flower to remain in the 80% plus range for six to nine months.

是。那就是 - 那里最大的问题,克里斯将成为围绕合法化的监管风险。因此,如果我们生活在十月,这仍然是非常可能的,但有风险,所以如果我们在10月份上架,HEXO准备就绪。所以我们已准备好迎接那个日期,我们要去 - 我们已准备好从9月开始加载。所以我们对此感到非常兴奋。桁架产品非常出色。他们味道很棒。他们的工作速度超快,所以我们认为这些将是一个本垒打。




Okay. Thank you. If I could squeeze in one more, I appreciate it. How quickly can you enter the U.S., and just any flavor on that launch? Thank you.

好的。 谢谢。 如果我再挤一次,我会很感激。 你能多快进入美国,并且在那次发布会上有什么味道? 谢谢。

Sebastien St-Louis

We’re very excited about the U.S. So I’ve committed to be in the U.S. in 2020. I think we can do multiple states, so the number I mentioned is eight. I think we could do those states legally with powered by HEXO non-THC based experiences, so that’d be focused sport and sleep to start. We think we can enter with our Fortune 500 partners in our hub and spoke strategy. We think we can lever their existing distribution and go through traditional non-marijuana channels.
So I think this is going to be a key advantage for us as we use our hemp supply and the farm bill and our extraction technology to clean outdoor field hemp. I think we can use all that in our formulation technology and are powered by HEXO team to gain -- to essentially leapfrog the multi-state operators. So instead of being limited to say 60 in individual retail stores, our strategy is to go with non-THC experiences at first through traditional retail where we could get a listing in a traditional retail like our Walgreens or CBS thereby getting thousand plus stores at once. So that’s a -- watch for them in 2020. And of course, if we’re able to do that a bit faster, you’ll see it in the news right away.


所以我认为这对我们来说是一个关键的优势,因为我们使用大麻供应和农场法案以及我们的提取技术来清洁户外田间大麻。我认为我们可以在我们的配方技术中使用所有这些,并由HEXO团队提供支持 - 从根本上超越多国运营商。因此,我们的策略是首先通过传统零售来实现非THC体验,而不是仅限于60个单一零售店,我们可以在传统零售店(如Walgreens或CBS)上市,从而一次性获得数千家商店。所以这是一个 - 在2020年为他们注意。当然,如果我们能够更快地做到这一点,你会立即在新闻中看到它。


Thank you.



Our next question comes from Brett Hundley of Seaport Global. Please go ahead.

我们的下一个问题来自Seaport Global的Brett Hundley。 请继续。


Hi, good morning, Sebastien. Thank you for all this detail around near-term revenue and margin. It’s really helpful. If I can go a step further and think about your specific route to the new 2.0 market, as we get beyond fiscal Q4 and maybe look at the early part of fiscal 2020. What parameters might you put in place for us thinking about revenue performance in Q1 into Q2 as you potentially short the flower market and get product ready for the 2.0 market?

嗨,早上好,塞巴斯蒂安。 感谢您关于近期收入和利润的所有细节。 这真的很有帮助。 如果我能够更进一步思考你进入新2.0市场的具体路线,那么我们将超越第四财政年度,可能会看到2020财年的早期阶段。您可能会考虑哪些参数来考虑我们的收入表现。 Q1进入第二季度,您可能会缩短花卉市场并为2.0市场做好产品准备?

Sebastien St-Louis

Yes. So we haven’t provided guidance spread on specific ramps for the CAD400 million, but you can expect that it will be an incremental step function, so try to -- I think if your model is a linear model, it will get pretty close. If -- and that’s probably a good place to start.

是。 所以我们没有提供针对4亿加元的特定斜坡的指导,但是你可以预期它将是一个增量阶梯函数,所以试着 - 我想如果你的模型是一个线性模型,它会非常接近。 如果 - 这可能是一个好的起点。


Okay. I appreciate that. And then I wanted to go back to a comment you just made on entering the U.S., because I think what you’re saying does make some sense insofar as competing well with the MSOs, if in fact you’re able to get product into traditional markets, traditional channels rather and leverage some of these hub and spoke partners. And it gets back to a question that I wanted to ask you broadly just about hub and spoke trends. We personally were hoping to see more in the way of strategic tie-up at this point in time.
And it’s at least my understanding that maybe big CPG and big pharma are looking a little bit away from marijuana and maybe towards hemp and bio synthesis insofar as getting cannabis into their branded products sooner or rather than later, and I’m clearly here focusing more on the U.S. market. Can you just talk a little bit about your own discussions with hub and spoke partners? And what you think they’re looking for at this point in time? And whether or not that’s changed relative to six or nine months ago? I’d really appreciate it.



Sebastien St-Louis

Yes. Thanks. I think you’re absolutely bang on that hemp is a key part of the strategy. So one thing that hasn’t changed for the Fortune 500s, I mean, we’re talking to over 60 of them right now in the funnel, obviously talking to more than that, about 60 in various stages of discussion. So we remain on track for our plan, kind of one a year over the next five years to round out a wheel.
The hemp strategy is key, because if you want to operate legally in the U.S., and of course not pseudo legally on a state by state basis, but legally at all levels of government with FDA and DEA, no contest, you’d need the source from hemp. And so that’s why HEXO has put in place these hemp relationships. That’s why we already now have 260 tons of hemp biomass secured under contract. That’s why we’ve invested heavily in specific extraction technology to be able to clean out those real hemp.
I think one of the things that the Fortune 500 companies, and you’ve seen this from a few of them, some of them are taking a strategy of saying, we don’t need the marijuana companies, we don’t need LPs, we’re going to go at our own, and then they take a hemp strategy. And then they come up with a product that perhaps doesn’t taste as great as what they would normally have. That doesn’t have the right actives, that doesn’t work fast enough and quite frankly becomes a sub-par offering.
Now just going with the pure hemp product, like we’re doing with a hemp oil, much easier alternatives that go in with a complex formulation something that we’re trying to achieve with powered by HEXO. So I think the discussions are still very lively. We’re still very excited about delivering kind of our one year spoke partner. In the meantime, Truss, our existing spoke partner is performing very well. We’re developing that business plan and the drinks are going to be absolutely dynamite, we believe, in traditional retail channels, so working away at that.






That’s really helpful. Thank you for going through that. Just lastly for me. Do you guys have a target for reaching profitability on the EBITDA line? We can all do the math given your commentary over the near-term, but have you disclosed any target as far as profitability on that line?

这真的很有帮助。 谢谢你的经历。 最后对我来说。 你们有没有在EBITDA线上实现盈利的目标? 我们都可以根据您对近期的评论进行数学计算,但是您是否就该行的盈利能力披露了任何目标?

Sebastien St-Louis

No, we haven’t guided that. But I do – I am happy to share with you that 2020, we’re going to make some money. I mean obviously, CAD400 million at the kind of margin we’re throwing off, it would be a little foolish not to. So we’re going to do that, but this we are in growth mode. So the reason I don’t want to guide EBITDA is because I’m ramping up my R&D team and nobody is investing in marijuana today for the EBITDA I’m going to generate next year. If we were all investing in marijuana for that reason, none of these companies should be worth what they are worth.
What we’re building, our global branded companies, what we’re building is a sustainable moats around not only that brand but the technology and the powered by HEXO experiences, and that takes significant investments. With these top PhD scientists we’ve hired, I mean, the team of 25 obviously, there’s significant cost to that but I don’t want to stop there. 25 is not enough. We plan on having 100 PhDs on staff. We believe that that will actually create a human capital moat as well beyond just the pure technology and IP.
There’s not a thousand of these top food scientists on the planet and HEXO is continuously attracting top talent. So we believe that over time that erects the technology moat over the next three years and then that gives you one more reason to go back to the Fortune 500s and say, well our technology is fundamentally better, you can do it on your own and spend hundreds of millions of dollars to try to develop a product that will be sub-par or you can solve it immediately, global supply chain, already solved in the U.S. and eight states in the UK, in France and then we also solve the technology piece. So I think that, yes, absolutely, able to be profitable next year but the number will be modulated given our investments back into R&D.

不,我们没有指导。但我这样做 - 我很高兴与大家分享,2020年,我们将赚到一些钱。我的意思是,显然,在我们放弃的那种边际上,有4亿加元,不会有点愚蠢。所以我们要做到这一点,但我们处于增长模式。所以我不想引导EBITDA的原因是因为我正在加强我的研发团队,今天没有人投资大麻以获得明年我将产生的EBITDA。如果我们都因为这个原因投资大麻,这些公司都不值得他们的价值。

我们正在建设的,我们的全球品牌公司,我们正在建设的是一个可持续的护城河,不仅是该品牌,还有技术和HEXO经验,并需要大量投资。我们已经聘请了这些顶级博士科学家,我的意思是,显然是25人的团队,这需要很大的成本,但我不想止步于此。 25还不够。我们计划在员工中拥有100名博士学位。我们相信,这实际上将创造一个人力资本护城河,而不仅仅是纯粹的技术和知识产权。



Thanks, Sebastien.



Your next question comes from Graeme Kreindler of Eight Capital. Please go ahead.

你的下一个问题来自Eight Capital的Graeme Kreindler。 请继续。

Graeme Kreindler

Hi, good morning and thank you for taking my questions here. Just first off, as a matter of housekeeping, you are mentioning in the press release this morning about revenues doubling in the next quarter, I just want to confirm that that the doubling there would not include anything on the Newstrike side of things, that would be strictly from the number reported on the HEXO side this quarter?

嗨,早上好,谢谢你在这里提出我的问题。 刚开始,作为家务管理的问题,你在今天早上的新闻稿中提到下一季度的收入翻倍,我只是想确认一下,在新闻报道方面不会包含任何东西,那就是 严格来自本季度HEXO方面报道的数字?

Sebastien St-Louis

So the doubling of revenue would include the Newstrike numbers, which are expected to be consolidated in next quarter, yes.


Graeme Kreindler

Okay. Understood. Thank you. I wanted to just elaborate a little bit on the U.S. strategy and understanding that you have supply agreements signed for 2020 to source the biomass there. But, when you think about that strategy how capital-intensive does that get for you? We’ve seen some other of your peers looking to invest a significant amount of capital on the processing manufacturing side. So, how does HEXO look at the U.S. opportunity and how capital-light or capital-intensive would that be?

好的。了解。 谢谢。 我想简单介绍一下美国的战略,并了解你已经签署了2020年的供应协议,以便在那里采购生物质。 但是,当你考虑这个策略时,资金密集型会为你带来什么? 我们已经看到其他一些同行希望在加工制造方面投入大量资金。 那么,HEXO如何看待美国的机遇以及资本密集型还是资本密集型呢?

Sebastien St-Louis

Yes. So the – well, the U.S., I mean, at a very broad level, right, when I look at our world wide plan, when I talk about becoming a top three global cannabis player, if I look at what it took to becoming top three Canadian player, that was about $400 million, right, deployed often down between CapEx operations. And I was pretty efficiently deployed. So if I looked at Europe, that's five times the size of the Canadian market that will be 400 times five gets you to $2 billion in investment required for Europe, the U.S. is about 10 times the size. So you're looking at $4 billion.
So look at the total capital deployment of about $6 billion. Now that's not all going to come from treasury in the form of capital raises. I think there's significant M&A opportunity in the U.S. And so the exact mix of what's going to be done through M&A out of that $6 billion and what's going to be done through capital -- future capital raises is yet to be determined. So whether that's 40-60 or 50-50 we're not sure yet.
We believe that that level of investment fundamentally long term will be required in the U.S. And then of course, that'll break down between your capital, your R&D and then your marketing spend as we get the traditional channels and we lever the ability to build brands in the U.S., which is very exciting, because that's going to unlock our potential. And as you see in that marketing video we put out on our B9 greenhouse on Tuesday, the HEXO marketing team is doing a great job and putting some exciting material out there.
So that gives you a high level idea, where kind of the next five to 10 years of $6 billion requirement to become a top three global player. And of course, HEXO will continue to manage its capital responsibly continuing to rely on our great finance team and calculating our IRR making sure we return a good return on capital and continuing to penetrate in new markets.

是。所以 - 好吧,美国,我的意思是,在我看到我们的全球计划时,当我谈到成为全球三大大麻播放器时,如果我看看成为顶级人物需要什么三个加拿大玩家,大约4亿美元,通常在资本支出运营之间部署。我的部署非常有效。因此,如果我看一下欧洲,这个数字是加拿大市场规模的五倍,将是欧洲所要求的20亿美元,那么美国的规模将是其10倍。所以你看40亿美元。

所以看看总资本约为60亿美元。现在,这并非都是以资本筹集的形式来自财政部。我认为在美国有重大的并购机会因此,通过并购中的60亿美元以及将通过资本实现的目标 - 未来资本筹集的确切组合尚未确定。所以,无论是40-60还是50-50,我们还不确定。



Graeme Kreindler

Okay. Understood. Appreciate the color there. Just to follow-up, with respect to the entrance into the U.S. market, is that something where you would lead in with the HEXO brand or would this be leading in through the Truss JV?

好的。了解。 欣赏那里的颜色。 就进入美国市场而言,只是为了跟进,你会引领HEXO品牌,还是通过Truss合资公司引领?

Sebastien St-Louis

So leading in with the Truss suite of products, so we're really excited for Truss to come out and have a conference call with Brett later next week and we're excited to be able to start to plan that rollout. Obviously, a lot of questions around what the brands are going to be. They are very exciting. We're touching over 85% of consumer occasions and the marketing team at Truss has done an absolutely dynamite job. But I'll let him take that thunder. The exciting piece is that, we're going to have powered by HEXO marks on every single product going out.
So the idea of course is to build a long-term brand around powered by HEXO, think and tell inside, think the draw where someone can walk into a store know that powered by HEXO sleep has worked very well in the brief format, but then know that if they need to go take a plane the next morning, they can also find a face cream by a trusted cosmetics brand that has powered by HEXO sleep as well. So that's our long-term build on the HEXO brand itself. And of course, in Canada, we'll continue to have HEXO as core products.



Graeme Kreindler

Got it. Thank you. And finally, with respect to the eight states, is there any additional color you can provide at this time in terms of which markets are at the top of the priority list?

得到它了。 谢谢。 最后,就八个州而言,目前哪个市场位于优先列表的首位,您还可以提供任何其他颜色吗?

Sebastien St-Louis

We're keeping that as a bit of a competitive advantage, figuring out all the regulatory work around how to operate legally in the U.S. is a key strategic advantage. Our regulatory team is absolutely phenomenal under the direction of our General Counsel, Roch Vaillancourt. He's built an amazing legal team, which I really think that if you look 10 years out, those are going to be the two core functions at HEXO. It is going to be R&D and innovation and our legal and regulatory team. So we're really making great inroads there. So I'm not disclosing a whole bunch of color on where we're going to be, but what I can tell you is, we will be legal at all levels of government and we will have no contest from both the DEA and FDA.

我们将这一点视为一种竞争优势,弄清楚如何在美国合法经营的所有监管工作是一项关键的战略优势。 在我们的总法律顾问Roch Vaillancourt的指导下,我们的监管团队绝对非凡。 他建立了一个令人惊叹的法律团队,我真的认为,如果你看起来10年后,这些将成为HEXO的两个核心职能。 它将成为研发和创新以及我们的法律和监管团队。 所以我们真的在那里取得了很大进展。 所以我不会透露一大堆关于我们将会成为什么样的颜色,但我可以告诉你的是,我们将在各级政府中合法,我们将不会同时接受DEA和FDA的竞争。

Graeme Kreindler

Okay, thank you very much, appreciate that. That's it for me.

好的,非常感谢,谢谢。 这对我来说。


Your next question comes from Matt Bottomley of Canaccord Genuity. Please go ahead.

你的下一个问题来自Canaccord Genuity的Matt Bottomley。 请继续。

Matt Bottomley

Good morning, Sebastien. Thanks for taking all these questions. Just wanted to touch back on something Graeme mentioned with respect to what we're expecting for next quarter on that top line. So maybe it has to do with the dynamics of the production ramp up versus getting everything packaged and labeled and excise tax into the wholesale channels, but considering you are producing close to 10,000 kilograms as of this reported quarter versus sales of 3,000, I would have anticipated that that double next quarter would be facilitated just from the HEXO side of things independent of Newstrike, so can you just comment on the dynamics of how that shapes out?

早上好,塞巴斯蒂安。 感谢您提出所有这些问题。 只想回到Graeme提到的关于我们期望下一季度在该顶线上的东西。 所以也许它与生产增长的动力有关,而不是将所有包装和标签打包并将税收纳入批发渠道,但考虑到你报告的季度产量接近10,000公斤,而销售额为3,000,我会 预计下一季度的双倍会从HEXO方面促成独立于Newstrike的事情,所以你能评论一下它的形成动态吗?

Sebastien St-Louis

Yeah. Happy to Matt, and thanks for the question. So it all boils back down to infrastructure. So I think last quarter I had mentioned that we'd be flat this quarter, we'd double in Q4. And I pointed that the key reason for that is that our infrastructure to package what we were growing was still ramping up, right. And now that infrastructure, this particular quarter has caught up and that's what's leading to the double.
So your insight is right. The infrastructure that’s allowing us to package everything is really from HEXO – from the HEXO side leading to that double. Obviously, we’re going to grow much more, right. Our yields continue to go up every day. We’re going to add the Newstrike yields, which is going to be great. But fundamentally, to truly unlock our infrastructure requirements, I need my Belleville facility. So I need the facility that’s going to have processing capacity for 375 tons per year. And that kicks in, in the fall. So that’s why we’re going to double and not much more immediately, as you pointed out, because we’re catching up our infrastructure in two phases. Phase one now complete, and Belleville in the fall.


所以你的见解是对的。允许我们打包所有东西的基础设施实际上来自HEXO - 从HEXO一侧到达那个双倍。显然,我们会增长得更多,对吧。我们的收益率每天都在上升。我们将增加新闻报道的收益率,这将是很好的。但从根本上说,要真正解开我们的基础设施要求,我需要我的Belleville工厂。所以我需要的设施每年可处理375吨的加工能力。在秋天,这就开始了。正如你所指出的那样,这就是为什么我们要加倍而不是更多,因为我们分两个阶段追赶我们的基础设施。第一阶段现在完成,而Belleville在秋季。

Matt Bottomley

Great, that’s helpful, makes sense. And then just on the guidance, again I know this was for 2020, touched on a little bit already. But you gave some good color there that about 25% relates to derivative products, and obviously, there’s some timing there that, that is within your control base than what the government puts out. Can you give any other sort of slicing of that number with respect to just the domestic contribution in Canada between Quebec and other markets? Obviously, it’s about 90% plus, now listing Quebec on a trailing basis. So of that 400, how much of that would be just Canada? And then what would sort of the goalpost be between Quebec and ex-Quebec?

太棒了,这很有帮助,很有意义。 然后只是在指导下,我再次知道这是2020年,已经触及了一点点。 但是你给出了一些好的颜色,大约25%与衍生产品有关,显然,那里有一些时间,这是你的控制基础,而不是政府推出的。 你能否就魁北克和其他市场之间加拿大的国内捐款给出任何其他类型的切片? 显然,它大约有90%以上,现在将魁北克列为尾随基础。 那么400,加拿大有多少呢? 那么魁北克和前魁北克之间的目标是什么呢?

Sebastien St-Louis

Yes, well you can work back to our five year contract with the province of Quebec, year two 35 ton commitment there. So that gives you a good sense of where that should round out. Expect that Ontario will be pretty close as a large market. Alberta certainly doing a great job with their rollout, so we’re excited to be in market there. And so it’s fundamentally all going to wash out to kind of population base with HEXO being overweight in Quebec. So that gives you a good sense, but we’re still working through the exact numbers before we share those.

是的,你可以回到我们与魁北克省的五年合同,那里有两年35吨的承诺。 这样就可以很好地了解应该在哪里完成。 预计安大略省将成为一个大型市场。 艾伯塔省的推出肯定做得很好,所以我们很高兴能够进入市场。 因此,从根本上说,所有人都会因为HEXO在魁北克省超重而被淘汰出局。 所以这给你一个很好的感觉,但我们仍然在分享这些之前完成确切的数字。

Matt Bottomley

No. That’s understood. And then just on the Quebec side of things. So given that there was six more LPs entering that market, I know initially when you announced the five-year deal and I understand there’s assumptions that go into this number, but sort of that headline CAD1 billion five-year contract, did that contemplate other entrants coming into the market? And would you still classify at that quantum over a five-year period?

不,这是理解的。 然后只是魁北克方面的事情。 因此,考虑到有六个LP进入该市场,我最初知道当你宣布这个五年的交易时,我知道这个数字有假设,但这个标题是10亿加元的五年期合同,是否考虑了其他 参赛者进入市场? 你还能在五年内分类吗?

Sebastien St-Louis

I think we still – I still think the potential with that contract is absolutely to hit CAD1 billion in five years, yes.

我认为我们仍然 - 我仍然认为该合同的潜力绝对会在五年内达到10亿加元,是的。

Matt Bottomley

Okay, great. I’ll flip one more in, and apologies, I know Brett was talking about the hemp side of things in the US, you know, I was pulled out of my office for a second. But can you comment if you would anticipate that an execution strategy in the US similar to what you’re doing on the parameters with Truss or maybe you partner with cosmoceutical, nutraceutical, I know healthcare is becoming more and more topical right now into entities outside of HEXO as part of that rollout? Or are you expecting it to be completely in the economics of your current entity.

好,太棒了。 我会再打开一个,道歉,我知道布雷特正在谈论美国大麻的一面,你知道,我被拉出了我的办公室一秒钟。 但是你能评论一下,如果你预计美国的执行策略与你在使用桁架的参数上所做的相似,或者你可能与宇宙,保健品合作,我知道医疗保健现在变得越来越局部化到外面的实体 HEXO作为推出的一部分? 或者您是否期望它完全符合您当前实体的经济效益。

Sebastien St-Louis

No, we’re absolutely planning on using our Fortune 500 partners. So in Canada, HEXO has all the distribution. We’re listed now in nine provinces, touch 95% of the population. So we actually provide the marijuana distribution to our partners like Truss and Molson, and our other spoke partners. So when we add cosmetics, when we add health and wellness, when we add edibles, when we add vapes. So in the other markets, we’re going to rely on their distribution. So we’re actually getting their international distribution. So in the U.S. obviously, Molson very strong with a top four position in beverages, top two in the UK. But, as we add more spoke partners that gives us all that more opportunity.
So as we’re focused on the technology and supply chain piece, those partners are bringing a deep understanding, a consumer occasion, the international distribution piece. And of course, the base product, which is very important. Because there’s really two parts to creating awesome cannabis products, it has to work and it has to work better than the rest. And so HEXO has got that covered. But I do think one risk that most cannabis companies are ignoring is that, it will be very difficult for a cannabis company to make a better chocolate than the Nestle, to make a better face cream than L’Oreal and a better beer than a Molson. So that’s why I think our strategy fundamentally leads to better products, which will lead to better success in market.


因此,当我们专注于技术和供应链时,这些合作伙伴正在深刻理解,消费者的场合,国际分销。当然,基础产品,这是非常重要的。因为创造令人敬畏的大麻产品真的有两个部分,它必须工作,它必须比其他产品更好地工作。所以HEXO已经涵盖了这一点。但我确实认为大多数大麻公司忽视的一个风险是,大麻公司制作比雀巢更好的巧克力,制作比欧莱雅更好的面霜和比莫尔森更好的啤酒将是非常困难的。 。这就是为什么我认为我们的战略从根本上会带来更好的产品,从而在市场上取得更好的成功。

Matt Bottomley

Great. Thanks, Sebastien.

非常好。 谢谢,塞巴斯蒂安。


Your next question comes from Robert Fagan of GMP. Please go ahead.

您的下一个问题来自GMP的Robert Fagan。 请继续。

Robert Fagan

Hey, Sebastien. Thanks for taking the questions. Just wanted to ask about on the ramp up of capacity at B9. Obviously, we saw in the video, how it seems to be already quite filled up with plants and just wondering if you can give us kind of a cadence of how much of the overall capacity of that facility is already ramped up and what’s left to ramp up?

嘿,塞巴斯蒂安。 感谢您提出问题。 只是想询问有关B9容量增加的问题。 显然,我们在视频中看到,它似乎已经充满了植物,只是想知道你是否可以给我们一种节奏,说明该设施的总体容量已经增加了多少以及剩下什么吗?

Sebastien St-Louis

Yes, absolutely. Thanks, Rob. So the facility is full. So as you’ve seen in the video, there’s plants – the entire million feet is full of plants. So with the first harvest out of greenhouse, there’s always dialing in. And you’ll see, if you look at our historical numbers for B6, so our 250,000 square feet greenhouse, that will give you a really good idea of how we’re dialing the environmental with the new greenhouse, how we start to improve yields quarter-over-quarter. I think to get to our 150 ton ramp, reasonable to see is, early 2020 to be at that number on a run rate basis. And so that’ll really reflect incremental yield improvements. But the facility is full and now it’s just a question of you should see meaningful improvement every quarter.

是的,一点没错。 谢谢,罗布。 所以设施已满。 正如你在视频中看到的那样,有植物 - 整个百万英尺的植物都充满了植物。 所以随着温室的第一次收获,总会拨入。你会看到,如果你看看我们的历史数字B6,那么我们的250,000平方英尺的温室,这将让你非常了解我们如何 用新温室拨打环境,我们如何开始提高季度产量。 我认为要达到我们的150吨坡道,合理的是,2020年初将以运行率为基础。 因此,这将真正反映增量产量的提高。 但是设施已满,现在只是一个问题,你应该每个季度看到有意义的改进。

Robert Fagan

Great. That’s quite impressive. Is there any potential delays from beginning sales from that facility around licensing in any kind of way, does that create any type of hurdle to actually get sales generation from that facility?

非常好。 这令人印象深刻。 从该设施开始销售是否有任何潜在的延迟,以任何方式围绕许可,是否会产生任何类型的障碍,以实际从该设施获得销售?

Sebastien St-Louis

Rob, we have our sales license. We just didn’t think it was a big deal. It’s kind of order of operations these days. So now we’re selling from that facility, I’d say, really we’ve begun. And so, you know that facility is fully licensed, so no worries there.

Rob,我们有销售许可证。 我们只是认为这不是什么大问题。 现在这是一种操作顺序。 所以现在我们从那个设施出售,我会说,我们真的已经开始了。 所以,你知道该设施是完全许可的,所以不用担心。

Robert Fagan

Excellent. Just shifting to extraction now. In light of your agreement with Valens and in the context of Belleville, hoping to be able to accommodate 375 tons of the input material for extraction. How do you see the kind of margin evolution from your cannabis 2.0 products as a result of perhaps a shift in capacity from third-party to your own for the production of those products? And then if you can just give us maybe a bit of insight on how you intend to go about extraction operations in the U.S. with that hemp biomass being secured?

优秀。 现在转向提取。 根据您与Valens的协议以及贝尔维尔的情况,希望能够容纳375吨用于提取的输入材料。 您如何看待大麻2.0产品的保证金演变,因为这些产品的生产可能会从第三方转移到您自己的产品? 然后,如果您可以向我们提供一些有关如何打算在美国进行提取操作以及大麻生物质得到保护的信息?

Sebastien St-Louis

Yes, I think from a long-term strategy perspective, if we get a third-party extractor, that can match or beat; a, our capacity; two, our quality, three, our technology. We’d conceptually be happy to work through a third-party operator, which is why we’ve been working with Valens and they’ve been great so far. From a – remember that 10 years out, if HEXO were to look like a team of lawyers and a team of scientists and a great brand Powered by HEXO in hundreds of different Fortune 500 products, that’s what we’re striving for. In the meantime, we have to make sure that we can deliver certain products and that means having enough capacity for HEXO’s scale, which is shooting to be a top three global player.
And quite frankly, there’s nobody else whether that’s the extractors, other LPs that have shot for the level of scale that we’re putting in. We are preparing for the possibility that we could shoot not just for a 20% share in Canada, but actually grow that. So, we are preparing ourselves, and let’s say, we were to say this is a 1,000 ton market with 375 tons of potential processing power and 150 ton to grow, the idea is we’re already starting to prepare to have less grow in the supply chain, so 150 tons moves through our manufacturing and extraction and formulation stage, which has 375 tons supplemented by hemp in the short-term, in the medium term, perhaps supplemented by other forward contracts with other licensed producers or imports from overseas, and then moving on eventually to the final phase, where we’re simply an IP and technology company.
During that whole journey, as I mentioned, in the very short-term, we’ll see some margin compression, especially as our sales on flower come in. But that margin should start to dilate back up. The nice thing is as we scale up; our costs are coming down significantly. And I think a testament to the team has been the supporters, you see our revenue per gram of course has dipped, but we’ve managed to hold our gross margin relatively stable. So, we’re recovering the costs. Unfortunately, I do think that in the face of lowering costs, you will have continued selling pressure. So, it will be difficult to translate those costs to additional gross margin until those advanced products come online.

是的,我认为从长期战略的角度来看,如果我们得到一个可以匹配或击败的第三方提取器; a,我们的能力;二,我们的质量,三,我们的技术。从概念上讲,我们很乐意通过第三方运营商工作,这就是我们与Valens合作的原因,到目前为止他们一直都很棒。从一个 - 记得10年后,如果HEXO看起来像一个律师团队和一个科学家团队和一个伟大的品牌由HEXO支持数百种不同的财富500强产品,那就是我们正在努力的目标。与此同时,我们必须确保我们能够提供某些产品,这意味着拥有足够的HEXO规模,这将成为全球前三大玩家。



Robert Fagan

Okay, great. Thanks for that color. So, as an – last quick one, if you could maybe – I don’t know if you can give us an idea of the mix in terms of the new products in Canada. You mentioned the gummies, vape and beverages; can you give us an order of magnitude of the split there? What would be the biggest drivers?

好,太棒了。 谢谢你的颜色。 所以,作为最后一个快速的,如果你可以 - 我不知道你是否可以让我们了解加拿大新产品的组合。 你提到了gummies,vape和饮料; 你能给我们一个数量级的分裂吗? 什么是最大的驱动因素?

Sebastien St-Louis

So, our top priority is our beverage launch followed by our vape launch and then gummies is one that we think from an edible’s perspective, will be very interesting. So, they’re in that order. I think steady state in the future as I mentioned on the call that, at steady state, this market will be about 35% flower, 65% advanced products. Of the advanced products, we think that beverage and vape could easily be a third each with other categories such as edibles, which gummies is the largest part of the edible segment, which would be less. I had started to give you a bit of an idea of how we see that well.

所以,我们的首要任务是我们的饮料发布,然后我们的vape发布,然后gummies是我们从食用的角度思考,将非常有趣。 所以,他们按顺序排列。 我认为未来的稳定状态正如我在电话会议上提到的那样,在稳定的状态下,这个市场将有35%左右的花,65%的先进产品。 在先进的产品中,我们认为饮料和vape可以很容易地成为第三种,其他类别如食用,其中gummies是可食用部分中最大的部分,而且可能更少。 我已经开始给你一些关于我们如何看好的想法。

Robert Fagan

Great. Thanks a lot.

非常好。 非常感谢。


Your next question comes from David Kideckel of AltaCorp Capital. Please go ahead.

您的下一个问题来自AltaCorp Capital的David Kideckel。 请继续。

David Kideckel

Hi, good morning. Congrats on the results and thanks for taking my call. I just wanted to go back to the U.S. and with you – Truss, the JV, in particular. So, when we’re talking about in the press release and we’ve talked about this morning so far, when you are looking to enter into eight states in 2020, just to clarify for housekeeping here. Does this only – and you also mentioned, Sebastien that you want to lead into the U.S. with Truss. But do these initial eight states; is this only going to be including the Truss products?

早上好。 祝贺结果并感谢接听我的电话。 我只是想回到美国和你一起 - 特别是桁架,合资企业。 因此,当我们在新闻发布会上讨论并且到目前为止我们已经谈到了今天早上,当你想在2020年进入八个州时,只是为了澄清这里的内务管理。 这只是 - 而且你也提到过,塞巴斯蒂安想要带着桁架进入美国。 但这些最初的八个州是否存在; 这只包括桁架产品吗?

Sebastien St-Louis

No. So, it will be including Truss. Well and specifically, I should clarify. So, Truss is a Canadian joint venture. So, it’s Canadian-only. So, most likely, the exact form of entity we haven’t revealed exactly how we’re doing this with MCBC yet. So, MCBC and HEXO will be doing a joint release at some point in the future to explain exactly how under which brands. Of course, Truss and all the work that’s been done will be leveraged on the marketing side. So that’s one piece. The other piece is we’re going to have our other spoke partners. So, I’ve said one a year. So, you could assume that in 2020, we have two at this point. Late 2020, maybe three. And, yes, the idea is to enter the U.S. using our spoke partners not to go direct with HEXO core products in the short-term.

不,所以,它将包括桁架。 嗯,具体来说,我应该澄清一下。 因此,特鲁斯是一家加拿大合资企业。 所以,它只是加拿大人。 所以,最有可能的是,实体的确切形式我们还没有完全透露我们如何使用MCBC这样做。 因此,MCBC和HEXO将在未来的某个时间点联合发布,以准确解释下哪个品牌。 当然,桁架和所有已完成的工作将在营销方面得到充分利用。 这是一件事。 另一件事是我们将有我们的其他发言合作伙伴。 所以,我说过一年一次。 所以,你可以假设在2020年,我们现在有两个。 2020年末,也许是三个。 而且,是的,我们的想法是使用我们的合作伙伴进入美国,不要在短期内直接使用HEXO核心产品。

David Kideckel

Okay, thanks. That’s helpful. And to clarify as well, then you mentioned that the Truss beverages are great. And so there’s a lot of progress that has been made. So, can we assume that the development in the R&D, all the innovation behind the actual beverages, are those nailed down now or are they still being tweaked?

好的谢谢。 这很有帮助。 为了澄清,那么你提到桁架饮料很棒。 因此,已经取得了很多进展。 那么,我们是否可以假设研发的发展,实际饮料背后的所有创新,是现在已经确定的还是仍在调整?

Sebastien St-Louis

Our 1.0 is nailed down and our 1.0 is amazing. It's better than anything, that's in the U.S. today. I am having that, but I think our 1.0 has a lot of room to grow. What I'm excited about is the future, right, if I'm excited about a two minute onset, I'm excited about a 45 minute onset, I'm excited about diet experiences, a sparkling water where it reduce your appetite using the ingredients in cannabis that are non-psychoactive. These are all things that R&D teams are working on and I think that's going to provide really exciting roadmap for the next five years. Today, our starting lineup is best-in-class, it's better than anything that exists on the planet that I've seen and so I'm tremendously excited about that.

我们的1.0已经确定了,我们的1.0非常棒。 这比今天在美国的任何东西都要好。 我有这个,但我认为我们的1.0有很大的发展空间。 我很兴奋的是未来,对,如果我对两分钟的发病感到兴奋,我对45分钟的发病感到兴奋,我对饮食经验感到兴奋,一种波光粼粼的水会减少你的食欲 大麻中的成分是非精神活性的。 这些都是研发团队正在努力的事情,我认为这将为未来五年提供真正令人兴奋的路线图。 今天,我们的首发阵容是同类最佳的,它比我见过的星球上的任何东西都要好,所以我对此感到非常兴奋。

David Kideckel

Okay. So then just to confirm then, so the Truss product – beverages are ready to go subject to, I guess number one, Canadian, the derivative legalization and then also with your – eventual in near term strategy in the U.S.?

好的。 那么接下来就确认一下,所以桁架产品 - 饮料已经准备好了,我猜第一,加拿大,衍生品合法化,然后还有你最近在美国的近期战略?

Sebastien St-Louis

Yes, we have technology. We have a level of technology in product quality right now, that puts us in our own class. I expect that at launched, you will probably – we'll see how we're performing against the other top LP. Obviously, Canopy with the Constellation partnership, I'm sure are getting coming out with something pretty impressive as well. But I haven't seen anything else in the industry right now that compares to what we have today. So what we have from the technology perspective today is absolutely phenomenal. The team's done a great job.
And now the question is going to be the ramp up in infrastructure, and that ramp up in infrastructure is dependent on our Belleville facility rollout and the Truss rollout. Within that Belleville facility, which we are scheduled to deliver for the fall, but that is the risk to [indiscernible] that full roll out and obviously for the 2020 plan in the U.S., there's some infrastructure in U.S., which is why we formed HEXO USA, our corp. in Delaware, to have that corporate structure to start acquiring assets in doing infrastructure build out in the U.S.

是的,我们有技术。我们现在拥有一定的产品质量技术,这使我们成为了自己的一员。我希望在推出时你可能会 - 我们会看到我们如何对抗其他顶级LP。显然,Canopy与Constellation合作伙伴关系,我肯定也会出现一些非常令人印象深刻的东西。但是我现在还没有看到业内其他任何与我们今天相比的东西。因此,从技术角度来看,我们今天拥有的绝对是惊人的。团队做得很好。


David Kideckel

Okay, great. Thank you for that. Another question, I have a couple more here quick ones. I know Sebastien, you mentioned sort of capital deployment over time around the $6 billion mark, which could include both M&A and capital raises, is there any, just to tweak this down a little bit over the next say 12 months or six months to 12 months, can you provide any CapEx guidance for HEXO?

好,太棒了。 谢谢你。 另一个问题,我在这里有几个快速的问题。 我知道塞巴斯蒂安,你提到的资本部署时间大约在60亿美元左右,这可能包括并购和资本加注,有没有,只是为了在下一个说12个月或6个月到12个点稍微调整一下 几个月,您能为HEXO提供任何资本支出指引吗?

Sebastien St-Louis

We're not going to provide the CapEx guidance is just yet, but thanks for asking. We'll see what we can do over the following quarters in terms of thinking about that. But I want to make sure we nailed down our numbers and again, we don't give up exactly of how we're entering the U.S., just yet. I'd rather do it and then tell you guys about that, if that's all right.

我们暂时还没有提供CapEx指南,但感谢您的提问。 在考虑这一点时,我们将看到我们在接下来几个季度可以做些什么。 但我想确保我们已经确定了我们的数字,我们还没有完全放弃我们进入美国的方式。 我宁愿这样做,然后告诉你们这些,如果可以的话。

David Kideckel

Understood. That's great. My last question, Sebastien, actually, I think it was brought up by another analyst before passing around bio-synthetic s. I'm just wondering in all of your discussions with Fortune 500 partners, I mean it's apparent, I think from a lot of our due diligence that a lot of the Fortune 500 partners, especially when considering cannabis, they really pride their final product with consistency, purity and potentially low cost as well.
So on that note with bio-synthetic s, can you maybe – is there any color you can give to your discussions with the Fortune 500s around any sort of bio-synthetic discussion that’s relevance for them, and how that could impact your strategy if you decide to move into the area of bio-synthetic s as well?

了解。 那很棒。 我的最后一个问题,Sebastien,实际上,我认为它是由另一位分析师在传递生物合成物之前提出的。 我只是想知道你与财富500强合作伙伴的所有讨论,我的意思很明显,我认为很多财富500强的合作伙伴,特别是在考虑使用大麻时,他们真正为自己的最终产品感到自豪。 一致性,纯度和潜在的低成本。

所以,就生物合成而言,你可以 - 你可以给与财富500强企业讨论的任何颜色围绕任何与他们相关的生物综合讨论,以及如果你如何影响你的策略 决定进入生物合成领域?

Sebastien St-Louis

Yes. I think bio-synthetic certainly have a lot to offer but they also have a lot to prove. And so from our perspective, we’re waiting to see who will emerge as the bio-synthetic winners, before making significant investments in that space. And to us, the winners are not only the ones that will solve scale, but also the ones that will solve intellectual property and especially when it comes to rare cannabinoids that would be relevant to a specific powered by HEXO experience. So those are the really ones that are going to keep our attention. We have great relationships with quite a few of the bio-synthetics companies. We’re keeping an eye on them. We’re tracking their progress and I think from the Fortune 500 perspective, they’re leveraging our maturity in market and understanding of all that to kind of sort it out. The Fortune 500s today, from my perspective are not taking bets on technology to come, they need to solve the market access now and that’s something that HEXO is doing today from plants.
In the future, of course, I’ve talked about the HEXO team being lawyers and scientists that could very well mean that our supply chain is sourced from greenhouses in Canada for the flower, hemp fields in the U.S. for 80% of our cannabinoids and then a few bio-synthetic providers for rare specific cannabinoids as cost depends. But I don’t plan on marrying myself now to a cost structure. I think we can pivot in the future depending on which solution becomes best. And I think that the reason of Fortune 500 would need HEXO as a partner, it’s because to figure all this out in a relatively effective way, it takes a lot of energy and expertise which they simply don’t have on their team. So that’s why our powered by HEXO, a partnership model has resonated very well with Molson and is resonating very well with a number of companies in our funnel.



David Kideckel

That’s a really great insight, Sebastien, thank you. That’s it for me.

这是一个非常好的见解,Sebastien,谢谢。 这对我来说。


Your next question comes from John Chu of Desjardins Capital Markets. Please go ahead.

您的下一个问题来自Desjardins Capital Markets的John Chu。 请继续。

John Chu

Hi. Good morning. Just a couple of quick questions. On the U.S. strategy, the $400 million in revenue guidance for 2020, is that including any revenue generated from the U.S.? And then second one, I just...

你好。 早上好。 只是几个简单的问题。 在美国的战略中,2020年的4亿美元营收指引是包括美国产生的任何收入吗? 然后是第二个,我只是......

Sebastien St-Louis

No, it doesn’t, John, and let me clarify. So the 400 million guidance is for fiscal ending July. When I say 2020 U.S., I’m talking to December calendar. So there’s some offset, but the nuance to consider as well is that our current spoke partner, Truss, so with Molson and depending on how the future ones will be structured, the revenue itself does not consolidate up to HEXO. We’re going to see our 42.5% share of the net income or loss. So you will see it post bottom line, so obviously, show up on our financials, but you wouldn’t see the revenue and so that’s the primary reason that’s not in the guidance.

不,它没有,约翰,让我澄清一下。 所以4亿美元的指引是针对7月份的财政结果。 当我说2020美国时,我正在谈论12月的日历。 所以有一些抵消,但要考虑的细微差别是我们目前的合作伙伴,Truss,以及Molson,并且取决于未来的结构如何,收入本身并没有巩固到HEXO。 我们将看到我们42.5%的净收入或亏损份额。 所以你会发现它显示在底线上,很明显,显示在我们的财务上,但你不会看到收入,所以这是不在指导中的主要原因。

John Chu

Right. Okay. And then to what extent does FDA approval on the CBD side come into play in terms of your entry into the U.S.?

对。 好的。 那么,在你进入美国方面,FDA对CBD方面的批准在多大程度上起了作用?

Sebastien St-Louis

Yes, we’re watching the FDA very closely, because how they will decide to treat overall CBD treatment relative to the pharmaceutical, nutraceutical, et cetera will obviously have an impact on how we’re operating. But we’re currently following a path where we believe we’ll have no contest from FDA. So very confident at this point in our strategy.

是的,我们非常密切地关注FDA,因为他们决定如何处理相对于药物,营养品等的整体CBD治疗,显然会对我们的运营方式产生影响。 但我们目前正走在一条道路上,我们相信我们不会与FDA竞争。 因此,我们的战略非常有信心。

John Chu

Okay. And then just lastly, you mentioned in terms of shipping flower to Ontario, BC and in other provinces, are you going to ship that officially right now and what's the update on Alberta? That's a pretty big market and it doesn't seem you're having much exposure there at this point in time?

好的。 然后最后,你提到将花运到安大略省,不列颠哥伦比亚省和其他省份,你现在正式发货吗?艾伯塔省的更新是什么? 这是一个非常大的市场,而且此时你似乎没有多少曝光?

Sebastien St-Louis

Yes. So when you look at the – you look at our throughput of course, Quebec remains – has remained a huge market. But that has not been demand constrained. That has been supply constraint to-date. As we double this quarter and as we go of course, and we start to ramp from there into our 400 million next year, as I mentioned, the infrastructure block goes away largely by fall. So you have more and more capacity to supply into these markets. And we want to make sure that we are not only a preferred supplier in Quebec, but that we're a top supplier in all other provinces. So we want to make sure when we go into these provinces that we respect our commitments, we make sure that whatever is on the shelf is always available and that we really provide a great customer experience.
So not so much demand cap, and that's why you haven't seen anything in Alberta yet, but expect to see more and more things in other provinces as the months go by.

是。 因此,当你看到 - 你看我们的吞吐量当然,魁北克仍然 - 仍然是一个巨大的市场。 但这并没有受到需求的限制。 到目前为止,这一直是供应约束。 当我们这个季度增加一倍的时候,当然,正如我所提到的那样,我们明年开始从那里开始增加到我们的4亿,基础设施块在很大程度上会在秋天消失。 因此,您有越来越多的能力供应这些市场。 我们希望确保我们不仅是魁北克省的首选供应商,而且我们是所有其他省份的顶级供应商。 因此,我们希望确保当我们进入这些省份时,我们尊重我们的承诺,我们确保货架上的任何东西始终可用,并且我们确实提供了良好的客户体验。


John Chu

Okay, that's it for me. Thank you.

好的,那对我而言。 谢谢。


Your next question is from John Zamparo of CIBC. Please go ahead.

您的下一个问题来自CIBC的John Zamparo。 请继续。

Krishna Ruthnum

Hi. This is actually Krishna Ruthnum on for John. My first question is on pricing. And my apologies, I missed part of the prepared remarks that there's a meaningful decline quarter-over-quarter in your pricing. I just wanted to understand whether that was simply due to lower oil sales, a greater focus on Quebec or maybe what you alluded to earlier, which was constraints on the packaging size?

你好。 这实际上是Krishna Ruthnum为约翰。 我的第一个问题是定价问题。 我的道歉,我错过了部分准备的评论,即您的定价中的季度环比有意义地下降。 我只是想了解这是否仅仅是因为石油销售量下降,对魁北克的关注度更高,或者您之前提到的,这是对包装尺寸的限制?

Sebastien St-Louis

Yes. Thank you. I think a little bit on oil, but it's really – we're starting – so earlier in the call, I'm not sure you got the point, but I was talking about how we're going to go into a period of price compression around flower as you have these 150 smaller LPs that vie for market share and that really have very little ability to go to market, right. So we're already seeing that price compression in the market begin, so that has started. And I think that it's prudent that we all expect that to continue for a certain period of time.
And I think that it's been prudent to have a bet on companies like HEXO that will have to scale in operational expertise and cost control to survive their margins in that price compression. So as you've seen, despite the price compression we've held our margins, so I'm not too worried about it. But the smaller producers over time will not be able to because they won't have the economy of scale.

是。 谢谢。 我觉得有点油,但它确实 - 我们正在开始 - 所以在电话会议的早些时候,我不确定你是否明白这一点,但我在谈论我们将如何进入一段价格期间 因为这些150个较小的LP可以争夺市场份额并且真正具有很小的上市能力,所以你可以在花朵周围进行压缩。 所以我们已经看到市场上的价格压缩开始了,所以这已经开始了。 而且我认为谨慎的是我们都希望能够持续一段时间。

而且我认为对HEXO等公司进行赌注是谨慎的,这些公司必须在运营专业知识和成本控制方面进行扩展才能在价格压缩中保持其利润率。 所以你已经看到,尽管价格压缩,我们仍然保持了利润,所以我并不太担心。 但随着时间的推移,较小的生产者将无法做到,因为他们不具备规模经济。

Krishna Ruthnum

Okay. Thanks for that. I also had another question just around the 260 tons of hemp supply that you announced. Are there any terms or is there any additional color that you can give us just sort of around that supply?

好的。 感谢那。 我还有另外一个问题,就是你宣布的260吨大麻供应。 是否有任何条款或是否有任何其他颜色可以给我们提供这种供应?

Sebastien St-Louis

So we're not disclosing the terms, but you can kind of look at how we operate. We always operate from a kind of a fundable supply, globally approved supply chain perspective. So when we look at our cost per milligram, we track everything. And then there's – so there's two things to look at. Where do you need the supply to come from and how is that supply relevant to specific jurisdictions? So in the US, you need hemp to participate, but then two, whether it's bio-synthesis, hemp or marijuana, we are continuously evaluating our cost per milligram of all cannabinoids in formulation and flower and then searching the most cost effective alternative. So you can assume that our hemp transformation will be at a good price.

所以我们没有透露这些条款,但你可以看看我们的运作方式。 我们始终以一种可资金供应,全球认可的供应链视角运作。 因此,当我们查看每毫克的成本时,我们会跟踪所有内容。 然后就是 - 所以有两件事要看。 您在哪里需要供应来源以及该供应如何与特定司法管辖区相关? 所以在美国,你需要大麻才能参与,但是无论是生物合成,大麻还是大麻,我们都在不断评估配方和花卉中每毫克所有大麻素的成本,然后寻找最具成本效益的替代品。 因此,您可以假设我们的大麻转型将是一个很好的价格。

Krishna Ruthnum

Okay. Thanks for that. And one last question just on your guidance for Q4, just given where we are in the quarter, just wondering if you can give us some comments on the trend to date as well as your – the pace and sort of your confidence of reaching that target?

好的。 感谢那。 最后一个问题就是你对第四季度的指导,只考虑了我们在本季度的情况,只是想知道你是否可以就迄今为止的趋势以及你 - 达到目标的信心的速度和种类给我们一些评论?

Sebastien St-Louis

We're going to reach the target. I mean, I'd ask you and I continuously, I welcome a challenge as I think that the analyst community is doing a phenomenal job in our space. I welcome more transparency in our space. I welcome a broader discussion for investors. If you ever hear me say something and not deliver, you have to call me out. And in reverse, I would tell you today, nobody has ever called me out on anything because HEXO has always delivered what we said we would. We're delivering a double this quarter.

我们将达到目标。 我的意思是,我会不断地问你和我,我欢迎挑战,因为我认为分析师社区在我们这个领域做了非凡的工作。 我欢迎更多透明度。 我欢迎对投资者进行更广泛的讨论。 如果你听到我说些什么但没有交付,你必须叫我出去。 反过来,我今天会告诉你,没有人曾打电话给我,因为HEXO总是提供我们所说的。 我们本季度提供了两倍。

Krishna Ruthnum

Thank you.



[Operator Instructions] There are no further questions at this time. Please proceed.

[操作员说明]目前没有其他问题。 请继续

Sebastien St-Louis

Thank you very much, everybody, for your time and the great questions. Look forward to speaking with you during the following months and of course at our next earnings call.

非常感谢大家,感谢您的时间和重大问题。 期待在接下来的几个月里与您交谈,当然还有下一次的财报电话会议。


Ladies and gentlemen, this concludes your conference call for today, and we thank you for participating and ask that you please disconnect your lines.



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