Humble & Fume Inc. HMBL (OTCQX: HUMBF), a leading North American distributor of cannabis and cannabis accessories reported its first quarter fiscal 2023 financial and operating results late Monday for the three months ended September 30, 2022.
“Our focus continues to be optimizing growth opportunities while proactively right-sizing the business. We are very pleased with our efforts to expand our portfolio of cannabis brands and broaden the scope and scale of our retail relationships,” stated Joel Toguri, CEO of Humble.
Q1/2023 Highlights include:
- Q1 continued growth of California cannabis distribution business generated revenue of a quarter-over-quarter increase of 68%
- Q1 revenue in the North American accessories business grew by 11% quarter over quarter
- Q1 saw a quarter-over-quarter decrease in operating expenses of 21% or $2.3m, driven by decreased costs in North American accessories business of 44% or $3.8m, offset by increased costs of 57% or $1.5m relating to the expansion of the California cannabis distribution business
Restructuring initiatives completed last fiscal year are positively impacting the P&L, with operational expenses relating to the North American accessories down quarter-over-quarter by $3.8m or 44%.
Inventory levels with the North American accessories business continue to decrease, selling off old/slow-moving items. Year over year inventory decreased by $6.5m, with the prior year having a balance of $17.8m vs the current balance of $11.2m. Quarter-over-quarter inventory has decreased by 10% or $1.3m.
“California continues to be a dynamic market providing ongoing growth opportunities to help great brands, like Cookies, scale throughout the state,” Toguri said.
Cookies, the leading California-based lifestyle, and cannabis brand was successfully onboarded with revenue starting in October. Operational costs in Q1 were incurred ahead of the revenue, with additional headcount, vehicles, and other one-time costs added to ensure successful onboarding & to have the infrastructure in place to start selling on October 1, 2022.
The California cannabis distribution business continues to grow, with revenue increasing quarter-over-quarter.
The company’s retail customer base grows from 81 to 290; this represents an increase of 258%. Moreover, the number of deliveries experienced a similar increase growing from 128 in the prior quarter to 602, representing an increase of 370%.
“Our ongoing focus on profitable growth includes right-sizing our organization to ensure we have the most effective and efficient team in place to serve the needs of our brand and retail partners,” said Toguri.
Additionally, restructuring & cost-saving initiatives taken last year are “starting to show in the P&L, with overall operational expenses down year over year by $1.5m & down $3.8m quarter-over-quarter relating to the North American accessories business,” according to the press release.
Finally, salary and wages experienced the most significant reduction, with YoY savings of 20.7% and QoQ reduction of 14.6%.
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