Hill Incorporated Releases Q2 FY 2025 Results: Continues To Improve Net Loss

(TheNewswire)

Highlights for the Quarter

• DehydraTECH licensing revenues increased in Q2 FY2025 vs. same quarter year ago on an adjusted basis (after adjustingdown last year’s revenues for amounts subsequently written off atthe close of FY2024), although they declined on an accounting basis(unadjusted for last year’s revenues ultimately written off). Fiscalyear-to-date licensing revenues also increased on an adjusted basisbut declined on an accounting basis.

• Vin(Zero)alcohol-free wine business had a strong quarter, even though thetiming of the inventory replenishment cycle and corresponding salesresulted in a lower net revenue vs. Q2 FY 2024.  Net revenue on thisbusiness is up a strong 20% for the six-month fiscal year-to-date vs.the same period year ago.

• Strong Q2 FY 2025 consolidated net revenue was thehighest in a year but was below Q2 FY 2024, due to the quarterlyinventory and revenue cycle timing on the Vin(Zero) business alongwith the unadjusted DehydraTECH licensing revenuecomparison .

• Despite netrevenue and gross profit declines vs. prior year on an accountingbasis, the continued focus on managing costs enabled Hill to continuenarrowing the net loss in the quarter, with a 44% improvement over theyear ago period.

Toronto, ON. — March 3, 2024 — TheNewswire - Hill Incorporated, formerly Hill StreetBeverage Company Inc. ( TSXV: HILL )(" Hill ” or the " Company "), announces today that it hasreleased its financial results for the three-month period endedDecember 31, 2024 (“ Q2 FY 2025 ”), which can be found at www.sedarplus.com . The progressive bioscience implementationcompany is dedicated to building pathways to better and healthierliving by leveraging deep CPG expertise to commercialize leading-edgetechnologies, crafting superior cannabis solutions and non-alcoholicbeverage products globally. The financial information summarized inthis press release is based on audited data for FY2024.

DehydraTECHlicensing revenues increased in Q2 FY 2025 vs. same quarter year agoon an adjusted basis (after adjusting down last year’s revenues foramounts subsequently written off at the close of FY2024), althoughthey declined on an accounting basis (unadjusted for last year’srevenues ultimately written off). Fiscal year-to-date licensingrevenues also increased on an adjusted basis but declined on anaccounting basis.

DehydraTECH licensing revenues continue to be fueled bylegacy licensee 1906 as well as the more recent sublicensees broughton through Hill partner Dehydr8, LLC.  However, because Hill wrotedown revenue from 1906 at the close of FY 2024 (which included some Q2revenue), comparisons are made of Q2 2025 results to the same quarterprior year (which are pre-write-off) as well as on an adjusted basis(adjusting for the write-offs) to provide the most accurate view ofthe trends.

The US cannabis industry continues to face a marketenvironment of significant price reductions and margin compression,along with extended accounts receivable and delays in cash receipt. The impacts to Hill’s DehydraTECH licensing business from theseindustry-wide challenges are mainly that licensing fee rates have been compressed within our ecosystem ofsublicensing partners and our accounts receivable of licensing feesfrom our licensee partners are affected by collection delaysdownstream.

Dehydr8, which now has DehydraTECH licensing rights inall US states, continues to focus on the rollouts and expansion of itsbase of DehydraTECH customers, while facing this very challengingcannabis market environment, price and margin compressions, andextended accounts receivable.

Key DehydraTECH customers of Dehydr8’s in the USinclude MariMed, Greenlight Dispensary and Drecisco Farms.

• Major multi-state operator MariMed Inc. has brandspowered by DehydraTECH in Massachusetts, Maryland, Missouri, Delawareand Illinois.  More information on MariMed’s brands can be found at MariMed Brands

• Multi-state operator Greenlight Dispensary is one of the leading cannabis brands in the United States,with operations in Missouri, Arkansas, West Virginia, Illinois andSouth Dakota, and now has brands powered by DehydraTECH inMissouri.

• Drecisco Farms sells their Sweet Buzz ’ DehydraTECH-powered cannabis edibles products inIllinois.

Vin(Zero)alcohol-free wine business had a strong quarter, even though thetiming of the inventory replenishment cycle and corresponding salesresulted in a lower net revenue vs. Q2 FY 2024.  Net revenue on thisbusiness is up a strong 20% for the six-month fiscal year-to-date vs.the same period year ago.

As communicated, we have fundamentally transformed ourVin(Zero) business model over the past two years, with majoradjustments across all the key areas of production planning, shippingand logistics, warehousing, sales and retail distribution.  The newstreamlined commercial model creates a new and different cadence tothe business, where dramatic quarter-to-quarter swings on therecognized revenues are planned based on inventory efficiencies andthe timing of direct inventory arrivals to our distributor.

Following a strong level of inventory replenishment andrevenue in Q1 FY 2025, our planned ordering and inventory managementcycle resulted in less  revenue for Q2 FY 2025 compared to a veryhigh Q2 FY 2024. Net revenue for the six-month period ending December31, 2024 is up a strong 20% vs. year ago.  Case depletions, whichrepresent the shipment figures from our distributor to retailers, are up 3% for the fiscal year-to-date.

Strong Q2 FY 2025consolidated net revenue was the highest in a year but was below Q2 FY2024, due to the quarterly inventory and revenue cycle timing on theVin(Zero) business along with the unadjusted DehydraTECH licensingrevenue comparison.

Consolidated net revenues, as reported on an accountingbasis, were a strong $661,123, which was down 33% for Q2 and down 2%for the full six-month fiscal year-to-date on an accounting basis. On an adjusted basis net revenues were down 18% for Q2 and up 37%for the six-month period, after adjusting down portions of lastyear’s DehydraTECH revenues subsequently written off at the close ofFY 2024.

Despite netrevenue and gross profit declines vs. prior year on an accountingbasis, the continued focus on managing costs enabled Hill to continuenarrowing the net loss in the quarter, with a 44% improvement over theyear ago period.

The 44% improvement for Q2 drove a year-to-dateimprovement of 34% for the first six months of the fiscal year.

About Hill Incorporated (TSXV:HILL)

Hill Incorporated is a progressive bioscienceimplementation company that is dedicated to building pathways tobetter and healthier living by leveraging our deep CPG expertise tocommercialize leading-edge technologies to craft superior cannabissolutions and non-alcoholic beverage products globally. Our HillAvenue Cannabis business unit is pioneering the space where craftconsumer products meet bioscience by combining our deep CPGcommercialization expertise with our rights to use LexariaBioscience Corp’s ground-breaking DehydraTECH patentportfolio for product development, licensing and B2B and B2C salesof cannabis ingredients or products on a global scale. Our Hill StreetBeverages business unit represents the Company’s legacy alcohol-freeconsumer beverage marketing and distribution business.

For more information on our business activities visit www.hillincorporated.com , tolearn more about our DehydraTECH cannabis biodelivery technology, goto www.dehydratech-thc.com , orto check out Hill Street Beverage’s award-winning alcohol-free wineline-up and order product to be delivered straight to your home, go to www.hillstreetbeverages.com .

If you wish to sign up for the Hill Incorporatedmailing list, click HERE .

For more information, contact:

Craig Binkley, Chief Executive Officer

Email: craig@hillincorporated.com

Phone: 604-609-6154

FORWARD-LOOKING STATEMENTS

Statements in this press release may containforward-looking information. Any statements in this press release thatare not statements of historical fact may be deemed to beforward-looking statements. Forward-looking statements are oftenidentified by terms such as “may”, “should”, “would”,“anticipate”, “expects”, and similar expressions. The readeris cautioned that assumptions used in the preparation of anyforward-looking information may prove to be incorrect. Events orcircumstances, such as future availability of capital on favourableterms, may cause actual results to differ materially from thosepredicted, as a result of numerous known and unknown risks,uncertainties, and other factors, many of which are beyond the controlof the Company. The reader is cautioned not to place undue reliance onany forward-looking information. Such information, although consideredreasonable by management at the time of preparation, may prove to beincorrect and actual results may differ materially from thoseanticipated. Forward-looking statements contained in this pressrelease are expressly qualified by this cautionary statement. Theforward-looking statements contained in this press release are made as of the date of this press release. TheCompany does not undertake any obligation to update publicly or torevise any of the included forward-looking statements, whether as aresult of new information, future events or otherwise, except asrequired by securities law.

Neither TSXVenture Exchange nor its Regulation Services Provider (as that term isdefined in policies of the TSX Venture Exchange) acceptsresponsibility for the adequacy or accuracy of this release.

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