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New products, strong online and retail sales drive record quarterly revenue for The Hydration Pharmaceuticals Company

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By Imelda Cotton - 
The Hydration Pharmaceuticals Company ASX HPC Hydralyte North America revenue sales retail online

Hydralyte North America chief executive officer Oliver Baker says the June quarter performance laid a solid foundation leading into the North American summer.

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The Hydration Pharmaceuticals Company (ASX: HPC), trading as Hydralyte North America, has posted a record net sales revenue for the June quarter of US$2.2 million, representing a 56% growth on US$1.4 million for the previous corresponding period.

The company’s latest quarterly report attributed the revenue increase to higher shipments into new and existing North American retailers – propelled by record retail shelf sell-through, new product launches and ongoing sales to online customers.

Marketing spend for the quarter was marginally down, however, from US$1.3 million in the previous quarter to US$1.2 million, while marketing spend as a percentage of net sales decreased from 68% to 55%.

Despite the reduction, the company continued to invest in multiple marketing activities including the appointment of US actress Shay Mitchell as a brand ambassador, a China distribution partnership and upgrades to its e-commerce website.

The earnings before interest, tax, depreciation and amortisation (EBITDA) loss reduced 21% by US$400,000 to US$1.5 million, compared to a loss of US$1.9 million in the previous quarter.

Cash expenditures for the period rose mainly due to a decrease in payables of US$300,000 and an increase in inventory of US$400,000.

Gross margin as a percentage of sales increased to 57% – mainly due to reduced airfreight costs during the quarter and continued sales of new and more profitable products combined with a higher margin customer mix.

Commenting on the June quarter performance Hydralyte North America chief executive officer Oliver Baker said it “laid a solid foundation” for the North American summer months.

Brand partnership

During the quarter, Hydralyte North America began a brand ambassador partnership with Shay Mitchell.

As part of her ongoing engagement, Ms Mitchell will provide insight into the company’s social media strategy to increase brand awareness and underpin potential sales growth.

She will utilise her own social media channels for additional posts featuring the company’s products, and has agreed to collaborate on two promotional events during this year.

The first event was held subsequent to the end of the quarter and was attended by nearly 50 high-profile North American influencers, leading to significant coverage across social media platforms and a boost to the company’s profile amongst its target demographic.

Marketing campaigns

Hydralyte North America launched marketing campaigns in Toronto, Ontario and British Columbia during the period in an effort to increase market share during the region’s summer months.

It commenced daily instore merchandising with major retailers in the region and increased its daily store visit rate to ensure products remain well positioned and out of stock items can be immediately addressed, particularly at higher volume stores.

The company launched Hydralyte+ Liver Support and Hydralyte+ Stress Relief with Ashwagandha and is in the process of shipping new stock keeping units (or SKUs) to US retailers.

Hydralyte North America is also working on 12 new products for launch into the US and Canadian markets during the peak of the North American summer, providing the potential for increased uptake and enhanced sales.

The launches will include new flavours, larger serving sizes for the sport and recreational categories, and variety packs which have generated strong online sales to date.

Cash position

At the end of June, Hydralyte North America had cash and cash equivalents of US$6.3 million at hand, providing it with the financial flexibility to increase its revenue profile and gross margin and reduce net cash used in operating activities.

Payments to related parties for the quarter were $1,734 excluding director remunerations.