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Home Capital Reports Q1 2019 Results
TORONTO–(BUSINESS WIRE)–Home Capital Group Inc. (“Home Capital” or “the Company”) (TSX:HCG)
today reported financial results for the three months ended March 31,
2019. This press release should be read in conjunction with the
Company’s 2019 First Quarter Report including Financial Statements and
Management’s Discussion and Analysis (MD&A), which are available on Home
Capital’s website at www.homecapital.com
and on SEDAR at www.sedar.com.
“The growth in our mortgage portfolio and deposits with Oaken Financial
show that more Canadians are trusting us to look after their financial
needs. We have begun to upgrade our information technology
infrastructure on a multi-year IT Roadmap that will include an upgrade
of our core banking system and new initiatives in digital technologies,
customer relationship management and mobile banking. These investments
will enable us to improve productivity, accelerate new product
introductions and improve the customer experience,” said Yousry Bissada,
President and Chief Executive Officer. “We have the capability and
desire to continue returning capital through the normal course issuer
bid as we grow our mortgage portfolio and make substantial technology
investments to build our business for the future,” added Mr. Bissada.
Asset growth: Positive year-over-year growth in both mortgage
originations of 4.9% and total loans of 9.6%
-
Mortgage originations of $1.22 billion in Q1 2019, compared
with $1.61 billion in Q4 2018 and $1.16 billion in Q1 2018 -
Single-family mortgage originations of $933.2 million in Q1
2019, compared with $1,160.1 million in Q4 2018 and $869.7 million in
Q1 2018 -
Total loans at the end of the quarter of $16.68 billion, an
increase of 1.7% from Q4 2018 and 9.6% from Q1 2018 -
Loans under administration of $23.11 billion up 0.8% from Q4
2018 and up 2.5% from Q1 2018
Funding: Oaken share of total deposits reaches 21.8%
-
Total deposits of $13.57 billion compared with $12.98 billion
at the end of Q4 2018 and $12.08 billion at the end of Q1 2018 -
Total Oaken deposits of $2.95 billion, an increase of 10.2%
year to date and 34.3% from the end of Q1 2018 -
Oaken’s share of total deposits was 21.8% at the end of Q1 2019
compared with 20.7% at the end of Q4 2018 and 18.2% at the end of Q1
2018
Net income: Net income of 45 cents per share up 4.7% from 43 cents
per share in Q1 2018
-
Net income of $27.8 million or 45 cents per share, compared
with $35.8 million or 46 cents per share for Q4 2018 and $34.6 million
or 43 cents per share for Q1 2018 -
Adjusted net income of $30.2 million or 49 cents per share, up
14.0% over Q1 2018 after adjustment for incremental amortization of
legacy information systems in connection with investment in IT Roadmap -
Net interest margin of 2.01% compared with 1.99% in Q4 2018 and
2.02% in Q1 2018 -
Non-interest expenses of $60.0 million compared with $55.7
million in Q4 2018 and $51.4 million in Q1 2018, an increase of 7.8%
from Q4 2018 and 16.8% from Q1 2018 -
Expense growth attributed to number of active employees
returning to more normalized staffing levels compared to one year ago,
in addition to $3.2 million of incremental amortization of legacy
information systems adjusted as an item of note. There were no items
of note in Q4 2018 or Q1 2018.
Credit Quality: Net write-offs of 0.02% of gross loans compared with
0.03% in Q1 2018
-
Total provision for credit losses (PCL) of $6.1 million in Q1
2019 compared with $3.9 million in Q4 2018, and $6.0 million in Q1 2018 -
Provision expense of 0.15% of gross loans on an annualized
basis compared with 0.10% in Q4 2018 and 0.16% in Q1 2018, largely due
to an increase in non-performing other consumer retail loans, offset
by a lower allowance estimate on the commercial loan portfolio. -
Net write-offs as a percentage of gross loans of 0.02% compared
with 0.13% in Q4 2018 and 0.03% in Q1 2018 -
Net non-performing loans (represented by Stage 3 loans under
IFRS 9) as a percentage of gross loans remained low at 0.49% at the
end of Q1 2019 compared to 0.47% at the end of Q4 2018 and up from
0.29% at the end of Q1 2018
Return of Capital
Effective January 2, 2019, Home Capital commenced a normal course issuer
bid (“NCIB”) to permit the purchase of common shares of Home Capital
(“Common Shares”) through the facilities of the Toronto Stock Exchange
(the “TSX”), designated exchanges and alternative trading systems. The
price that Home Capital will pay for any Common Shares will be the
market price of such Common Shares at the time of acquisition or such
other price as may be permitted.
Under the NCIB, Home Capital may purchase for cancellation up to
4,753,517 of its Common Shares, representing approximately 10% of its
public float as of December 21, 2018, calculated in accordance with TSX
rules.
As at May 7, 2019, Home Capital had purchased 1,943,585 Common Shares
under the NCIB at an average price of approximately $16.88 per Common
Share. Purchases under the NCIB will terminate on January 1, 2020, or on
such earlier date as Home Capital may complete its purchases pursuant to
the Notice of Intention submitted to the TSX.
Outlook
Home Capital expects that the Canadian real estate market will be stable
for the balance of 2019 with improving affordability, healthy levels of
competition and stable interest rates. “We believe the key drivers of
our Q1 results will continue to support our growth for the balance of
the year,” said Mr. Bissada. “Through dedication to customer service,
attention to risk management and strategic deployment of capital, we
expect to continue to create long-term value for our shareholders and
our customers.”
YOUSRY BISSADA
President and Chief Executive Officer May 8, 2019 |
PAUL DERKSEN Chair of the Board |
||||
The Company’s 2019 First Quarter Financial Report, including
Management’s Discussion and Analysis, for the three months ended March
31, 2019 is available at www.homecapital.com
and on the Canadian Securities Administrators’ website at www.sedar.com.
First Quarter 2019 Results Conference Call and Slide Presentation
Webcast
The conference call will take place on Wednesday, May 8, 2019, at 8:00
a.m. ET. Participants are asked to call approximately 10 minutes in
advance at toll-free 1-866-393-4306 throughout North America.
Participants calling from outside of North America may dial
1-734-385-2616. The call will also be accessible in listen-only mode on
Home Capital’s website at www.homecapital.com
in the Investor Relations section of the website.
Conference Call Archive
A telephone replay of the call will be available between 11:00 a.m. ET
Wednesday, May 8, 2019 and midnight ET Wednesday, May 15, 2019 by
calling 1-855-859-2056 (enter passcode 5324937). The archived audio
webcast will be available for 90 days on Home Capital’s website at www.homecapital.com.
Financial Highlights |
|
||||||||||||||
For the three months ended | |||||||||||||||
March 31 | December 31 | March 31 | Year-over-Year | ||||||||||||
2019 | 2018 | 2018 | Change | ||||||||||||
INCOME STATEMENT HIGHLIGHTS | |||||||||||||||
Net Interest Income | $ | 91,778 | $ | 90,324 | $ | 88,100 | 4.2% | ||||||||
Net Interest Margin (TEB1) | 2.01% | 1.99% | 2.02% | (1) bps | |||||||||||
Efficiency Ratio (TEB1) | 57.7% | 51.3% | 49.5% | 820 bps | |||||||||||
Adjusted Efficiency Ratio (TEB1)2 | 54.7% | 51.3% | 49.5% | 520 bps | |||||||||||
Provision for Credit Losses | $ | 6,060 | $ | 3,932 | $ | 5,968 | 1.5% | ||||||||
Provision as a Percentage of Gross Loans (annualized) | 0.15% | 0.10% | 0.16% | (1) bps | |||||||||||
Net Income | $ | 27,823 | $ | 35,811 | $ | 34,586 | (19.6)% | ||||||||
Adjusted Net Income2 | 30,152 | 35,811 | 34,586 | (12.8)% | |||||||||||
Diluted Earnings per Share | $ | 0.45 | $ | 0.46 | $ | 0.43 | 4.7% | ||||||||
Adjusted Diluted Earnings per Share2 | 0.49 | 0.46 | 0.43 | 14.0% | |||||||||||
Return on Shareholders’ Equity (annualized) | 6.8% | 8.1% | 7.6% | (80) bps | |||||||||||
Adjusted Return on Shareholders’ Equity (annualized)2 | 7.3% | 8.1% | 7.6% | (30) bps | |||||||||||
ORIGINATIONS | |||||||||||||||
Total Mortgage Originations | $ | 1,216,066 | $ | 1,614,164 | $ | 1,159,228 | 4.9% | ||||||||
Single-Family Residential Mortgage Originations | 933,220 | 1,160,051 | 869,690 | 7.3% | |||||||||||
As at | |||||||||||||||
March 31 | December 31 | March 31 | YTD Growth/ | ||||||||||||
2019 | 2018 | 2018 | (Decline) | ||||||||||||
BALANCE SHEET HIGHLIGHTS | |||||||||||||||
Total Assets | $ | 18,501,204 | $ | 18,141,689 | $ | 17,458,034 | 2.0% | ||||||||
Total Assets Under Administration3 | 24,935,030 | 24,680,225 | 24,776,803 | 1.0% | |||||||||||
Total Loans4 | 16,678,384 | 16,394,738 | 15,222,310 | 1.7% | |||||||||||
Total Loans Under Administration3,4 | 23,112,210 | 22,933,274 | 22,541,079 | 0.8% | |||||||||||
Deposits | $ | 13,565,828 | $ | 12,977,090 | $ | 12,084,408 | 4.5% | ||||||||
Demand Deposits | 459,659 | 437,046 | 476,038 | 5.2% | |||||||||||
FINANCIAL STRENGTH | |||||||||||||||
Capital Measures5 | |||||||||||||||
Common Equity Tier 1 Capital Ratio | 18.99% | 18.94% | 23.64% | ||||||||||||
Leverage Ratio | 7.60% | 7.54% | 9.02% | ||||||||||||
Credit Quality | |||||||||||||||
Net Non-Performing Loans as a Percentage of Gross Loans | 0.49% | 0.47% | 0.29% | ||||||||||||
NPL Allowance as a Percentage of Gross NPL6 | 23.8% | 19.9% | 23.9% | ||||||||||||
Share Information | |||||||||||||||
Book Value per Common Share | $ | 27.00 | $ | 26.43 | $ | 23.04 | |||||||||
Number of Common Shares Outstanding | 61,031 | 62,065 | 80,246 |
1 See definition of Taxable Equivalent Basis (TEB) under
Non-GAAP Measures in the Company’s 2019 First Quarter Report.
2
See definition of Adjusted Net Income, Adjusted Diluted Earnings
per Share, Adjusted Return on Shareholders’ Equity and Adjusted
Efficiency Ratio under Non-GAAP Measures in the Company’s 2019 First
Quarter Report.
3 Total assets and loans under
administration include both on- and off-balance sheet amounts.
4
Total loans include loans held for sale and are presented gross of
allowance for credit losses.
5 These figures relate to
the Company’s operating subsidiary, Home Trust Company.
6 NPL
indicates non-performing loans, defined as Stage 3 loans under IFRS 9 Financial
Instruments. See definition of impaired or non-performing loans
under Glossary of Terms in the Company’s 2019 First Quarter Report.
Caution Regarding Forward-looking Statements
From time to time Home Capital Group Inc. makes written and verbal
forward-looking statements. These are included in the Annual Report,
periodic reports to shareholders, regulatory filings, press releases,
Company presentations and other Company communications. Forward-looking
statements are made in connection with business objectives and targets,
Company strategies, operations, anticipated financial results and the
outlook for the Company, its industry, and the Canadian economy. These
statements regarding expected future performance are “financial
outlooks” within the meaning of National Instrument 51-102. Please see
the risk factors, which are set forth in detail in the Risk Management
section of this report, as well as the Company’s other publicly filed
information, which is available on the System for Electronic Document
Analysis and Retrieval (SEDAR) at www.sedar.com,
for the material factors that could cause the Company’s actual results
to differ materially from these statements. These risk factors are
material risk factors a reader should consider, and include credit risk,
liquidity and funding risk, structural interest rate risk, operational
risk, investment risk, strategic risk, reputational risk, compliance
risk and capital adequacy risk along with additional risk factors that
may affect future results. Forward-looking statements can be found in
the Report to the Shareholders and the Outlook section in the 2019 First
Quarter Report. Forward-looking statements are typically identified by
words such as “will,” “believe,” “expect,” “anticipate,” “intend,”
“should,” “estimate,” “plan,” “forecast,” “may,” and “could” or other
similar expressions.
By their very nature, these statements require the Company to make
assumptions and are subject to inherent risks and uncertainty, general
and specific, which may cause actual results to differ materially from
the expectations expressed in the forward-looking statements. These
risks and uncertainties include, but are not limited to, global capital
market activity, changes in government monetary and economic policies,
changes in interest rates, inflation levels and general economic
conditions, legislative and regulatory developments, competition and
technological change. The preceding list is not exhaustive of possible
factors.
These and other factors should be considered carefully and readers are
cautioned not to place undue reliance on these forward-looking
statements. The Company presents forward-looking statements to assist
shareholders in understanding the Company’s assumptions and expectations
about the future that are relevant in management’s setting of
performance goals, strategic priorities and outlook. The Company
presents its outlook to assist shareholders in understanding
management’s expectations on how the future will impact the financial
performance of the Company. These forward-looking statements may not be
appropriate for other purposes. The Company does not undertake to update
any forward-looking statements, whether written or verbal, that may be
made from time to time by it or on its behalf, except as required by
securities laws.
Assumptions about the performance of the Canadian economy in 2019 and
its effect on Home Capital’s business are material factors the Company
considers when setting strategic priorities and outlook. In determining
expectations for economic growth, both broadly and in the financial
services sector, the Company primarily considers historical and
forecasted economic data provided by the Canadian government and its
agencies and other third-party providers. In setting and reviewing its
strategic priorities and outlook for the remainder of 2019, management
continues to assume:
-
The Canadian economy is expected to be relatively stable in 2019.
However, it will continue to be influenced by economic conditions in
the United States and global markets, including the impact from the
renegotiated trade agreement with the United States and Mexico and
from other global trade relations; the Company is prepared for
potential volatility. -
Stable employment conditions in the Company’s established regions.
Also, the Company expects inflation will generally be within the Bank
of Canada’s target of 1% to 3%, leading to stable credit losses and
demand for the Company’s lending products in its established regions. - The Bank of Canada overnight interest rate will remain stable in 2019.
-
Current and expected levels of housing activity indicate a relatively
stable real estate market overall and in particular for the Company’s
key Greater Toronto Area (GTA) market. Please see Market Conditions
under the 2019 Outlook in the Company’s 2019 First Quarter Report for
more discussion on the Company’s expectations for the housing market. -
Debt service levels of Canadian households will remain manageable in
2019; however, high levels of consumer debt make the economy more
vulnerable to higher interest rates and any economic weakness. -
Access to the mortgage and deposit markets through broker networks
will be maintained.
Non-GAAP Measures
The Company has adopted IFRS as its accounting framework. IFRS are the
generally accepted accounting principles (GAAP) for Canadian publicly
accountable enterprises for years beginning on or after January 1, 2011.
The Company uses a number of financial measures to assess its
performance. Some of these measures are not calculated in accordance
with GAAP, are not defined by GAAP, and do not have standardized
meanings that would ensure consistency and comparability between
companies using these measures. Definitions of non-GAAP measures can be
found under Non-GAAP Measures in the Management’s Discussion and
Analysis included in the Company’s 2019 First Quarter Report.
Regulatory Filings
The Company’s continuous disclosure materials, including interim
filings, annual Management’s Discussion and Analysis and audited
consolidated financial statements, Annual Information Form, Notice of
Annual Meeting of Shareholders, and Proxy Circular are available on the
Company’s website at www.homecapital.com
and on the Canadian Securities Administrators’ website at www.sedar.com.
About Home Capital
Home Capital Group Inc. is a public company, traded on the Toronto Stock
Exchange (HCG), operating through its principal subsidiary, Home Trust
Company. Home Trust is a federally regulated trust company offering
residential and non-residential mortgage lending, securitization of
insured residential mortgage products, consumer lending and credit card
services. In addition, Home Trust offers deposits via brokers and
financial planners, and through a direct to consumer brand, Oaken
Financial. Home Trust also conducts business through its wholly owned
subsidiary, Home Bank. Licensed to conduct business across Canada, we
have offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec
and Manitoba.
Contacts
Jill MacRae
Director, Investor Relations
(416) 933-4991
[email protected]
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Cannabis
Medical Cannabis Market Report 2024-2030: Asia-Pacific Set to Witness Robust Growth, Driven by R&D Discovery Initiatives
Cannabis
Rubicon Organics Reports Q1 2024 Financial Results
SCHWAZZE
Schwazze Announces First Quarter 2024 Financial Results
Schwazze Management to Host Conference Call Today at 5:00 p.m. Eastern Time
DENVER, May 15, 2024 /PRNewswire/ — Medicine Man Technologies, Inc., operating as Schwazze, (OTCQX: SHWZ) (Cboe CA: SHWZ) (“Schwazze” or the “Company”), today announced financial and operational results for the first quarter ended March 31, 2024.
“We delivered another period of revenue growth in Q1 as we further refined our retail strategy while contending with the prolonged competitive challenges in Colorado and New Mexico,” said Forrest Hoffmaster, Interim CEO of Schwazze. “Throughout the quarter, we continued to sharpen our pricing and promotional efforts while enhancing the in-store experience, widening assortment, improving in-stock position, and advancing our loyalty program to attract and retain new customers. We also strengthened our wholesale business with quarter-over-quarter growth, while surpassing 30% total door penetration across both states.”
“The Colorado market remains highly competitive with more than 680 active recreational licenses, underscoring the importance of delivering an exceptional customer experience and fully integrated retail support program. Although retail pricing has recently stabilized, Colorado sales in Q1 were down 10% year-over-year due to lower volumes. Nonetheless, we significantly outpaced the market as our sales were up 9%, demonstrating the effectiveness of our operating playbook to compete in challenging environments. We expect to continue driving improvements in customer acquisition, retention, and loyalty as we further increase market share in the state.”
“In New Mexico, the proliferation of new licenses continued to outpace state cannabis sales as store count in Q1 increased 31% year-over-year while the market grew only 13%. In addition to pricing and promotional efforts, we’ve focused on driving traffic into our stores by expanding assortment with high quality flower and delivering an elevated customer experience. The New Mexico regulatory body has also increased its license enforcement efforts in recent months, contributing to more than 70 store closures and a 33% sequential decrease in net new store openings in the first quarter. We will continue to support the New Mexico Cannabis Control Division as it develops its regulatory framework.”
“Over the past four years we have rapidly scaled our footprint through 13 acquisitions, building a leading retail presence in both Colorado and New Mexico. We are beginning to see positive momentum from our pricing and promotional strategy and will remain focused on driving operating efficiencies while further optimizing our assets as we consolidate cultivation facilities and eliminate underperforming stores that do not meet our high-margin thresholds. We believe these initiatives, coupled with our operating playbook and strict cost controls, will enable us to return to stronger levels of profitability moving forward.”
First Quarter 2024 Financial Summary
$ in Thousands USD |
Q1 2024 |
Q4 2023 |
Q1 2023 |
Total Revenue |
$41,601 |
$43,325 |
$40,001 |
Gross Profit |
$17,934 |
$7,034[1] |
$21,849 |
Operating Expenses |
$20,643 |
$23,276 |
$16,199 |
Income (Loss) from Operations |
$(2,709) |
$(16,242) |
$5,650 |
Adjusted EBITDA[2] |
$7,341 |
$10,953 |
$14,525 |
Operating Cash Flow |
$(3,700) |
$3,452 |
$(880) |
Recent Highlights
- Announced the grand opening of a medical and recreational dispensary in March under the Everest Apothecary banner in Las Cruces, New Mexico, increasing the Company’s retail footprint to 34 stores across the state.
- Increased wholesale penetration in the first quarter to more than 30% of total doors in Colorado and New Mexico.
- Lowell Herb Co. pre-roll sales increased more than 3x quarter-over-quarter in Colorado, where it continues to be the #1 pre-roll in the state.
- Wana gummy sales up more than 2x quarter-over-quarter in New Mexico.
First Quarter 2024 Financial Results
Total revenue in the first quarter of 2024 increased 4% to $41.6 million compared to $40.0 million for the same quarter last year. The increase was primarily due to growth from new stores compared to the prior year period, partially offset by continued pricing pressure and the proliferation of new licenses in New Mexico.
Gross profit for the first quarter of 2024 was $17.9 million or 43.1% of total revenue, compared to $21.8 million or 54.6% of total revenue for the same quarter last year. The decrease in gross margin was primarily driven by the aforementioned pricing pressure in New Mexico, as well as higher medical sales mix in Colorado.
____________________________ |
1 Q4 2023 Gross Profit includes one-time, non-cash inventory adjustments of approximately $13.1 million comprised of $3.1 million of product consolidation, obsolescence, and shrinkage expenses, $4.3 million of net realizable value adjustments, and $5.8 million of fair value adjustments on acquired inventory in New Mexico in 2023. |
Operating expenses for the first quarter of 2024 were $20.6 million compared to $16.2 million for the same quarter last year. The year-ago period benefitted from a payroll tax credit of $3.9M. The remaining increase was primarily driven by personnel expenses and four-wall SG&A costs associated with 21 additional stores in Colorado and New Mexico that are still ramping.
Loss from operations for the first quarter of 2024 was $2.7 million compared to income from operations of $5.6 million in the same quarter last year. Net loss was $16.1 million for the first quarter of 2024 compared to net income of $1.7 million for the same quarter last year.
Adjusted EBITDA for the first quarter of 2024 was $7.3 million compared to $14.5 million for the same quarter last year. The decrease in Adjusted EBITDA was primarily driven by lower gross margin and higher operating expenses associated with the 21 additional stores that are still ramping.
As of March 31, 2024, cash and cash equivalents were $13.2 million compared to $19.2 million on December 31, 2023. Total debt as of March 31, 2024, was $159.7 million compared to $156.8 million on December 31, 2023.
Conference Call
The Company will conduct a conference call today, May 15, 2024, at 5:00 p.m. Eastern time to discuss its results for the first quarter ended March 31, 2024.
Schwazze management will host the conference call, followed by a question-and-answer period. Interested parties may submit questions to the Company prior to the call by emailing [email protected].
Date: Wednesday, May 15, 2024
Time: 5:00 p.m. Eastern time
Toll-free dial-in: (888) 664-6383
International dial-in: (416) 764-8650
Conference ID: 84167910
Webcast: SHWZ Q1 2024 Earnings Call
The conference call will also be broadcast live and available for replay on the investor relations section of the Company’s website at https://ir.schwazze.com.
Toll-free replay number: (888) 390-0541
International replay number: (416) 764-8677
Replay ID: 167910
If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.
About Schwazze
Schwazze (OTCQX: SHWZ) (Cboe CA: SHWZ) is building a premier vertically integrated regional cannabis company with assets in Colorado and New Mexico and will continue to explore taking its operating system to other states where it can develop a differentiated regional leadership position. Schwazze is the parent company of a portfolio of leading cannabis businesses and brands spanning seed to sale.
Schwazze is anchored by a high-performance culture that combines customer-centric thinking and data science to test, measure, and drive decisions and outcomes. The Company’s leadership team has deep expertise in retailing, wholesaling, and building consumer brands at Fortune 500 companies as well as in the cannabis sector.
Medicine Man Technologies, Inc. was Schwazze’s former operating trade name. The corporate entity continues to be named Medicine Man Technologies, Inc. Schwazze derives its name from the pruning technique of a cannabis plant to enhance plant structure and promote healthy growth. To learn more about Schwazze, visit https://schwazze.com/.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include financial outlooks; any projections of net sales, earnings, or other financial items; any statements of the strategies, plans and objectives of our management team for future operations; expectations in connection with the Company’s previously announced business plans; any statements regarding future economic conditions or performance; and statements regarding the intent, belief or current expectations of our management team. Such statements may be preceded by the words “may,” “will,” “could,” “would,” “should,” “expect,” “intends,” “plans,” “strategy,” “prospects,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other words of similar meaning in connection with a discussion of future events or future operating or financial performance, although the absence of these words does not necessarily mean that a statement is not forward-looking. We have based our forward-looking statements on management’s current expectations and assumptions about future events and trends affecting our business and industry. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Therefore, forward-looking statements are not guarantees of future events or performance, are based on certain assumptions, and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control and cannot be predicted or quantified. Consequently, actual events and results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) regulatory limitations on our products and services and the uncertainty in the application of federal, state, and local laws to our business, and any changes in such laws; (ii) our ability to manufacture our products and product candidates on a commercial scale on our own or in collaboration with third parties; (iii) our ability to identify, consummate, and integrate anticipated acquisitions; (iv) general industry and economic conditions; (v) our ability to access adequate capital upon terms and conditions that are acceptable to us; (vi) our ability to pay interest and principal on outstanding debt when due; (vii) volatility in credit and market conditions; (viii) the loss of one or more key executives or other key employees; and (ix) other risks and uncertainties related to the cannabis market and our business strategy. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s website at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise except as required by law.
Investor Relations Contact
Sean Mansouri, CFA or Aaron D’Souza
Elevate IR
(720) 330-2829
[email protected]
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
For the Periods Ended March 31, 2024 and December 31, 2023
Expressed in U.S. Dollars
March 31, |
December 31, |
||||
2024 |
2023 |
||||
ASSETS
|
|||||
Current Assets |
|||||
Cash & Cash Equivalents |
$ |
13,151,317 |
$ |
19,248,932 |
|
Accounts Receivable, net of Allowance for Doubtful Accounts |
3,356,032 |
4,261,159 |
|||
Inventory |
26,382,184 |
25,787,793 |
|||
Marketable Securities, net of Unrealized Loss of $347,516 and Loss of $1,816, respectively |
108,583 |
456,099 |
|||
Prepaid Expenses & Other Current Assets |
3,502,310 |
3,914,064 |
|||
Total Current Assets |
46,500,426 |
53,668,047 |
|||
Non-Current Assets |
|||||
Fixed Assets, net Accumulated Depreciation of $10,061,700 and $8,741,782, respectively |
31,326,000 |
31,113,630 |
|||
Investments |
2,000,000 |
2,000,000 |
|||
Investments Held for Sale |
– |
202,111 |
|||
Goodwill |
67,492,705 |
67,499,199 |
|||
Intangible Assets, net Accumulated Amortization of $36,483,160 and $32,706,765, respectively |
162,391,482 |
166,167,877 |
|||
Other Non-Current Assets |
1,328,187 |
1,263,837 |
|||
Operating Lease Right of Use Assets |
34,575,832 |
34,233,142 |
|||
Deferred Tax Assets, net |
992,144 |
1,996,489 |
|||
Total Non-Current Assets |
300,106,350 |
304,476,285 |
|||
Total Assets |
$ |
346,606,776 |
$ |
358,144,332 |
|
LIABILITIES & STOCKHOLDERS’ EQUITY
|
|||||
Current Liabilities |
|||||
Accounts Payable |
$ |
9,443,233 |
$ |
13,341,561 |
|
Accrued Expenses |
8,106,618 |
7,774,691 |
|||
Derivative Liabilities |
1,319,845 |
638,020 |
|||
Lease Liabilities – Current |
5,186,316 |
4,922,724 |
|||
Current Portion of Long Term Debt |
29,579,713 |
3,547,011 |
|||
Income Taxes Payable |
28,235,039 |
25,232,782 |
|||
Total Current Liabilities |
81,870,764 |
55,456,789 |
|||
Non-Current Liabilities |
|||||
Long Term Debt, net of Debt Discount & Issuance Costs |
130,120,753 |
153,262,203 |
|||
Lease Liabilities – Non-Current |
30,735,072 |
30,133,452 |
|||
Total Non-Current Liabilities |
160,855,825 |
183,395,655 |
|||
Total Liabilities |
$ |
242,726,589 |
$ |
238,852,444 |
|
Stockholders’ Equity |
|||||
Preferred Stock, $0.001 Par Value. 10,000,000 Shares Authorized; 82,185 Shares Issued and |
|||||
82,185 Outstanding as of March 31, 2024 and 85,534 Shares Issued and 85,534 Outstanding as of |
|||||
December 31, 2023. |
82 |
86 |
|||
Common Stock, $0.001 Par Value. 250,000,000 Shares Authorized; 79,168,539 Shares Issued |
|||||
and 78,248,389 Shares Outstanding as of March 31, 2024 and 74,888,392 Shares Issued |
|||||
and 73,968,242 Shares Outstanding as of December 31, 2023. |
79,169 |
74,888 |
|||
Additional Paid-In Capital |
202,677,665 |
202,040,968 |
|||
Accumulated Deficit |
(96,843,602) |
(80,790,927) |
|||
Common Stock Held in Treasury, at Cost, 920,150 Shares Held as of March 31, 2024 and |
|||||
920,150 Shares Held as of December 31, 2023. |
(2,033,127) |
(2,033,127) |
|||
Total Stockholders’ Equity |
103,880,187 |
119,291,888 |
|||
Total Liabilities & Stockholders’ Equity |
$ |
346,606,776 |
$ |
358,144,332 |
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND (LOSS)
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
For the Three Months Ended |
|||||
March 31, |
|||||
2024 |
2023 |
||||
(Unaudited) |
(Unaudited) |
||||
Operating Revenues |
|||||
Retail |
$ |
37,633,252 |
$ |
35,820,111 |
|
Wholesale |
3,898,320 |
4,058,925 |
|||
Other |
69,421 |
121,900 |
|||
Total Revenue |
41,600,993 |
40,000,936 |
|||
Total Cost of Goods & Services |
23,667,319 |
18,152,163 |
|||
Gross Profit |
17,933,674 |
21,848,773 |
|||
Operating Expenses |
|||||
Selling, General and Administrative Expenses |
11,835,818 |
10,100,934 |
|||
Professional Services |
1,671,881 |
1,187,364 |
|||
Salaries |
6,880,988 |
4,695,971 |
|||
Stock Based Compensation |
253,916 |
214,544 |
|||
Total Operating Expenses |
20,642,603 |
16,198,813 |
|||
Income from Operations |
(2,708,929) |
5,649,960 |
|||
Other Income (Expense) |
|||||
Interest Expense, net |
(8,307,369) |
(7,745,854) |
|||
Unrealized Gain (Loss) on Derivative Liabilities |
(681,825) |
8,501,685 |
|||
Other Loss |
10,500 |
– |
|||
Loss on Investment |
(33,382) |
– |
|||
Unrealized Gain on Investment |
(347,516) |
1,816 |
|||
Total Other Income (Expense) |
(9,359,592) |
757,647 |
|||
Pre-Tax Net Income (Loss) |
(12,068,521) |
6,407,607 |
|||
Provision for Income Taxes |
3,984,154 |
4,662,178 |
|||
Net Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
|
Less: Accumulated Preferred Stock Dividends for the Period |
(2,155,259) |
(2,029,394) |
|||
Net Income (Loss) Attributable to Common Stockholders |
$ |
(18,207,934) |
$ |
(283,965) |
|
Earnings (Loss) per Share Attributable to Common Stockholders |
|||||
Basic Earnings (Loss) per Share |
$ |
(0.24) |
$ |
(0.01) |
|
Diluted Earnings (Loss) per Share |
$ |
(0.24) |
$ |
(0.06) |
|
Weighted Average Number of Shares Outstanding – Basic |
76,006,932 |
55,835,501 |
|||
Weighted Average Number of Shares Outstanding – Diluted |
76,006,932 |
101,608,278 |
|||
Comprehensive Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
For the Three Months Ended |
|||||
March 31, |
|||||
2024 |
2023 |
||||
(Unaudited) |
(Unaudited) |
||||
Cash Flows from Operating Activities: |
|||||
Net Income (Loss) for the Period |
$ |
(16,052,675) |
$ |
1,745,429 |
|
Adjustments to Reconcile Net Income (Loss) to Cash for Operating Activities |
|||||
Depreciation & Amortization |
5,096,314 |
6,151,395 |
|||
Non-Cash Interest Expense |
1,031,431 |
991,184 |
|||
Non-Cash Lease Expense |
2,871,226 |
2,251,459 |
|||
Deferred Taxes |
1,004,345 |
(637,225) |
|||
Loss on Investment |
202,111 |
– |
|||
Change in Derivative Liabilities |
681,825 |
(8,501,685) |
|||
Amortization of Debt Issuance Costs |
421,512 |
421,513 |
|||
Amortization of Debt Discount |
2,303,246 |
1,999,933 |
|||
(Gain) Loss on Investments, net |
347,516 |
(1,816) |
|||
Stock Based Compensation |
640,974 |
214,544 |
|||
Changes in Operating Assets & Liabilities (net of Acquired Amounts): |
|||||
Accounts Receivable |
905,127 |
(118,181) |
|||
Inventory |
(587,900) |
(3,023,251) |
|||
Prepaid Expenses & Other Current Assets |
411,754 |
(3,036,801) |
|||
Other Assets |
(64,350) |
360,674 |
|||
Change in Operating Lease Liabilities |
(2,348,703) |
(1,531,765) |
|||
Accounts Payable & Other Liabilities |
(3,566,401) |
(3,464,671) |
|||
Income Taxes Payable |
3,002,257 |
5,299,403 |
|||
Net Cash Provided by (Used in) Operating Activities |
(3,700,390) |
(879,861) |
|||
Cash Flows from Investing Activities: |
|||||
Collection of Notes Receivable |
– |
10,631 |
|||
Purchase of Fixed Assets |
(1,532,287) |
(2,913,394) |
|||
Net Cash Provided by (Used in) Investing Activities |
(1,532,287) |
(2,902,763) |
|||
Cash Flows from Financing Activities: |
|||||
Payment on Notes Payable |
(864,938) |
– |
|||
Net Cash Provided by (Used in) Financing Activities |
(864,938) |
– |
|||
Net (Decrease) in Cash & Cash Equivalents |
(6,097,615) |
(3,782,624) |
|||
Cash & Cash Equivalents at Beginning of Period |
19,248,932 |
38,949,253 |
|||
Cash & Cash Equivalents at End of Period |
$ |
13,151,317 |
$ |
35,166,628 |
|
Supplemental Disclosure of Cash Flow Information: |
|||||
Cash Paid for Interest |
$ |
4,515,205 |
$ |
6,540,748 |
MEDICINE MAN TECHNOLOGIES, INC.
ADJUSTED EBITDA RECONCILIATION (NON-GAAP)
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
For the Three Months Ended |
|||||
March 31, |
|||||
2024 |
2023 |
||||
Net Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
|
Interest Expense, net |
8,307,369 |
7,745,854 |
|||
Provision for Income Taxes |
3,984,154 |
4,662,178 |
|||
Other (Income) Expense, net of Interest Expense |
1,052,223 |
(8,503,501) |
|||
Depreciation & Amortization |
5,618,834 |
6,612,814 |
|||
Earnings Before Interest, Taxes, Depreciation and |
|||||
Amortization (EBITDA) (non-GAAP) |
$ |
2,909,905 |
$ |
12,262,774 |
|
Non-Cash Stock Compensation |
253,916 |
214,544 |
|||
Deal Related Expenses |
637,761 |
1,195,802 |
|||
Capital Raise Related Expenses |
20,760 |
35,068 |
|||
Severance |
484,561 |
118,436 |
|||
Retention Program Expenses |
807,500 |
280,632 |
|||
Pre-Operating & Dark Carry Expenses |
1,053,837 |
391,917 |
|||
One-Time Legal Settlements |
417,653 |
– |
|||
Other Non-Recurring Items |
754,751 |
25,707 |
|||
Adjusted EBITDA (non-GAAP) |
$ |
7,340,644 |
$ |
14,524,880 |
|
Revenue |
41,600,993 |
40,000,936 |
|||
Adjusted EBITDA Percent |
17.6 % |
36.3 % |
View original content:https://www.prnewswire.co.uk/news-releases/schwazze-announces-first-quarter-2024-financial-results-302146858.html
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