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CORRECTING and REPLACING EPR Properties Reports First Quarter 2019 Results

Published

5 years ago

on

Reading Time: 13 minutes

KANSAS CITY, Mo.–(BUSINESS WIRE)–Thirteenth paragraph, second sentence of release should read: The
Company is confirming its guidance for 2019 FFO as adjusted per diluted
share of a range of $5.30 to $5.50 and confirming its 2019 investment
spending guidance of a range of $600.0 million to $800.0 million
(instead of The Company is increasing its guidance for 2019 FFO as
adjusted per diluted share to a range of $5.30 to $5.50 and confirming
its 2019 investment spending guidance of a range of $600.0 million to
$800.0 million).

The corrected release reads:

EPR PROPERTIES REPORTS FIRST QUARTER 2019 RESULTS

EPR Properties (NYSE:EPR) today announced operating results for the
first quarter ended March 31, 2019.

  • Total revenue was $164.5 million for the first quarter of 2019,
    representing a 6% increase from $155.0 million for the same quarter in
    2018.
  • Net income available to common shareholders was $59.3 million, or
    $0.79 per diluted common share, for the first quarter of 2019 compared
    to $23.5 million, or $0.32 per diluted common share, for the same
    quarter in 2018.
  • Funds From Operations (FFO) (a non-GAAP financial measure) for the
    first quarter of 2019 was $93.1 million, or $1.23 per diluted common
    share, compared to $61.0 million, or $0.82 per diluted common share,
    for the same quarter in 2018.
  • FFO as adjusted (FFOAA) (a non-GAAP financial measure) for the first
    quarter of 2019 was $102.6 million, or $1.36 per diluted common share,
    compared to $94.0 million, or $1.26 per diluted common share, for the
    same quarter in 2018, representing an 8% increase in per share results.

“We are pleased with the sustained momentum demonstrated by our first
quarter results,“ stated Company President and CEO Greg Silvers. “We
continue to source additional growth opportunities consistent with our
focus on experiential activities which play directly into the Company’s
differentiated and deep expertise. With the expected payoff of the
mortgage associated with the Schlitterbahn water parks, we are
well-positioned with additional capital for reinvestment. As we further
expand, we will adhere to our core underwriting principles as we seek
both accretive initial returns and growth in yield.”

Portfolio Update

The Company’s investment portfolio (excluding property under
development) consisted of the following at March 31, 2019:

  • The Entertainment segment included investments in 157 megaplex theatre
    properties, seven entertainment retail centers (which include seven
    additional megaplex theatre properties) and 11 family entertainment
    centers. The Company’s portfolio of owned entertainment properties
    consisted of 13.7 million square feet and was 99% leased, including
    megaplex theatres that were 100% leased.
  • The Recreation segment included investments in 12 ski areas, 20
    attractions, 34 golf entertainment complexes and 13 other recreation
    facilities. The Company’s portfolio of owned recreation properties was
    100% leased.
  • The Education segment included investments in 56 public charter
    schools, 69 early education centers and 15 private schools. The
    Company’s portfolio of owned education properties consisted of 4.6
    million square feet and was 98% leased.
  • The Other segment consisted primarily of the land under ground lease,
    property under development and land held for development related to
    the Resorts World Catskills project in Sullivan County, New York.

The Company’s combined owned portfolio consisted of 22.4 million square
feet and was 99% leased. As of March 31, 2019, the Company also had a
total of $315.2 million invested in property under development.

Investment Update

The Company’s investment spending for the three months ended March 31,
2019 totaled $174.6 million, and included investments in each of its
operating segments:

  • Entertainment investment spending during the three months ended
    March 31, 2019 totaled $117.9 million, including spending on the
    acquisition of five megaplex theatres totaling $93.3 million,
    build-to-suit development and redevelopment of megaplex theatres,
    entertainment retail centers and family entertainment centers.
  • Recreation investment spending during the three months ended March 31,
    2019 totaled $44.2 million, including spending on build-to-suit
    development of golf entertainment complexes and attractions.
  • Education investment spending during the three months ended March 31,
    2019 totaled $12.3 million, including spending on build-to-suit
    development and redevelopment of public charter schools, early
    education centers and private schools.
  • Other investment spending during the three months ended March 31, 2019
    totaled $0.2 million, and was related to the Resorts World Catskills
    project in Sullivan County, New York.

Capital Recycling

During the first quarter of 2019, pursuant to tenant purchase options,
the Company completed the sale of two public charter schools located in
Florida and North Carolina for net proceeds totaling $23.3 million. In
connection with these sales, the Company recognized a gain on sale of
$5.4 million.

During the first quarter of 2019, the Company completed the sale of one
recreation property and four education properties for net proceeds
totaling $14.4 million and recognized a net gain on sale of $0.9 million.

Disposition proceeds totaled $37.7 million for the first quarter of
2019. Additionally, the Company expects the payoff of the mortgages
associated with the Schlitterbahn waterparks of approximately $190.0
million during the second quarter.

Balance Sheet Update

Excluding prepayment penalties from earnings, the Company had a net debt
to adjusted EBITDA ratio (a non-GAAP financial measure) of 5.7x at
March 31, 2019. The Company had $11.1 million of unrestricted cash on
hand and $70.0 outstanding balance under its $1.0 billion unsecured
revolving credit facility at March 31, 2019.

During the quarter, the Company issued 1,059,656 common shares under its
Direct Share Purchase Plan (DSPP) for net proceeds of $78.6 million.

Dividend Information

The Company declared regular monthly cash dividends during the first
quarter of 2019 totaling $1.125 per common share. This dividend
represents an annualized dividend of $4.50 per common share, an increase
of 4.2% over the prior year, and is the Company’s ninth consecutive year
with a significant annual dividend increase.

The Company also declared first quarter cash dividends of $0.359375 per
share on its 5.75% Series C cumulative convertible preferred shares,
$0.5625 per share on its 9.00% Series E cumulative convertible preferred
shares and $0.359375 per share on its 5.75% Series G cumulative
redeemable preferred shares.

2019 Guidance

The Company’s updated 2019 guidance for net income per diluted share is
$3.10 to $3.30. The Company is confirming its guidance for 2019 FFO as
adjusted per diluted share of a range of $5.30 to $5.50 and confirming
its 2019 investment spending guidance of a range of $600.0 million to
$800.0 million. The Company is increasing its 2019 expected disposition
proceeds to a range of $300.0 million to $400.0 million from a range of
$100.0 million to $200.0 million.

FFO as adjusted guidance for 2019 is based on FFO per diluted share of
$4.91 to $5.06 adjusted for estimated transaction costs, termination
fees related to public charter schools, deferred income tax expense and
the impact of Series C and Series E dilution. FFO per diluted share is
based on a net income per diluted share range of $3.10 to $3.30 less
estimated gain on sale of real estate of a range of $0.29 to $0.34 and
the impact of Series C and Series E dilution of $0.05, plus estimated
real estate depreciation of $2.11 and allocated share of joint venture
depreciation of $0.04 (in accordance with the NAREIT definition of FFO).

Quarterly Supplemental

The Company’s supplemental information package for the first quarter
ended March 31, 2019 is available on the Company’s website at http://investors.eprkc.com/earnings-supplementals.

 
EPR Properties
Consolidated Statements of Income
(Unaudited, dollars in thousands except per share data)
 
    Three Months Ended March 31,
2019     2018
Rental revenue $ 150,723 $ 132,924
Other income 344 630
Mortgage and other financing income 13,475   21,414  
Total revenue 164,542 154,968
Property operating expense 15,793 7,564
General and administrative expense 12,130 12,324
Costs associated with loan refinancing or payoff — 31,943
Interest expense, net 33,826 34,337
Transaction costs 5,123 609
Depreciation and amortization 39,743   37,684  
Income before equity in income from joint ventures and other items 57,927 30,507
Equity in income from joint ventures 489 51
Gain on sale of real estate 6,328   —  
Income before income taxes 64,744 30,558
Income tax benefit (expense) 605   (1,020 )
Net income 65,349 29,538
Preferred dividend requirements (6,034 ) (6,036 )
Net income available to common shareholders of EPR Properties $ 59,315   $ 23,502  
Per share data attributable to EPR Properties common shareholders:
Basic earnings per share data:
Net income available to common shareholders $ 0.79   $ 0.32  
Diluted earnings per share data:
Net income available to common shareholders $ 0.79   $ 0.32  
Shares used for computation (in thousands):
Basic 74,679 74,146
Diluted 74,725 74,180
 
EPR Properties
Condensed Consolidated Balance Sheets
(Unaudited, dollars in thousands)
 
       

    March 31, 2019    

    December 31, 2018
Assets
Rental properties, net of accumulated depreciation of $920,409 and
$883,174 at March 31, 2019 and December 31, 2018, respectively 		$ 5,072,298 $ 5,024,057
Land held for development 28,080 34,177
Property under development 315,237 287,546
Operating lease right-of-use assets 211,299 —
Mortgage notes and related accrued interest receivable 527,627 517,467
Investment in direct financing leases, net 20,616 20,558
Investment in joint ventures 35,188 34,486
Cash and cash equivalents 11,116 5,872
Restricted cash 11,166 12,635
Accounts receivable 111,146 98,369
Other assets 87,458   96,223
Total assets $ 6,431,231   $ 6,131,390
Liabilities and Equity
Accounts payable and accrued liabilities $ 117,746 $ 168,463
Operating lease liabilities 235,612 —
Dividends payable 34,340 32,799
Unearned rents and interest 85,012 79,051
Debt 3,045,742   2,986,054
Total liabilities 3,518,452   3,266,367
Total equity $ 2,912,779   $ 2,865,023
Total liabilities and equity $ 6,431,231   $ 6,131,390
 
EPR Properties
Reconciliation of Non-GAAP Financial Measures
(Unaudited, dollars in thousands except per share data)
 
    Three Months Ended March 31,
2019     2018

FFO: (A)

Net income available to common shareholders of EPR Properties $ 59,315 $ 23,502
Gain on sale of real estate (6,328 ) —
Real estate depreciation and amortization 39,514 37,464
Allocated share of joint venture depreciation 555   58
FFO available to common shareholders of EPR Properties $ 93,056   $ 61,024
 
FFO available to common shareholders of EPR Properties $ 93,056 $ 61,024
Add: Preferred dividends for Series C preferred shares 1,939 —
Add: Preferred dividends for Series E preferred shares 1,939   —
Diluted FFO available to common shareholders of EPR Properties $ 96,934   $ 61,024
 

FFOAA: (A)

FFO available to common shareholders of EPR Properties $ 93,056 $ 61,024
Costs associated with loan refinancing or payoff — 31,943
Transaction costs 5,123 609
Termination fee included in gain on sale 5,001 —
Deferred income tax (benefit) expense (609 ) 428
FFOAA available to common shareholders of EPR Properties $ 102,571   $ 94,004
 
FFOAA available to common shareholders of EPR Properties $ 102,571 $ 94,004
Add: Preferred dividends for Series C preferred shares 1,939 1,940
Add: Preferred dividends for Series E preferred shares 1,939   1,939
Diluted FFOAA available to common shareholders of EPR Properties $ 106,449   $ 97,883
 
FFO per common share:
Basic $ 1.25 $ 0.82
Diluted 1.23 0.82
FFOAA per common share:
Basic $ 1.37 $ 1.27
Diluted 1.36 1.26
Shares used for computation (in thousands):
Basic 74,679 74,146
Diluted 74,725 74,180
 
Weighted average shares outstanding-diluted EPS 74,725 74,180
Effect of dilutive Series C preferred shares 2,145   2,098
Adjusted weighted average shares outstanding-diluted Series C 76,870 76,278
Effect of dilutive Series E preferred shares 1,622   1,598
Adjusted weighted average shares outstanding-diluted Series C and
Series E 		78,492   77,876
 
Other financial information:
Straight-lined rental revenue $ 2,414 $ 1,874
Dividends per common share $ 1.125 $ 1.080
(A)   NAREIT developed FFO as a relative non-GAAP financial measure of
performance of an equity REIT in order to recognize that
income-producing real estate historically has not depreciated on the
basis determined under GAAP and management provides FFO herein
because it believes this information is useful to investors in this
regard. FFO is a widely used measure of the operating performance of
real estate companies and is provided here as a supplemental measure
to GAAP net income available to common shareholders and earnings per
share. Pursuant to the definition of FFO by the Board of Governors
of NAREIT, the Company calculates FFO as net income available to
common shareholders, computed in accordance with GAAP, excluding
gains and losses from disposition of real estate and impairment
losses on real estate, plus real estate related depreciation and
amortization, and after adjustments for unconsolidated partnerships,
joint ventures and other affiliates. Adjustments for unconsolidated
partnerships, joint ventures and other affiliates are calculated to
reflect FFO on the same basis. The Company has calculated FFO for
all periods presented in accordance with this definition. In
addition to FFO, the Company presents FFO as adjusted (FFOAA).
Management believes it is useful to provide FFOAA as a supplemental
measure to GAAP net income available to common shareholders and
earnings per share. FFOAA is FFO plus costs (gain) associated with
loan refinancing or payoff, transaction costs, severance expense,
litigation settlement expense, preferred share redemption costs,
termination fees associated with tenants’ exercises of education
properties buy-out options, impairment of direct financing lease
(allowance for lease loss portion) and provision for loan losses,
and by subtracting gain on early extinguishment of debt, gain on
insurance recovery and deferred tax benefit (expense). FFO and FFOAA
are non-GAAP financial measures. FFO and FFOAA do not represent cash
flows from operations as defined by GAAP and are not indicative that
cash flows are adequate to fund all cash needs and are not to be
considered an alternative to net income or any other GAAP measure as
a measurement of the results of the Company’s operations, cash flows
or liquidity as defined by GAAP. It should also be noted that not
all REITs calculate FFO or FFOAA the same way so comparisons of each
of these non-GAAP measures with other REITs may not be meaningful.
 

The conversion of the 5.75% Series C cumulative convertible preferred
shares and the 9.00% Series E cumulative convertible preferred shares
would be dilutive to FFO and FFOAA per share for the three months ended
March 31, 2019. Therefore, the additional 2.1 million common shares and
1.6 million common shares that would result from the conversion and the
corresponding add-back of the preferred dividends declared on those
shares are included in the calculation of diluted FFO per share and
diluted FFOAA per share for the three months ended March 31, 2019.

The effect of the conversion of the 5.75% Series C cumulative
convertible preferred shares and the 9.00% Series E cumulative
convertible preferred shares do not result in more dilution to per share
results and are therefore not included in the calculation of diluted FFO
per share data for the three months ended March 31, 2018. The conversion
of the 5.75% Series C cumulative convertible preferred shares and the
9.00% Series E cumulative convertible preferred shares would be dilutive
to FFOAA per share for the three months ended March 31, 2018. Therefore,
the additional 2.1 million and 1.6 million common shares that would
result from the conversion and the corresponding add-back of the
preferred dividends declared on those shares are included in the
calculation of diluted FFOAA per share for the three months ended March
31, 2018.

Net Debt to Adjusted EBITDA Ratio

Net Debt to Adjusted EBITDA Ratio is a supplemental measure derived from
non-GAAP financial measures the Company uses to evaluate its capital
structure and the magnitude of its debt against its operating
performance. The Company believes that investors commonly use versions
of this ratio in a similar manner. In addition, financial institutions
use versions of this ratio in connection with debt agreements to set
pricing and covenant limitations. The Company’s method of calculating
Net Debt to Adjusted EBITDA Ratio may be different from methods used by
other REITs and, accordingly, may not be comparable to such other REITs.
Reconciliations of debt and net income (both reported in accordance with
GAAP) to Net Debt, EBITDAre, Adjusted EBITDA, and Net Debt to Adjusted
EBITDA Ratio (each of which is a non-GAAP financial measure) are
included in the following tables (unaudited, in thousands):

        March 31,
2019     2018

Net Debt: (B)

Debt $ 3,045,742 $ 3,131,437
Deferred financing costs, net 32,838 28,558
Cash and cash equivalents (11,116 ) (24,514 )
Net Debt $ 3,067,464   $ 3,135,481  
 
Three Months Ended March 31,
2019 2018

EBITDAre and Adjusted EBITDA:

Net income $ 65,349 $ 29,538
Interest expense, net 33,826 34,337
Income tax (benefit) expense (605 ) 1,020
Depreciation and amortization 39,743 37,684
Gain on sale of real estate (6,328 ) —
Costs associated with loan refinancing or payoff — 31,943
Equity in income from joint ventures (489 ) (51 )
EBITDAre (for the quarter) (C) $ 131,496   $ 134,471  
 
Transaction costs 5,123 609
Prepayment fees (900 ) —  
Adjusted EBITDA (for the quarter) $ 135,719   $ 135,080  
 
Adjusted EBITDA (1) (D) $ 542,876   $ 540,320  
 
Net Debt/Adjusted EBITDA Ratio 5.7 5.8
 
(1) Adjusted EBITDA for the quarter is multiplied by four to
calculate an annual amount.
 
(B)   Net Debt represents debt (reported in accordance with GAAP) adjusted
to exclude deferred financing costs, net and reduced for cash and
cash equivalents. By excluding deferred financing costs, net and
reducing debt for cash and cash equivalents on hand, the result
provides an estimate of the contractual amount of borrowed capital
to be repaid, net of cash available to repay it. The Company
believes this calculation constitutes a beneficial supplemental
non-GAAP financial disclosure to investors in understanding our
financial condition. The Company’s method of calculating Net Debt
may be different from methods used by other REITs and, accordingly,
may not be comparable to such other REITs.
 
(C) NAREIT developed EBITDAre as a relative non-GAAP financial measure
of REITs, independent of a company’s capital structure, to provide a
uniform basis to measure the enterprise value of a company. Pursuant
to the definition of EBITDAre by the Board of Governors of NAREIT,
the Company calculates EBITDAre as net income, computed in
accordance with GAAP, excluding interest expense (net), income tax
expense (benefit), depreciation and amortization, gains and losses
from disposition of real estate, impairment losses on real estate,
costs (gain) associated with loan refinancing or payoff and
adjustments for unconsolidated partnerships, joint ventures and
other affiliates.
 
Management provides EBITDAre herein because it believes this
information is useful to investors as a supplemental performance
measure as it can help facilitate comparisons of operating
performance between periods and with other REITs. EBITDAre does not
represent cash flow from operations as defined by GAAP and is not
indicative that cash flows are adequate to fund all cash needs and
is not to be considered an alternative to net income or any other
GAAP measure as a measurement of the results of the Company’s
operations or cash flows or liquidity as defined by GAAP.
 
(D) Management uses Adjusted EBITDA in its analysis of the performance
of the business and operations of the Company. Management believes
Adjusted EBITDA is useful to investors because it excludes various
items that management believes are not indicative of operating
performance, and that it is an informative measure to use in
computing various financial ratios to evaluate the Company. The
Company defines Adjusted EBITDA as EBITDAre (defined above)
excluding gain on insurance recovery, severance expense, litigation
settlement expense, impairment of direct financing lease (allowance
for lease loss portion), the provision for loan losses, transaction
costs and prepayment fees, and which is then multiplied by four to
get an annual amount.
 
The Company’s method of calculating Adjusted EBITDA may be different
from methods used by other REITs and, accordingly, may not be
comparable to such other REITs. Adjusted EBITDA is not a measure of
performance under GAAP, does not represent cash generated from
operations as defined by GAAP and is not indicative of cash
available to fund all cash needs, including distributions. This
measure should not be considered as an alternative to net income for
the purpose of evaluating the Company’s performance or to cash flows
as a measure of liquidity.
 

About EPR Properties

EPR Properties is a specialty real estate investment trust (REIT) that
invests in properties in select market segments which require unique
industry knowledge, while offering the potential for stable and
attractive returns. Our total investments are nearly $7.0 billion and
our primary investment segments are Entertainment, Recreation and
Education. We adhere to rigorous underwriting and investing criteria
centered on key industry and property level cash flow standards. We
believe our focused niche approach provides a competitive advantage, and
the potential for higher growth and better yields.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

With the exception of historical information, certain statements
contained or incorporated by reference herein may contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), such as those pertaining to our acquisition or
disposition of properties, our capital resources, future expenditures
for development projects, expected dividend payments, and our results of
operations and financial condition. Forward-looking statements
involve numerous risks and uncertainties and you should not rely on them
as predictions of actual events. There is no assurance the events
or circumstances reflected in the forward-looking statements will occur.
You can identify forward-looking statements by use of words such as
“will be,” “intend,” “continue,” “believe,” “may,” “expect,” “hope,”
“anticipate,” “goal,” “forecast,” “pipeline,” “estimates,” “offers,”
“plans,” “would” or other similar expressions or other comparable terms
or discussions of strategy, plans or intentions contained or
incorporated by reference herein. While references to commitments
for investment spending are based on present commitments and agreements
of the Company, we cannot provide assurance that these transactions will
be completed on satisfactory terms. In addition, references to
our budgeted amounts and guidance are forward-looking statements. Forward-looking
statements necessarily are dependent on assumptions, data or methods
that may be incorrect or imprecise.

Contacts

EPR Properties
Brian Moriarty, 888-EPR-REIT
www.eprkc.com

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Cannabis

Rubicon Organics Reports Q1 2024 Financial Results

Published

15 hours ago

on

May 16, 2024

By

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SCHWAZZE

Schwazze Announces First Quarter 2024 Financial Results

Published

20 hours ago

on

May 15, 2024

By

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. 
2  Adjusted EBITDA is a non-GAAP measure as defined by the SEC, and represents earnings before interest, taxes, depreciation, and amortization, adjusted for other income, non-cash share-based compensation, one-time transaction related expenses, or other non-operating costs. The Company uses Adjusted EBITDA as it believes it better explains the results of its core business. See “ADJUSTED EBITDA RECONCILIATION (NON-GAAP)” section herein for an explanation and reconciliations of non-GAAP measure used throughout this release.

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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