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Materialise Reports First Quarter 2019 Results
LEUVEN, Belgium–(BUSINESS WIRE)–Materialise NV (NASDAQ:MTLS), a leading provider of additive
manufacturing and medical software and of sophisticated 3D printing
services, today announced its financial results for the first quarter
ended March 31, 2019.
Highlights – First Quarter 2019
-
Total revenue increased 7.3% to 47,115 kEUR for the first quarter of
2019 from 43,899 kEUR for the first quarter of 2018. -
Total deferred revenue from annual software sales and maintenance
contracts increased by 2,305 kEUR to 24,911 kEUR from 22,606 kEUR at
the end of 2018. -
Adjusted EBITDA increased 12% from the first quarter of 2018 to 5,829
kEUR for the first quarter of 2019. -
Net loss for the first quarter of 2019 was (304) kEUR, or (0.01) EUR
per diluted share, compared to (183) kEUR, or 0.00 EUR per diluted
share, over the same period last year.
Executive Chairman Peter Leys commented, “In the year’s opening quarter,
all three of our segments performed well. Materialise Software and
Materialise Medical, which continue to invest in both sales and
marketing and research and development, combined healthy double-digit
revenue growth rates with solid double-digit EBITDA margins. In spite of
the continuing macro-economic uncertainties, in particular in the
automotive sector, Materialise Manufacturing also realized growth, both
in terms of revenue and, more significantly, in terms of EBITDA. We
believe we are on track to meet our financial guidance for 2019.”
First Quarter 2019 Results
Total revenue for the first quarter of 2019 increased 7.3% to 47,115
kEUR compared to 43,899 kEUR for the first quarter of 2018. Adjusted
EBITDA increased to 5,829 kEUR from 5,224 kEUR. The Adjusted EBITDA
margin (Adjusted EBITDA divided by total revenue) in the first quarter
of 2019 was 12.4% compared to 11.9% in the first quarter of 2018.
Revenue from our Materialise Software segment increased 12.3% to
9,350 kEUR for the first quarter of 2019 from 8,326 kEUR for the same
quarter last year. Segment EBITDA increased to 2,961 kEUR from 2,324
kEUR while the segment EBITDA margin (the segment’s EBITDA divided by
the segment’s revenue) was 31.7% compared to 27.9% in the prior-year
period.
Revenue from our Materialise Medical segment increased 13.6% to 13,566
kEUR for the first quarter of 2019 compared to 11,946 kEUR for the same
period in 2018. Compared to the same quarter in 2018, revenues from
medical devices and services grew 15.8%, and revenues from our medical
software grew 9.4%. Segment EBITDA was 1,773 kEUR compared to 2,060 kEUR
while the segment EBITDA margin decreased to 13.1% from 17.2% in the
first quarter of 2018.
Revenue from our Materialise Manufacturing segment increased 2.3% to
24,184 kEUR for the first quarter of 2019 from 23,632 kEUR for the first
quarter of 2018. Segment EBITDA increased to 3,695 kEUR from 3,133 kEUR
while the segment EBITDA margin increased to 15.3% from 13.3% for the
same quarter in 2018.
Gross profit was 25,579 kEUR, or 54.3% of total revenue, for the first
quarter of 2019 compared to 23,955 kEUR, or 54.6% of total revenue, for
the first quarter of 2018.
Research and development (“R&D”), sales and marketing (“S&M”) and
general and administrative (“G&A”) expenses increased, in the aggregate,
8.5% to 25,361 kEUR for the first quarter of 2019 from 23,374 kEUR for
the first quarter of 2018.
Net other operating income increased by 709 kEUR to 1,258 kEUR compared
to 549 kEUR for the first quarter of 2018.
Operating result increased 30.6% to 1,476 kEUR from 1,130 kEUR for the
same period in the prior year.
Net financial result was (592) kEUR compared to (710) kEUR for the
prior-year period. The share in loss of joint venture amounted to (123)
kEUR from (103) kEUR for the same period last year.
The first quarter of 2019 contained income tax expenses of (1,065) kEUR,
compared to (500) kEUR in the first quarter of 2018. The decrease of 565
kEUR primarily reflects the change in deferred taxes from an income of
320 kEUR as at March 31, 2018 to an expense of 290 kEUR as at March 31,
2019.
As a result of the above, net loss for the first quarter of 2019 was
(304) kEUR, compared to (183) kEUR for the same period in 2018. Total
comprehensive income for the first quarter of 2019, which includes
exchange differences on translation of foreign operations, was 284 kEUR
compared to a loss of (278) kEUR for the same period in 2018.
At March 31, 2019, we had cash and equivalents of 111,052 kEUR compared
to 115,506 kEUR at December 31, 2018. Cash flow from operating
activities for the first quarter of 2019 was 4,081 kEUR compared to
6,200 kEUR in 2018. As a result of the implementation of the new
accounting standard IFRS 16, we have recognized additional lease assets
and liabilities for an amount of 4,998 kEUR at January 1, 2019. Our
Adjusted EBITDA for the first quarter of 2019 was affected positively by
this new standard from the rental payments decrease of 596 kEUR, but our
operating profit was not impacted as the depreciation expenses increased
by the same amount.
Net shareholders’ equity at March 31, 2019 was 136,377 kEUR compared to
135,989 kEUR at December 31, 2018.
2019 Guidance
As detailed in the company’s year-end fiscal 2018 earnings announcement,
in fiscal 2019, management expects to report consolidated revenue
between 196,000 – 204,000 kEUR and Adjusted EBITDA between 29,000 –
33,000 kEUR. Management also expects the amount of deferred revenue the
company generates from annual licenses and maintenance in 2019 to
increase by an amount between 2,000 – 4,000 kEUR as compared to 2018.
Reflecting the usual seasonality of the company’s business, Materialise
expects its financial performance to be weighted towards the second half
of 2019.
Non-IFRS Measures
Materialise uses EBITDA and Adjusted EBITDA as supplemental financial
measures of its financial performance. EBITDA is calculated as net
profit plus income taxes, financial expenses (less financial income),
shares of loss in a joint venture and depreciation and amortization.
Adjusted EBITDA is determined by adding non-cash stock-based
compensation expenses and acquisition-related expenses of business
combinations to EBITDA. Management believes these non-IFRS measures to
be important measures as they exclude the effects of items which
primarily reflect the impact of long-term investment and financing
decisions, rather than the performance of the company’s day-to-day
operations. As compared to net profit, these measures are limited in
that they do not reflect the periodic costs of certain capitalized
tangible and intangible assets used in generating revenues in the
company’s business, or the charges associated with impairments.
Management evaluates such items through other financial measures such as
capital expenditures and cash flow provided by operating activities. The
company believes that these measurements are useful to measure a
company’s ability to grow or as a valuation measurement. The company’s
calculation of EBITDA and Adjusted EBITDA may not be comparable to
similarly titled measures reported by other companies. EBITDA and
Adjusted EBITDA should not be considered as alternatives to net profit
or any other performance measure derived in accordance with IFRS. The
company’s presentation of EBITDA and Adjusted EBITDA should not be
construed to imply that its future results will be unaffected by unusual
or non-recurring items.
Exchange Rate
This document contains translations of certain euro amounts into U.S.
dollars at specified rates solely for the convenience of readers. Unless
otherwise noted, all translations from euros to U.S. dollars in this
document were made at a rate of EUR 1.00 to USD 1.1235, the reference
rate of the European Central Bank on March 29, 2019.
Conference Call and Webcast
Materialise will hold a conference call and simultaneous webcast to
discuss its financial results for the first quarter of 2019 on Tuesday,
April 30, 2019, at 8:30 a.m. ET/2:30 p.m. CET. Company participants on
the call will include Wilfried Vancraen, Founder and Chief Executive
Officer; Peter Leys, Executive Chairman; and Johan Albrecht, Chief
Financial Officer. A question-and-answer session will follow
management’s remarks.
To access the conference call, please dial 844-469-2530 (U.S.) or
765-507-2679 (international), passcode #4573367. The conference call
will also be broadcast live over the Internet with an accompanying slide
presentation, which can be accessed on the company’s website at http://investors.materialise.com.
A webcast of the conference call will be archived on the company’s
website for one year.
About Materialise
Materialise incorporates more than 25 years of 3D printing experience
into a range of software solutions and 3D printing services, which form
the backbone of the 3D printing industry. Materialise’s open and
flexible solutions enable players in a wide variety of industries,
including healthcare, automotive, aerospace, art and design, and
consumer goods, to build innovative 3D printing applications that aim to
make the world a better and healthier place. Headquartered in Belgium,
with branches worldwide, Materialise combines one of the largest groups
of software developers in the industry with one of the largest 3D
printing facilities in the world. For additional information, please
visit: www.materialise.com.
Cautionary Statement on Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
regarding, among other things, our intentions, beliefs, assumptions,
projections, outlook, analyses or current expectations, plans,
objectives, strategies and prospects, both financial and business,
including statements concerning, among other things, current estimates
of fiscal 2019 revenues, deferred revenue from annual licenses and
maintenance and Adjusted EBITDA, results of operations, cash needs,
capital expenditures, expenses, financial condition, liquidity,
prospects, growth and strategies (including our strategic priorities for
2019), and the trends and competition that may affect the markets,
industry or us. Such statements are subject to known and unknown
uncertainties and risks. When used in this press release, the words
“estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,”
“believe,” “forecast,” “will,” “may,” “could,” “might,” “aim,” “should,”
and variations of such words or similar expressions are intended to
identify forward-looking statements. These forward-looking statements
are based upon the expectations of management under current assumptions
at the time of this press release. These expectations, beliefs and
projections are expressed in good faith and the company believes there
is a reasonable basis for them. However, the company cannot offer any
assurance that our expectations, beliefs and projections will actually
be achieved. By their nature, forward-looking statements involve risks
and uncertainties because they relate to events, competitive dynamics
and industry change, and depend on economic circumstances that may or
may not occur in the future or may occur on longer or shorter timelines
than anticipated. We caution you that forward-looking statements are not
guarantees of future performance and involve known and unknown risks,
uncertainties and other factors that are in some cases beyond our
control. All of the forward-looking statements are subject to risks and
uncertainties that may cause the company’s actual results to differ
materially from our expectations, including risk factors described in
the company’s annual report on Form 20-F filed with the U.S. Securities
and Exchange Commission. There are a number of risks and uncertainties
that could cause the company’s actual results to differ materially from
the forward-looking statements contained in this press release.
The company is providing this information as of the date of this press
release and does not undertake any obligation to update any
forward-looking statements contained in this press release as a result
of new information, future events or otherwise, unless it has
obligations under the federal securities laws to update and disclose
material developments related to previously disclosed information.
Consolidated income statements (Unaudited) |
|||||||||||||||||||||||||
For the three months ended |
For the three months ended |
||||||||||||||||||||||||
In 000 | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
U.S.$ | € | € | € | € | |||||||||||||||||||||
Revenue | 52,934 | 47,115 | 43,899 | 47,115 | 43,899 | ||||||||||||||||||||
Cost of sales | (24,195 | ) | (21,536 | ) | (19,944 | ) | (21,536 | ) | (19,944 | ) | |||||||||||||||
Gross profit | 28,739 | 25,579 | 23,955 | 25,579 | 23,955 | ||||||||||||||||||||
Gross profit as % of revenue | 54,3 | % | 54,3 | % | 54.6 | % | 54,3 | % | 54.6 | % | |||||||||||||||
Research and development expenses | (6,388 | ) | (5,686 | ) | (5,615 | ) | (5,686 | ) | (5,615 | ) | |||||||||||||||
Sales and marketing expenses | (13,571 | ) | (12,079 | ) | (10,599 | ) | (12,079 | ) | (10,599 | ) | |||||||||||||||
General and administrative expenses | (8,534 | ) | (7,596 | ) | (7,160 | ) | (7,596 | ) | (7,160 | ) | |||||||||||||||
Net other operating income (expenses) | 1,412 | 1,258 | 549 | 1,258 | 549 | ||||||||||||||||||||
Operating (loss) profit | 1,658 | 1,476 | 1,130 | 1,476 | 1,130 | ||||||||||||||||||||
Financial expenses | (1,344 | ) | (1,196 | ) | (1,550 | ) | (1,196 | ) | (1,550 | ) | |||||||||||||||
Financial income | 679 | 604 | 840 | 604 | 840 | ||||||||||||||||||||
Share in loss of joint venture | (139 | ) | (123 | ) | (103 | ) | (123 | ) | (103 | ) | |||||||||||||||
(Loss) profit before taxes | 854 | 761 | 317 | 761 | 317 | ||||||||||||||||||||
Income taxes | (1,196 | ) | (1,065 | ) | (500 | ) | (1,065 | ) | (500 | ) | |||||||||||||||
Net (loss) profit for the period | (342 | ) | (304 | ) | (183 | ) | (304 | ) | (183 | ) | |||||||||||||||
Net (loss) profit attributable to: | |||||||||||||||||||||||||
The owners of the parent | (342 | ) | (304 | ) | (183 | ) | (304 | ) | (183 | ) | |||||||||||||||
Non-controlling interest | – | – | – | – | – | ||||||||||||||||||||
Earnings per share attributable to owners of the parent | |||||||||||||||||||||||||
Basic | (0.01 | ) | (0.01 | ) | 0.00 | (0.01 | ) | 0.00 | |||||||||||||||||
Diluted | (0.01 | ) | (0.01 | ) | 0.00 | (0.01 | ) | 0.00 | |||||||||||||||||
Weighted average basic shares outstanding | 52,891 | 52,891 | 47,428 | 52,891 | 47,428 | ||||||||||||||||||||
Weighted average diluted shares outstanding | 52,891 | 52,891 | 47,428 | 52,891 | 47,428 | ||||||||||||||||||||
Consolidated statements of comprehensive income (Unaudited) |
|||||||||||||||||||||||||
For the three months ended |
For the three months ended |
||||||||||||||||||||||||
In 000 | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
U.S.$ | € | € | € | € | |||||||||||||||||||||
Net profit (loss) for the period | (342 | ) | (304 | ) | (183 | ) | (304 | ) | (183 | ) | |||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||
Exchange difference on translation of foreign operations | 661 | 588 | (95 | ) | 588 | (95 | ) | ||||||||||||||||||
Other comprehensive income (loss), net of taxes | 661 | 588 | (95 | ) | 588 | (95 | ) | ||||||||||||||||||
Total comprehensive income (loss) for the year, net of taxes | 319 | 284 | (278 | ) | 284 | (278 | ) | ||||||||||||||||||
Total comprehensive income (loss) attributable to: | |||||||||||||||||||||||||
The owners of the parent | 319 | 284 | (278 | ) | 284 | (278 | ) | ||||||||||||||||||
Non-controlling interest | – | – | – | – | – | ||||||||||||||||||||
Consolidated statement of financial position (Unaudited) |
|||||||||
As of |
As of |
||||||||
In 000 |
2019 |
2018 |
|||||||
€ | € | ||||||||
Assets | |||||||||
Non-current assets | |||||||||
Goodwill | 17,680 | 17,491 | |||||||
Intangible assets | 26,189 | 26,326 | |||||||
Property, plant & equipment | 97,120 | 92,537 | |||||||
Investments in joint ventures | |||||||||
Deferred tax assets | 257 | 315 | |||||||
Other non-current assets | 9,388 | 7,237 | |||||||
Total non-current assets | 150,634 | 143,906 | |||||||
Current assets | |||||||||
Inventories | 11,203 | 9,986 | |||||||
Trade receivables | 39,397 | 36,891 | |||||||
Other current assets | 7,172 | 6,936 | |||||||
Cash and cash equivalents | 111,052 | 115,506 | |||||||
Total current assets | 168,824 | 169,319 | |||||||
Total assets | 319,458 | 313,225 | |||||||
As of |
As of |
||||||||
In 000 | 2019 | 2018 | |||||||
€ | € | ||||||||
Equity and liabilities | |||||||||
Equity | |||||||||
Share capital | 3,050 | 3,050 | |||||||
Share premium | 136,741 | 136,637 | |||||||
Consolidated reserves | (2,152 | ) | (1,848 | ) | |||||
Other comprehensive income | (1,262 | ) | (1,850 | ) | |||||
Equity attributable to the owners of the parent |
136,377 |
135,989 | |||||||
Non-controlling interest | – | – | |||||||
Total equity | 136,377 | 135,989 | |||||||
Non-current liabilities | |||||||||
Loans & borrowings | 93,638 | 92,440 | |||||||
Deferred tax liabilities | 6,484 | 6,226 | |||||||
Deferred income | 4,813 | 4,587 | |||||||
Other non-current liabilities | 585 | 868 | |||||||
Total non-current liabilities | 105,520 | 104,121 | |||||||
Current liabilities | |||||||||
Loans & borrowings | 15,517 | 13,598 | |||||||
Trade payables | 17,128 | 18,667 | |||||||
Tax payables | 2,730 | 2,313 | |||||||
Deferred income | 26,476 | 23,195 | |||||||
Other current liabilities | 15,710 | 15,342 | |||||||
Total current liabilities | 77,561 | 73,115 | |||||||
Total equity and liabilities | 319,458 | 313,225 | |||||||
Consolidated statement of cash flows (Unaudited) |
||||||
For the three months ended |
||||||
in 000 | 2019 | 2018 | ||||
€ | € | |||||
Operating activities | ||||||
Net (loss) profit for the period | (304 | ) | (183 | ) | ||
Non-cash and operational adjustments | ||||||
Depreciation of property, plant & equipment | 3,429 | 2,700 | ||||
Amortization of intangible assets | 1,101 | 1,305 | ||||
Share-based payment expense | (177 | ) | 89 | |||
Loss (gain) on disposal of property, plant & equipment | 51 | – | ||||
Movement in provisions | 14 | (16 | ) | |||
Movement reserve for bad debt | (136 | ) | 84 | |||
Financial income | (60 | ) | (667 | ) | ||
Financial expense | 583 | 1,067 | ||||
Impact of foreign currencies | 83 | 310 | ||||
Share in loss of a joint venture (equity method) | 124 | 103 | ||||
(Deferred) income taxes | 1,065 | 501 | ||||
Other | 35 | (88 | ) | |||
Working capital adjustment & income tax paid | ||||||
Increase in trade receivables and other receivables | (2,393 | ) | (4,372 | ) | ||
Decrease (increase) in inventories | (1,200 | ) | 1,147 | |||
Increase in trade payables and other payables | 2,251 | 5,027 | ||||
Income tax paid | (385 | ) | (807 | ) | ||
Net cash flow from operating activities | 4,081 | 6,200 | ||||
For the three months ended |
||||||
in 000 | 2019 | 2018 | ||||
€ | € | |||||
Investing activities | ||||||
Purchase of property, plant & equipment | (2,657 | ) | (4,275 | ) | ||
Purchase of intangible assets | (575 | ) | (324 | ) | ||
Proceeds from the sale of property, plant & equipment & intangible assets (net) |
– | 20 | ||||
Convertible loan to third party | (2,500 | ) | – | |||
Investments in joint-ventures | – | – | ||||
Interest received | 53 | 14 | ||||
Net cash flow used in investing activities | (5,679 | ) | (4,565 | ) | ||
Financing activities | ||||||
Proceeds from loans & borrowings | 1,500 | 12,413 | ||||
Repayment of loans & borrowings | (2,543 | ) | (11,388 | ) | ||
Repayment of finance leases | (1,399 | ) | (760 | ) | ||
Capital increase | – | 207 | ||||
Interest paid | (503 | ) | (404 | ) | ||
Other financial income (expense) | (110 | ) | 5 | |||
Net cash flow from (used in) financing activities | (3,055 | ) | 73 | |||
Net increase of cash & cash equivalents | (4,653 | ) | 1,708 | |||
Cash & cash equivalents at beginning of the year | 115,506 | 43,175 | ||||
Exchange rate differences on cash & cash equivalents | 199 | (186 | ) | |||
Cash & cash equivalents at end of the year | 111,052 | 44,697 | ||||
Reconciliation of Net Profit (Loss) to EBITDA and Adjusted |
||||||||||||||||||
For the three months |
For the three months |
|||||||||||||||||
In 000 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
€ | € | € | € | |||||||||||||||
Net profit (loss) for the period | (304 | ) | (183 | ) | (304 | ) | (183 | ) | ||||||||||
Income taxes | 1,065 | 500 | 1,065 | 500 | ||||||||||||||
Financial expenses | 1,196 | 1,550 | 1,196 | 1,550 | ||||||||||||||
Financial income | (604 | ) | (840 | ) | (604 | ) | (840 | ) | ||||||||||
Share in loss of joint venture | 123 | 103 | 123 | 103 | ||||||||||||||
Depreciation and amortization | 4,530 | 4,006 | 4,530 | 4,006 | ||||||||||||||
EBITDA | 6,006 | 5,136 | 6,006 | 5,136 | ||||||||||||||
Non-cash stock-based compensation expense (1) | (177 | ) | 88 | (177 | ) | 88 | ||||||||||||
Acquisition-related expenses business combinations | – | – | – | – | ||||||||||||||
ADJUSTED EBITDA | 5,829 | 5,224 | 5,829 | 5,224 |
(1) Non-cash stock-based compensation expenses represent the cost of
equity-settled and cash-settled share-based payments to employees.
Segment P&L (Unaudited) |
||||||||||||
In 000 |
Materialise
Software |
Materialise
Medical |
Materialise
Manufact- uring |
Total
segments |
Unallocated
(1) |
Consoli-
dated |
||||||
€ | € | € | € | € | € | |||||||
For the three months ended March 31, 2019 | ||||||||||||
Revenues | 9,350 | 13,566 | 24,184 | 47,100 | 15 | 47,115 | ||||||
Segment EBITDA | 2,961 | 1,773 | 3,695 | 8,429 | (2,423) | 6,006 | ||||||
Segment EBITDA % | 31.7% | 13.1% | 15.3% | 17.9% | 12.7% | |||||||
For the three months ended March 31, 2018 | ||||||||||||
Revenues | 8,326 | 11,946 | 23,632 | 43,904 | (5) | 43,899 | ||||||
Segment EBITDA | 2,324 | 2,060 | 3,133 | 7,517 | (2,381) | 5,136 | ||||||
Segment EBITDA % | 27.9% | 17.2% | 13.3% | 17.1% | 11.7% |
(1) Unallocated Revenues consist of occasional one-off sales by our core
competencies not allocated to any of our segments. Unallocated Segment
EBITDA consists of corporate research and development, corporate
headquarter costs and other operating income (expense).
Reconciliation of Net Profit (Loss) to Segment EBITDA |
||||||||||||||||||
For the three months |
For the three months |
|||||||||||||||||
In 000 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
€ | € | € | € | |||||||||||||||
Net profit (loss) for the period | (304 | ) | (183 | ) | (304 | ) | (183 | ) | ||||||||||
Income taxes | 1,065 | 500 | 1,065 | 500 | ||||||||||||||
Financial cost | 1,196 | 1,550 | 1,196 | 1,550 | ||||||||||||||
Financial income | (604 | ) | (840 | ) | (604 | ) | (840 | ) | ||||||||||
Share in loss of joint venture | 123 | 103 | 123 | 103 | ||||||||||||||
Operating profit | 1,476 | 1,130 | 1,476 | 1,130 | ||||||||||||||
Depreciation and amortization | 4,530 | 4,006 | 4,530 | 4,006 | ||||||||||||||
Corporate research and development | 464 | 490 | 464 | 490 | ||||||||||||||
Corporate headquarter costs | 2,565 | 2,263 | 2,565 | 2,263 | ||||||||||||||
Other operating income (expense) | (606 | ) | (372 | ) | (606 | ) | (372 | ) | ||||||||||
Segment EBITDA | 8,429 | 7,517 | 8,429 | 7,517 |
Contacts
Investor Relations
Harriet Fried
LHA
212.838.3777
[email protected]
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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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