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Schwazze Announces Second Quarter 2023 Financial Results – GrassNews
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SCHWAZZE

Schwazze Announces Second Quarter 2023 Financial Results

Published

on

schwazze-announces-second-quarter-2023-financial-results

Q2 Revenue of $42.4 Million; Income from Operations of $5.0 Million; Adjusted EBITDA of $13.8 Million or 33% of revenue 

Generated $2.7 Million of Operating Cash Flow 

DENVER, Colo., Aug. 9, 2023 /PRNewswire/ — Medicine Man Technologies, Inc., operating as Schwazze, (OTCQX: SHWZ) (NEO: SHWZ) (“Schwazze” or the “Company”), today announced financial and operational results for the second quarter ended June 30, 2023.

Second Quarter 2023 Summary

For the Three Months Ended

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$ in Thousands USD

June 30, 2023

March 31, 2023

June 30, 2022

Revenue

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$42,375

$40,001

$44,263

Gross Profit

$24,519

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$23,033

$25,156

Income from Operations

$4,957

$5,650

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$9,036

Adjusted EBITDA1

$13,814

$14,525

$15,021

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Operating Cash Flow

$2,683

$(880)

$(13,486)

______________________________

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1 Adjusted EBITDA 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.

Management Commentary

“We continued to execute on our ‘go deep’ retail strategy in the second quarter, demonstrated by our acquisitions of Everest Apothecary in New Mexico in June, as well as Standing Akimbo and Smokey’s in Colorado,” said Nirup Krishnamurthy, CEO of Schwazze. “Although it is early in the integration process and these stores have yet to ramp, in July we began to recognize synergies from bulk purchasing, introducing new product assortment, and leveraging best cultivation practices to improve yields, among other improvements. We expect to realize additional benefits as we further integrate our assets in the months ahead.

“The cannabis market environment in Colorado and New Mexico remains a challenge due to pricing pressure and license proliferation in key markets. However, we are beginning to see early signs of wholesale pricing stabilization in Colorado and are hyper-focused on customer acquisition and experience, while maintaining our brand standards and margin through targeted promotions for customers. Through these efforts, we increased market share in both Colorado and New Mexico, demonstrating the effectiveness of our operating playbook and acquisition strategy, as well as our ability to execute in a competitive environment.

“Looking ahead, we will continue to run a lean operation while implementing the Schwazze retail playbook across our markets to expand our customer base, increase labor and price optimization, and improve customer loyalty and brand penetration. We are well positioned to continue driving strong adjusted EBITDA margins and consistent cash flow generation in 2023.”

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Recent Highlights

  • Completed the acquisition of Everest Apothecary in June, increasing the Company’s New Mexico operations to 32 dispensaries, four cultivation facilities, two manufacturing facilities and over 400 employees statewide.
  • Appointed Nirup Krishnamurthy as Chief Executive Officer.
  • Acquired two Colorado retail dispensaries from Smokey’s Cannabis Company.
  • Acquired Standing Akimbo, the largest medical cannabis dispensary in Colorado, and opened the Company’s first medical dispensary in Colorado Springs under the Standing Akimbo banner.
  • Ecommerce penetration in New Mexico and Colorado grew approximately 45% and 15%, respectively, compared to the first quarter of 2023 when the program was first launched.
  • Experienced 17% sequential growth of new customer loyalty members in the second quarter of 2023.

Second Quarter 2023 Financial Results

Total revenue in the second quarter of 2023 was $42.4 million compared to $44.3 million for the same quarter last year. The decrease was primarily due to lower wholesale revenue resulting from a 25% year-over-year decline in wholesale pricing and the proliferation of new licenses in key New Mexico markets, partially offset by growth from new stores compared to the prior year period.

Gross profit for the second quarter of 2023 was $24.5 million or 57.9% of total revenue, compared to $25.2 million or 56.8% of total revenue for the same quarter last year. The increase in gross margin was primarily driven by efficiency gains across retail, cultivation, and production, partially offset by the aforementioned wholesale pricing pressure.

Operating expenses for the second quarter of 2023 were $19.6 million compared to $16.1 million for the same quarter last year. The increase was primarily due to the four-wall SG&A increases associated with 27 additional stores in Colorado and New Mexico that are still ramping, as well as an increase in stock-based compensation. This was partially offset by efficiencies implemented throughout the Company’s operations.

Income from operations for the second quarter of 2023 was $5.0 million compared to $9.0 million in the same quarter last year. Net loss was $6.6 million compared to net income of $33.8 million for the second quarter of 2022, primarily driven by a $35.2 million change in the non-cash accounting revaluation of the derivative liability related to the Company’s convertible note.

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Adjusted EBITDA for the second quarter of 2023 was $13.8 million or 32.6% of revenue, compared to $15.0 million or 33.9% of revenue for the same quarter last year. The decrease in adjusted EBITDA margin was primarily driven by lower revenue and higher SG&A associated with new stores that are still ramping, partially offset by improved gross margin.

As of June 30, 2023, cash and cash equivalents were $19.9 million compared to $38.9 million on December 31, 2022, while operating working capital increased by $5.8 million to $10.0 million during this period. Total debt as of June 30, 2023, was $155.4 million compared to $127.8 million on December 31, 2022.

Schwazze CFO Forrest Hoffmaster added, “In addition to our focus on top line growth, supply chain efficiencies and cash generation, we are capitalizing on our hyper-regional retail strategy with a series of cost optimization programs that are improving our cash position and margins. We have begun to see the benefit of these initiatives and expect to drive further improvements in the months ahead.”

Conference Call

The Company will conduct a conference call today, August 9, 2023, at 5:00 p.m. Eastern time to discuss its results for the second quarter ended June 30, 2023.

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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 ir@schwazze.com.

Date: Wednesday, August 9, 2023
Time: 5:00 p.m. Eastern time
Toll-free dial-in number: (888) 664-6383
International dial-in number: (416) 764-8650
Conference ID: 70252888
Webcast: SHWZ Q2 2023 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: 252888

If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.

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About Schwazze

Schwazze (OTCQX: SHWZ) (NEO: SHWZ) is building a premier vertically integrated regional cannabis company with assets in Colorado and New Mexico and will continue to take 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 www.schwazze.com.

Forward-Looking Statements
This press release contains “forward-looking statements.” 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. 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.

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MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
For the Periods Ended June 30, 2023 and December 31, 2022
Expressed in U.S. Dollars

June 30,

December 31,

2023

2022

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(Unaudited)

(Audited)

ASSETS

Current Assets

Cash & Cash Equivalents

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$

19,872,099

$

38,949,253

Accounts Receivable, net of Allowance for Doubtful Accounts

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6,179,662

4,471,978

Inventory

33,821,282

22,554,182

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Notes Receivable – Current, net

11,944

Marketable Securities, net of Unrealized Loss of $1,816 and Loss of $39,270, respectively

456,099

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454,283

Prepaid Expenses & Other Current Assets

6,203,056

5,293,393

Total Current Assets

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66,532,198

71,735,033

Non-Current Assets

Fixed Assets, net Accumulated Depreciation of $7,007,889 and $4,899,977, respectively

31,128,357

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27,089,026

Investments

2,000,000

2,000,000

Goodwill

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75,968,130

94,605,301

Intangible Assets, net Accumulated Amortization of $24,981,817 and $16,290,862, respectively

168,892,605

107,726,718

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Note Receivable – Non-Current, net

1,313

Other Non-Current Assets

1,222,805

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1,527,256

Operating Lease Right of Use Assets

23,213,504

18,199,399

Total Non-Current Assets

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302,426,714

251,147,700

Total Assets

$

368,958,912

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$

322,882,733

LIABILITIES & STOCKHOLDERS’ EQUITY

Current Liabilities

Accounts Payable

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$

12,105,250

$

10,701,281

Accounts Payable – Related Party

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6,073

22,380

Accrued Expenses

6,398,115

7,462,290

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Derivative Liabilities

6,538,485

16,508,253

Lease Liabilities – Current

4,026,595

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3,139,289

Current Portion of Long Term Debt

6,583,334

2,250,000

Income Taxes Payable

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14,113,477

7,297,815

Total Current Liabilities

49,771,329

47,381,308

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Non-Current Liabilities

Long Term Debt, net of Debt Discount & Issuance Costs

148,861,810

125,521,520

Lease Liabilities – Non-Current

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22,096,232

17,314,464

Deferred Income Taxes, net

178,031

502,070

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Total Non-Current Liabilities

171,136,073

143,338,054

Total Liabilities

$

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220,907,402

$

190,719,362

Stockholders’ Equity

Preferred Stock, $0.001 Par Value. 10,000,000 Shares Authorized; 86,994 Shares Issued and

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86,994 Shares Outstanding as of June 30, 2023 and 86,994 Shares Issued and 86,994 Shares

Outstanding as of December 31, 2022.

87

87

Common Stock, $0.001 Par Value. 250,000,000 Shares Authorized; 71,730,449 Shares Issued

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and 70,590,451 Shares Outstanding as of June 30, 2023 and 56,352,545 Shares Issued and

55,212,547 Shares Outstanding as of December 31, 2022.

71,730

56,353

Additional Paid-In Capital

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201,116,605

180,381,641

Accumulated Deficit

(51,103,785)

(46,241,583)

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Common Stock Held in Treasury, at Cost, 920,150 Shares Held as of June 30, 2023 and 920,150

Shares Held as of December 31, 2022.

(2,033,127)

(2,033,127)

Total Stockholders’ Equity

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148,051,510

132,163,371

Total Liabilities & Stockholders’ Equity

$

368,958,912

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$

322,882,733

MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND (LOSS)
For the Three and Six Months Ended June 30, 2023 and 2022
Expressed in U.S. Dollars

For the Three Months Ended

For the Six Months Ended

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June 30,

June 30,

2023

2022

2023

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2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

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Operating Revenues

Retail

$

38,098,957

$

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38,138,799

$

73,919,068

$

64,664,515

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Wholesale

4,274,483

6,080,843

8,333,408

11,288,231

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Other

1,660

43,750

123,560

88,200

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Total Revenue

42,375,100

44,263,392

82,376,036

76,040,946

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Total Cost of Goods & Services

17,856,050

19,106,944

34,824,320

39,946,995

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Gross Profit

24,519,050

25,156,448

47,551,716

36,093,951

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Operating Expenses

Selling, General and Administrative Expenses

8,838,936

6,666,044

19,054,847

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13,521,755

Professional Services

487,860

1,516,544

1,675,224

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4,101,016

Salaries

7,389,172

7,240,368

13,154,165

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12,537,145

Stock Based Compensation

2,845,691

697,842

3,060,235

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1,688,925

Total Operating Expenses

19,561,659

16,120,798

36,944,471

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31,848,841

Income from Operations

4,957,391

9,035,650

10,607,245

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4,245,110

Other Income (Expense)

Interest Expense, net

(7,890,439)

(7,489,205)

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(15,636,294)

(14,791,459)

Unrealized Gain (Loss) on Derivative Liabilities

1,468,083

36,705,764

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9,969,768

23,288,292

Other Loss

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7

Unrealized Gain (Loss) on Investments

(5,264)

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1,816

(13,813)

Total Other Income (Expense)

(6,422,356)

29,211,295

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(5,664,710)

8,483,027

Pre-Tax Net Income (Loss)

(1,464,965)

38,246,945

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4,942,535

12,728,137

Provision for Income Taxes

5,142,559

4,405,962

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9,804,737

5,665,856

Net Income (Loss)

$

(6,607,524)

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$

33,840,983

$

(4,862,202)

$

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7,062,281

Less: Accumulated Preferred Stock Dividends for the Period

(2,353,883)

(1,766,575)

(4,383,277)

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(3,510,019)

Net Income (Loss) Attributable to Common Stockholders

$

(8,961,407)

$

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32,074,408

$

(9,245,479)

$

3,552,262

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Earnings (Loss) per Share Attributable to Common Stockholders

Basic Earnings (Loss) per Share

$

(0.15)

$

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0.65

$

(0.16)

$

0.07

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Diluted Earnings (Loss) per Share

$

(0.15)

$

0.24

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$

(0.16)

$

0.03

Weighted Average Number of Shares Outstanding – Basic

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60,538,317

49,178,494

57,999,461

49,178,494

Weighted Average Number of Shares Outstanding – Diluted

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60,538,317

133,481,667

57,999,461

133,481,667

Comprehensive Income (Loss)

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$

(6,607,524)

$

33,840,983

$

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(4,862,202)

$

7,062,281

MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2023 and 2022
Expressed in U.S. Dollars

For the Six Months Ended

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June 30,

2023

2022

(Unaudited)

(Unaudited)

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Cash Flows from Operating Activities:

Net Income (Loss) for the Period

$

(4,862,202)

$

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7,062,281

Adjustments to Reconcile Net Income (Loss) to Cash for Operating Activities

Depreciation & Amortization

10,826,289

1,553,817

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Non-Cash Interest Expense

1,992,280

2,165,366

Non-Cash Lease Expense

3,316,171

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4,705,059

Deferred Taxes

(324,039)

Change in Derivative Liabilities

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(9,969,768)

(23,288,292)

Amortization of Debt Issuance Costs

843,025

843,025

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Amortization of Debt Discount

4,088,319

3,590,017

(Gain) Loss on Investments, net

(1,816)

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13,813

Stock Based Compensation

3,060,235

776,917

Changes in Operating Assets & Liabilities (net of Acquired Amounts):

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Accounts Receivable

(923,614)

(1,689,914)

Inventory

(5,937,100)

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3,924,172

Prepaid Expenses & Other Current Assets

(909,663)

(5,219,898)

Other Assets

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304,451

(185,589)

Change in Operating Lease Liabilities

(2,661,202)

(8,873,051)

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Accounts Payable & Other Liabilities

(3,853,458)

5,922,458

Income Taxes Payable

6,815,662

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(1,163,770)

Net Cash Provided by (Used in) Operating Activities

1,803,570

(9,863,589)

Cash Flows from Investing Activities:

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Collection of Notes Receivable

10,631

Cash Consideration for Acquisition of Business, net of Cash Acquired

(15,834,378)

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(56,875,923)

Purchase of Fixed Assets

(4,704,093)

(7,076,116)

Purchase of Intangible Assets

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(2,825)

Net Cash Provided by (Used in) Investing Activities

(20,527,840)

(63,954,864)

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Cash Flows from Financing Activities:

Payment on Notes Payable

(750,000)

Proceeds from Issuance of Common Stock, net of Issuance Costs

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397,116

1,280,660

Net Cash Provided by (Used in) Financing Activities

(352,884)

1,280,660

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Net (Decrease) in Cash & Cash Equivalents

(19,077,154)

(72,537,793)

Cash & Cash Equivalents at Beginning of Period

38,949,253

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106,400,216

Cash & Cash Equivalents at End of Period

$

19,872,099

$

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33,862,423

Supplemental Disclosure of Cash Flow Information:

Cash Paid for Interest

$

10,931,090

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$

9,004,575

MEDICINE MAN TECHNOLOGIES, INC.
ADJUSTED EBITDA RECONCILIATION (NON-GAAP)
For the Three and Six Months Ended June 30, 2023 and 2022
Expressed in U.S. Dollars

For the Three Months Ended

For the Six Months Ended

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June 30,

June 30,

2023

2022

2023

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2022

Net Income (Loss)

$

(6,607,524)

$

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33,840,983

$

(4,862,202)

$

7,062,281

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Interest Expense, net

7,890,439

7,489,205

15,636,294

14,791,459

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Provision for Income Taxes

5,142,559

4,405,962

9,804,737

5,665,856

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Other (Income) Expense, net of Interest Expense

(1,468,083)

(36,700,500)

(9,971,584)

(23,274,486)

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Depreciation & Amortization

3,865,190

2,960,603

10,478,004

5,506,627

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Earnings Before Interest, Taxes, Depreciation and

Amortization (EBITDA) (non-GAAP)

$

8,822,581

$

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11,996,253

$

21,085,249

$

9,751,737

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Non-Cash Stock Compensation

2,845,691

697,842

3,060,235

1,688,925

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Deal Related Expenses

733,718

1,656,529

1,929,520

3,913,463

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Capital Raise Related Expenses

41,312

35,068

605,632

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Inventory Adjustment to Fair Market Value for

Purchase Accounting

246,613

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6,507,047

Severance

185,681

44,537

304,117

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49,102

Retention Program Expenses

115,000

395,632

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Employee Relocation Expenses

26,468

332

52,175

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19,110

Other Non-Recurring Items

1,085,005

338,050

1,477,028

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334,632

Adjusted EBITDA (non-GAAP)

$

13,814,144

$

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15,021,468

$

28,339,024

$

22,869,648

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Revenue

42,375,100

44,263,392

82,376,036

76,040,946

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Adjusted EBITDA Percent

32.6 %

33.9 %

34.4 %

30.1 %

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MEDICINE MAN TECHNOLOGIES, INC.
OPERATING WORKING CAPITAL RECONCILIATION (NON-GAAP)
For the Periods Ended June 30, 2023 and December 31, 2022
Expressed in U.S. Dollars

June 30,

December 31,

2023

2022

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Current Assets

$

66,532,198

$

71,735,033

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Less: Cash & Cash Equivalents

(19,872,099)

(38,949,253)

Adjusted Current Assets (non-GAAP)

46,660,099

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32,785,780

Current Liabilities

$

49,771,329

$

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47,381,308

Less: Derivative Liabilities

(6,538,485)

(16,508,253)

Less: Current Portion of Long Term Debt

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(6,583,334)

(2,250,000)

Adjusted Current Liabilities (non-GAAP)

36,649,510

28,623,055

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Operating Working Capital (non-GAAP)

$

10,010,589

$

4,162,725

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Investor Relations Contact: Sean Mansouri, CFA or Aaron D’Souza, Elevate IR, (720) 330-2829, ir@schwazze.com

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SCHWAZZE

Schwazze Announces First Quarter 2024 Financial Results

Published

on

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.”

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“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

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Q1 2023

Total Revenue

$41,601

$43,325

$40,001

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Gross Profit

$17,934

$7,034[1]

$21,849

Operating Expenses

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$20,643

$23,276

$16,199

Income (Loss) from Operations

$(2,709)

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$(16,242)

$5,650

Adjusted EBITDA[2]

$7,341

$10,953

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$14,525

Operating Cash Flow

$(3,700)

$3,452

$(880)

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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.

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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

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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 ir@schwazze.com.

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

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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/.

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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
ir@schwazze.com

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,

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December 31, 

2024

2023

 

ASSETS

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Current Assets

Cash & Cash Equivalents

$

13,151,317

$

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19,248,932

Accounts Receivable, net of Allowance for Doubtful Accounts

3,356,032

4,261,159

Inventory

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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

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Prepaid Expenses & Other Current Assets

3,502,310

3,914,064

Total Current Assets

46,500,426

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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

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Investments

2,000,000

2,000,000

Investments Held for Sale

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202,111

Goodwill

67,492,705

67,499,199

Intangible Assets, net Accumulated Amortization of $36,483,160 and $32,706,765, respectively

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162,391,482

166,167,877

Other Non-Current Assets

1,328,187

1,263,837

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Operating Lease Right of Use Assets

34,575,832

34,233,142

Deferred Tax Assets, net

992,144

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1,996,489

Total Non-Current Assets

300,106,350

304,476,285

Total Assets

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$

346,606,776

$

358,144,332

 
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LIABILITIES & STOCKHOLDERS’ EQUITY

 

Current Liabilities

Accounts Payable

$

9,443,233

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$

13,341,561

Accrued Expenses

8,106,618

7,774,691

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Derivative Liabilities

1,319,845

638,020

Lease Liabilities – Current

5,186,316

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4,922,724

Current Portion of Long Term Debt

29,579,713

3,547,011

Income Taxes Payable

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28,235,039

25,232,782

Total Current Liabilities

81,870,764

55,456,789

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Non-Current Liabilities

Long Term Debt, net of Debt Discount & Issuance Costs

130,120,753

153,262,203

Lease Liabilities – Non-Current

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30,735,072

30,133,452

Total Non-Current Liabilities

160,855,825

183,395,655

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Total Liabilities

$

242,726,589

$

238,852,444

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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

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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

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74,888

Additional Paid-In Capital

202,677,665

202,040,968

Accumulated Deficit

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(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)

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(2,033,127)

Total Stockholders’ Equity

103,880,187

119,291,888

Total Liabilities & Stockholders’ Equity

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$

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

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For the Three Months Ended

March 31,

2024

2023

(Unaudited)

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(Unaudited)

Operating Revenues

Retail

$

37,633,252

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$

35,820,111

Wholesale

3,898,320

4,058,925

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Other

69,421

121,900

Total Revenue

41,600,993

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40,000,936

Total Cost of Goods & Services

23,667,319

18,152,163

Gross Profit

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17,933,674

21,848,773

Operating Expenses

Selling, General and Administrative Expenses

11,835,818

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10,100,934

Professional Services

1,671,881

1,187,364

Salaries

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6,880,988

4,695,971

Stock Based Compensation

253,916

214,544

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Total Operating Expenses

20,642,603

16,198,813

Income from Operations

(2,708,929)

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5,649,960

Other Income (Expense)

Interest Expense, net

(8,307,369)

(7,745,854)

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Unrealized Gain (Loss) on Derivative Liabilities

(681,825)

8,501,685

Other Loss

10,500

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Loss on Investment

(33,382)

Unrealized Gain on Investment

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(347,516)

1,816

Total Other Income (Expense)

(9,359,592)

757,647

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Pre-Tax Net Income (Loss)

(12,068,521)

6,407,607

Provision for Income Taxes

3,984,154

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4,662,178

Net Income (Loss)

$

(16,052,675)

$

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1,745,429

Less: Accumulated Preferred Stock Dividends for the Period

(2,155,259)

(2,029,394)

Net Income (Loss) Attributable to Common Stockholders

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$

(18,207,934)

$

(283,965)

Earnings (Loss) per Share Attributable to Common Stockholders

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Basic Earnings (Loss) per Share

$

(0.24)

$

(0.01)

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Diluted Earnings (Loss) per Share

$

(0.24)

$

(0.06)

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Weighted Average Number of Shares Outstanding – Basic

76,006,932

55,835,501

Weighted Average Number of Shares Outstanding – Diluted

76,006,932

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101,608,278

Comprehensive Income (Loss)

$

(16,052,675)

$

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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

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2023

(Unaudited)

(Unaudited)

Cash Flows from Operating Activities:

Net Income (Loss) for the Period

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$

(16,052,675)

$

1,745,429

Adjustments to Reconcile Net Income (Loss) to Cash for Operating Activities

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Depreciation & Amortization

5,096,314

6,151,395

Non-Cash Interest Expense

1,031,431

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991,184

Non-Cash Lease Expense

2,871,226

2,251,459

Deferred Taxes

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1,004,345

(637,225)

Loss on Investment

202,111

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Change in Derivative Liabilities

681,825

(8,501,685)

Amortization of Debt Issuance Costs

421,512

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421,513

Amortization of Debt Discount

2,303,246

1,999,933

(Gain) Loss on Investments, net

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347,516

(1,816)

Stock Based Compensation

640,974

214,544

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Changes in Operating Assets & Liabilities (net of Acquired Amounts):

Accounts Receivable

905,127

(118,181)

Inventory

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(587,900)

(3,023,251)

Prepaid Expenses & Other Current Assets

411,754

(3,036,801)

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Other Assets

(64,350)

360,674

Change in Operating Lease Liabilities

(2,348,703)

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(1,531,765)

Accounts Payable & Other Liabilities

(3,566,401)

(3,464,671)

Income Taxes Payable

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3,002,257

5,299,403

Net Cash Provided by (Used in) Operating Activities

(3,700,390)

(879,861)

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Cash Flows from Investing Activities:

Collection of Notes Receivable

10,631

Purchase of Fixed Assets

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(1,532,287)

(2,913,394)

Net Cash Provided by (Used in) Investing Activities

(1,532,287)

(2,902,763)

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Cash Flows from Financing Activities:

Payment on Notes Payable

(864,938)

Net Cash Provided by (Used in) Financing Activities

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(864,938)

Net (Decrease) in Cash & Cash Equivalents

(6,097,615)

(3,782,624)

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Cash & Cash Equivalents at Beginning of Period

19,248,932

38,949,253

Cash & Cash Equivalents at End of Period

$

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13,151,317

$

35,166,628

Supplemental Disclosure of Cash Flow Information:

Cash Paid for Interest

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$

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

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For the Three Months Ended

March 31,

2024

2023

Net Income (Loss)

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$

(16,052,675)

$

1,745,429

Interest Expense, net

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8,307,369

7,745,854

Provision for Income Taxes

3,984,154

4,662,178

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Other (Income) Expense, net of Interest Expense

1,052,223

(8,503,501)

Depreciation & Amortization

5,618,834

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6,612,814

Earnings Before Interest, Taxes, Depreciation and

Amortization (EBITDA) (non-GAAP)

$

2,909,905

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$

12,262,774

Non-Cash Stock Compensation

253,916

214,544

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Deal Related Expenses

637,761

1,195,802

Capital Raise Related Expenses

20,760

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35,068

Severance

484,561

118,436

Retention Program Expenses

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807,500

280,632

Pre-Operating & Dark Carry Expenses

1,053,837

391,917

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One-Time Legal Settlements

417,653

Other Non-Recurring Items

754,751

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25,707

Adjusted EBITDA (non-GAAP)

$

7,340,644

$

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14,524,880

Revenue

41,600,993

40,000,936

Adjusted EBITDA Percent

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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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SCHWAZZE

Schwazze Sets First Quarter 2024 Conference Call for May 15, 2024 at 5:00 p.m. ET

Published

on

schwazze-sets-first-quarter-2024-conference-call-for-may-15,-2024-at-5:00-pm.-et

DENVER, April 29, 2024 /PRNewswire/ — Medicine Man Technologies, Inc., operating as Schwazze, (OTCQX: SHWZ) (Cboe CA: SHWZ) (“Schwazze” or the “Company”), will host a conference call on Wednesday, May 15, 2024 at 5:00 p.m. Eastern time to discuss its financial and operational results for the first quarter ended March 31, 2024. The Company’s results will be reported in a press release prior to the call.

The Schwazze management team 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 ir@schwazze.com.

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

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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 take 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 http://www.schwazze.com/.

Investor Relations Contact

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Sean Mansouri, CFA or Aaron D’Souza
Elevate IR
(720) 330-2829
ir@schwazze.com

View original content:https://www.prnewswire.co.uk/news-releases/schwazze-sets-first-quarter-2024-conference-call-for-may-15-2024-at-500-pm-et-302130423.html

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SCHWAZZE

Schwazze Announces Fourth Quarter and Full Year 2023 Financial Results

Published

on

schwazze-announces-fourth-quarter-and-full-year-2023-financial-results

 FY 2023 Revenue of $172.4 Million; Income from Operations of $3.3 Million; Adjusted EBITDA of $53.4 Million or 31% of Revenue

 Generated $12.2 Million of Operating Cash Flow in FY 2023

DENVER, March 27, 2024 /PRNewswire/ — Medicine Man Technologies, Inc., operating as Schwazze, (OTCQX: SHWZ) (Cboe: SHWZ) (“Schwazze” or the “Company”), today announced financial and operational results for the fourth quarter and full year ended December 31, 2023.

“This past year, the Schwazze team delivered solid top-line growth in two highly competitive markets with 31% adjusted EBITDA margins and improved operating cash flow,” said Forrest Hoffmaster, Interim CEO of Schwazze. “We continued to sharpen our retail strategy while expanding our store footprint by more than 50% to 63 dispensaries across our two markets. Although the Colorado and New Mexico markets were pressured in 2023, we have built a solid foundation with best-in-class service for our patients and customers. Internally, we are also relentlessly focused on maximizing the operating efficiencies of our manufacturing and cultivation facilities to drive higher yields, improved flower quality, and greater output.”

“With strong demand and over 680 recreational retail stores at year-end, the competitive landscape in Colorado is fierce, underscoring the importance of our investments in and attention to elevating the customer experience. We significantly outpaced the market in Q4 on a sequential and year-over-year basis and expect to bolster our growth through improvements in customer acquisition, retention, and loyalty, as well as in the overall retail experience. Additionally, we are beginning to see wholesale pricing stabilize, which we anticipate will continue based on plant counts and ongoing retail pricing pressure.”

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“In New Mexico, the proliferation of new licenses has led to increased competition and aggressive pricing strategies from certain players. Cannabis sales in the state were up 18% across a store base that was over 50% higher year-over-year in Q4, leading to lower average revenue per store. While we are beginning to see a slow-down in net new store openings, we anticipate a challenging market ahead. We remain focused on cost optimization and asset utilization while implementing a balanced pricing and promotional strategy to drive traffic into our stores, where we believe we excel in delivering an elevated retail experience. We are committed to fulfilling our promise of being the retailer of choice in New Mexico.”

“Looking ahead, we are optimistic about the regulatory momentum in the industry at large. In the meantime, we will continue to elevate the customer experience, improve our loyalty program, increase our cost efficiencies, and enhance our retail assets. Our team has a demonstrated track record of executing in competitive markets like Colorado and New Mexico where we remain one of the largest operators. We look forward to driving growth and profitability across each of our markets in 2024.”

Fourth Quarter 2023 Financial Summary

$ in Thousands USD

Q4 2023

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Q3 2023

Q4 2022

Total Revenue

$43,325

$46,747

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$40,147

Gross Profit

$7,034

$21,438

$21,719

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Adjusted Gross Profit[1]

$20,180

$21,438

$21,719

Operating Expenses

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$23,276

$12,514

$24,224

Income (Loss) from Operations

$(16,242)

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$8,924

$(2,505)

Adjusted EBITDA[2]

$10,953

$14,119

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$13,285

Operating Cash Flow

$3,452

$6,946

$6,260

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Full Year 2023 Financial Summary

$ in Thousands USD

FY 2023

FY 2022

Total Revenue

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$172,448

$159,379

Gross Profit

$76,024

$80,289

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Adjusted Gross Profit1

$89,170

$86,830

Operating Expenses

$72,735

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$67,434

Income from Operations

$3,289

$12,855

Adjusted EBITDA2

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$53,412

$52,010

Operating Cash Flow

$12,201

$6,694

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___________________________

1  Adjusted Gross Profit is a non-GAAP measure as defined by the SEC and represents gross profit excluding non-cash inventory adjustments. The Company uses Adjusted Gross Profit as it believes it better explains the results of its core business. See “ADJUSTED GROSS PROFIT RECONCILIATION (NON-GAAP)” section herein for an explanation and reconciliations of non-GAAP measure used throughout this release.

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.

Full Year 2023 Operational Highlights

  • Expanded the Company’s retail footprint by more than 50% in New Mexico and Colorado to 63 dispensaries.
  • Completed the acquisition of Everest Apothecary, adding 14 dispensaries, one cultivation facility, and one manufacturing plant to the Company’s New Mexico operations.
  • Acquired Standing Akimbo, the largest medical cannabis dispensary in Colorado, and opened the Company’s first medical dispensary in Colorado Springs under the Standing Akimbo banner.
  • Acquired two Colorado retail dispensaries in Fort Collins and Garden City from Smokey’s.
  • Unveiled an enhanced, custom ecommerce platform in New Mexico under the R. Greenleaf banner.
  • Increased wholesale penetration in Colorado and New Mexico by over 3x year-over-year to more than 27% total door penetration in both states.
  • Grew Lowell Farms pre-roll sales by over 250% in Colorado where it is now the #1 pre-roll in the state. In addition, Lowell is in six of the largest Colorado accounts and will be available for wholesale in New Mexico starting April 1st, 2024.
  • Grew sales with Wana, our fan-favorite gummies brand, by 48% in New Mexico where it is now in 130 doors with eight of the top ten accounts in the state.

Fourth Quarter 2023 Financial Results

Total revenue in the fourth quarter of 2023 increased 8% to $43.3 million compared to $40.1 million for the same quarter last year. The increase was primarily due to growth from new stores compared to the prior year period and increased wholesale revenue, partially offset by pricing pressure from the proliferation of new licenses in New Mexico.

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Gross profit for the fourth quarter of 2023 was $7.0 million or 16.2% of total revenue, compared to $21.7 million or 54.1% of total revenue for the same quarter last year. The decrease in gross margin was primarily driven by 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. Adjusted gross profit, which excludes non-cash inventory adjustments, for the fourth quarter of 2023 was $20.2 million or 46.6% of revenue.

Operating expenses for the fourth quarter of 2023 were $23.3 million compared to $24.2 million for the same quarter last year. The decrease was primarily due to a lower impairment charge in the fourth quarter of 2023. This was partially offset by an increase in four-wall SG&A expenses associated with the 22 additional stores in Colorado and New Mexico that are still ramping, as well as greater salaries and stock-based compensation.

Loss from operations for the fourth quarter of 2023 was $16.2 million compared to $2.5 million in the same quarter last year. The decrease was driven by the aforementioned lower gross profit, primarily related to the non-cash inventory adjustment. Net loss was $33.9 million for the fourth quarter of 2023 compared to $27.3 million for the same quarter last year.

Adjusted EBITDA for the fourth quarter of 2023 was $11.0 million or 25.3% of revenue, compared to $13.3 million or 33.1% of revenue for the same quarter last year. The decrease in Adjusted EBITDA margin was primarily driven by higher operating expenses associated with the 22 additional stores that are still ramping.

As of December 31, 2023, cash and cash equivalents were $19.2 million compared to $38.9 million on December 31, 2022. Total debt as of December 31, 2023, was $156.8 million compared to $127.8 million on December 31, 2022.

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Conference Call

The Company will conduct a conference call today, March 27, 2024, at 5:00 p.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2023.

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 ir@schwazze.com.

Date: Wednesday, March 27, 2024
Time: 5:00 p.m. Eastern time
Toll-free dial-in: (888) 664-6383
International dial-in: (416) 764-8650
Conference ID: 38840334
Webcast: SHWZ Q4 & FY 2023 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.

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Toll-free replay number: (888) 390-0541
International replay number: (416) 764-8677
Replay ID: 840334

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: 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/.

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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
ir@schwazze.com

MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND (LOSS)
For the Periods Ended December 31, 2023 and 2022
Expressed in U.S. Dollars

For the Three Months Ended

For the Twelve Months Ended

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December 31,

December 31,

2023

2022

2023

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2022

(Unaudited)

(Unaudited)

(Audited)

(Audited)

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Operating Revenues

Retail

$

39,592,779

$

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36,868,429

$

155,463,816

$

141,254,893

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Wholesale

3,730,749

3,158,670

16,765,425

17,819,938

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Other

1,287

120,188

218,545

304,388

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Total Revenue

43,324,815

40,147,287

172,447,786

159,379,219

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Total Cost of Goods & Services

36,291,059

18,428,528

96,424,150

79,090,461

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Gross Profit

7,033,756

21,718,759

76,023,636

80,288,758

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Operating Expenses

Selling, General and Administrative Expenses

10,848,029

8,922,627

39,916,518

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29,036,962

Professional Services

1,115,457

1,112,975

3,558,501

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6,722,554

Loss on Impairment

1,810,890

8,011,405

1,801,740

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8,011,405

Salaries

6,561,800

5,292,996

23,883,354

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20,990,290

Stock Based Compensation

2,952,669

883,890

3,574,831

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2,672,713

Total Operating Expenses

23,288,845

24,223,893

72,734,944

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67,433,924

Income from Operations

(16,255,089)

(2,505,134)

3,288,692

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12,854,834

Other Income (Expense)

Interest Expense, net

(8,112,391)

(6,827,557)

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(32,069,082)

(30,139,645)

Unrealized Gain (Loss) on Derivative Liabilities

1,384,228

(9,690,200)

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15,870,233

18,414,760

Other Loss

68,400

3,736

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68,400

24,136

Loss on Business Disposition

(1,968,807)

(4,684,366)

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(1,968,807)

(4,684,366)

Unrealized Gain (Loss) on Investments

3,083

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1,816

(39,270)

Total Other Income (Expense)

(8,628,570)

(21,195,304)

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(18,097,441)

(16,424,385)

Pre-Tax Net Income (Loss)

(24,883,659)

(23,700,438)

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(14,808,749)

(3,569,551)

Provision for Income Taxes

4,494,049

3,638,695

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19,740,595

14,898,064

Net Income (Loss)

$

(29,377,708)

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$

(27,339,133)

$

(34,549,344)

$

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(18,467,615)

Less: Accumulated Preferred Stock Dividends for the Period

(1,541,341)

(2,508,677)

(8,154,993)

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(7,802,809)

Net Income (Loss) Attributable to Common Stockholders

$

(30,919,049)

$

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(29,847,810)

$

(42,704,337)

$

(26,270,424)

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Earnings (Loss) per Share Attributable to Common Stockholders

Basic Earnings (Loss) per Share

$

(0.43)

$

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(0.57)

$

(0.66)

$

(0.49)

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Diluted Earnings (Loss) per Share

$

(0.43)

$

(0.57)

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$

(0.66)

$

(0.49)

Weighted Average Number of Shares Outstanding – Basic

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71,680,200

53,637,003

64,535,245

53,637,003

Weighted Average Number of Shares Outstanding – Diluted

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71,680,200

53,637,003

64,535,245

53,637,003

Comprehensive Income (Loss)

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$

(29,377,708)

$

(27,339,133)

$

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(34,549,344)

$

(18,467,615)

MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods Ended December 31, 2023 and 2022
Expressed in U.S. Dollars

For the Twelve Months Ended

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December 31,

2023

2022

(Audited)

(Audited)

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Cash Flows from Operating Activities:

Net Income (Loss) for the Period

$

(34,549,344)

$

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(18,467,615)

Adjustments to Reconcile Net Income (Loss) to Cash for Operating Activities

Depreciation & Amortization

20,933,541

10,660,172

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Non-Cash Interest Expense

4,024,604

4,118,391

Impairment of Goodwill

1,801,740

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8,011,405

Non-Cash Lease Expense

7,648,531

3,910,679

Deferred Taxes

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(2,090,967)

502,070

Loss on Disposition of Business Units

1,968,807

4,684,369

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Change in Derivative Liabilities

(15,870,233)

(18,414,760)

Amortization of Debt Issuance Costs

1,686,049

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1,686,048

Amortization of Debt Discount

8,523,493

7,484,613

(Gain) Loss on Investments, net

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(1,816)

39,270

Stock Based Compensation

3,590,473

812,073

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Changes in Operating Assets & Liabilities (net of Acquired Amounts):

Accounts Receivable

927,259

(105,185)

Inventory

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4,571,069

789,399

Prepaid Expenses & Other Current Assets

1,579,349

(2,770,179)

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Other Assets

263,419

(248,682)

Change in Operating Lease Liabilities

(7,498,128)

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(13,113,041)

Accounts Payable & Other Liabilities

(3,241,850)

11,845,245

Income Taxes Payable

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17,934,967

5,270,074

Net Cash Provided by (Used in) Operating Activities

12,200,963

6,694,346

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Cash Flows from Investing Activities:

Collection of Notes Receivable

11,944

Cash Consideration for Acquisition of Business, net of Cash Acquired

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(15,834,378)

(58,981,226)

Purchase of Fixed Assets

(7,865,654)

(14,007,892)

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Purchase of Intangible Assets

(2,750,000)

Investment in Private Entity

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(2,000,000)

Net Cash Provided by (Used in) Investing Activities

(26,438,088)

(74,989,118)

Cash Flows from Financing Activities:

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Payment on Notes Payable

(5,354,218)

(134,498)

Proceeds from Issuance of Common Stock

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978,308

Payment for Statutory Withholdings on RSU

(108,978)

Net Cash Provided by (Used in) Financing Activities

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(5,463,196)

843,810

Net (Decrease) in Cash & Cash Equivalents

(19,700,321)

(67,450,962)

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Cash & Cash Equivalents at Beginning of Period

38,949,253

106,400,216

Cash & Cash Equivalents at End of Period

$

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19,248,932

$

38,949,253

Supplemental Disclosure of Cash Flow Information:

Cash Paid for Interest

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$

17,896,954

$

15,243,990

Cash Paid for Income Taxes

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5,000,000

12,340,000

MEDICINE MAN TECHNOLOGIES, INC.
ADJUSTED EBITDA RECONCILIATION (NON-GAAP)
For the Periods Ended December 31, 2023 and 2022
Expressed in U.S. Dollars

For the Three Months Ended

For the Twelve Months Ended

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December 31,

December 31,

2023

2022

2023

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2022

Net Income (Loss)

$

(29,364,680)

$

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(27,339,133)

$

(34,549,344)

$

(18,467,615)

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Interest Expense, net

8,112,391

6,827,557

32,069,082

30,139,645

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Provision for Income Taxes

4,494,049

3,638,695

19,740,595

14,898,064

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Other (Income) Expense, net of Interest Expense

516,180

14,367,747

(13,971,641)

(13,715,260)

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Depreciation & Amortization

3,162,425

3,701,128

18,970,960

12,524,677

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Earnings Before Interest, Taxes, Depreciation and

Amortization (EBITDA) (non-GAAP)

$

(13,079,635)

$

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1,195,994

$

22,259,652

$

25,379,511

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Non-Cash Stock Compensation

1,597,157

883,890

2,219,319

2,672,713

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Deal Related Expenses

2,196,733

1,914,820

5,528,048

6,822,111

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Capital Raise Related Expenses

1,779

(257,271)

38,559

533,958

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Inventory Adjustment to Fair Market Value for

Purchase Accounting

5,792,488

5,792,488

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6,541,651

One-Time Inventory Impairment

7,353,972

7,353,972

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One-Time Goodwill Impairment

1,801,740

8,011,405

1,801,740

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8,011,405

Severance

111,752

263,374

537,584

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334,910

Retention Program Expenses

505,655

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Employee Relocation Expenses

5,065

(3,750)

70,107

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15,360

Pre-Operating & Dark Carry Expenses

2,663,824

1,027,738

2,663,824

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1,027,738

One-Time Legal Settlements

1,204,058

440,000

1,204,058

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440,000

Other Non-Recurring Items

1,304,501

(191,674)

3,436,773

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230,858

Adjusted EBITDA (non-GAAP)

$

10,953,434

$

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13,284,526

$

53,411,779

$

52,010,215

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Revenue

43,324,815

40,147,287

172,447,786

159,379,219

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Adjusted EBITDA Percent

25.3 %

33.1 %

31.0 %

32.6 %

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View original content:https://www.prnewswire.co.uk/news-releases/schwazze-announces-fourth-quarter-and-full-year-2023-financial-results-302101678.html

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