SCHWAZZE ANNOUNCES FOURTH QUARTER 2022 & YEAR-END 2022 RESULTS
Company Continues to Grow Positive Cash Flow from Operations in Fourth Quarter and Year-End 2022
Expansion into New Mexico Market as well as Colorado Acquisitions Add 23 Retail Dispensaries, One Manufacturing and Four Operating Cultivation Facilities
Conference Call & Webcast Scheduled for Today – 5:00 pm ET
DENVER, March 29, 2023 /PRNewswire/ -- Medicine Man Technologies Inc. operating as Schwazze, (OTCQX: SHWZ) (NEO: SHWZ) ("Schwazze" or the "Company"), today announced financial results for the fourth quarter ("Q4 2022") and for the year ended December 31, 2022 ("2022").
Full Year 2022 Financial Summary:
Q4 2022 Financial Summary:
Accomplishments for 2022 and Q1 2023
In 2022, the Company completed seven acquisitions and opened six new stores not related to acquisitions, which increased the Company's retail presence from 18 dispensaries as of December 31, 2021 to 41 dispensaries as of December 31, 2022. The Company now has five operating cultivation facilities and two manufacturing assets in Colorado and New Mexico. In Q1 2023, the Company subsequently announced the opening of two additional New Mexico retail locations and entry into a definitive agreement to acquire two retail dispensaries in Colorado from Smokey's Cannabis, which will bring the total dispensary count to 45.
Recent Developments
2022 Business Highlights and Significant Achievements
"In 2022, Schwazze continued to execute its strategy to "go deep" in our operating states and build customer loyalty and share," stated Justin Dye, CEO of Schwazze. "To date, we have opened, acquired, or announced pending acquisitions of 45 dispensaries with five operating cultivation and two manufacturing facilities across Colorado and New Mexico. We believe our retail brands are really connecting with customers. Schwazze is well-positioned to play offense in this challenging environment. As market forces become more favorable, we believe Schwazze will emerge with a much stronger position which will reward shareholders. For now, we will keep executing our strategy and playbook."
"While we had seasonally lower quarter over quarter revenues, we recorded a solid fourth quarter and outpaced retail sales in the state of Colorado by 11%, despite a challenging environment and continued price compression," said Nirup Krishnamurthy, President of Schwazze. "Along with our New Mexico operations, revenue for the year increased by 47%, with retail sales growing 92% over the prior year with solid execution. In addition, we are focused on building a high-quality house of product brands that deliver good value to our customers. These results could not be achieved without the hard work and dedication of the entire Schwazze team."
2022 Results of Operations
Consolidated revenues for 2022, totaled $159.4 million, increasing $51.0 million or 47% over 2021 revenues of $108.4 million. This increase was influenced by several factors, including consummation of identified acquisitions, new store openings, entrance into the New Mexico market, and adult-use legalization taking effect in New Mexico in 2022. Based on publicly available sales data, management estimates that overall cannabis sales in the New Mexico market increased approximately 75% as compared to 2021 sales because of increased adult-use recreational cannabis sales following its legalization in April 2022.
Cost of goods and services for 2022, totaled $74.3 million compared to cost of goods and services of $59.1 million in 2021, representing an increase of $15.2 million, or approximately 26%. This increase is primarily due to the New Mexico acquisition and subsequent opening of six new stores in 2022.
Gross profit increased to $85.0 million for the year compared to $49.4 million in 2021. Gross profit margin rose as a percentage of revenue from 46% to 53%, with improvements in our cost structure, buying power and retail playbook.
Operating expenses for 2022, totaled $72.2 million, compared to operating expenses of $38.9 million during 2021, representing an increase of $33.2 million or approximately 85%. This increase was largely due to increased selling, general and administrative expenses related to acquisition growth, the New Mexico market entry, and includes certain one-time impairment charges for 2022.
Other expense for 2022 was ($16.4) million, compared to other income of $8.5 million in 2021. This is largely driven by non-cash debt related interest obligations and a one-time disposition of assets.
As a result of the factors discussed above, Schwazze generated a net loss of ($18.5) million for 2022 compared to net income of $14.5 million for 2021.
Adjusted EBITDA for the year was $52.0 million representing 33% of revenue, compared to $32.2 million and 30% in 2021. This is derived from Operating Income and adjusting one-time expenses, merger and acquisition and capital raising costs, non-cash related compensation costs, and depreciation and amortization. See the financial table for Adjusted EBITDA below for details and a reconciliation to net income (loss).
For 2022, the Company generated positive operating cash flow of $11.4 million compared to $8.4 million for 2021 and had $38.9 million in cash and cash equivalents as of December 31, 2022.
Forrest Hoffmaster, CFO for Schwazze commented, "Despite the challenging economic backdrop, we've delivered an excellent year resulting in the continued generation of operating cash flows from our acquired businesses. This allows us to not only meet our borrowing obligations but reinvest in infrastructure improvements and in our strategy to go deep in both Colorado and New Mexico."
Webcast – March 29, 2023 –
5:00 pm ET
Investors and stakeholders may participate in the conference call by dialing 416-764-8650 or by dialing North American toll free 1-888-664-6383 or listen to the webcast from the Company's website at https://ir.schwazze.com The webcast will be available on the Company's website and on replay until April 5, 2023, and may be accessed by dialing 1-416-764-8677 or North American toll free 1-888-390-0541 / 592815 #.
Following their prepared remarks, Company management will answer investor questions. Investors may submit questions in advance or during the conference call itself through the weblink: https://app.webinar.net/x0q6rpnP84n This weblink has been posted to the Company's website and will be archived on the website. All Company SEC filings can also be accessed on the Company website at https://ir.schwazze.com/sec-filings.
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. The Company is committed to unlocking the full potential of the cannabis plant to improve the human condition. 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. Schwazze is passionate about making a difference in our communities, promoting diversity and inclusion, and doing our part to incorporate climate-conscious best practices.
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.
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.
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
For the Years Ended December 31, 2022 and 2021
Expressed in U.S. Dollars
MEDICINE MAN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) AND INCOME
For the Years Ended December 31, 2022 and 2021
Expressed in U.S. Dollars
MEDICINE MAN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters & Years Ended December 31, 2022 and 2021
Expressed in U.S. Dollars
MEDICINE MAN TECHNOLOGIES, INC.
Adjusted EBITDA Reconciliation
Non-GAAP measurement
(UNAUDITED)
Investors, Joanne Jobin, Investor Relations, [email protected], 647 964 0292; Legal, Christine Jones, Chief Legal Counsel, [email protected], 303 809 2697; Media, Julie Suntrup, Schwazze, Vice President, Marketing & Merchandising, [email protected], 303 371 0387
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