Monday, August 14, 2023
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.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
2Q Results. Schwazze reported revenue of $42.4 million, down from last year’s $44.3 million. We had estimated revenue of $44 million. Schwazze reported a net loss, before preferred dividends, of $6.6 million, compared to net income of $33.8 million last year, which was impacted by unrealized derivative gains. After preferred dividends, net loss was $8.96 million, or a loss of $0.15/sh, versus net income of $32.1 million, or $0.24/sh, last year. Adjusted EBITDA was $13.8 million, or a margin of 32.6%, compared to $15 million, or 33.9%, last year. We had projected a $3.4 million net loss, or $0.06/sh.
Playbook Protecting Margins. By implementing its “go deep” retail strategy in its Colorado and New Mexico markets, Schwazze has been able to capture market share while cost optimization and operating efficiencies are enabling the Company to protect margins, as seen in 2Q23 gross margin of 57.9% up from 56.8% in 2Q22.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.