SHWZ - Earnings call transcript Q1 2021 | Medicine Man Technologies, Inc.

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Operator

Greetings, and welcome to the First Quarter 2021 Conference Call and Webcast for Schwazze.

We are being hosted by Justin Dye, Chairman and Chief Executive Officer; and Nancy Huber, Chief Financial Officer.

Following the presentation, management will take questions submitted via the web link found on Schwazze's Investor Relations website and in the earnings press release. I would also like to remind you that management's prepared remarks and answers to your submitted questions may contain forward-looking statements, which are subject to risks and uncertainties. The words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, position, objective, determine, vision and similar expressions as they're related to Schwazze are as such a forward-looking statements. all actual involve those results Schwazze this that that and anticipated cautioned at cause may to time. are forward-looking risks statements uncertainties by Investors differ from

is could on ended and Form March the and XX-K ended results that the earnings year the factors the XX, XX, on the Schwazze XXXX. information to Additional quarter differ December available for Form in release for cause XXXX XX-Q

and remarks are the with more fully Commission, Schwazze's reviewed in be filing Securities website. company's I on other described the would to public at U.S. to over now addition, call Justin Exchange Relations or can which like In www.sec.gov the Dye. turn Investor

Justin Dye

on joining Thank provide afternoon. business the us will commentary I industry this you afterwards. update for a brief and some

first your final would thoughts. conclude results review Nancy detail in CFO, take I We some will Huber, to our questions. Our with happy quarter financial presentation be our then before

first its quarter XXXX, the XX, announced Star now acquired dispensaries company Mesa total of including Buds. the our in of X to XXXX Star Organic bringing retail acquisition During rebranded and of number dispensaries completion of of April the as Buds,

Buds revenue During approximately to Purplebee's to XXXX XX% April to our increase. April increased margin from retail XXX XXXX, product XXXX Star But merchandising. data synergy and growth included we or refining our growth with and Buds, April increased division, a that to April billion. forma $X.X been product of practices realization The company's efficiencies locations. notably, operations to to up and a Organic announced X ownership business over We're increased have recorded retail average an disciplines April December Mesa million. XX% from a in SRO, for recorded equivalent also consumer for Buds loss taking have XX%. first of And $X.X derived in year quarter, completing report million, expected of X, at of XX X from flow Since XXXX. Same-store prior production Most dispensaries the kilograms as if from estimated The in XX% period, of to XX% quarter company revenues calculated compared stocking XX Through general our EBITDA to our our the our $XX.X quarter of does year, output growth product adjusted able retail manufacturing X cash $X.X all Star last revenue from XXXX. of not the be acquired last million saw we April Star $XX.X XXX% have last January million. elevated XX.X% areas recorded office, to first of assets, At was positive that also owned the compared from million XXXX. of in XXXX business. retail pleased XXXX quarter from $XX.X XX% year's quarter. XXXX and and XXXX, the customer our of Mesa the and At we to to year, purchasing, as efficiencies the effectively acquisitions, also from the I'm kilograms still was retail million wholesale such of were same at to XX% we and the Pro XX.X% is we all during contribute implementation basket increase representing increase. sales had of XXX% size we next stores compared to was dispensaries when visits the the of margins prior our quarter holding for $XX.XX, manufacturing XXX,XXX. data up $X.X to in Organics, from at

Our in-house and operating data analytics integration best-in-class office to utilizes advanced synergy and our efficiencies. realize synergies playbook leverages our M&A and

to efficiencies state legislation. comment laws practices board of our these the At expect federal continue We across on positively cannabis will government this impact status regarding we time, and the going have no forward.

we are, federal are impact always, changes However, any to and as any and closely necessary. poised state industry our monitoring would that make changes

on Our that ongoing products where market with to for measurement, planning the during a year-over-year year. recorded estimates, expectation growth number $XXX previous for on recent the pleased marketplace. product past an in retail approximate and recent and the directly demonstrating capture fits million quarter market year-over-year. this into And compared in let's was of last this the general I'm Analytics approvals. to units cannabis year-over-year XX.X increase submittals by million those we increase report in. approved efforts delivery increase industry. quarter our where application from growth units and $XXX stores The million XX% million, same growth quarter, XX% Schwazze of the Based home our XX.X of Colorado's delivery to XX% on ability hyper sold an in adult-use footprint retail share will have that outpace Schwazze an of We're this to medical and Colorado. in is by home cannabis driven X suburb surpassed Aurora, now application Denver, be include to representing BDS to towards based Colorado entry move Colorado experience

mind refer of stimulus on in maybe growth to quarter-over-quarter remainder to that XXXX will from record COVID consumers for checks, relief to rate XXXX along rates due for the customers, the the changed as QX by be tempered eliminated. relief Based cannabis expect as like growth XXXX. of and supported consumers. the habits the somewhat XXXX therefore, Keep have We market with our canacurious another QX or Colorado conversations was the year we interests be is that new to as them with

the benefits magnitude realized However, than underlying market from Colorado greater an we strongly believe that by order stimulus changed relief. the has of

with XXXX more XXXX, of the quarter X in X Colorado greater For cannabis demonstrating $X in billion U.S. units to will legal compared XX.X the than second that as to million operate example, market were continue of quarter sold sales. in largest

to future. Turning the

evaluate We opportunities industry the across dispensaries. the manufacturing cultivation, continue retail and cannabis of additional in areas to

for with exceeds our criteria expansion averages, includes acquisition Revenue regarding opportunities, once and made or provides prospective we've attractive acquisition that products reached shareholders synergy will to services profitability the Any with EBITDA following: that Colorado's accretive locations. agreements potential growth be potential definitive partners. and attractive growth Our intentions prices announcements additional in our are

with acquire targets have geography Nancy represents out provides the reiterate also me and that opportunity that attractive Let and an to our our the building review. to we now are home state I'd Since profitable financial and it of continue first us quarter the early turn continue sophisticated Colorado over to believe And the bust industry. already discussion our to to weathered boom cycle of platform. like

Nancy Huber

now Thank March for review financial our quarter you, results XXXX. like I'd XX, Justin. the to ended

during As representing in the quarter increase Justin $XX.X the top XXX% an of mentioned to million, for of compared $X.X approximately at the the period same first revenue during total XXXX. was Schwazze presentation, million

with business cultivation, or segment the to manufactured on closely our and how performance. touching align we have and business we of dispensaries, plant our With reporting manage evaluate changed infused MIPs, more products, refocus our

of million income and Total administrative expenses revenue period same and taxes a is loss the consulting. consulting a X cost this the EBITDA and which in compared accounting, was financial during million from a adjusting sales and $X.X due noncash $X.X decrease costs operating Buds of the This and million of Organics the retail the was period weighted $X.X segments service loss revenue. services weighted net during Organics XXXX, margin from April quarter. wholesale $X.X discussing goods previous months Star due revenues the from was in driven attributed general for Retail XX, $X.X X for XXXX. is merger were and derived to details and loss to and the year acquisition to on which compared Nutrients; The basic first increased million This loss were XXXX. our XXXX. loss in be retail, of loss Adjusted percentage March other, $X.X $X.X XXXX. now press for average other million ended income, focus reduced and XXXX The March QX increase same Success XX.X%. table $XX.X increase acquisition QX the were net sales expenses recorded, XXXX the million and from small costs, to compared basic completion profit the increased to dispensaries; revenue, in approximately March and from Total our the million gross million the professional before includes wholesale will for other and share average and to onetime period in QX in were and million, includes selling, operations adjustments quarter Buds million the of or XX, other, QX which capital profit a is acquisitions. which Star increased taxes, as ended XXXX margin revenue amortization. to on of adjusted a wholesale, compared approximately the up million in $X.X revenue to to and raising and from stock-based in same per year. per million to during EBITDA fees million adjusted during the compared during charge acquisition the onetime ended for XX, addition during for March which quarter $X.XX was share dispensaries, to MIPs, wholesale The months the in income compensation. $X.X See for includes X of for onetime XX.X%, accounting of purchase Mesa strength $X.X the retail and net the was to market Tomato expenses, retail a mostly fair areas. a no Gross million $XX.X XX.X% purchase by period million months by of increased XX.X% of Mesa purchase compensation depreciation in during of prior noncash-related and accounting We XXXX, $X.X of higher this increased for due Big Star Gross $X.X acquisition. $X.XX net value for XXXX expenses XXXX. as before XXXX inventory or writing $X.X release other sales to Buds

flow, cash of $XX $X.X During and million positive quarter, the the generated and first cash flow in equivalents. $XX.X in company cash operating total with cash ending quarter the million, million

outlook the XXXX. now Turning for to

projected includes updating increasing million $XXX $XX from end. $XXX to million of are end guidance, $XXX low our low $XX $XXX to guidance revenue revenue to million EBITDA of We and $XX Therefore, of guidance previous million guidance projected the adjusted up adjusted from million our revised projections to the now results year time $XX approximately today, The million million companies, regarding Thank of related approximately EBITDA reported completion and to the your Star remains you call to will the to above company now like based full to X Buds back acquisition of to proceeding the for turn the open and date, the million. I'd Justin, the questions. is optimistic and expectations. which integration on who on

Justin Dye

Thank job and your you of great a a in are to support, in customers like terrific continued build Schwazze. all of I and our encouragement us all care company. employees recognize of interest who would taking helping for doing

now We take would you. be to your happy thank [Operator questions. So Instructions].

Joanne Jobin

Schwazze's thank you, first and and for everyone, Thank in quarter webcast. Nancy, participating you, Justin

Our currently other you looks submitted discuss Colorado, expansion are an what you for Can first like aggressive plan. question that and have markets? focused Colorado in but is,

Justin Dye

the Colorado. large in is plenty market you very to continue second opportunities Colorado organically Yes. Joanne. north Thank $X.X a last question, the largest a of to market, inorganically of There and in is market. XX% the grow billion country for year. grew of It's state

we will there grow continue be our focused market certainly on to and strategy. to stay focused share So

our very next medical other thoughtful rec states we be know, As cannabis, how careful are certainly very We'll side. we all state that be think going both there and forward. the about and are on about opening to

we've better don't advantage. well I we're by it. we and time a the see taking to putting I continue our that. number we these on Colorado, of profitable. ensuring efficiencies we as And focused want So questions announced business best at double acquisition to drive frame about that. great continue believe target we of think And are better believe and are acquisition competitive $XXX as us revenues that really candidates that together, better drive in have well going that the between to opportunities north we in million, be here get Colorado. up on can But a drive margins, and them better, can practices We

Joanne Jobin

question. next The

expansion does about Do so, from you If that of we've look do how raise? Where plans. a these talked funding that coming plan is financially? all Now the like now? What to much?

Nancy Huber

a have commitment are we currently -- for. that on purchase million definitive We about debt agreement asset $X we have completing certain for the

So we bit on have have we debt And balance commitment. million our sheet. cash one of then $XX

the equity and debt that's solution debt have market, enough of the we can use then large There acquisitions to the do complete that if looking And evaluating. we're some we So will advantage come that our some convertible be looking the we cash find time. are and both most acquisitions or to at fruition, the shareholders' that to at are those we we'll at. cost-effective

Joanne Jobin

you new deploy do as involved entity individual Keeping when or the group on strategy strategy another or questions, to Star large such dispensaries plan takeover the the with Buds? acquisition of

Justin Dye

question. Thank for that Yes. you

balanced how retail-led We are We're we're thinking organization. the -- we remain in business. about a

believe certainly to is great we creating service. great a products value So customers retail to great great opportunity get the a with start at for by place

us. we're then there. But we good present go a different buying in look we I And scale and today a that those running -- business. have like -- stores an X synergies business X integrated retail not a mindset network if So would we'll or would we build to state. go for that think, would with we -- would within some out integrated vertically at the with us think of start buy general, We themselves, opportunities and

our going also and relationships that part a Buds to Star be X,XXX continuing the to have great to as well to grow Denver We customer -- growers just and over there's with a in operations. there's grow capacity a good a acquiring partnerships, that -- came the with to question So look that, do But we to know high-quality We're square capability XX I add in on as in flowers. we're acquisition. growing state have foot have been we about of internal. where and them continue biomass capabilities

to our having of own us see we'll a be purchaser well. into you'll out So large but expand more as continue capabilities, there also

Joanne Jobin

that acquisitions The impact forward? can is in seen margins product improvements you've Do impressive. all of you your in you think going have

Justin Dye

Nancy, to go want You that ahead.

Nancy Huber

Okay.

be different believe are going along said, It's strategy. can further of terms different. systems the in talked that our that the others. but every we and level where That path a how a little with is growth Justin at We're some that's every results level look had. our different. operating So very we really is little question. is on affect do about we to bit We acquisitions from at in are much as Everybody his we we acquisitions, synergies really than acquisition implementing the all happy we've playbook focused appreciate impact of made. on acquisitions see point an of bit remarks operating and And much in the

we'll efficiently current more Buds certainly one. think than I see operating less with was Star the and we've So others. seen some with very potentially with

hard So say. to

Joanne Jobin

Okay.

Justin, did add you that? to to want

Justin Dye

Nancy create it on the and our the and And can we'll It value. well. No. where depends see operators' best to said really best we look other practices practices opportunity. take take

Joanne Jobin

Okay.

to you you both? be to or to to in plan on other and integrated intend committed cultivation, be retail focus in you markets integrated Next question. are planning fully How do Colorado? fully or Do states? And

Justin Dye

Yes.

we'll in Colorado, see growers. you'll said partnering see with earlier, in own to other I capabilities that our addition have us growing you'll As --

manufacturing. And the intention there's brand really see cultivation and I our supply also, So you partners want to our banners is I we we can own of continue there think XXX% more One, are have chain don't capabilities. our in there that -- can development intelligently not think our well to with. in there. our -- approach I balanced deploy in a think work capital I out as retail to as good

Joanne Jobin

Okay.

please you Let's company Can switch on what that announced were for question gears. it means a that going subsidiary. you next The forming is forward? you elaborate Biosciences the XX May and

Justin Dye

Great question. -- free company is generating the We're Yes. cash flow.

available both any the products. innovation, part it's as important for making I capabilities, R&D and and new will we businesses We a of which, very capabilities, launching which product through is of cannabinoids R&D on is think about fund new think, development, products, these those then doing research our new and different

of and piece look excited we'll about an think it, to products, that. those that's in I for and very market bring rapid to we're So important application

bite-sized well it's lot pay R&D. and think be So company's a common we're a it's how makes but as the And of and it. there that investment as will operations for sense deploying innovation in we will -- investment, a capital both

too an big not it's investment. So of

Joanne Jobin

at Next question balance is sheet. the looking

to there million the in being charge goodwill, intangible assets. you give intangibles is are addition In qualified? how on Could $XX those color million some of a $XX

Nancy Huber

Sure.

in a look on those assets. license If is Section that X value. XX-Q, million breaks intangible at you there's $XX.X that our detail out About

acquisition in relationships, about amounts the XX-Q. have smaller those they Buds the de with them, licenses for and as MIPs as noncompetes and well name other a valuation Star detailed the XX.X%, grow there I for and to Mesa, of minimis and are the then trade are attached And the things, said. some So license that's dispensaries customer but and as

Joanne Jobin

assuming is, classes, all fully and what question count, is the Next warrants share options? diluted

Nancy Huber

the common includes XXX stock. vested about options shares. in of into recent and well in our -- million money, were converted calculation was million shares or and being when stock as So common it preferred XXX.X our the That did as $XXX.X resulted looking a about that we at warrants

Joanne Jobin

Okay.

on Another stock. question

plans this? Are accomplish And to to how liquidity? you Your very will be stock thinly improve seems there traded.

Nancy Huber

on recently our working are become we story. company we the are. telling So have We

In fact, Star acquisitions in concluded just of March, Buds. the

are and who and audience. been have a we wider to out will help we getting making people conferences getting to of are. working on aware in And of sure So that terms believe interest trading out we

who liquidity. So to more people that capital, be the we And reaching the and in as we'll and raise then might more improve are name. opportunity evaluate we interested Schwazze cannabis

of We we've at that have them. on to number and issued shares a just so point, this people are holding many

structure opportunity there's So as to much not we have see. will. the we liquidity, capital we'd But as trading improve like add the to as and

Joanne Jobin

The the in comment Colorado the question on pricing market? is, you next trends can

Justin Dye

Yes. We've remained on fairly flower, on of in the side, seen the things wholesale have terms constant.

as we've So inflation. consistent We times deal see through the and market seen fairly summer We've it's to But at of both of from not very coming general, a expect seen remained busier great this supply more the do inflation in chain year standpoint. during has well. a cyclicality retail. some pricing constant, the -- then in the retail

distillate now. Now -- right on the is distillate market, regarding tight the fairly it

been some certainly biomass, We with passing it's able through have seen to that -- the pressure that through offset we've customers. growing but been to -- it's

So side. of really haven't we that you're seen online and more kind biomass fairly focus that flow supply remain think I retail, think And that -- more I seeing of sort think the we stagnant. and will any -- haven't on and major seen coming I to through

Joanne Jobin

Okay. XXXE. is Banking on Can Section next movement SAFE a The you question the Act comment. comment

Justin Dye

Yes.

federal voice ability we heard sure, legislation likely. happen and end is banking time tax a likely. that. lot think up the SAFE level. Banking the obviously of the as early working to making early We think sure spend for cards at see descheduled. to We not state our have it's regards cannabis general think We XXXE handle we level take that year. to and this working open could industry. local could next as be as the it's as the credit but federal it's well level a It's me lobbying on think With Let of on with and and perhaps services to as decriminalization We having see year, our Section well as at perspective, view a that we'll from

down that's road. the So we remain we bit probably think But a farther optimistic. little

a the standpoint, looked from have regulatory things for think brighter I never industry.

of in lots coming going federal years. meaningful the at months have results to We and some And momentum traction the see think level. you're I and

Joanne Jobin

a announced plans This multi-part space. of next affect this How There This announcements question Harvest going Trulieve also the number on does M&A. week, acquisition Health. expansion question Schwazze's the consolidation other been forward? in is have of a

Justin Dye

it Yes, great, was large billion great, $X question. over blockbuster companies. X believe Obviously, was a that very between the great deal. I well

it So value. emerging, we'll look they're create to and like try to looks

within as well I going to see borders. continue to as consolidation think states you're cross-state

us, it seeing our are of going to we're driving with capabilities driving model, the progression customers, to are driving capital and operating good work markets market on capital supply standpoint strategy. our to As looking industry We're very With revenue dollars continue regards We're get it affects better and on continue as companies to to flowing to work going doesn't. a margins, up, chain. of to our down. and from a how capital cost lean coming continue opening more care into up taking

do tack So efficient. new and continue We'll continue Colorado. start bulk acquisitions well on to we're that to up as we in as very to

Joanne Jobin

have labor any you on market the Do comments outlook.

Justin Dye

within have business. a we need, to good living lives. tight, hiring we're supply with to major as issues our but -- landed we is chain or seeing today. little continue people watch bit we standard, very expand perspective, at that. retail we wage, a regards But any continue with continue We'll our operations be cetera, not see so our labor From and monitor growth we're fair for obviously jobs and can folks No. et getting certainly to their our a providing And to a

So watch good. far, so but it, so we'll continue to

Joanne Jobin

think the sectors, final your manufacturing retail what do on here too? I and And question is attribute you growth the Excellent. exponential

Justin Dye

over two acquired Buds assets, XX things. we the obviously One is stores course to from I March. mean Well, Star December

a us real So the obviously, side. on shot gave retail that

XX So stores. we X from to stores went

by grown force there driving On sales got out and with with -- MIP that's great -- customers the going really side, products. that and business a them we've distillate have partnering high-quality providing business out and manufacturing we

we supply continue X best with a taken to of other that, practices Star over chain Organics our stores, work to rebannered But Buds. that side, customers we've a put to lot we've being scale Star better as on think regards would at applied place great when Mesa to making assortment, promotions, I stock, And solid providing also, get which we've we're with products. to we playbook merchandising, labor our So Buds, good sure continue and equation the them retail do our you those and pricing, retail. in with in to we as have got the right taken their servicing

drive all think grow us I continue margin. to things and helped those So sales have

we'll I that better. continue think to get and continue to to try do

Joanne Jobin

Thank the you be we questions to of That have all Okay. seems much. very that today.

final you do have remarks the any we call? before end Justin,

Justin Dye

try about few to hard thank in And able employees to to continue I customers and a grow about these and you. work our momentum. the announce Thank our and you. We're we're to of of our our capital very We're operating thank, We'd like about up being about like excited Yes. markets for Joanne. excited supporting opportunities, capital we'll company. very, to acquisition excited coming very Thank our and continue just for down. cost all very want We're us. the and supporting us, excited to here weeks. investors We'd to of opening being driven our thank all of

Joanne Jobin

is first again, Schwazze's Justin. the webcast. joining thank Thank remind Once on I'd everyone quarter to website. that you webcast the you, the you. available Thank Schwazze like for

Operator

disconnect. All parties may

Medicine Man (SHWZ) 14 May 212021 Q1 Earnings call transcript