Last week, Schwazze, (OTCQX: SHWZ) (NEO: SHWZ) announced financial results for the first quarter and the market had a relatively muted response to the earnings report.
During the last year, Schwazze has reported a series of positive developments and we are favorable on how the business has evolved. In the first quarter, the United States (US) multi-state operator (MSO) continued its expansion plans into Colorado and New Mexico.
Over the next year, we expect Schwazze to enter new markets and will monitor how the story evolves from here. Three of the most important takeaways from the company’s first quarter earnings report are:
- When compared to the same period last year, revenue increased by more than 25% and gross profit increased by more than 100%. We are impressed with how the business has grown consider these metrics to be significant.
- During the quarter, Schwazze generated $1.7 million of net income on $40 million of revenue. Adjusted EBITDA was also positive and we are favorable on this aspect of the story. Most cannabis operators are not profitable and we will monitor this trend for the business on a going forward basis.
- As of March 31st, Schwazze reported to have approx. $35 million of cash on hand and we will monitor how the management team uses its resources to grow the business.
During the first quarter, Schwazze entered into definitive agreements to acquire two Smokey’s retail dispensaries in Fort Collins and Garden City, as well as Standing Akimbo, the largest medical dispensary in Colorado. During this time, the company expanded its presence in New Mexico via a definitive agreement to acquire 14 retail dispensaries, one manufacturing and one cultivation facility.
We classify Schwazze as a mid-tier US MSO and will monitor how the management team is able to execute on its growth strategy. If you are interested in learning more about Schwazze, please send an email to firstname.lastname@example.org with the subject “Schwazze” to be added to our distribution list.
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