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CALGARY, Alberta, May 30, 2022 (GLOBE NEWSWIRE) -- Sugarbud Craft Growers Corp. (TSXV: SUGR, SUGR.DB, SUGR.WR, SUGR.WS, SUGR.WT) (OTCQB: SBUDF) ("Sugarbud" or the "Company"), a leading Canadian Craft Cannabis producer and distributor, is pleased to announce the filing of its unaudited financial statements ("Financial Statements") for the quarter-ended March 31st, 2022 and related management's discussion and analysis ("MD&A"). Sugarbud's Financial Statements and MD&A are available on SEDAR at www.sedar.com and on Sugarbud's website.
Q1 2022 Highlights
Strong Year Over Year Revenue Growth | Sugarbud continues to see strong consumer demand for the Company’s products with strong year over year growth in Q1 2022. Gross revenue for the quarter was $930,585 compared to $679,755 in Q1 2021, representing a 37% increase. Net revenue grew year over year by $198,547 or 38% ($716,563 in Q1 2022 vs. $518,016 in Q1 2021). Sequentially, quarter over quarter gross revenue also remained very strong increasing by 25% vs. Q4 2021 ($930,585 in Q1 2022 vs. $743,985 in Q4 2021).
Record Grams Sold | Total grams sold increased by 103% year over year to 159,733 grams in Q1 2022 vs. 78,626 grams in Q1 2021. The continued growth in both demand for Sugarbud products and the corresponding revenue line in a highly competitive industry, is testament to both the Company’s unwavering focus on delighting the consumer and the underlying strength of the craft cannabis sector.
Strong Quarterly Gross Profit | Despite persistent industry-wide price compression, and additional investment in production and cultivation headcount at the Company's Stavely facility, Sugarbud continues to gain leverage on gross margin through a very disciplined approach to product pricing, internal cost control and operating efficiency. Gross margin before fair market value adjustments for Q1 2022 continued to strengthen and trend higher as both a percentage of net revenue and in real dollars. Q1 2022 gross margin before fair value adjustments totaled $254,821 (Q1 2021 - $122,341), representing a year over year increase of $132,480 or 108%. Gross margin as a percentage of net sales improved by 12 percentage points in Q1 2022 (36%) vs Q1 2021 (24%) and was 13 percentage points higher than Q4 2021 on an unadjusted basis (23%). Management forecasts further improvement in gross profit for the year 2022; due to the positive impact on product mix of the Company’s Cannabis 1.0 and 2.0 products, disciplined price management and further operating efficiencies at the Facility.
Cost Control and Operational Stability | The Company continues to take a prudent approach to cost management with general and administrative expenses down 12.5% year over year ($973,263 in Q1 2022 vs. $1,111,666 in Q1 2021).
"We are very pleased to see the growing momentum and demand for our products continue to accelerate in early 2022. Sugarbud is rapidly establishing a strong brand identity and reputation as a leader in the Craft Cannabis space as consumers embrace our commitment to both quality, and an exceptional total value cannabis experience," stated Sugarbud President and CEO, John Kondrosky. "We believe that our progress and growth to date has us well positioned to continue to expand our market share and accelerate profitable revenue growth in our target markets over the balance of 2022," concluded Mr. Kondrosky.
2022 - Catalysts for Growth
In order to fully realize and accelerate growth throughout 2022, the Company will continue to leverage existing operational and commercial capacity for growth by:
Building up and around Sugarbud's rapidly growing connection to its retail partners and consumers to increase the penetration and adoption of the Company’s existing products in current target markets.
Expanding the size and penetration of the Company’s product portfolio within major markets including Alberta, British Columbia and Ontario.
Leveraging the quality of its exceptional dried flower portfolio to expand into complimentary Cannabis 2.0 products; such as high-terpene, full-flavored solventless extracted inhalable extracts.
Continuing to build product excellence around the Company’s genetic portfolio and investing in targeted new product and portfolio development to accelerate growth.
Continuing to maintain and adhere to strong financial discipline and operating controls that management believes will continue to deliver superior operating results. Instead of focusing on rapid expansion and scale-up, the Company continues to approach future scale using a self-sustaining revenue first model - that both places a priority on a healthy balance sheet and supports controlled future expansion.
Operationally the Company has the existing capacity to achieve its current business objectives for the balance of 2022, however the Company does recognize that in order to really be a leader in the craft cannabis segment, some reasonable amount of scale will be required. Consequently, Sugarbud maintains an agile and scalable operating model and has several facility build-out options which it can quickly deploy as market demand requires. The Company also continues to actively review opportunities to expand its scale and reach to consumers through inorganic M&A driven means.
"Hand-Crafted Cannabis for a New Era"
Sugarbud is a consumer-driven craft cannabis company focused on the cultivation and production of superior, select-batch, craft cannabis products. Our vision and mission are to become a trusted and well-respected consumer brand renowned for providing exceptional high-quality craft cannabis products to legal markets by delighting the most discerning of cannabis consumers.
The Sugarbud Craft Cannabis Collection offers consumers "Hand-Crafted Cannabis for a New Era". The Company is proudly Albertan and is proud to share Western Canada's long tradition of exceptional craft cannabis with the most discerning of enthusiasts. Sugarbud strives to define the intersection of product craftsmanship, quality, and value for consumers in the Canadian craft cannabis space.
Sugarbud Craft Cannabis products are currently available to adult recreational consumers in the Yukon Territory, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and nationally to registered medical patients through MendoCannabis.ca.
We Take Pride.
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Investor Relations Contact
Chief Financial Officer
Sugarbud Craft Growers Corp.
Tel: (778) 388-8700
Forward Looking and Cautionary Statements This news release contains forward-looking statements. More particularly, and without limitation, this news release contains statements concerning: Sugarbud's assessment of future plans, operations and cannabis cultivation and processing, including sales, marketing and distribution opportunities; product quality; the development, production, sale and distribution of Sugarbud's Craft Cannabis Collection,; the expected timing of retail availability of new products future growth; and customer satisfaction. When used in this document, the words "will," "anticipate," "believe," "estimate," "expect," "intent," "may," "project," "should," and similar expressions are intended to be among the statements that identify forward-looking statements. The forward-looking statements are founded on the basis of expectations and assumptions made by Sugarbud. Forward-looking statements are subject to a wide range of risks and uncertainties, and although Sugarbud believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including, but not limited to: currently contemplated expansion and development plans may cease or otherwise change; production of cannabis may be lower than expected; ability to ship cannabis products may be lower than expected; demand for Sugarbud's products may be lower than anticipated; results of production and sale activities; results of scientific research; changes in prices and costs of inputs; demand for labour; demand for products; failure of counter-parties to perform contractual obligations; failure to maintain consumer brand recognition and loyalty of customers; reliance on relationships with wholesalers and retailers for distribution of products and failure to maintain strategic business relationships; intense competition, including from illicit sources; uncertainty and continued evolution of markets; product liability litigation; reliance on information technology; infringement on intellectual property; failure to benefit from partnerships; sensitivity of end-customers to increased sales taxes and economic conditions; failure to comply with certain regulations; departure of key management personnel or inability to attract and retain talent; actions and initiatives of federal and provincial governments and changes to government actions, initiatives and policies and the execution and impact thereof; the ability to implement corporate strategies; the state of domestic capital markets; the ability to obtain financing; changes in general market conditions; industry conditions and events; the size of the medical marijuana market and the recreational marijuana market; government regulations, including future legislative and regulatory developments involving medical and recreational marijuana; construction delays; risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks which can have a significant impact on the size and quality of the harvest of cannabis crops; competition from other industry participants; and other factors more fully described from time to time in the reports and filings made by Sugarbud with securities regulatory authorities. In addition, the Company cautions that current global uncertainty with respect to the spread of the COVID-19 virus, and variant strains of the virus, and its effect on the broader global economy may continue to have a significant negative effect on the Company. While the precise impact of the COVID-19 virus on the Company remain unknown, rapid spread of the COVID-19 virus may continue to have a material adverse effect on global economic activity and can result in volatility and disruption to global supply chains, operations, mobility of people and the financial markets, which could affect interest rates, credit ratings, credit risk, inflation, business, financial conditions, results of operations and other factors relevant to the Company. Please refer to Sugarbud's most recent annual information form and MD&A for additional risk factors relating to Sugarbud, which can be accessed under Sugarbud's profile on www.sedar.com. Except as required by applicable laws, Sugarbud does not undertake any obligation to publicly update or revise any forward-looking statements.
FOFI. This news release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about the Company's 2022 outlook, including reasonably estimated prospective results of operations, cannabis production capacity and volumes, revenue, expenses, profit, gross margin and components thereof, all of which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs, including with respect to economic conditions and proposed courses of action, based on management's assessment of the relevant information available as of the date of this news release. Sugarbud disclaims any intention or obligation to update or revise any FOFI contained in this news release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law.
Neither the TSXV nor its regulation services provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.