Tuesday, August 16, 2022
Schwazze (SHWZ)
A Record Quarter, But What’s Next?
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, Senior Research Analyst, 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.
2Q22 Results. Revenue for the quarter totaled $44.3 million, up from $31.8 million in the first quarter and $30.7 million a year ago. The increase was mostly due to acquisitions as the Colorado market continued to experience softness from the 2021 COVID highs. Adjusted EBITDA was $15.0 million in the quarter, up from $10.0 million a year ago. Schwazze reported operating income of $9 million and net income of $32.1 million, or $0.24 per diluted share, versus $4.4 million and $0.08 last year. We had forecast revenue of $39 million and a net loss of $1.6 million, or $0.03 per share.
Metrics. For the sixth consecutive quarter, Schwazze outpaced the Colorado industry, this time by 11%, but ongoing weakness in the Colorado market resulted in declines in key performance metrics. Colorado two year stacked IDs for same store sales in the second quarter were up 1.8%, although one year were down 12.7%. The same measurements for New Mexico were up 41% and 30.4%, respectively. Average basket size fell in both markets….
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*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.
