Schwazze (SHWZ) – Continuing to Perform in a Challenging Market

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Thursday, March 30, 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 – Generalist 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.

4Q22 Results. Revenue was $40.1 million, up 51.4% y-o-y from $26.5 million. Adjusted EBITDA was $13.3 million, or 33.1% of revenue in the quarter, up from $7.5 million, or 28.3%, a year ago. Schwazze reported a net loss to common shareholders of $29.8 million, or a loss of $0.53/sh in the quarter, versus $5.5 million of net income, or $0.12/sh. last year. Both periods were impacted by one-time items.

Key Metrics. For the eighth consecutive quarter, Schwazze outpaced the Colorado industry, this time by 11%, but, once again, ongoing weakness in the Colorado market resulted in declines in key performance metrics. Colorado two year stacked IDs for same store sales in the fourth quarter were down 6%, and down 9% for the one year period. The same measurements for New Mexico were up 57% and 43%, respectively. Average basket size fell 11.8% in New Mexico but was up 1.5% in Colorado. Customer visits declined 10.5% in Colorado and were up 61.7% in New Mexico.

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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. 


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