SHWZ - Schwazze (SHWZ) - Updated PEA Reflects Enhanced Economics Supporting Bolivar Expansion
2Q21 Results. Revenue totaled $30.7 million, up 467% from $5.4 million last year and up 58.9% sequentially, driven by the acquisitions. Adjusted EBITDA for the quarter was $10 million, up from $5.8 million sequentially and representing a 32.6% margin. Schwazze recorded net income of $4.4 million, or $0.08 per diluted share compared to a loss of $6.6 million, or $0.16 per share, last year. Net income received a boost from a $1.9 million pre-tax derivative gain in the quarter. We were at $30.2 million and $0.02, respectively.Operating Metrics Improving. Same store sales of the seventeen Star Buds dispensaries when compared to last year, prior to taking ownership of the assets, were $21.5M up 16%, or about twice the overall Colorado market growth. Average basket size was $61.04, up 6.4%, and recorded customer visits were 357,056, up 8.9%. GM increased to 48.5% from 42.7% last year.Continued Acquisition Growth. The recent acquisition of Southern Colorado Growers (SCG) and planned acquisition of the Drift dispensaries continues Schwazze's selective acquisition growth strategy. The two Drift dispensaries increases Schwazze's total to 19. Significantly, SCG enables Schwazze to begin providing its retail locations with its own production, as well as biomass for the wholesale operations, likely adding to overall margins for the Company.Updated Guidance. Management maintained its guidance of $110-$125 million of revenue and $30-$36 million of adjusted EBITDA. With greater insight into the combined operating model, we have tweaked our quarterly projections. We are now projecting revenue of $34.2 million and EPS of $0.06 for the third quarter. For the full year, we are at revenue of $116.8 million, adjusted EBITDA of $34 million, and EPS of $0.12.Maintaining Outperform. We are maintaining our Outperform rating and $4.00 twelve month price target. At our price target, SHWZ shares would trade at 4x projected 2021 revenue and 13.8x projected 2021 EBITDA on a fully diluted basis. Read More >>