CALGARY, Alberta, May 02, 2022 (GLOBE NEWSWIRE) — Sugarbud Craft Growers Corp. (TSXV: SUGR, SUGR.DB, SUGR.WR, SUGR.WS, SUGR.WT) (OTCQB: SBUDF) (“Sugarbud” or the “Company“) is pleased to announce the filing of its audited financial statements (“Financial Statements“) for the year-ended December 31, 2021 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.
FISCAL 2021 HIGHLIGHTS
SIGNIFICANT YEAR-OVER-YEAR INCREASE IN TOPLINE REVENUE & CONSUMER DEMAND | Sugarbud grew topline gross revenue on an unadjusted basis by over 348% ($2,400,193 in 2021 vs. $535,756 in 2020) and by over 300% on an as reported basis ($2,194,008 in 2021, $535,756 in 2020 ).1 Unadjusted quarter-over-quarter gross revenue increased by 11.6% to $743,985, in line with previously disclosed guidance. Total grams shipped also significantly increased year-over-year as the Company started to see the full benefit of the supply agreements put in place earlier in the year and as consumer adoption and repeat purchases continued to gain traction. Total grams shipped in 2021 increased by 590% to 422,266 (61,236 in 2020). Grams sold in Q4, 2021 increased by over 150% vs the prior year period (136,083 in 2021, 52,896 in 2020). A testament to the Company’s unwavering focus and commitment to delighting the consumer and the underlying strength of the craft cannabis sector.
Management expects the trend of sequential quarter over quarter growth to continue in Q1 2022 with estimated gross revenue forecasted to be between $900,000 and $1,000,000, and total grams shipped between 140,000 and 150,000. Furthermore, the Company is well on track for a fourth consecutive quarter of record gross revenue with Q2 2022 purchase orders already in hand of $762,106 as of May 2, 2022.
1 See “Non-IFRS Measures” below.
MAINTAINED HEALTHY UNDERLYING GROSS MARGINS | Before the impact of fair market value provisions, prior period price adjustments for discontinued products, and one-time product development costs, gross margin before fair market value adjustments for Q4, 2021 was 23%.2 Despite persistent industry-wide price compression the Company expects to continue to build upon a sound operating model to maintain and improve gross profit margins in 2022. Key operating metrics such as cash cost to grow continue to improve year over year and the Company finished 2021 with an average cash cost to grow per gram of $1.51 vs. $2.82 in 2020.3
Total gross margin on an unadjusted basis for 2021 was 28% vs. 21% in 2020.
Management forecasts further significant 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 product, disciplined price management and further operating efficiencies at the Company’s Stavely facility.
2 See “Non-IFRS Measures” below.
3 See “Non-IFRS Measures” below.
EXPANDED MARKET ACCESS | Sugarbud received approval from Health Canada for its amended license permitting the sale of cannabis extract, edible, and topical products (“Cannabis 2.0 License“) on September 29, 2021. Sugarbud is now amongst a handful of craft cannabis LPs able to directly sell its expanded portfolio of exceptional Cannabis 2.0 products to all authorized provincial and territorial distributors/retailers as well as registered medical patients nationwide. Sugarbud has built up an inventory of Cannabis 2.0 work-in-progress and launched its first Cannabis 2.0 products under the Company’s own Cannabis 2.0 License in late Q4 2021.
LAUNCH OF FIRST >30% THC STRAIN | With the launch of GMO Cookies, the Company successfully crossed the 30% potency barrier for the first time on a commercial batch while maintaining a high terpene profile – a delicate balancing act that management believes sets Sugarbud’s cultivation and post-harvest processing techniques apart.
RECORD QUARTERLY YIELDS AND THC CONTENT | During the year ended December 31, 2021, the Company successfully completed eight harvests resulting in a total of 1,009,213 grams harvested with an annual yield per plant of 92.05g/plant. Sugarbud’s cultivation and processing operations continue to deliver exceptional terpene content (2-5%), total potency (THC 20-31%) and an industry leading post-harvest cure; a testament to the Company’s unwavering focus on exceptional genetics, plant health and best practice cultivation and post-harvest processing techniques.
EXPANDED DISTRIBUTION AND REACH | During the first half of 2021, the Company worked to establish clear routes to market in key provinces and territories. The Company now has direct access to over 90% of the recreational cannabis retail network in Canada across 6 provinces and territories as well as full national access to authorized medical patients through a Medical Supply Agreement with Mendo Cannabis which was announced subsequent to December 31, 2021.
Management views the establishment of these clear routes to major Canadian markets and subsequent product portfolio expansion within each market as both critical and significant catalysts for future sustainable growth. The benefit of these supply agreements and corresponding consumer adoption of Sugarbud products across all major markets is evidenced by the strong sequential quarter over quarter growth the Company continues to see.
“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, Ontario and nationally to registered medical patients through MendoCannabis.ca.
We Take Pride.
We Take Our Time.
Experience The Difference.
This press release contains certain financial measures that do not have a standardized meaning prescribed by IFRS. These non-IFRS financial measures may not be comparable to similar measures presented by other issuers. Unadjusted gross revenue and unadjusted gross margin are not recognized measures under IFRS. These metrics may be useful to investors and research securities analysts in evaluating operating performance. Sugarbud’s method of calculating these measures may differ from other companies and accordingly, may not be comparable to measures used by other companies.
“Unadjusted gross revenue” (non-GAAP financial measure) excludes the impact of the Company’s prior period price adjustments and return provisions used to calculate the as reported gross revenue for the Company. Management believes that the unadjusted gross revenue is a meaningful metric to assess the underlying quarter-over-quarter and year-over-year growth of the Company’s revenues and its products.
“Unadjusted gross margin” (supplementary financial measure) excludes the impact of the Company’s prior period price adjustments, return provisions, the impact of inventory revaluation provisions and one-time costs used to calculate the as reported gross revenue for the Company. Management believes that unadjusted gross margin is a meaningful metric to assess the underlying quarter-over-quarter and year-over-year profitability of the Company and its products.
“Cash cost to grow per gram” (supplementary financial measure) includes the capitalization of certain production costs including direct labor and operating overhead. Cash cost to grow per gram is calculated as cash cost to grow divided by the grams harvested.
The above non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Please refer to the MD&A for additional information relating to specified financial measures including non-GAAP financial measures, non-GAAP financial ratios and capital management measures. The MD&A can be accessed either on Sugarbud’s website at www.sugarbud.ca or under the Company’s profile on www.sedar.com.
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; future business strategy; 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, including new product lines and the characteristics thereof; future growth; success of the Company’s GMO cookies; impact of Cannabis 2.0 License; relationships established through recent supply agreements; 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 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 management’s discussion and analysis 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.
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