Sugarbud Craft Growers Corp. announced certain preliminary unaudited financial and operating results for Q4 2021 and provide Management comments regarding the Company’s outlook for 2022.
Q4 2021 Results and Corporate Operating Update
“2021 was a pivotal year for the Company and our commercial growth overall as an emerging leader in Canadian Craft Cannabis. Over the course of our first full year of commercial operations, we established a strong platform for future profitable growth through a combination of relentless focus on delighting our target consumers and an efficient, demand-driven operating model,” stated Sugarbud CEO John Kondrosky.
2021 Highlights
- Record Grams Sold | Consistent with previous guidance, the Company shipped between 120,000 – 140,000 grams of dried cannabis for Q4 2021 and between 385,000g – 405,000g during 2021; representing a year over year increase of between 530% – 562% (~385,000g – 405,000g in FY 2021 vs. 61,236g in FY 2020).
- Record Revenue | Consistent with previous guidance, the Company achieved strong, double digit, sequential quarter over quarter growth in Q4, 2021 and realized gross revenue of between $750,000 – $850,000 for the quarter and full year gross revenue of between $2,400,000 – $2,500,000; representing a year over year increase of between 350% – 368% (~$2,400,000 – $2,500,000 in FY 2021 vs. $535,756 in FY 2020).
- Strong Quarterly Gross Profit | Despite continued industry-wide price compression, Sugarbud continues to gain leverage on gross margin through a very disciplined approach to product pricing, internal cost control and operating efficiency.
- Cost Control and Operational Stability | The Company’s focused and disciplined approach to efficient and high-quality cultivation continues to gain momentum. The Company continues to keep general overhead well under control despite doubling net revenue.
- Improved Genetic Strength and Cultivation Outcomes | Sugarbud successfully crossed the 30% potency barrier for the first time on a commercial batch whilst maintaining critical total quality attributes such as high terpene profiles. The Company launched its first commercial 30%+ cultivar – GMO Cookies in late Q4 2021.
- Expanded Market Access | Sugarbud received approval from Health Canada for its amended license permitting the sale of cannabis extract, edible and topical products in Q3 2021. Sugarbud is now amongst a handful of craft cannabis LPs able to directly sell both its dried flower and expanded portfolio of exceptional craft Cannabis 2.0 products to all authorized provincial and territorial distributors/retailers as well as registered medical patients nationwide.
- Expanded Distribution and Reach | Throughout the first half of 2021, the Company firmly established clear routes to all of Canada’s major markets. Sugarbud products are now available to recreational consumers across 7 provinces and territories – encompassing over 96% of the established Canadian retail network – and to registered medical patients nationwide.
- Product Portfolio Expansion | The Company added 9 new dried flower and 2 new Cannabis 2.0 product SKU’s to the Sugarbud Craft Cannabis Collection in 2021 including 3 Sugarbud exclusive cultivars – Mule Fuel, Krypto Chronic #2 and Bahama Blizzard #11.
We are very encouraged by the commercial momentum in product sales we saw across every one of our target markets over the latter half of 2021. We are rapidly establishing a strong brand identity and reputation as a leader in the Craft Cannabis space, and we believe that our results to date have us well-positioned to continue to expand our market share and accelerate profitable revenue growth in 2022,” added Mr. Kondrosky.
Independent Analyst Report – Forecasts $4.75 share price by 2023
READ RESEARCH CAPITAL CORPORATION COVERAGE HERE
Outlook for 2022 – Catalysts for Growth
Record Volume and Revenue | The Company remains on pace to continue the trend of strong sequential quarter over quarter growth and expects to ship between 140,000 – 160,000 grams of dried cannabis and record gross revenue of between $850,000 – $1,000,000 in Q1, 2022. 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.
READ WINTER 2022 CORPORATE PRESENTATION HERE
About Sugarbud
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.
