Look, I know what you’re going to say: “This is marijuana and you’re writing about a cannabis company,” and you’re right, it’s marijuana but anyone who knows anything about the industry knows that cannabis companies are about as common as unicorns these days. But here’s the thing, at this time last year Gage Growth was a $1.1 million company with $4.6 million in revenues. This year, it made $17.6 million. That’s 219 percent growth. Now, keep in mind that this is a Canadian company that operates in Canada so I don’t know if we can really call these numbers “growth”. Regardless, when you look at the company’s revenue growth, it seems like the model is
The company reported Q1 revenue of $17.6 million, up from $5.8 million in Q1 2017. “This growth is attributable to our strong position in the cannabis and hemp markets, as well as an increased focus on the international markets such as Canada, Australia, and Germany,” comments Gage Chief Executive Officer, Stephen Shearin. “Gage has also announced several key additions to our management team, including the appointment of David Moen, as the new Chief Financial Officer.”
Gage Growth Corp. announces record results for the first quarter of 2021 and provides an update on thebusiness
- Record revenues for the first quarter of 2021 were $17.6 million, up 219.4% year over year and 67.9% quarter over quarter.
- At the end of the quarter, cash and cash equivalents exceeded $43.6 million.
- Gross margin was 26.1%, up from 17.3% in the fourth quarter of 2020, up 880 basis points in the quarter.
- In April, total cannabis sales in Michigan reached $154 million, or about $1.85 billion on an annual basis. That makes Michigan the third-largest cannabis market in the United States, according to the study.
- Eight active acres (three managed by Gage and five contracted), up from two acres in the first quarter of 2020; the company expects to increase the number of acres to 13 by the end of the year.
- A high average basket – $158 in Q1 2021.
- The company’s own processing plant is expected to be commissioned in the third quarter of 2021, further increasing margins.
- A strategic agreement has been made to supply up to 10,000 pounds of Gage and Cookies premium outdoor flower varieties.
DETROIT, 27. May 2021. /PRNewswire/ – Gage Growth Corp. (Gage or the Company) (CSE: GAGE), Michigan’s leading premium cannabis brand and company, today announced its financial results for the quarter ended December 31. March 2021 announced. All currencies in this press release are expressed in US dollars unless otherwise stated. Financial highlights for the quarter ended December 31, March 2021 For more information on Gage’s use of non-IFRS financial measures and for additional reconciliations, see the non-IFRS financial measures section below. In the first quarter of 2021, revenues increased to $17.6 million from $10.5 million in the fourth quarter of 2020, an increase of 67.9%. This significant increase over the previous quarter is mainly due to the expansion of cultivation capacity and the opening of two new clinics. Gross margin before fair value gains on biological assets was 26.1% in the first quarter of 2021, compared to 17.3% in the fourth quarter of 2020. Gross margin increased 880 basis points from the previous quarter to 26.1%, driven by higher retail margin and increased cultivation capacity through acreage managed by Gage, contract growers and lower production costs through committed wholesale partners. The company expects margins to continue to increase in the second quarter of 2021 compared to the prior quarter, driven by higher returns on Gage-managed assets and new contract growth partners. Remark of the management Following Gage’s tremendous growth this quarter, with revenue of $17.6 million, we expect revenue in the first half of 2021 to surpass that of the full year 2020 and more than double that of the first half of 2020.
Fabian Monaco, Director of Gage
We are growing rapidly as our investments in infrastructure begin to deliver operational value and the team continues to respond to the changing needs of our patients, clients and communities. Mr. Monaco continued: Demand for Gage’s products and shopping experience, as well as the Michigan market, is extremely high as cannabis continues to do well as a mainstream product. During the quarter, we opened two new pharmacies, including the first Cookies branded adult pharmacy in the Midwest. We opened our Battle Creek store in late April, bringing our total number of outlets to eight. In terms of agriculture, the company’s three farms are fully operational and meeting growing consumer demand, while we continue to optimize yields and efficiency. All this is made possible by the dedicated staff of our organization. Mr. Monaco concluded: Overall, we will continue to execute our growth strategy in 2021. We look forward to building on this momentum and are already seeing great results as we continue to expand our store network and increase square footage. Operational updates and developments
- External diversion agreement
- The Company is pleased to announce that it has entered into an agreement to supply up to £10,000 per annum of premium floral varieties of Gage and Cookies.
- This underscores the company’s continued commitment to expanding its product line and brand with a low capital expenditure strategy, with an attractive cost per pound of just $400, which will further increase margins.
- Will expand the Company’s color offering and provide cost-effective supplies for recycling initiatives in H2 2021 and H1 2022.
- Opening of the 9th pharmacy led by Gage on the 28th. May 2021 in Jackson, Michigan
- The company is continuing its retail expansion strategy, aiming to open 20 stores by the end of the year.
- Enable more cultivation and open a processing lab to meet consumer demand.
- The Company’s portfolio currently includes eight cultivation operations (three Gage-managed and five contract cultivation operations), while only two operations were active in the first quarter of 2020.
- The expansion of the Monitor’s Phase II seed is expected to be completed in the fourth quarter. The project will be completed in the second quarter of 2021. The 80,000 square foot building is already complete and interior work will begin at the end of the second quarter.
- Five contract growers are currently active, three of whom are already delivering and the other two are in the process of harvesting. The company plans to add more partners by the end of the year and increase its total production capacity to more than 7,000 pounds per month by the end of the year.
- Gage is expected to open the processing plant in the third quarter of 2021. This will enable the company to manufacture its own extract products at significantly higher margins. Additionally, the processing facility will allow the company to introduce new products (Blue River™ Extracts & Terpenes) and launch world-class brands (SLANG Worldwide).
Outlook for the 2nd quarter of 2021(1) The company confirmed its revenue forecast for the second quarter. quarter 2021 in the range of $26 million to $31 million. The company reaffirmed its guidance for higher gross profit in the second quarter of 2021 and expects a further significant increase in gross profit in the second quarter of 2021 as a result of improved productivity in its growth business and improved manufacturing costs. Notes:
- These preliminary and unaudited financial results are subject to the Company’s normal financial reporting procedures. Actual results may be affected by subsequent events or determinations. While the Company believes that these preliminary financial results are reasonable, they are subject to known and unknown risks and uncertainties that could cause actual results to differ materially. These preliminary financial results are forward-looking information. See the Cautionary Statement Regarding Forward-Looking Information and Statements and Financial Prospects.
Conference call The company will host a conference call on Friday, May 28, 2021 at 8:30 a.m. AND to discuss its operational and financial results and provide updates on current business developments. To join the call, dial 1-877-317-6789 for a toll-free call from the U.S. or Canada, or 1-412-317-6789 if calling from outside those countries. A recording of the conference call will be available until Friday 11. June 2021, available. To register by phone, call toll-free 1-877-344-7529 from the United States, 1-855-669-9658 from Canada, or 1-412-317-0088 if calling from outside these countries, and use the following registration PIN: 10157206. Call the conference phone number 5-10 minutes before the start time. A live audio webcast of the conference call will also be available at https://services.choruscall.com/mediaframe/webcast.html?webcastid=w3Qc6mqM. About Gage Growth Corp. Gage Growth Corp. innovates and creates the highest quality cannabis products for Michigan cannabis consumers, bringing world-class brands to market. With years of progressive industry experience, the company’s founders have successfully built and expanded businesses with federal and state licenses, including cultivation, processing and retail. Gage’s portfolio includes 19 city and state approved Class C cultivation permits, three reprocessing permits and 13 supply centers (dispensaries). More information about Gage Growth Corp. can be found at www.gagecannabis.com. Instagram: @gagecannabis Facebook: @gageusa Twitter: @gagecannabisco Sources: Gage Growth Corp. and the Marijuana Regulatory Authority. Explanation of the company’s activities References in this press release to the Company, its operations and assets include the operations and assets of certain licensed cannabis operators operating under the Gage brand pursuant to contractual agreements with the Company. For further information, please refer to the Company’s long form prospectus dated March 26, 2021 and other disclosure documents available on the Company’s website at www.sedar.com. Non-IFRS financial ratios The company presented certain financial measures not covered by IFRS, including gross margin and adjusted EBITDA. These non-IFRS measures do not have standard IFRS definitions, are not calculated and presented in accordance with IFRS, and may not be comparable to similar measures reported by other entities. The Company defines gross margin as gross profit before fair value of inventory and biological assets divided by sales. The Company calculates adjusted EBITDA as net income adjusted for the effects of the following items: Fair value adjustment on sale of inventory, fair value adjustment on growth of biological assets, provision for income taxes, foreign exchange gain (loss), change in fair value of investments, interest expense, share-based compensation, depreciation and amortization, listing fees, impairment loss, loss on financial assets. The Company has presented these non-IFRS measures as supplementary information and in addition to the financial measures calculated and presented under IFRS. The Company believes that these additional non-IFRS measures provide a valuable additional measure that can be used to assess the Company’s operating performance. Since other entities may calculate these non-IFRS measures differently than the Company, these measures may not be comparable to those of other entities. These additional non-IFRS financial measures should not be considered superior, substitute or alternative financial measures and should be considered only in conjunction with the IFRS financial measures presented herein. For a detailed reconciliation of adjusted EBITDA to net income/(loss), please refer to the Company’s Management Discussion and Analysis for the three months ended December 31. March 2021 (Management Report for the first quarter of 2021). The Company’s financial statements for the three months ended March 31, 2021 and Management’s Discussion and Analysis for the first quarter of 2021 are available on SEDAR at www.sedar.com. Warning about the cannabis trade in the United States Investors should keep in mind that the cannabis industry is subject to significant legal restrictions and regulations in the United States. Although cannabis is legal in some states, it remains a Schedule I drug under the United States Controlled Substances Act, which, among other things, makes the cultivation, distribution, and possession of cannabis illegal under United States federal law. Financial transactions involving products derived from or intended to facilitate commercial cannabis activities in the United States are subject to criminal prosecution under applicable United States federal money laundering laws. Investors should review the risk factors and information contained in the Company’s full prospectus dated March 26, 2021 and other disclosure documents available on the Company’s website at www.sedar.com. Financial perspectives This press release contains financial information as required by applicable Canadian securities laws. The financial outlook has been prepared by the Company’s management to provide guidance for the second quarter of 2021 and may not be appropriate for other purposes. The financial projections have been prepared based on a number of assumptions, including those discussed in this press release and assumptions regarding market conditions, pricing and demand. The Company’s actual results for any period are likely to differ from the amounts indicated in these forecasts, and such differences could be material. The Company and its management believe that the financial projections have been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including those described in the Cautionary Statement on Forward-Looking Information and Statements, it should not necessarily be construed as an indication of future results. Information from third parties This press release contains market and industry data derived from third-party sources, including trade publications. The Company believes that industry data is accurate and that its estimates and assumptions are reasonable, but no assurance can be given as to the accuracy or completeness of such data. Third party sources generally state that the information they contain is from sources believed to be reliable, but no guarantee is given as to the accuracy or completeness of the information they contain. Although the data is considered reliable, the Company has not independently verified the data from the third-party sources referred to in this press release and has not tested the economic assumptions underlying these sources. Original press release Stay ahead of the crowd by subscribing to 420 Investor, the largest and most comprehensive subscription service for cannabis dealers and investors since 2013. 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