Sugarbud Craft Growers Corp. (TSXV:SUGR, SUGR.WT, SUGR.WS, SUGR.DB)
("
Sugarbud" or the "
Company") is
pleased to provide a corporate operating update and comments
regarding its outlook for 2021.
Corporate Operating Update
"2020 was a pivotal and productive period for
the Company's overall scale up and growth plans," stated Sugarbud
CEO John Kondrosky. "In addition to receiving our amended sales
license for dried cannabis in Q3 2020, the Company formally entered
the adult-use recreational cannabis market in earnest in Q4 2020 –
after securing important supply agreements with the Provinces of
Saskatchewan, Alberta and British Columbia. In the final weeks of
the year, we received our first $1.0 million in purchase orders,"
continued Mr. Kondrosky.
Subsequent to year end, the Company entered into
supply agreements with the Province of Ontario and the Yukon
Territory.
With a clear line of sight on revenue generating
supply and harvests now occurring once every month and a half at
its Stavely cultivation facility, the Company has firmly
established steady state commercial operations and is now operating
at a level sufficient to meet the Company's positive revenue and
EBITDA objectives for 2021.
"We are pleased with our progress to date after
our first full year of operations and believe that we have
established a strong platform to rapidly accelerate the Company's
continued growth in 2021," concluded Mr. Kondrosky.
2021 Outlook - Quality Over
Quantity
The Canadian adult-use recreational cannabis
market continues to evolve at a rapid pace as consumer buying
practices and preferences become more refined and informed.
Despite volatility in the sector, the Company
expects that the growth and momentum the recreational cannabis
sector saw building in the latter half of 2020 will continue in
2021. The Company believes that the most significant drivers of
growth will be a holistic commitment to premium quality and
consumer satisfaction over volume.
"Sugarbud puts the consumer at the center of
everything we do. Our experience, market data and both retailer and
consumer feedback confirm that our focus is both well-aimed and
critical to the success of the Sugarbud brand," stated Mr.
Kondrosky.
Rather than focus solely on general categories
such as "value priced" or "premium products", the Company believes
that a relentless pursuit and commitment to total value and
consumer satisfaction across multiple product and consumer
preference attributes is the more prudent pathway forward towards a
sustainable and profitable business.
"We are producing exceptional top-quality
products for an intelligent consumer," Mr. Kondrosky notes. "We
recognize that our consumers have different interests, diverse
hobbies, busy jobs and are pursuing all kinds of things to make
their lives even fuller. We understand that we must work hard to
find and earn a place in their busy day", continued Mr.
Kondrosky.
"Consequently, we have set a high bar for
ourselves and spend a lot of time making sure that what we produce
measures up to consumer expectations," concluded Mr. Kondrosky.
The Company believes that the recent drive to
split the market between the binary choice of "price/value" versus
"premium", is short-sighted. Along with a focus on singular product
attributes such as potency alone, Sugarbud believes this does a
disservice to the consumer.
"As the market continues to mature, we believe
that the time and effort we are putting into providing our target
consumers with a balanced approach to total product quality at a
fair price will drive sustainable growth. This overarching
commitment to consumer excellence will play a fundamental role in
eliminating the need for consumers to continue to access the black
market," added Mr. Kondrosky.
"Based on positive feedback received from the
market to date, we believe that we are well-positioned to continue
to expand our market share and accelerate revenue growth in 2021,"
concluded Mr. Kondrosky.
Critical Operating Priorities for
2021
Operationally the Company has the existing
capacity to achieve its business objectives for 2021 and has the
flexibility and agility to rapidly expand capacity within its
existing licensed Stavely facility to meet an increase in demand
should it be required.
The Company maintains an agile and scalable
operating model and has several facility build-out options which it
can quickly deploy, when market demand requires.
In order to fully realize significant growth
opportunities and continue to expand market share in 2021, the
Company will continue to leverage existing operational capacity and
expand commercial capacity for growth by:
-
Expanding our geographic reach to include new provincial markets
including Ontario. READ: Sugarbud Enters Canada's Largest
Recreational Cannabis Market, Signs Supply Agreement with
Ontario
-
Leveraging the quality of our exceptional dried flower portfolio to
expand into Cannabis 2.0 products, such as vapes and inhalable
concentrates. READ: Sugarbud Accelerates Cannabis 2.0 Product
Launch Via Purchase and Supply Agreement with CannMart Inc.
-
Continuing to build product excellence around our genetic
portfolio.
-
Partnering with leading sales and distribution agencies to maximize
the visibility and awareness of the Sugarbud brand within its
target markets. READ: Sugarbud Expands National Distribution Reach,
Announces Sales Agency Partnership With Velvet Management Inc.
-
Building Sugarbud's connection to its retail partners and consumers
- to increase the penetration and adoption of its products in
current target markets.
-
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 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.
READ Q1 2021 CORPORATE PRESENTATION HERE
https://www.globenewswire.com/NewsRoom/AttachmentNg/0469cd5f-ada9-4225-bbd4-b030de1b5027
About Sugarbud
Sugarbud is an Alberta-based, consumer-driven
boutique 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.
John Kondrosky Chief Executive
Officer Sugarbud Craft Growers Corp. Phone: (604) 499-7847
E-mail: johnk@sugarbud.caInvestor
Relations ContactChris
MoulsonChief Financial OfficerSugarbud
Craft Growers Corp.Tel: (778) 388-8700E-mail:
chrism@sugarbud.ca |
Websites:
http://www.sugarbud.ca/
Address: Suite 620, 634 - 6th Avenue S.W.,
Calgary, Alberta T2P 0S4
Forward Looking and Cautionary Statements
This news release contains forward-looking
statements. More particularly, and without limitation, this news
release contains statements concerning: the Company's business
strategy and future operations, including the Company's expected
business objectives for 2021; ability to identify and successfully
execute strategic partnerships; the grant of licenses and
regulatory approvals to conduct the Company's cannabis-related
activities; ability to cultivate and produce premium cannabis
products; the Company's cultivation methods; the build out of the
Company's cannabis cultivation and processing facility and lands
located in Stavely, Alberta; ability to establish and market the
Company's brand within its targeted markets and compete
successfully; ability to produce and market additional products as
regulations permit; the distribution and sale of Sugarbud's
cannabis products, including in new markets such as Ontario; future
product offerings, including the development, commercialization and
sale of Cannabis 2.0 products; legislation, regulations and
licensing relating to the cultivation, distribution and sale of
cannabis products for recreational and medical purposes; and the
Company's expectations regarding its revenues generated from sales
of the Company's product lines in 2021, including self-sustaining
revenue. 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,
including, but not limited to: the success of the Company's
business strategy, including organic growth, acquisitions,
partnerships and other strategic activities; ability to manage
growth in the Company's business; the ability to maintain licenses
and necessary approvals for Sugarbud to cultivate cannabis at the
Stavely facility; ability to cultivate premium cannabis products;
ability to sell cannabis products; access to market for the
Company's future cannabis products; impact of increasing
competition; ability to keep pace with changing consumer
preferences; ability to protect the Company's intellectual
property; timing and amount of capital expenditures; operating
costs; government regulations, including future legislative and
regulatory developments involving recreational and medical cannabis
and the timing thereto; changes to laws regarding the recreational
and medical use of cannabis and the impact on the Company's
business strategy; demand for cannabis products and corresponding
forecasted increase in revenues; size of the recreational and
medical cannabis markets in Canada; legislative and regulatory
environments of the jurisdictions where the Company carries on
business; ability of the Company to obtain qualified staff,
services, supplies and equipment in a timely and cost-efficient
manner; the Company's competitive advantages; conditions in general
economic and financial markets;
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: the
global public health crises in respect of the outbreak of a novel
strain of coronavirus (COVID-19), including volatility and
disruptions in global supply chains and financial markets, as well
as declining trade and market sentiment and reduced mobility of
people; success of the operations of the Company; ability of the
Company to execute its business strategy; the effect consumer
perception of the medical and recreational use of cannabis will
have on the market price of cannabis products; the premium segment
of the medical and recreational cannabis markets; consumer's
attraction to premium cannabis products and changes in consumer
preference; development of the cannabis industry in ways that
differ from the Company's expectations; legislative and regulatory
environments of the jurisdictions where the Company carries on
business or has operations; ability of Sugarbud to develop or
maintain a brand that attracts or retains customers; any failure by
the Company to comply with applicable regulations could prevent it
from being able to carry on its business, and there may be
additional costs associated with any such failure; federal,
provincial and municipal government cannabis regulation and changes
thereto; actions taken by governmental authorities, including
increases in taxes and changes in government regulations; any
failure by the Company or its suppliers to comply with supplier
standards established by provincial or territorial distributors
could prevent the Company from accessing certain markets in Canada;
constraints by law in the Company's ability to market its products
in Canada; development of the Stavely facility, including
construction delays; availability of sufficient financial resources
to fund the Company's capital expenditures; stock market volatility
and market valuations; changes in general economic, market and
business conditions; the effect of any future litigation
proceedings on the Company's business; impact of competition and
the competitive response to the Company's business strategy;
competition for, among other things, licences, capital, skilled
personnel and customers the risks of the cannabis industry, such as
regulatory risks and increasing competition; timing and amount of
capital and other expenditures; the availability of capital on
acceptable terms or at all; cyber-security issues; and, in relation
to the Company's expectations regarding revenues during 2021 and
the Company achieving self-sustaining revenue, assumptions relating
to production and production capacity, growth in the number of
product offerings and store locations in which the Company's
products are sold, growth in total sales, consumer demand for the
Company's products, market pricing of cannabis products, cost of
sales, general and administrative expenses (including sales and
marketing expenses), the pace of opening of and increase in the
total number of recreational cannabis retail stores across Canada,
and the total size of the Canadian recreational and medical
cannabis markets over that time period. In particular, the Company
has assumed and expects that, among other things: (i) its products
will meet the specifications of it and its distribution partners,
for instance with regard to THC content and other specifications;
(ii) the pricing of its products and the product mix of its sales
will be consistent with its most recent discussions with its
distribution partners; (iii) its Facility will produce between
1,600 kgs and 2,000 kgs in 2021 without additional scale-up, based
on the following assumptions: 85 - 100 gram yield per plant; and
growing cycle of 10 – 11 weeks per harvest, resulting in 4.75
harvests per year for each room; (iv) the Company will receive an
amended sales license from Health Canada prior to the end of Q2
2021, or sell Cannabis 2.0 products pursuant to its existing
distribution agreement with a third-party with such license, to
permit the Company to sell Cannabis 2.0 products to authorized
provincial distributors, retailers and registered medical patients
and such products will be developed and move to commercialization
by the end of Q3 2021; (v) its cost of sales will be consistent
with its current cost of sales throughout 2021; (vi) certain
general and administrative expenses are expected to increase if the
Company achieves increased sales; and (vii) the total recreational
and medical cannabis market in Canada will grow in line with the
expectations of the analysts whose reports the Company has
reviewed. 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.
This news release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about the Company's reasonably estimated
prospective results of operations, cannabis production capacity,
revenue, expenses, profit and components thereof, all of which are
subject to the same assumptions, risk factors, limitations and
qualifications as set forth in the above paragraphs, including with
respect to economic conditions and proposed courses of action,
based on management's assessment of the relevant information
available as of the date of this news release. Sugarbud disclaims
any intention or obligation to update or revise any FOFI contained
in this news release, whether as a result of new information,
future events or otherwise, unless required pursuant to applicable
law.
Neither the TSXV nor its regulation
services provider (as that term is defined in the policies of the
TSXV) accepts responsibility for the adequacy or accuracy of this
release.
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