Gage Growth Corp. a leading high-quality cannabis brand and operator in Michigan, today reported its financial results for the three months ended March 31, 2021. All currency references used in this press release are in U.S. dollars unless otherwise noted.
Financial Highlights for the quarter ended March 31, 2021
(in millions of US Dollars) |
Q1-2021 |
Q4-2020 |
Revenue |
$17.6 |
$10.5 |
Gross Profit |
$4.6 |
$1.8 |
Gross Margin % |
26.1% |
17.3% |
Adjusted EBITDA |
($3.8) |
($5.7) |
Net Loss |
($10.8) |
($14.5) |
Cash, End of Period |
$43.6 |
$45.5 |
See “Non-IFRS Financial Measures” below for more information regarding Gage’s use of Non-IFRS financial measures and other reconciliations.
Revenue increased to $17.6 million in the first quarter of 2021, as compared to $10.5 million in the fourth quarter of 2020, a 67.9% increase. This strong quarter over quarter growth was driven primarily by cultivation capacity expansion and two new dispensary openings.
Gross margin, before gain on fair value of biological assets, was 26.1% in the first quarter of 2021 compared to 17.3% in the fourth quarter of 2020. The 880 basis point improvement quarter over quarter in gross margin to 26.1% is due to a greater mix of higher margin sales from retail locations and cultivation capacity expansion via Gage operated cultivation assets, contract grow partners and lower input costs from dedicated wholesale partners. The Company anticipates further quarter over quarter margin expansion in Q2 2021 as cultivation yields increase from Gage operated assets and more contract grow partners come online.
Management Commentary
“After Gage’s tremendous growth this quarter with revenue of $17.6 million, we expect our first half of 2021 revenue to exceed full fiscal year 2020 revenue and more than double the first half of fiscal year 2020. We are rapidly growing as our investments in infrastructure have started to deliver operating leverage and the team continues to meet the evolving needs of our patients, customers and communities,” said Fabian Monaco, CEO of Gage.
Mr. Monaco continued, “Demand for Gage’s products and retail experience, along with the Michigan market, is extremely strong as cannabis continues to behave like a consumer staple. We opened two new dispensaries during the quarter, including the first adult-use Cookies branded dispensary in the Midwest. In late April, we opened our Battle Creek location, bringing our total retail footprint to eight dispensaries. On the cultivation side, the Company’s three cultivation facilities are fully operational and keeping pace with rising consumer demand while we continue to optimize yields and efficiency. This is all made possible by the dedicated team members we have throughout the organization.”
Mr. Monaco concluded, “Overall, we continue to execute on our growth strategy in 2021. We are excited to build on our momentum and are already seeing great performance evidenced by continued expansion of our retail and cultivation footprint.”
Operational Updates and Developments
1. Outdoor Off-Take Agreement
2. Opening 9th Gage operated dispensary on May 28th, 2021 in Jackson, Michigan
3. Delivering on cultivation ramp-up and opening of processing lab to satisfy consumer demand
Q2 2021 Outlook(1)
The Company reiterates Q2 2021 revenue guidance of $26-31 million previously provided. The Company further reiterates guidance previously provided of flower margins expanding in Q2 2021 and anticipates a further material increase in Q2 2021 gross margin from improved output from its cultivation facilities and improvement in input costs.
Notes:
Conference Call
The Company will host a conference call on Friday, May 28, 2021 at 8:30 a.m. ET to review its operational and financial results and provide an update on current business trends.
To join the call, dial 1-877-317-6789 toll free from the United States or Canada or 1-412-317-6789 if dialing from outside those countries.
The call will be available for replay until Friday, June 11, 2021. To access the telephone replay, dial 1-877-344-7529 toll free from the United States, 1-855-669-9658 from Canada or 1-412-317-0088 if dialing from outside those countries, and use the following replay pin number: 10157206.
Please call the conference telephone number 5-10 minutes prior to the start time.
A live audio webcast of the call will also be available at https://services.choruscall.com/mediaframe/webcast.html?webcastid=w3Qc6mqM.
About Gage Growth Corp.
Gage Growth Corp. is innovating and curating the highest quality cannabis experiences possible for cannabis consumers in the state of Michigan and bringing internationally renowned brands to market. Through years of progressive industry experience, the firm’s founding partners have successfully built and grown operations with federal and state licenses, including cultivation, processing and retail locations. Gage’s portfolio includes city and state approvals for 19 “Class C” cultivation licenses, three processing licenses and 13 provisioning centers (dispensaries).
For more information about Gage Growth Corp., visit www.gagecannabis.com
Instagram: @gagecannabis
Facebook: @gageusa
Twitter: @gagecannabisco
Sources: Gage Growth Corp., Marijuana Regulatory Agency.
Explanatory Note Regarding the Company’s Operations
References in this news release to the Company and its operations and assets are inclusive of the operations and assets of certain licensed cannabis operators that operate under the Gage brand pursuant to contractual arrangements with the Company. For additional information, please refer to the Company’s long form prospectus dated March 26, 2021 and other disclosure documents available on the Company’s profile at www.sedar.com.