Sugarbud Announces Preliminary Q4 2021 Results, Corporate Update and 2022 Outlook

CALGARY, Alberta, March 01, 2022 (GLOBE NEWSWIRE) -- Sugarbud Craft Growers Corp. (TSXV: SUGR, SUGR.DB, SUGR.WR, SUGR.WS, SUGR.WT) (OTCQB: SBUDD) ("Sugarbud" or the "Company") is pleased to announce 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

"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, Manitoba, Ontario and nationally to registered medical patients through MendoCannabis.ca. Sugarbud products are also distributed in the Province of Quebec through ROSE LifeScience Inc.’s ("ROSE") pursuant to a previously announced Sales, Marketing, Supply and Distribution Agreement between ROSE and the Company.

We Take Pride.

We Take Our Time.

Experience The Difference.

Websites:
http://www.sugarbud.ca/
http://craftcannabiscollection.ca

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, 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 properties, characteristics and launch timing thereof; the expected timing of retail availability of new products, including in the Province of Ontario; future growth; 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 variant strains of the 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.

Unaudited Financial Information. Certain financial and operating results included in this press release, including shipping volumes, growth and revenue, are based on unaudited estimated results. These estimated results are subject to change upon completion of the Company’s audited financial statements for the year ended December 31, 2021, and changes could be material.

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.