Sugarmade
Targets Additional Acquisitions in Hydroponics Roll-Up
Strategy
NEW YORK, December
03,
2019 -- InvestorsHub NewsWire -- Sugarmade, Inc. (OTCQB:SGMD)
("Sugarmade", "SGMD", or the "Company"), a major supplier to the
hydroponic cultivation and hemp sectors, is
excited
to announce
that the Company continues
to pursue an aggressive M&A roll-up strategy as it positions
Sugarmade as the dominant entity in the hydroponics marketplace.
Specifically, the Company is currently in
preliminary
talks with six hydroponic and agricultural supply targets in the US
and central Europe.
Management notes that ideal
targets should have an EBITDA margin of at
least 8%.
The
Company prefers
to pay a
reasonable multiple to revenue,
with
10% in cash and 90% in stock for potential
acquisitions,
with precise terms dependent
on
market
conditions.
Sugarmade
closed on its acquisition of BZRTH Inc.,
a marketer and manufacturer of hydroponic growth supplies,
on
October 30,
2019, for
roughly
1x
revenue,
integrating an
annualized $33
million in revenues and
an EBITDA
margin of 5%,
with revenues anticipated to continue to grow over coming
quarters.
Sugarmade CEO, Jimmy Chan, noted, "We continue to position
Sugarmade as a dominant entity in a market that promises aggressive
growth as margins tighten for larger producers in the hemp and
hemp-related space. The return on investment in this space is
extremely appealing right now, and we believe that will continue to
be the case as we pursue this strategy."
In addition, the
Company intends
to revive
its October 2018 Letter of Intent ("LOI") to pursue the acquisition
of Sky
Unlimited (dba Athena United), a supplier of cannabis cultivation
materials in
the near term.
Sugarmade
plans
to close the deal in
Q1 2020. Sky
Unlimited has annualized revenues of
$33-35
million
and
EBITDA margin of 11%.
Chan continued, "When
we
close
the
Sky
Unlimited acquisition,
we
expect
to have around $70
million
in
annualized revenues."
Management notes that this strategy is also predicated on a planned
uplisting to either the New
York Stock
Exchange or
the Nasdaq
before
mid-year 2020.
Chan concluded, "The
capital market is valuing publicly-traded
hemp ancillary companies at 3x-5x revenue, while most
of
these
companies are
in the red.
GrowGeneration
[NASDAQ:GRWG]
just
started trading
on Nasdaq a few
days ago with a market cap of $172 million. Our financial
performance is tracking in a very similar profile at a discount of
$160 million. We are targeting shareholder value and believe we
have a strategy in place that offers a tremendous path
forward."
About
Sugarmade, Inc.
Sugarmade, Inc. (OTCQB:
SGMD) is a product and branding marketing company investing in
operations and technologies with disruptive potential. The Company
is becoming a leading supplier to the growing hemp industry and is
benefitting from the growth of the hydroponic marketplace. The
Company is in the process of acquiring several leading hydroponic
and agricultural supply companies that are currently producing in
excess of $70 million in annual revenues. Sugarmade is also an
investor in fast growing Hempistry,
Inc., a Kentucky-based cultivator,
operates
Carryoutsupplies.com a leader provider to the quick service
restaurant industry and
Zenhydro.com a leading supplier in the online hydroponic
industry.
FORWARD-LOOKING STATEMENTS: This release contains "forward-looking
statements" within the meaning of the safe harbor provisions of the
U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements also may be included in other publicly
available documents issued by the Company and in oral statements
made by our officers and representatives from time to time. These
forward-looking statements are intended to provide management's
current expectations or plans for our future operating and
financial performance, based on assumptions currently believed to
be valid. They can be identified by the use of words such as
"anticipate," "intend," "plan," "goal," "seek," "believe,"
"project," "estimate," "expect," "strategy," "future," "likely,"
"may," "should," "would," "could," "will" and other words of
similar meaning in connection with a discussion of future operating
or financial performance. Examples of forward
looking statements
include, among others, statements relating to future sales,
earnings, cash flows, results of operations, uses of cash and other
measures of financial performance.
Because forward-looking statements relate to the future, they are
subject to inherent risks, uncertainties and other factors that may
cause the Company's actual results and financial condition to
differ materially from those expressed or implied in the
forward-looking statements. Such risks, uncertainties and other
factors include, among others. such as, but not limited to economic
conditions, changes in the laws or regulations, demand for products
and services of the company, the effects of competition and other
factors that could cause actual results to differ materially from
those projected or represented in the forward
looking statements.
Any forward-looking information provided in this release should be
considered with these factors in mind. We assume no obligation to
update any forward-looking statements contained in this
report.
Corporate
Contact:
Jimmy Chan
+1-(888)-982-1628
info@Sugarmade.com
Press &
Media Inquiries:
EHC Branding
Agency
Info@EHCBrandingAgency.Com
(626)
MJ-BRAND