Sugarmade Targets Additional
Acquisitions in Hydroponics Roll-Up Strategy
NEW YORK, NY -- December 3, 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
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