$SGMD NEW YORK, NY -- December 3, 2019 -- Sugarmad
Post# of 17808
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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"
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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."
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