HARBORSIDE INC (CSE: HBOR | OTCQX: HBORF)
A True Trailblazer Enjoying Record Growth And With Massive Upside
Harborside Inc. (CSE: HBOR | OTCQX: HBORF) is targeting an annualized revenue run rate of more than $100 MILLION by end-2021.
For a storied cannabis brand with a market cap of only C$55 million, doesn’t that sound appealing?
The company’s plan is simple.
It is pursuing a strategy known as “vertical integration”.
By controlling every element of production, manufacturing and sales, Harborside (CSE: HBOR | OTCQX: HBORF) is confident it can deliver such epic top line revenue growth.
The California-based cannabis pioneer only went public 12 months ago on the Canadian CSE exchange.
However, that was after 14 years as a thriving private firm that built a successful business model and trusted brand name product line.
Harborside (CSE: HBOR | OTCQX: HBORF) now has a new set of executive leaders in place, who took over their roles late last year.
And in the 12 months since?
The team has been laser-focused on enhancing the company’s supply chain to boost profit margins significantly.
Thanks to Harborside’s (CSE: HBOR | OTCQX: HBORF) ‘vertically integrated’ operations this job has been relatively straightforward.
By controlling every step of the sales process, the company is in a wonderful position. From growing its product, to packaging and shipping, to selling face-to-face to its legion of customers in four high-end stores in California and one in Oregon, this is a master plan in action.
Not only does it improve sales volume, but crucially it boosts profit margins too.
This is how Harborside (CSE: HBOR | OTCQX: HBORF) will push forward on its $100 million revenue and profitability objectives for 2021.
“ACCRETIVE ACQUISITIONS, AND FURTHER EXPANSION OF EXISTING BUSINESS UNITS AROUND THE MORE-THAN-30 CANNABIS LICENSES WE CURRENTLY HOLD, ALL WITH A GOAL OF INCREASING TOP LINE REVENUE, AND MORE IMPORTANTLY BOTTOM-LINE RESULTS”, SAYS PETER BILODEAU, CHAIRMAN AND INTERIM CEO.
But what does he mean?
BIGGER PROFITS? FIND OUT HOW VERTICAL INTEGRATION SUPPORTS FASTER GROWTH IN THIS EASY-ACCESS REPORT
Maximising cannabis margins through vertical integration
HARBORSIDE INC (CSE: HBOR | OTCQX: HBORF)
Successful business is often a game of managing the margins.
Most Harborside (CSE: HBOR | OTCQX: HBORF) competitors have much higher cost bases, because they have to buy in or outsource some parts of their manufacturing supply chains.
Whatever revenue gains are made elsewhere can be swallowed up by those costs.
Someone, somewhere is skimming off a 20% or 25% profit margin on this rival, whether it’s the daily farming routine, the packaging, the shipping, or sale from shelves in a front-facing store.
That extra 20% or 25%?
All of it is retained inside the Harborside (CSE: HBOR | OTCQX: HBORF) business, increasing shareholder value.
Peter Bilodeau is famously honest with his investors.
It’s one of the reasons they love him.
Transparency.
Fairness.
Straight talking, every step of the way.
“BACK IN NOVEMBER OF LAST YEAR, WE WERE BURNING CLOSE TO THREE-QUARTERS OF A MILLION DOLLARS A MONTH,” SAYS PETER.
Today-
“WE DISPLACED OTHER FLOWER PRODUCERS AND TOOK OVER OUR OWN SHELF SPACE WITH OUR OWN QUALITY FLOWER PRODUCTS. INSTEAD OF MAKING A 50% MARGIN, WE’RE NOW MAKING ROUGHLY A 75% MARGIN. THAT IS A BIG PART OF WHERE OUR PROFITABILITY TURNAROUND HAS COME ABOUT,” PETER EXPLAINS.
Considering Harborside (CSE: HBOR | OTCQX: HBORF) had already done over $400 million in sales over its 14-year lifetime, these sorts of improvements were always likely to improve overall performance.
You see, this is vertical integration at work. Grow your product, ship your product yourself, package it up, and sell it in your own stores and beyond.
HARBORSIDE’S LINES OF CANNABIS PRODUCTS
Leverage the true power of vertical integration success
HARBORSIDE INC (CSE: HBOR | OTCQX: HBORF)
Taking a cold, hard look at every tiny element of the supply chain doesn’t just mean stripping out costs with surgical precision.
The best businesses also add to top line growth.
The story of Harborside’s (CSE: HBOR | OTCQX: HBORF) plant clones is a perfect illustration of what can be achieved by deploying vertical integration.
Instead of laboriously growing every single cannabis plant from seed, Harborside (CSE: HBOR | OTCQX: HBORF) technicians take a cutting from a healthy plant and grow an entirely new herb. It’s faster. It’s more productive. It’s much cheaper.
“WHEN I FIRST WENT INTO OUR FARM IN NOVEMBER 2019, ONE OF THE QUESTIONS I ASKED WAS: ‘HOW COME WE’RE NOT SELLING OUR OWN CLONES?’ I WAS GIVEN EXCUSES!” LAUGHS PETER.
“I PUSHED AND PUSHED BECAUSE I DIDN’T BELIEVE THAT WE COULDN’T CAPITALIZE ON THIS OPPORTUNITY. I WOULDN’T BUY IT.”
“TODAY WE SELL OUR REGULAR CLONES FOR $12 TO $14 EACH. IN THE PAST THE BUSINESS WOULD HAVE PAID $6 TO $7 FOR EACH. BY SELLING THE ONES WE ALREADY GROW ON OUR FARM? EACH ONE COSTS US A FEW CENTS!”
That’s an instant 30,000% gain. On a single decision.
Growing a full plant from tiny seedling to mature shrub takes weeks. Cultivating a clone not only shortens the growing time but adds an extra in-house product that Harborside (CSE: HBOR | OTCQX: HBORF) can sell at the highest possible margin.
Best of all, Harborside (CSE: HBOR | OTCQX: HBORF) makes money every step of the way.
To leverage the true power of this vertical integration success, Bilodeau and Harborside (CSE: HBOR | OTCQX: HBORF) looking at accretive acquisitions, ones that enhance revenues, margins, bottom line, and shareholder returns.
They are on the hunt for targets up and down the retail chain that will add value and enable even greater growth.
But there’s something else.
Industry insiders are starting to speculate that Harborside (CSE: HBOR | OTCQX: HBORF) is becoming an ideal takeout target.
It is difficult for multi-state operators or international cannabis producers to set up quickly in California.
As the largest local market in the world, there is already a lot of competition and difficult regulatory framework to work within.
The best hires, who understand local farming and the supply chain, are already taken. Licenses are required and not easy to obtain. Competition already exists. The barriers to entry are enormous.
Companies like Harborside (CSE: HBOR | OTCQX: HBORF), that control vertically integrated operations — from farm to shelf — are in a prized position.
Rather than attempt to compete with such established strong competition, it would make sense for any major new entrant into the Californian scene to buy what is already working.
Factor in that Harborside (CSE: HBOR | OTCQX: HBORF) appears substantially undervalued to its peers and rivals and its takeover appeal is further enhance.
After all, Harborside (CSE: HBOR | OTCQX: HBORF) is breaking its own records for sales and profits, 14 years after the company started!
And yet the shares are trading for LESS THAN ONE TIMES REVENUE.
Most Harborside (CSE: HBOR | OTCQX: HBORF) competitors are much more expensive: most trade for multiples of two or three to six or seven times revenue!
At some point the market will correct this mistake and when it does, expect to see this stock rerate hard.
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