Full Press Release Details
SNDL Reports First Quarter 2024 Financial and
The Company reports increased
revenue year-over-year and record profit margin
CALGARY, AB, May 9, 2024 /CNW/ - SNDL Inc. (NASDAQ:
SNDL) ("SNDL" or the "Company") reported its financial and operational results for the first quarter
ended March 31, 2024. All financial information in this press release is reported in millions of Canadian dollars unless otherwise indicated.
SNDL has also posted a supplemental investor presentation
on its website, found at https://sndl.com.
The Company will hold a conference call and webcast
presentation at 10:30 a.m. EDT (8:30 a.m. MDT) on Thursday, May 9, 2024. The conference call details can be found below.
FIRST QUARTER 2024 FINANCIAL AND OPERATIONAL HIGHLIGHTS
"The SNDL team has delivered a solid first
quarter result, exemplified by a record gross margin of 25% and the undeniable improvement in the profitability of all
of our operating segments over multiple years," said Zach George, Chief Executive Officer of SNDL. "We are well positioned
to further expand our retail network and product distribution in Canada where we expect further consolidation and attrition.
Building on the momentum of our Canadian operations, the recent completion of Nasdaq's review of our SunStream USA structure creates an
opportunity for SNDL to close on U.S. assets currently under restructuring, positioning us to become a leading global cannabis company. We
intend to complete a rigorous strategic planning exercise in June of 2024 and are focused on a material reduction in corporate
expenses to drive further improvements into the back half of the year. SNDL remains steadfast in its commitment to driving long-term,
stabilized profitability. Following our first-ever two quarters of positive free cash flow in 2023, we are targeting the generation
of positive free cash flow for the aggregate 2024 calendar year."
FIRST QUARTER 2024 KEY FINANCIAL METRICS
| OPERATING SEGMENTS | ||||||||||||||||||
| ($000s) | Liquor Retail | Cannabis Retail | Cannabis Operations | Investments | Corporate | Total | ||||||||||||
| Three months ended March 31, 2024 | ||||||||||||||||||
| Net revenue | 116,054 | 71,306 | 22,395 | - | (12,005) | 197,750 | ||||||||||||
| Gross profit | 28,806 | 18,359 | 3,235 | - | - | 50,400 | ||||||||||||
| Operating income (loss) | 2,180 | (1,042) | 891 | 13,079 | (19,485) | (4,377) | ||||||||||||
| Adjusted operating income (loss) (1) | 2,180 | (1,042) | 1,146 | 13,079 | (19,829) | (4,466) | ||||||||||||
| Three months ended March 31, 2023 | ||||||||||||||||||
| Net revenue | 115,911 | 67,408 | 19,133 | - | (11,407) | 191,045 | ||||||||||||
| Gross profit | 26,267 | 15,819 | (9,545) | - | - | 32,541 | ||||||||||||
| Operating income (loss) | (1,950) | (78) | (18,832) | 8,737 | (20,081) | (32,204) | ||||||||||||
| Adjusted operating income (loss) (1) | (1,950) | (78) | (17,936) | 8,737 | (18,634) | (29,861) |
FIRST QUARTER 2024 RESULTS
SNDL's business is operated and reported in four segments:
Liquor Retail, Cannabis Retail, Cannabis Operations and Investments.
SNDL is Canada's largest private sector liquor
retailer, operating 171 locations, predominantly in Alberta, under its three retail banners: "Wine and Beyond",
"Liquor Depot", and "Ace Liquor".
As of May 9, 2024, the Ace Liquor store count is 138,
the Liquor Depot store count is 20, and the Wine and Beyond store count is 13.
With its 63% ownership interest in Nova Cannabis Inc.
("Nova"), SNDL is Canada's largest private-sector cannabis retailer by number of stores, operating 188 locations
under its four retail banners: "Value Buds", "Spiritleaf", "Superette", and "Firesale
Cannabis". The Company's Cannabis Retail strategy is based on several pillars, including the quality of its store locations,
its range of products, and the unique experiences it provides customers. Using data and insights from a large volume of monthly transactions
enables SNDL to leverage technology and analytics to inform and improve its retail strategy.
As of May 9, 2024, the Spiritleaf store count was
84 (20 corporate stores and 64 franchise stores), the Superette store count was 4 corporate stores, the Firesale store count was 1 corporate
store, and the Value Buds store count was 99 corporate stores.
SNDL has a diverse brand portfolio from value to premium,
emphasizing premium inhalable formats and a full suite of 2.0 products. With enhanced procurement capabilities and plans to continue evolving
toward a cost-effective cultivation and manufacturing operation, the Cannabis Operations segment is a key enabler of SNDL's vertical integration
strategy. Cannabis Operations include the operations of The Valens Company Inc. ("Valens") for the period of January
18, 2023, to December 31, 2023.
This press release is intended to be read in conjunction
with the Company's condensed consolidated interim financial statements and the notes thereto for the three months ended March 31, 2024,
and the accompanying Management's Discussion and Analysis. These documents are available under the Company's profile on SEDAR+ at www.sedarplus.ca
and EDGAR at www.sec.gov/edgar.shtml.
The Company will hold a conference call and webcast
presentation at 10:30 a.m. EDT (8:30 a.m. MDT) on Thursday, May 9, 2024.
To access the live webcast of the call, please visit
A telephone replay will be available for one month.
To access the replay, dial:
Canada/USA Toll Free: 1-855-669-9658 or International Toll: +1-604-674-8052
When prompted, enter Replay Access Code: 0888 #
The webcast archive will be available for three months via the link provided above.
SNDL is a public company whose shares are traded on
the Nasdaq under the symbol "SNDL." SNDL is the largest private-sector liquor and cannabis retailer in Canada with retail
banners that include Ace Liquor, Wine and Beyond, Liquor Depot, Value Buds, Spiritleaf, and Firesale Cannabis. SNDL is a licensed cannabis
producer and one of the largest vertically integrated cannabis companies in Canada specializing in low-cost biomass sourcing, indoor cultivation,
product innovation, low-cost manufacturing facilities, and a cannabis brand portfolio that includes Top Leaf, Contraband, Palmetto,
Bon Jak, Versus, Value Buds, and Vacay. SNDL's investment portfolio seeks to deploy strategic capital through direct and indirect investments
and partnerships throughout the North American cannabis industry. For more information on SNDL, please go to https://sndl.com/.
Forward-Looking Information Cautionary Statement
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law ("forward-looking statements"),
including, but not limited to, statements regarding the Company's operational goals, the Company's ability to achieve improved profitability,
growth and efficiencies across all segments, or its goal of sustainable, positive gross margin and positive free cash flow, revenue generation
from the Liquor Retail proprietary data licensing program, expansion of product offerings (including the expected expansion of the Company's
wine private label), the impact of productivity initiatives within the Cannabis Operations segment and owned retail locations, the expansion
and additional cost savings at the Atholville facility, performance of the Company's investments, including through the SunStream joint
venture and SunStream USA Group, implementation of the proposed SunStream USA Group investment structure, the timing and closing of the
transactions with Parallel and Skymint, and any other potential forms of shareholder value creation. Forward-looking statements are frequently
characterized by words such as "aim", "anticipate", "assume", "believe", "contemplate",
"continue", "could", "due", "estimate", "expect", "goal", "intend",
"may", "objective", "plan", "predict", "potential", "positioned", "pioneer",
"seek", "should", "target", "will", "would", and other similar expressions that are
predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking
statements are based on current expectations, estimates, forecasts and projections about the Company's business and the industry in which
it operates and management's beliefs and assumptions and are not guarantees of future performance or development and involve known and
unknown risks, uncertainties and other factors that are in some cases beyond its control. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties
and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements.
Please see "Risk Factors" in the Company's Annual Information Form dated March 20, 2024, and the risk factors included
in our other public disclosure documents for a discussion of the material risk factors that could cause actual results to differ
materially from the forward-looking information. The Company is under no obligation, and expressly disclaims any intention or obligation,
to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except
as expressly required by applicable law.
Condensed Consolidated Interim Statement of Loss
and Comprehensive Loss
(Unaudited - expressed in thousands of Canadian dollars, except per share amounts)
| . | Three months ended March 31 | |||||||
| 2024 | 2023 | |||||||
| Net revenue | 197,750 | 191,045 | ||||||
| Cost of sales | 147,350 | 158,504 | ||||||
| Gross profit | 50,400 | 32,541 | ||||||
| Investment income (loss) | 4,036 | (958) | ||||||
| Share of profit of equity-accounted investees | 9,148 | 9,516 | ||||||
| General and administrative | 44,695 | 48,573 | ||||||
| Sales and marketing | 2,598 | 3,386 | ||||||
| Research and development | 37 | 140 | ||||||
| Depreciation and amortization | 14,143 | 16,468 | ||||||
| Share-based compensation | 4,843 | 2,209 | ||||||
| Restructuring (recovery) costs | (89) | 1,536 | ||||||
| Asset impairment | 1,656 | 807 | ||||||
| Loss on disposition of assets | 78 | 184 | ||||||
| Operating income (loss) | (4,377) | (32,204) | ||||||
| Other income (expenses) | (3,272) | (2,574) | ||||||
| Loss before income tax | (7,649) | (34,778) | ||||||
| Income tax recovery | 2,997 | - | ||||||
| Net loss from continuing operations | (4,652) | (34,778) | ||||||
| Net loss from discontinued operations | - | (1,365) | ||||||
| Net loss | (4,652) | (36,143) | ||||||
| Equity-accounted investees - share of other comprehensive income (loss) | 10,034 | (385) | ||||||
| Gain on translation of foreign operations | - | 5 | ||||||
| Comprehensive income (loss) | 5,382 | (36,523) | ||||||
| Net loss from continuing operations attributable to: | ||||||||
| Owners of the Company | (2,554) | (34,203) | ||||||
| Non-controlling interest | (2,098) | (575) | ||||||
| (4,652) | (34,778) | |||||||
| Net loss attributable to: | ||||||||
| Owners of the Company | (2,554) | (35,568) | ||||||
| Non-controlling interest | (2,098) | (575) | ||||||
| (4,652) | (36,143) | |||||||
| Comprehensive income (loss) attributable to: | ||||||||
| Owners of the Company | 7,480 | (35,948) | ||||||
| Non-controlling interest | (2,098) | (575) |
Condensed Consolidated Interim Statement of Financial
(Unaudited - expressed in thousands of Canadian dollars)
| As at | March 31, 2024 | December 31, 2023 | ||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | 188,954 | 195,041 | ||||
| Restricted cash | 20,122 | 19,891 | ||||
| Marketable securities | 170 | 225 | ||||
| Accounts receivable | 20,522 | 27,059 | ||||
| Biological assets | 772 | 429 | ||||
| Inventory | 134,786 | 129,060 | ||||
| Prepaid expenses and deposits | 15,478 | 22,464 | ||||
| Investments | 13,034 | 3,400 | ||||
| Assets held for sale | 25,233 | 6,375 | ||||
| Net investment in subleases | 2,818 | 2,970 | ||||
| 421,889 | 406,914 | |||||
| Non-current assets | ||||||
| Long-term deposits and receivables | 7,344 | 4,837 | ||||
| Right of use assets | 122,100 | 129,679 | ||||
| Property, plant and equipment | 129,895 | 152,916 | ||||
| Net investment in subleases | 17,287 | 18,396 | ||||
| Intangible assets | 72,595 | 73,149 | ||||
| Investments | 20,663 | 29,660 | ||||
| Equity-accounted investees | 560,342 | 538,331 | ||||
| Goodwill | 119,282 | 119,282 | ||||
| Total assets | 1,471,397 | 1,473,164 | ||||
| Liabilities | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | 61,360 | 68,210 | ||||
| Lease liabilities | 32,975 | 30,537 | ||||
| Derivative warrants | 5,700 | 4,400 | ||||
| 100,035 | 103,147 | |||||
| Non-current liabilities | ||||||
| Lease liabilities | 128,816 | 136,492 | ||||
| Other liabilities | 5,918 | 4,185 | ||||
| Total liabilities | 234,769 | 243,824 | ||||
| Shareholders' equity | ||||||
| Share capital | 2,377,163 | 2,375,950 | ||||
| Warrants | 667 | 2,260 | ||||
| Contributed surplus | 75,233 | 73,014 | ||||
| Contingent consideration | 2,279 | 2,279 | ||||
| Accumulated deficit | (1,263,405) | (1,260,851) | ||||
| Accumulated other comprehensive income | 29,451 | 19,417 | ||||
| Total shareholders' equity | 1,221,388 | 1,212,069 | ||||
| Non-controlling interest | 15,240 | 17,271 | ||||
| Total liabilities and shareholders' equity | 1,471,397 | 1,473,164 |
Condensed Consolidated Interim Statement of Cash
(Unaudited -expressed in thousands of Canadian dollars)
| Three months ended March 31 | ||||||||
| 2024 | 2023 | |||||||
| Cash provided by (used in): | ||||||||
| Operating activities | ||||||||
| Net loss for the period | (4,652) | (36,143) | ||||||
| Adjustments for: | ||||||||
| Income tax recovery | (2,997) | - | ||||||
| Interest and fee income | (4,091) | (4,211) | ||||||
| Change in fair value of biological assets | (232) | 3,535 | ||||||
| Share-based compensation | 4,843 | 2,209 | ||||||
| Depreciation and amortization | 14,570 | 18,259 | ||||||
| Loss on disposition of assets | 78 | 184 | ||||||
| Inventory impairment and obsolescence | 1,913 | 9,177 | ||||||
| Finance costs, net | 1,625 | 5,173 | ||||||
| Change in estimate of fair value of derivative warrants | 1,300 | (4,802) | ||||||
| Unrealized foreign exchange loss | 104 | 48 | ||||||
| Transaction costs | 164 | - | ||||||
| Asset impairment | 1,656 | 807 | ||||||
| Share of (profit) of equity-accounted investees | (9,148) | (9,516) | ||||||
| Realized loss on settlement of marketable securities | - | 43,804 | ||||||
| Unrealized (gain) loss on marketable securities | 55 | (38,635) | ||||||
| Proceeds from settlement of marketable securities | - | 26 | ||||||
| Interest received | 3,172 | 3,703 | ||||||
| Change in non-cash working capital | (5,059) | (42,562) | ||||||
| Net cash used in operating activities from continuing operations | 3,301 | (48,944) | ||||||
| Net cash provided by operating activities from discontinued operations | - | 147 | ||||||
| Net cash used in operating activities | 3,301 | (48,797) | ||||||
| Investing activities | ||||||||
| Additions to property, plant and equipment | (2,410) | (1,394) | ||||||
| Additions to intangible assets | - | (17) | ||||||
| Changes to investments | 133 | (827) | ||||||
| Changes to equity-accounted investees | 168 | (7,546) | ||||||
| Proceeds from disposal of property, plant and equipment | (62) | 82 | ||||||
| Acquisitions, net of cash acquired | - | 3,695 | ||||||
| Change in non-cash working capital | 495 | (459) | ||||||
| Net cash used in investing activities from continuing operations | (1,676) | (6,466) | ||||||
| Net cash used in investing activities from discontinued operations | - | - | ||||||
| Net cash used in investing activities | (1,676) | (6,466) | ||||||
| Financing activities | ||||||||
| Change in restricted cash | (231) | (42) | ||||||
| Payments on lease liabilities, net | (7,516) | (9,491) | ||||||
| Repurchase of common shares, net of costs | - | (1,536) | ||||||
| Change in non-cash working capital | 35 | (1) | ||||||
| Net cash used in financing activities from continuing operations | (7,712) | (11,070) | ||||||
| Net cash used in financing activities from discontinued operations | - | - | ||||||
| Net cash used in financing activities | (7,712) | (11,070) | ||||||
| Effect of exchange rate changes on cash held in foreign currency | - | - | ||||||
| Change in cash and cash equivalents | (6,087) | (66,333) | ||||||
| Cash and cash equivalents, beginning of period | 195,041 | 279,586 | ||||||
| Cash and cash equivalents, end of period | 188,954 | 213,253 |