Full Press Release Details
SNDL Reports Full Year and Fourth Quarter 2023
Financial and Operational Results
The Company reports record
net revenue and gross profit in 2023 and achieves positive cash flow in the second half of 2023
CALGARY, AB, March 21, 2024 /CNW/ - SNDL Inc.
(NASDAQ: SNDL) ("SNDL" or the "Company") reported its financial and operational results for the full
year and fourth quarter ended December 31, 2023. 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
and shareholder letter on its website, found at https://sndl.com.
The Company will hold a conference call and webcast
at 10 a.m. EDT (8 a.m. MDT) on Thursday, March 21, 2024. The conference call details can be found below.
FULL YEAR AND FOURTH QUARTER 2023 FINANCIAL AND
OPERATIONAL HIGHLIGHTS
"2023 was a year of significant financial success
for SNDL, including record-breaking revenue and gross profit, and the achievement of free cash flow in the second half of the year,"
said Zach George, Chief Executive Officer of SNDL. "The generation of stabilized free cash flow continues to be a top priority for
our team, and I am proud that we delivered on this stated objective during the last two quarters. This period was foundational as we acquired
Valens, welcomed top-tier leaders and streamlined our balance sheet, positioning SNDL for improved performance in 2024 and beyond. In
our Cannabis Operations, we undertook a comprehensive overhaul, establishing a solid foundation for future success. We refined our brand
portfolio, optimized our operational footprint, and enhanced our procurement strategies, with early signs of a positive impact in 2024.
We continued to build on the Liquor Retail segment's stable base, focusing on strategies that enhance margins through our data program,
improved inventory management, and emerging e-commerce program. We delivered record results in revenue, gross profit, and cash flow within
our Cannabis Retail segment, driven by the expansion of both our owned portfolio and network data programs. We also announced the launch
of SunStream USA Group through our joint venture partner, SunStream Bancorp Inc., highlighting our commitment to the U.S. market as a
key catalyst for growth. Our consumer-centric approach and relentless focus on quality is the cornerstone of our strategy, supported by
a strong balance sheet and improving operations. This approach lays the groundwork for a business positioned to create value for shareholders
through high-quality unadjusted earnings and robust free cash flow."
| ____________________________________ |
| 1 Free cash flow is a non-IFRS financial measure that is not defined by IFRS and, therefore, may not be comparable to similar measures reported by other companies. See "Specified Financial Measures - Free Cash Flow" below. |
| 2 Adjusted EBITDA from continuing operations is a non-IFRS financial measure that is not defined by IFRS and, therefore, may not be comparable to similar measures reported by other companies. See "Specified Financial Measures - Adjusted EBITDA from continuing operations" below. |
FULL YEAR AND FOURTH QUARTER 2023 KEY FINANCIAL
| OPERATING SEGMENTS | ||||||||||||||||||
| ($000s) | Liquor Retail | Cannabis Retail | Cannabis Operations | Investments | Corporate | Total | ||||||||||||
| Year ended December 31, 2023 | ||||||||||||||||||
| Net revenue | 578,895 | 289,980 | 87,071 | - | (46,940) | 909,006 | ||||||||||||
| Gross profit | 137,286 | 73,690 | (20,561) | - | - | 190,415 | ||||||||||||
| Operating income (loss) | 24,630 | 4,919 | (112,445) | 11,746 | (91,668) | (162,818) | ||||||||||||
| Adjusted operating income (loss) (1) | 24,630 | 4,919 | (52,429) | 11,746 | (86,541) | (97,675) | ||||||||||||
| Three months ended December 31, 2023 | ||||||||||||||||||
| Net revenue | 159,493 | 75,152 | 26,044 | - | (12,239) | 248,450 | ||||||||||||
| Gross profit | 38,396 | 20,045 | (1,105) | - | - | 57,336 | ||||||||||||
| Operating income (loss) | 10,102 | (849) | (65,653) | (5,217) | (23,322) | (84,939) | ||||||||||||
| Adjusted operating income (loss) (1) | 10,102 | (849) | (7,619) | (5,217) | (23,433) | (27,016) | ||||||||||||
| Year ended December 31, 2022 | ||||||||||||||||||
| Net revenue | 462,180 | 205,610 | 44,407 | - | - | 712,197 | ||||||||||||
| Gross profit | 106,307 | 47,334 | (13,266) | - | - | 140,375 | ||||||||||||
| Operating income (loss) | 20,619 | (180,956) | (29,372) | (91,275) | (66,790) | (347,774) | ||||||||||||
| Adjusted operating income (loss) (1) | 20,619 | (8,347) | (27,522) | (91,945) | (66,790) | (173,985) | ||||||||||||
| Three months ended December 31, 2022 | ||||||||||||||||||
| Net revenue | 159,745 | 68,402 | 12,258 | - | - | 240,405 | ||||||||||||
| Gross profit | 36,927 | 15,650 | (9,009) | - | - | 43,568 | ||||||||||||
| Operating income (loss) | (3,898) | (98,444) | (12,442) | (19,543) | (20,319) | (154,646) | ||||||||||||
| Adjusted operating income (loss) (1) | (3,898) | (10,201) | (12,442) | (19,331) | (20,319) | (66,191) | ||||||||||||
| (1) Adjusted operating income (loss) is a non-IFRS financial measure that is not defined by IFRS and, therefore may not be comparable to similar measures reported by other companies. See "Specified Financial Measures - Adjusted operating income (loss)" below. |
FULL YEAR AND FOURTH QUARTER 2023 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 170 locations, predominantly in Alberta, under its three retail banners: "Wine and Beyond",
"Liquor Depot" and "Ace Liquor". Revenue comparisons for 2022 include operations from March 31
to December 31, 2022, following the acquisition of Alcanna Inc.
With its 63% ownership interest in Nova Cannabis Inc.
("Nova"), SNDL is Canada's largest private-sector cannabis retailer, operating 187 locations under its four retail
banners: "Value Buds", "Spiritleaf", "Superette", and "Firesale Cannabis".
SNDL'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. Revenue comparisons for 2022 include operations of Nova retail stores
for the period of March 31, 2022, to December 31, 2022.
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 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 audited consolidated financial statements and the notes thereto for the years ended December 31, 2023 and December
31, 2022, and the accompanying Management's Discussion and Analysis ("MD&A"). 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
at 10 a.m. EDT (8 a.m. MDT) on Thursday, March 21, 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: 1-800-319-6413 or International Toll: +1-604-638-9010
When prompted, enter Replay Access Code: 0739 #
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, premium
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 rationalization initiatives on revenue
and margins 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, the receipt
of regulatory and listing authority approvals necessary to implement the proposed SunStream USA Group investment structure, the ability
to realize expected cost savings in relation to the Valens Acquisition, expected run-rate synergies and expected proceeds from future
asset sales, 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.
Consolidated Statement of Loss and Comprehensive
(Expressed in thousands of Canadian dollars, except per share amounts)
| Year ended December 31 | ||||||||
| 2023 | 2022 | |||||||
| Gross revenue | 957,725 | 729,694 | ||||||
| Excise taxes | 48,719 | 17,497 | ||||||
| Net revenue | 909,006 | 712,197 | ||||||
| Cost of sales | 689,338 | 558,089 | ||||||
| Inventory impairment and obsolescence | 30,644 | 7,012 | ||||||
| Gross profit before fair value adjustments | 189,024 | 147,096 | ||||||
| Change in fair value of biological assets | (7,936) | (1,309) | ||||||
| Change in fair value realized through inventory | 9,327 | (5,412) | ||||||
| Gross profit | 190,415 | 140,375 | ||||||
| Interest and fee revenue | 14,517 | 16,739 | ||||||
| Investment loss | (9,258) | (65,164) | ||||||
| Share of profit (loss) of equity-accounted investees | 6,758 | (43,002) | ||||||
| General and administrative | 199,725 | 140,168 | ||||||
| Sales and marketing | 15,045 | 8,417 | ||||||
| Research and development | 324 | 2,448 | ||||||
| Depreciation and amortization | 60,216 | 40,945 | ||||||
| Share-based compensation | 15,400 | 9,671 | ||||||
| Restructuring costs (recovery) | 19,573 | (670) | ||||||
| Asset impairment | 54,967 | 196,033 | ||||||
| Gain on cancellation of contracts | - | (290) | ||||||
| Operating income (loss) | (162,818) | (347,774) | ||||||
| Transaction costs | (3,718) | (1,352) | ||||||
| Finance costs, net | (11,362) | (41,314) | ||||||
| Change in estimate of fair value of derivative warrants | 6,602 | 10,783 | ||||||
| Foreign exchange loss | (367) | (19) | ||||||
| Loss on disposition of assets | (353) | (94) | ||||||
| Loss before income tax | (172,016) | (379,770) | ||||||
| Income tax recovery | - | 7,342 | ||||||
| Net loss from continuing operations | (172,016) | (372,428) | ||||||
| Net loss from discontinued operations | (4,535) | - | ||||||
| Net loss | (176,551) | (372,428) | ||||||
| Equity-accounted investees - share of other comprehensive income (loss) | (12,771) | 24,581 | ||||||
| Comprehensive loss | (189,322) | (347,847) | ||||||
| Net loss from continuing operations attributable to: | ||||||||
| Owners of the Company | (168,125) | (335,114) | ||||||
| Non-controlling interest | (3,891) | (37,314) | ||||||
| (172,016) | (372,428) | |||||||
| Net loss attributable to: | ||||||||
| Owners of the Company | (172,660) | (335,114) | ||||||
| Non-controlling interest | (3,891) | (37,314) | ||||||
| (176,551) | (372,428) | |||||||
| Comprehensive loss attributable to: | ||||||||
| Owners of the Company | (185,431) | (310,533) | ||||||
| Non-controlling interest | (3,891) | (37,314) |
Consolidated Statement of Financial Position
(Expressed in thousands of Canadian dollars)