CALGARY,
AB, Nov. 13, 2023 /CNW/ - SNDL Inc. (Nasdaq:
SNDL) ("SNDL" or the "Company") reported its
financial and operational results for the third quarter ended
September 30, 2023. Unless otherwise
indicated, all financial information in this press release is
reported in millions of Canadian dollars.
SNDL has also posted a supplemental investor presentation on its
website, at https://sndl.com.
THIRD QUARTER 2023 FINANCIAL AND OPERATIONAL
HIGHLIGHTS
- Net cash provided by operating activities of $27.5 million in the third quarter of 2023,
compared to $8.6 million in the third
quarter of 2022.
- Positive free cash flow1 of $16.5 million in the third quarter of 2023,
compared to negative $67.1 million in
the third quarter of 2022.
- As of September 30,
2023, SNDL's unrestricted cash stood at $202.0 million, up from $185.5 million on June 30,
2023. This 8.9% sequential increase can be attributed to
effective cash-generating initiatives and operational efficiencies
implemented throughout the quarter, particularly in working
capital.
- Net revenue for the third quarter of 2023 of $237.6 million, compared to $230.5 million in the third quarter of 2022, an
increase of 3.1%.
- Liquor Retail: Net revenue of $151.8 million for the third quarter of 2023,
showing stable revenue compared to the same quarter in the prior
year.
- Cannabis Retail: Net revenue of $75.5 million for the third quarter of 2023, an
increase of 14.1% compared to the same quarter of the prior
year.
- Cannabis Operations: Net revenue of $21.0 million for the third quarter of 2023, an
increase of 77.4% compared to the same quarter of the prior
year.
- Gross margin of $48.6 million in
the third quarter of 2023, compared to $50.3
million in the third quarter of 2022, a 3.4% decrease driven
by non-cash inventory impairments.
- Net loss of $21.8 million for the
third quarter of 2023, compared to a loss of $98.8 million in the third quarter of 2022, an
improvement of 77.9% mainly driven by asset impairments recorded in
2022.
- Adjusted EBITDA of $16.1 million
for the third quarter of 2023, compared to $18.3 million from the third quarter of
2022.
- SNDL currently has five credit investments in the SunStream
portfolio following the monetization of one credit exposure in the
third quarter of 2023.
_____________________________
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1 See
Specified Financial Measures – Free Cash Flow
|
"SNDL's positive net cash from operating activities and first
quarter of free cash flow generation marks a pivotal milestone,
reflecting our team's commitment to operational and financial
excellence," said Zach George, Chief
Executive Officer of SNDL. "We are intent on realizing SNDL's
potential for improved profitability, material growth and greater
efficiencies across all of our segments. We recently commenced our
Liquor Retail data program and continue to see margin improvements
in our Cannabis Retail network. In addition, we have rationalized
our facility footprint and are moving aggressively into procurement
to drive improved results in our Cannabis Operations segment. As
previously disclosed, we are in the advanced stages of
restructuring key U.S. credit exposures in a manner compliant with
U.S. laws. Our commitment to delight consumers remains steadfast as
we work to deliver cost-effective, high-quality products and
exceptional retail experiences. While we have made significant
progress and recognize our achievements, our goals are a far climb
from where we stand today. Our industry-leading balance sheet and
improved operations enable us to avoid short-term thinking in order
to build the foundations of a business that we believe will create
sustainable shareholder value through strong free cash flow
generation."
THIRD QUARTER 2023 KEY FINANCIAL METRICS
OPERATING
SEGMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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($000s)
|
Liquor
Retail
|
|
Cannabis
Retail
|
|
Cannabis
Operations
|
|
Investments
|
|
Corporate
|
|
Total
|
|
Three months ended
September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
151,801
|
|
|
75,539
|
|
|
20,954
|
|
|
—
|
|
|
(10,699)
|
|
|
237,595
|
|
Gross margin
|
|
37,263
|
|
|
20,046
|
|
|
(8,704)
|
|
|
—
|
|
|
—
|
|
|
48,605
|
|
Income (loss) from
operations
|
|
8,257
|
|
|
3,481
|
|
|
(13,971)
|
|
|
9,886
|
|
|
(24,023)
|
|
|
(16,370)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
152,488
|
|
|
66,202
|
|
|
11,810
|
|
|
—
|
|
|
—
|
|
|
230,500
|
|
Gross margin
|
|
35,568
|
|
|
14,494
|
|
|
247
|
|
|
—
|
|
|
—
|
|
|
50,309
|
|
Income (loss) from
operations
|
|
13,302
|
|
|
(83,708)
|
|
|
(5,673)
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|
|
7,936
|
|
|
(20,399)
|
|
|
(88,542)
|
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THIRD QUARTER 2023 RESULTS
SNDL's business is operated and reported in four segments:
Liquor Retail, Cannabis Retail, Cannabis Operations and
Investments.
Liquor Retail
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".
- Net revenue for Liquor Retail sales for the three banners
combined was $151.8 million for the
third quarter of 2023, showcasing stable revenue compared to
$152.5 million in the same quarter in
the prior year.
- For locations operational throughout the third quarter of 2023
and 2022, same-store sales remained stable year-over-year across
all liquor banners.
- Gross margin in the Liquor Retail segment was $37.3 million, or 24.5% of sales in the third
quarter of 2023, compared to $35.6
million, or 23.3% of sales, in the third quarter of 2022.
Gross margin growth added $1.7
million to cash flow, mainly driven by procurement
productivity and product mix management initiatives.
- SNDL launched an e-commerce platform for its Liquor Retail
banner Wine and Beyond to drive accretive revenues and meaningful
basket growth opportunities. Early observations suggest an average
increase in total basket spend for online purchases compared to
in-store purchases in the first four weeks post-launch.
- SNDL has constructed and shared the Liquor Retail proprietary
data licensing program framework with its partners. It anticipates
revenue generation starting in the first quarter of 2024, helping
to further enhance the segment's profit margins.
- Private label sales, a substantial driver of gross margin
growth, increased by 33% compared to the third quarter of 2022 and
7% compared to the second quarter of 2023. This increase is driven
by further additions to the private label offerings, particularly
within the value segment.
- The Company expects to launch its first wine private label in
the first half of 2024, enhancing its successful private label
lineup. This new offering will feature an array of wine varietals
sourced from distinguished regions and notable winemakers, all
priced attractively, which is expected to contribute to SNDL's
margin growth while further distinguishing its liquor retail
banners.
- The Company plans to open a new Wine and Beyond location in
Airdrie, Alberta, in the first
quarter of 2024 to further drive revenue growth under the
banner.
- As of November 13, 2023, the Ace
Liquor store count is 138, the Liquor Depot store count is 20, and
the Wine and Beyond store count is 12.
Cannabis Retail
With its ownership interest in Nova Cannabis Inc.
("Nova"), SNDL is Canada's largest private-sector cannabis
retailer, operating 186 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.
- Net revenue from the Cannabis Retail segment for the third
quarter of 2023 was $75.5 million,
compared to $66.2 million in the
third quarter of 2022, a 14.1% increase year-over-year and a record
for the segment since SNDL diversified into Cannabis Retail in
2021.
- For locations operational throughout the third quarter of 2023
and 2022, same-store sales increased 3.9% year-over-year across all
Cannabis Retail banners.
- Gross margin of $20.0 million, or
26.5% of sales, up from 21.9% of sales in the third quarter of
2022, and a 12.4% increase sequentially showcasing the Company's
efforts in continued margin expansion initiatives and data program
enhancements.
- Nova's proprietary data licensing program resulted in revenue
for the third quarter of 2023 of $4.0
million, compared to $1.4
million in the third quarter of 2022, representing a 53.8%
growth compared to the second quarter of 2023.
- The Company expanded its collaboration with Nova for Value
Buds' private label products. This past quarter, Nova introduced a
new 1.2-gram vape to its existing large format flower offerings.
From the launch of this product on September
8, 2023, to September 30,
2023, 'Hello My Name is Strawberry' was the bestselling
1.2-gram vape cartridge in Alberta Value Buds stores. The Company
anticipates expanding to a full suite of products, with a keen
focus on launching pre-rolls in the near future.
- As of November 13, 2023, the
Spiritleaf store count is 87 (22 corporate stores and 65 franchise
stores), the Value Buds store count is 92 corporate stores, the
Superette store count is five corporate stores, and the Firesale
store count is two corporate stores.
Cannabis Operations
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.
- Net revenue from the Cannabis Operations segment for the third
quarter of 2023 was $21.0 million, a
77.4% increase compared to the third quarter of 2022.
- Gross margin of negative $8.7
million in the third quarter of 2023, compared to
$0.2 million in the third quarter of
2022, mainly due to inventory impairment.
- SNDL recently announced an additional step towards optimizing
its facility footprint to bolster competitiveness and profitability
in its Cannabis Operations segment. The Company will consolidate
cultivation activities at its Atholville,
New Brunswick facility while centralizing manufacturing,
processing, and production operations in Kelowna, British Columbia.
- The Company has implemented innovative strategies in its
Atholville, New Brunswick facility
to improve cultivation, resulting in an average annual yield of 105
grams per square foot and an average THC potency result of
25%.
- In the third quarter of 2023, SNDL optimized its brand
portfolio rationalizing by close to 50% its total offerings across
all brands to focus on high-performing SKUs, key consumer
categories and new innovations. This rationalization initiative
prioritizes revenue generation and key volume SKUs to deliver
increased margins within the Cannabis Operations segment and owned
retail locations through 2024.
- The Company launched 41 SKUs in the third quarter of 2023,
primarily focusing on large format flower, vapes, and pre-rolls
under its value-driven brands, Palmetto and Versus, aligning with
its consumer-driven innovation strategy and retail trends.
- SNDL worked cross-functionally to roll out the Ontario Cannabis
Store flow-through fulfillment process and has since ranked as the
#4 licensed producer in dollar sales since the process was
implemented.
Investments
- As of the end of the third quarter of 2023, the Company had
deployed capital into cannabis-related credit investments with a
carrying value of $583.2 million,
including $550.5 million through the
SunStream Bancorp Inc. joint venture ("SunStream").
- SunStream is a joint venture sponsored by SNDL. SunStream
directed the formation of the SunStream USA group of companies ("SunStream
USA"), in connection with the
restructuring of certain loans controlled by SunStream. SunStream
USA is anticipated to be a U.S.
platform with one or more independent third-party investors, which
will be independently managed and governed. The SunStream
USA structure is anticipated to be
reviewed by the Nasdaq, as the relevant listing authority for
SNDL.
- For the third quarter of 2023, the investment portfolio
generated revenue of $10.0 million,
mainly driven by interest and fee revenue of $3.3 million and an increase in the estimated
fair value of the Company's U.S. credit investments of $6.6 million.
- At the end of the third quarter of 2023, the credit portfolio
controlled by SunStream comprised five investments: Jushi Holdings
Inc., SKYMINT Brands ("Skymint"), Ascend Wellness Holdings,
Surterra Holdings, Inc. d/b/a Parallel ("Parallel"), and
Columbia Care Inc.
- On September 22, 2023, an
affiliate of SunStream entered into restructuring arrangements
relating to investments in Parallel, which contemplate the
foreclosure, to a SunStream USA
entity, of certain Parallel cannabis operations in Florida, Massachusetts, Texas, and Nevada (the "Parallel
Transaction").
- On October 23, 2023, an affiliate
of SunStream announced a receivership court order granting the sale
of certain assets of Skymint to a SunStream USA entity (the "Skymint
Transaction").
- The Parallel Transaction and Skymint Transaction are
anticipated to close by the end of the first quarter of 2024 and
are subject to certain conditions and regulatory approvals.
|
Three months
ended
September 30
|
|
Nine months
ended
September 30
|
|
($000s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Interest and fee
revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest revenue from
investments at amortized cost
|
|
891
|
|
|
924
|
|
|
2,819
|
|
|
2,737
|
|
Interest and fee
revenue from investments at Fair Value
Through Profit or Loss
|
|
250
|
|
|
1,095
|
|
|
1,124
|
|
|
3,754
|
|
Interest revenue from
cash
|
|
2,185
|
|
|
2,293
|
|
|
6,780
|
|
|
4,259
|
|
|
|
3,326
|
|
|
4,312
|
|
|
10,723
|
|
|
10,750
|
|
Investment revenue
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized (losses)
gains
|
|
(46,082)
|
|
|
—
|
|
|
(138,874)
|
|
|
389
|
|
Unrealized gains
(losses)
|
|
46,167
|
|
|
(5,513)
|
|
|
130,267
|
|
|
(58,685)
|
|
|
|
85
|
|
|
(5,513)
|
|
|
(8,607)
|
|
|
(58,296)
|
|
Revenue from direct
investments
|
|
3,411
|
|
|
(1,201)
|
|
|
2,116
|
|
|
(47,546)
|
|
Share of profit (loss)
of equity-accounted investees
|
|
6,581
|
|
|
9,176
|
|
|
15,161
|
|
|
(24,711)
|
|
Total investment
activities
|
|
9,992
|
|
|
7,975
|
|
|
17,277
|
|
|
(72,257)
|
|
Equity Position
- $785 million of unrestricted
cash, marketable securities and investments, including investments
in equity-accounted investees and no outstanding debt at
September 30, 2023, resulting in a
net book value of $1.3 billion.
- The Company's share repurchase program continues to be
available to lower the outstanding share float. SNDL will continue
to assess opportunities to utilize the program to the extent that
management believes it is in the best interest of SNDL's
shareholders. For the three months ended September 30, 2023, the Company did not purchase
common shares for cancellation. The share repurchase program was
set to expire on November 20, 2023,
but on November 10, 2023, SNDL's
board of directors approved an extension to November 20, 2024.
STRATEGIC AND ORGANIZATIONAL UPDATE
SNDL remains focused on building long-term shareholder value
through vertical integration, the accretive deployment of cash
resources, expansion of its retail distribution network, the
further streamlining of the Company's operating structure, and
enhanced offerings of high-quality brands within the Liquor Retail,
Cannabis Retail and Cannabis Operations segments.
Integration Initiatives
Since the acquisition of The Valens Company Inc. in
January 2023 (the "Valens
Acquisition"), the Company has realized $21.9 million in annualized cost savings,
substantially exceeding its total initial target of $10 million. In 2023 alone, SNDL achieved cost
savings of $17.8 million at an
expenditure of $3.6 million. Most
cost savings have been realized through SG&A, supply chain
consolidation and operational efficiency. By 2024, run-rate
synergies are expected to exceed $40
million annually, and proceeds from asset sales are expected
to total $9 million.
SNDL made significant optimizations to its facility footprint to
enhance the competitiveness and profitability of its Cannabis
Operations segment. As a result of this key integration initiative,
SNDL expects optimizing its facility footprint to result in an
additional $10 million in annual
savings from its Cannabis Operations segment through reduced fixed
overhead, power costs, and increased labour
efficiencies.
As part of SNDL's commitment to effectively address market
demand, the Company is in the process of rationalizing its SKU
portfolio. By focusing on high-margin products and continuing to
drive innovation, the Company expects to see better margins for the
Cannabis Operations segment and through owned retail in the
upcoming quarters. This approach is designed to allow the Company
to optimize its resources and achieve its long-term goals while
maintaining a competitive edge in the market.
The Company's integration initiatives are critical to SNDL's
vision of establishing Canada's
largest regulated products platform and generating sustainable free
cash flow.
This press release is intended to be read in conjunction with
the Company's condensed consolidated interim Financial Statements
and Notes for the three and nine month ended September 30, 2023, and the accompanying
Management's Discussion and Analysis ("MD&A"). These
reports are available under the Company's profile on SEDAR at
www.sedarplus.ca and EDGAR at www.sec.gov/edgar.shtml.
CONFERENCE CALL
The Company will hold a conference call and webcast at
10:30 a.m. EST (8:30 a.m. MST) on Monday,
November 13, 2023.
WEBCAST ACCESS
To access the live webcast of the call,
please visit the following link:
https://services.choruscall.ca/links/sndl2023q3.html
REPLAY
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: 0541#
The webcast archive will be available for three months via the link
provided above.
ABOUT SNDL INC.
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, Citizen Stash,
Sundial Cannabis, Palmetto, Bon Jak, Spiritleaf Selects, Versus
Cannabis, Value Buds, Vacay, Grasslands and Superette. 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 launch 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, the receipt of regulatory and listing
authority approvals necessary to implement the proposed SunStream
USA 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 "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "likely",
"outlook", "forecast", "may", "will", "potential", "proposed" and
other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the
forward-looking statements throughout this news release.
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 "Item
3.D.—Risk Factors" in the Company's annual report on Form 20-F,
filed with the Securities and Exchange Commission ("SEC") on
April 24, 2023, and the risk factors
included in our other SEC filings 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
September 30
|
|
|
Nine months
ended
September 30
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Gross
revenue
|
|
|
249,796
|
|
|
|
235,144
|
|
|
|
696,118
|
|
|
|
482,828
|
|
Excise taxes
|
|
|
12,201
|
|
|
|
4,644
|
|
|
|
35,562
|
|
|
|
11,036
|
|
Net
revenue
|
|
|
237,595
|
|
|
|
230,500
|
|
|
|
660,556
|
|
|
|
471,792
|
|
Cost of
sales
|
|
|
180,375
|
|
|
|
179,093
|
|
|
|
503,444
|
|
|
|
367,710
|
|
Inventory impairment
and obsolescence
|
|
|
9,126
|
|
|
|
(2,307)
|
|
|
|
22,594
|
|
|
|
3,545
|
|
Gross margin before
fair value adjustments
|
|
|
48,094
|
|
|
|
53,714
|
|
|
|
134,518
|
|
|
|
100,537
|
|
Change in fair value of
biological assets
|
|
|
(1,819)
|
|
|
|
(1,899)
|
|
|
|
(6,767)
|
|
|
|
1,403
|
|
Change in fair value
realized through inventory
|
|
|
2,330
|
|
|
|
(1,506)
|
|
|
|
5,328
|
|
|
|
(5,133)
|
|
Gross
margin
|
|
|
48,605
|
|
|
|
50,309
|
|
|
|
133,079
|
|
|
|
96,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fee
revenue
|
|
|
3,445
|
|
|
|
4,312
|
|
|
|
11,077
|
|
|
|
10,750
|
|
Investment
loss
|
|
|
(29)
|
|
|
|
(5,513)
|
|
|
|
(9,218)
|
|
|
|
(58,296)
|
|
Share of profit (loss)
of equity-accounted investees
|
|
|
6,581
|
|
|
|
9,176
|
|
|
|
15,161
|
|
|
|
(24,711)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
48,235
|
|
|
|
45,014
|
|
|
|
149,535
|
|
|
|
95,989
|
|
Sales and
marketing
|
|
|
3,271
|
|
|
|
1,935
|
|
|
|
10,761
|
|
|
|
6,178
|
|
Research and
development
|
|
|
57
|
|
|
|
1,503
|
|
|
|
217
|
|
|
|
1,988
|
|
Depreciation and
amortization
|
|
|
15,545
|
|
|
|
9,783
|
|
|
|
45,456
|
|
|
|
19,322
|
|
Share-based
compensation
|
|
|
5,373
|
|
|
|
2,069
|
|
|
|
11,475
|
|
|
|
6,711
|
|
Restructuring
costs
|
|
|
708
|
|
|
|
—
|
|
|
|
6,286
|
|
|
|
(882)
|
|
Asset
impairment
|
|
|
1,783
|
|
|
|
86,522
|
|
|
|
4,248
|
|
|
|
88,372
|
|
Loss from
operations
|
|
|
(16,370)
|
|
|
|
(88,542)
|
|
|
|
(77,879)
|
|
|
|
(193,128)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
|
|
(226)
|
|
|
|
(417)
|
|
|
|
(2,439)
|
|
|
|
1,040
|
|
Finance costs,
net
|
|
|
(2,142)
|
|
|
|
(8,409)
|
|
|
|
(9,773)
|
|
|
|
(34,853)
|
|
Change in estimate of
fair value of derivative warrants
|
|
|
(2,840)
|
|
|
|
(8,500)
|
|
|
|
4,202
|
|
|
|
6,856
|
|
Foreign exchange gain
(loss)
|
|
|
(235)
|
|
|
|
91
|
|
|
|
(429)
|
|
|
|
102
|
|
Gain (loss) on
disposition of assets
|
|
|
(14)
|
|
|
|
6
|
|
|
|
(275)
|
|
|
|
408
|
|
Loss before income
tax
|
|
|
(21,827)
|
|
|
|
(105,771)
|
|
|
|
(86,593)
|
|
|
|
(219,575)
|
|
Income tax
recovery
|
|
|
—
|
|
|
|
6,927
|
|
|
|
—
|
|
|
|
8,718
|
|
Net loss from
continuing operations
|
|
|
(21,827)
|
|
|
|
(98,844)
|
|
|
|
(86,593)
|
|
|
|
(210,857)
|
|
Net loss from
discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,535)
|
|
|
|
—
|
|
Net
loss
|
|
|
(21,827)
|
|
|
|
(98,844)
|
|
|
|
(91,128)
|
|
|
|
(210,857)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity-accounted
investees - share of other comprehensive
income (loss)
|
|
|
11,124
|
|
|
|
23,194
|
|
|
|
(882)
|
|
|
|
29,188
|
|
Comprehensive
loss
|
|
|
(10,703)
|
|
|
|
(75,650)
|
|
|
|
(92,010)
|
|
|
|
(181,669)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from
continuing operations attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the
Company
|
|
|
(21,784)
|
|
|
|
(98,108)
|
|
|
|
(85,337)
|
|
|
|
(209,313)
|
|
Non-controlling
interest
|
|
|
(43)
|
|
|
|
(736)
|
|
|
|
(1,256)
|
|
|
|
(1,544)
|
|
|
|
|
(21,827)
|
|
|
|
(98,844)
|
|
|
|
(86,593)
|
|
|
|
(210,857)
|
|
Net loss
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the
Company
|
|
|
(21,784)
|
|
|
|
(98,108)
|
|
|
|
(89,872)
|
|
|
|
(209,313)
|
|
Non-controlling
interest
|
|
|
(43)
|
|
|
|
(736)
|
|
|
|
(1,256)
|
|
|
|
(1,544)
|
|
|
|
|
(21,827)
|
|
|
|
(98,844)
|
|
|
|
(91,128)
|
|
|
|
(210,857)
|
|
Comprehensive loss
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the
Company
|
|
|
(10,660)
|
|
|
|
(74,914)
|
|
|
|
(90,754)
|
|
|
|
(180,125)
|
|
Non-controlling
interest
|
|
|
(43)
|
|
|
|
(736)
|
|
|
|
(1,256)
|
|
|
|
(1,544)
|
|
Condensed Consolidated Interim Statement of Financial
Position
(Unaudited - expressed in thousands of Canadian
dollars)
As at
|
September 30,
2023
|
|
December 31,
2022
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
201,983
|
|
|
279,586
|
|
Restricted
cash
|
|
19,661
|
|
|
19,338
|
|
Marketable
securities
|
|
265
|
|
|
21,926
|
|
Accounts
receivable
|
|
25,505
|
|
|
22,636
|
|
Biological
assets
|
|
562
|
|
|
3,477
|
|
Inventory
|
|
142,550
|
|
|
127,782
|
|
Prepaid expenses and
deposits
|
|
17,814
|
|
|
10,110
|
|
Investments
|
|
3,400
|
|
|
6,552
|
|
Assets held for
sale
|
|
8,391
|
|
|
6,375
|
|
Net investment in
subleases
|
|
3,603
|
|
|
3,701
|
|
|
|
423,734
|
|
|
501,483
|
|
Non-current
assets
|
|
|
|
|
|
|
Long-term
deposits
|
|
9,720
|
|
|
8,584
|
|
Right of use
assets
|
|
133,792
|
|
|
134,154
|
|
Property, plant and
equipment
|
|
176,144
|
|
|
143,409
|
|
Net investment in
subleases
|
|
18,262
|
|
|
19,618
|
|
Intangible
assets
|
|
73,776
|
|
|
74,885
|
|
Investments
|
|
29,058
|
|
|
90,702
|
|
Equity-accounted
investees
|
|
550,523
|
|
|
519,255
|
|
Goodwill
|
|
148,282
|
|
|
67,260
|
|
Total
assets
|
|
1,563,291
|
|
|
1,559,350
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
57,230
|
|
|
48,153
|
|
Lease
liabilities
|
|
33,809
|
|
|
30,206
|
|
Derivative
warrants
|
|
6,800
|
|
|
11,002
|
|
|
|
97,839
|
|
|
89,361
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Lease
liabilities
|
|
137,201
|
|
|
139,625
|
|
Other
liabilities
|
|
6,860
|
|
|
2,709
|
|
Total
liabilities
|
|
241,900
|
|
|
231,695
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
Share
capital
|
|
2,366,775
|
|
|
2,292,810
|
|
Warrants
|
|
2,260
|
|
|
2,260
|
|
Contributed
surplus
|
|
76,912
|
|
|
68,961
|
|
Contingent
consideration
|
|
2,279
|
|
|
2,279
|
|
Accumulated
deficit
|
|
(1,178,063)
|
|
|
(1,091,999)
|
|
Accumulated other
comprehensive income
|
|
31,306
|
|
|
32,188
|
|
Total shareholders'
equity
|
|
1,301,469
|
|
|
1,306,499
|
|
Non-controlling
interest
|
|
19,922
|
|
|
21,156
|
|
Total liabilities
and shareholders' equity
|
|
1,563,291
|
|
|
1,559,350
|
|
Condensed Consolidated Interim Statement of Cash
Flows
(Unaudited - expressed in thousands of Canadian
dollars)
|
|
Three months
ended
September 30
|
|
|
Nine months
ended
September 30
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Cash provided by
(used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the
period
|
|
|
(21,827)
|
|
|
|
(98,844)
|
|
|
|
(91,128)
|
|
|
|
(210,857)
|
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
|
—
|
|
|
|
(6,927)
|
|
|
|
—
|
|
|
|
(8,718)
|
|
Interest and fee
revenue
|
|
|
(3,445)
|
|
|
|
(4,312)
|
|
|
|
(11,077)
|
|
|
|
(10,750)
|
|
Change in fair value
of biological assets
|
|
|
1,819
|
|
|
|
1,899
|
|
|
|
6,767
|
|
|
|
(1,403)
|
|
Share-based
compensation
|
|
|
5,373
|
|
|
|
2,069
|
|
|
|
11,475
|
|
|
|
6,711
|
|
Depreciation and
amortization
|
|
|
16,602
|
|
|
|
11,294
|
|
|
|
49,535
|
|
|
|
24,271
|
|
Loss (gain) on
disposition of assets
|
|
|
14
|
|
|
|
(6)
|
|
|
|
275
|
|
|
|
(408)
|
|
Inventory
obsolescence
|
|
|
9,126
|
|
|
|
(2,307)
|
|
|
|
22,594
|
|
|
|
3,545
|
|
Finance
costs
|
|
|
2,142
|
|
|
|
8,409
|
|
|
|
9,773
|
|
|
|
34,853
|
|
Change in estimate of
fair value of derivative warrants
|
|
|
2,840
|
|
|
|
8,500
|
|
|
|
(4,202)
|
|
|
|
(6,856)
|
|
Unrealized foreign
exchange loss (gain)
|
|
|
68
|
|
|
|
(75)
|
|
|
|
44
|
|
|
|
(40)
|
|
Asset
impairment
|
|
|
1,783
|
|
|
|
86,522
|
|
|
|
4,248
|
|
|
|
88,372
|
|
Share of (profit) loss
of equity-accounted investees
|
|
|
(6,581)
|
|
|
|
(9,176)
|
|
|
|
(15,161)
|
|
|
|
24,711
|
|
Realized loss on
settlement of marketable securities
|
|
|
46,082
|
|
|
|
—
|
|
|
|
138,874
|
|
|
|
—
|
|
Unrealized loss on
marketable securities
|
|
|
(46,053)
|
|
|
|
5,513
|
|
|
|
(129,656)
|
|
|
|
58,685
|
|
Additions to
marketable securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,500)
|
|
Proceeds from
settlement of marketable securities
|
|
|
3,241
|
|
|
|
—
|
|
|
|
6,704
|
|
|
|
—
|
|
Income distributions
from equity-accounted investees
|
|
|
—
|
|
|
|
976
|
|
|
|
—
|
|
|
|
1,661
|
|
Interest
received
|
|
|
3,325
|
|
|
|
3,874
|
|
|
|
10,245
|
|
|
|
9,673
|
|
Change in non-cash
working capital
|
|
|
13,033
|
|
|
|
1,163
|
|
|
|
(43,722)
|
|
|
|
(45,271)
|
|
Net cash provided by
(used in) operating activities from continuing
operations
|
|
|
27,542
|
|
|
|
8,572
|
|
|
|
(34,412)
|
|
|
|
(35,321)
|
|
Net cash provided by
operating activities from discontinued
operations
|
|
|
—
|
|
|
|
—
|
|
|
|
4,314
|
|
|
|
—
|
|
Net cash provided by
(used in) operating activities
|
|
|
27,542
|
|
|
|
8,572
|
|
|
|
(30,098)
|
|
|
|
(35,321)
|
|
Investing
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property,
plant and equipment
|
|
|
(3,042)
|
|
|
|
(2,119)
|
|
|
|
(5,683)
|
|
|
|
(6,654)
|
|
Additions to
intangible assets
|
|
|
(32)
|
|
|
|
—
|
|
|
|
(88)
|
|
|
|
(55)
|
|
Additions to
investments
|
|
|
195
|
|
|
|
(60,676)
|
|
|
|
(507)
|
|
|
|
(74,770)
|
|
Additions to
equity-accounted investees
|
|
|
—
|
|
|
|
(8,072)
|
|
|
|
(16,989)
|
|
|
|
(102,272)
|
|
Proceeds from disposal
of property, plant and equipment
|
|
|
1,150
|
|
|
|
3
|
|
|
|
1,287
|
|
|
|
4,003
|
|
Acquisitions, net of
cash acquired
|
|
|
—
|
|
|
|
—
|
|
|
|
3,695
|
|
|
|
(31,149)
|
|
Change in non-cash
working capital
|
|
|
730
|
|
|
|
(754)
|
|
|
|
1,857
|
|
|
|
(495)
|
|
Net cash used in
investing activities from continuing operations
|
|
|
(999)
|
|
|
|
(71,618)
|
|
|
|
(16,428)
|
|
|
|
(211,392)
|
|
Net cash used in
investing activities from discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net cash used in
investing activities
|
|
|
(999)
|
|
|
|
(71,618)
|
|
|
|
(16,428)
|
|
|
|
(211,392)
|
|
Financing
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in restricted
cash
|
|
|
(205)
|
|
|
|
70
|
|
|
|
(323)
|
|
|
|
7,677
|
|
Payments on lease
liabilities, net
|
|
|
(9,793)
|
|
|
|
(9,127)
|
|
|
|
(29,400)
|
|
|
|
(18,751)
|
|
Repurchase of common
shares, net of costs
|
|
|
—
|
|
|
|
(4,096)
|
|
|
|
(1,536)
|
|
|
|
(6,149)
|
|
Repayment of long-term
debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(10,000)
|
|
Change in non-cash
working capital
|
|
|
(17)
|
|
|
|
4,996
|
|
|
|
182
|
|
|
|
7,112
|
|
Net cash used in
financing activities from continuing operations
|
|
|
(10,015)
|
|
|
|
(8,157)
|
|
|
|
(31,077)
|
|
|
|
(20,111)
|
|
Net cash used in
financing activities from discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net cash used in
financing activities
|
|
|
(10,015)
|
|
|
|
(8,157)
|
|
|
|
(31,077)
|
|
|
|
(20,111)
|
|
Change in cash and cash
equivalents
|
|
|
16,528
|
|
|
|
(71,203)
|
|
|
|
(77,603)
|
|
|
|
(266,824)
|
|
Cash and cash
equivalents, beginning of period
|
|
|
185,455
|
|
|
|
362,630
|
|
|
|
279,586
|
|
|
|
558,251
|
|
Cash and cash
equivalents, end of period
|
|
|
201,983
|
|
|
|
291,427
|
|
|
|
201,983
|
|
|
|
291,427
|
|
SPECIFIED FINANCIAL MEASURES
Certain specified financial measures in this news release are
non-IFRS measures. These terms are not defined by IFRS and,
therefore, may not be comparable to similar measures provided by
other companies. These non-IFRS financial measures should not be
considered in isolation or as an alternative for or superior to
measures of performance prepared in accordance with IFRS. These
measures are presented and described in order to provide
shareholders and potential investors with additional measures in
understanding the Company's operating results in the same manner as
the management team.
ADJUSTED EBITDA
Adjusted EBITDA is a non-IFRS measure
which the Company uses to evaluate its operating performance.
Adjusted EBITDA provides information to investors, analysts, and
others to aid in understanding and evaluating the Company's
operating results in a manner similar to its management team.
Adjusted EBITDA is defined as net income (loss) from
continuing operations before finance costs, change in estimate of
fair value of derivative warrants, depreciation and amortization,
income tax recovery and excluding change in fair value of
biological assets, change in fair value realized through inventory,
unrealized foreign exchange gains or losses, unrealized gains or
losses on marketable securities, realized gains or losses on
marketable securities, share-based compensation expense, asset
impairment, gain or loss on disposal of property, plant and
equipment, cost of sales non-cash component, inventory impairment
(recovery) and obsolescence, restructuring costs and transaction
costs.. The Company presents both consolidated or total Adjusted
EBITDA and Adjusted EBITDA by operating segment.
OPERATING
SEGMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($000s)
|
Liquor
Retail
|
|
Cannabis
Retail
|
|
Cannabis
Operations
|
|
Investments
|
|
Corporate
|
|
Total
|
|
Three months ended
September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
|
6,449
|
|
|
2,753
|
|
|
(13,774)
|
|
|
9,834
|
|
|
(27,089)
|
|
|
(21,827)
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
costs
|
|
1,652
|
|
|
679
|
|
|
(241)
|
|
|
52
|
|
|
—
|
|
|
2,142
|
|
Change in estimate of
fair value of derivative
warrants
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,840
|
|
|
2,840
|
|
Depreciation and
amortization
|
|
9,436
|
|
|
4,340
|
|
|
954
|
|
|
—
|
|
|
815
|
|
|
15,545
|
|
Change in fair value of
biological assets
|
|
—
|
|
|
—
|
|
|
1,819
|
|
|
—
|
|
|
—
|
|
|
1,819
|
|
Change in fair value
realized through inventory
|
|
—
|
|
|
—
|
|
|
(2,330)
|
|
|
—
|
|
|
—
|
|
|
(2,330)
|
|
Unrealized foreign
exchange (gain) loss
|
|
—
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
68
|
|
Unrealized (gain) loss
on marketable securities
|
|
—
|
|
|
—
|
|
|
114
|
|
|
(46,167)
|
|
|
—
|
|
|
(46,053)
|
|
Realized loss on
marketable securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,082
|
|
|
—
|
|
|
46,082
|
|
Share-based
compensation
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
5,371
|
|
|
5,373
|
|
Asset
impairment
|
|
1,640
|
|
|
108
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
1,783
|
|
Loss (gain) on
disposition of PP&E
|
|
(21)
|
|
|
49
|
|
|
(14)
|
|
|
—
|
|
|
—
|
|
|
14
|
|
Cost of sales non-cash
component (1)
|
|
—
|
|
|
—
|
|
|
601
|
|
|
—
|
|
|
—
|
|
|
601
|
|
Inventory impairment
(recovery) and
obsolescence
|
|
—
|
|
|
—
|
|
|
9,126
|
|
|
—
|
|
|
—
|
|
|
9,126
|
|
Restructuring
costs
|
|
—
|
|
|
—
|
|
|
(323)
|
|
|
—
|
|
|
1,031
|
|
|
708
|
|
Transaction
costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
226
|
|
|
226
|
|
Adjusted
EBITDA
|
|
19,156
|
|
|
7,931
|
|
|
(3,965)
|
|
|
9,801
|
|
|
(16,806)
|
|
|
16,117
|
|
(1) Cost of sales
non-cash component is comprised of depreciation expense
|
|
|
|
OPERATING
SEGMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($000s)
|
Liquor
Retail
|
|
Cannabis
Retail
|
|
Cannabis
Operations
|
|
Investments
|
|
Corporate
|
|
Total
|
|
Three months ended
September 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
|
10,736
|
|
|
(84,848)
|
|
|
(5,686)
|
|
|
10,179
|
|
|
(29,225)
|
|
|
(98,844)
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
costs
|
|
2,570
|
|
|
1,142
|
|
|
13
|
|
|
4,684
|
|
|
—
|
|
|
8,409
|
|
Change in estimate of
fair value of derivative
warrants
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,500
|
|
|
8,500
|
|
Depreciation and
amortization
|
|
407
|
|
|
2,076
|
|
|
—
|
|
|
—
|
|
|
7,300
|
|
|
9,783
|
|
Income tax
recovery
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,927)
|
|
|
—
|
|
|
(6,927)
|
|
Change in fair value of
biological assets
|
|
—
|
|
|
—
|
|
|
1,899
|
|
|
—
|
|
|
—
|
|
|
1,899
|
|
Change in fair value
realized through inventory
|
|
—
|
|
|
—
|
|
|
1,506
|
|
|
—
|
|
|
—
|
|
|
1,506
|
|
Unrealized foreign
exchange (gain) loss
|
|
(2)
|
|
|
—
|
|
|
(73)
|
|
|
—
|
|
|
—
|
|
|
(75)
|
|
Unrealized (gain) loss
on marketable securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,513
|
|
|
—
|
|
|
5,513
|
|
Share-based
compensation
|
|
—
|
|
|
105
|
|
|
—
|
|
|
—
|
|
|
1,964
|
|
|
2,069
|
|
Asset
impairment
|
|
—
|
|
|
84,366
|
|
|
2,156
|
|
|
—
|
|
|
—
|
|
|
86,522
|
|
Loss (gain) on
disposition of PP&E
|
|
(4)
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6)
|
|
Cost of sales non-cash
component (1)
|
|
—
|
|
|
—
|
|
|
1,861
|
|
|
—
|
|
|
—
|
|
|
1,861
|
|
Inventory impairment
(recovery) and
obsolescence
|
|
—
|
|
|
—
|
|
|
(2,307)
|
|
|
—
|
|
|
—
|
|
|
(2,307)
|
|
Restructuring
costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Transaction
costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
417
|
|
|
417
|
|
Adjusted
EBITDA
|
|
13,707
|
|
|
2,839
|
|
|
(631)
|
|
|
13,449
|
|
|
(11,044)
|
|
|
18,320
|
|
(1) Cost of sales
non-cash component is comprised of depreciation expense
|
|
FREE CASH FLOW
Free cash flow is a non-IFRS financial
measure which the Company uses to evaluate its financial
performance. Free cash flow provides information which management
believes to be useful to investors, analysts and others in
understanding and evaluating the Company's ability to generate
positive cash flows as it removes cash used for non-operational
items. Free cash flow is defined as the total change in cash and
cash equivalents less cash used for common share repurchases,
dividends (if any), net cash used for acquisitions plus cash
provided by dispositions (if any).
|
|
Three months
ended
September 30
|
|
($000s)
|
|
|
2023
|
|
2022
|
|
Change in cash and cash
equivalents
|
|
|
|
16,528
|
|
|
(71,203)
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Repurchase of common
shares
|
|
|
|
—
|
|
|
4,096
|
|
Free cash
flow
|
|
|
|
16,528
|
|
|
(67,107)
|
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/sndl-reports-third-quarter-2023-financial-and-operational-results-and-achieves-positive-net-cash-from-operating-activities-and-free-cash-flow-301985520.html
SOURCE SNDL Inc.