UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 6-K
REPORT OF FOREIGN PRIVATE
ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE
SECURITIES EXCHANGE ACT OF
1934
For the month of
August 2023
Commission File Number 001-39005
SNDL INC.
(Registrant’s name)
#300, 919 - 11 Avenue SW
Calgary, AB T2R 1P3
Tel.: (403) 948-5227
(Address of principal executive
offices)
Indicate by check mark whether the registrant files
or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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SUNDIAL GROWERS INC. |
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| Date:
August 14, 2023 |
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By: |
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/s/ James Keough |
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Name: |
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James Keough |
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Title: |
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Chief Financial Officer |
EXHIBIT
Exhibit 99.1
SNDL Reports Second Quarter 2023 Financial and
Operational Results
The Company achieves record
net revenue and gross margin results since its inception
CALGARY, AB, Aug. 14, 2023 /CNW/ - SNDL Inc.
(NASDAQ: SNDL) ("SNDL" or the "Company") reported its financial and operational results for the second
quarter ended June 30, 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
on its website, which can be found at https://sndl.com.
SECOND QUARTER 2023 FINANCIAL AND OPERATIONAL HIGHLIGHTS
| • | Net revenue for the second quarter of 2023 of $244.5 million,
compared to $223.7 million in the corresponding period of 2022, an increase of 9.3%. This marks an all-time high for the Company, underscoring
SNDL's strategic initiatives and operational enhancements, which have led to financial and operational improvements. |
| • | Liquor Retail: Net revenue of $151.7 million for the
second quarter of 2023, an increase of 2.1% compared to the prior year. |
| • | Cannabis Retail: Net revenue of $71.9 million for
the second quarter of 2023, an increase of 13.2% compared to the prior year. |
| • | Cannabis Operations: Net revenue of $20.9 million
for the second quarter of 2023, an increase of 81% compared to the prior year. |
| • | Record gross margin of $51.9 million in the second quarter
of 2023, compared to $43.1 million in the second quarter of 2022. The 21% increase in gross margin year-over-year is driven by cost-saving
measures, supply chain efficiencies, improved pricing strategies, economies of scale, and product mix optimization. |
| • | Net loss of $33.2 million for the second quarter of 2023,
compared to a $74.0 million net loss in the second quarter of 2022. The loss was driven by one-time events, including the Valens Company
("Valens") integration and related costs, as well as by realized losses from equity investments. |
| • | Adjusted EBITDA of $2.2 million for the second quarter of
2023, compared to a loss of $25.9 million from the second quarter of 2022, reflecting the improvement in the financial performance of
SNDL's operating segments along with synergies realized through the Company's vertical integration strategies. |
| • | During the second quarter of 2023, a total of $8.8 million
cash was used in operating activities, compared to $17.9 million in the same quarter of last year, an improvement of 51%, showcasing the
Company's enhanced operational efficiency. |
| • | SNDL currently has five credit exposures in the SunStream
portfolio following the monetization of a credit exposure in July 2023. The current portfolio includes one credit under a court-supervised
receivership process and another in active restructuring negotiations. |
| • | $754 million of unrestricted cash, marketable securities and investments, and no outstanding debt at June 30, 2023, resulting in a net book value per share of $4.86; and $182.6 million of unrestricted cash at August 11, 2023. SNDL has not raised cash through share offerings since June 2021. |
"Our incredible two-year journey from less than
$10 million of net revenue and negative gross margin in Q2 2021 to our current trajectory of reaching an expected $1 billion in annual
revenue and continued gross margin growth in 2023 is a testament to our team's commitment to becoming a leader in Canadian regulated products,"
said Zach George, Chief Executive Officer of SNDL. "We have taken decisive steps to simplify operations throughout our business segments
with a sharp focus on the goal of reaching profitability in 2024. In Liquor Retail, we are capitalizing on margin accretive product opportunities
and modest expansion. In Cannabis Retail, our data licensing program is driving improved profitability and supplier relationships, and
we look to enhance consumer engagement through new loyalty capabilities. In our Cannabis Operations, we have taken aggressive cost-cutting
measures, streamlined manufacturing operations, and reduced reliance on high-cost cultivation. During this process, we have maintained
cannabis sales momentum and are actively exploring B2B and international opportunities. We have also simplified our investment portfolio
by divesting from securities, prioritizing the opportunity to return capital to our shareholders."
"Over the last two years, SNDL has grown both
organically and by acquisition while our leaders have implemented bold changes throughout the business," added George. "We believe
that we now have the requisite scale and platform optionality to create sustainable shareholder value. We expect our Canadian retail network
to continue to grow at a modest pace while our internal focus on optimization is in the early stages of producing tangible results. We
look forward to updating investors on the closing of the Nova transaction, and events related to our SunStream portfolio as we focus on
delivering improved performance in the second half of 2023."
SECOND QUARTER 2023 KEY FINANCIAL METRICS
| OPERATING SEGMENTS |
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| ($000s) |
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Liquor
Retail |
Cannabis
Retail |
Cannabis
Operations |
Investments |
Corporate |
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Total |
| Three months ended June 30, 2023 |
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| Net revenue |
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151,690 |
71,881 |
20,940 |
— |
— |
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244,511 |
| Gross margin |
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35,360 |
17,780 |
(1,207) |
— |
— |
|
51,933 |
| Earnings (loss) from Operations |
|
8,207 |
2,340 |
(14,134) |
(1,660) |
(24,242) |
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(29,489) |
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| Three months ended June 30, 2022 |
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| Net revenue |
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148,637 |
63,494 |
11,564 |
— |
— |
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223,695 |
| Gross margin |
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33,528 |
13,897 |
(4,346) |
— |
— |
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43,079 |
| Earnings (loss) from Operations |
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11,288 |
1,476 |
(8,293) |
(69,973) |
(15,914) |
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(81,416) |
SECOND 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 $151.7 million for the second quarter of 2023, an increase of 2.1% compared to the second quarter of 2022.
- Same stores sales increased 1.7% across all liquor banners, with
Liquor Depot and Ace Liquor seeing 5.6% and 2.8% in same-store sale increases, respectively.
- Gross margin in the Liquor Retail segment was $35.4 million, or
23.3% of sales in the second quarter of 2023, compared to $33.5 million, or 22.6% of sales, in the second quarter of 2022. The 5.5% gross
margin growth is mainly driven by procurement productivity and product mix management initiatives.
- Preferred label sales, which are a substantial driver of gross
margin growth, increased 28% compared to the second quarter of 2022 and 22% compared to the first quarter of 2023.
- SNDL's liquor banners' market share in Alberta was approximately
18% in the second quarter of 2023, with Wine and Beyond representing approximately 3% from only 11 stores in the province, showcasing
the continued success of the banner. Sales at the Wine and Beyond in Kelowna, British Columbia, continue to increase year-over-year, further
validating the banner's expansion strategy into Saskatchewan in 2024.
- SNDL expects to launch an e-commerce platform for its Liquor Retail
banner, Wine and Beyond, which presents significant opportunities to drive accretive revenues. It is expected to provide the Company with
a scalable and adaptable platform to expand its market presence, increase customer engagement, and capitalize on the growing trend of
online shopping for liquor products. The launch date is scheduled for the third quarter of 2023.
- As of August 11, 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, SNDL is Canada's largest
private-sector cannabis retailer, operating 196 locations under its four retail banners: Value Buds, Spiritleaf, Superette, and Firesale
Cannabis. SNDL's Cannabis Retail strategy is based on several factors, including the quality of its store locations, the range of products
it offers, 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.
On July 25, 2023, SNDL and Nova announced that while
all other provincial approvals have been received, the continued review by one provincial regulator has necessitated the extension of
the outside date for the closing of the previously-announced strategic partnership (the "Transaction"). SNDL and Nova
anticipate that the Transaction will close on or before August 25, 2023, subject to the receipt of regulatory approval and the amendment
to certain terms of the Transaction that are mutually satisfactory to SNDL and Nova.
- Net revenue from the Cannabis Retail segment for the second quarter
of 2023 was $71.9 million, compared to $63.5 million in the second quarter of 2022, a 13.2% increase year-over-year and a record for the
segment since SNDL diversified into Cannabis Retail.
- Same stores sales for the second quarter of 2023 increased 3.3%
across all Cannabis Retail banners, compared to the same period in the year prior. Nova's same store sales increased 38% for the period.
- Gross margin of $17.8 million, or 24.7% of sales, up by close
to 28% compared to the second quarter of 2022, showcasing the Company's efforts in continued margin expansion initiatives.
- In the first half of 2023, SNDL took proactive steps to optimize
its proprietary data licensing program for the Cannabis Retail segment, aiming to create mutually beneficial results for its retail operations
and licensed producer partners. This margin accretive opportunity has resulted in revenue for the second quarter of 2023 of $2.7 million,
compared to $1.3 million in the second quarter of 2022, and represents growth of 80% compared to the first quarter of 2023. By leveraging
the volume of Nova's retail locations and the Company's access to high-quality analytics, it expects to deliver continued successful outcomes
for its partners and drive top-line revenue and margin growth.
- The Company partnered with Nova for Value Buds' private label
products, and sales of Value Buds products represented approximately 6.6% of total 28-gram sales and 18.0% of 14-gram sales in Value Buds
locations nationwide.
- As of August 11, 2023, the Spiritleaf store count is 98 (21 corporate
stores and 77 franchise stores), the Value Buds store count is 91 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, premium cultivation and
manufacturing facilities, the Cannabis Operations segment is a key enabler of SNDL's vertical integration strategy.
- Net revenue from the Cannabis Operations segment for the second
quarter of 2023 was $20.9 million, an 81% increase compared to the second quarter of 2022, and a 9% increase compared to the first quarter
of 2023.
- Gross margin of negative $1.2 million in the second quarter of
2023, compared to negative $4.3 million in the second quarter of 2022, and negative $9.5 million in the first quarter of 2023. The improved
results showcase the Company's focus on bolstering margins through increased product distribution and streamlining the Cannabis Operations
segment.
- In the first half of 2023, SNDL implemented aggressive cost-cutting
measures and improved manufacturing efficiency. A key initiative involved right-sizing cannabis cultivation in Olds, Alberta to focus
on producing premium products.
- Subsequently, SNDL successfully centralized most manufacturing
activities and consolidated processing, labelling, and excising at its Kelowna facilities. This move optimizes resource allocation and
streamlines operations to significantly reduce costs.
- Following the Valens acquisition, the Company underwent a meticulous
evaluation of its portfolio, focusing on higher-margin brands and products. SNDL's vertical integration capabilities facilitate informed
and data-driven product portfolio decisions. This strategic alignment enables SNDL to effectively enhance overall market positioning and
product offerings.
- Market share in owned retail continues to scale through the Company's
vertical integration strategy. Driving increased owned retail share is a key focus for the Company and a meaningful contributor to overall
margin and profit growth. As a supplement to this strategy, SNDL partnered with ColdHaus Direct ("ColdHaus") in May of
2023 to manage the Company's in-market sales and logistics execution for its branded cannabis products.
Investments
- As of the end of the second quarter of 2023, the Company had deployed
capital on a portfolio of cannabis-related investments with a carrying value of $569.0 million, including $532.8 million through the SunStream
Bancorp Inc. joint venture ("SunStream").
- For the second quarter of 2023, the investment portfolio generated
a net loss of $1.5 million, mainly driven by interest and fee revenue of $3.2 million, and an investment loss of $3.8 million on marketable
securities. To streamline its business operations, SunStream made the strategic decision to divest certain cannabis investments, and as
part of this process, the Company realized losses. The realized loss on marketable securities and the reversal of the unrealized loss
on marketable securities was due to the disposition of shares in cannabis-related investments.
- At the end of the second quarter of 2023, SunStream's credit portfolio
comprised six investments: Jushi Holdings, SKYMINT Brands ("Skymint"), Ascend Wellness Holdings, Parallel Inc. ("Parallel"),
Columbia Care Inc., and AFC Gamma, Inc. The AFC Gamma, Inc. investment was monetized above carrying value subsequent to the end of the
second quarter of 2023.
- SunStream is actively implementing a stock-exchange compliant
structure to facilitate participation in US cannabis companies. In connection, SunStream is exploring the restructuring and transfer of
certain credit interests in Skymint and Parallel to a new US holding entity ("Sunstream USA"). The SunStream USA structure
is expected to allow SNDL to participate in SunStream assets while complying with all US federal and state laws. This SunStream USA structure
is anticipated to include the issuance of securities upon the equitization of specific credit instruments held by SunStream. In turn,
SNDL would hold non-voting shares in SunStream USA, with the right to exchange such shares into common shares in the future, if certain
conditions are met. As such, the Sunstream USA structure is expected to allow SNDL to participate in SunStream assets through a revamped
capital structure. The proposed Sunstream USA structure will be reviewed by Nasdaq, as the relevant listing authority for SNDL, prior
to its execution. SNDL anticipates providing further details on progress with the Skymint and Parallel restructuring initiatives in the
third quarter of 2023.
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Three months ended
June 30 |
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Six months ended
June 30 |
| ($000s) |
2023 |
2022 |
|
2023 |
2022 |
| Interest and fee revenue |
|
|
|
|
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| Interest revenue from investments at amortized cost |
922 |
818 |
|
1,928 |
1,813 |
Interest and fee revenue from investments at Fair
Value Through Profit or Loss |
250 |
543 |
|
874 |
2,659 |
| Interest revenue from cash |
2,014 |
1,216 |
|
4,595 |
1,966 |
| Total interest and fee revenue |
3,186 |
2,577 |
|
7,397 |
6,438 |
| Investment revenue (loss) |
|
|
|
|
|
| Realized (losses) gains |
(48,988) |
265 |
|
(92,792) |
389 |
| Unrealized gains (losses) |
45,182 |
(35,338) |
|
84,100 |
(53,172) |
| Total investment revenue/(loss) |
(3,806) |
(35,073) |
|
(8,692) |
(52,783) |
| |
|
|
|
|
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| Share of profit (loss) of equity-accounted investees |
(936) |
(37,978) |
|
8,580 |
(33,887) |
| Total investment activities |
(1,556) |
(70,474) |
|
7,285 |
(80,232) |
Liquidity Position
- As at June 30, 2023, and August 11, 2023, the Company had unrestricted
cash balances of $185.5 million and $182.6 million, respectively, and a total of approximately 260 million shares outstanding as at August
11, 2023.
- The Company's share repurchase program continues to be available
to lower the outstanding share float and increase the earnings per share for shareholders. SNDL will continue to assess opportunities
to utilize the program to the extent that management believes SNDL's shares are undervalued. For the three months ended June 30, 2023,
the Company did not purchase or cancel common shares.
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
The Company has achieved $18.2 million in annualized
cost savings since the Valens acquisition in January 2023. These initiatives surpass the Company's original $10 million cost savings target.
Most of the cost savings have been realized through SG&A, public company costs, as well as supply chain consolidation and operational
efficiency. By 2024, run-rate synergies are expected to exceed $30 million annually, and proceeds from asset sales are expected to total
$9 million.
The integration work has allowed the Company to undertake
a comprehensive organizational design update, restructuring certain departments to achieve scale, support growth, and reinforce key initiatives.
The organizational design work supports a more efficient structuring of SNDL's shared service teams to realize additional cost savings
and enable targeted focus on key initiatives, such as loyalty, e-commerce, increasing market share within owned retail, and manufacturing,
cultivation and processing improvements.
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.
SNDL's strategy is predicated on the below key
objectives:
- Generate positive cash flow from all operating segments by 2024.
- Maximize the profitability and sustainability of SNDL's Liquor
Retail segment.
- Establish a dominant multi-banner cannabis retail platform with
a national presence.
- Streamline SNDL's cannabis production and drive profitable market
share.
This press release is intended to be read in conjunction
with the Company's Financial Statements and Notes for the period ended June 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.sedar.com 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, August 14, 2023.
WEBCAST ACCESS
To access the live webcast of the call, please visit
the following link:
https://services.choruscall.ca/links/sndl2023q2.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: 0323#
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, demand for the Company's products, the Company's
ability to achieve profitability or its goal of sustainable, positive gross margin and positive free cash flow, the development
of the legal cannabis industry, performance of the Company's investments, including through the SunStream joint venture, any potential
forms of shareholder value creation, the ability to realize expected cost savings and the expansion of product offerings, brand and market
share and retail networks, and the closing, integration and realization of expected benefits of, as applicable, the acquisition of The
Valens Company, Zenabis and Superette. 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)
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Three months ended
June 30 |
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Six months ended
June 30 |
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|
2023 |
|
2022 |
|
2023 |
|
2022 |
| Gross revenue |
|
257,425 |
|
227,557 |
|
470,324 |
|
247,684 |
| Excise taxes |
|
12,914 |
|
3,862 |
|
23,361 |
|
6,392 |
| Net revenue |
|
244,511 |
|
223,695 |
|
446,963 |
|
241,292 |
| Cost of sales |
|
188,922 |
|
174,291 |
|
347,071 |
|
188,617 |
| Inventory impairment and obsolescence |
|
4,291 |
|
3,871 |
|
13,468 |
|
5,852 |
| Gross margin before fair value adjustments |
|
51,298 |
|
45,533 |
|
86,424 |
|
46,823 |
| Change in fair value of biological assets |
|
(1,413) |
|
(388) |
|
(4,948) |
|
3,302 |
| Change in fair value realized through inventory |
|
2,048 |
|
(2,066) |
|
2,998 |
|
(3,627) |
| Gross margin |
|
51,933 |
|
43,079 |
|
84,474 |
|
46,498 |
| |
|
|
|
|
|
|
|
|
| Interest and fee revenue |
|
3,421 |
|
2,577 |
|
7,632 |
|
6,438 |
| Investment loss |
|
(4,020) |
|
(35,073) |
|
(9,189) |
|
(52,783) |
| Share of profit (loss) of equity-accounted investees |
|
(936) |
|
(37,978) |
|
8,580 |
|
(33,887) |
| |
|
|
|
|
|
|
|
|
| General and administrative |
|
52,727 |
|
40,293 |
|
101,300 |
|
50,975 |
| Sales and marketing |
|
4,104 |
|
3,132 |
|
7,490 |
|
4,243 |
| Research and development |
|
20 |
|
390 |
|
160 |
|
485 |
| Depreciation and amortization |
|
13,443 |
|
8,800 |
|
29,911 |
|
9,539 |
| Share-based compensation |
|
3,893 |
|
438 |
|
6,102 |
|
4,642 |
| Restructuring costs |
|
4,042 |
|
(882) |
|
5,578 |
|
(882) |
| Asset impairment |
|
1,658 |
|
1,850 |
|
2,465 |
|
1,850 |
| Loss from operations |
|
(29,489) |
|
(81,416) |
|
(61,509) |
|
(104,586) |
| |
|
|
|
|
|
|
|
|
| Transaction costs |
|
(173) |
|
7,938 |
|
(2,213) |
|
1,457 |
| Finance costs, net |
|
(2,458) |
|
(26,505) |
|
(7,631) |
|
(26,444) |
| Change in estimate of fair value of derivative warrants |
|
2,240 |
|
23,656 |
|
7,042 |
|
15,356 |
| Foreign exchange gain (loss) |
|
(31) |
|
161 |
|
(194) |
|
11 |
| Gain (loss) on disposition of assets |
|
(77) |
|
402 |
|
(261) |
|
402 |
| Loss before income tax |
|
(29,988) |
|
(75,764) |
|
(64,766) |
|
(113,804) |
| Income tax recovery |
|
— |
|
1,791 |
|
— |
|
1,791 |
| Net loss from continuing operations |
|
(29,988) |
|
(73,973) |
|
(64,766) |
|
(112,013) |
| Net loss from discontinued operations |
|
(3,170) |
|
— |
|
(4,535) |
|
— |
| Net loss |
|
(33,158) |
|
(73,973) |
|
(69,301) |
|
(112,013) |
| |
|
|
|
|
|
|
|
|
Equity-accounted investees - share of other
comprehensive income (loss) |
|
(11,621) |
|
12,727 |
|
(12,006) |
|
5,994 |
| Gain on translation of foreign operations |
|
(5) |
|
— |
|
— |
|
— |
| Comprehensive loss |
|
(44,784) |
|
(61,246) |
|
(81,307) |
|
(106,019) |
| |
|
|
|
|
|
|
|
|
| Net loss from continuing operations attributable to: |
|
|
|
|
|
|
|
|
| Owners of the Company |
|
(29,350) |
|
(73,301) |
|
(63,553) |
|
(111,205) |
| Non-controlling interest |
|
(638) |
|
(672) |
|
(1,213) |
|
(808) |
| |
|
(29,988) |
|
(73,973) |
|
(64,766) |
|
(112,013) |
| Net income (loss) attributable to: |
|
|
|
|
|
|
|
|
| Owners of the Company |
|
(32,520) |
|
(73,301) |
|
(68,088) |
|
(111,205) |
| Non-controlling interest |
|
(638) |
|
(672) |
|
(1,213) |
|
(808) |
| |
|
(33,158) |
|
(73,973) |
|
(69,301) |
|
(112,013) |
| Comprehensive income (loss) attributable to: |
|
|
|
|
|
|
|
|
| Owners of the Company |
|
(44,146) |
|
(60,574) |
|
(80,094) |
|
(105,211) |
| Non-controlling interest |
|
(638) |
|
(672) |
|
(1,213) |
|
(808) |
| |
|
(44,784) |
|
(61,246) |
|
(81,307) |
|
(106,019) |
Condensed Consolidated Interim Statement of Financial
Position
(Unaudited - expressed in thousands of Canadian dollars)
| As at |
|
June 30, 2023 |
|
December 31, 2022 |
| |
|
|
|
|
| Assets |
|
|
|
|
| Current assets |
|
|
|
|
| Cash and cash equivalents |
|
185,455 |
|
279,586 |
| Restricted cash |
|
19,456 |
|
19,338 |
| Marketable securities |
|
3,535 |
|
21,926 |
| Accounts receivable |
|
32,661 |
|
22,636 |
| Biological assets |
|
1,330 |
|
3,477 |
| Inventory |
|
160,407 |
|
127,782 |
| Prepaid expenses and deposits |
|
21,792 |
|
10,110 |
| Investments |
|
23,038 |
|
6,552 |
| Assets held for sale |
|
8,391 |
|
6,375 |
| Net investment in subleases |
|
3,656 |
|
3,701 |
| |
|
459,721 |
|
501,483 |
| Non-current assets |
|
|
|
|
| Long-term deposits |
|
9,766 |
|
8,584 |
| Right of use assets |
|
136,947 |
|
134,154 |
| Property, plant and equipment |
|
181,841 |
|
143,409 |
| Net investment in subleases |
|
18,918 |
|
19,618 |
| Intangible assets |
|
74,446 |
|
74,885 |
| Investments |
|
9,638 |
|
90,702 |
| Equity-accounted investees |
|
532,818 |
|
519,255 |
| Goodwill |
|
147,680 |
|
67,260 |
| Total assets |
|
1,571,775 |
|
1,559,350 |
| |
|
|
|
|
| Liabilities |
|
|
|
|
| Current liabilities |
|
|
|
|
| Accounts payable and accrued liabilities |
|
62,557 |
|
48,153 |
| Lease liabilities |
|
35,982 |
|
30,206 |
| Derivative warrants |
|
3,960 |
|
11,002 |
| |
|
102,499 |
|
89,361 |
| Non-current liabilities |
|
|
|
|
| Lease liabilities |
|
136,136 |
|
139,625 |
| Other liabilities |
|
5,252 |
|
2,709 |
| Total liabilities |
|
243,887 |
|
231,695 |
| |
|
|
|
|
| Shareholders' equity |
|
|
|
|
| Share capital |
|
2,365,845 |
|
2,292,810 |
| Warrants |
|
2,260 |
|
2,260 |
| Contributed surplus |
|
73,636 |
|
68,961 |
| Contingent consideration |
|
2,279 |
|
2,279 |
| Accumulated deficit |
|
(1,156,279) |
|
(1,091,999) |
| Accumulated other comprehensive income |
|
20,182 |
|
32,188 |
| Total shareholders' equity |
|
1,307,923 |
|
1,306,499 |
| Non-controlling interest |
|
19,965 |
|
21,156 |
| Total liabilities and shareholders' equity |
|
1,571,775 |
|
1,559,350 |
Condensed Consolidated Interim Statement of Cash
Flows
(Unaudited - expressed in thousands of Canadian dollars)
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
| |
2023 |
2022 |
|
2023 |
|
2022 |
| Cash provided by (used in): |
|
|
|
|
|
|
| Operating activities |
|
|
|
|
|
|
| Net loss for the period |
(33,158) |
(73,973) |
|
(69,301) |
|
(112,013) |
| Adjustments for: |
|
|
|
|
|
|
| Income tax recovery |
— |
(1,791) |
|
— |
|
(1,791) |
| Interest and fee revenue |
(3,421) |
(2,577) |
|
(7,632) |
|
(6,438) |
| Change in fair value of biological assets |
1,413 |
388 |
|
4,948 |
|
(3,302) |
| Share-based compensation |
3,893 |
438 |
|
6,102 |
|
4,642 |
| Depreciation and amortization |
14,674 |
10,538 |
|
32,933 |
|
12,977 |
| Loss (gain) on disposition of assets |
77 |
(402) |
|
261 |
|
(402) |
| Inventory obsolescence |
4,291 |
3,871 |
|
13,468 |
|
5,852 |
| Finance costs |
2,458 |
26,505 |
|
7,631 |
|
26,444 |
| Change in estimate of fair value of derivative warrants |
(2,240) |
(23,656) |
|
(7,042) |
|
(15,356) |
| Unrealized foreign exchange loss (gain) |
(72) |
19 |
|
(24) |
|
35 |
| Asset impairment |
1,658 |
1,850 |
|
2,465 |
|
1,850 |
| Share of (profit) loss of equity-accounted investees |
936 |
37,978 |
|
(8,580) |
|
33,887 |
| Loss on settlement of marketable securities |
48,988 |
— |
|
92,792 |
|
— |
| Unrealized (gain) loss on marketable securities |
(44,968) |
35,338 |
|
(83,603) |
|
53,172 |
| Additions to marketable securities |
— |
(2,899) |
|
— |
|
(3,500) |
| Proceeds from settlement of marketable securities |
3,437 |
— |
|
3,463 |
|
— |
| Income distributions from equity-accounted investees |
— |
— |
|
— |
|
685 |
| Interest received |
3,217 |
2,084 |
|
6,920 |
|
5,799 |
| Change in non-cash working capital |
(14,193) |
(31,584) |
|
(56,755) |
|
(46,434) |
| Net cash used in operating activities from continuing operations |
(13,010) |
(17,873) |
|
(61,954) |
|
(43,893) |
| Net cash provided by operating activities from discontinued operations |
4,167 |
— |
|
4,314 |
|
— |
| Net cash used in operating activities |
(8,843) |
(17,873) |
|
(57,640) |
|
(43,893) |
| Investing activities |
|
|
|
|
|
|
| Additions to property, plant and equipment |
(1,247) |
(3,554) |
|
(2,641) |
|
(4,535) |
| Additions to intangible assets |
(39) |
1 |
|
(56) |
|
(55) |
| Additions to investments |
125 |
337 |
|
(702) |
|
(14,094) |
| Additions to equity-accounted investees |
(9,443) |
(36,880) |
|
(16,989) |
|
(94,200) |
| Proceeds from disposal of property, plant and equipment |
55 |
4,000 |
|
137 |
|
4,000 |
| Acquisitions, net of cash acquired |
— |
— |
|
3,695 |
|
(31,149) |
| Change in non-cash working capital |
1,586 |
294 |
|
1,127 |
|
259 |
| Net cash used in investing activities from continuing operations |
(8,963) |
(35,802) |
|
(15,429) |
|
(139,774) |
| Net cash used in investing activities from discontinued operations |
— |
— |
|
— |
|
— |
| Net cash used in investing activities |
(8,963) |
(35,802) |
|
(15,429) |
|
(139,774) |
| Financing activities |
|
|
|
|
|
|
| Change in restricted cash |
(76) |
2,541 |
|
(118) |
|
7,607 |
| Payments on lease liabilities, net |
(10,116) |
(9,177) |
|
(19,607) |
|
(9,624) |
| Repurchase of common shares, net of costs |
— |
(2,053) |
|
(1,536) |
|
(2,053) |
| Repayment of long-term debt |
— |
— |
|
— |
|
(10,000) |
| Change in non-cash working capital |
200 |
2,170 |
|
199 |
|
2,116 |
| Net cash used in financing activities from continuing operations |
(9,992) |
(6,519) |
|
(21,062) |
|
(11,954) |
| Net cash used in financing activities from discontinued operations |
— |
— |
|
— |
|
— |
| Net cash used in financing activities |
(9,992) |
(6,519) |
|
(21,062) |
|
(11,954) |
| Change in cash and cash equivalents |
(27,798) |
(60,194) |
|
(94,131) |
|
(195,621) |
| Cash and cash equivalents, beginning of period |
213,253 |
422,824 |
|
279,586 |
|
558,251 |
| Cash and cash equivalents, end of period |
185,455 |
362,630 |
|
185,455 |
|
362,630 |
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, depreciation and amortization, accretion expense, income
tax recovery and excluding changes in fair value of biological assets, changes in fair value realized through inventory, unrealized foreign
exchange gains or losses, unrealized gains or losses on marketable securities, changes in fair value of derivative warrants, 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 June 30, 2023 |
|
|
|
|
|
|
| Net earnings (loss) |
6,714 |
1,221 |
(13,831) |
(1,917) |
(22,175) |
(29,988) |
| Adjustments |
|
|
|
|
|
|
| Finance costs |
1,490 |
1,111 |
(400) |
257 |
— |
2,458 |
Change in estimate of fair value of
derivative warrants |
— |
— |
— |
— |
(2,240) |
(2,240) |
| Depreciation and amortization |
8,161 |
3,361 |
650 |
— |
1,271 |
13,443 |
| Change in fair value of biological assets |
— |
— |
1,413 |
— |
— |
1,413 |
Change in fair value realized through
inventory |
— |
— |
(2,048) |
— |
— |
(2,048) |
| Unrealized foreign exchange (gain) loss |
(2) |
— |
(70) |
— |
— |
(72) |
Unrealized (gain) loss on marketable
securities |
— |
— |
214 |
(45,182) |
— |
(44,968) |
| Realized loss on marketable securities |
— |
— |
— |
49,093 |
— |
49,093 |
| Share-based compensation |
— |
15 |
— |
— |
3,878 |
3,893 |
| Asset impairment |
— |
458 |
1,200 |
— |
— |
1,658 |
| Loss (gain) on disposition of PP&E |
— |
5 |
72 |
— |
— |
77 |
| Cost of sales non-cash component (1) |
— |
— |
969 |
— |
— |
969 |
Inventory impairment (recovery) and
obsolescence |
— |
— |
4,291 |
— |
— |
4,291 |
| Restructuring costs |
— |
— |
1,282 |
— |
2,760 |
4,042 |
| Transaction costs |
— |
— |
— |
— |
173 |
173 |
| Adjusted EBITDA |
16,363 |
6,171 |
(6,258) |
2,251 |
(16,333) |
2,194 |
| (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 June 30, 2022 |
|
|
|
|
|
|
| Net earnings (loss) |
8,379 |
447 |
(8,036) |
(90,487) |
15,724 |
(73,973) |
| Adjustments |
|
|
|
|
|
|
| Finance costs |
2,874 |
1,070 |
195 |
22,305 |
61 |
26,505 |
Change in estimate of fair value of
derivative warrants |
— |
(56) |
— |
— |
(23,600) |
(23,656) |
| Depreciation and amortization |
5,315 |
3,370 |
— |
— |
115 |
8,800 |
| Income tax recovery |
— |
— |
— |
(1,791) |
— |
(1,791) |
| Change in fair value of biological assets |
— |
— |
388 |
— |
— |
388 |
Change in fair value realized through
inventory |
— |
— |
2,066 |
— |
— |
2,066 |
| Unrealized foreign exchange (gain) loss |
9 |
— |
10 |
— |
— |
19 |
Unrealized (gain) loss on marketable
securities |
— |
— |
— |
35,338 |
— |
35,338 |
| Share-based compensation |
— |
(180) |
— |
— |
618 |
438 |
| Asset impairment |
— |
— |
1,850 |
— |
— |
1,850 |
| Loss (gain) on disposition of PP&E |
35 |
15 |
(452) |
— |
— |
(402) |
| Cost of sales non-cash component (1) |
— |
— |
3,440 |
— |
— |
3,440 |
Inventory impairment (recovery) and
obsolescence |
— |
— |
3,871 |
— |
— |
3,871 |
| Restructuring costs |
— |
— |
— |
(882) |
— |
(882) |
| Transaction costs |
— |
— |
— |
— |
(7,938) |
(7,938) |
| Adjusted EBITDA |
16,612 |
4,666 |
3,332 |
(35,517) |
(15,020) |
(25,927) |
| (1) Cost of sales non-cash component is comprised of depreciation expense |
View original content to download multimedia:https://www.prnewswire.com/news-releases/sndl-reports-second-quarter-2023-financial-and-operational-results-301899495.html
SOURCE Sundial Growers Inc.
View original content to download multimedia: http://www.newswire.ca/en/releases/archive/August2023/14/c9918.html
%CIK: 0001766600
For further information: Sophie Pilon, SNDL Inc., O: 1.587.327.2017,
E: investors@sndl.com
CO: Sundial Growers Inc.
CNW 07:00e 14-AUG-23
Sundial Growers (NASDAQ:SNDL)
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