M&A Strategy Pays Off: SNDL Q2 Revenue Soars 2344% YoY

SNDL Inc. SNDL released its financial and operational results for the second quarter ended June 30, 2022, revealing record net revenue of CA$223.7 million ($173.3 million), compared to CA$9.2 million in the second quarter of 2021, representing a 2,344% increase. All results for the second quarter of 2021 exclude the subsequent acquisitions of Inner Spirit Holdings and Alcanna Inc., which closed on July 20, 2021, and March 31, 2022, respectively.

Q2 2022 Financial Highlights

Gross margin grew to CA$43.1 million, a record since its inception, up 1,627% from its second quarter of 2021 loss of CA$2.8 million.
Net loss of CA$74.0 million for the second quarter of 2022, compared to a CA$52.3 million net loss in the second quarter of 2021, a 41% increase.
Adjusted EBITDA loss of CA$25.9 million for the second quarter of 2022, including an adjusted EBITDA loss of CA$35.5 million from the investments segment, compared to adjusted EBITDA loss of CA$0.2 million in the second quarter of 2021.
CA$900 million of cash, marketable securities, and long-term investments and no outstanding debt at June 30, 2022; CA$334.9 million of unrestricted cash at August 11, 2022.

SNDL Rebrand

Following its annual and special meeting of shareholders on July 25, 2022, Sundial Growers Inc. to SNDL Inc. In light of the evolution of SNDL's business over the past two years, management feels that this change more appropriately reflects the operating model and strategy of the company.

Liquidity Position

Effective July 25, 2022, the company's common shares were consolidated on a one share for each ten shares outstanding basis pursuant to shareholder approval at the company's annual and special meeting of shareholders.
As at June 30, 2022, and August 11, 2022, the company had an unrestricted cash balance of CA$363 million and CA$334.9 million, respectively, and a total of 238 million post-consolidation shares outstanding as at August 11, 2022.
For the six months ended June 30, 2022, the company purchased and cancelled 0.5 million common shares at a weighted average price of CA$3.86 ($2.98) per common share for a total cost of CA$2.0 million. SNDL has CA$98 million remaining under its current buyback program allowing the company to repurchase from time to time at prevailing market prices, enabling SNDL to opportunistically return value to shareholders. The share repurchase program expires on November 19, 2022.

Alcanna Integration Update

Through the acquisition of Alcanna, SNDL's retail footprint is expected to facilitate customer relationships and capture additional economies of scale.
By gaining insight into thousands of daily shopper transactions at over 350 retail stores, SNDL has begun to optimize offerings, pricing, and promotions in both liquor and cannabis locations to better serve customers.
Additionally, SNDL expects to continue accessing profitable opportunities and will launch a Value Buds private label flower product. SNDL will continue to develop various offerings and targeted merchandising strategies for its entire retail portfolio.
Since the closing of the Alcanna transaction, the company is on target to deliver CA$6.4 million in cost synergies. These synergies are due to consolidation in key areas such as retail operations, integrated supply and demand planning, and corporate expenses.
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