Why Is SNDL Trading Higher Today?

SNDL Inc. SNDL shares are trading 8.85% higher at $2.83 per share during Monday’s pre-market session. The company released its financial results for the third quarter this morning, revealing record net revenue of CA$230.5 million ($173.3 million), compared to CA$223.7 million in the second quarter of 2022 and CA$14.4 million in the third quarter of 2021, representing a 3% increase sequentially and 1,501% increase year-over-year. The results for the third quarter of 2021 do not include the subsequent acquisition of Alcanna Inc., which closed on March 31, 2022.

Q3 2022 Financial Highlights

• Net loss was CA$98.8 million, compared to net income of CA$16.7 million for three months ended September 30, 2021.

• Adjusted EBITDA of CA$18.3 million for the third quarter of 2022, up 169% from the second quarter of 2022 and up 74% from the third quarter of 2021.

• Gross margin grew to CA$50.3 million in the third quarter of 2022, a record since SNDL's inception, up 17% from the second quarter of 2022 and up 2,723% from the third quarter of 2021.

• CA$988 million of cash, marketable securities, and long-term investments and no outstanding debt at September 30, 2022; and CA$278 million of unrestricted cash at November 11, 2022. SNDL has not raised cash through share offerings since June 2021.

Other Highlights

• Entered into an arrangement agreement to acquire The Valens Company Inc.VLNS

• Entered into a purchase agreement to acquire substantially all of the business of Superette Inc., a cannabis retail operator with six locations in Ontario.

• Subsequent to the quarter end, acquired all of the core Zenabis assets adding low-cost indoor cultivation with international export capabilities.

"As a result of our team's focus on operational execution and sustainable profitability, we delivered record revenue and cash flow from operations in the third quarter," stated Zach George, CEO of SNDL. "Our regulated products platform has shown resiliency in the face of stiff industry and macroeconomic headwinds, and our vertically integrated cannabis business is in the early stages of providing the scale and results that we believe are required for SNDL to be a strong member of a future oligopoly in Canada. Our integration work and cost control initiatives will continue into 2023 as we remain focused on opportunities related to the Alcanna assets and look to close the proposed acquisition of Valens in the first quarter of 2023.”

Valens Transaction

The special meeting of Valens shareholders to vote on the previously announced plan of arrangement between SNDL and Valens will be held November 29, 2022, at 10 a.m. (ET).

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