SNDL's Acquisitions Payoff, Q1 Revenue Skyrockets 1050% YoY

SNDL Inc. SNDL released its financial and operational results for the first quarter ended March 31, 2023. The results for the first quarter of 2023 include the operating results of The Valens Company Inc. subsequent to the acquisition on January 17, 2023, and the results for the first quarter of 2022 include one day of Alcanna Inc. operations subsequent to the acquisition closing on March 31, 2022.

Q1 2023 Financial Highlights

• Net revenue for the first quarter of 2023 of CA$202.5 million, ($150 million) compared to CA$240.4 million in the fourth quarter of 2022, and CA$17.6 million in the first quarter of 2022, representing a 1,050% increase year-over-year. The increase over the comparative quarter in the prior year is due to the acquisitions of Alcanna, Valens and Zenabis.

• Net loss of CA$36.1 million for the first quarter of 2023, compared to a CA$161.6 million net loss in the fourth quarter of 2022, and a CA$38.0 million net loss in the first quarter of 2022.

• Adjusted EBITDA of CA$7.4 million for the first quarter of 2023, compared to a loss of CA$7.5 million in the fourth quarter of 2022, and a loss of CA$0.7 million from the first quarter of 2022.

• Gross margin was CA$32.5 million in the first quarter of 2023, compared to CA$43.6 million in the fourth quarter of 2022 and up 856% from the first quarter of 2022.

• CA$793 million of unrestricted cash, marketable securities and long-term investments, and no outstanding debt at March 31, 2023, resulting in a net book value per share of CA$5.26; and CA$189.8 million of unrestricted cash at May 12, 2023. SNDL has not raised cash through share offerings since June 2021.

Integration Initiatives

The company reported that the integration initiatives and cost synergies are progressing well, with more than CA$13 million in annual cost savings made in just five months since the Valens acquisition. SNDL has also identified over CA$5 million in additional annual cost savings that are expected to be realized in 2023. These initiatives place the company on track to surpass its original CA$10 million cost savings target. Most of the cost savings have been realized through SG&A and public company costs, while the remainder will be achieved through supply chain consolidation and COGS. By 2024, run-rate synergies are expected to exceed CA$30 million annually, and proceeds from assets sales are expected to total CA$9 million.

Photo: Benzinga edit with photo by Kindel Media on Pexels

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