SNDL Renews CA$100M Share Buyback Plan, Narrows Q3 Net Loss By 78% YoY

SNDL Inc. SNDL announced on Monday that its board of directors has approved the renewal of its share repurchase program upon the expiry of its current share repurchase program on November 20, 2023.

The share repurchase program allows the Alberta-based company to repurchase up to CA$100 million ($72.5 million) of its outstanding common shares from time to time at prevailing market prices.

Under the program, SNDL may only repurchase a maximum of approximately 13.1 million, representing 5% of the issued and outstanding shares when the program commences on Nov. 21, 2023. The share repurchase program will expire on Nov. 20, 2024.

Under the company's current share repurchase program, which commenced on Nov. 21, 2022, the company previously sought to repurchase up to CA$100 million or 13.1 million shares. As of Nov. 10, 2023, the company had repurchased an aggregate of 2.9 million shares for cancellation under its current share repurchase program at a weighted average price of approximately CA$2.78 per share.

Meanwhile, the move comes on the heels of SNDL's third-quarter financial results.

The company has generated CA$237.6 million in net revenue during the three months ended Sept.30, 2023, compared to CA$230.5 million in the third quarter of 2022, representing an increase of 3.1%.

Cannabis retail and operations accounted for CA$75.5 million and CA$21 million in total net sales, representing a year-over-year increase of 14.1% and 77.4%, respectively.

Zach George, the company's CEO said SNDL continues to see margin improvements in its 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."

Q3 2023 Financial Highlights

• Gross margin was CA$48.6 million in the third quarter of 2023 or 20.2% of sales, representing a 3.4% decrease driven by non-cash inventory impairments.
• Net loss was CA$21.8 million for the third quarter of 2023, compared to a loss of CA$98.8 million in the third quarter of 2022, an improvement of 77.9% mainly driven by asset impairments recorded in 2022.
• Adjusted EBITDA came in positive at CA$19.1 million, compared to CA$7.9 million adjusted EBITDA gain in the same quarter of last year.
• Free cash flow totaled CA$16.5 million as of Sept. 30, 2023.

The company had CA$785 million of unrestricted cash, marketable securities, and investments, including investments in equity-accounted investees and no outstanding debt on Sept. 30, 2023, resulting in a net book value of CA$1.3 billion.

“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," George said.

What’s Next

SNDL 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.

Deals with Parallel and Skymint are anticipated to close by the end of the first quarter of 2024 and are subject to certain conditions and regulatory approvals.

Price Action

SNDL’s shares were trading 11.19% higher at $1.58 per share at the time of this writin late Monday afternoon.

Photo: Courtesy Of Elsa Olofsson On Unsplash