Cannabis company SNDL Inc. SNDL reported its financial results Tuesday for the third quarter ended Sept. 30, 2024 with revenue of CA$236.9 million ($170.65 million), compared to CA$237.6 million in the same period last year and CA$228.1 million in the previous quarter. The Calgary, Alberta-based cannabis operator attributed the revenue decrease to market softness in the liquor retail segment, adding that both cannabis retail and cannabis operations segments experienced strong growth.
“We are pleased with the substantial progress reflected in our results for the third quarter of 2024 as we advance towards sustainable profitability," stated Zach George, chief executive officer of SNDL. "Our team delivered a record gross margin, positive cash flow and free cash flow, and closed the quarter with over a quarter billion dollars in unrestricted cash and zero debt. We are materially improving our operational performance while executing multiple strategic initiatives that we believe will solidify our foundation and drive sustained, profitable growth. Our strong balance sheet serves as a beacon for future opportunities, allowing us to thoughtfully deploy capital into organic and inorganic investments with attractive, risk-adjusted returns. I am more confident than ever that our team – setting new records with each quarter – has the expertise and drive to unlock SNDL’s significant potential.”
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Q3 Financial Highlights
- Net revenue for cannabis retail in the third quarter of 2024 was CA$81.1 million, compared to CA$75.5 million in the third quarter of 2023. The 7.4% increase year-over-year was driven by productivity improvements and new stores opened throughout the year.
- Gross profit was CA$63 million, representing a record gross margin of 26.6% of sales in the third quarter of 2024, up from 20.5% in the third quarter of 2023.
- Operating loss was CA$18.5 million for the third quarter of 2024, driven by a negative valuation adjustment of equity-accounted investees (SunStream portfolio) of CA$13.4 million and restructuring charges of CA$1.9 million. This compares to a loss of CA$16.4 million in the third quarter of 2023, which included a favorable equity-accounted investees valuation adjustment of CA$6.6 million.
- Cash flow was CA$80.0 million in the third quarter of 2024, compared to CA$16.5 million in the third quarter of 2023, as a result of profitability improvements and the repayment of loan investments. Year-to-date cash flow is positive by CA$67.9 million.
- Free cash flow in the third quarter of 2024 was CA$9.2 million, compared to CA$16.3 million in the third quarter of 2023. This result brings year-to-date free cash flow to negative CA$2.8 million, compared to negative CA$62.3 million in the first nine months of 2023. SNDL is on pace to deliver positive free cash flow for the 2024 calendar year, in line or ahead of guidance.
- The company had CA$763.8 million in unrestricted cash, marketable securities and investments, and no outstanding debt, with CA$263 million in unrestricted cash as of Sept. 30, 2024. Subsequent to the end of the quarter, CA$37.3 million was used to pay the cash consideration portion of the acquisition of Nova’s minority equity interest. SNDL has not raised cash through share offerings since June 2021.
Price Action
SNDL shares traded 2.78% higher at $2.22 per share during Tuesday's pre-market session.
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