SNDL reports 2023 Full Year Results

The TDR Three Takeaways for SNDL:

  1. SNDL achieved record cannabis revenue and gross profit in 2023, along with strong contributions from  retail liquor segments.
  2. Strategic acquisitions and operational optimizations were key to SNDL’s cannabis progress.
  3. With positive cash flow in the latter half of the year, SNDL is positioning itself for more progress in 2024.

SNDL Inc. (NASDAQ: SNDL), reported  its financial and operational performance for the full year and fourth quarter ending December 31, 2023 this morning. The reported figures, provided in Canadian dollars, shared a number of positive points of progress.

In 2023, SNDL achieved a notable increase in net revenue, reaching $909.0 million, up 28% from $712.2 million in 2022. The fourth quarter alone saw revenues of $248.5 million, a 3% rise from the same period in the previous year, indicating steady growth across its Cannabis Retail and Cannabis Operations segments.

Gross profit for the year rose to $190.4 million, or 21% of sales, from $140.4 million, or 20% of sales, in 2022, marking a 36% increase. The fourth quarter’s gross profit also saw an improvement, reaching $57.3 million or 23% of sales, compared to $43.6 million or 18% of sales in the fourth quarter of 2022. These figures suggest effective supply chain management, highlighted by the closure of the Olds, Alberta cultivation facility in October 2023.

The company experienced a significant reduction in cash flow deficits, reporting a negative cash flow of $84.5 million in 2023, a 70% improvement from $278.7 million in 2022. Specifically, the second half of 2023 marked a positive cash flow of $9.6 million.

The operating income showed a loss of $162.8 million for 2023, a 53% improvement from a $347.8 million loss in 2022, attributed to both restructuring charges and goodwill impairment costs. Adjusted EBITDA from continuing operations turned positive at $29.2 million in 2023, compared to a loss of $15.8 million the previous year, indicating a 147% improvement in the fourth quarter of 2023 alone.

Strategic decisions made in 2023, such as the acquisition of The Valens Company Inc. and operational optimizations, have set a foundation for enhanced performance in 2024 and beyond. These strategies include transitioning cultivation activities to a more efficient location, optimizing the cannabis brand portfolio, and focusing on margin enhancement in the Cannabis Retail segment through proprietary data programs.

Financially, SNDL reported $766.7 million in unrestricted cash, marketable securities, and investments by the end of 2023, with no outstanding debt, highlighting a strong balance sheet. The company emphasized its focus on generating stable free cash flow and enhancing shareholder value through strategic initiatives, including its investment portfolio and the potential U.S. market expansion through SunStream USA Group.

SNDL’s 2023 financial year showed significant improvements in revenue, gross profit, and cash flow management. Strategic acquisitions, operational efficiencies, and a strong focus on the U.S. market expansion are central to the company’s future growth prospects.  Want to keep up to date with all of TDR’s research and news, subscribe to our daily Baked In newsletter.   

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