SNDL Inc. (NASDAQ: SNDL) has achieved a remarkable increase in revenue, surpassing $712.2 million in 2022, up more than tenfold from the previous year.
In their latest financial and operational results for the full year and fourth quarter ending Dec. 31, 2022, the company reported a growth of 4 per cent in net revenue during the fourth quarter compared to the previous quarter, with growth in the liquor retail, cannabis retail and cannabis operations segments.
The net cash used in operating activities for 2022 was $6.7 million, a substantial decrease from $155.8 million in 2021. The fourth quarter of 2022 recorded record net cash provided by operating activities of $28.6 million, a 233 per cent increase from $8.6 million in the third quarter of 2022.
The company’s gross margin also grew to a record high of $140.4 million in 2022, up from a loss of $9.0 million in the previous year, representing a 1,660 per cent increase. In the fourth quarter of 2022, the gross margin was $43.6 million, lower than in the third quarter of 2022 due to the monetization of low-value inventory and inventory impairments.
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In 2022, SNDL reported a net loss of $372.4 million, an increase from the previous year’s net loss of $226.8 million due to non-cash charges, including impairments related to the Alcanna transaction. Adjusted EBITDA was a loss of $15.8 million in 2022, compared to positive EBITDA of $30.4 million in the previous year, and $7.5 million in the fourth quarter of 2022.
SNDL expects to become a majority owner of one or more multi-state operators in the US in 2023 and currently has six credit exposures in the SunStream portfolio.
“Our vertical integration strategy is beginning to show its intended results, and we are working to gain stability in a challenging and dynamic industry,” SNDL CEO Zach George said.
“Our acquisition of Valens provides midstream capabilities in every material cannabis product category and the ability to selectively balance higher cost cultivation costs while taking advantage of the current massive oversupply in Canadian markets.”
“We now expect to materially outperform our originally contemplated savings and are on target to realize more than $20.0 million in cost synergies.’
As of Dec. 31, 2022, SNDL had $918.0 million in unrestricted cash, marketable securities and long-term investments, with no outstanding debt. This resulted in a net book value per share of $5.02. As of April 19, SNDL had $207 million of unrestricted cash, and it has not raised any cash through share offerings since June 2021.
Last December, SNDL proposed a strategic partnership with its subsidiary Nova Cannabis, of which SNDL owns 63 per cent. The partnership is designed to create a well-capitalized cannabis retail platform by leveraging SNDL’s upstream and midstream capabilities through a vertical integration model. If approved by Nova’s minority shareholders, this restructuring of Nova will enable SNDL to continue evolving in the still immature cannabis sector and become a trusted partner to the Canadian cannabis ecosystem.
SNDL acquired Alcanna on March 31, 2022, which created the largest private-sector liquor and cannabis retail network in Canada.
George explained that despite the company’s positive progress and expansion, SNDL’s stocks are currently trading at very low prices, which is below its book value and significantly less than its annual revenue. Therefore, the company needs to find ways to increase its value and consider different possibilities for its business and operating segments.
He says that despite the challenges, the company has seen encouraging outcomes in all of its operating segments and remain committed to becoming free cash flow positive.
SNDL stock dropped by 1.76 per cent on Tuesday to $1.40 on the Nasdaq stock exchange.