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Friday, Jul 1, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.


Sundial stock jumps on Q3 earnings of $11M

Particularly the firm’s new retail acquisition is turning a profit

Sundial stock jumps on Q3 earnings of $11M
In July, Sundial bought Spiritleaf in a deal valued at $131 million. Press photo

The share price of Canadian producer Sundial Growers Inc. (Nasdaq: SNDL) hit a four-month high on Friday, as the firm posted strong quarterly earnings — a welcome sign for investors, who have been used to the company reporting steep losses

For its third-quarter report for the three months ended Sept. 30, Sundial said it made net income of $11.3 million, compared to losses of $52.3 million in Q2 and $134.5 million in Q1.

Net revenue from cannabis was $14.4 million, up 57 per cent over the previous quarter, and up 12 per cent year-over-year. Revenue from production fell by 11 per cent to $8.2 million, while retail revenue was $6.1 million after closing a $131-million acquisition of Spiritleaf in July.

Read more: Sundial to buy weed retailer Inner Spirit for $131M

Read more: Sundial set to buy liquor and pot retailer Alcanna for $346M

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) shot up to $10.5 million, from a loss of $0.2 million last quarter and $4.4 million a year ago.

Sundial ended the quarter with $1.1 billion in cash, marketable securities and long-term investments at the end of the quarter. As of Nov. 9, the firm said it had $571 million in unrestricted cash with no outstanding debt.

Company stock soared 28 per cent Friday to $0.92 on the Nasdaq, it’s highest value since July 7.

In October, the company made a deal to buy liquor and cannabis seller Alcanna for $346 million. The transaction is expected to close in December or early next year.

CEO Zach George says the third-quarter results reflect a business transformation made over the past 10 months.

“We remain focused on sustainable profitability and continued improvement in all aspects of our operations. Despite the ongoing challenges facing industry participants, our financial condition has never been stronger,” he said in a statement.

“Our balance sheet strength enables our team to avoid short term pressures while working to improve the quality of our decision making. We expect that the achievement of our objectives will result in an aggregate base business that generates free cash flow in 2022.”


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