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SNDL Inc. (Nasdaq: SNDL) looks to have turned a major corner after reporting its financial results in Canadian dollars for the third quarter ending September 30, 2023. Gross revenue grew to $249 million from last year’s $235 million for the same period. In addition to that, the net losses dropped to $21 million from last year’s net loss of $98 million. SNDL also reported a positive free cash flow of $16.5 million in the third quarter of 2023 versus a negative $67.1 million in the third quarter of 2022.

“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,” said Zach George, Chief Executive Officer of SNDL. “We are intent on realizing SNDL’s potential for improved profitability, material growth, and greater efficiencies across all of our segments. We recently commenced our Liquor Retail data program and continue to see margin improvements in our 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”

Revenue Breakdown

Liquor

Most of SNDL’s revenue stemmed from liquor sales, but the company still sees a sizable amount of cannabis revenue. The liquor business brought in net revenue of $151.8 million in the quarter which was slightly lower than last year’s $152 million for the same period. SNDL is Canada’s largest private sector liquor retailer with 170 locations under its three retail banners: “Wine and Beyond”, “Liquor Depot” and “Ace Liquor.” SNDL also noted that it has launched an e-commerce platform for Wine and Beyond and that early observations indicate an average increase in total basket spend for online purchases compared to in-store purchases in the first four weeks post-launch. The company added that it expects to launch its first wine private label in the first half of 2024.

Cannabis

The retail cannabis revenue came in at $75.5 million for the third quarter of 2023, an increase of 14.1% compared to the same quarter of the prior year. Net revenue from cannabis operations was $21.0 million, an increase of 77.4% compared to the same quarter of the prior year. SNDL is Canada’s largest private-sector cannabis retailer, operating 186 locations under its four retail banners: “Value Buds”, “Spiritleaf”, “Superette”, and “Firesale Cannabis”.

During the quarter, SNDL said it cut back on its brand portfolio cutting close to 50% of its total offerings across all brands to focus on high-performing SKUs, key consumer categories, and new innovations. The statement said, “This rationalization initiative prioritizes revenue generation and key volume SKUs to deliver increased margins within the Cannabis Operations segment and owned retail locations through 2024.” As part of these changes, SNDL said it launched 41 SKUs in the third quarter of 2023, primarily focusing on large format flower, vapes, and pre-rolls under its value-driven brands, Palmetto and Versus.

Sunstream

Sunstream is the joint venture for SNDL in which the company has sunk $531 million. The portfolio has five investments: Jushi Holdings Inc., SKYMINT Brands, Ascend Wellness Holdings, Surterra Holdings, Inc. d/b/a Parallel, and Columbia Care Inc. During the quarter, an affiliate of SunStream entered into restructuring arrangements regarding the foreclosure of certain Parallel cannabis operations in Florida, Massachusetts, Texas, and Nevada.

Then on October 23, 2023, an affiliate of SunStream announced a receivership court order granting the sale of certain assets of Skymint to a SunStream USA entity. SNDL said that the Parallel Transaction and Skymint Transactions are expected to close by the end of the first quarter of 2024.

The company’s cash and cash equivalents were $201 million at the end of the quarter, down from $279 million at the end of December 2022.

The post SNDL Revenues Grow As Losses Drop appeared first on Green Market Report.

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Debra Borchardt, KahliBuds, 420GrowLife