SNDL Inc. (NASDAQ: SNDL) reported its financial results for the full year and fourth quarter ended December 31, 2023, in Canadian dollars. SNDL said that net revenue for the fourth quarter of 2023 was $248.5 million versus $240.4 million in the fourth quarter of 2022, an increase of 3%, with sequential growth in the Cannabis Retail and Cannabis Operations segments.
In the fourth quarter of 2023, cash flow was negative $6.9 million, compared to negative $11.8 million in the fourth quarter of 2022, a 42% improvement. The company had an operating income loss of $84.9 million for the fourth quarter of 2023, including $13.3 million of restructuring cost and $29.0 million of goodwill impairment, compared to a loss of $154.6 million in the fourth quarter of 2022, a 45% improvement.
Full-year results
For 2023, SNDL reported net revenue of $909 million versus $712.2 million in 2022, an increase of 28%. The company said the operating income loss of $162.8 million for 2023 was due to restructuring charges of $19.6 million and goodwill impairment of $29 million. Considering 2022 reported a loss of $347.8 million this was a 53% improvement. The company’s cash has dropped by 30% from $279 million at the end of 2022 to $195 million at the end of 2023.
“2023 was a year of significant financial success for SNDL, including record-breaking revenue and gross profit, and the achievement of free cash flow in the second half of the year,” said Zach George, Chief Executive Officer of SNDL. “The generation of stabilized free cash flow continues to be a top priority for our team, and I am proud that we delivered on this stated objective during the last two quarters. This period was foundational as we acquired Valens, welcomed top-tier leaders and streamlined our balance sheet, positioning SNDL for improved performance in 2024 and beyond.”
Cannabis sales increase
With its 63% ownership interest in Nova Cannabis Inc., SNDL is Canada’s largest private-sector cannabis retailer, operating 187 locations under its four retail banners: “Value Buds“, “Spiritleaf“, “Superette“, and “Firesale Cannabis“. SNDL noted that its revenue comparisons for 2022 include operations of Nova retail stores for the period of March 31, 2022, to December 31, 2022.
Net revenue from the Cannabis Retail segment was $290 million in 2023 versus $205.6 million in 2022, an increase of 41% year-over-year. Net revenue in the fourth quarter of 2023 was $75.2 million, compared to $68.4 million in the fourth quarter of 2022, a 10% increase year-over-year in reported sales.
George added, ” In our Cannabis Operations, we undertook a comprehensive overhaul, establishing a solid foundation for future success. We refined our brand portfolio, optimized our operational footprint, and enhanced our procurement strategies, with early signs of a positive impact in 2024. We delivered record results in revenue, gross profit, and cash flow within our Cannabis Retail segment, driven by the expansion of both our owned portfolio and network data programs.
Sunstream
SNDL’s investment portfolio has five properties: Jushi Holdings Inc., SKYMINT Brands, Ascend Wellness Holdings, Surterra Holdings, Inc. d/b/a Parallel, and Columbia Care Inc. Two of these properties are in financial trouble.
“We also announced the launch of SunStream USA Group through our joint venture partner, SunStream Bancorp Inc., highlighting our commitment to the U.S. market as a key catalyst for growth. Our consumer-centric approach and relentless focus on quality is the cornerstone of our strategy, supported by a strong balance sheet and improving operations. This approach lays the groundwork for a business positioned to create value for shareholders through high-quality unadjusted earnings and robust free cash flow.”
In September 2023, an affiliate of SunStream entered into restructuring arrangements relating to investments in Parallel, which contemplate the foreclosure, to a SunStream USA entity, of certain Parallel cannabis operations in Florida, Massachusetts, Texas, and Nevada. 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 Group entity.
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