CALGARY, AB, Could 16, 2022 /CNW/ – Sundial Growers Inc. (NASDAQ: SNDL) (“Sundial” or the “Firm”) reported its monetary and operational outcomes for the primary quarter ended March 31, 2022. All monetary info on this press launch is reported in thousands and thousands of Canadian {dollars} except in any other case indicated.

The Firm will maintain a convention name and webcast at 10:30 a.m. EDT (8:30 a.m. MDT) on Tuesday, Could 17, 2022. Please see the dial-in particulars throughout the launch and extra particulars on Sundial’s web site at www.sndlgroup.com.

This press launch is meant to be learn along with the Firm’s Monetary Statements and Notes for the interval and the accompanying Administration’s Dialogue and Evaluation (“MD&A”). These experiences can be found beneath the Firm’s profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml.

Sundial has additionally posted a supplemental investor presentation on its web site which may be discovered at https://sndlgroup.com/traders.

FIRST QUARTER 2022 FINANCIAL AND OPERATIONAL HIGHLIGHTS

• Acquired Alcanna Inc. (“Alcanna“) on March 31, 2022, creating the biggest non-public sector hashish and liquor retail community in Canada.

• Internet income for the primary quarter of 2022 of $17.6 million, together with sooner or later of income on the acquisition of Alcanna, a rise of 78% over the primary quarter of 2021.

• Alcanna’s revenues for the interval from January 1, 2022 to March 30, 2022 (previous to the date it was acquired by Sundial had been $162.5 million, with gross margin of roughly $36.3 million, which, topic to sure acquisition-related and different changes, would have been consolidated with Sundial’s outcomes for this era had the acquisition occurred on January 1, 2022.

• Gross margin elevated to $3.4 million for the primary quarter of 2022 in comparison with a lack of $3.5 million within the first quarter of 2021, a 199% enhance.

• Internet loss was improved to $38.0 million for the primary quarter of 2022 in comparison with a $134.4 million internet loss within the first quarter of 2021, an enchancment of 72%.

• Adjusted EBITDA lack of $0.7 million for the primary quarter of 2022, in comparison with Adjusted EBITDA of $3.3 million within the first quarter of 2021, largely pushed by central financial institution rate of interest modifications and honest worth changes associated to the SunStream three way partnership.

• $1.0 billion of money, marketable securities, and long-term investments and no excellent debt at March 31, 2022; $361 million of unrestricted money at Could 13, 2022.

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“The primary quarter of 2022 was each transformational and transitional for Sundial,” mentioned Zach George, Chief Government Officer. “We are actually Canada’s largest non-public sector distributor of each liquor and hashish with 354 retail places and have shortly benefitted from collaboration with our new legacy Alcanna colleagues. Sundial’s regulated merchandise platform offers distinctive insights into evolving shopper preferences and worth propositions. We proceed to strengthen and rework our enterprise whereas benefitting from vertical integration throughout our segments beneath a shared providers mannequin. In lower than two months, we’ve been in a position to enhance branded product distribution by delivery merchandise to Worth Buds shops and have began to appreciate synergies towards an integration plan that may catch the attention of the stability of the 12 months. Via price construction enhancements in our hashish operations, we’ve created a extra balanced and numerous product combine that focuses on higher-margin, higher-quality hashish. As well as, the present rising rate of interest surroundings has led us to make non-cash accounting changes to our largely fixed-rate SunStream portfolio, leading to muted adjusted EBITDA contribution for the quarter.”

Commenting on the present market surroundings, Mr. George added “Whereas our shares have outperformed international and Canadian hashish indices on a year-to-date and a one-year foundation by Could 13, we’re centered on sustainable absolute returns and dedicated to the relentless pursuit of shareholder worth creation. Sundial’s debt-free stability sheet and ample money reserves place us in an enviable place as we witness a reckoning taking maintain within the Canadian hashish market. Continued aggressive money consumption by our friends, decreased entry to capital, and waning investor danger urge for food is prone to speed up sector rationalization because the business slowly strikes in the direction of the formation of an oligopoly.”

FIRST QUARTER 2022 KEY FINANCIAL METRICS

FIRST QUARTER 2022 RESULTS

Sundial is comprised of 4 segments: Hashish Cultivation and Manufacturing, Hashish Retail, Liquor Retail, and Investments.

CANNABIS CULTIVATION AND PRODUCTION

Sundial stays centered and dedicated to its cultivation and processing actions, together with steady enchancment of its product choices for purchasers whereas specializing in price optimization and essentially the most aggressive and worthwhile strains and types.

• Price of gross sales per gram bought for the three months ended March 31, 2022 was $2.69 in comparison with $2.87 for the three months ended March 31, 2021. The lower of $0.18 per gram bought displays reductions in per gram prices throughout all branded product codecs as a consequence of operational efficiencies, regardless of will increase in price of energy and wages.

• Gross margin for the primary quarter of 2022 was unfavorable $0.2 million in comparison with unfavorable $3.5 million for the three months ended March 31, 2021. The gross margin enchancment demonstrates Sundial’s progress in implementing provide chain excellence to drive self-discipline round price optimization, regardless of intense value compression and decrease income.

• Cultivation consistency continues to enhance in 2022 with Sundial’s highest ever common weighted efficiency outcomes achieved within the first quarter of 2022 at 23.9% THC representing a 1.5% enhance from the earlier quarter. Additional, Sundial’s common weighted yield per sq. foot broke a brand new Firm file in March 2022, with a median weighted yield of 64 grams per sq. foot.

• Via its enhanced portfolio initiative, Sundial stays centered on the premium inhalables section. The Firm has made materials enhancements in its cultivation and innovation pipeline, which is contributing to an enhanced product portfolio nationally. Within the first quarter of 2022, Sundial’s precedence SKU distribution elevated nationally by 1,389 factors as measured by inside Buyer Relationship Administration reporting. Additional, the corporate continues to associate successfully with provincial boards and secured 159 new inhalable product listings nationally 12 months up to now. This innovation success price represents a 92% strike price towards the Firm’s plan regardless of provinces and retailers scrutinizing and rationalizing SKUs.

• Sundial has terminated the Service and Sale Settlement between Sundial and Solar 8 Holdings Inc. for a complete consideration of roughly $3.1 million in money and $2.9 million in Sundial shares. As a part of this transaction, Sundial has acquired the royalty rights to personal the mental property of Prime Leaf, which eliminates the royalty payment Sundial was paying to Solar 8.

REVENUE FROM CULTIVATION AND PRODUCTION
Gross income from branded hashish merchandise was $9.7 million for the primary quarter of 2022, a rise of 8% in comparison with the primary quarter of 2021. The rise in branded gross sales as a part of the corporate’s product combine displays the progress and dedication to executing its retail vertical integration technique throughout Western Canada and Ontario. Whole gross income from the cultivation and product of hashish was $11.3 million for the primary quarter of 2022, a lower of three% in comparison with the primary quarter of 2021. The decline in gross income was pushed by a 42% lower in wholesale gross sales to different Licensed Producers within the first quarter of 2022 versus the primary quarter of 2021.

NET SELLING PRICE
Common internet promoting value per gram was $2.60 within the first quarter of 2022, a rise of 5%, in comparison with $2.48 per gram within the first quarter of 2021. The rise was as a consequence of increased costs for provincial board gross sales. Provincial board costs have elevated because of the shift of the combo of Sundial choices from worth merchandise to core merchandise in addition to cheaper price reductions and concessions in comparison with the prior interval.

REVENUE BY FORMATS
Within the first quarter of 2022 gross income from Sundial’s codecs was:

CANNABIS RETAIL

The Firm’s expanded retail community creates a possibility to personal the connection with hashish customers and showcase each Sundial’s branded merchandise and the very best choices from different Canadian licensed producers.

• Efficient March 31, 2022, Sundial appointed Marcie Kiziak as its President, Hashish Retail.

• Gross margin for retail operations for the primary quarter of 2022, was $3.3 million {dollars}.

• As of Could 13, 2022, the Spiritleaf retailer rely is 103 (20 company shops and 83 franchised shops) and the Nova retailer rely is 80 shops.

• Sundial continued to see model share enhance for its home manufacturers bought in Spiritleaf places by the primary quarter and we proceed to see product penetration momentum within the second quarter of 2022. Worth Buds shops started carrying Sundial model merchandise instantly following the Alcanna acquisition.

REVENUE FROM CANNABIS RETAIL
Gross income from the hashish retail section for the three months ended March 31, 2022 was $7.5 million, together with $0.7 million representing sooner or later of gross sales for Nova.

SYSTEM-WIDE RETAIL SALES
System-wide retail gross sales¹ at had been $34.6 million for the primary quarter of 2022 in comparison with $41.4 million within the fourth quarter of 2021. System-wide retail gross sales signify the combination income earned by franchised Spiritleaf retail hashish shops and corporate-owned Spiritleaf retail hashish shops and don’t signify revenues that accrue to the Firm. The Firm receives all revenues from corporate-owned Spiritleaf retail hashish shops, and royalties and promoting charges in respect of the franchised Spiritleaf retail hashish retailer income.

The Nova retail shops outcomes are comprised of sooner or later of operations following the acquisition on March 31, 2022, and had been as follows:

Whereas Sundial doesn’t account for the outcomes of the Nova retail shops previous to the acquisition date, the outcomes for the interval from January 1, 2022 to March 31, 2022 had been as follows:

• Gross income of $49.8 million.

• Gross margin of $9.4 million, or 18.8% of gross sales.

• Within the first quarter of 2022, Nova opened six new Worth Buds places with 12 additional retailer openings deliberate for the rest of 2022.

LIQUOR RETAIL (ALCANNA)
With the Alcanna acquisition on March 31, 2022, Sundial is now Canada’s main regulated merchandise platform. Sundial has commenced and can proceed the post-acquisition integration work all through the rest of 2022.

The retail liquor section outcomes are comprised of sooner or later of operations following the acquisition on March 31, 2022 and are as follows:

Whereas Sundial doesn’t account for the outcomes of the liquor retail section previous to the acquisition date, the outcomes of Alcanna’s retail places for the interval from January 1, 2022 to March 31, 2022 had been as follows:

• Gross income for liquor retail gross sales for the Ace Liquor, Wine and Past, and Liquor Depot banners was $114.7 million.

• Gross margin was $27.3 million, or 24.1% of gross sales.

• Within the first quarter of 2022, one Ace Liquor and 4 Wine & Past places had been opened in Alberta.

INVESTMENTS

• As of the top of the primary quarter of 2022, the Firm had deployed capital on a number of cannabis-related investments totaling $650 million, together with $453 million to the SunStream Bancorp Inc. three way partnership (“SunStream“). For the primary quarter of 2022, the funding portfolio generated curiosity and payment income of $3.9 million ($2.8 million within the first quarter of 2021), share of the revenue of equity-accounted investees generated from investments by SunStream of $4.1 million (nil within the first quarter of 2021), and an funding lack of $17.7 million (acquire of $12.9 million within the first quarter of 2021) on marketable securities, which incorporates unrealized losses on publicly disclosed strategic investments in Village Farms Worldwide, Inc. and The Valens Firm Inc.

• The investments in SunStream are accounted for at an estimate of their honest worth ready by unbiased valuators, reflecting present credit score market circumstances and underlying uncertainty. The affect of modifications to rates of interest throughout the quarter on the portfolio was roughly $6.6 million. Precise returns from investments could differ materially from the affect of accounting honest worth changes. So far no credit score losses have been realized within the SunStream portfolio.

REVENUE FROM INVESTMENTS
Income from investments within the first quarter of 2022 was unfavorable $17.7 million, together with unrealized losses on marketable securities of $17.8 million, as a consequence of fluctuations in share costs from our strategic fairness portfolio of Canadian cannabis-related investments.

CONSOLIDATED FINANCIAL RESULTS

GENERAL AND ADMINISTRATIVE EXPENSES
Basic and administrative bills for the three months ended March 31, 2022 had been $10.7 million in comparison with $7.1 million for the three months ended March 31, 2021. The rise of $3.6 million was primarily as a consequence of will increase in salaries and wages, workplace and basic {and professional} charges. The will increase in salaries and wages and workplace and basic bills had been because of the acquisition of Inside Spirit Holdings in July 2021. The rise in skilled charges was largely as a consequence of a rise in accounting providers charges referring to the completion of the Firm’s 2021 year-end audit.

NET LOSS
The $96.4 million enchancment in internet loss is primarily because of the increased internet income of $7.7 million, share of revenue from SunStream of $4.1 million and alter in honest worth of spinoff warrant liabilities of $121.6 million, partially offset by funding losses of $30.6 million and better basic and administrative bills of $3.6 million.

ADJUSTED EBITDA

Adjusted EBITDA was a lack of $0.7 million for the three months ended March 31, 2022 in comparison with optimistic Adjusted EBITDA of $3.3 million for the three months ended March 31, 2021. The lower was because of the following:

• A rise in price of gross sales, because of the inclusion of hashish retail price of gross sales; and

• A lower in realized features on marketable securities.

The lower was partially offset by:

• A rise in internet income, primarily because of the inclusion of hashish retail income; and

• Share of revenue from the SunStream three way partnership.

LIQUIDITY POSITION

• E-book worth of internet belongings at March 31, 2022, was USD$1.3 billion or USD$0.53 per share

• As at March 31, 2022, and Could 13, 2022, the Firm had an unrestricted money stability of $423 million and $361 million, respectively, and whole frequent shares excellent of two.4 billion at March 31, 2022 and Could 13, 2022.

SHARE REPURCHASE PROGRAM

• Sundial’s insider buying and selling blackout interval expires on Could 18, 2022. Administration views the repurchase of shares as an accretive use of capital given the present buying and selling value of Sundial’s shares and administration’s view of the Firm’s liquidity, belongings, and operations. Along with the beforehand introduced Share Repurchase Program, the Firm not too long ago sought approval from the Alberta and Ontario Securities Commissions to promote Sundial put choices to boost this program. No shares have been repurchased or put choices bought by Sundial beneath the Share Repurchase Program up to now because of the beforehand disclosed blackout.

STRATEGIC AND ORGANIZATIONAL UPDATE

Sundial stays centered on constructing long-term shareholder worth by vertical integration, accretive deployment of money assets, growth of its retail distribution community, additional streamlining of the Firm’s working construction, and enhanced choices of high-quality manufacturers.

ACCESS TO UNIQUE INSIGHTS

• Throughout a broader retail worth chain, Sundial’s retail footprint is anticipated to assist facilitate buyer relationships and assist seize extra economies of scale.

• By gaining perception into hundreds of every day shopper transactions at over 354 retail shops, Sundial intends to optimize choices, pricing, and promotions in each liquor and hashish places to raised serve prospects.

IMPROVED SUPPLY AND DEMAND PLANNING

• The vertical integration of Sundial can also be designed to offer economies of scale and higher synergies with a shared providers mannequin, offering the corporate with the power to raised align its demand and provide plans and function extra cohesively.

• Along with implementing extra rigorous provide and demand planning processes, the corporate’s in depth business footprint could positively affect relations with regulators, suppliers, and distributors.

• The Firm’s entry to a big buyer base offers it with a powerful basis for e-commerce and direct-to-consumer methods which might be anticipated to extend income.

• Moreover, Sundial expects to proceed to evaluate worthwhile alternatives similar to non-public label choices and to develop focused merchandising methods for its total retail portfolio.

MANAGEMENT TEAM
With the acquisition of Alcanna, Sundial has gained important retail expertise and experience. The Firm’s Board of Administrators has appointed the next administration workforce:

• Zach George – Chief Government Officer

• Jim Keough – Chief Monetary Officer

• David Gordey – Chief Administrative Officer

• Andrew Stordeur – President and Chief Working Officer

• Marcie Kiziak – President, Hashish Retail

• Tank Vander – President, Liquor Division

• Matthew Hewson – Basic Counsel and SVP, Authorized and Regulatory Affairs

• Robbie Madan – Chief Info and Digital Officer

SPECIFIED FINANCIAL MEASURES
Sure specified monetary measures on this information launch, together with adjusted EBITDA and system-wide retail gross sales, are non-IFRS measures. These phrases aren’t outlined by IFRS and, due to this fact, will not be corresponding to comparable measures offered by different firms. These non-IFRS monetary measures shouldn’t be thought of in isolation or in its place for or superior to measures of efficiency ready in accordance with IFRS. These measures are offered and described so as to present shareholders and potential traders with extra measures in understanding the Firm’s working leads to the identical method because the administration workforce.

ADJUSTED EBITDA
Adjusted EBITDA is a non-IFRS measure which the Firm makes use of to guage its working efficiency. Adjusted EBITDA offers info to traders, analysts, and others to assist in understanding and evaluating the Firm’s working leads to the same method to its administration workforce. Adjusted EBITDA is outlined as internet revenue (loss) from persevering with operations earlier than finance prices, depreciation and amortization, accretion expense, revenue tax restoration and excluding change in honest worth of organic belongings, change in honest worth realized by stock, unrealized overseas trade features or losses, unrealized features or losses on marketable securities, change in honest worth of spinoff warrants, share-based compensation expense, asset impairment, acquire or loss on disposal of property, plant and gear and sure one-time non-operating bills, as decided by administration.

SYSTEM-WIDE RETAIL SALES
System-wide retail gross sales is a non-IFRS measure which the Firm makes use of to guage the efficiency of its retail operations. System-wide retail gross sales signify the combination income earned by each franchised and corporate-owned retail hashish shops and don’t signify solely the retail section’s income. The Firm solely receives royalties, promoting and franchise charges in respect of franchised Spiritleaf retail hashish retailer income. The system-wide retail gross sales measure is beneficial to administration in evaluating model scale and market penetration and is utilized by administration to evaluate the monetary and working efficiency of the Firm and the energy of the Firm’s market place relative to its opponents.

CONFERENCE CALL
Sundial will host a convention name and webcast at 10:30 a.m. EDT (8:30 a.m. MDT) on Tuesday, Could 17, 2022.

WEBCAST ACCESS
To entry the stay webcast of the decision, please go to the next hyperlink:
https://providers.choruscall.ca/hyperlinks/sundialgrowers2022q1.html

REPLAY
The webcast archive will probably be obtainable for 3 months through the hyperlink offered above.
A phone replay will probably be obtainable for one month. To entry the replay dial:
Canada/USA Toll Free: 1-800-319-6413 or Worldwide Toll: +1-604-638-9010
When prompted, enter Replay Entry Code: 8957#

ABOUT SUNDIAL GROWERS INC.
Sundial is a public firm whose shares are traded on Nasdaq beneath the image “SNDL.” Its enterprise is reported and analyzed beneath 4 segments: Hashish Manufacturing and Cultivation, Hashish Retail, Liquor Retail, and Investments.

As a licensed producer that crafts small-batch hashish utilizing state-of-the-art indoor services, Sundial’s ‘craft-at-scale’ modular rising method, award-winning genetics, and skilled growers set us aside. Sundial’s model portfolio contains Prime Leaf, Sundial Hashish, Palmetto, Spiritleaf Selects and Grasslands. Sundial has acquired Alcanna and is now the biggest non-public sector hashish and liquor retailer in Canada because the Firm retail banners now embody Spiritleaf, Worth Buds, Ace Liquor, Liquor Depot, and Wine & Past.

Sundial’s funding portfolio seeks to deploy strategic capital by direct and oblique investments and partnerships all through the worldwide hashish business.

For extra info on Sundial, please go to www.sndlgroup.com.

Ahead-Trying Info Cautionary Assertion
This information launch contains statements containing sure “forward-looking info” throughout the that means of relevant securities legislation (“forward-looking statements”), together with, however not restricted to, statements concerning the Firm’s operational targets, demand for the Firm’s merchandise, the Firm’s skill to attain profitability or its objective of sustainable, optimistic gross margin and optimistic free money move, the event of the authorized hashish business, efficiency of the Firm’s investments, together with by the SunStream three way partnership, any potential types of shareholder worth creation, the upkeep of manufacturing ranges and upkeep or enchancment in harvest THC ranges (together with throughout the COVID-19 pandemic), the growth of product choices, model and market share and retail networks, and the mixing and realization of anticipated advantages of the acquisition of Alcanna. Ahead-looking statements are often characterised by phrases similar to “plan”, “proceed”, “anticipate”, “venture”, “intend”, “consider”, “anticipate”, “estimate”, “probably”, “outlook”, “forecast”, “could”, “will”, “potential”, “proposed” and different comparable phrases, or statements that sure occasions or circumstances “could” or “will” happen. These statements are solely predictions. Varied assumptions had been utilized in drawing the conclusions or making the projections contained within the forward-looking statements all through this information launch. Ahead-looking statements are primarily based on the opinions and estimates of administration on the date the statements are made and are topic to a wide range of dangers and uncertainties and different elements that would trigger precise occasions or outcomes to vary materially from these projected within the forward-looking statements. Please see “Merchandise 3.D.—Threat Components” within the Firm’s annual report on Type 20-F, filed with the Securities and Change Fee (“SEC”) on April 28, 2022, and the danger elements included in our different SEC filings for a dialogue of the fabric danger elements that would trigger precise outcomes to vary materially from the forward-looking info. The Firm is beneath no obligation, and expressly disclaims any intention or obligation, to replace or revise any forward-looking statements, whether or not because of new info, future occasions or in any other case, besides as expressly required by relevant legislation.

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