Sundial Growers Reports $28 Million Cannabis Revenue in Q3
“Our financial and operating results this quarter are the outcome of executing against the clear goals we set for our business this year,” continued Mr. Kuenzlen. “Increasing our harvests from 1,896 kilograms in the first quarter of 2019 to approximately 11,700 kilograms of premium cannabis in our third quarter, demonstrates our ability to rapidly scale our operation to the level of other leading Canadian LPs. Importantly, we step-changed production quantities while improving quality and growing a much larger variety of desirable premium cannabis strains. At the same time, we advanced operationally for effectiveness and efficiency and carefully managed our inventory levels. Production expansion went hand-in-hand with geographic expansion, as we increased coverage to additional Provincial boards and stores across Canada. This progress, combined with our focus on building out our brand story, not only delivered strong results this quarter, but also sets the stage for the profitable expansion of our business in 2020 and beyond.”
All information in this press release is in Canadian dollars unless otherwise indicated
THIRD QUARTER HIGHLIGHTS
- Delivered net revenue of $33.5 million, a 74% sequential quarterly increase, driven by a 41% growth in Canadian sales and the expansion into the UK, with the acquisition of Bridge Farm Group (“Bridge Farm”).
- Sold 7,944 kilograms of cannabis in Canada, increasing almost 70% from the second quarter of 2019.
- Average selling price per gram (“ASP”) for branded cannabis products for the quarter was $6.34, broadly consistent with ASP in the second quarter of $6.53. ASP for unbranded flower sales was $4.03, declining slightly from $4.46 in the second quarter.
- Sundial’s net loss for the third quarter was $97.5 million, driven by the acquisition and the termination of a royalty obligation.
- Consolidated Adjusted EBITDA¹ loss was $7.9 million. This was impacted by the scaling of operations, costs related to becoming a publicly traded company, acquisition and construction related expenses, and the impact from Sundial’s decision to manage inventory levels by wholesaling lower margin products.
- Deepened our branded product portfolio by growing and beginning to commercialize 19 premium strains. This included Sundial’s Lemon Riot, a high-quality premium strain which has consistently sold out at retail as soon as it becomes available.
- Expanded international footprint with the acquisition of leading UK-based agricultural indoor producer Bridge Farm in early July to secure low-cost production at scale and valuable commercial relationships in the UK, Europe and internationally.
- Completed its IPO on Nasdaq on August 6th, raising approximately USD $143 million of gross proceeds.
- Secured financing of up to $140 million in corporate credit facilities consisting of an initial $90 million senior secured term credit facility and the right to an additional facility to a maximum of $50 million. This financing, combined with the proceeds from its IPO, provides the capital to complete the Company’s expansion in Canada and the UK, as well as fund its business operations through to self-funding.
- Remained focused on positioning Sundial as a leader in the global cannabis industry for 2020 and beyond with its branded product portfolio in the Heal, Help, and Play markets.
Subsequent to quarter end
- Granted licence by Health Canada to produce and sell cannabis oil products which enable new Cannabis 2.0 formats to be sold in the near future.
- Entered into strategic partnerships to broaden and enhance the Heal and Help product portfolios.
- Launched Palmetto, a new brand in Sundial’s Play brand portfolio. Palmetto is synonymous with high-quality and convenient cannabis, offering pre-rolls and vape pens for an effortless and exceptional consumer experience.
“We are firmly focused on profitable growth,” said Mr. Kuenzlen. “Going forward we will benefit significantly from the foundation we are laying. Optimizing our substantially complete, state-of-the-art flagship facility in Olds, will drive operational improvements, which translate into reduced cost of sales and enhanced profitability. We will also continue to be disciplined in our capital spending and cost structure. We expect to consistently grow our business and remain agile in the rapidly evolving and dynamic global cannabis industry. While short-term fluctuations are a challenge for the entire industry, our belief in the immense overall market opportunity remains unchanged.