SNDL Sales Dip in First Quarter

Sales grew over last year as acquisitions helped build the company.

SNDL Inc. (Nasdaq: SNDL) reported that its net revenue for the first quarter fell sequentially to C$202.5 million versus the fourth quarter revenue of C$240.4 million, according to its financial results for the first quarter ending March 31.

However, the quarterly revenue was a steep increase over last year’s C$17.6 million.

SNDL attributed the increase to the acquisitions of Alcanna, Valens, and Zenabis. The decrease in revenue, as compared to the fourth quarter of 2022 was due to seasonality in the liquor retail segment, as the fourth quarter is traditionally the strongest and the first quarter is typically the weakest. This was partially offset by an increase in revenue from the cannabis operations segment due to the partial quarter contribution of Valens in 2023.

SNDL also trimmed its net losses to C$36.1 million in the quarter versus a C$161.6 million net loss in the fourth quarter of 2022 and a C$38 million net loss in the first quarter of 2022. The loss for the first quarter was impacted by the seasonal downturn in liquor retail sales and inventory and asset impairments of C$10 million.

“The integration of Valens is proceeding with pace, and we are actively identifying new revenue streams and cost reduction opportunities,” CEO Zach George said. “The first quarter was impacted by a number of one-time items including C$13.5 million to replenish liquor inventory following the seasonal holiday draw in the fourth quarter of 2022, C$2.7 million in severance and restructuring costs, and C$17.5 million to stabilize Valens and bring overdue accounts payable up to date.”

SNDL told investors that the results for the first quarter include the operating results of The Valens Co. subsequent to the acquisition on Jan. 17 and the results for the first quarter of 2022 include one day of Alcanna operations subsequent to the acquisition closing on March 31, 2022.

Through its acquisitions, SNDL  has become one of the largest adult-use cannabis manufacturers and retailers in Canada.

Cannabis Expansion

Gross revenue from the cannabis retail segment for the first quarter of 2023 was C$67.4 million, compared to C$68.4 million in the fourth quarter of 2022, showing a modest seasonal dip, and up from C$7.5 million in the first quarter of 2022.

The Nova acquisition and Value Buds sales were the material driver of the increase relative to the first quarter of 2022, with C$60.2 million of revenue during the first quarter of 2023. On May 5, SNDL proposed a strategic partnership with Nova that was approved by Nova shareholders.

In February, SNDL announced the acquisition of five Superette stores in Ontario. In addition to that deal, the company entered into an agreement with Lightbox Enterprises to buy four cannabis retail stores operating under the Dutch Love Cannabis banner. The transaction is anticipated to close by the end of June.

However, all of these moves come at a price, George told investors.

“We expect additional restructuring charges to impact the second quarter and the results of our team’s hard work to become clear in late 2023,” he said. “We are focused on improving all aspects of our business with the objective of generating strong free cash flow. The relocation of all cannabis processing activities to our Kelowna complex will drive improved capacity utilization, and we are aggressively reducing our exposure to higher-cost cultivation as we seek low-cost producer status in all relevant product categories.”


SNDL invested C$535.9 million through the SunStream Bancorp Inc. joint venture. The investment portfolio generated:

  • Interest and fee revenue of C$4.2 million.
  • Share of profit of equity-accounted investees generated from investments by SunStream of C$9.5 million.
  • An investment loss of C$5.2 million on marketable securities, which includes unrealized losses on its publicly disclosed strategic investment in Village Farms International Inc.

SunStream’s credit portfolio currently consists of six investments:

  • Jushi Holdings.
  • Skymint Brands.
  • Ascend Wellness Holdings.
  • Parallel Inc.
  • Columbia Care Inc.
  • AFC Gamma Inc.

Both Skymint and Parallel are in financial trouble, but the company has not written down the values of these investments. SNDL said it “continues to explore the potential monetization or equitization of some of its U.S. senior credits.”

George also alluded to upcoming events related to SunStream in the coming weeks, but didn’t elaborate in the press release.

As of March 31 and May 12, the company had unrestricted cash balances of C$213.3 million and C$189.8 million, respectively.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest cannabis news delivered right to your inbox

The Morning Rise

Unpack the industry with the daily cannabis newsletter for business leaders.

 Sign up

About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


Recent Tweets

Get the latest cannabis news delivered right to your inbox

The Morning Rise

Unpack the industry with the daily cannabis newsletter for business leaders.