CALGARY, Aug. 14, 2019 /PRNewswire/ - Sundial Growers Inc.
(Nasdaq: SNDL) ("Sundial" or the "Company") today reported its
financial results for the second quarter ended June 30, 2019. Sundial is an international
cannabis company with state-of-the-art facilities in Canada and the United Kingdom, providing quality and
consistent products consumers can trust. This is Sundial's
inaugural quarterly earnings release as a public company following
its listing on Nasdaq on August 1,
2019.
"Sundial accomplished great things this past quarter and our
team's solid execution across key areas of our business resulted in
significant revenue growth," said Torsten Kuenzlen, Chief Executive
Officer of Sundial. "We are very confident in our go-to-market
strategy, our strengthened balance sheet and our ability to execute
upon organic growth opportunities. With the completion of our
initial public offering and Bridge Farm acquisition subsequent to
the second quarter, we are well on our way to becoming a leading
international cannabis company. We are working diligently to
craft high-quality cannabis products that consumers can trust."
All information in this press release is in Canadian dollars
unless otherwise indicated. Sundial will host a conference call and
webcast at 8:30 a.m. EDT
(6:30 a.m. MDT) on August 14, 2019, during which management will
discuss financial results and provide a general business update.
Dial-in details can be found below.
A complete copy of Sundial's unaudited interim consolidated
financial statements and related Management's Discussion and
Analysis ("MD&A") for the three and six months ended June
30, 2019 can be obtained through the Company's website
at www.sndlgroup.com, EDGAR at www.sec.gov and SEDAR
at www.sedar.com.
SUCCESSFULLY COMPLETED IPO ON NASDAQ
Subsequent to quarter end on August 1,
2019, Sundial successfully completed its initial public
offering (IPO) on Nasdaq under the symbol SNDL. Sundial issued
11,000,000 common shares at a price of US$13.00 per share, for gross proceeds of
US$143,000,000.
Sundial intends to use the net proceeds from the IPO, in
combination with cash on hand, other anticipated sources of
financing and expected cash flow from operations, to complete the
construction, expansion and transition of its cultivation and
processing facilities. The remainder of the net proceeds will be
used for capital expenditures required to maintain the Company's
productive capacity on an ongoing basis, future acquisitions and
general corporate purposes.
Q2 2019 FINANCIAL HIGHLIGHTS
- Sundial reported gross revenues of $20.3
million in the second quarter of 2019, 12 times higher than
the previous quarter. The Company's production and sales ramped up
exponentially with our added growing capacity and rapidly improving
harvest yields.
- 9,551 kilograms of cannabis were harvested from 94 crops during
the second quarter of 2019, compared to 1,896 kilograms from 30
crops during the first quarter.
- 4,741 kilograms of cannabis were sold during the second
quarter, a 14-fold increase from the first quarter of 2019.
- The Company's average net selling price was $4.07 per gram in the second quarter, compared to
$4.64 per gram in the first quarter
of 2019. The average net selling price was affected by the sale of
lower-priced trim during the second quarter.
- Cost of sales decreased to $2.20
per gram in the second quarter of 2019 from $2.41 per gram in the previous quarter,
reflecting the increasing scale and efficiency of the Company's
operations.
- Sundial's net loss for the second quarter was $12.4 million, down from $16.7 million in the first quarter.
- The Company reported an Adjusted EBITDA(1) loss of
$0.5 million in the second quarter of
2019, improving from an Adjusted EBITDA(1) loss of
$5.5 million in the first
quarter.
Key Financial Highlights
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|
|
|
|
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Three Months
Ended
|
Six Months
Ended
|
|
|
June 30,
2019
|
March 31,
2019
|
June 30,
2019
|
|
|
|
|
|
Operational
|
|
|
|
|
Kilograms
harvested
|
kg
|
9,551
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1,896
|
11,447
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Kilograms
sold
|
kg
|
4,741
|
323
|
5,064
|
Average gross selling
price per gram
|
$/gram
|
4.28
|
5.24
|
4.34
|
Average net selling
price per gram
|
$/gram
|
4.07
|
4.64
|
4.11
|
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
|
Gross
revenue
|
$mm
|
20.3
|
1.7
|
22.0
|
Net
revenue
|
$mm
|
19.3
|
1.5
|
20.8
|
Cost of
sales
|
$mm
|
10.4
|
0.8
|
11.2
|
Cost of sales per
gram
|
$/gram
|
2.20
|
2.41
|
2.21
|
Gross margin %,
before fair value adjustments
|
%
|
46
|
48
|
46
|
Net loss
|
$mm
|
12.4
|
16.7
|
29.1
|
Adjusted EBITDA
loss(1)
|
$mm
|
0.5
|
5.5
|
6.0
|
|
|
|
|
|
|
|
|
|
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Balance
Sheet
|
|
|
|
|
Cash
(unrestricted)
|
$mm
|
38.4
|
13.0
|
38.4
|
Biological
assets
|
$mm
|
12.8
|
6.2
|
12.8
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Inventory
|
$mm
|
17.5
|
5.0
|
17.5
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Net debt
|
$mm
|
130.3
|
107.4
|
130.3
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$mm
|
33.4
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30.6
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64.0
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(1) Refer to
"Non‑IFRS Financial Measures".
|
Financing Highlights
Convertible Notes
In May 2019, Sundial closed a
private placement of 8% convertible notes for proceeds of
$93.2 million. The proceeds of the
notes were used to retire existing debt and to enhance working
capital.
Term Debt Facility
On June 27, 2019, the Company
entered into a term debt facility consisting of two tranches
totalling $159.6 million. The first
tranche of $115.0 million was used to
fund the acquisition of Bridge Farm as described below. The second
tranche currently remains unfunded and is subject to various
conditions precedent.
COMPANY UPDATES
Acquisition of Bridge Farm in the UK
On July 2, 2019, Sundial acquired
the Bridge Farm Group, a leading producer of ornamental plants,
flowers and edible herbs supplying retailers across the
United Kingdom and other parts of
Europe. This was a significant
step forward in Sundial's strategic growth plan as Bridge Farm's
acquisition will enable Sundial's plan to produce and sell
high-quality CBD products globally. Bridge Farm's facilities
position Sundial to become a leader in the "Help" (health and
wellness) sector and a leading global cannabis company.
Acquisition of a 50% Interest in Pathway Rx Inc. (Pathway
Rx)
In June 2019, Sundial acquired a
50% interest in Pathway Rx, a company that uses advanced
technologies, including machine learning approaches, to screen an
extensive library of cannabis strains to identify and customize
treatments for symptoms associated with a wide range of medical
conditions. In the future, Sundial intends to leverage Pathway Rx's
cannabis strains to develop cannabis-based pharmaceutical drugs,
including strains initially targeted towards symptoms associated
with cancer, skin disorders, skin protection and rejuvenation, and
inflammatory processes.
Top Leaf and BC Weed Co. Brands
Sundial secured the world-wide proprietary rights, including
copyrights and trademarks, to a portfolio of brand names, designs,
domain names and other intellectual property associated with Top
Leaf, BC Weed Co. and certain other brands. Top Leaf and BC Weed
Co. are recognized brands that are supported by award-winning
cultivars and loyal consumers.
Additional Health Canada Licences
On June 14, 2019, Sundial received
a Standard Cultivation and Standard Processing license from Health
Canada for an additional 115,000 square feet of cannabis
cultivation at its flagship facility in Olds, Alberta. Each of the 34 newly licensed
flowering rooms has been purpose-built for the cultivation of
premium cannabis. Sundial is on track with construction plans for
the Olds facility and is targeting
full operational capacity by the end of the year. When fully
operational, it will have 114 individual, purpose-built indoor
flowering rooms, occupying a total of approximately 450,000 square
feet.
More than 150 Harvests
Due to its purpose-built modular facility in Olds, Alberta, Sundial successfully achieved
more than 150 harvests to date in 2019 with average yields of more
than 50 grams per square foot.
People and Culture
At the end of Q2 2019, Sundial had a total of 650 employees,
adding a total of 259 employees over the quarter. Following the
Bridge Farm acquisition, Sundial now employs nearly 1,000 employees
globally, on a full-time and seasonal basis, bringing economic
benefits to the local communities in which the Company
operates.
In addition to the rapid growth of the team, Sundial is actively
investing in its employees to enhance capabilities and
productivity.
Product Launches
The Sundial brand offers five product lines: Calm, Ease, Flow,
Lift and Spark. Each line is focused on meeting specific needs with
tailored product offerings that provide premium consumer
experiences.
To date, Sundial has launched four products under the Sundial
line:
- Zen Berry, under the Calm line, is an indica-dominant
Shishkaberry strain
- Daydream, under the Flow line, was second to launch and offers
high THC levels
- Citrus Punch, under the Lift line, is a balanced hybrid that
leans on its sativa properties with a distinctive taste of fresh
Florida oranges
- Lemon Riot, also under the Lift line, is a strong, musty lemon
flavoured strain with a mid-to-high THC levels
Sundial Now Available in Ontario
Subsequent to the second quarter, Sundial shipped its first
batch of craft cannabis to the Ontario Cannabis Store (OCS). The
first product available in Ontario
is Sundial's Zen Berry. Additional products under the Sundial
brand, and the Company's other brands, will be added in the coming
weeks and months, offering consumers in Ontario the full portfolio of Sundial's craft
cannabis products.
CONFERENCE CALL ACCESS
Sundial will host a conference call and webcast at 8:30 a.m. EDT (6:30 a.m.
MDT) on August 14, 2019.
Callers may access the conference call via the following phone
numbers:
Canada/USA Toll Free: 1-800-319-4610
International Toll: +1-604-638-5340
UK Toll Free: 0808-101-2791
Callers should dial in 5-10 minutes prior to the scheduled start
time.
A replay will be available until end of day, September 14, 2019. From Canada/USA
dial toll free 1-800-319-6413 and when prompted, enter the access
code 3523#. International callers dial +1-604-638-9010 and
when prompted, enter the access code 3523#.
WEBCAST
To access the live conference call webcast, please visit the
following link:
http://services.choruscall.ca/links/sundialgrowers20190814.html
A replay will be available for three months following the
conference call.
For more information about Sundial, visit
www.sndlgroup.com and follow us on Twitter @SundialCannabis,
Instagram @SundialCannabis, LinkedIn @SundialCannabis and
Facebook @SundialCommunity.
ABOUT SUNDIAL GROWERS INC.
Sundial proudly crafts pioneering cannabis brands to Heal, Help
and PlayTM:
- Heal - cannabis products used as prescription medicine
- Help - cannabis products that strive to promote health and
wellness through CBD
- Play - cannabis products to enhance social, spiritual and
recreational occasions
Sundial is a global cannabis company with facilities in
Canada and the United Kingdom, providing quality and
consistent products consumers can trust.
In Canada, we grow
'craft-at-scale' cannabis using purpose-built modular facilities
and award-winning genetics. Sundial's flagship production facility
is located in Olds, Alberta with a
second facility in Rocky View,
Alberta. We have commenced
construction of our next purpose-built facility in Merritt, British Columbia.
In the United Kingdom, we grow
high-quality traceable plants, including hemp, ornamental flowers
and edible herbs, in over 1.5 million square feet of
state-of-the-art environmentally friendly, indoor facilities.
Bridge Farm has three facilities in Spalding, with another
currently under construction.
We employ nearly 1,000 employees globally, full-time and
seasonal, which brings economic benefits to the local communities
in which we operate.
RECONCILIATION OF IFRS PERFORMANCE MEASURES TO NON-IFRS
PERFORMANCE MEASURES
For information regarding non-IFRS measures please refer to the
definitions in our second quarter 2019 Management Discussion and
Analysis.
Adjusted EBITDA is a non-IFRS measure which the Company uses to
evaluate its operating performance. Adjusted EBITDA provides useful
information to investors, analysts and others in understanding and
evaluating the Company's operating results in the same manner as
its management team. Adjusted EBITDA is defined as net income
(loss) before finance costs, depreciation and amortization,
accretion expense, income tax recovery and excluding change in fair
value of biological assets, change in fair value realized through
inventory, unrealized foreign exchange gains or losses, share based
compensation expense, asset impairment and gain or loss on disposal
of property, plant and equipment.
The following table reconciles adjusted EBITDA to net loss.
|
Three months ended
June 30
|
Six months ended
June 30
|
|
|
|
|
|
($000s)
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
Net loss and
comprehensive loss
|
(12,350)
|
(5,827)
|
(29,052)
|
(12,975)
|
Adjustments
|
|
|
|
|
Finance
costs
|
8,083
|
24
|
10,868
|
24
|
Depreciation and
amortization
|
148
|
170
|
268
|
333
|
Income tax
recovery
|
-
|
-
|
(3,609)
|
-
|
Change in fair value
of biological assets
|
(12,174)
|
366
|
(12,866)
|
-
|
Change in fair value
realized through inventory
|
1,769
|
-
|
1,689
|
-
|
Unrealized foreign
exchange (gain) loss
|
555
|
-
|
422
|
-
|
Share based
compensation
|
13,529
|
1,838
|
26,154
|
3,399
|
Asset
impairment
|
-
|
-
|
162
|
2,184
|
Loss on disposal of
PP&E
|
(15)
|
-
|
(15)
|
52
|
Adjusted EBITDA
(1)
|
(455)
|
(3,429)
|
(5,979)
|
(6,983)
|
(1)
|
Adjusted EBITDA does
not have a standardized meaning prescribed by IFRS and therefore
may not be comparable to similar measures used by other companies.
The non-IFRS measure of adjusted EBITDA is reconciled to net loss
in accordance with IFRS in the "NON-IFRS MEASURES" section of this
MD&A and discussed further in the "ADVISORY" section of this
MD&A.
|
FORWARD-LOOKING AND INFORMATION CAUTIONARY STATEMENT
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable
securities law ("forward-looking statements"). Forward looking
statements in this release include, but are not limited to, the
potential expansion plans of the Company, and statements regarding
the future performance of the Company. Forward-looking statements
are frequently characterized by words such as "plan", "continue",
"expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur.
These statements are only predictions. Various assumptions were
used in drawing the conclusions or making the projections contained
in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates
of management at the date the statements are made and are subject
to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from
those projected in the forward-looking statements. The Company is
under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
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SOURCE Sundial Growers