$Sundial Growers(SNDL.US)$ reported its financial and operational results Thursday for the third quarter ended Sept. 30, revealing net earnings of CA$11.3 million ($9 million) for the period, compared to a CA$71.4 million loss in the third quarter of the prior year.
In July, the Calgary, Alberta-based company acquired Inner Spirit Holdings, known for its national network of Spiritleaf retail stores.
Moreover, Sundial recently revealed it's purchasing Canadian liquor retailer Alcanna Inc. (TSX:CLIQ) (OTCPK: LQSIF) for roughly $346 million.
"Despite the ongoing challenges facing industry participants, our financial condition has never been stronger," Zach George, Sundial's CEO said. "Our balance sheet strength enables our team to avoid short-term pressures while improving the quality of our decision-making. We expect that the achievement of our objectives will result in an aggregate base business that generates free cash flow in 2022."
Q3 2021 Financial Highlights
Adjusted EBITDA was CA$10.5 million, compared to an adjusted EBITDA loss of CA$4.4 million in the same quarter of last year.
Net revenue from cannabis segments was CA $14.4 million, representing an increase of 57% sequentially and an increase of 12% year-over-year.
Net revenue for the cultivation and production of cannabis was CA$8.2 million compared to CA$9.2 million in the previous quarter, a decline of 11%.
Net revenue for cannabis retail was CA$6.1 million following the acquisition of Inner Spirit and the Spiritleaf retail network during the period.
Gross margin before fair value adjustments from cannabis cultivation and production was negative CA$4.9 million compared to negative CA$17.3 million for the three months ended Sept. 30, 2020.
The gross margin from cannabis segments was CA$1.8 million, including a loss of CA$1.9 million from cannabis cultivation and production compared to a loss of $19.5 million from that segment in the third quarter of 2020.
SMG&A costs increased by 30%, from CA$8.3 million to CA$10.8 million.
As of Sept. 30, the company had CA$1.1 billion of cash, marketable securities, and long-term investments, and CA$1.2 billion on Nov. 9, with CA$571 million of unrestricted cash and no outstanding debt.
"Our third-quarter results reflect the initial impact of the business transformation led by Sundial's team over the last 10 months," George continued. "We remain focused on sustainable profitability and continued improvement in all aspects of our operations."
Share Repurchase Program
Simultaneously, Sundial's board of directors approved a new share repurchase program which enables the company to repurchase up to CA$100 million of its outstanding common shares from time to time to return value to shareholders opportunistically.
Under the program, Sundial can purchase a maximum of 102.8 million shares through open market purchases, privately negotiated transactions, block trades, derivatives, accelerated or other structured share repurchase programs, or other means.
In addition, the share repurchase program will commence on Nov. 19, 2021, and expire on Nov. 19, 2022.
SNDL Price Action
Sundial's shares traded 30.56% higher at $0.949 per share during the pre-market session on Friday morning.