SNDL Inc. (NASDAQ:SNDL) announced additional optimizations of its facility footprint on Thursday to boost its cannabis operations segment.
What Happened
The Calgary, Alberta-based company said it would consolidate all cultivation activities at its Atholville, New Brunswick facility following the centralization of SNDL's manufacturing, processing and production operations to Kelowna, British Columbia.
Why It Matters
SNDL expects optimizing its facility footprint to result in over $10 million in annual savings from its cannabis operations segment through reduced fixed overhead, power costs and labor efficiencies.
These cost savings are in addition to the previously announced $18.2 million of annualized cost savings since the acquisition of The Valens Company Inc. in January 2023.
"In the past year, we've transformed our facility footprint with a clear goal of achieving profitability in our Cannabis Operations by 2024," Tyler Robson, SNDL's president of cannabis said. "This initiative reinforces SNDL's commitment to long-term sustainable cash flow through streamlined manufacturing operations and reduced reliance on high-cost cultivation, ensuring we deliver on both our customer and shareholder promise."
What's Next
In connection with the closing of the Olds facility, SNDL expects to record any related non-cash impairment charges during the fourth quarter of 2023.
"Through our facility reorganization, we expect to capture increased margins from more sustainable fixed operating costs and leverage strategic procurement opportunities to achieve material cost reductions," Robson continued.
The Atholville facility will continue to focus on cultivation, research and development, and supply chain efficiencies to realize additional cost savings while ensuring no disruptions to the availability of SNDL's current product portfolio.
SNDL expects to expand its operations in Atholville in line with this strategic transition.
SNDL Price Action
SNDL's shares traded 0.02% lower at $1.4897 per share during the pre-market session on Friday morning.
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