CALGARY, AB (August 14, 2019) – 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
Key Financial 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.
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.
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:
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#.
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.
Investor Relations Contact:
Jayson Moss, Investor Relations
Sundial Growers Inc.
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.
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