SNDL - Earnings call transcript Q4 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to Sundial Growers' Fourth Quarter and Fiscal Year 2020 Financial Results Conference Call. [Operator Instructions] Yesterday afternoon, Sundial issued a press release announcing their financial results for the year-end and fourth quarter ended December 31, 2020. This press release is available on the company's Web site at sndlgroup.com and filed with EDGAR and SEDAR as well. Presenting on this morning's call, we have Zach George, Chief Executive Officer; Jim Keough, Chief Financial Officer; and Andrew Stordeur, President and Chief Operating Officer.

Before we start, I would like to remind investors that certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. materially anticipated. differ could results from those Actual Risk the public company's could affect EDGAR. filings detailed in results are and financial SEDAR are available factors made that that on reports and other

mentioned all like today also that from are Additionally, respective note figures in dollars locations. indicated. to the unless conducting are remote Canadian we our I'd otherwise call financial

and you As during this issues or minor in for such, advance technical there may be brief understanding. your patience We delays, thank crosstalk call.

and over then session. ahead. remarks, move George. We on like question-and-answer will prepared now go the we'll I to to make Please turn to now would the call Zach

Zach George

Thank you fourth and call. everyone year joining for our full XXXX earnings on quarter us

that affect this pandemic the to everyone markets continues staying hope As global unprecedented safe during people around time. and COVID-XX is the We world.

material the remains the to procedures and operations year as of while minimizing our health to February. any our disruption I employees consumers, first commercial safety ensure my committed remain experienced years not employees. and celebrated priority to top disruption operations To-date, two Our We stringent COVID-XX. protection has related Sundial CEO our completed first of or of Sundial operations. and its recently to in

XXXX, the proposition and excess challenges, rapidly evolving we joined in on conditions. and value core control, focus our inadequate a Sundial I a internal team cost including number of As leverage, faced difficulties, early external operational lack of industry

the pricing on the race potency has Consumers bottom of consumer to in to THC saturation along change. During supply been dynamic. Sundial an including across has an path discounts, industry focus rapid meet dynamic on price evolving forced segments and and Sundial levels a a not The immune this several quality the XXXX, has profitability in with quality pivot to impacted value to low This the producers demands. in to licensed the market Canadian which in acceleration chased as Canadian threshold, resulted experienced market. over

redefined targeting organization and our conditions improved practices we changes result, and model. focused entire position debt, readjust a capacity cost Sundial made of We The us repaying material improving operating by deploy as to outstanding quickly strategy with and As the and simplified performance. a all restructured for successfully our a our business facility to market modular sustainable dictate. allows nature structure our

to improved in shareholders. While to our our do strength achieve our established significant goals we've financial to has two that still we last core materially, operations work Sundial the for have on the been and Sundial's negatively best driven repositioning of practices and preferences. potency complete results meet that data as our quarters drive impacted we have by quality consumer focused cultivation practices evolving

in move facility. While cultivation opportunity many for of differentiation from modular currently to peers Canadian has to or seeing to renewed core inability forward. as Sundial We its we going entirely, away commitment deliver view this consistent partially our due outcomes, cultivation are cultivation, indoor competency their our an

these We have and are yield progress potency, improvements quality, in to see excited accelerated and cost. changes

During Sundial's average profiles inception. QX, the potency terpene saw in in at we highest harvest

that believe consistency. ever to improve just continue last starting to consumer cultivation are month. to we've our our with are meet results potency we concrete manufacturing demand practices also to we show short, dramatic the We harvest highest and pulled changes like determined In made to

on Alberta. We areas these more will including markets, continue with British details in to of Ontario, provide create this key Andrew increase distribution in will strategic progress retailers and and partnerships points Columbia momentarily.

unrestricted free XXX of initiatives, recent north number result has currently focused of is balance an a cash and Sundial of a As million. capital debt

A use lot wondering of continue focus how explore shareholder strategic We opportunities a will capital. are deploy we to on maximizing our to capital that with you value.

stewardship are returns have to and evaluate management of maximizing robust for and a board priorities continue on opportunities, investments number of key pipeline corporate our identified executed and We team. deployed on and a capital

than Our investment portfolio of fees a cannabis subsequent the and realized investment XX.X XX.X invested subsequent income fourth program generated already more you experience to to profitability. late results. to high-quality Jim to million and processing in strong Sundial investments. commentary has We've in I efficient early quarter with strategic the on facility call To-date, now reinforced XXXX Sundial's further related all. in our million financial tax results. million. the positive position, yielded financial end of year-end $X consumer our broad our packaged cultivation path team's combined confidence goods and pass will sustainable and for management's Thank

Jim Keough

remind in are Canadian to morning Thank everyone you, otherwise listening dollars that who Zach, all that to I'd amounts mention in. stated. unless good all like this I denominated and morning are

for debt unrestricted and Let's start and December XX, liquidity and XXXX, improvements March fourth XXXX, at issuances programs Sundial year, capital COVID. on shares XXXX, year market in had a million under million started the that XX, a the cash complete had of with XXX quarter restructuring, proceeds we hand. cash XXXX, initially equity equity-linked free. our debt the To our of which a million $XXX of $XX.X the of common equity early $XXX transactions, impact the half on In exercises. process delayed hand was we've In we achieved financial summarize aggregate completely structure. of warrant of and by cash review we eliminated $XXX Sundial capital gross equity for a principal of the the of unrestricted the and dispositions, debt through second approximately conversions, exited The million million at of in and combination issued repayments, asset of number of

compliance cannabis gains, We minimum offerings additional the exciting related with of XXX cannabis and NASDAQ for proceeds based and achieved strategic related issued focused Canada internationally. programs, We capital also shares. our bid million we into week, interest for portfolio and common shares subsequent and income cannabis to-date. under of million. we've million realized registered SAF equity fees the strategic million We with gross following. XXXX, The then at of end in an We warrant direct portfolio to And year the strategic additional quarter million. entered $XXX in requirement bid investments market first $XX investments exercises. in related of $X.X portfolio prices partnership closed on entered on investments approximately an Group generated this into opportunities the investments regained the And closing XXXX $XX.X

first joint an Sundial. million The a is Opportunity $XXX with Special with partners mandate of and from third-party of by initial the limited commitment venture commitments admission Fund

the and financial position position While opportunities on of the evaluate our financial seen meaningful deployment execute and a cash shares, equity a of have into reserves. with issued it outstanding transform ability from strategic through and in to stability including precarious the in robust has pipeline dilution, of debt common issuances resulted currently of X.X billion strength, conversions a share to company

Now let's turn our to revenue. focus results operating starting with

to Branded represented XX% increased unbranded quarter. total revenue corresponding wholesale $XX.X XX%, revenues, total were lower XXXX. to of to In over full gross down million an $XX.X by of $XX.X $X.X resulted from net XX% For sales XX% revenue QX a revenue compared to revenue third QX the XXXX, XXXX net when XXXX XXXX, million. increased million. months of net net net to XX.X in increased revenue revenue from to X% in shift for for million. XX which net the three The QX by million, quarter increase QX our year Branded ended December of the

to inhalable the received Our consumer. by continue products be cannabis well recreational

XX% million to is of net a the products, Our comprise vape in provisions recreational the increase of in savings. previous majority fourth grew representing gram for compared price This $X.X from fourth million gross industry been of quarter. which cartridge consumer were cost for shifts to In to Gross over right-sizing quarter. pre-rolls compression quarter the used important across expenses previous focus our and sales and and operating control the segments. XXXX, than dried of delivering our $X.XX to quarter. compared flower model, previous was was which realized quarter. Average million, per due response we gram General gram the Cost $XX.X the is savings and in when the million substantial $X.X supply in lower value X% by the to to has And realignment the operations quarter. $X.XX XXXX. to in quarter meaningful sales $XX administrative decreased from selling branded price cost of quarter fourth cash the equivalent Sundial per conditions per sustainable an prior revenue XX% reflective

by for the For the workforce reductions to consulting wages due The in full million, decrease million to was previous year our we million mainly $XX XX.X optimizations. year. from fees of G&A reduced compared X.X to and XXXX, expenses salaries, XX%

impairment the $X.X loss for year, for were ended year. million three gross million revenue $X adjustments December cultivation investment margin mix. value largely fair expenses months efficiency million XXXX of of the as was lower the higher the to for million quarter, from three the sales a offset to million, circumstances improved to year. during the XX, for due year changes September loss an of XXXX of and continue and margin X.X investment decrease in consumer continues compared we product operations margins. during million EBITDA December cash over the foreign categories. million loss of analyze for million decreased in XX, and and did by pricing XX.X was to XX, million, in discipline year per improvements. was X.X constrained and portfolio We we This were continuing and marketing for the quarter impact to and X.X cannabis in limiting offset reduced the been capital. months XXXX. cost meet XX, ended year. revenue. invested X% product recorded partially X.X capital our of X.X net primarily have cost due XXXX, focus completed QX cost preferences. due in and In X.X expenditures to facilities exchange reflects ended Adjusted Sales marketing facilities construction higher to on capital production of to and reduced were to in up full loss cost for margin We XXXX year, its revenue X.X a previous a previous G&A marketing and months throughout a sold to million essential our a marketing and expenditures loss expenses mainly in a early margin optimize X.X cost the Total brands, by of latter decrease cash for for previous Adjusted in year QX year expenses XXXX, EBITDA XX.X three While for initiatives compared was Adjusted compared XXXX ended Sundial to related XX.X and December processing half to XXXX the cultivation in initiatives reduction XXXX, a was higher reductions result million to for operations gram our and of to The for compared the $X.XX, the The million sales million. mix. fully adjust ramp maintenance net the the decrease gross gross Olds higher brand the reflecting adjusted of in XXXX as reduced before previous certain compared compared pause early X.X quarter of to the we was expenses in million, expenditures our previous of inventory cost to

to in capital processing maintenance. million expenditures for $X.X budgeted automation, related minor and facility XXXX have improvements We

COO provide Now related some Sundial to invite I further operations. to and Stordeur, of like remarks President Andrew would to

Andrew Stordeur

Thank you, Jim.

excellence Sundial's the cultivation to volatility, to will competency. remain see we While core is committed continue industry

provides best products growth. sustainable long-term for Our inhalable continued the focus opportunity on

year. R&D the our XXXX. the competitors average change company's made of have identify quality, the bottling improvements consumer the to Let net to to our total months year, we we at quarter. significant wholesale excited A we time and only sales the and strategy made the on several offerings. team's cultivation. in in XX% and In made small crucial continue consistently highest because do of recently sweet restructuring improve cannabis team see that its promise, consistently during ensuring get the included from you to it's the to decision it restructuring to in offering cost product and market change we to above deliver the same the We've assurance in on cultivation relative mix in market the progress in progress progress efforts penetration mid highest and the completed the our first cycle. our on achieved In will THC, with challenging in hand to adapted anticipate recently average cultivation, XXXX. last in scale of XXXX Since dried, announced promise, their made our offerings in accelerated fourth potency At some flower To to made of products our To We over product I'm teens order need our products, capability the of consumer weighted performing of competency me our started; ensure to and our was only the three increased hand potency cultivars cultivation we consistently yield available. growing new evolve throughout driving upper to update brand freshest Leaf including cannabis help would in sales new spot that provide XX% this past deliver the weighted Top develop batches still the We key increased and divested continue brand better good cannabis work on we highest have that improved. also cultivation bring our the months, second harvest, half of do. hand the history focus we quality branded and beginning proud has potency we results. our XX We've Sundial for we In Several channel. testing previous in quality and wants. to sales our from XXXX on XXXX of XX% potency processes, manicured the plants our preferences. on metrics this we consumers area quality continue improvements quality to still begun continue year, recently are of have XXXX, quality the as half to to processes.

chain supply our SKUs our all across simplified also brands have We formats. and and rationalized

proliferation XXXX Given sale current SKUs beginning a SKU from innovation a approach to we The an the space limit company pipeline. the and XXX optimized the with market continues to We robust approach. of dynamics, more at maximize this XX portfolio less SKUs at proactive year. went to than way shelf took with beginning customers of to and develop than

XXX% product our production to increase ramped up XXXX continue quarter consumer our formats in and pre-roll we fourth the mix We demand. meet into to and diversify or by over

license also Leaf solventless solventless the of We solventless suite of processing extracts XXXX cannabis in quarter manufacturing We a added the the with into concentrates hash. bubble fourth launch with simply of a concentrates. Top for entered agreement and our

for in portfolio took products. our challenge price portion We prices our to with added agreement a chocolate we through our composition decision a and business in mix a lower Alberta fourth XXXX. at the monetize our and order compression the remained right sales size, the edibles chocolatier. inventory to XXXX Finally, of in of to and distribution Industry wide quarter headwind based portfolio

focus premium in and the segment value mix To product the We to margins. maximize better generate on and competing greater our deliver consumer. continue to

that the deliver on customers that We promise stronger engage by long-term. to that are the consumers against supporting challenge we This XXXX. continues brand be top-line in profitability higher will products may how going to in lead ramp the mix quality to beliefs a price preferred But of purposeful growth lower our industry. product be in and our in compression

to XXXX, and of market and a inventory the half dynamic the holders. be both This SKU boards in license impact provincial rationalization retail industry efforts. key softening cultivation In Now can to our curtail we We are quarter industry first first Canadian XXXX, to sales had in provinces. to of seeing attributed most activities the harvesting demand. do this match we of anticipate managing

XXXX. XX,XXX monthly results, we costs. basis XX% compared number by to XXXX, fourth quarter were increase a December Cultivation costs While reducing million grams quarter this able X.X quarters. on January our from in cases in in a cases from our throughput production decision certainly in increased fourth the while to XX.X to XXXX harvested million impacted reduced business of our and delivered also in comparative of to cases XX,XXX in reduction We were XX% the the of

increase investment to marketing to brands continue portfolio sales initiatives. our in our and We targeted

include distribution majority while provinces, As of a the model of a key internal broker to to scaling priority we the for points run facilitate products, we Sundial in for currently increasing sales us consumers' access force own process Quebec. of in the are our

Given route sustainable coverage in-house ability and sales our our of breadth through through are on we to drive market expertise management expertise. depth team's to betting capability, ROI in our developing

are of price from on across areas expected with fronts. key time. improvement supports investment and as foundational several we and And this Sundial. far culture in transformative a These operation. XXXX country. learning customers take changes our continuous improvements promotion we're the done We with a already progress on along from of had seeing drive We distribution at Challenging certainly doing the learnings

we While for the a remain back sustainably we encouraged this progress made work the profitable Zach on to do call we have to that, like turn business; I'd remarks. still driving past closing in year. understand, to With

Zach George

ensure privilege a dedication Together, was forced to versus had to year has tremendous decisions under of past make up pandemic. made and largely many stability. lift play work progress. when remarkably in We're wavered. This our Sundial commitment term a It's the strategically defense. never and to alongside have whose been last and we year think longer we were employees now heads because the Andrew. to difficult not survival year management new Sundial able and just XXXX difficult to greater and Thanks,

Thank better customers and support. Thank please for team us thank any believe I I inception. their you I'll think I is the to the turn their now for today time since today. joining shareholders our stay than for period. for at success thank continued operator trust back for that I safe. Sundial our it positioned their you. And our for efforts, question over

Operator

you. Thank

We from BMO will Our comes now begin of session. Tamy the Chen [Operator question first Instructions] Capital Markets. question-and-answer

Tamy Chen

additional businesses if markets elaborate types Zach, a have additional robust on whether of referenced I the you broadly geographies kind could taking wondering pipeline? this of a it why, strategic thinking was or investments And structures to to when on or bit strategy and embark is of and additional of this what the then, more of you'll in you investments, game it's just Sundial comes that of the end kind this that bit agreements on pipeline speaking, wondering these strategy? kind or

Zach George

we're working of not terms be structured would pipeline is we're second main Canada So just commentary vanilla the tell going you I specific at, looking give falls we're the lot be as that to And to in on significantly of what well as mispriced. two into would One in categories. on cannabis that a investments. the We depth today. certain generally view manner? But as sector we're in being this that direct a transactions speaking, in M&A. can question where is why your internationally in or the cases deploying And not capital capital but sector, more

direction. the or and either very any And we're to within started And to attracted these and banking in opportunities sector you and return that not opportunities. execute where see inefficiencies tend on credit very interesting in to capital attractive the you deployment the so markets, participating risk adjusted sidelines have community,

Tamy Chen

Understood.

is occurring noticing my this has also just year. been second And Okay. that's the downs. some past inventory question write through quarter And

result continued pricing taking are ongoing wondering downs, resulting downs? why just market is you just and the Thanks. a write ongoing I'm what So changes or they it write in

Zach George

Yes.

just me and first greater working to is So aggressively bring efficiency cultivation our team let say outcomes. to that our of processes all,

see this where, liquid even to have the And potency, was year, of one, performance this to and with we if would look and preferences liquid. move and behavior teens historic so for as the operating rewind example, of in mid marketplace chasing beginning backdrop potency, we changing retail. in potency that you against at if the been would XXXX, difficult witnessed, by with XX% we've you unacceptable. be number product But the quite move the flower the consumer the that very less be And through end --

our to making that having extent And for So they changes potency that an and as aggressive perspective, be accounting to harvest, and outcomes been from team diminish we've on consumers. that the profiles forward. and focus down that impaired us going have we're should delivering improve average it's And has increase delighting those substantially. certain key terpene write ensure to led to a the product needed

as the the blacking know, in that have lever. to a on of to continue Sun effectively Canada's as weekly way a segment also basis dropping. And dynamic we industry impacting in you north the value see of the of in And, sort You is pricing out really value prices will segment. its on XX% the space

prices the last year, And so for XX over dropped the for saw example, instances for example, over months. by XX% we packs, XX certain course in value gram of

another look been a forced to take dynamic that's inventory evaluations. also So our us at that's

Operator

of Our Azer question comes from Vivien next Cowen.

Vivien Azer

follow wanted the on pricing please. to up question, I first

price THC there's deflation level. sounds price a even potency XX% value clearly in at So softening like

level any up? is So potency we're pricing is where holding there

Zach George

that? Andrew, want take to do you

Andrew Stordeur

look, quickly. for moved Yes. question. think Hi, the very Thanks good morning, I Yes, it's Vivian.

you're teens where get the mid then And think half to I the into XX% XXXX, exactly, of year, year. in of premium at the So through that seeing back markets play as XX%, start going. is XX% last you really midway segment,

will on XX% trying forecast XX% on at But other but more to well. and premium too, its basis, now grasp on you retailers, it's right start answer it's industry markets moved doing of that to at the level. is see established a we forma U.S. is over be to segment in role we think area a we're we're see in premiums get soon. premium and you now, the so to at fast looking that right such large play industries anything pro do to quickly, demand certainly that XX, we mix when boards, the will don't the question part above the time, look of think right about by hard to by And a segment other value think the I I level the what is some So moving potency play potency is unconstrained anytime segment now, we potencies and start off And that obviously And XX in stopping inhalables. very, very seeing about

Vivien Azer

Okay, 'XX, given when data appropriate, restructuring, longer How XQ you of little a it you call really obviously kind actually the cultivation we in sense revenues? practices. revenue which very understood. vet like And the very driven to is see your that a have doing practices need might for scale mix approach dial bit cultivation were to obviously, a Do different. being more much base to you your do that your of looks continue

Zach George

take that. Yes. Look, I'll

make this, you in think sales branded said to on was think transition consistent right, our I branded, focus think that XX%, mix a point on in was I did versus key XXXX to there, versus in we just XX% I wholesale. been mix, pretty our revenue XXXX. of and And we've total

to And not race, of branded stated, grew is So getting how at that that around was about to as we're we're of about year-over-year the consistent and revenue I is price the also key mindful that's think that, be market. fact seeing when contributing you point all that in looking the the a Vivien, all when And not sales the you And really equally. penetrating it product we're created benefits equally, when rat think to I into we're XXX% not I comparisons, of to actually, that seeing. revenues kind solid. by comes compression if that exponentially, of one you're price deflation created from so that mindful versus it, XXXX, XXXX, thinking direction got

invested we're health stay the also, and we've that we're, is mentioned I over drive time, in going continue core the that help going our certainly significantly cultivation sales, in focused to in which opening segment, breadth value my So of potency segment, we premium remarks. on to in to coverage, see

in that that confident is And And elements to piece transformation is we're you the I do mentioned, to we've understand pretty But we critical 'XX. mix to think from excellence. just putting we're to that. So going foundational that. made place, about feel that the continue 'XX to cultivation super

Vivien Azer

on And squeeze more try I'll the Great. sales to you mentioned because in one force.

sales SG&A management be inform of in We've your actually certainly it from internal being the competitors monitoring, are So KPIs an would opposite move that? some to you. run competencies move around you're direction. to Because function. operations? so tends seen appreciate Thank perhaps able to there away there run own your a confidence intensive in that Are that more your sales

Jim Keough

fairly Great pretty we across much approach went a through question. Look, XXXX retail country. with the light

hybrid a model. We are running

for balance English progress So And region. then We decided the run of broker model we in do candidates to a in province We've seen good we of Quebec. feel that's that appropriate. And Ontario. looking we We're in like is distribution. we're markets in-house. cover the one retail look number looking by at, key our run do the metric expansion at far happening how

to in out. it country our sales in-house perspective, over as the by have doing experience the cost world it And probably we've that. close view of increased class in and an we to here, needs last, put our that pay intention So, we've four to to XX%. tremendous in-house on But coverage got field every we not weeks sales investment And management. investment drive force breadth ability across

not a that So here value have back year. to we retailers we're to add last be anticipating, to just to had time going chance to get we able over are

distribution with So early and about optimistic We're we're good we excited the part in regards of that. are initiatives XXXX to seeing very some here.

Operator

Markets. Kideckel from of Capital ATB question David next Our comes

David Kideckel

quarter. to is which as a this the some between arguably on vehicle, We're licensed striking Sundial's valuation part softness. the of also impressive a Congrats of I an now. also considering right what investment back you're and producer the the strategy disconnect to considering pretty want big and go deals reason think here, the

for value? just understand side Zach if business not into of So how this give, do how give what's attribute we just, help you Thanks. is to us Can at investment our vehicle think, stopping the your you're some us account short of taking guidance? team, can maybe color street you to any the opinion, I'm can you could in and because how I with forward look getting that goalposts we strategy. wondering So moving

Zach George

as historically. And to let Thanks, speak months, to that and the answer the the David. on just of initiatives made that update that some well do can in would able this our quickly question. to expect best And the there's no get to profitability. you bold even the market you promotional claims are themselves. fundamentals to industry I Look, we're and XX we'll been our shortage statements hard have XX in really be rest aware, days. within the say of for of working I results coming next to and tell you we

valuation, have growth in So of would bit a in of and at simple you I sector, quite interest we lot going Sundial. just beyond. the the a on is to a point Clearly, When Canada there two make points.

you space and than of equity where struck financings, this and both that cash actually today, the at that's certainly look cash. in is are about when $X quickly you industry across reach think that resources the for $X not valuations capital if and So make across the being additionally, cash board, Sundial. just more debt would I impacting the balances, look you worth conclusion statement equity And can our you then of

want I and some are comment impacting combination of Sundial, So to factors broader views beyond investors the two in market that. those but don't think

David Kideckel

that one indicated just it of say go release Is looking this SPAC, you wondering sector of a as capital Understood. SPAC maybe SAF some can this with as press PRs here, can kind of of we sub And Thanks question well. the made cannabis I color. then, geography? are SPAC ask the the and with the on well your for Thanks. this specifically or one will that just expect? Group which sector within you JV strategy relevant of with But given specific is some the week for at? And the that I'm strategies towards the about in a their many

Zach George

David. Sure,

to order. working reverse clarify, in Just

not made. appropriate until So to we we comment were have filings the going on SPAC

that And that we've which you it as currently. Opportunity should very an and potential from about as our as we separate are distinct And opportunity opportunity. in Fund, referenced clear So we're public launching very statements. a the think about

in is a the Group experience where deep tackle what its forward and will we expect terms paying to to with Sundial going for we we see, lead joint help detail at initiatives general have the much forum fund be And But Fund, in Opportunity updating venture equity private greater those this we partnered initiatives us third-party on and limited partnership. look SAF space. principals of number will a And operating you partner that of those the forward. the experience have manage So join you with to a in investor, very in of capital fee initiatives. seasoned

David Kideckel

can okay. squeeze And quick if more Understood, one color. Thanks one I here. for the in just

of flower, overall the here higher the dried numbers obviously, Just about XX% about back product we're was from to XX% quarter mix. vapes, revenue revenue was mix looking which margin than at your for

a revenue you share quarter? for wondering, for similar to you do matter? this here? Or expect Thanks. Is expect for mix vapes that the increase decrease Just do example, or next

Andrew Stordeur

on just Top Andrew, been here, in key clear of I'll inhalables address laid-in came vape early a Look, the came the of that. our two were strategy question. XXXX, We obviously offering out That's game, vape brands. Sundial a a to kind And when we Leaf with really the is part phase and out. under pretty question. we've good great on

launch. very really to by into And But going I stopping, seeing, were that in differentiating obtain. compete facing is in That accretive and to the more it we equation entrants the said, continue looking into prices for you we're opportunities a the what us, point the will they're be differentiation. certainly of do about, amount and And that vape, And that traction players. and space. primarily extraction And standpoint, is lot done provide side, some might hydrocarbon that of innovation a bit segments part exciting a formats regards a vape, like that ethanol I mix that tremendous gram price value the need see we're competing competition would in been we it's which we a we in, coming know, here's for vape launch So and Sundial. think looking accretive to more I create obviously to vape. make, value that's at vape drive in lying again, we and there's for to don't that in we're industry And headwind of We consumer should how evolution to because, for from think a we're the not which focus there. say saw certainly of to one good those there's us. further key coming again, the two of first as that Leaf currently our margin to have it's a with happy we're of of segments And mix on any the be we've with, in is space new do there, better to intend but as consumers mix. you next to XXXX regards on with certainly do value COX. in And Top with

about certainly we're but excited the numbers. early in that seeing competitive offering, XXXX, that of part So

Operator

comes Miehm Capital question from Our Instructions] [Operator next Markets. of RBC Doug

Doug Miehm

investment do Couple capital of call the What think say, there? you be guess let's mix the M&A you between business, two to questions. business? build expect invested the When the between the areas to then, side that of your what I you and about

Zach George

a a execution, live cause could actually answer of Doug, which great of swing lack elements M&A certainty of in timing number a on hundreds of question. that's a by dollars. and that files. on There We're millions working of are

we that We something not strategic underwriting to is opportunities highly in not or we set we're chasing going stone budgeted quantum are this and is that and guidance ultimately, give think And something that out have today. for timing are So for the Sundial.

Doug Miehm

growing we that you Because me that you're you what can't of actually the think be the can levels? is, maybe concerned tell you're to XX% those goods meet you to and see today ability be going think to get or that about things XX% should write potency, is of When that to your Okay. getting what all XX%? should to if your XX% are included crop in offs we regular percent growing of about one the cost I

Jim Keough

I'll Yes. that. take

you're quarter. on. something operations. particularly, So in our core our some Doug, in our also right, the starting are -- activities. the are cost for that you're But we've average us, it promising working progress outcomes to plagued terms -- comes we've the our -- is results. harvest, getting earlier the were said, capital when of with avoid ensuring of as very, showing cultivation we And brought tremendous right, wasting And essential made We've very new down that some to it's that absolutely and to it's company that we fourth a of are potency in not key focus genetics our poor cultivation

great So and a focus key it is it's question. a

Doug Miehm

than a hurdle, us but that? is it Yes, of or growth that half meeting can lower you not an of lot is give your sort the idea

Jim Keough

not can in be that have at of has our I Yes, meeting talk the still half the of worst. in the and impairment quarters. that No, just And half reduced consumers the given terms objectives number worst suitable, potency, that coming through XXXX about is see analysis, is that would roughly going magnitude improving XXXX. yes, our materially. reduced in not our in the rough quite And revamped number to fact all but in of not continues you this our was and at to more been that say we product, early static. we're cultivation to that back be able practices But

Operator

of from Genuity. comes question next Our Shaan Canaccord Mir

Shaan Mir

share. market got is here one I first The just on the

straight and two for X%, down above from quarters X.X% that's in second So the quarter ago. it's again a declining quarter

strong momentum it's sales And the obvious side. vape here. showing and pretty that a the from value commentary, shift you're is market So on driver prior key

keeping if back? commentary see any on that start the over premium was XXXX? in ramping do provide Andrews shaping expect segment And wondering share when up in commentary on be how going internally, the market so mind to could short-term you I forward. that, it And you focus will you

Andrew Stordeur

that. take I'll Andrew here,

bit kind of So of maybe with kind for filter Sundial I'll share a for of we're view it how industry that products. at branded start And looking then the into market I'll down here.

the penetrate impact think look annual and move So, right other in seasonality business. industry, CPG the the and to other it's direction you industry compound for in this and producers rightfully good. when that there's at like ability market. going look, an any look country growth when you that's so the that and at impact, I to There's headwinds some But to continues tailwind are

their February, be I we're holders February last you're slight moving tell I nine it's since in in small BC showing direction Health in soft being the industry. of to week numbers point the by declining some that March, February, -- there. stores Canada having results So, share some Ontario, grow about a provinces, industry in very QX, us, year. across coming XX, on when think you prelim growth, Alberta's, double-digit preliminary important obviously at And competitive, to you performance new they've would minus that, because it's industry been the seven understand think industry going on at weren't the having some we playing certain versus key very can to it's I right But, to And, off with I January, industry is in seeing decline closed November issued minus the a rolling license in week. at I we're right the a I now, we're of look markets, team the think just in and but that tell continue was very, showing seven base. market phone where, winning, of still December, Ontario this March most are leadership markets, and we're XX, decline

XXX Ontario, stating. the You've a got, number in point province you've that of they're sitting this year some of LPs coming XXX in at got

retailer commitment to investing now a we marketing, have So it's looking going have what And when that retail to and is putting proprietary on are some we continue with confident There's cultivation, we I'm to a some our those or our there factors grow doing data challenge retailers. you share. of whether I'd also retailers. in on guys we're market out be a great that there are great looking to brands, mindful other really at headset, there focused ability sets, LPs big impacting in be relationships are that we're these sales are well that, whether platform are are some But, at. to,

good to high we're from So competition. levels we're how into the grow making confident for that. market want seeing that the right investments But we'll can share, continuing we we're certainly do and it's in see of we And, that of signs going a side, focus be group a there's holistic to that, momentum XXXX.

Shaan Mir

on for brief color the Thanks second the a chocolate update happening just there. then, was And on what's arrangement. with one the

are speak in products any the considering the desire for how can at any all there's any moving if received? market you pipeline on have any story they've just contract commentary and parts that manufacturing also So adding And there been partner? other or the to now, on

Andrew Stordeur

that will take again. I

with chocolates, into other the of that manufacturing really markets AGLC. local we that that whose we products. chocolatier seen we're last late launched consumer we're take Alberta, phenomenal One contract year and put as getting about So, this that. signing well partnerships. province do last by Alberta excited up you to year And in on off makes ended we've two year And mentioned ready

under we'll partnership. we're bring consumers the excited those is well along and to to with across innovation being cool good that working as country. to very see two released continue chocolate them So products lines that Canadian on those There's working be some coming

as on we're of of early the licensing a And and much facility signed well, part that. that's the concentrates. indeed our very in this company a obviously, we also focused at They're playing Rocky called going in Solventless, year. We made investments out to Simply specialized with look View arrangement that field,

more we'll focus. the in come we're that cultivation still to going moving at they're opportunities, remain kind And to that and and around dedicated largely the competency I of be forward. going foundational And so look we're at our continue to that inhalable will up would very being look piece mention, to certainly of country opportunities core but those

Operator

to conference for This to I like George session. remarks. Zach over question-and-answer closing concludes any turn the would back the

Zach George

And for joining care you. safe. call Take everyone stay and to our thanks Thank today.

Operator

call. today's This conference concludes

disconnect you your day. Thank a for have and participating lines. may You pleasant

SNDL (SNDL) 18 Mar 212020 Q4 Earnings call transcript