SNDL's 2024 Earnings: A Missed EPS Target and the Path Forward

Julian WestWednesday, Mar 19, 2025 6:40 am ET
5min read

In the ever-evolving landscape of the cannabis industry, (SNDL) has been a company that has garnered significant attention from investors. The recent release of SNDL's full-year 2024 earnings report has provided a mixed bag of results, with an EPS miss that has left many investors questioning the company's trajectory. However, a deeper dive into the financials and strategic initiatives reveals a more nuanced picture of SNDL's performance and future prospects.



The EPS Miss: A Short-Term Setback

The EPS miss in SNDL's full-year 2024 earnings report has undoubtedly been a disappointment for investors. The company reported a negative Q4 net income of $67.2 million, primarily driven by a $65.7 million noncash negative fair value adjustment to the SunStream investment. This adjustment, coupled with other exceptional items, resulted in an operating loss of $103.8 million for the full year. While this EPS miss is a short-term setback, it is essential to consider the broader context of SNDL's financial performance and strategic initiatives.

Financial Performance: Record Highs and Strategic Gains

Despite the EPS miss, SNDL's financial performance for the full year and fourth quarter of 2024 shows significant achievements. The company reported record full-year net revenue of $920.4 million, representing growth of +1.3% compared to the previous year. This growth was driven by strong performance in the cannabis business, which saw a +10.6% increase over the full year. Additionally, gross profit reached a record $240.3 million for the full year, with a growth of +26.2% compared to the previous year. The gross margin for the full year was 26.1%, representing an improvement of +5.2 percentage points compared to the previous year.



Strategic Initiatives: Positioning for Long-Term Growth

SNDL has implemented several strategic initiatives and acquisitions to drive future growth and profitability. One of the key acquisitions is the acquisition of Indiva Inc., which positions as the largest manufacturer of infused edibles in Canada. This acquisition is expected to enhance SNDL's long-term growth potential by expanding its product offerings and market reach. Additionally, SNDL has completed the privatization of Nova Cannabis Inc. through the acquisition of the remaining minority equity interest, which further strengthens its position in the cannabis market. The company has also received approval from the Florida Department of Health for the transfer of the Parallel license, a key milestone in the restructuring process. Furthermore, SNDL has acquired a 5.4% participation in High Tide's equity and reactivated its share repurchase program, retiring 10.8 million SNDL shares. These initiatives have been effective in driving growth and profitability, as evidenced by the company's record full-year net revenue, gross profit, and gross margin, along with positive cash flow and free cash flow. The company's cannabis segment has shown strong momentum with steady revenue gains for the 12th consecutive quarter, growing well ahead of market averages. The company's liquor segment, despite facing market headwinds, has never performed better under SNDL's stewardship, achieving all-time high gross profit and gross margin for both the full year and the fourth quarter.

Industry Benchmarks and Competitor Comparison

SNDL's financial performance for the full year and fourth quarter of 2024 shows significant achievements that can be compared to industry benchmarks and competitors. According to the provided information, SNDL reported record full-year net revenue of $920.4 million, representing growth of +1.3% compared to the previous year. This growth was driven by strong performance in the cannabis business, which saw a +10.6% increase over the full year. Additionally, gross profit reached a record $240.3 million for the full year, with a growth of +26.2% compared to the previous year. The gross margin for the full year was 26.1%, representing an improvement of +5.2 percentage points compared to the previous year.

These figures indicate that SNDL is performing well in terms of revenue and profitability. The cannabis segment, in particular, showed strong momentum with steady revenue gains for the 12th consecutive quarter, growing well ahead of market averages. This suggests that SNDL is outperforming industry benchmarks in the cannabis sector.

Comparing SNDL's performance to competitors, the company's achievements in gross profit and gross margin are noteworthy. The gross margin of 26.7% in the fourth quarter of 2024 and 26.1% for the full year are new records, representing improvements of +3.6 and +5.2 percentage points, respectively, when compared to the same periods of the previous year. This indicates that SNDL is effectively managing its costs and improving operational efficiency, which is a competitive advantage in the industry.

Furthermore, SNDL's positive free cash flow of $8.9 million for the full year is a significant achievement. This is the first year the company has achieved positive free cash flow, which is a testament to its operational and financial discipline. This positive cash flow allows SNDL to invest in growth opportunities and strengthen its organizational capabilities, positioning it favorably against competitors who may not have achieved this milestone.

Conclusion: A Balanced Outlook

In conclusion, while the EPS miss in SNDL's full-year 2024 earnings report is a short-term setback, the company's financial performance and strategic initiatives position it for long-term growth and profitability. SNDL's record net revenue, gross profit, and gross margin, along with positive cash flow and free cash flow, indicate that the company is on the right track. The strategic acquisitions and initiatives, such as the Indiva acquisition and the privatization of Nova, are expected to drive future growth and profitability. Investors should consider the broader context of SNDL's performance and strategic initiatives when evaluating the company's prospects.