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Sundial Growers Inc (NASDAQ:SNDL) Generates $19.3 Revenue in Q2

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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Sundial Growers Inc (NASDAQ: SNDL) CEO Torsten Kuenzlen joins Midas Letter to discuss the company’s Q2 financial report, the associated company revenues, and its footprint within the cannabis industry. This is Sundial’s inaugural quarterly earnings release as a public company following its listing on the NASDAQ stock exchange on August 1, 2019. The CEO states that “with over $20 million in gross revenue, that places us among the larger players.” Mr. Kuenzlen is working hard to grow the company to compete with the larger players starting with the completion of its initial public offering and the recent Bridge Farm acquisition subsequent to the second quarter. Bridge Farm is a producer of ornamental plants, flowers and herbs in the United Kingdom. This international acquisition allows Sundial access to marketshare in Europe. Sundial are concentrating on three areas internationally in which they call “Heal, Health and Play”; Heal: operating within the medical cannabis space, Health: the global health and wellness CBD opportunity, and Play: the company’s recreational adult-use product-line. Watch the full interview to hear everything the Sundial CEO has to say about the company’s financials and the latest company developments.

Transcript

James West: Torsten Kuenzlen joins me now. He is the CEO of Sundial Growers, a NASDAQ trader under the symbol SNDL. Torsten, welcome.

Torsten Kuenzlen: Thank you.

James West: Torsten, I can’t believe it’s taken us this long to acquaint ourselves with each other, considering how great your company has been doing, and how well, how highly spoken of it is in the industry. And recently you reported results which indicated great revenue. Tell me about Sundial Growers: what does the footprint all look like?

Torsten Kuenzlen: Thank you so much. Yeah, look, we’ve been a bit of a secret, here. We’ve grown really quick over the last two years, built a fantastic consumer packaged goods team that’s been driving the progress we’ve been making. Flying under the radar, I guess, successfully under yours until now, and of course, intending to change that. I think the NASDAQ listing kind of put us on notice, and then hopefully, the results today speak for themselves.

I mean, with over $20 million in gross revenue, that places us among the larger players. We think ourselves one of the Tier 1s. You know, we did a big acquisition in Europe, so we are now looking on the international side, as well. Playing in those three areas that we call Heal, Health and Play: Heal being medical cannabis, Health the global health and wellness CBD opportunity, and Play recreational cannabis, and doing that internationally. So, really excited about where the team is heading.

James West: Wow, that’s a great intro! How is it that you guys stayed so far under the radar for so long out there in Alberta? I mean, it’s like you guys just came out of nowhere and really just sort of took the stage by storm.

Torsten Kuenzlen: Yeah, there’s not a lot of coverage of private companies, and then, you know, you get on the radar once you go public. It’s been a blessing that we haven’t been, you know. So I think the consumer packaged goods approach of driving a profitable, sustainable growth model, versus one where, you know, you’ve got to build a huge business and backing profitability, is slightly different than what we’ve seen so far in cannabis. I think it differentiates Sundial. I’ve collected a great team, and I think now that the NASDAQ listing became more prominent, and people are beginning to see our numbers, we’re getting more calls, and it’s been good to be able to focus on building a good, solid foundation in our business over the last two years.

James West: Sure. You essentially started trading on the first of August this year, and to say the least, you’ve come to market at a time when the cannabis sector is basically under pressure as a result of the typical summer cycle of disinterest that sets in. how do you sort of envision that, how do you reconcile that, with where you’re going, and what is it that’s going to drive interest in Sundial Growers going the other way?

Torsten Kuenzlen: That’s a fair summary. I think the volatility in the industry has obviously been pretty pronounced, maybe even more so with the summer. Things like CannTrust certainly didn’t help. But you know, ultimately, I think the longer-term approach of building a business that our grandchildren hopefully could be proud of one day, and doing it one step at a time, one province at a time, one brand at a time, one product at a time, and then replicating that with the CBD approach that we’re going to take with our products across Europe, is going to set us aside.

Proactively, you know, our first day of trading wasn’t what we had hoped and looked forward to, you know. For me, honestly, IPOd at $13, and that first day, there’s some very strange trading dynamics in an overall volatile industry, and an overall volatile market. But I’m really proud of how we’ve bounced b ack. I see that today we’re doing pretty good here, trading a little bit against the trend, and hopefully our Quarter 2 results help.

James West: Yeah. Starting off with Q2 net revenue of 19.3 million, I’m curious as to what is the source of your revenue in order of sort of priority?

Torsten Kuenzlen: I think maybe most importantly, it’s all cannabis, you know?

James West: [laughter] That’s good.

Torsten Kuenzlen: So, as I look at some of the other P&Ls, you wonder how much of it’s cannabis and how much of it is other stuff. So look, it’s all cannabis revenue. As we’re building our operation, you know, we have a reflection facility in Olds, Alberta, where we’re now cultivating for sale in 74 grow rooms already, and I think that revenue has really helped. You know, when you come online at a new facility, some people say it takes three years to really dial in your rooms, but our modular, proprietary grow rooms that we’ve built that are all identical, which are fully controlled, all elements are under control, allowed us to return really fast and really improve our yields pretty aggressively.

But what we do do, in the beginning, is the first rounds of products have brand-new rooms and maybe not yet the quality that we want. We’re focused on the super-premium inhalable segment; that’s where Sundial is going to play. So we’ve been wholesaling some of our initial product to some of the other LPs that don’t really have product that we really want to put our brand name on. So it’s been a combination of some LP to LP sales, so to other licensed producers, and then, increasingly, retail through the provincial boards. And that’s going to swing all the way to almost exclusively through the provincial boards and the retailers as we move forward. 

James West: What is your most popular product?

Torsten Kuenzlen: At the moment, you know, we still have limited SKUs. So we’ve just started shipping more under the Sundial brand. We started with a product called Zenberry in our so-called Calm product line, and we’ve now launched three more in that under the Sundial brand. Excited about the next two brands that are going to come to market: it’s going to be Chopped Leaf (phon), really the best cannabis money can buy – that’s what I would call that brand – and that’s going to come out here in the next couple of weeks and months. And then we’re going to scale up across Canada. You know, we started in our home province here in Alberta; we’re still only in the flower format, only in 3.5 and 7 grams, right? So, still a lot to do, still spaces underneath each of our brands, a lot of geographies to expand into Canada. So, excited about the future, here.

James West: Great. Well, Torsten, we’re going to leave it there for now. That’s a great introduction to the company. Congratulations on your go public. I look forward to speaking to you more in the future.

Torsten Kuenzlen: Let’s do that. Thank you so much for your time.

James West: Thank you. Bye for now.

Torsten Kuenzlen: Thank you.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

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