SNDL Reports First Quarter 2025 Financial and Operational Results

Canada NewsWire

EDMONTON, AB, May 1, 2025

The Company Delivers Record Gross Margin and Positive Cash Flow; Announces Strategic Review of U.S. Platform and Listing Structure

EDMONTON, AB, May 1, 2025 /CNW/ - SNDL Inc. $(SNDL)$ (CSE: SNDL) ("SNDL" or the "Company") reported its financial and operational results for the first quarter ended March 31, 2025. All financial information in this press release is reported in millions of Canadian dollars unless otherwise indicated.

SNDL has also posted a supplemental investor presentation on its website, found at https://sndl.com.

The Company will hold a conference call and webcast presentation at 10:00 a.m. EDT (8:00 a.m. MDT) on Thursday, May 1, 2025. The conference call details can be found below.

MANAGEMENT HIGHLIGHTS

   -- Net revenue: In the first quarter of 2025, net revenue totaled $204.9 
      million, reflecting a growth rate of +3.6% compared to the same period in 
      the previous year. This increase was primarily driven by robust growth of 
      +16.8% in our combined Cannabis business. 
 
   -- Gross profit: Gross profit for the first quarter of 2025 reached $56.6 
      million, marking a strong growth of +12.4% compared to the same period in 
      the prior year. 
 
   -- Gross margin (1): The gross margin in the first quarter of 2025 was 27.6%, 
      setting a new record for the company. This represented an improvement of 
      +2.2 percentage points year-over-year. 
 
   -- Operating loss: Operating loss for the first quarter of 2025 amounted to 
      $(12.1) million. This was partially impacted by a loss of $(4.5) million 
      from the SunStream portfolio driven by a negative valuation adjustment, 
      and restructuring charges of $(3.0) million. The quarter is lapping a 
      favorable $9.1 million SunStream portfolio valuation adjustment in the 
      first quarter of 2024. 
 
   -- Cash flow: Cash flow was positive at $2.5 million during the first 
      quarter of 2025. This was driven by the collection of Delta 9's 
      outstanding loan balance of $28 million, offset in part by the repurchase 
      of SNDL's common shares and the previously announced minority investment 
      in High Tide stock. 
 
   -- Free cash flow (1): Free cash flow in the first quarter of 2025 was 
      slightly negative at $(1.1) million, despite seasonal impacts on revenue 
      and the associated build-up of working capital, representing an 
      improvement from the same quarter of 2024. 

"In the first quarter of 2025, we saw robust growth in our Cannabis segments and record aggregate Gross Margin. Our improvements in Free Cash Flow generation helped us nearly break even despite seasonal impacts and our unrestricted cash balances increased versus year end." said Zach George, Chief Executive Officer of SNDL.

"During the first quarter of 2025, we advanced several strategic initiatives to drive long-term value creation and strengthen our platform:

   -- Collected $28 million in outstanding debt from FIKA Company ("FIKA") 
      pertaining to loans previously extended to Delta 9 Cannabis Inc. ("Delta 
      9"), inclusive of an interest premium settlement 
 
   -- Received approval from the Florida Department of Health for the transfer 
      of the Parallel (Surterra Holdings, Inc.) license - an important 
      prerequisite for completing the Parallel restructuring process 
 
   -- Repurchased 5,761,735 SNDL common shares for cancellation at an average 
      price of US$1.79 per share during the first quarter of 2025 
 
   -- Completed the acquisition of 4,350,000 common shares of High Tide Inc. 
      ("High Tide"), representing 5.4% ownership 
 
   -- Announced the Company application for listing its common shares on the 
      Canadian Securities Exchange ("CSE") and commenced trading on April 11, 
      2025. 

Subsequent to the first quarter of 2025, on April 9, 2025, we announced that we had entered into an arrangement agreement to acquire 32 cannabis retail stores from 1CM Inc. ("1CM") for a total cash consideration of $32.2 million. We have also announced on April 22, 2025, the launch of our highly anticipated Rise Rewards loyalty program, designed to help Value Buds customers save more, earn more, and get even more from every visit. SNDL intends to expand the program across its retail banners in the future.

SNDL's Board of Directors has approved an amendment to the Company's share repurchase program (the "Share Repurchase Program"), as described in further detail below

Finally, our Board of Directors has initiated a formal strategic review to evaluate SNDL's exposure to U.S. multi-state licensed cannabis enterprises and its current exchange listing status, as outlined later in this document.

Our track record of operational execution, diversified asset base, and strong balance sheet - including $220.9 million of unrestricted cash as of March 31, 2025 - gives us with the flexibility to pursue both organic and inorganic opportunities with compelling returns. This review supports our long-term goal of establishing SNDL as a global cannabis leader and delivering sustainable shareholder value." concluded Zach George.

TOTAL COMPANY HIGHLIGHTS

 
                                      Three months ended March 31 
($000s)                               2025         2024      % Change 
IFRS Financial Measures 
------------------------------------ 
Net revenue                               204,914   197,750      3.6 % 
Gross profit                               56,641    50,400     12.4 % 
Operating loss                           (12,053)   (4,377)   -175.4 % 
Change in cash and cash equivalents         2,508   (6,087)      141 % 
 
Non-IFRS Financial Measures (1) 
------------------------------------ 
Gross margin                               27.6 %    25.5 %      2.2pp 
Adjusted operating loss                   (9,031)   (4,466)     -102 % 
Free cash flow                            (1,090)   (6,388)      -83 % 
 
 
 
(1)  Gross Margin is a supplementary financial measure 
      calculated by dividing Gross Profit by Net Revenue. 
      Adjusted operating income (loss) and Free Cash Flow 
      are specified financial measures that do not have 
      a standardized meanings prescribed by IFRS and therefore 
      may not be comparable to similar measures reported 
      by other companies. See "Non-IFRS Measures" section 
      below for further information. 
 

BUSINESS SEGMENT HIGHLIGHTS

SNDL operates and reports its business through four segments: Liquor Retail, Cannabis Retail, Cannabis Operations, and Investments. Additionally, a consolidated total for Cannabis is presented, encompassing the combined results of the two Cannabis segments, along with the revenue elimination associated with the Cannabis Operations sales to the provincial boards that are expected to be subsequently repurchased by the Company's licensed retail subsidiaries for resale. Corporate and Shared Service expenses are reported as "Corporate".

 
                                Three months ended March 31 
($000s)                         2025        2024       % Change 
Net Revenue 
------------------------------ 
Liquor Retail                      109,472    116,054     -5.7 % 
    Cannabis Retail                 77,540     71,306      8.7 % 
    Cannabis Operations             34,319     22,395     53.2 % 
    Intersegment Eliminations     (16,417)   (12,005)    -36.8 % 
                                 ---------  ---------  --------- 
Total Cannabis                      95,442     81,696     16.8 % 
Investments                             --         --        0 % 
Total                              204,914    197,750      3.6 % 
 
Operating Income 
------------------------------ 
Liquor Retail                        1,980      2,180     -9.2 % 
    Cannabis Retail                  5,162    (1,042)    595.4 % 
    Cannabis Operations              (486)        891   -154.5 % 
                                 ---------  ---------  --------- 
Total Cannabis                       4,676      (151)    >1,000% 
Investments                        (1,601)     13,079   -112.2 % 
Corporate                         (17,108)   (19,485)     12.2 % 
Total                             (12,053)    (4,377)   -175.4 % 
 
Adjusted Operating Income 
------------------------------ 
Liquor Retail                        1,980      2,180     -9.2 % 
    Cannabis Retail                  5,162    (1,042)    595.4 % 
    Cannabis Operations              2,409      1,146    110.2 % 
                                 ---------  ---------  --------- 
Total Cannabis                       7,571        104    >1,000% 
Investments                        (1,601)     13,079   -112.2 % 
Corporate                         (16,981)   (19,829)     14.4 % 
Total                              (9,031)    (4,466)   -102.2 % 
 

Liquor Retail

SNDL is Canada's largest private sector liquor retailer, operating at April 30, 2025 in 165 locations, predominantly in Alberta, under its three retail banners: "Wine and Beyond" (13), "Liquor Depot" (19), and "Ace Liquor" (133).

 
                            Three months ended March 31 
($000s)                     2025        2024       % Change 
Net revenue                    109,472    116,054     -5.7 % 
Gross profit                    27,803     28,806     -3.5 % 
Gross margin                    25.4 %     24.8 %      0.6pp 
Operating income                 1,980      2,180     -9.2 % 
Adjusted operating income        1,980      2,180     -9.2 % 
 
   -- Net revenue for Liquor Retail continued to decline in the first quarter 
      of 2025 due to ongoing market demand softness. Additionally, the first 
      quarter of 2025 had one fewer day compared to 2024, and Easter 
      consumption shifted to April 20, 2025, from March 31 in the previous 
      year. Same-store sales (2) decreased by -4.9% in the first quarter. 
 
(2)  Same store sales are specified financial measures 

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