SNDL Inc. Q2 FY2025 earnings call

• Strategic pillars: growth, profitability, and people. The cannabis business grew at nearly 3x the rate of the Canadian recreational market. The Liquor Retail segment had modest growth with a 1% year-over-year net revenue increase, supported by factors like Easter timing and private label sales. The Cannabis Retail segment had an 11% year-over-year net revenue growth, driven by an 8.2% increase in same-store sales. The Cannabis Operations segment had a 43% year-over-year net revenue growth, driven by the Indiva acquisition and international exports. The company achieved positive operating income for the first time, with adjusted operating income at $5.8 million. There was disciplined cost management with a $5 million year-over-year reduction in G&A expenses. The company has a strong balance sheet with no debt and over $200 million in unrestricted cash, and is actively monitoring the US market and expanding its international footprint, serving patients in the UK and Continental Europe.

Liquor Retail segment delivered net revenue of $141.9 million in the second quarter of 2025, marking a 1% year-over-year increase. Its gross profit was $36.5 million, an increase of 2.2% year-over-year. Cannabis Retail achieved a new quarterly net revenue record of $84.4 million, representing 11% year-over-year growth. Cannabis Operations had net revenue of $35.8 million in the second quarter of 2025, reflecting a $10.9 million or 43% growth compared to the prior year. The cannabis business expanded at nearly 3x the rate of the Canadian recreational market, and each segment delivered year-over-year gross margin expansion.

• Expect meaningful growth in international sales in the back half of the year. - Committed to profitable growth in Canada and will continue to monitor market dynamics. - Although early days in Europe, international sales are showing accretive margins.

• Supply chain volatility in international markets. - Potential compression of margins in emerging markets. - Uncertainty in the US asset disposal process, including ongoing foreclosure and receivership processes.

Q: Congrats on the great quarter. You reported good growth in international sales this quarter but lower provincial board sales. Are those two related, and what's the outlook for international sales?

A: There's no lack of focus on the Canadian recreational market; expecting meaningful growth in international sales in the back half of the year, off a slow base, and monitoring markets in the UK and EU.

Q: Comment on RISE Rewards loyalty program rollout. How many members and in line with expectations?

A: Making daily progress, in the 6-figure range, early days with the program out for several months, will announce key milestones.

Q: View on cultivation expansion. Constraints and potential?

A: The Atholville facility is fully ramped, cultivation represents 15% of biomass needs, watching the cycle, conservative with capital, taking advantage of procurement opportunities.

Q: Satisfied with supply chain in international, margins?

A: Early days in Europe, margins are high but emerging market with potential compression, margins accretive to national margins.

Q: Liquor segment return to growth, specific to company or broader category?

A: Approach to banner management is a big driver, Wine and Beyond did well, still monitoring shifting consumer behavior.

Q: Wholesale revenue for cannabis, how much international?

A: International sales in the second quarter were $3.8 million.

Q: Aspiration in Canadian recreational market?

A: Focus on profitable growth, not sole focus on market share, operating income and free cash flow are priorities.

Q: Update on US assets consolidation?

A: Closing of restructurings needed, ongoing foreclosure and receivership processes, waiting on court rulings, Board reviewing listing status.