SNDL Inc. Q3 FY2025 earnings call

Growth: Cannabis Retail had 3.6% same-store sales growth and 12 basis point market share gain; Wine & Beyond banner had 2.9% same-store sales growth; accelerated opening of 5 new Cannabis stores and 2 new Wine & Beyond stores in Q4; Cannabis Operations revenue up 50% with international sales at $4.2 million. ### Profitability: Record quarterly free cash flow and positive cumulative free cash flow for first 9 months; adjusted operating income improved despite noncash items. ### People: Enhanced talent deployment, launched recruitment efficiencies project, monthly leadership development series.

Liquor Retail: Net revenue $139.4 million, down 3.6% y-o-y; gross profit $36.7 million, margin 26.3%; operating income $11.2 million, down $0.6 million y-o-y. Cannabis Retail: Net revenue $85 million, up 4.8% y-o-y; gross profit $22.5 million, historic high; operating income reached new record. Cannabis Operations: Net revenue $37.4 million, up 50% y-o-y; impacted by $3.9 million inventory write-offs and $2.7 million fixed asset impairment; adjusted operating income negative $4.8 million. Investment Segment: Favorable year-over-year. Corporate Segment: Impacted by $6.8 million increase in share-based compensation.

Accelerated investment pace for store openings in Q4; continuing regulatory review for 32 1CM cannabis stores acquisition in Ontario; SunStream restructurings expected to provide shareholder exposure to medical markets in Florida and Texas.

Volatility in stock price leading to noncash charges affecting operating income; regulatory uncertainties with Ontario approval for 1CM acquisition; ongoing litigation related to SunStream restructurings.

Q: Clarify inventory and fixed asset impairments in Cannabis Operations and gross margin outlook.

A: $3.9 million inventory adjustment impacts gross profit, $2.7 million fixed asset impairment is below gross profit; without adjustments, Cannabis Operations margin would be around 25%.

Q: Drivers of sales to provincial boards and mix timing.

A: Cannabis Operations sales to provincial boards growing, but third-party retail soft; working on new products and innovation for momentum.

Q: 1CM transaction status and Cannabis Retail market outlook.

A: 1CM transaction waiting Ontario regulatory approval; Cannabis Retail seeing market maturity, focus on consumer relationship and execution; same-store sales growth slowing, margin improving.

Q: Rise Rewards program rollout.

A: Still early days, tracking well, engagement strong, plan to roll out similar program for Liquor business in future.