SNDL Inc. Q4 FY2025 earnings call

2025 marked progress with new records in net revenue, gross profit, etc. Free cash flow more than doubled in 2025 to $18 million. Cannabis business had 16 consecutive quarters of year-over-year revenue growth. Achieved positive full-year adjusted operating income. Increased capital expenditures by nearly 50% in 2025 for new store openings. Completed first stage of acquiring 1CM stores. Close to completing ERP system consolidation. Repurchased shares. Encouraged by U.S. cannabis rescheduling progress. Fourth quarter and full-year financial results showed improved profitability. Segments gained market share. Liquor segment had margin expansion and operating income increase. Cannabis retail had strong results with margin expansion and operating income doubling. Cannabis operations had revenue growth but volatility. Strategic priorities include growth (market share gain, capital expenditures for new stores), profitability (gross margin improvement, G&A optimization), and people (performance to pay, employee engagement initiatives).

Liquor segment: Fourth quarter net revenue declined by ~3% year-over-year due to market factors. Full-year net revenue decreased by 2.8%. However, through margin improvement, Q4 gross profit was $38.7 million, and full-year gross margin reached 25.9%, both new records for the segment. Cannabis retail segment: Fourth quarter revenue was essentially flat year-over-year. Full-year net revenue was $330 million, up 6%, with gross profit of $86.1 million and gross margin of 26.1%, both new records. Cannabis operations segment: Fourth quarter net revenue was flat year-over-year. Full-year net revenue was $144.7 million, up 32%, with gross profit of $32.9 million and gross margin of 22.8%, both new full-year records.

Focus on sustaining long-term profitable growth and shareholder returns. Address market headwinds through disciplined execution and balanced organic/inorganic investment. Expect industry consolidation to create opportunities. Cannabis operations see opportunities to enhance margins and expand capabilities.

Market slowdown affecting revenue in liquor and cannabis retail. Industry competition leading to some store closures. Uncertainty in U.S. cannabis investment restructurings. Delay in EU GMP certification process.

Q: About cannabis retail segment slowdown in second half, causes?

A: Factors include market saturation in provinces, lapping aggressive promotional period in prior year, some independents shutting down due to rent commitments and competition from larger operators.

Q: When to close 1CM stores acquisition in Ontario?

A: Finalizing review with AGCO, expect to report back to shareholders in Q2 at latest.

Q: Status of EU GMP certification and international growth outlook?

A: Waiting for last site visit, expect completion over summer. International business had decent growth in 2025 from small base, expect material growth but early days.

Q: Liquor retail outlook in 2026?

A: Market still expected to decline in low to mid single digits, but Wine & Beyond banner and private label show growth.

Q: U.S. exposure update, especially Sunstream DOS assets?

A: Portfolio simplified, Parallel in foreclosure process in Florida with key settlement in Dec 2025, expected to resolve in Q2 or after; SkyMint in receivership in Michigan.