SNDL Reports Q4 and Full Year 2024 Financial and Operational Results

[PRESS RELEASE] – CALGARY, Alberta, March 18, 2025 – SNDL Inc. reported its financial and operational results for the full year and fourth quarter ended Dec. 31, 2024. 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 and shareholder letter on its website at https://sndl.com.

The company will hold a conference call and webcast presentation at 10 a.m. EDT on March 18, 2025. The conference call details can be found below.

Management Highlights

• Net revenue for the fourth quarter of 2024 was $257.7 million, and $920.4 million for the full year of 2024, representing growth of +3.7% and +1.3%, respectively, when compared to the same periods of the previous year. Both the quarter and the full year represent new records for the corporation, driven by strong growth from our combined cannabis business of +16.5% in the fourth quarter and +10.6% over the full year.
• Gross profit also reached new records, with $68.8 million in the fourth quarter of 2024, and $240.3 million for the full year, representing growth of +20.0% and +26.2%, respectively, when compared to the same periods of the previous year.
• Gross margin ⁽¹⁾ of 26.7% in the fourth quarter of 2024 and 26.1% for the full year are also new records, representing improvements of +3.6 and +5.2 percentage points, respectively, when compared to the same periods of the previous year.
• Operating loss was $(76.1) million for the fourth quarter of 2024, driven by a negative valuation adjustment of the SunStream portfolio of $(65.7) million, a Spiritleaf intangible write-off of $(15) million, and restructuring charges of $(0.6) million. Excluding these exceptional items adding up to $(81.3) million, our underlying operating income would have been positive for the quarter. These exceptional items largely contributed to the full-year reported operating loss of $(103.8) million.
• Cash flow was negative by $(44.6) million in the fourth quarter of 2024, driven by the acquisition of Nova's minority equity interest, as well as the repurchase of SNDL's common shares. Full-year cash flow was positive by $23.3 million.
• Free cash flow ⁽¹⁾ was positive both in the fourth quarter of 2024, at $11.6 million, and for the full year, at $8.9 million.

"We are pleased with the continued progress reflected in our fourth-quarter and full-year 2024 results, as we set new records and exceeded our commitment to achieving break-even free cash flow for the year,” SNDL CEO Zach George said. “We have accomplished this while continuing to transform our business by investing in growth opportunities and strengthening our organizational capabilities. The SNDL team remains dedicated to raising the bar in 2025 and beyond.”

During the fourth quarter of 2024 and the first months of 2025 up to this date, the company took several strategic steps to enhance its foundation for long-term success and shareholder value:

• Completed the privatization of Nova Cannabis Inc. through the acquisition of the remaining minority equity interest
• Acquired business and assets of Indiva Inc., positioning SNDL as the largest manufacturer of infused edibles in Canada
• Received approval from the Florida Department of Health for the transfer of the Parallel (Surterra Holdings Inc.) license—an important milestone and prerequisite for completing the Parallel restructuring process
• Repurchased 10,764,107 SNDL common shares for cancellation at an average price of US$1.81 per share
• Acquired 4,350,000 common shares of High Tide Inc., equivalent to 5.4% ownership

In addition to these achievements, the company has applied for the listing of its common shares on the Canadian Securities Exchange (CSE) and anticipates the CSE listing to go live in April 2025, providing its shareholders with increased flexibility and optionality.

The progress made during the last year in operational performance and financial discipline is undeniable, and the company is encouraged by the many opportunities it still has ahead. The company’s strong balance sheet, including $218.4 million of unrestricted cash as of Dec. 31, 2024, is not only a competitive differentiator but also provides the flexibility to thoughtfully deploy capital into organic and inorganic investments with attractive returns. The company plans to continue building strong fundamentals, as it expects to build momentum through 2025 with the goal of generating $100 million in positive annual free cash flow within the next three years.

“We want to thank our employees for their dedication and passion in delivering the progress we made during the last year, as well as our shareholders for their continued trust and support," George said.

Total company highlights

Business Segment Highlights

SNDL's business is operated and reported in four segments: Liquor Retail, Cannabis Retail, Cannabis Operations and Investments. Corporate and shared service expenses, as well as the revenue elimination associated with the cannabis operation sales to the provincial boards that are expected to be subsequently repurchased by the company's licensed retail subsidiaries for resale, are reported as "corporate".

Liquor Retail 

SNDL is Canada's largest private sector liquor retailer, operating on March 17, 2025, in 165 locations, predominantly in Alberta, under its three retail banners: "Wine and Beyond" (13), "Liquor Depot" (19), and "Ace Liquor" (133). 

• Net revenue for liquor retail continued to decline in the fourth quarter of 2024, although at a slightly slower pace than in previous quarters, as we continue to experience market demand softness. Same-store sales⁽²⁾ decreased by -3.5% in the fourth quarter, and -4.6% for the full year.
• Operating Income expanded significantly in both the fourth quarter and the full year, despite the revenue declines, driven by the introduction early in the year of our proprietary data licensing program, enhanced pricing and mix management strategies, including private label expansion at accretive margins, as well as cost optimization and in-store productivity improvements.

Cannabis Retail

SNDL is one of Canada's largest private-sector cannabis retailers, operating on March 17, 2025, in 185 locations under its three retail banners: "Value Buds" (117), "Spiritleaf" (67, of which eight are corporate stores and 59 are franchise stores), and "Superette" (1). The company's cannabis retail strategy is based on several pillars, including the quality of its store locations, its range of products, and the unique experiences provided to customers. Using data and insights from a large volume of monthly transactions enables SNDL to leverage technology and analytics to inform and improve its retail strategy.

• Net revenue for cannabis retail grew dynamically over the full year, and particularly in the fourth quarter, as our value buds banner continues to gain market share, and we also run some additional promotional activities in the fourth quarter. Same store sales increased by +6.3% in the fourth quarter, and +3.5% over the full year.
• Operating income was impacted in the fourth quarter by a $15 million Spiritleaf intangible asset impairment, as we have converted several Spiritleaf stores into Value Buds. These conversions are increasing revenue, profitability and cash flow, and therefore create shareholder value. However, when the profit pool associated with the Spiritleaf intangible asset was reduced, it triggered the one-time, non-cash impairment.
• Adjusted operating income excludes the Spiritleaf intangible impairment, showing the underlying operational profitability of the segment, which has seen a material improvement when compared to the previous year, both in the fourth quarter and the full year.

Cannabis Operations

SNDL has a diverse brand portfolio from value to premium, emphasizing premium inhalable formats and a full suite of 2.0 products. With enhanced procurement capabilities and plans to continue evolving toward a cost-effective cultivation and manufacturing operation, the cannabis operations segment is a key enabler of SNDL's vertical integration strategy.

• Cannabis Operations reported a significant step up in revenues and profitability throughout the year, particularly in the fourth quarter of 2024.
• Net revenue expansion is driven by increased provincial board and business-to-business distribution and a continued focus on consumer innovation, quality and operational efficiencies. Reported revenue includes $7.5 million from Indiva between Nov. 4 and Dec. 31, 2024.
• Gross profit and operating income improvements are driven by efficiency improvements from scale as well as productivity initiatives.

Investments

• As of Dec. 31, 2024, the company has deployed capital to a portfolio of cannabis-related investments with a carrying value of $449.1 million, including $413.1 million to SunStream Bancorp Inc. This carrying value was reduced by $51.3 million during the fourth quarter of 2024, mainly driven by a negative valuation adjustment of the SunStream portfolio.
• In the fourth quarter of 2024, the investment portfolio generated a negative operating income of $(63.7) million, including a $(65.7) million negative valuation adjustment of equity-accounted investees (SunStream portfolio). This non-cash valuation adjustment is the consequence of multiple factors, including increased U.S. industry risk and volatility following the negative adult use Florida vote last November, as well as the worsening performance of Parallel and Skymint investments due to delays in the completion of their restructuring process while operating in challenging competitive environments.
• The negative Florida election vote to legalize adult-use cannabis in this state is seen as an unfavorable development by the industry and the investor community, as evidenced by the significant declines in equity valuation of different Cannabis multistate operators. For SNDL's investment in SunStream assets, the company finds a positive in this development, as it gives Parallel more time to complete its restructuring process without the additional competitive pressure of a changing market environment.
• Subsequent to the end of the fourth quarter, on Feb. 4, 2025, the Florida Department of Health approved the transfer of Parallel's license. While a few additional steps are still required, this is an important milestone in completing Parallel's restructuring process.
• On March 17, 2025, the company announced the purchase of 4,350,000 common shares of High Tide, equivalent to 5.4% ownership, at an average price of US$2.46 per share.

Equity Position

• $667.6 million of unrestricted cash, marketable securities and investments, including investments in equity-accounted investees, and no outstanding debt on Dec. 31, 2024, resulting in a net book value of $1.1 billion.
• On Nov. 14, 2024, the company announced that its board of directors had approved a renewal of the share repurchase program upon its expiry on Nov. 20, 2024. The company's share repurchase program continues to be available to lower the outstanding share float. SNDL will continue to assess opportunities to utilize the program to the extent that management believes it is in the best interest of SNDL's shareholders. During the three months ending Dec. 31, 2024, the company repurchased 5,002,372 common shares for cancellation at an average price of US$1.84 per share. Subsequent to the quarter end, in January and February 2025 the company repurchased an additional 5,761,735 common shares for cancellation at an average price of US$1.79 per share. This brings the total number of common shares repurchased during the last six months to a total of 10,764,107 at an average price of US$1.81 per share.

This press release is intended to be read in conjunction with the company's consolidated financial statements and the notes thereto for the years ended Dec. 31, 2024, and 2023, and the accompanying management's discussion and analysis. These documents are available under the company's profile on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.shtml.

Non-IFRS Measures

Certain specified financial measures in this news release are non-IFRS measures. These terms are not defined by IFRS and, therefore, may not be comparable to similar measures reported by other companies. These non-IFRS financial measures should not be considered in isolation or as an alternative for or superior to measures of performance prepared in accordance with IFRS. These measures are presented and described in order to provide shareholders and potential investors with additional measures for understanding the company's operating results in the same manner as the management team.