SNDL Reports Second Quarter 2025 Financial and Operational Results

Executive Summary

• SNDL Inc. reported its financial and operational results for the second quarter ended June 30, 2025, marking the first time in company history it achieved positive quarterly operating income and net earnings.
• Net revenue grew 7.3% year-over-year to $244.8 million, driven by a 17.4% increase in the combined Cannabis business and a return to growth in the Liquor Retail segment.
• The Company announced strategic initiatives including an agreement to acquire 32 cannabis retail stores from 1CM Inc. for $32.2 million, the launch of the Rise Rewards loyalty program, and a formal strategic review of its U.S. exposure and exchange listings.

Key Details

• Financial Performance (Q2 2025 vs Q2 2024):
  • Net Revenue: $244.8 million (+7.3%).
  • Gross Profit: $67.6 million (+16.2%).
  • Gross Margin: 27.6% (+2.1 percentage points).
  • Operating Income: $5.0 million (positive for the first time); Adjusted Operating Income: $5.8 million.
  • Net Earnings: $2.9 million (positive for the first time).
  • Free Cash Flow: $(7.9) million.
  • Cash and Cash Equivalents: $208.2 million; No outstanding debt.
• Segment Highlights:
  • Cannabis Retail: Net revenue of $84.4 million (+11.0%); Operating income of $8.1 million (+106.6%); Same-store sales growth of 8.2%.
  • Liquor Retail: Net revenue of $141.9 million (+1.0%); Operating income of $11.1 million (+30.6%); Same-store sales growth of 2.7%.
  • Cannabis Operations: Net revenue of $35.8 million (+43.5%); Operating income of $2.3 million (vs. loss of $1.9 million prior year); Gross margin expanded to 25.8% from 12.7%.
  • Investments: Operating income of $1.8 million; Carrying value of $406.1 million (including $384.2 million in SunStream Bancorp).
• Strategic Transactions & Initiatives:
  • Entered into an arrangement agreement to acquire 32 cannabis retail stores from 1CM Inc. for $32.2 million in cash; expected to close in Q3 2025.
  • Approved $9.5 million in CAPEX and working capital for organic expansion of Cannabis and Liquor retail footprints over the next 9 months.
  • Launched "Rise Rewards" loyalty program.
  • Initiated a formal strategic review to evaluate exposure to U.S. multi-state licensed cannabis enterprises and current exchange listings.
• Investment Activity:
  • Purchased 2,272,645 common shares of High Tide in Q2, bringing total ownership to 6,622,645 shares (8.2%).
  • Received $3.1 million cash distribution from Ascend Wellness Holdings.
  • Investment portfolio carrying value reduced by $23.4 million due to USD/CAD exchange rate fluctuations.
• Share Repurchases:
  • Board approved amendment to increase maximum repurchase limit to 10% of public float.
  • No repurchases completed in Q2 2025; previously repurchased 10,764,107 shares in Q4 2024 and Q1 2025.

Notable Quotes

• "Achieving positive quarterly operating income and net earnings across both metrics for the first time in the Company's history during Q2 2025 marks a pivotal milestone and underscores the effectiveness of our strategic improvement agenda." — Zach George, CEO
• "Unlike many of its peers, SNDL's strong balance sheet provides a strategic advantage as we continue to build a resilient and growth-oriented business. With no debt and $208.2 million in unrestricted cash as of June 30, 2025, we are well-positioned to pursue a range of high-return organic and inorganic growth opportunities." — Zach George, CEO