Release Date: March 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SNDL Inc (SNDL, Financial) reported record full-year net revenue, gross profit, and gross margin, along with positive cash flow and free cash flow.
- The Cannabis segment showed strong momentum with steady revenue gains for the 12th consecutive quarter, growing well ahead of market averages.
- SNDL Inc (SNDL) achieved all-time high gross profit and gross margin for both the full year and the fourth quarter, driven by productivity and cost optimization initiatives.
- The company achieved positive free cash flow for the first time, exceeding their guidance with a positive $9 million.
- Strategic acquisitions, such as Indiva, positioned SNDL Inc (SNDL) as the largest manufacturer of infused edibles in Canada, enhancing long-term growth potential.
Negative Points
- The Liquor segment experienced a revenue decline due to a market slowdown, impacting overall consolidated results.
- A $65.7 million noncash negative fair value adjustment to the SunStream investment affected adjusted operating income.
- The Liquor Retail segment faced continuous market headwinds, resulting in a 3.4% revenue decline compared to the previous year.
- The company reported a negative Q4 net income of $67.2 million, primarily driven by the SunStream fair value adjustment.
- SNDL Inc (SNDL) anticipates flat revenue growth for the Liquor segment in 2025, reflecting ongoing market challenges.
Q & A Highlights
Q: Could you discuss the outlook for the Liquor Retail segment, given the weak same-store sales performance?
A: Alberto Paredero-Quiros, CFO, explained that the slowdown in liquor sales is a global trend impacting the market. For 2025, they anticipate flat revenue growth, with long-term growth expected at 1% to 1.5%. Volume declines are expected to be offset by pricing adjustments.
Q: Can you elaborate on the operational challenges faced by your US investments and whether they might need additional capital?
A: Zachary George, CEO, noted that while they see opportunities for improvement, their current structure prevents plant-touching activities. They believe in the long-term potential of their investments, particularly in the Florida market, and are focused on building infrastructure in Canada and exploring US opportunities.
Q: What is the rationale behind the CSE listing application, and does it relate to potential US plant-touching activities?
A: Zachary George, CEO, stated that while the CSE listing provides optionality for growth in the US and internationally, no corporate decision has been made regarding plant-touching activities. The listing is part of their strategy to explore various growth avenues.
Q: What products are driving growth in the Cannabis Operations segment, excluding Indiva's contributions?
A: Alberto Paredero-Quiros, CFO, highlighted strong growth across all product categories, particularly pre-rolls, vapes, and edibles. Increased distribution and improved product quality are key drivers, along with momentum in international sales and B2B business.
Q: Given the focus on discount retail in Canadian cannabis, will you continue employing multiple banners or convert more to Value Buds?
A: Zachary George, CEO, explained that while they will continue converting banners to improve returns, they also remain open to acquiring additional banners. They believe in consolidation and have a pipeline for both organic and inorganic retail development.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
