SNDL Reports Third Quarter 2025 Financial and Operational Results

Core Insights - SNDL Inc. reported strong financial results for Q3 2025, achieving record free cash flow and positive cumulative free cash flow for the first nine months of the year, indicating operational and profitability improvements [4][6][8] - The company maintains a strong balance sheet with no debt and $240.6 million in unrestricted cash, positioning it for growth and investment opportunities [5][6] Financial Performance - Net Revenue: In Q3 2025, net revenue was $244.2 million, a 3.1% increase from Q3 2024, driven by a 13.5% growth in the combined Cannabis business, partially offset by a decline in the Liquor retail segment [6][8][30] - Gross Profit: Gross profit reached $64.2 million, up 1.9% year-over-year, with a gross margin of 26.3%, reflecting a slight decrease of 0.3 percentage points [6][8][30] - Operating Income: The company reported an operating loss of $11.1 million, improved by 40.3% compared to the previous year, influenced by non-cash items and restructuring charges [6][8][30] - Free Cash Flow: Free cash flow hit a record $16.7 million, primarily due to a reduction in working capital, despite significant CAPEX investments [6][8][30] Business Segments - Cannabis Retail: Generated net revenue of $85.0 million, a 4.8% increase year-over-year, with operating income growing by 107.2% [18][21] - Cannabis Operations: Achieved a 49.5% increase in net revenue to $37.4 million, although it faced an operating loss due to inventory write-offs [20][27] - Liquor Retail: Experienced a decline in net revenue to $139.4 million, down 3.6% year-over-year, with same-store sales decreasing by 2.6% [15][16] Strategic Initiatives - The company is pursuing the acquisition of 32 cannabis retail stores from 1CM Inc. for $32.2 million, pending regulatory review [12] - SNDL is investing in organic growth with plans for five new Cannabis store openings and two new Wine & Beyond stores in Q4 2025 [12] - The company continues to restructure SunStream Bancorp Inc. to enhance shareholder exposure to medical cannabis markets [12][27] Investment Portfolio - As of September 30, 2025, SNDL's investment portfolio had a carrying value of $410.8 million, with a positive operating income of $1.5 million generated during the quarter [27] - The company realized a gain of $5.3 million from the partial sale of its equity position in High Tide Inc. [27]