SNDL, Inc. Q4 FY2024 earnings call

• Strategic initiatives: Privatization of Nova, acquisition of Endiva, Florida Department of Health approval for parallel license transfer, 5.4% participation in High Tide's equity, share repurchase program, and application for listing on the Canadian Stock Exchange.
• Financial highlights: Record full year net revenue ($920 million), gross profit ($240 million), and gross margin (26.1%). Positive free cash flow of $9 million achieved for the year.
• Operational improvements: Productivity and cost optimization initiatives across the organization, inventory reduction of $4.7 million in Q4 and $6 million full year, store efficiency optimization in liquor retail, and strategic promo investments in cannabis retail to strengthen market position.

Cannabis Segments:

• Cannabis retail: Q4 2024 net revenue reached $83.2 million, a 10.7% increase year over year. Full year net revenue was $311.7 million, a 7.5% growth year over year.
• Cannabis operations: Q4 2024 net revenue was $37.1 million, a 42% growth year over year. Full year net revenue was $109.5 million, a 26% growth year over year. The cannabis operations segment delivered four consecutive quarters of positive gross profit, ending the year with a Q4 gross margin of 27.2%. Liquor Segment: Q4 2024 net revenue declined 3.4% compared to the prior year, but gross margin expanded. Full year gross margin for the liquor segment was nearly 41%. Revenue contribution: Liquor segment net revenue decline impacted consolidated results, while cannabis segments showed strong growth.

• Committed to delivering $100 million in annualized free cash flow within the next three years.
• 2024 free cash flow exceeded guidance, achieving a positive $9 million.

• Market slowdown impacted liquor segment revenue.
• Operational challenges in US investments due to competitive environment and unfavorable Florida vote affecting growth expectations.

Q: On liquor retail outlook, what is the expectation for the segment?

A: Anticipate flat revenue in 2025, with long-term industry growth estimated at 1-1.5% despite volume headwinds.

Q: On US investments' operational performance and need for additional capital, what's the outlook?

A: Focus on Canada infrastructure build-out as top priority, with US opportunities to be explored after restructuring processes are complete.

Q: Rationale behind CSE listing application?

A: Creates optionality for growth, with potential scenarios for US plant-touching activity, but no immediate plan confirmed.

Q: Regarding cannabis retail banners and consumer preference for discount retail, are more doors to be converted to value buds?

A: Both converting banners where beneficial and exploring organic/inorganic retail development opportunities are possible, with a focus on maximizing returns and market presence.