SNDL (NASDAQ:SNDL) executives highlighted record full-year financial results and expanding profitability during the company’s fourth-quarter 2025 earnings call, while also acknowledging a late-year slowdown in Canadian cannabis retail demand and ongoing market contraction in liquor.
Chief Executive Officer Zach George said 2025 marked “another step forward” for SNDL, with new records in full-year net revenue, gross profit, adjusted operating income, and free cash flow. Chief Financial Officer Alberto Paredero-Quiros added that the fourth quarter showed “strong profitability improvements despite softness at the top line,” as margin expansion and cost controls offset modest revenue declines.
Free cash flow and profitability records in 2025
SNDL also reported its first year of positive full-year adjusted operating income, which George attributed to operational efficiencies, productivity initiatives, and synergies from the Indiva acquisition. He noted that the only adjustments to operating income in 2025 related to restructuring costs tied to Indiva integration and a corporate restructuring program that is in its third and final phase.
In the fourth quarter, SNDL posted:
- Net revenue of CAD 252 million, down 2% year-over-year, driven by contractions in both liquor and cannabis retail markets
- Gross profit of CAD 70.2 million, up 2.1% year-over-year and described as a new quarterly record
- Gross margin of 27.8%, a 110-basis-point improvement and a new quarterly record
- Adjusted operating income of CAD 12.8 million, which the CFO said was a record quarterly result
- Free cash flow of over CAD 10 million, lower than the prior year due to working capital timing, higher capital expenditures, and inventory investments for store openings
Paredero-Quiros said the quarter’s improvement versus the prior year reflected not only the absence of a CAD 65.7 million SunStream valuation adjustment recorded one year earlier, but also “meaningful underlying operational margin improvements.”
Full-year revenue rose as cannabis growth offset liquor declines
For the full year, Paredero-Quiros reported net revenue of CAD 946 million, up 2.8% year-over-year. He said the increase was supported by 11% growth from the combined cannabis segments, partially offset by a 2.8% decline in liquor. Management added that all segments gained market share during the year.
SNDL’s gross profit grew 7.6% year-over-year, supported by a 120-basis-point increase in gross margin. The CFO credited improved promotional execution, mix management, and productivity initiatives for the margin gains, while also pointing to reductions in G&A spending driven by in-store efficiency gains and the corporate restructuring program.
Segment performance: Liquor and cannabis retail margins improve amid mixed demand
In liquor retail, SNDL reported revenue declines of roughly 3% in both the quarter and full year (rounded), reflecting broader market conditions. Despite this pressure, the company cited market share gains, the performance of its Wine and Beyond banner, and continued private label growth. Paredero-Quiros said liquor segment gross margin expanded 120 basis points in Q4 and 70 basis points for the full year, reaching 26.0% and 25.9%, respectively, with both quarterly gross profit (CAD 38.7 million) and full-year gross margin described as records for the segment.
During Q&A, management said the overall liquor category has experienced a “pretty consistent” ~3% revenue decline and ~4% to 5% market decline. Looking into early 2026, the CFO said the company was seeing similar market declines in the first couple of months, but pointed to areas of relative strength where SNDL is focusing investment—particularly Wine and Beyond, which management said has been growing despite category weakness, and private label offerings benefiting from increased consumer price sensitivity.
In cannabis retail, Paredero-Quiros said fourth-quarter revenue was essentially flat year-over-year, while a 190-basis-point gross margin improvement and store-level efficiency gains helped lift Q4 operating income to CAD 8 million, up 33% year-over-year. For the full year, cannabis retail delivered a new revenue record of CAD 330 million (up 6%), supported by 3.9% same-store sales growth and new store openings. Operating income exceeded CAD 30 million, more than doubling compared to 2024, driven by margin expansion and overhead optimization.
Management also discussed a late-2025 cannabis retail slowdown. In response to an analyst question about same-store sales declines, SNDL said the market experienced “absolute declines” in November and December. The company attributed the softness to several factors, including retail saturation in key provinces, lapping an earlier period of aggressive promotions, retailers shifting focus toward profitability and mix, reduced traffic, and increasing store closures among smaller independents as lease commitments come due.
In cannabis operations, Paredero-Quiros said results were more volatile as the company lapped the Indiva acquisition in the fourth quarter baseline. While Q4 net revenue was flat year-over-year, gross profit, gross margin, and operating income declined due to stabilization efforts tied to a volume ramp-up and infrastructure improvements at the Atholville cultivation facility. On a full-year basis, cannabis operations produced record net revenue of CAD 144.7 million, up 32% year-over-year, driven by Indiva and growth in international sales. Adjusted operating income for the segment was CAD 2.5 million, down modestly year-over-year, which management attributed primarily to under-absorbed overhead investments.
Capital allocation, store expansion, and balance sheet positioning
George highlighted what he called a “best-in-class” balance sheet, noting SNDL ended 2025 with no debt and over CAD 250 million in unrestricted cash. He said this position supports disciplined capital deployment across organic and inorganic opportunities.
Management said 2025 capital expenditures increased by nearly 50% versus 2024, largely directed to new store openings across cannabis (SunStream) and liquor retail. In Q4, SNDL increased capital expenditures and working capital investments to support three additional SunStream store openings and two new Wine and Beyond locations.
George also noted progress on operational simplification, saying SNDL was “days away” from completing a full consolidation of its ERP systems, which he said is expected to create opportunities to optimize processes and enhance analytics.
On shareholder returns, George said the company has continued to utilize its share repurchase program. Since Q4 2024, SNDL has repurchased 15.1 million shares, including 4.3 million shares over the last 90 days.
M&A pipeline, international expansion, and U.S. investment restructuring updates
George said SNDL completed the first stage of its acquisition of Cost Cannabis retail stores from 1CM Inc., adding five locations in Alberta and Saskatchewan. Regarding the remaining 1CM stores in Ontario, he said the company is finalizing its review with the AGCO and expects to update shareholders on timing by Q2, adding that it “should be resolved shortly.”
On growth strategy, George said SNDL has a “pretty active pipeline” with a double-digit count of assets under review across multiple provinces, and emphasized the company is not relying solely on M&A to drive future growth. Still, he said the company expects an increased focus on consolidation across the Canadian landscape as same-store sales growth decelerates and as operators explore value-creation opportunities.
Internationally, management said it expects EU GMP certification for its site to be completed “sometime over the summer,” noting the process has been lengthy and that a change in administration in Germany has affected timing. George described international sales as still “early days” and a small portion of the business today, but said the company expects “material growth” and views the area as a top-three priority for future capital deployment.
In the U.S.-linked investment portfolio, management said the portfolio has been simplified to three positions, with a liquidation process underway for SunStream and recent return of capital as positions are monetized. George said Parallel is in a foreclosure process in Florida and Skymint is in receivership in Michigan. He noted the Parallel process was delayed for much of 2025 due to litigation, with a key settlement reached in December. He said the company now sees a path to resolve the foreclosure, potentially in Q2 or shortly after, and added that delays have been influenced by the lack of access to federal bankruptcy courts for cannabis-related insolvency proceedings.
About SNDL (NASDAQ:SNDL)
SNDL Inc, formerly known as Sundial Growers Inc, is a Canada-based consumer packaged goods company focused on the production, manufacturing and distribution of cannabis products. Headquartered in Calgary, Alberta, SNDL operates multiple cultivation and processing facilities across Canada, including indoor and hybrid greenhouses in British Columbia and Ontario. The company serves both adult-use and medical cannabis markets, supplying provincial distributors as well as operating through its own wholesale and retail networks.
The company’s product portfolio spans dried flower, pre-rolls, vape cartridges, cannabis oils, edibles and infused beverages under a variety of in-house brands.
