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The call mixed clear operational and market challenges—most notably declines in net revenue (-4.4% YoY), a sharp drop in cannabis operations revenue (-14%) and compressed margins—with several credible strategic responses: an exclusive Jeter brand deal, retail margin improvements, a profit enhancement program expected to yield >$20M in incremental operating income, active share repurchases and constructive U.S. regulatory developments. Near-term cash flow and inventory/working-capital issues are material, but management has delineated remediation actions and efficiency levers that could materially improve results later in the year.
Management guided that they expect revenue growth to improve year‑over‑year through 2026 (as they lap softer comps in H2) and that profit‑enhancement actions—pricing, mix and efficiency initiatives—should generate more than $20 million of incremental operating income over the remainder of the year, noting upstream cannabis working‑capital issues were remedied after quarter end. In Q1 they reported net revenue of $196.0 million (‑4.4% y/y), gross profit of $53.0 million (‑$3.8M, ‑6.8% y/y) and a consolidated gross‑margin decline of 70 bps; cash of $213.4 million at March 31, 2026 (vs $252.2M at Dec. 31, 2025 that included $12.1M cash in transit); free cash flow of negative $7.6 million (down $6.5M y/y); 2026 share repurchases of 4.5 million shares; $2 million of G&A savings in the quarter; $4.2 million of data‑related revenue; and $3.6 million higher CapEx/lease payments. Segment detail: liquor same‑store sales ‑6.1% and revenue ‑4.9% with a +20‑bp margin improvement; cannabis retail same‑store sales ‑2.5%, gross profit $20.4M (+3.7% y/y) and +100‑bp margin (operating income $1.1M); cannabis operations revenue $29.4M (‑14% y/y), international sales $3.5M (up 94%), contract sales down to $4.5M from $9M, gross margin down ~7 percentage points to 19.7% (from 26.8%) and an operating loss of about $6.9M.
Exclusive contract for production and commercialization of Jeter assumed in April; production and inventory build began in March with initial shipments to provincial boards. Creates an end-to-end cross-border branded platform with potential to drive long-term growth.
Repurchased 4.5 million shares in 2026 under board-approved program. Reported cash of $213.4 million on March 31, 2026 (note: excludes cash-in-transit reclassified under IFRS amendments).
Liquor retail gross margin expanded by 20 basis points; cannabis retail gross margin expanded by 100 basis points; combined retail margin improvement ~50 basis points. Cannabis retail gross profit was $20.4 million (+3.7% YoY) and delivered positive operating income of $1.1 million.
Management implemented profit enhancement measures expected to generate more than $20 million of incremental operating income over the remainder of the year. Delivered an additional $2 million in G&A savings during the quarter.
International sales increased to $3.5 million (+94% YoY). Expanded cannabis retail footprint by six stores since year-end (including five Canna Cabana locations) and continued rollout of Rise Rewards loyalty program across retail banners.
Data-related revenue reached $4.2 million during the quarter, contributing to diversified revenue channels.
U.S. regulators moved certain state‑licensed medical marijuana toward Schedule III — a constructive development for SNDL's credit exposure through SunStream and for Parallel, potentially removing 280E tax uncertainty for 2026 and aiding restructure prospects.
Good morning, and welcome to SNDL Inc.'s first quarter 2026 financial results conference call. This morning, SNDL Inc. issued a press release announcing their financial results for the first quarter ended March 31, 2026. This press release is available on the company's website at sndl.com and filed on EDGAR and SEDAR as well. The webcast replay of the conference call will also be available on the sndl.com website. SNDL Inc. has also posted a supplemental investor presentation in addition to the conference call presentation we will be reviewing today on its sndl.com website. Presenting on this morning's call we have Zachary George, Chief Executive Officer, and Alberto Paredero-Quiros, Chief Financial Officer.
Before we start, I would like to remind investors that certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the company's financial reports and other public filings that are made available on SEDAR and EDGAR. Additionally, all financial figures mentioned are in dollars, unless otherwise indicated. We will now make prepared remarks, and then we will move on to the analyst questions. I would now like to turn the call over to Zachary George. Please go ahead.
Welcome to SNDL Inc.'s Q1 2026 financial and operational results conference call. During 2026, SNDL Inc. faced notable challenges beyond the usual seasonality that typically results in the lowest demand at the start o...
