SNDL

Download the Complete Report Here Key Takeaways: International medical cannabis growth continued to strengthen ACB’s global medical-first platform and reinforce the durability of its growth strategy. ACB reported 1Q FY27 (q/e June 30, 2026) net revenue of C$67.6 million, down 9% from C$74.1 million in the prior-year period and down 20% sequentially from C$84.8 million in 4Q FY26. The decline was principally attributable to the April 1 reduction in Canadian federal medical reimbursement rates and the planned wind-down of the consumer cannabis business rather than weakening international demand. Medical cannabis revenue was broadly stable at C$64.0 million versus C$64.8 million y/y, as a C$6.2 million increase in International medical revenue offset C$7.0 million of Canadian medical pressure. Medical cannabis represented approximately 95% of consolidated net revenue, up from 87% in the prior-year quarter and 91% in 4Q FY26, demonstrating that the Bevo divestiture and consumer wind-down have substantially advanced ACB’s transition into a focused global medical cannabis company. Strong operating discipline kept adjusted EBITDA positive despite the full initial impact of the Canadian reimbursement reset. Adjusted EBITDA was C$3.4 million, down 68% from C$10.8 million y/y and 63% from C$9.2 million in 4Q FY26, with the adjusted EBITDA margin declining to 5.1% from 14.6% a year ago and 10.8% sequentially. The C$7.4 million y/y decline primarily reflected an C$8.3 million reduction in adjusted gross profit, partly offset by C$1.0 million of adjusted SG&A savings. Adjusted SG&A declined 3% to C$35.1 million from C$36.1 million, as lower general and administrative spending more than offset an 8% increase in sales and marketing to C$15.6 million. The higher selling investment was directed toward international growth markets, while the broader cost base remained controlled through the transition. Liquidity remains a meaningful competitive advantage, with C$149.1 million of cash, restricted cash, and short-term investments and no loans or borrowings. Cash and cash equivalents were C$69.3 million, restricted cash was C$49.1 million, and short-term investments were C$30.7 million at June 30. Approximately C$46.4 million of restricted cash is expected to become unrestricted following the wind-up of the company’s segregated self-insurance cell by 3Q FY27, materially increasing immediately deployable liquidity without requiring external financing. On a pro forma basis, unrestricted cash and short-term investments would rise from approximately C$100.0 million to C$146.4 million, subject to movements before completion. This liquidity gives ACB the ability to complete Safari and Leuna investments, absorb the Canadian reset, and pursue additional medical-cannabis acquisitions without adding financial debt. Safari contributed positively to adjusted EBITDA in its first quarter and is transitioning from strategic capacity to an operating contributor. ACB completed the acquisition in April for C$15.0 million of cash and 2.4 million shares valued at C$11.6 million, with C$2.0 million of the cash consideration tied to EU-GMP certification conditions and a provisional C$0.7 million working-capital adjustment receivable. Safari’s 59,000-square-foot Ontario facility received a three-year EU-GMP certification on July 23, advancing integration by enabling supply to Germany, Poland, Australia, and the U.K. while expanding ACB’s internal capacity and reducing reliance on third-party production. Safari contributed positively to adjusted EBITDA in its first quarter of ownership, while the planned C$3.5 million investment over three years is intended to improve operating efficiency, increase cultivation output, and lower manufacturing costs. Best-in-class global medical operations continue to diversify ACB’s growth profile beyond Canada. Leadership positions in Germany, Poland, Australia, and New Zealand, together with a focused U.K. strategy and longer-term U.S. optionality, reinforce the scalability of ACB’s international medical platform and reduce reliance on any single market. Street estimates continue to frame FY27 as a transition year before growth reaccelerates in FY28. Based on Street estimates sourced from TIKR, revenue is projected to decline from C$320.6 million in FY26 to C$293.3 million in FY27E, reflecting the impact of lower Canadian medical reimbursement rates and the company’s exit from lower-margin businesses. Adjusted EBITDA is expected to decline to C$24.5 million from C$53.8 million in FY26, with margins compressing to 8.3% as the reimbursement changes flow through results. The first quarter contributed C$67.6 million of revenue and C$3.4 million of adjusted EBITDA, representing 23% and 14% of the respective full-year estimates. Disclaimer: Exec Edge does not publish proprietary estimates, ratings, price targets, or investment recommendations. The valuation discussion below is illustrative only and is based on company filings, management commentary, and third-party data and estimates. It does not constitute a recommendation, price target, rating, or prediction of future pricing. We believe ACB’s current valuation underappreciates the quality and long-term earnings potential of its international medical cannabis platform despite the near-term Canadian reimbursement reset. Overall, current valuation levels appear to inadequately reflect ACB’s competitive positioning and the improving quality of its international earnings base. Key differentiators include: 1) leadership positions in Germany, Poland, and Australia, with international markets contributing 64% of 1Q revenue; 2) a GMP-led operating model supported by proprietary genetics, integrated production, and regulatory expertise; 3) no loans or borrowings and approximately C$149 million of liquidity; and 4) expanding internal EU-GMP capacity through Leuna and Safari. While FY27 remains a transition year, continued international growth, manufacturing efficiencies, and a more favorable revenue mix should support margin recovery and create scope for valuation multiples to move toward historical and peer levels over time. Read Exec Edge’s Initiation on ACB Here Subscribe to our Weekly Newsletter to Receive All Research Contact: Executives-Edge.com [email protected] The post Why Aurora Cannabis Looks Cheaper Than Its International Growth Suggests – Quarterly Update Report appeared first on ExecEdge.

Earlier this week, SNDL Inc. SNDL reported dismal second-quarter 2026 results, with earnings and sales missing consensus estimates. The Canada-based cannabis company reported a loss of 2 cents per share, up from the 1-cent loss reported in the year-ago quarter. Sales declined nearly 4% year over year to $170.3 million (~C$235.8 million). While earnings provide an important snapshot of recent performance, investors should also assess whether the company's long-term fundamentals and strategic outlook have changed. Let's examine SNDL's business to determine whether the latest developments warrant buying, holding or selling the stock. SNDL's operating performance remained under pressure during the first half of 2026 as persistent market headwinds weighed on both its cannabis and liquor businesses. For the six months ended June 30, 2026, net revenues declined 4% year over year to C$431.7 million. While the company's gross margin contracted 230 basis points to 25.3%, adjusted operating loss widened to nearly C$16 million from C$3.2 million in the year-ago period, highlighting the continued pressure on profitability. The company's Liquor Retail business, its largest revenue contributor, continued to face weak consumer demand, with revenues declining 5% year over year during the first half. Increased promotional spending and higher operating expenses related to new store openings further weighed on profitability, pushing the segment into an operating loss. Within cannabis, Cannabis Retail remained relatively resilient, with revenues declining less than 1% and gross margins improving. However, Cannabis Operations continued to struggle, with revenues falling 12.1% year over year. Profitability was hurt by softer wholesale demand and production inefficiencies associated with the ramp-up of the Jeeter brand. While Jeeter continues to gain commercial traction, integration and manufacturing costs significantly compressed margins. Management expects some of these headwinds to persist in the near term. On the positive side, SNDL continued to advance its long-term growth strategy through the Parallel acquisition. Following the completion of Parallel's restructuring, the company expects to assume direct control of medical cannabis operations in Florida, Texas and Massachusetts, adding 56 retail stores and three cultivation and manufacturing facilities. The acquisition significantly expands SNDL's footprint in the U.S. market and partly offsets the company's partially completed 1CM acquisition, whose second phase was terminated after prolonged regulatory delays. While the deal strengthens SNDL's long-term growth platform, investors should expect near-term integration costs and execution risks before the acquisition begins contributing meaningfully to earnings. SNDL operates in an increasingly competitive cannabis industry, where both Canadian producers and established U.S. multi-state operators are competing for growth. As the company expands beyond Canada through the Parallel acquisition, it will face stronger competition from well-entrenched players with larger operating footprints. Tilray Brands TLRY is pursuing a similar international strategy. The company recently acquired HelloMD to expand patient access in Canada while continuing to grow its medical cannabis operations across Europe through Tilray Medical and CC Pharma. Management believes these initiatives will strengthen TLRY's vertically integrated medical cannabis platform and support long-term international growth. Green Thumb Industries GTBIF remains one of the leading U.S. cannabis operators, with more than 110 retail stores across 14 states and a diversified portfolio of branded products. The company continues to generate positive earnings and cash flows while investing in expansion and returning capital to shareholders through aggressive share repurchases. This provides it with a competitive advantage as the U.S. cannabis market matures. Shares of SNDL have lost nearly 25% year to date compared with the industry’s 16% decline, as seen in the chart below. Image Source: Zacks Investment Research Bottom-line estimates for 2026 and 2027 have moved south in the past 7 days. Image Source: Zacks Investment Research SNDL expects operating performance to improve in the second half of 2026, supported by cost optimization initiatives and the gradual integration of the Parallel acquisition. However, its core cannabis and liquor businesses continue to face challenging market conditions, while the benefits of recent strategic initiatives are likely to take time to materialize. The stock currently carries a Zacks Rank #4 (Sell), suggesting limited near-term upside potential. The cautious outlook is also reflected in analyst sentiment, with earnings estimates for 2026 and 2027 moving lower following the second-quarter results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SNDL Inc. (SNDL) : Free Stock Analysis Report Tilray Brands, Inc. (TLRY) : Free Stock Analysis Report Green Thumb Industries Inc. (GTBIF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Release Date: July 28, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. SNDL Inc (NASDAQ:SNDL) generated positive operating cash flow and improved free cash flow by 1.2 million CAD year over year. The company repurchased 11.7 million common shares during the second quarter, reflecting confidence in its intrinsic value. SNDL Inc (NASDAQ:SNDL) has no outstanding debt and holds 183.2 million CAD in unrestricted cash, providing strategic flexibility. The completion of the parallel restructuring is expected to provide significant exposure to US medical cannabis operations, potentially increasing annual revenue to over 1 billion CAD. SNDL Inc (NASDAQ:SNDL) is well-positioned for disciplined growth and strategic investments, supported by a strong balance sheet and a portfolio of cannabis-related investments valued at 415.2 million CAD. Net revenue declined by 3.7% year over year to 235.8 million CAD, driven by market headwinds in both liquor and cannabis segments. Gross profit decreased by 16.6% year over year, with a gross margin decline of 3.7 percentage points. The company reported an operating loss of 7.8 million CAD, with adjusted operating loss at 7 million CAD. Cannabis operations faced significant inefficiencies due to production ramp-up costs, impacting gross profit and margins. Market contraction in Alberta and Ontario led to a decline in cannabis retail net revenue by 1.4% year over year. Warning! GuruFocus has detected 2 Warning Sign with SNDL. Is SNDL fairly valued? Test your thesis with our free DCF calculator. Q: How does SNDL's capital allocation strategy change with the upcoming completion of the Parallel deal, especially considering recent share repurchases? A: Zach George, CEO: While some aspects will change, our view remains that our equity is trading below its intrinsic value, making share repurchases an attractive use of capital. We have positioned ourselves with access to both debt and equity capital, maintaining a debt-free balance sheet. This provides us with significant optionality. We plan to invest in the U.S., particularly in enhancing processing capabilities in Florida and expanding in Texas, which presents a promising opportunity. Q: What is causing the gross margin pressure in cannabis operations, and how do you plan to address it? A: Zach George, CEO: The majority of the margin pressure, about 80-90%, is due to the Jeter production ramp-up. We believe these challenges are fixable and expect to generate positive free cash flow for the full year. The solution may not be to invest further upstream but rather to focus on best-in-class hybrid glasshouse operations. Alberto Perdi, CFO, added that the Jeter ramp-up accounts for about 20 percentage points of the margin shortfall. Q: Can you discuss the market contraction in Alberta and Ontario and your M&A strategy for cannabis retail? A: Zach George, CEO: The market contraction is due to a flattening of consumption growth and an increase in store count, leading to more competition. We expect this dynamic to continue, with consolidation and e-commerce penetration transforming the retail experience. Our M&A strategy is focused on organic growth, with a disciplined approach to capital allocation, ensuring attractive risk-adjusted returns. Q: What is the outlook for liquor retail given the ongoing headwinds and your entry into the U.S. cannabis market? A: Alberto Perdi, CFO: The liquor market is experiencing global declines, and we do not expect a significant turnaround soon. However, we are focusing on improving our performance within the segment and gaining market share. Our Wine and Beyond banner is growing, and we are working on improving our convenience banner. We anticipate margins to stabilize or grow in the second half of the year. Q: How do you plan to address the challenges in cannabis operations, particularly with the Jeter production ramp-up? A: Zach George, CEO: We are managing acute issues in Kelowna, where the Jeter ramp-up is occurring. We believe these challenges are fixable and expect to generate positive free cash flow for the year. The solution may involve focusing on best-in-class hybrid glasshouse operations rather than investing further upstream. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

The Company Maintains Strong Liquidity, Accelerates Share Repurchases, and Completes Parallel Restructuring Milestone EDMONTON, Alberta, July 28, 2026 (GLOBE NEWSWIRE) -- SNDL Inc. (NASDAQ: SNDL, CSE: SNDL) (“SNDL” or the “Company”) reported its financial and operational results for the second quarter ended June 30, 2026. All financial information in this press release is reported in millions of Canadian dollars unless otherwise indicated. SNDL has also posted a supplemental investor presentation on its website, found at https://sndl.com. The Company will hold a conference call and webcast presentation at 10:00 a.m. EDT (8:00 a.m. MDT) on Tuesday, July 28, 2026. The conference call details can be found below. MANAGEMENT HIGHLIGHTS Net revenue for the second quarter of 2026 was $235.8 million, representing a -3.7% decrease compared with the same period of the prior year, driven by market headwinds in both Liquor and Cannabis segments. Gross profit of $56.3 million for the second quarter of 2026, represents a decline of $(11.3) million, or  -16.6%, compared to the same period of the prior year, driven by lower revenue across all segments and Jeeter production ramp-up costs in Cannabis Operations. Gross margin (1) of 23.9% in the second quarter of 2026 represents a reduction of -3.7pp compared to the same period of the prior year, mainly driven by Cannabis Operations and Liquor Retail segments, partially offset by margin expansion in Cannabis Retail. Operating Loss of $(7.8) million for the second quarter of 2026, representing a reduction of $(12.8) million compared to the same period of the prior year, driven by Jeeter production ramp-up cost impacting Cannabis Operations, the revenue and margin decline in Liquor retail, the absence of prior-year impairment reversal in Cannabis Retail, and a reduction in equity-accounted investees valuation, partly offset by lower corporate overhead cost. Excluding restructuring-related charges, Adjusted Operating Loss totaled $(7.0) million in the second quarter of 2026, a $(12.8) million reduction compared with the same period of the prior year. Cash flow was negative by $(30.2) million in the second quarter of 2026, partly driven by cash outflows of $23.5 million related to share repurchases. Free cash flow (1) was negative $(6.7) million in the second quarter of 2026, primarily driven by the $6.9 million annual payment of the 2025 management incentive and a $2.7 million increase in cash-in-transit. This represents an improvement of $1.2 million compared to the same period in the prior year. “Our second quarter results reflect the impact of continued market softness across our core operating segments, as well as temporary production inefficiencies,” said Zach George, Chief Executive Officer of SNDL. “While these near-term factors pressured revenue and operating income, we remain focused on disciplined execution, cost optimization, and the strategic initiatives that we believe will strengthen SNDL’s competitive position over time. Importantly, we continued to generate positive operating cash flow, improved free cash flow compared to the prior year, and maintained a debt-free balance sheet with strong liquidity. Few companies in the cannabis industry have the combination of scale, strategic optionality and financial strength that SNDL possesses today. With $183.2 million of unrestricted cash and no debt as of June 30, 2026, and an active share repurchase program, we remain focused on allocating capital where we believe it will generate the highest long-term returns for shareholders. During the second quarter of 2026 we repurchased 11.7 million common shares for cancellation, bringing the total repurchases since the fourth quarter of 2024 to over 29.0 million shares as of July 23, 2026. We believe the repurchases represent an attractive use of capital and reflect our confidence in the intrinsic value of SNDL and the long-term prospects of the business. While current market conditions remain challenging across portions of both our cannabis and liquor businesses, we continue to focus on initiatives that strengthen the long-term earnings power of SNDL. These include the ongoing profit-enhancement initiatives, operational efficiency improvements across the organization, and continued investment in our high-performing retail banners. Despite the challenges faced during the first half of the year, we expect a stronger performance in the second half and remain on track to deliver positive free cash flow for the full year. The completion of the restructuring of Surterra Holdings, Inc. and certain of its affiliates (collectively, “Parallel”) marks a significant milestone for SNDL. Subject to satisfying the remaining legal, regulatory, accounting, and NASDAQ requirements, we expect to gain direct control of Parallel’s medical cannabis operations in Florida, Texas, and Massachusetts in the coming months. With 56 retail locations and three cultivation and manufacturing facilities, Parallel is expected to generate annualized revenue of approximately US$150 million in the near term. Combined with its accretive margin profile, this transaction positions SNDL as a leading vertically integrated cannabis operator, with the potential to exceed $1B in annual revenue and become the largest cannabis retailer in North America by store count. As industry conditions evolve, we believe SNDL is exceptionally well positioned to capitalize on opportunities that may emerge through organic growth, strategic investments, acquisitions, or continued returns of capital to shareholders”, concluded Zach George. TOTAL COMPANY HIGHLIGHTS (1)    Gross Margin is a supplementary financial measure calculated by dividing Gross Profit by Net Revenue. Adjusted operating income (loss) and Free Cash Flow are specified financial measures that do not have a standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures reported by other companies. See “Non-IFRS Measures” section below for further information. BUSINESS SEGMENT HIGHLIGHTS SNDL operates and reports its business through four segments: Liquor Retail, Cannabis Retail, Cannabis Operations, and Investments. Additionally, a consolidated total for Cannabis is presented, encompassing the combined results of the two Cannabis segments, along with the revenue elimination associated with the Cannabis Operations sales to the provincial boards that are expected to be subsequently repurchased by the Company’s licensed retail subsidiaries for resale. Corporate and shared service expenses are reported as “Corporate”. (2)    In 2026, the Company began allocating applicable direct and indirect overhead costs from the corporate segment to each individual operating segment all categorized within general and administrative expenses. The Company has recast the comparative period to illustrate the impact of these allocations had they been done during the prior period, as documented in the condensed interim Financial Statements. Liquor Retail SNDL is Canada's largest private sector liquor retailer, operating at July 27, 2026 in 165 locations, predominantly in Alberta, under its three retail banners: “Wine and Beyond” (16), “Liquor Depot” (19), and “Ace Liquor” (130). Net revenue for Liquor Retail continued to decline year over year in the second quarter of 2026, at a rate consistent with the previous quarter, as persistent softness in market demand continued to impact same-store sales(3), which decreased by -6.2% compared to the same period in the prior year. Despite remaining positive in the second quarter, Operating income declined year over year driven by lower revenue, increased promotional support, and higher SG&A expenses associated with the recent Wine & Beyond store openings. (3)    Same-store sales is a specified financial measure that does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures used by other companies. See “Non-IFRS Measures” section below for further information. Cannabis Retail SNDL is one of Canada’s largest private-sector cannabis retailer, operating at July 27, 2026 in 192 locations under its three retail banners: “Value Buds” (127), “Spiritleaf” (60, of which 4 are corporate stores and 56 are franchise stores), and “Cost Cannabis” (5). The Company’s Cannabis Retail strategy is based on several pillars, including the quality of its store locations, its range of products, and the unique experiences provided to customers. Using data and insights from a large volume of monthly transactions enables SNDL to leverage technology and analytics to inform and improve its retail strategy. Net revenue for Cannabis Retail declined slightly in the second quarter compared with the same period of the prior year, driven by a -4.6% decline in same‑store sales, reflecting market contraction in Alberta and Ontario. This decline was partially offset by incremental revenue from new stores and Value Buds store conversions. Operating income also declined slightly compared to the same period in the prior year, primarily due to the absence of a $1.1 million impairment reversal recorded in the second quarter of 2025. From an operational perspective, the impact of lower revenue was fully offset by a 0.5 percentage point improvement in gross margin. Cannabis Operations SNDL has a diverse brand portfolio from value to premium, emphasizing premium inhalable formats and a full suite of 2.0 products. With enhanced procurement capabilities and plans to continue evolving toward a cost-effective cultivation and manufacturing operation, the Cannabis Operations segment is a key enabler of SNDL’s vertical integration strategy. Cannabis Operations experienced a larger relative decline in revenue, driven by overall softening market demand and the absence of flower business-to-business deliveries in the second quarter. These declines were partially offset by growth in international sales, which increased from $3.8 million in the second quarter of 2025 to $5.0 million in the second quarter of 2026. Operating income declined compared with the same period in the prior year, primarily due to significant production ramp-up inefficiencies associated with the Jeeter launch. In May, the Company received net cash proceeds of $1.7 million from the sale of the idle Stellarton facility, resulting in a loss on disposition of $0.2 million. Investments As of June 30, 2026, the Company has deployed capital to a portfolio of cannabis-related investments with a carrying value of $415.2 million, including $400.4 million to SunStream Bancorp Inc. (“SunStream”). This carrying value was increased by $5.0 million during the second quarter of 2026, primarily due to an increase in the USD to CAD exchange rate from 1.3939 on March 31, 2026 to 1.4210 on June 30, 2026. This increase was partially offset by a $(2.3) million reduction in net asset value, driven in part by declines in the value of Cannabist Co.’s notes and the equity interest following the company’s entry into Chapter 15 restructuring proceedings. As a result of the impact from the net asset value adjustment of SunStream, the investment portfolio generated operating losses of $(1.6) million in the second quarter of 2026. The previously disclosed restructuring process relating to Skymint continues. On April 1, 2026, the Michigan Supreme Court has agreed to hear oral argument on applications for leave to appeal. The Court has not reached a decision on the merits. Timing and outcomes remain uncertain and are subject to court process and other factors. On April 23, 2026, the United States Department of Justice and the United States Drug Enforcement Administration issued an order placing Food and Drug Administration-approved cannabis products and state-regulated medical cannabis in Schedule III of the United States Controlled Substances Act, while initiating an expedited administrative hearing process to consider rescheduling all cannabis from Schedule I to Schedule III. This rescheduling, if approved and completed, is expected to eliminate 280E tax burdens, expand research, improve regulation, and enhance access to capital, strengthening the industry outlook. This is directly relevant to SNDL given its exposure to core United States medical markets through its SunStream credit exposure. On July 27, 2026, the restructuring of Parallel was completed. As the principal asset within the SunStream investment portfolio, Parallel represents a significant step forward for SNDL, which gained indirect majority economic exposure through the restructuring transaction. Subject to applicable legal, regulatory, accounting, and NASDAQ requirements, SNDL expects to assume direct control of Parallel’s medical cannabis operations in Florida, Texas, and Massachusetts in the coming months. This milestone has the potential to make SNDL the first NASDAQ-listed company to consolidate U.S. medical cannabis operations and establish the Company as a leading vertically integrated cannabis operator in North America. Equity Position $598.5 million of unrestricted cash, marketable securities and investments, including investments in equity-accounted investees, and no outstanding debt at June 30, 2026, resulting in a net book value of $1.1 billion. The board of directors of the Company has approved the renewal of its share repurchase program upon the expiry on November 20, 2025. For the three months ended June 30, 2026, the Company purchased for cancellation 11,747,395 common shares at a weighted average price, excluding commissions, of US$1.43 per share. SNDL will continue to evaluate opportunities to utilize the program to the extent that management believes it is in the best interest of SNDL’s shareholders. As a reminder, since the fourth quarter of 2024 the Company has repurchased 29,005,622 common shares for cancellation as of July 23, 2026. This press release is intended to be read in conjunction with the Company’s condensed consolidated interim financial statements and the notes thereto for the three months ended June 30, 2026, and the accompanying Management’s Discussion and Analysis. These documents are available under the Company’s profile on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.shtml. CONFERENCE CALL The Company will hold a conference call and webcast presentation at 10:00 a.m. EDT (8:00 a.m. MDT) on Tuesday, June 28, 2026. WEBCAST ACCESSTo access the live webcast of the call, please visit the following link: https://edge.media-server.com/mmc/p/v948tjwm REPLAYA replay of the webcast will be available at https://sndl.com/financials/quarterly-results/default.aspx ABOUT SNDL INC. SNDL Inc. (NASDAQ: SNDL, CSE: SNDL), through its wholly owned subsidiaries, is one of the largest vertically integrated cannabis companies and the largest private-sector liquor and cannabis retailer in Canada, with retail banners that include Ace Liquor, Wine and Beyond, Liquor Depot, Value Buds, Spiritleaf and Cost Cannabis. With products available in licensed cannabis retail locations nationally, SNDL’s consumer-facing cannabis brands include Top Leaf, Contraband, Palmetto, Bon Jak, La Plogue, Versus, Value Buds, Grasslands, Vacay, Pearls by Grön, No Future and Bhang Chocolate. SNDL's investment portfolio seeks to deploy strategic capital through direct and indirect investments and partnerships throughout the North American cannabis industry. For more information, please visit www.sndl.com For more information: Tomas BottgerInvestor Relations, SNDL Inc. O: 1.587.327.2017 E: [email protected] Forward-Looking Information Cautionary Statement  This news release includes statements containing certain "forward-looking information" within the meaning of applicable securities law ("forward-looking statements"), including, but not limited to, statements regarding the Company’s operational goals, plans and key priorities, the Company’s ability to deploy capital and the expected benefits thereof, expectations related to the Jeeter contract, the growth opportunities available to SNDL and the expected benefits thereof, expectations with respect to the 1CM transaction, including the satisfaction of certain regulatory approvals, the progress of the Sunstream restructurings, expectations with respect to the Skymint and Parallel restructuring processes, the timing and expectations related to the Company gaining direct control of Parallel’s medical cannabis operations in Florida, SNDL’s corporate restructuring program, including the timing to conclude the restructuring and expected benefits thereof, the expected benefits of the enterprise resource planning (“ERP”) system consolidation, SNDL’s ability to recover the senior secured notes held in Cannabist, the timing and expected impact of reclassifying cannabis from Schedule I to Schedule III under the United States Controlled Substances Act, the Company’s retail strategy,  and any other potential forms of shareholder value creation. Forward-looking statements are frequently characterized by words such as “aim”, “anticipate”, “assume”, “believe”, “contemplate”, “continue”, “could”, “due”, “estimate”, “expect”, “goal”, “intend”, “may”, “objective”, “plan”, “predict”, “potential”, “positioned”, “pioneer”, “seek”, “should”, “target”, “will”, “would”, and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the Company’s business and the industry in which it operates and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond its control. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Please see “Risk Factors” in the Company’s annual information form dated March 11, 2026, and the risk factors included in our other public disclosure documents for a discussion of the material risk factors that could cause actual results to differ materially from the forward-looking information. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. NON-IFRS MEASURES Certain specified financial measures in this news release are non-IFRS measures. These terms are not defined by IFRS and, therefore, may not be comparable to similar measures reported by other companies. These non-IFRS financial measures should not be considered in isolation or as an alternative for or superior to measures of performance prepared in accordance with IFRS. These measures are presented and described in order to provide shareholders and potential investors with additional measures in understanding the Company’s operating results in the same manner as the management team. ADJUSTED OPERATING INCOME (LOSS)Adjusted operating income (loss) is a non-IFRS financial measure which the Company uses to evaluate its operating performance in a similar manner to its management team. The Company defines adjusted operating income (loss) as operating income (loss) less restructuring costs (recovery), goodwill and intangible asset impairments and asset impairments triggered by restructuring activities. The following tables reconcile adjusted to un-adjusted operating income (loss) for the periods noted. (4)     In 2026, the Company began allocating applicable direct and indirect overhead costs from the corporate segment to each individual operating segment all categorized within general and administrative expenses. The Company has recast the comparative period to illustrate the impact of these allocations had they been done during the prior period. GROSS MARGINGross margin is a supplementary financial measure calculated as gross profit divided by net revenue for the periods presented. This measure evaluates the underlying profitability of our operations and provides useful information about the Company’s ability to price products effectively, manage input costs, drive operating efficiencies, and compare results across periods and business segments FREE CASH FLOW Free cash flow is a non-IFRS financial measure which the Company uses to evaluate its financial performance, providing information which management believes to be useful in understanding and evaluating the Company’s ability to generate positive cash flows as it removes cash used for non-operational items. The Company defines free cash flow as the total change in cash and cash equivalents less cash used for common share repurchases, dividends (if any), changes to debt instruments, changes to long-term investments, net cash used for acquisitions plus cash provided by dispositions (if any). The following table reconciles free cash flow to change in cash and cash equivalents for the periods noted. SAME-STORE SALESSame-store sales is a non-IFRS financial measure which the Company uses to evaluate its financial performance in its retail segments. Same store sales provides information which management believes to be useful to investors, analysts and others in understanding and evaluating the Company’s sales trends excluding the effect of the opening and closure of stores. Same store sales refers to the revenue generated by the Company’s existing retail locations during the current and prior comparison periods. ADJUSTED EBITDAAdjusted EBITDA is a non-IFRS financial measure which the Company uses to evaluate its operating performance. Adjusted EBITDA provides information to investors, analysts, and others to aid in understanding and evaluating the Company’s operating results. The Company defines adjusted EBITDA as net earnings (loss) before inventory and biological assets fair value and impairment adjustments, share of (gain) loss of equity-accounted investees, depreciation and amortization, share-based compensation expense, restructuring costs, asset impairment, gain or loss on disposal of property, other expenses, net, income tax expense (recovery) and excluding non-recurring items including ERP implementation costs and litigation settlements, net of recoveries.

Interested in SNDL Inc.? Here are five stocks we like better. Second-quarter results weakened: Revenue fell 3.7% year over year to C$235.8 million, while gross profit declined 16.6% to C$56.3 million as liquor and cannabis demand softened, promotions increased and Jeeter production ramp-up costs pressured margins. Capital position remained strong: SNDL ended the quarter with C$183.2 million in unrestricted cash and no debt, repurchased 11.7 million shares for C$23.3 million, and expects profit initiatives to generate more than C$20 million in incremental operating income. U.S. expansion advanced: SNDL expects to gain direct control of Parallel’s medical cannabis operations in Florida, Texas and Massachusetts, potentially adding 56 retail locations and approximately C$150 million in annualized revenue, subject to regulatory and other approvals. Cannabis: One Stock to Play the Movement SNDL (NASDAQ:SNDL) reported lower second-quarter revenue and gross profit as demand weakness across liquor and cannabis markets, cannabis-production ramp-up costs and promotional activity weighed on results. The company said it continued to generate positive operating cash flow and improved free cash flow year over year, while accelerating share repurchases and advancing a restructuring involving U.S. cannabis operator Parallel. Net revenue for the quarter ended June 30 fell 3.7% from a year earlier to C$235.8 million. Gross profit declined 16.6% to C$56.3 million, while gross margin contracted 3.7 percentage points to 23.9%. → Volatility Is Back and These 3 Market Tollbooths Are Best Positioned to Profit Will This New Development Mean A Big Rally In Cannabis Stocks? SNDL recorded an operating loss of C$7.8 million and an adjusted operating loss of C$7 million. Chief Financial Officer Alberto Paredero-Quiros said the results reflected lower revenue and gross profit, costs associated with new cannabis-product production ramp-up, weaker liquor retail performance and a C$2.3 million reduction in the value of its SunStream investment. Free cash flow was negative C$6.7 million, compared with negative C$7.9 million in the prior-year period. Paredero-Quiros said the year-over-year improvement was supported by working-capital changes and rent-expense timing, though the quarter also included a C$6.9 million annual payment tied to 2025 management incentives and a C$2.7 million increase in cash in transit. → This Tiny AI Supplier Could Be More Important Than the Chipmakers Whatever You Believe About Sundial Growers, You Could Be Right Liquor Retail revenue declined 5.1% to C$134.7 million, driven by a 6.2% decrease in same-store sales amid softer market demand. The revenue decline occurred despite the contribution from two Wine and Beyond locations that opened in the fourth quarter of 2025 and private-label sales that outperformed national brands by 13 percentage points during the quarter. Liquor Retail gross profit fell 7.4% to C$33.8 million, and gross margin declined 60 basis points to 25.1%. The company attributed the margin pressure to increased promotional activity intended to support sales volumes. Adjusted operating income in the segment was C$3.2 million, down C$3.5 million year over year, reflecting lower sales, promotional support and higher selling, general and administrative costs related to the newer Wine and Beyond stores. → 2 Stocks Built to Thrive If Inflation Refuses to Fade Cannabis Retail revenue slipped 1.4% to C$83.2 million as same-store sales declined 4.6%, which SNDL attributed to market contraction in Alberta and Ontario. New store openings and Value Buds conversions partly offset the decline. Gross profit was essentially unchanged at C$22 million, while gross margin increased 50 basis points to 26.4% on promotional efficiencies, pricing actions and product-mix management. During the analyst question-and-answer session, Paredero-Quiros said cannabis retail trends improved through the second quarter, with some provincial markets moving closer to break-even growth in June. He said SNDL expects market growth to return at a low-single-digit rate during the second half of the year. Cannabis Operations revenue fell 10.1% to C$32.2 million, affected by market headwinds and the absence of business-to-business flower deliveries from partners facing their own demand shortfalls. International sales rose C$1.2 million to C$5 million. Segment gross profit declined to C$0.6 million from C$9.3 million a year earlier, and gross margin fell 24 percentage points to 1.8%. Chief Executive Officer Zach George and Paredero-Quiros said production inefficiencies associated with the Jeeter ramp-up in Kelowna were the principal factor behind the Cannabis Operations margin shortfall. Paredero-Quiros estimated that 80% to 90% of the quarterly gross-margin shortfall was related to the ramp-up, with about 20 percentage points of margin pressure tied to Jeeter. SNDL expects some related costs to continue over the coming months while it works on process and labor-efficiency improvements. George said SNDL has deployed profit-enhancement initiatives that it expects will generate more than C$20 million of incremental operating income, primarily over the rest of 2026. He also said the company expects to produce positive free cash flow for the full calendar year, noting the seasonal effect of second-quarter payments and historically stronger second-half cash generation. As of June 30, SNDL had C$183.2 million of unrestricted cash, no outstanding debt and cannabis-related investments with a carrying value of C$415.2 million, according to George. The company repurchased 11.7 million common shares during the quarter for C$23.3 million, excluding commissions, at a weighted average price of C$1.43 per share. Since the fourth quarter of 2024, SNDL has bought back more than 29 million shares for about C$64.5 million at an average price of C$1.58 per share, reducing shares outstanding by approximately 7%. George said the company still views repurchases as an attractive use of capital, while its debt-free balance sheet provides flexibility for investments and acquisitions. He said SNDL also sees opportunities to invest in U.S. operations following the Parallel transaction, including improving processing capabilities in Florida and pursuing growth in Texas. SNDL said it completed a major milestone in the restructuring of Parallel, one of SunStream’s legacy credit investments. Subject to remaining legal, regulatory, accounting and Nasdaq requirements, SNDL expects to obtain direct control of Parallel’s medical cannabis operations in Florida, Texas and Massachusetts in the coming months. Parallel has 56 retail locations, three cultivation and manufacturing sites and approximately 800 employees, according to SNDL. George said the business is expected to have near-term annualized revenue of about C$150 million. If completed, the transaction could give SNDL a U.S. medical cannabis platform with what George described as an accretive margin profile. He said the combined company could exceed C$1 billion in annual revenue and become the largest cannabis retailer globally by store count. The restructuring also substantially reduces Parallel’s historical debt burden, SNDL said. Looking ahead, management said it plans to balance operational improvements, selective growth investments, potential U.S. opportunities and continued shareholder returns amid challenging conditions in both liquor and cannabis markets. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "SNDL Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Download the Complete Report Here Key Takeaways: FY26 topline exceeded management’s outlook, validating ACB’s global medical cannabis strategy. ACB reported FY26 net revenue of C$320.6 million, up 11% y/y, exceeding the top end of management’s prior outlook by approximately C$8 million. This beat was driven by double-digit growth in global medical cannabis and record annual medical cannabis net revenue of C$288.6 million, up 18% y/y from C$244.4 million. The performance reflected the effectiveness of the company’s medical-first strategy, with international medical cannabis revenue increasing C$39.5 million y/y to C$176.5 million and roughly 55% of annual net revenue generated outside Canada. Adjusted EBITDA also reached a record C$53.8 million, up 32% y/y. EBITDA softened in 4Q, but FY26 profitability still improved materially and came in within management’s guided range. Adjusted EBITDA was C$9.2 million in 4Q FY26, down 34% y/y from C$14.1 million and down 50% sequentially from C$18.4 million, consistent with prior expectations for a softer fourth quarter. For the full year, adjusted EBITDA increased 32% to a record C$53.8 million, highlighting the underlying earnings power of the medical cannabis platform even as 4Q absorbed transition costs. ACB maintains significant financial flexibility, supported by substantial liquidity, no loans or borrowings, and access to additional capital. ACB ended FY26 with approximately C$165 million of cash, cash equivalents, restricted cash, and short-term investments, with no loans or borrowings outstanding, while retaining a shelf prospectus that provides financing flexibility through 2028 and an ATM program authorizing the issuance of up to $100 million of common shares to support growth investments and potential M&A opportunities. The Safari Flower acquisition is an accretive strategic step that directly addresses EU-GMP capacity, third-party sourcing risk, and Germany-led growth. ACB acquired Safari Flower Company in April for C$26.5 million, consisting of C$15.0 million in cash, 2.4 million common shares, and C$2.0 million of contingent consideration tied to certain GMP certifications. Safari adds a 59,000-square-foot EU-GMP-certified indoor cultivation and manufacturing facility in Ontario, reducing reliance on third-party purchases and adding capacity for key international markets including Germany, Australia, Poland, and the U.K. Strategically, Safari is a capacity, quality, and margin-control acquisition that strengthens ACB’s EU-GMP production footprint and supports its Germany-led international growth strategy. The facility already operates under standards aligned with ACB’s GMP requirements, and management expects positive adjusted EBITDA contribution in FY27 with incremental benefits in FY28 and beyond as ACB introduces its proprietary genetics, cultivation practices, and existing international operating infrastructure to enhance productivity, profitability, and operating synergies over time. Recent product launches across Canada, Europe, Australia, and New Zealand reinforce ACB’s medical-first strategy and demonstrate the scalability of its global GMP platform. ACB expanded its portfolio across dried flower, pre-rolls, and edibles to address patient and prescriber demand for high-quality, consistent products. Importantly, these launches are not one-off events; they reflect the company’s ability to leverage its international GMP supply network to broaden product offerings, deepen penetration in key regulated markets such as Germany and Poland, and support continued growth across its global medical cannabis franchise. Canadian medical cannabis reimbursement rates for veterans were reduced by ~30% effective April 1, 2026, creating a headwind for licensed producers with exposure to the channel. As part of a revised Veterans Affairs Canada (VAC) reimbursement framework, the maximum reimbursable amount was reduced from C$8.50/gram to C$6.00/gram in April, reflecting the government’s effort to better align reimbursement levels with prevailing market prices following years of industry price compression. Importantly, patient eligibility, prescription authorizations, and covered volumes remain unchanged, suggesting the policy primarily impacts realized pricing rather than underlying demand. Management indicated that the change translates into an approximately 30% reduction in reimbursement-related revenue and, given the largely fixed nature of production costs, is expected to negatively impact both topline growth and adjusted gross margins beginning in FY27. ACB further noted that the reimbursement change is the primary factor driving its expectation for adjusted gross margins to decline into the mid-to-high 50% range in FY27. Notably, early observations since the April 1 implementation suggest limited changes in patient purchasing behavior, with no material shift in product formats, price points, or prescribing patterns observed to date. While international growth, particularly in Germany and Poland, is expected to partially offset the pressure, the reimbursement revision remains the primary driver of ACB’s lower FY27 revenue and EBITDA outlook and should be viewed primarily as a pricing reset rather than evidence of weaker patient demand or operational execution. Potential U.S. cannabis rescheduling could create new long-term opportunities for established medical cannabis operators with GMP and regulatory expertise. On April 23, 2026, the U.S. Department of Justice issued a final order moving FDA-approved drug products containing marijuana and medicinal marijuana products subject to qualifying state-issued licenses from Schedule I to Schedule III, while a separate process remains ongoing to evaluate broader changes to marijuana’s federal status. Management views the development as a positive step toward a more federally regulated medical cannabis framework in the U.S. Given ACB’s position as one of Canada’s largest exporters of GMP-manufactured medical cannabis and its experience operating in highly regulated international markets, the company is well positioned to evaluate potential opportunities arising from further federal medical cannabis reform, although no specific U.S. strategy has been announced. FY27 guidance reflects a pricing-driven reset rather than any deterioration in ACB’s core operating execution, with Canadian reimbursement pressure more than offsetting international growth and portfolio cleanup. Management expects FY27 total net revenue to decline and be more in line with FY25 cannabis net revenue, following the Canadian medical reimbursement change effective April 1, 2026, partially offset by international growth driven by Germany and Poland. We note that the key issue is not operational execution, but pricing: the reimbursed rate for affected Canadian medical products is being reduced by approximately 30%, which directly pressures revenue and gross profit contribution from an otherwise high-quality direct-to-patient medical business. Adjusted gross margin before fair value adjustments is expected to be in the mid-to-high 50s, compared with 64% in FY26, as higher European revenue and the exit from lower-margin consumer and plant propagation businesses only partially offset lower Canadian medical reimbursement margins. Adjusted SG&A is expected to remain broadly in line with FY26, when adjusted SG&A was C$146.1 million, while adjusted EBITDA is expected to vary quarter to quarter and decline for the full year from FY26’s C$53.8 million record level. Overall, the FY27 setup reflects a pricing-driven reset rather than a change in the company’s international medical cannabis growth strategy, with Germany, Poland, Safari capacity, and the consumer/Bevo exits expected to support a cleaner growth base beyond the transition year. Street estimates also reflect that FY27 is expected to be a transition year before growth reaccelerates in FY28. Based on Street estimates sourced from TIKR, revenue is projected to decline from C$320.6 million in FY26 to C$293.1 million in FY27E, reflecting the impact of lower Canadian medical reimbursement rates and the company’s exit from lower-margin businesses. Adjusted EBITDA is expected to decline to C$28.7 million from C$53.8 million in FY26, with margins compressing to 9.8% as the reimbursement changes flow through results. Looking further out, revenue is estimated to recover to C$318.5 million in FY28E, while adjusted EBITDA is expected to rebound to C$41.2 million, implying a margin of 12.9%, supported by continued international medical cannabis growth and operational improvements. Valuation remains attractive based on our analysis. The valuation discussion below is illustrative in nature and is not intended to represent a stock recommendation, price target, or a buy/sell/hold opinion. Our analysis incorporates multiple approaches, including historical valuation and peer comparisons. Any implied upside referenced is not a price target and is presented solely to provide context for relative valuation. Despite near-term reimbursement-related headwinds, ACB continues to trade at a meaningful discount to both its historical valuation and cannabis peers. We believe the current valuation fails to fully reflect ACB’s leadership position in global medical cannabis, no loans or borrowings, expanding international footprint, and improving long-term cash generation profile. Overall, we believe current valuation levels inadequately reflect ACB’s long-term competitive positioning and improving quality of earnings. Key differentiators include: 1) leadership positions in Germany, Poland, and Australia; 2) a GMP-led operating model supported by proprietary genetics and regulatory expertise; 3) no loans or borrowings and approximately C$165 million of cash, cash equivalents, restricted cash, and short-term investments; and 4) a growing international medical cannabis platform capable of generating higher-margin and more predictable revenue streams. As near-term reimbursement-related headwinds are absorbed and international growth continues to scale, we believe there is scope for valuation multiples to move closer to historical levels. Read Exec Edge’s Initiation on ACB Here Subscribe to our Weekly Newsletter to Receive All Research Contact: Executives-Edge.com [email protected] The post Aurora Cannabis Generates 55% Revenue Outside Canada as Medical Sales Surge – Quarterly Update Report appeared first on ExecEdge.

Last week, SNDL Inc. SNDL reported mixed first-quarter 2026 results, with earnings meeting expectations but sales missing the mark. The Canada-based cannabis company reported a loss of 3 cents per share, improving from a loss of 4 cents in the year-ago quarter. Sales declined more than 4% year over year to nearly $143 million (~C$196 million). While quarterly results offer only a snapshot of performance, investors tend to focus more closely on broader business fundamentals and growth prospects. Let’s take a closer look at SNDL’s fundamentals to better understand how to approach the stock following its latest earnings report. SNDL operates through four reportable segments: Liquor Retail, Cannabis Retail, Cannabis Operations and Investments. Its cannabis business remains a key part of the company’s long-term strategy, spanning retail operations, branded products and vertically integrated manufacturing capabilities. However, the company’s cannabis segment showed clear signs of weakness during the first quarter of 2026. Total cannabis revenues declined nearly 4% year over year, reflecting softer market demand across Canada. The pressure was particularly visible in Cannabis Operations revenue, which fell more than 14% year over year. Management attributed the decline to weaker market demand, destocking activity across retail channels and temporary timing issues related to business-to-business orders. The weakness extended to retail trends as well. Although revenues from the Cannabis Retail unit remained essentially flat year over year despite the contribution from the newly added Cost Cannabis stores, same-store sales declined 2.5% during the quarter. Per management commentary, mature markets like Alberta and Ontario continue to face intense competition and market saturation, creating a challenging operating environment for cannabis retailers. Profitability within the cannabis business also deteriorated. SNDL’s overall gross margin contracted 70 basis points year over year to 27%, primarily due to margin pressure within the Cannabis Operations segment. Lower production volumes, inventory adjustments and launch-related inefficiencies tied to the Jeeter ramp-up weighed on profitability during the quarter. While SNDL continues expanding internationally and recently secured exclusive Canadian rights to the Jeeter brand, the latest quarter suggests the company is still grappling with slowing demand and persistent pricing pressure in Canada’s highly competitive cannabis market. SNDL competes in an overcrowded cannabis market against larger operators such as Aurora Cannabis ACB and Tilray Brands TLRY. What further differentiates the competitive landscape is geographic diversification. Aurora has increasingly focused on higher-margin international medical cannabis markets, particularly in Europe, while Tilray continues expanding its global cannabis footprint alongside its U.S.-focused beverage and wellness exposure. This broader international presence provides additional growth avenues and reduces reliance on any single market. In contrast, SNDL remains heavily dependent on Canada and has no direct U.S. cannabis operations. Although the company has been expanding international cannabis sales and partnerships, its business remains largely tied to the Canadian market, where pricing pressure, market saturation and intense retail competition continue to weigh on performance. As competition intensifies and growth moderates across Canada’s cannabis industry, SNDL’s relatively limited geographic diversification may continue to pressure investor sentiment toward the stock. Shares of SNDL have lost 14% year to date compared to the industry’s 23% decline, as seen in the chart below. Image Source: Zacks Investment Research Bottom-line estimates for 2026 and 2027 have been mixed in the past 7 days. Image Source: Zacks Investment Research While SNDL continues to maintain cost discipline and expand its international cannabis operations, its heavy exposure to the Canadian market remains a key overhang. Persistent pricing pressure and intense competition in an increasingly saturated cannabis market continue to weigh on margins and delay a return to consistent profitability. Although recent developments surrounding potential marijuana rescheduling in the United States have improved broader cannabis sector sentiment, SNDL’s limited direct exposure to this market may restrict its ability to benefit meaningfully relative to peers with established American operations. Downward revisions in earnings estimates for the near term further reflect cautious analyst sentiment toward the stock. SNDL currently carries a Zacks Rank #5 (Strong Sell), suggesting limited upside potential and elevated risk for investors at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tilray Brands, Inc. (TLRY) : Free Stock Analysis Report Aurora Cannabis Inc. (ACB) : Free Stock Analysis Report SNDL Inc. (SNDL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

SNDL said Q1 faced “notable challenges beyond the usual seasonality” as softer demand in both liquor and cannabis, plus working‑capital execution problems and destocking in cannabis operations, weighed on results — management says the working‑capital issues were addressed after quarter‑end. Financials weakened: net revenue declined to CAD 196 million (‑4.4% YoY), gross profit fell to CAD 53 million (‑6.8% YoY) with consolidated gross margin down 70 bps driven by cannabis operations, and free cash flow was negative CAD 7.6 million. Management is pushing growth and profitability initiatives — exclusive Canadian production and initial shipments of Jeeter, six net retail additions (including five Cost Cannabis locations), a CAD 20M+ Profit Enhancement Initiative, and 4.5 million shares repurchased — while monitoring Sunstream/Parallel exposure amid U.S. cannabis rescheduling developments. Interested in SNDL Inc.? Here are five stocks we like better. Cannabis: One Stock to Play the Movement SNDL (NASDAQ:SNDL) reported first-quarter 2026 results marked by softer market demand across both liquor and cannabis, alongside execution issues in cannabis operations working capital that management said have since been addressed. On the company’s earnings call, executives said the quarter reflected more than typical seasonal weakness, as both retail segments saw same-store sales declines after 16 consecutive quarters of operational improvement. Chief Executive Officer Zach George said the first quarter faced “notable challenges beyond the usual seasonality” that typically makes the start of the calendar year the weakest period. George pointed to familiar weakness in liquor retail, but said softness that began in cannabis during the second half of the prior year “has developed into a more significant and persistent challenge.” → Homebuilder Earnings: D.R. Horton Sticks Out as Pulte & NVR Sales Tank Will This New Development Mean A Big Rally In Cannabis Stocks? He also said results were “further affected by sub-optimal execution on working capital management within our upstream cannabis operations,” adding that the issue was addressed following the quarter-end. Despite the headwinds, George said SNDL continued investing in growth platforms, highlighting an exclusive contract to produce and commercialize Jeeter in Canada. While exclusivity was formally assumed in April, he said production activities and inventory pipeline development began in March, with initial shipments delivered to provincial boards. → Meta Platforms Earnings Preview: What to Watch in Q1 2026 Report Whatever You Believe About Sundial Growers, You Could Be Right Chief Financial Officer Alberto Paredero-Quiros reported net revenue of CAD 196 million, down 4.4% year over year, citing market contraction across segments. Gross profit totaled CAD 53 million, down CAD 3.8 million, or 6.8%, versus the prior-year quarter. Consolidated gross margin declined 70 basis points, which Paredero-Quiros said was “purely driven” by the cannabis operations segment, as both retail segments expanded margin. Operating income—both adjusted and unadjusted—remained negative in the quarter due to seasonality, but improved from the prior year, which management attributed to operating expense improvements and “the absence of prior year Sunstream valuation reduction,” according to Paredero-Quiros. → Palantir Is Down 30%: Noise? Or a Signal to Accumulate? Free cash flow was negative CAD 7.6 million, which the CFO said was “partially driven by seasonality.” Compared with the prior year, free cash flow declined by CAD 6.5 million, which he attributed mainly to working capital increases in cannabis operations, additional capital expenditures across segments, and higher lease costs. Paredero-Quiros noted that inventory built more than in the prior year, in part due to seasonality and “more pronounced” increases related to the Jeeter launch. He added that improvements elsewhere in working capital, including the net impact of receivables and payables, reflected “continued optimization of collections and payment terms.” The CFO also highlighted an accounting presentation change following amendments to IFRS 7 and IFRS 9. As of 2026, “cash in transit is no longer classified as cash and cash equivalents,” and is instead reported as a receivable. He said the change has no impact on liquidity, cash generation, or underlying economics, but affects comparability of reported cash balances. SNDL reported CAD 213.4 million of cash on its March 31, 2026 balance sheet, excluding cash in transit; the company’s reported CAD 252.2 million at Dec. 31, 2025 included CAD 12.1 million of cash in transit. SNDL also changed segment reporting beginning in 2026, allocating shared service costs to operating segments rather than Corporate. Paredero-Quiros said the company restated 2025 segment information for comparability and that the change is intended to provide a “fully loaded profitability” view for each segment. Liquor retail: Net revenue declined 4.9% year over year, driven by demand softness and broader market declines. Same-store sales fell 6.1%, partially offset by new store openings. Gross margin improved 20 basis points, supported by pricing and promotional optimization and greater penetration of private label offerings. Operating income was negative due to seasonality and “modestly lower than the prior year,” as depreciation and amortization efficiencies were offset by lower gross profit and higher sales and marketing expense. Cannabis retail: Same-store sales fell 2.5%, partially offset by new store openings and the integration of five Cost Cannabis locations. Gross profit increased 3.7% to CAD 20.4 million, supported by 100 basis points of gross margin expansion tied to pricing actions, promotional effectiveness, and product mix. The segment delivered positive operating income of CAD 1.1 million, though the CFO said operating income growth was constrained by approximately CAD 1 million in “unadjusted one-time charges.” Cannabis operations: Net revenue declined 14% to CAD 29.4 million, driven by destocking activity and timing shifts in business-to-business orders. International sales rose to CAD 3.5 million from CAD 1.8 million in the prior-year quarter. Gross margin fell by seven percentage points, with Paredero-Quiros attributing the compression to inventory adjustments and under-absorption due to lower production volumes, alongside one-time items including an incremental write-down related to an idle sterile term facility. George framed progress around three priorities: growth, profitability, and people. On growth, he said Jeeter represents an “important milestone,” and that SNDL now controls execution “end-to-end” in Canada, from manufacturing to distribution. The company also expanded its cannabis retail network by six stores since Dec. 31, including five Cost Cannabis locations in Alberta and Saskatchewan. In Saskatchewan, SNDL is completing investment for a new Wine and Beyond liquor store expected to open in the second quarter. George also said the Rise Rewards loyalty program, launched in cannabis in the second quarter of 2025, expanded into Ace Liquor and Liquor Depot during the first quarter of 2026, with rollout to Wine and Beyond scheduled for the second quarter. On profitability, George said retail margins improved year over year, with liquor retail gross margin up 20 basis points and cannabis retail up 100 basis points, translating to an average 50-basis-point improvement across combined retail segments. He said the company implemented decisions under a “Profit Enhancement Initiative” expected to generate “more than CAD 20 million in incremental operating income over the remainder of the year,” driven mostly by efficiency gains as well as pricing actions and mix optimization. George also noted CAD 2 million in additional G&A savings during the quarter and said “data-related revenue reached CAD 4.2 million.” George said SNDL repurchased 4.5 million shares in the first quarter under its board-approved share repurchase program. In the Q&A session, Paredero-Quiros said the company expects to continue the buyback program “as long as the share prices are at these levels,” adding that management believes the stock is trading below its internal assessment of underlying business value. George said SNDL has been approached frequently regarding transactions and financings amid what he described as a heating M&A environment, adding that at current levels the company’s equity is “not at a suitable valuation to be used as a currency in transactions.” As a result, he said investors should expect SNDL to be “biased to retiring shares as a more accretive use of cash” relative to larger-scale M&A. Executives also discussed a recent U.S. regulatory step toward rescheduling cannabis, which George said is relevant given SNDL’s credit exposure through Sunstream, particularly to Parallel. George said Parallel is a predominantly medical portfolio and that, as it seeks DEA registration, it would “no longer be liable for 280E related taxes for the 2026 calendar year,” which he said could reduce uncertainty around margins and profitability. He added SNDL is focused on completing Parallel’s foreclosure process, which he said is expected to be completed “in the next couple of months,” before considering significant additional investments. Asked about maintaining SNDL’s Nasdaq listing while managing U.S. exposure, George said the company would have “structural options” if DEA registration creates permissibility for uplisting, and that such options could allow SNDL to “retain our Nasdaq listing” while continuing to grow the business. On cannabis retail demand, George said multiple factors are at play, including market maturity, stiff competition, and consumer discretionary pressure. He specifically cited increases in gasoline and heating oil prices since the start of the Ukraine war and said the impact on Canadian consumers “became very, very acute early this year.” Paredero-Quiros added that more than 85% of cannabis retail sales are in Alberta and Ontario, markets he said declined about 3% and 1%, respectively, in the first quarter, and he said the company expects performance to improve as it laps softer comparisons in the second half of 2026. 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. The article "SNDL Q1 Earnings Call Highlights" was originally published by MarketBeat.

Image source: The Motley Fool. Wednesday, April 29, 2026 at 10 a.m. ET Chief Executive Officer — Zachary George Chief Financial Officer — Alberto Paredero-Quiros Zachary George: 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 of each calendar year. After 16 consecutive quarters of operational improvement, both our liquor and cannabis markets experienced declines in same-store sales. The downward trend in the liquor market is a familiar issue, but the softness that began to emerge in the cannabis market during the second half of the previous year has developed into a more significant and persistent challenge. Our results for the quarter were further affected by suboptimal execution on working capital management within our upstream cannabis operations. This issue has since been addressed and remedied following the close of the quarter. Despite these headwinds impacting our financial performance, we remain encouraged by the proactive actions taken by our teams. They have responded with focus and determination, taking control of the situation and implementing necessary initiatives that support our ongoing efforts to build a successful, sustainable, and profitable growth model. We continue to invest in growth platforms during the quarter. One notable example is our exclusive contract for the production and commercialization of Jeter, a leading U.S. cannabis brand. This exclusivity was formally assumed in April, but production activities and inventory pipeline development had already commenced in March, with initial shipments delivered to provincial boards. Additionally, both of our retail segments, liquor and cannabis, reported improvements in gross margin. Our teams achieved these gains by enhancing promotional efficiency, maintaining pricing discipline, and optimizing product mix management. Periods of adversity are a true test of a management team's resilience and determination. The SNDL Inc. team has demonstrated these qualities by thinking creatively and implementing several profit enhancement initiatives. These actions are expected to boost profitability and improve commercial execution, generating more than $20 million in incremental operating income over the remainder of the year. As previously communicated during our Q4 and full-year 2025 earnings call, we continue to leverage our board-approved share repurchase program. In 2026, SNDL Inc. repurchased a total of 4.5 million shares. Last week, U.S. authorities took a significant step towards rescheduling cannabis by moving certain state-licensed medical marijuana to Schedule III. While this does not constitute federal legalization, it is an important regulatory development. This step is particularly relevant for SNDL Inc. due to our credit exposure through the SunStream vehicle in the U.S., especially for Parallel, a licensed operator active in key medical markets such as Florida and Texas. The regulatory change is constructive for Parallel, as its restructuring process continues to progress with only a limited number of outstanding conditions remaining. Over now to Alberto for more insights on our first quarter financial performance. Alberto Paredero-Quiros: Thank you, Zachary. I want to remind everyone that the amounts discussed today are denominated in Canadian dollars unless otherwise stated. Certain figures referred to during this call are non-GAAP and non-IFRS measures. For definitions of these measures, please refer to SNDL Inc.'s Management’s Discussion and Analysis document. Before moving on, I would like to highlight a small accounting presentation change following the adoption of amendments to IFRS 7 and IFRS 9. As of 2026, cash in transit is no longer classified as cash and cash equivalents and is instead reported as a receivable. This change has no impact on liquidity, cash generation, or underlying economics, but it does affect the comparability of reported cash balances. Specifically, the $213.4 million of cash reported on our March 31, 2026 balance sheet does not include any cash in transit, whereas the $252.2 million reported at December 31, 2025 included $12.1 million of cash in transit. Net revenue of $196 million in Q1 2026 represented a 4.4% year-over-year decline, driven by market contractions that impacted our different segments. Gross profit of $53 million is a reduction of $3.8 million, or 6.8%, compared to the same period of the prior year. While most of this reduction is driven by the revenue decline, we also reported a consolidated gross margin decline of 70 basis points. This margin decline is purely driven by our cannabis operations segment, as both our retail segments expanded margin. Both adjusted and unadjusted operating income were negative due to the seasonality impact in the first quarter, but saw an improvement compared to the prior year, as the reduction in gross profit is more than offset by OpEx improvements and the absence of the prior year's downstream valuation reduction. Free cash flow of negative $7.6 million in the quarter was partially driven by seasonality impact. Compared to the prior year, it represents a reduction of $6.5 million, mainly driven by working capital increases in cannabis operations, as well as additional CapEx investments across retail and operations segments and increased lease costs. Our historical quarterly performance clearly reflects the seasonality typically impacting the first quarter. That said, despite the moderate year-over-year improvement in operating income, net revenue, gross profit, and free cash flow declined compared to the prior year, as previously discussed. Looking ahead, we expect to see improvements in revenue growth year over year as of 2026, driven in part by the impact of our initiatives and also as we begin to lap softer revenue comparisons for the second half of the year. Looking more closely at segment-level contributions across our key financial KPIs, and starting with net revenue, the overall decline was driven primarily by liquor retail and cannabis operations, while cannabis retail was essentially flat. I will expand further on the drivers by segment in a few minutes, but at a high level, liquor retail declines were driven by challenging market conditions, cannabis retail was able to offset market softness through growth from newer store openings, and cannabis operations declined due to market destocking and the timing of contract orders. Gross profit follows similar dynamics, although both retail segments were able to partially offset revenue pressure through continued margin improvements. Adjusted operating income showed a modest improvement, as the operating income decline driven by lower gross profit in cannabis operations was offset by the absence of the prior year SunStream valuation reduction and ongoing corporate cost savings. The decline in free cash flow compared to the same period last year was driven by lower earnings, primarily reflecting reduced gross profit, as well as higher capital expenditures to support store openings and differences in the timing of lease payments relative to the prior year. Movements in working capital were broadly consistent with the prior year; however, two offsetting dynamics largely netted each other out. Looking more closely at free cash flow, there are a few takeaways. First, the combined impact of net income and noncash addbacks was negative. This is what we refer to as earnings on the previous slide. In simple terms, while net income improved by $4.8 million compared to the same period last year, that improvement was driven by noncash items. After adjusting for these noncash effects, the overall contribution from earnings was negative. Second, inventory increased more in 2026 than in the prior year, largely offset by improvements elsewhere in working capital. Inventory typically builds in the first quarter due to seasonality, and this year's increase was more pronounced as a result of the inventory build related to the Jeter launch in cannabis operations. Other working capital, primarily the net impact of receivables and payables, represented an improvement year over year, reflecting continued optimization of collections and payment terms. We also saw capital expenditures and lease payments increase by $3.6 million compared to the same period last year, driven by initial investments to support new store openings as well as differences in the phasing of lease payments between the first and the second quarters relative to last year. Finally, the chart on the right-hand side of the slide clearly illustrates the seasonality of free cash flow, highlighting the typical differences between the first and second half of the year. When reviewing each commercial segment individually, I would like to begin by highlighting a change in the way we are reporting segment results. As of 2026, we have started allocating shared service costs to the respective segments, which were previously recorded within corporate. This change allows investors to assess the fully loaded profitability of each segment. For comparability purposes, we have also restated the segment information for 2025. Additional details on these adjustments are provided in our Management’s Discussion and Analysis. Starting with liquor, net revenue in this segment continued to be impacted by demand softness and broader market decline. This resulted in a 6.1% decline in same-store sales, which was partially offset by new store openings, leading to a net 4.9% year-over-year decrease in revenue. The decline in gross profit, driven primarily by lower revenue, was partially offset by a 20-basis-point improvement in gross margin. To this last point, in addition to pricing and promotional optimization, we continue to improve our product mix by the penetration of private-label offerings at accretive margins. Operating income was negative in the quarter, largely due to seasonality, and modestly lower than the prior year, as SG&A efficiency improvements were more than offset by the gross profit decline and higher sales and marketing expenses. Cannabis retail was also impacted by market demand softness, although to a lesser extent than the other two commercial segments. A 2.5% decline in same-store sales was partially offset by new store openings and the integration of five Canna Cabana locations. Gross profit of $20.4 million increased by 3.7% year over year, supported by a 100-basis-point expansion in gross margin driven by pricing actions, improved promotional effectiveness, and favorable product mix management. This gross profit improvement did not translate into operating income growth despite additional SG&A cost efficiencies, due to the impact of approximately $1 million in unadjusted one-time charges incurred during the quarter. That said, the segment still delivered positive operating income of $1.1 million in the quarter. Cannabis operations experienced a large relative decline during the quarter. Net revenue of $29.4 million represented a 14% year-over-year decrease, driven primarily by destocking activity and temporary changes in the timing of business-to-business orders. These declines were partially offset by strong growth in international sales, which increased from $1.8 million in 2025 to $3.5 million in 2026. Gross profit was impacted by both lower revenue and a seven-percentage-point decline in gross margin. The margin compression was primarily driven by inventory adjustments and under-absorption resulting from lower production volumes. The decline in gross profit also weighed on operating income. Operating expenses were largely flat compared to the prior year, as SG&A efficiency improvements were more than offset by one-time unadjusted charges, including an incremental write-down related to the idle federal term facility. As a reminder, we apply a very stringent definition of adjustments, and only restructuring-related charges and impairments of intangible assets are adjusted. Over to you, Zachary, for additional comments related to our strategic priorities. Zachary George: Turning now to the progress we have made during the first quarter against our three strategic priorities—growth, profitability, and people—I would like to highlight a few key developments starting with growth. Our Jeter launch represents an important milestone with significant potential. Jeter is one of the leading branded cannabis platforms in the U.S., with strong consumer recognition and a proven track record in key medical and adult-use markets. By taking over the exclusive production and commercialization rights in Canada, we now control execution end to end, from manufacturing to distribution, which gives us the ability to fully align quality supply and brand strategy with our broader cannabis platform. In Canada, we are focused on building a measured and scalable rollout, leveraging Jeter's brand strengths while applying our operational capabilities and relationships with provincial boards. In the U.S., Jeter continues to perform as a strong brand in medical and regulated markets, and together, this creates a complementary cross-border brand platform that supports long-term growth while remaining focused on execution and profitability. We also continue to expand our retail footprint. As most markets have reached or are approaching saturation, our focus remains on quality rather than quantity. In this context, since December 31, we have expanded our cannabis retail network by six stores, including five Canna Cabana locations in Alberta and Saskatchewan. In Saskatchewan, we are also completing our investment to support a new Wine and Beyond liquor store, which is expected to open during the second quarter. We also continue to expand our international partnerships, generating $3.5 million in international sales during the first quarter, representing a 94% increase compared to the same period last year. Following the launch of our Rise Rewards loyalty program in cannabis during 2025, we expanded the program into our convenience liquor banners, Ace Liquor and Liquor Depot, during 2026, with the rollout to our Wine and Beyond locations scheduled for the second quarter of this year. Rise Rewards is our customer-led loyalty program that delivers greater value to everyday shoppers through savings, rewards, and personalized offers, strengthening engagement and long-term loyalty across our retail network. Turning to profitability, as previously mentioned, we were pleased with the continued year-over-year improvement in retail margins during the first quarter. A 20-basis-point expansion in liquor retail and a 100-basis-point expansion in cannabis retail translated into an average improvement of 50 basis points across our combined retail segments. As highlighted in my introduction, we have recently implemented several decisions under a profit enhancement initiative that are expected to boost profitability and improve commercial execution, generating more than $20 million in incremental operating income over the remainder of the year. While the majority of this improvement will come from efficiency gains, it also reflects pricing actions and commercial and mix management optimizations. During the first quarter, we continued to demonstrate our ability to improve efficiencies by delivering an additional $2 million in G&A savings, while our data-related revenue reached $4.2 million. Under our people strategic priority, we also continue to make meaningful progress, from the completion of our performance-to-pay cycle—where our competitive compensation philosophy aligns individual impact and contributions with merit and incentives—to the alignment of individual goals for 2026, as well as continued improvements in our recruiting processes and employee value proposition. This strategic priority remains critical and foundational for us. As part of our ongoing talent review process, we will be particularly focused over the coming months on strengthening our capabilities in support of our strategy, including the review and deployment of individual development plans for our team members. While market conditions remain challenging, I am grateful for and energized by the passion and resilience demonstrated across our organization, and I want to thank our teams for their continued commitment. We remain focused on growth and cash flow generation, and on delivering sustainable returns for shareholders, whom I would also like to thank once again for their continued trust and support. I will now turn the call back to the operator for the analyst Q&A session. Operator: Thank you. We will now open the call for questions. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question will come from Frederico Gomes with ATB Cormack Capital. Your line is open. Frederico Gomes: Thank you. Good morning. Thanks for taking my questions. This question is about capital allocation and how you are thinking about the U.S. following the rescheduling news. Does anything change here in terms of how you are looking at potential additional investments there, as well as new investments in the SunStream platform? Thank you. Zachary George: Frederico, good morning. The recent news over the last week is actually incredibly positive for our SunStream exposure. As you are aware, Parallel, for example, which is yet to complete its foreclosure process—we expect that to be done in a couple of months—is a predominantly medical portfolio. So, number one, it is very clear that from a tax perspective, as they seek DEA registration, they will no longer be liable for 280E-related taxes for the 2026 calendar year, which lifts a lot of uncertainty around margins and path to profitability in the future. So very, very positive. We are really focused on completing the foreclosure before we tackle significant additional investments. But that team is working hard on potential operational improvements, and also whether it is growing in the state of Florida or the emerging opportunity in the medical market in Texas, of which they are an original three-license holder. We are very excited about the future. I do not want to speculate too much in terms of uplisting opportunities, but we believe we are going to have strong clarity on that in the next several weeks. It is a top priority, as we have stated in prior calls for the last several years, but we want to make sure we have all the facts and can close these restructurings before we get too aggressive. Frederico Gomes: Perfect. Appreciate that. And then just to follow up on capital allocation, you are obviously being active in terms of your share repurchases. If you look at the valuation, it looks like over 50% of your market cap now is net cash. So how much more aggressive do you think you could be, or do you intend to be, if these valuation levels hold? Alberto Paredero-Quiros: Hi, Frederico. We will certainly continue operating with our share buyback program as long as the share prices are at this level. Obviously, we have our own internal models. We are looking at what we believe is the underlying value of our different businesses and segments, and we are convinced that right now our stock is trading below those values. As long as that is the case, we will continue being active. Zachary George: I would just add some color to that. The M&A market is heating up, and with this Schedule III announcement, there should be further momentum there. We are being approached on a near-daily basis on a number of transactions and financings that we are being invited to participate in. We are seeing interest both on the buy and the sell side in different asset classes that have been relatively quiet over the last four years. So there is a sense that animal spirits are emerging here. But it is clear to us that where equity is trading today is really not at a suitable valuation to be used as a currency in transactions. And so you will see us biased to retiring shares as a more accretive use of cash relative to larger-scale M&A based on where we are trading right now. Frederico Gomes: Perfect. Appreciate that. And a final question from me. On the operational side, it looks like your cannabis operations segment is the one that has been particularly underperforming in terms of operating income loss. I am curious if you could provide more color on why that is and whether you have identified exactly what could be improved to get that segment to operating income profit like the cannabis retail segment. Thank you. Alberto Paredero-Quiros: Yes, great question. And yes, it is fair to say that the cannabis operations segment, particularly in the first quarter, had relatively weak performance. There were multiple factors impacting it. Starting with net revenue, you saw a 14% decline. There is a combination of different things, but the main two drivers were a little bit of destocking in our retail channel for this segment—about 70% of the revenue in this segment is to the provincial boards, and that volume, not only in our own retail but also in third-party retail, saw slight reductions in inventory levels both at board levels as well as third-party retail during the first quarter. We also had headwinds in the contract channel, or what we call B2B. As you know, we are producers for some other LPs, where we leverage our capacity and our expertise in manufacturing to provide products to others. In that front specifically, we saw a relatively large reduction compared to last year. To give you an indication, last year in the first quarter we had $9 million of contract sales, and in the first quarter of this year it was half of that amount—$4.5 million lower. All of that is tied in. The timing of these contracts and the shipments are relatively volatile, and we saw a very weak first quarter. We have strong orders for the second quarter, so we are not concerned when it comes to the full year, but certainly, in the first quarter, that was a headwind. That pretty much explains the reduction in net revenue, because as we pointed out in the presentation, we saw growth in our own retail and we saw growth in international, so we continue to be encouraged by the potential of those two channels. When you look at gross margin, we did see a relatively large reduction from a pretty healthy gross margin last year of 26.8%. We went down to 19.7%. An element of that was under-absorption triggered by the lower volumes and the lower revenue. We also had some problems with the ramp-up of the manufacturing of Jeter. We are still learning about the product, and we had some inefficiencies in that front. We also had some one-time inventory adjustments that hit the quarter. The combination of all of those factors triggered the reduction. A lot of what we set with the profit enhancement plan that we are planning for the second half of the year is already, as of May, starting to deliver good results. Much of that is pointed specifically at this segment because we see a lot of opportunities in addressing some of the basic inefficiencies that we have. Finally, we had a few one-time items that were impacting the quarter in SG&A. They are north of $1.5 million. We do not adjust for those things. As you know, we have a policy that we do not like to adjust whatever we do not like seeing in our P&L—we face it as it is and keep on working on it. But specifically in the first quarter, we had this $1.5 million of one-times between terminations and impairments of fixed assets, creating a bit more of a headwind on the bottom line. Keep in mind as well that the $6.9 million negative operating income, or operating income loss, that we have in 2026 includes all of the allocations of shared services. You are probably used to seeing last year better profitability levels, but as we pointed out in the presentation, we have restated that, so right now each segment shows the fully loaded profitability profile. It is the same thing for the two other segments. There are still a lot of opportunities that we can materialize in the cannabis operations going forward. Zachary George: Thank you very much for that, Frederico. Operator: Thank you. The next question will come from Aaron Grey with AGP. Your line is open. Aaron Grey: Hi. Thank you for the questions here. Just with rescheduling that was announced for FDA-approved and state medical, can you speak to some of the potential impacts for SunStream that you alluded to? And more particularly, given there are certain assets that are exclusively medical markets—you talked about Florida and Texas specifically—is there a route where you could choose only to consolidate those and maintain the Nasdaq listing while leaving the other ones within that SunStream portfolio? I know you said you are still evaluating that, but would love to hear some additional color there. Operator: Thank you. Zachary George: The short answer is yes. There is nothing about the portfolio makeup in terms of the exposure that we carry as creditors through SunStream. You have, in the case of Parallel, a medical operator that is serving patients in the states of Massachusetts, Florida, and Texas. Florida is the vast majority of that business. In the case of Skymint, today that is a purely recreational business. We understand that Nasdaq and its counsel are being swarmed right now by a lot of different parties looking for clarity. A number of MSOs are making aggressive commentary about their timelines to uplist. We just want to make sure that we can confirm that process. But if that DEA registration creates permissibility in terms of uplisting, we will certainly have structural options that would let us retain our Nasdaq listing, which I think would minimize disruption as we continue to grow the business. Aaron Grey: Okay, great. That is helpful color. Second for me is on cannabis retail. You commented on some of the same-store sales softness that you are seeing there. Obviously, some of it is just the market maturing, but I am curious if you are also seeing anything in terms of increased competitive market dynamics. Do you feel confident in terms of getting same-store sales back to positive in terms of some of that broader second half improvement in sales that you alluded to? Zachary George: It is a great question, and there are multiple factors driving this result. One is maturity, as you pointed to. There still is very stiff competition amongst operators. When you look at our levels of profitability, even with this emerging flatness in terms of growth, we compare very nicely amongst the top three operators in Canada. I am personally very concerned. Since the start of the Iran war, you have seen gasoline and heating oil prices up 20% to 35% as these commodities face the Canadian consumer. I think discretionary spend has been challenged. We have talked about this concern in prior quarters, but what was already challenging became very acute early this year, with energy pricing escalating so dramatically. We are watching it really carefully. We have levers to pull. Our profit enhancement plan is targeting even further efficiencies and margin improvement. We are not standing still, and we do have a plan to improve performance, but there are certain elements of the macro environment that are going to continue to have an impact, and we are working to overcome those. Alberto Paredero-Quiros: Adding some more color, Aaron, if you look at the composition of our revenue, a little bit north of 85% of our sales in cannabis retail are in the Alberta and Ontario provinces. Both provinces are declining in revenue. As Zachary mentioned, that is driven by saturation in those markets and challenges consumers are facing. Specifically, Alberta represents close to 55% of our revenue. The market has been declining 3% in the first quarter, and Ontario has been declining close to 1% in that period. Obviously, we are facing the headwinds that our large markets are the ones that are declining, more mature, and saturated. We need to put it in context that last year, during the first half, we were seeing very high single-digit growth rates in these markets too. The focus from the market, and from us as well, has been different as of late. As you can see, we improved one full percentage point in gross margin. While operators have been doing that already for a few years, we are seeing a slight decline in sales, but we continue focusing on opening the right profitable doors and improving the margin profile. We anticipate that as we start lapping the softer revenue profile from 2025 in the second half of the year, we will see better performance. We will continue with our strategy, as said before, on improving efficiencies and margins, and opening new doors where it makes sense. Operator: I am showing no further questions in the queue at this time. I will turn the call back over to Zachary for closing remarks. Zachary George: Thank you, and thank you to all for joining us today. We look forward to updating you on our progress in the near future. Thank you. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. 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