SNDL Inc.

Good morning and welcome to SNDL's fourth quarter 2025 financial results conference call. This morning, SNDL issued a press release announcing their financial results for the fourth quarter of 2025 ended on December 31st, 2025. This press release is available on the company's website at SNDL.com and filed on EDGAR and CDAR as well. The webcast replay of the conference call will also be available on the SNDL.com website. SNDL has also posted a supplemental investor presentation. In addition to the conference call presentation, we will be reviewing today on its SNDL.com website. Presenting on this morning's call, we have Zach George, Chief Executive Officer, and Alberto Peredero, Chief Financial Officer. Before we start, I would like to remind investors that certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the company's financial reports and other filings that are made available on CDER and EDGAR. Additionally, all financial figures mentioned are in Canadian dollars unless otherwise indicated. We will now make prepared remarks and then we'll move on to analyst questions. I would now like to turn the call over to Zach George. Please go ahead.

Welcome to S&DL's Q4 and full year 2025 financial and operational results conference call. 2025 marked another step forward in our performance with multiple new records achieved throughout the year, including record full year net revenue, gross profit, adjusted operating income, and free cash flow. Beginning with free cash flow, our most important KPI for assessing financial health We are pleased to report that following our first year of positive annual free cash flow in 2024, we more than doubled this result in 2025, reaching 18 million. This was achieved through continued operational improvements and disciplined working capital management. Our cannabis business continued to grow, expanding revenue year over year during the last 16 consecutive quarters. While we have seen a market slowdown during the second half of 2025, Both our retail and operations segments continue to gain market share, showcasing the strength of our vertical model. We would also like to highlight that for the first time in our history, we achieved positive full-year adjusted operating income, supported by a strong contribution in the fourth quarter. This result underscores our financial discipline and continued traction in delivering operational efficiencies and productivity initiatives including synergies from the INDIVA acquisition. As a reminder, the only adjustments to operating income in 2025 relate to restructuring costs associated with the integration of INDIVA and the corporate restructuring program, which is currently in its third and final phase. Delivering consistent year-on-year financial progress remains a priority, alongside continuing to build a strong foundation for long-term profitable growth and shareholder returns. Few companies in our industry are positioned to leverage a balance sheet of this strength with no debt and over $250 million in unrestricted cash at the end of 2025, enabling disciplined capital deployment across both organic and inorganic opportunities. In this regard, in 2025, we increased capital expenditures by nearly 50% compared to 2024, with the majority of the investment directed towards new store openings across our cannabis and liquor retail segments. As announced in January, we also completed the first stage of the acquisition of cost cannabis retail stores from 1CM, incorporating five locations in Alberta and Saskatchewan. We continue to maintain a strong pipeline of initiatives focused on simplification and strategic focus. For example, we are days away from completing a full consolidation of our ERP systems, which is expected to unlock significant opportunities to further optimize our processes and enhance our analytical capabilities. We continue to leverage the share repurchase program approved by our board, and since the fourth quarter of 2024, we have repurchased a total of 15.1 million shares, including 4.3 million shares acquired over the last 90 days. We are also encouraged by the continued momentum toward U.S. cannabis rescheduling, as well as the progress toward completion of the restructurings of our parallel and SkyMint investments, with only a limited number of remaining requirements outstanding. Over now to Alberto for more insights on our fourth quarter and full year financial performance.

Thank you, Cy. 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 SMDL's management discussion and analysis document. Our fourth quarter financial results demonstrate a strong profitability improvement despite softness at the top line. Net revenue of $252 million represents a 2% year-over-year decline driven by market contractions in both liquor and cannabis retail, particularly liquor retail, partially offset by market share gains across both retail segments. Gross profit of $70.2 million marked a new absolute quarterly record, increasing by 1.4 million, or 2.1% year-over-year, despite the decline in revenue. A strong margin expansion across both retail segments translating to a 110 basis point increase in gross margin, reaching a new quarterly record of 27.8%. This is strong gross margin performance combined with efficiency improvements across retail and corporate SMA resulted in a record quarterly adjusted operating income of $12.8 million. An adjusted operating income of $11.8 million also represents a new quarterly high. This performance reflects a significant improvement versus the prior year, driven not only by the absence of the $65.7 million downstream valuation adjustment recorded one year ago, but also by meaningful underlying operational margin improvements. Free cash flow of over $10 million in the quarter was another solid result. although slightly lower than the prior year due to differences in the timing of working capital buildup for the holiday season, as well as increased capital expenditures and inventory investments to support new store openings. Our full-year financial results demonstrate meaningful year-over-year progress and new records across all key metrics. Net revenue of $946 million represents growth of 2.8%, supported by 11% growth from our combined cannabis segments. partially offset by a 2.8% decline in liquor. Importantly, all of our segments gained market share during the year. This revenue growth, combined with 120 basis points increase in gross margin, translating to gross profit growth of 7.6% compared to the prior year. Improved promotional execution, mix management, and productivity initiatives were the key drivers of this gross margin expansion. This continuous improvement mindset also enabled us to reduce G&A spending. As in the store efficiency gains, as a well executed corporate restructuring program, more than offset cost inflation and the impact of new store openings. As a result, both adjusted and unadjusted operating income reached new highs, with four year adjusted operating income achieving break even for the first time in our history. We're also pleased to report free cash flow of $18 million for the year, more than doubling the result achieved in the prior year. Our historical quarterly performance demonstrates a clear upward trend in profitability and a strong multi-year compound annual growth rate. While quarterly operating income and free cash flow will continue to be influenced by seasonality and volatility, we remain committed to sustaining the upward trajectory with a focus on long-term value creation. We have seen market declines across both the liquor and cannabis segments. While declines in liquor have been a multi-year trend, the slowdown observed in cannabis during the second half of 2025, which ultimately resulted in a market decline in the fourth quarter, represents a newer development. We intend to address these headwinds through disciplined execution and a balanced approach to both organic and inorganic investment. In particular, as the cannabis industry matures and growth rates moderate, less efficient operators are likely to face increased pressure, creating a favorable condition for industry consolidation. We believe we're well positioned to capitalize on these opportunities. Looking more closely at segment-level contributions across our key financial KPIs, we can see these dynamics clearly unfolding. Net revenue reflects the market headwinds impacting both the liquor and cannabis segments, particularly in the fourth quarter. On a full year basis, however, growth in the cannabis retail and cannabis operations more than offset the declines experienced in liquor. Despite revenue pressure, our liquor segment was able to offset declines through productivity improvements, allowing it to maintain or expand growth profits. At the same time, our cannabis segments contributed to growth profit growth at a faster pace than net revenue, particularly over the full year. Adjusted operating income reflects solid contributions from our cannabis retail segment, while results from liquor and cannabis operations were more muted. In the context of ongoing market declines, maintaining or expanding adjusted operating income in liquor represents a strong performance. Cannabis operations was impacted by costs associated with the volume ramp-up at our edible cultivation facility undertaken to support international growth. The investment segments show significant year-over-year improvement, primarily due to the absence of unfavorable valuation adjustments recorded in the prior year. The corporate segment also delivered strong contributions to bottom-line profitability, supported by the cost reductions from the restructuring program initiated in the second half of 2024. The $7.5 million contribution in the fourth quarter reflects both the benefit of these cost reductions and a $3.2 million loss from share-based compensation, as the decline in our share price during the fourth quarter partially upset the increase recorded in the third quarter. Once again, both our fourth quarter and full-year free cash flow results stand out as key highlights. In the fourth quarter, while we did not achieve a new record, free cash flow levels remained strong. Compared to the prior year, we benefited from higher earnings, reflecting improved P&L performance. This was offset by inventory and capital expenditure investments in new store openings, as reflected in the working capital and other components of page number seven, respectively. On a full year basis, the benefits from improved earnings and a strong working capital management more than offset the investments made to support new store openings. On the following page, we can see the seasonability effects in our free cash flow generation. The first part of the year is typically impacted by lower revenue levels and working capital buildups, where the second half of the year benefits from the opposite dynamic. In aggregate, and supported by a particularly strong second half, we're more than double free cash flow compared to the prior year. When reviewing each commercial segment individually, starting with liquor, we can see that both the fourth quarter and the full year were impacted by market-driven headwinds affecting net revenues. These declines, approximately 3% in both periods on a rounded basis, were primarily driven by broader market conditions. In this context, our team was able to gain market share, supported by the strong performance of our Wine & Beyond banner and continued growth in our private label offerings, both of which delivered positive results. Improvements in pricing, promotional execution, and mix management were the key drivers behind the gross margin expansion of 120 basis points in the fourth quarter and 70 basis points for the full year, reaching 26.0% and 25.9% respectively. Q4 gross profit of $38.7 million and a full-year gross margin of 25.9%, both represent new records for the segment. This margin expansion, together with additional efficiency improvement in in-store operations, translating to an increased $1.7 million, or 5%, in full-year operating income. In the fourth quarter, operating income was close to flat year-over-year, reflecting the absorption of ramp-up costs associated with the two new Wine & Beyond stores that opened in November. Cannabis retail delivered strong results in 2025, despite the market slowdown experienced in the second half of the year. Fourth quarter revenue was essentially flat year over year. However, supported by 190 basis point improvement in growth margin and continued efficiency gains in the store operations, operating income reached $8 million, representing a 33% increase compared to the same period last year. Full year results reflect a new revenue record of $330 million, representing 6% growth supported by 3.9% same store sales growth and new store openings. Gross profit of $86.1 million was also a new record, as was the gross margin of 26.1%, which expanded 80 basis points year over year. Similar to the liquor segment, cannabis retail benefited from improved promotional execution and mix management. Operating income of over $30 million was driven by margin expansion and overhead optimization, more than doubling compared to 2024. Following a material step-up in 2024, cannabis operations experienced greater volatility during 2025. As we began to lap the inclusion of the INVIVA acquisition in the baseline starting in the fourth quarter of 2024, net revenue in the fourth quarter of 2025 was flat year over year. Gross profit, gross margin, and operating income declined compared to the prior year, reflecting ongoing stabilization efforts related to the volume ramp-up and infrastructure improvements at our Azovul cultivation facility. For the full year, the segment delivered record net revenue of $144.7 million, representing growth of 32%, supported by the acquisition and continued growth in international sales. Gross profit of $32.9 million and a gross margin of 22.8% were also new full year records for the segment. We continue to see opportunities to further expand margins to increase the scale and additional productivity initiatives. Adjusted operating income of $2.5 million declined modestly year over year, primarily due to underabsorbed overhead investments. While cannabis operations remain the smallest and most volatile of our three commercial segments, we see significant opportunities to enhance our capabilities and footprint, positioning the segment as an increasingly important driver of long-term value creation for SMDL. Over to you, Zach, for additional comments related to our strategic priorities.