Sundial Reports First Quarter 2020 Financial Results CALGARY

Sundial Reports First Quarter 2020 Financial

CALGARY, May 15, 2020 /CNW/ - Sundial Growers

Inc. (Nasdaq: SNDL) ("Sundial" or the "Company") reported its financial and operational results for first quarter

2020 ended March 31, 2020.

First quarter 2020 financial and operational

Strategic shift away

from "Heal, Help and Play" strategy to concentrate on Canadian recreational cannabis with a focus on inhalable products.

made on business optimization initiatives with annualized net cost reductions of approximately $28 million in 2020.

million, an increase of 7% over the prior quarter.

Net cannabis revenue

of $16.5 million, excluding provisions of $2.5 million, an 18% increase over the prior quarter

Branded net cannabis

sales increased to 54% of total net cannabis sales in the first quarter of 2020 vs. 33% in the fourth quarter of 2019.

Overcame significant

processing challenges and improved supply chain capabilities during the quarter; recently, 'On Time In Full' (OTIF) metrics have

Inventory write-down

of $14.4 million, on dried cannabis and cannabis extracts, primarily driven by product price compression due to broader trends

of oversupply in the Canadian market.

Since January 2020, the Company has reduced its workforce

by 51% to optimize its cost structure to align with market conditions. Sundial currently has 420 employees.

"We have made significant progress in

improving our cost structure and liquidity in the past few months," said Zach George, Chief Executive Officer of Sundial.

"The agility of our "craft-at-scale" cultivation strategy also became evident as we quickly aligned our operations

with market conditions, by temporarily curtailing cultivation activities to adapt to current demand levels. We are pleased

to have made progress towards the sale of Bridge Farm and the subsequent restructuring of our secured debt. These steps are critical

in order to improve Sundial's financial health."

"The COVID-19 pandemic has brought many

challenges over the past few months and our team has shown outstanding commitment and courage, working tirelessly despite these

new demands," added George. "We truly appreciate their efforts and their health and safety continues to be a priority

for Sundial. As we move forward, we remain focused on achieving sustainable profitability and will continue to pursue opportunities

to drive improved efficiency."

FINANCIAL AND OPERATING HIGHLIGHTS

Operational Highlights:

Average gross selling

price per gram of branded flower of $4.76 per gram in the first quarter of 2020 compared to $6.15 per gram in the prior quarter.

The average gross selling price per gram difference was due to price discounts and return provisions. Average gross selling prices

for unbranded flower in the first quarter was $2.74 per gram down from $3.15 per gram in the previous quarter due to competitive

pressures in wholesale market as a result of industry-wide increased inventory levels.

remains on delivering industry-leading, best-in-class products with a focus on inhalable products, including flower, pre-rolls

and vape cartridges. Gross revenue from vape cartridge sales were $4.4 million in Q1 representing 26% of the cannabis sales mix

and an increase of $3.9 million over Q4 2019. Sundial continues to build strong consumer adoption with its vape portfolio with

several new launches in Q1 2020 and a strong innovation pipeline planned for the balance of year.

The Company harvested

10,254 kilograms of cannabis in the first quarter of 2020 which was about flat compared to the kilograms of cannabis for the three

months ended December 31, 2019.

The Company has seen

continued commercial success in April 2020 with more than $9 million in net branded sales to provincial boards, which can be attributed

to its strong recreational launch in the Province of Quebec, supply chain optimizations and continued market share penetration

within the inhalable products segment nationally.

Cost of sales per gram

sold for the three months ended March 31, 2020 were $3.04 compared to $2.41 for the three months ended March 31, 2019. The increase

of $0.63 was due to lower production cost of bulk flower, offset by an increase in production cost of vape products.

Net loss from cannabis

operations for the three months ended March 31, 2020 was $36.4 million compared to a net loss of $16.7 million for three months

ended March 31, 2019. The increased loss of $19.7 million was primarily due to non-recurring inventory valuation provisions ($14.4

million), restructuring costs ($2.7 million) and asset impairment ($5.7 million), partially offset by increases in revenue, foreign

exchange gain and lower share-based compensation expense.

Adjusted EBITDA from cannabis operations was a loss of

$11.3 million for the three months ended March 31, 2020 compared to a loss of $5.5 million for the three months ended March 31,

2019. The increase loss was due to the following:

Increase in cost of sales due to an increase in kilogram

Increase in general and administrative expenses due to

increases in salary and wages, office and general and professional fees

Increase in sales and

marketing expense due to general marketing expenses

In addition, the loss was partially offset by the following:

Increase in gross revenue due to the Company expanding

its provincial distribution network and launching additional brands and product formats

Refinancing Initiatives

On May 14, 2020, the Company obtained amended

and restated waivers and agreements from its senior lenders for all events of default and cross default. Under the terms of the

waivers and agreements, the Company agreed that on or before June 1, 2020 it will (i) execute an amended and restated credit agreement

under its Syndicated Facility, (ii) execute a refinancing transaction under its Term Debt Facility, (iii) execute an intercreditor

agreement, and (iv) close the sale of Bridge Farm. Failure to execute any of these transactions will constitute an event of default.

These requirements, combined with the accumulated

losses to date, indicate the existence of a material uncertainty that casts substantial doubt on the Company's ability to continue

as a going concern. The Company continues to be in active dialogue with its lenders to finalize these amendments to its loan agreements.

Any failure or delay in completing these amendments would have a significant negative impact on the Company's liquidity and further

impact the Company's ability to operate as a going concern. In such a case, the Company would look to alternative sources of financing,

delay capital expenditures and/or evaluate potential asset sales, and potentially could be forced to curtail or cease operations

or seek relief under the applicable bankruptcy or insolvency laws

Sundial Receives Nasdaq Letter Regarding

Non-Compliance with Minimum Bid Price Requirement

Sundial was notified on May 12, 2020 by the

Listing Qualifications Department of The Nasdaq Stock Market ("Nasdaq") that the closing bid price of the Company's common

stock for the last 30 consecutive business days from March 30, 2020 to May 11, 2020 did not meet the minimum bid price of $1.00

per share (the "Minimum Bid Requirement"). The notice has no immediate effect on the trading of the Company's

common shares on Nasdaq and the Company has until December 28, 2020 to regain compliance with the Minimum Bid Requirement.

Sundial will actively monitor its closing bid

price during the compliance period and intends to take appropriate measures to remedy the deficiency and regain compliance with

the Minimum Bid Requirement.

The Company is monitoring daily developments

in the COVID-19 pandemic and actions taken by the government authorities. In accordance with the guidance of provincial and federal

health officials to limit the risk and transmission of COVID-19, Sundial has implemented mandatory self-quarantine policies, travel

restrictions, enhanced cleaning and sanitation processes and frequency, and social distancing measures. Sundial believes that it

can maintain safe operations with these pandemic-related procedures and protocols in place. Sundial did not experience a material

impact to sales in the first quarter from COVID-19.

Certain financial measures in this news release, including adjusted EBITDA, working capital and gross margin before fair value

adjustments are non-IFRS measures. These terms are not defined by IFRS and, therefore, may not be comparable to similar measures