Sundial Reports First Quarter 2021 Financial and Operational Results First positive quarterly earnings from operations in the Company's history CALGARY, AB

Sundial Reports First Quarter 2021 Financial

and Operational Results

First positive quarterly earnings

from operations in the Company's history

CALGARY, AB, May 11, 2021 /CNW/ - Sundial Growers

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

ended March 31, 2021. All financial information in this press release is reported in millions of Canadian dollars and represents results

from continuing operations, unless otherwise indicated.

FIRST QUARTER 2021 FINANCIAL AND OPERATIONAL HIGHLIGHTS

Earnings from operations of

$1.7 million compared to a loss from operations of $32.7 million in the prior quarter.

Net loss of $134.4 million as

a result of $130.0 million of non-cash amounts reflecting the impact of share price volatility on accounting valuation of derivative warrants.

Achieved first quarter of positive

adjusted EBIDTA in Sundial's history, at $3.3 million compared to an adjusted EBIDTA loss of $5.6 million in the prior quarter.

$969.5 million unrestricted

cash, marketable securities and long-term investments on hand at March 31, 2021 and $1.08 billion at May 7, 2021 with no outstanding debt.

Investment balance of $96.0

million at March 31, 2021 in cannabis-related loans and marketable securities generated income of $15.7 million for the quarter.

Gross cannabis revenue was $11.7

million, a decrease of 30% from the prior quarter.

Subsequent to the quarter end, announced an agreement to acquire

Inner Spirit Holdings and Spiritleaf retail cannabis network.

"We are pleased to announce Sundial's first-ever

quarter with positive earnings from operations and adjusted EBITDA," said Zach George, Chief Executive Officer of Sundial. "This

result reflects our continued efforts to build a platform targeting attractive capital deployment opportunities while we focus on the

continued improvement of our cultivation practices in an immature and rapidly changing industry. The sustained decline in Canadian cannabis

flower pricing has prompted Sundial to liquidate certain inventory in the first quarter and we are now limiting the offering of discount

products in markets where we view the economics as neither attractive nor sustainable. We do not plan to pursue top line advancement without

profitability nor the maintenance of market share at any and all cost. We have made progress in improving our cultivation outcomes and

we continue to focus on best practices to deliver great results in potency, yield and terpenes, but our work is far from complete. Our

brand promise to consumers is fundamental to our strategy, and we refuse to compromise on product quality and consumer expectations. Operational

improvements and capital deployment remain top priorities. I am pleased with our investment track record, which began with our internal

program and is evolving to include partnership with third party capital. Our strong financial position, unique cultivation facility and

focus on premium inhalables have positioned us for improved performance in the second half of 2021 and beyond."

"COVID-19 continues to significantly affect Canadians

and economies around the world as a third wave has impacted the way we are conducting our lives and the way we operate our business,"

added Mr. George. "We continue to maintain our focus on keeping our employees safe and adjusting to market demands. Sundial remains

confident that we have the right team, a strong balance sheet, and a world-class facility that will allow us to get through the pandemic,

while focusing on growth and doing the right thing for our employees and consumers."

FIRST QUARTER 2021 KEY FINANCIAL METRICS

FIRST QUARTER 2021 BUSINESS & OPERATIONAL RESULTS

While the first quarter of 2021 was challenged by

industry dynamics and continued price compression, Sundial's ability to consistently deliver high-quality inhalables will continue to

be a key component of the Company's strategy. Sundial remains focused and committed to its cultivation and processing activities and the

improvement of its cultivation outcomes. Revenue declines in the first quarter were the result of the continued growth of the discount

segment, inventory monetization strategies through Sundial's Grasslands brand and slower industry sales driven by seasonality and

COVID-19 restrictions.

Sundial continued to invest in its evolving library of strains,

utilization of data insights and continuous improvement in the Olds facility to achieve higher potency and more consistent quality metrics.

Sundial received its first laboratory results for its new extended library of genetics and will prioritize the strains with higher THC

potency results. The Company plans to commercialize these new strains in Q4 2021.

Following the cultivation restructuring efforts commenced in mid-2020,

potency and quality metrics have continued to be a focus in 2021. In February 2021, Sundial harvested its highest potency flower since

the Olds facility's inception with Top Leaf's LA Kush Cake initial lots producing potency in excess of 28% THC. The product has seen strong

velocity in sales during the first quarter with some stores selling out in two days. Sundial has seen higher potency, yields and terpenes

through the first quarter, increasing its average potency results by approximately 15%, year over year.

Sundial's commitment to premium products remains steadfast, and

the Company will become more selective and limit accessibility of its discount segment products to select customers, where the economics

are attractive. The price dynamics of the discount segment are not sustainable for Sundial's portfolio and assets. The Company will focus

on its most profitable and higher margin SKUs, while continuing to further simplify its supply chain and rationalize SKUs across all brands

and formats to help better position and optimize its products.

Sundial continues to work on research and development and a purposeful

and robust innovation pipeline focused on inhalable products. Sundial launched two concentrates SKUs in the first quarter of 2021 and

the Company implemented an approach targeted on the most profitable segments of its portfolio including Sundial's new partnerships with

Simply Solventless Concentrates Ltd. and Stigma Grow, in the development of additional concentrates offerings.

While continuing to focus on branded sales, Sundial has seen an

increased sales trend in the wholesale market due to its focus on cultivation excellence and other licensed producers divesting from cultivation

Sundial's cultivation and production costs were reduced to an

average of $4 million per month in the first quarter 2021 from $10 million per month in the first quarter of 2020 through efficiencies

and cost reduction initiatives. Cultivation and production costs have stabilized through the first quarter of 2021.

Sundial's facility in Olds amended its licence for standard processing

authorizing the activity of sale for cannabis extract, cannabis topical and edible cannabis products, in addition to the previously granted

licences for standard cultivation and for sale for medical purposes.

GROSS MARGIN BEFORE FAIR VALUE ADJUSTMENTS

Adjusted gross margin before inventory impairment and fair value adjustments for the three months ended March 31, 2021 was negative

$1.6 million, compared to $3.2 million for the previous quarter as a result of industry wide price compression and increased operating

costs of Sundial's premium facility. The Company is focused on improvement of gross margins through an emphasis on margin accretive strains

and SKUs, and better cultivation outcomes.

Net revenue from branded cannabis products declined in the first quarter to $7.2 million from $11.4 million in the previous quarter.

Sales were impacted by provincial boards reducing inventory levels, retail market conditions and continued price compression across the

industry and Sundial's portfolio. These market dynamics impacted all of Sundial's formats and brands in the first quarter. Revenue from

licensed producer sales was $2.7 million compared to $2.4 million in the previous quarter.

Average gross selling price per gram equivalent of branded products, net of provisions, was $3.15 per gram in the first quarter of

2021, compared to $4.14 per gram in the prior quarter. The decrease in the average gross selling price on branded products is a result

of industry price compression.

In the first quarter of 2021 gross revenue from Sundial's formats was:

Vape Cartridges: Gross revenue from vape cartridge sales

was $1.4 million in the first quarter of 2021 compared to $4.3 million in the prior quarter.

Dried Flower: Gross revenue from dried flower sales was

$9.7 million in the first quarter of 2021 compared to $11.9 million in the prior quarter.

Oil: Gross revenue from oil sales were $181 thousand compared

to $317 thousand in the prior quarter.

Concentrates: Gross revenue from concentrates sales was

$504 thousand in the first quarter of 2021 compared to $42 thousand in the prior quarter, due to concentrates being launched towards the

end of the prior quarter.

In the first quarter of 2021 gross revenue from Sundial's brands was:

Top Leaf: Gross revenue from Top Leaf sales was

$1.9 million in the first quarter of 2021 compared to $4.1 million in the prior quarter.