Sundial Reports First Quarter 2022 Financial and Operational Results CALGARY, AB

Sundial Reports First Quarter 2022 Financial

and Operational Results

CALGARY, AB, May 16, 2022 /CNW/ - Sundial Growers

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

ended March 31, 2022. All financial information in this press release is reported in millions of Canadian dollars unless otherwise indicated.

The Company will hold a conference call and webcast

at 10:30 a.m. EDT (8:30 a.m. MDT) on Tuesday, May 17, 2022. Please see the dial-in details within the release and additional details

on Sundial's website at www.sndlgroup.com.

This press release is intended to be read in conjunction

with the Company's Financial Statements and Notes for the period and the accompanying Management's Discussion and Analysis ("MD&A").

These reports are available under the Company's profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml.

Sundial has also posted a supplemental investor presentation

on its website which can be found at https://sndlgroup.com/investors.

FIRST QUARTER 2022 FINANCIAL AND OPERATIONAL HIGHLIGHTS

"The first quarter of 2022 was both transformational

and transitional for Sundial," said Zach George, Chief Executive Officer. "We are now Canada's largest private sector distributor

of both liquor and cannabis with 354 retail locations and have quickly benefitted from collaboration with our new legacy Alcanna colleagues.

Sundial's regulated products platform provides unique insights into evolving consumer preferences and value propositions. We continue

to strengthen and transform our business while benefitting from vertical integration across our segments under a shared services model.

In less than two months, we have been able to increase branded product distribution by shipping products to Value Buds stores and have

started to realize synergies against an integration plan that will be a focus for the balance of the year. Through cost structure improvements

in our cannabis operations, we have created a more balanced and diverse product mix that focuses on higher-margin, higher-quality cannabis.

In addition, the current rising interest rate environment has led us to make non-cash accounting adjustments to our largely fixed-rate

SunStream portfolio, resulting in muted adjusted EBITDA contribution for the quarter."

Commenting on the current market environment, Mr.

George added "While our shares have outperformed global and Canadian cannabis indices on a year-to-date and a one-year basis through

May 13, we are focused on sustainable absolute returns and committed to the relentless pursuit of shareholder value creation. Sundial's

debt-free balance sheet and ample cash reserves place us in an enviable position as we witness a reckoning taking hold in the Canadian

cannabis market. Continued aggressive cash consumption by our peers, reduced access to capital, and waning investor risk appetite is likely

to accelerate sector rationalization as the industry slowly moves towards the formation of an oligopoly."

FIRST QUARTER 2022 KEY FINANCIAL METRICS

FIRST QUARTER 2022 RESULTS

Sundial is comprised of four segments: Cannabis Cultivation

and Production, Cannabis Retail, Liquor Retail, and Investments.

CANNABIS CULTIVATION AND PRODUCTION

Sundial remains focused and committed to its cultivation

and processing activities, including continuous improvement of its product offerings for customers while focusing on cost optimization

and the most competitive and profitable strains and brands.

REVENUE FROM CULTIVATION AND PRODUCTION

Gross revenue from branded cannabis products was $9.7 million for the first quarter of 2022, an increase of 8% compared to the first

quarter of 2021. The increase in branded sales as part of the company's product mix reflects the progress and commitment to executing

its retail vertical integration strategy across Western Canada and Ontario. Total gross revenue from the cultivation and product

of cannabis was $11.3 million for the first quarter of 2022, a decrease of 3% compared to the first quarter of 2021. The decline in gross

revenue was driven by a 42% decrease in wholesale sales to other Licensed Producers in the first quarter of 2022 versus the first quarter

Average net selling price per gram was $2.60 in the first quarter of 2022, an increase of 5%, compared to $2.48 per gram in the first

quarter of 2021. The increase was due to higher prices for provincial board sales. Provincial board prices have increased due to the shift

of the mix of Sundial offerings from value products to core products as well as lower price discounts and concessions compared to the

In the first quarter of 2022 gross revenue from Sundial's formats was:

The Company's expanded retail network creates an opportunity

to own the relationship with cannabis consumers and showcase both Sundial's branded products and the best offerings from other Canadian

REVENUE FROM CANNABIS RETAIL

Gross revenue from the cannabis retail segment for the three months ended March 31, 2022 was $7.5 million, including $0.7 million

representing one day of sales for Nova.

SYSTEM-WIDE RETAIL SALES

System-wide retail sales1 at were $34.6 million for the first quarter of 2022 compared to $41.4 million in the fourth quarter

of 2021. System-wide retail sales represent the aggregate revenue earned by franchised Spiritleaf retail cannabis stores and corporate-owned

Spiritleaf retail cannabis stores and do not represent revenues that accrue to the Company. The Company receives all revenues from corporate-owned

Spiritleaf retail cannabis stores, and royalties and advertising fees in respect of the franchised Spiritleaf retail cannabis store revenue.

The Nova retail stores results are comprised of one

day of operations following the acquisition on March 31, 2022, and were as follows:

While Sundial does not account for the results of the Nova retail stores prior to the acquisition date, the results for the period from

January 1, 2022 to March 31, 2022 were as follows:

LIQUOR RETAIL (ALCANNA)

With the Alcanna acquisition on March 31, 2022, Sundial is now Canada's leading regulated products platform. Sundial has commenced

and will continue the post-acquisition integration work throughout the remainder of 2022.

The retail liquor segment results are comprised of

one day of operations following the acquisition on March 31, 2022 and are as follows:

While Sundial does not account for the results of

the liquor retail segment prior to the acquisition date, the results of Alcanna's retail locations for the period from January 1, 2022

to March 31, 2022 were as follows:

REVENUE FROM INVESTMENTS

Revenue from investments in the first quarter of 2022 was negative $17.7 million, including unrealized losses on marketable securities

of $17.8 million, due to fluctuations in share prices from our strategic equity portfolio of Canadian cannabis-related investments.

CONSOLIDATED FINANCIAL RESULTS

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the three months ended March 31, 2022 were $10.7 million compared to $7.1 million

for the three months ended March 31, 2021. The increase of $3.6 million was mainly due to increases in salaries and wages,

office and general and professional fees. The increases in salaries and wages and office and general expenses were due to the acquisition

of Inner Spirit Holdings in July 2021. The increase in professional fees was largely due to an increase in accounting services fees relating

to the completion of the Company's 2021 year-end audit.

The $96.4 million improvement in net loss is primarily due to the higher net revenue of $7.7 million, share of profit from SunStream

of $4.1 million and change in fair value of derivative warrant liabilities of $121.6 million, partially offset by investment losses of

$30.6 million and higher general and administrative expenses of $3.6 million.

Adjusted EBITDA was a loss of $0.7 million for the

three months ended March 31, 2022 compared to positive Adjusted EBITDA of $3.3 million for the three months ended March 31,

2021. The decrease was due to the following:

The decrease was partially offset by:

SHARE REPURCHASE PROGRAM

STRATEGIC AND ORGANIZATIONAL UPDATE

Sundial remains focused on building long-term shareholder

value through vertical integration, accretive deployment of cash resources, expansion of its retail distribution network, further

streamlining of the Company's operating structure, and enhanced offerings of high-quality brands.

ACCESS TO UNIQUE INSIGHTS

IMPROVED SUPPLY AND DEMAND PLANNING

With the acquisition of Alcanna, Sundial has gained significant retail experience and expertise. The Company's Board of Directors

has appointed the following management team: