Sundial Reports Full Year and Fourth Quarter 2020 Financial and Operational Results CALGARY, AB

Sundial Reports Full Year and Fourth Quarter

2020 Financial and Operational Results

CALGARY, AB, March 17, 2021 /CNW/ - Sundial

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

the full year and fourth quarter ended December 31, 2020. All financial information in this press release is reported in millions

of Canadian dollars and represents results from continuing operations, unless otherwise indicated.

FULL YEAR AND FOURTH QUARTER 2020 FINANCIAL

AND OPERATIONAL HIGHLIGHTS

financial restructuring and eliminated $227 million aggregate principal amount of debt during 2020.

million unrestricted cash on hand at December 31, 2020 and $719 million unrestricted cash on hand at March 15, 2021.

revenue increased by 10% to $73.3 million in 2020 compared to the prior year.

net cannabis sales increased to 75% of total cannabis sales in 2020 from 20% in the previous year as Sundial transitioned from

wholesale to branded retail sales.

cannabis revenue for the fourth quarter of 2020 was $13.9 million, an increase of 8% over the third quarter of 2020.

and administrative costs were reduced by 18% in 2020 as a result of cost reduction initiatives to $32.0 million compared to $38.9

in the previous year.

Committed $58.9 million

in the fourth quarter of 2020 and a further $31.5 million subsequent to year-end in strategic cannabis-related portfolio investments.

Generated realized investment income and fees subsequent to year-end of $9.3 million.

"We entered our second year of commercial

operations facing a number of internal and external challenges, including operational difficulties, excessive leverage, inadequate

cost control, a lack of focus on our core value proposition, and rapidly evolving industry conditions," said Zach George,

Chief Executive Officer of Sundial. "In response, we redefined our strategy and made material changes to position Sundial

for improved performance. We successfully restructured the entire organization by repaying all outstanding debt, improving our

operating practices, targeting a sustainable cost structure and a simplified business model. Sundial also curtailed production

and reduced the size of our workforce in response to market demand. We have raised significant capital, made a number of profitable

investments, and continue to evaluate a robust pipeline of strategic opportunities. Capital preservation and corporate stewardship

are key priorities for our Board and management team. While our financial strength has improved materially, we still have significant

work to do in our core operations to achieve the goals we have established for Sundial and our shareholders. Sundial's last two

quarters have been negatively impacted by the complete repositioning of our cultivation operations as we focused on data-driven

best practices to drive quality and potency results that meet evolving consumer preferences. While we are currently seeing many

of our Canadian peers move away from cultivation, partially or entirely, due to their inability to deliver consistent cultivation

outcomes, Sundial has renewed its commitment to cultivation in our modular indoor facility and views this core competency as an

opportunity for differentiation going forward. We are confident that the adjustments made to our cultivation and processing

activities better enable us to delight our consumers and customers in the coming year."

"Sundial's dedicated team of employees

and a corporate culture focused on leveraging consumer insights, innovation and continuous improvement have driven increased gross

revenue in a dynamic environment, where the industry has faced a multitude of challenges including an oversupplied cannabis market

along with severe price compression and a worldwide pandemic. Sundial's high-quality cultivation and processing facility combined

with our team's broad consumer packaged goods experience and strong financial position reinforce management's confidence in our

ability to generate continued growth on the path to sustainable profitability."

FULL YEAR 2020 KEY FINANCIAL METRICS

YEAR END 2020 BUSINESS & OPERATIONAL

Capital raised during 2020 and after year-end

provides Sundial with substantial financial resources to pursue operational goals and execute on strategic opportunities.

Sundial remains focused and committed to its

cultivation and processing activities and continues to implement critical changes to enhance results:

MARGIN BEFORE FAIR VALUE ADJUSTMENTS

Adjusted gross margin before inventory impairment and fair value adjustments for the year ended December 31, 2020 was $9.2 million,

compared to $16.8 million for 2019. This decrease in gross margin was mainly due to reduced pricing and a shift to a higher cost

product mix. Sundial continues to analyze and adjust its operations for optimal margin accretion.

Average gross selling price per gram equivalent of branded products was $5.05 per gram in 2020, net of provisions, compared

to $6.24 per gram in the prior year as a result of industry wide price compression and a shift to value product. Average gross

selling price for unbranded flower of $1.43 per gram reflects the monetization of winterized oil, trim and shake inventory.

Sundial anticipates continued downward price pressure throughout the industry in the coming year due to continuing competition

and relative oversupply.

Sundial remains focused on delivering premium products with an emphasis on inhalable formats, including flower, pre-rolls,

vape cartridges and concentrates. Gross revenue by format is as follows:

Vape cartridge sales were $18.4 million in the year ended December 31, 2020 compared to $0.5 million in the prior year because

of the legalization of cannabis vape cartridges late in 2019.

revenue from dried flower sales was $51.4 million in 2020 representing a 12% decrease from the previous year due to a shift of

Sundial's portfolio from wholesale to branded sales and other formats in response to consumer preferences.

from oil sales was $3.2 million in the year ended 2020 compared to $8.2 million in 2019.

Company continued to diversify its product mix in 2020 and added solventless extracts late in the fourth quarter of 2020. Sundial

also entered into a licence agreement with Simply Solventless Concentrates ("SSC") for the processing and manufacturing

of a suite of solventless cannabis concentrates.

also added edibles to its portfolio in the fourth quarter of 2020, through its sales and distribution agreement with Choklat,

an Alberta-based chocolate maker.

of branded products yielded significant revenue from the retail marketplace in 2020. Net revenue by brands is as follows:

premium inhalable brand was launched near the end of 2019, generating just $677,000 in sales that year. In 2020, Top Leaf products

generated $16.5 million in net revenue.

Company continued to diversify its product mix and shifted its portfolio to include more offerings, the revenue from the Sundial

brand increased to $16.5 million in 2020 compared to $8.4 million in 2019.

2020, the Grasslands brand generated net revenue of $6.9 million, compared to $1.1 million in the previous year. The increase

in 2020 revenue was due to the value segment becoming a preferred choice for consumers.

Palmetto: Net revenue

from the newly introduced Palmetto brand, launched near the end of 2019 was $3.4 million in 2020, resulting from increased investments

to the brand and products.

The Company sold 23,500 kilogram equivalents of cannabis in 2020, a 36% increase over the previous year sales of 17,293 kilogram

In 2020, the Company continued to focus on increasing its branded sales through brand portfolio penetration coast-to-coast,

the addition of new formats and supply chain optimization. Branded net cannabis sales increased to 75% of total cannabis sales

in 2020 from 20% in the previous year, representing $55.3 million of sales up from $13.4 million of sales in 2019.

SALES, MARKETING AND GENERAL AND ADMINISTRATIVE

SMG&A costs were reduced by 20% from $47.0 million to $37.8 million in 2020 when compared to the prior year. A reduction

in the Company's workforce in response to market conditions and a focused review of all spending drove this improvement. Targeted

spending on marketing costs was increased in the second half of 2020.

Net loss from continuing operations for 2020 was $206.3 million in 2020 compared to $142.7 million in 2019. The 2020 net loss

included impairment charges related to inventory ($45.9 million) and asset impairments ($79.1 million) for a total of $125.0 million.

Adjusted EBITDA from cannabis operations was

a loss of $25.6 million for 2020 compared to a loss of $30.1 million for the previous year. The decreased loss was primarily

due to reduced general and administrative expenses relating to cost reduction initiatives during the year, partially offset by

lower net revenue and higher cost of sales.

FOURTH QUARTER 2020 KEY FINANCIAL METRICS

FOURTH QUARTER 2020 BUSINESS & OPERATIONAL

Net revenue for the three months ended December 31, 2020 increased by 8% over the third quarter of 2020 from $12.9 million

GROSS MARGIN BEFORE FAIR VALUE ADJUSTMENTS

Adjusted gross margin before inventory impairment and fair value adjustments for the three months ended December 31, 2020 was

$3.2 million, compared to $2.6 million for the previous quarter as a result of higher revenue and improved margin mix.