SNDL (SNDL) Q4 2025 Earnings Call Transcript

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Date

Thursday, Mar. 12, 2026 at 10 a.m. ET

Call participants

• Chief Executive Officer — Zachary George
• Chief Financial Officer — Alberto Paredero-Quiros
• Operator

Takeaways

• Free cash flow -- $18 million for the full year, more than doubling from 2024, with quarterly free cash flow exceeding $10 million despite increased working capital needs for store openings.
• Net revenue -- $252 million in Q4, representing a 2% decline, and $946 million for the full year, reflecting a 2.8% increase driven by 11% growth in cannabis segments and a 2.8% decrease in liquor revenue.
• Gross profit -- $70.2 million, an absolute record for Q4, up 2.1%, and $32.9 million in the Cannabis Operations segment for the year, supporting margin improvement.
• Gross margin -- Q4 gross margin rose 110 basis points to 27.8%, a new record, with Liquor segment gross margin at 26% in Q4 and 25.9% for the year, both at all-time highs.
• Adjusted operating income -- $12.8 million in Q4 (record), with a full-year figure reaching breakeven for the first time and $11.8 million in Q4 unadjusted operating income (also a record).
• Liquidity and balance sheet -- Over $250 million in unrestricted cash and no debt at year-end, providing strategic flexibility for organic and inorganic investments.
• Capital expenditures -- Nearly 50% increase in 2025, focused mainly on new store openings across cannabis and liquor formats.
• Market share -- Cannabis and liquor retail segments each gained 20 basis points of market share during the year, with outperformance despite overall market softness.
• Share repurchases -- 15.1 million shares repurchased since 2024, with 4.3 million acquired in the past 90 days as part of the board-approved buyback program.
• Acquisitions -- Completed first stage of Cost Cannabis retail acquisition, adding five stores in Alberta and Saskatchewan, and actively awaiting regulatory completion for Ontario stores.
• ERP consolidation -- Full system consolidation scheduled for imminent completion to improve process efficiency and analytics.
• Retail segment performance -- Cannabis Retail set new records for revenue ($330 million, up 6%) and gross profit ($86.1 million), with operating income exceeding $30 million (doubling year over year).
• Liquor segment -- Both Q4 and full year net revenue declined around 3%, but Wine and Beyond banner and private label offerings contributed to new gross profit and margin records.
• Cannabis operations -- 32% net revenue growth to $144.7 million for the year, but lower gross margin and operating income due to ramp-up costs and stabilization efforts.
• G&A savings -- Retail segments achieved $7.1 million in G&A reductions, and the corporate restructuring program surpassed $20 million in annualized savings before final phase completion.

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Risks

• CFO Paredero-Quiros noted, "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."
• Quarterly and full-year net revenue in the Liquor segment declined approximately 3%, attributed to "broader market conditions."
• Management described a slowdown in the Canadian cannabis market in late 2025, with saturation in retail “doors” and increasing competition leading to store closures and reduced traffic.
• Gross margin and operating income in Cannabis Operations declined due to volume ramp-up costs and under-absorbed overhead, indicating volatility in the smallest segment.

Summary

SNDL (NASDAQ:SNDL) delivered record free cash flow and achieved its first full year of positive adjusted operating income, supported by disciplined cost controls and substantial gross margin expansion. Management highlighted increased capital allocation to new store investments, system integration, and ongoing share repurchases facilitated by over $250 million in unrestricted cash. While both liquor and cannabis retail segments secured incremental market share, persistent declines in top-line revenue were acknowledged, alongside explicit industry headwinds, especially in liquor retail and late-year cannabis demand. Strategic focus included executing on acquisitions, advancing international compliance capabilities, and positioning for potential market consolidation as less efficient competitors exit.

• SNDL advanced the integration of acquired retail stores, with near-term completion of the full ERP consolidation projected to improve operating efficiency.
• Management stated that “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.”
• Full-year cannabis operations revenue was bolstered by “continued growth in international sales” and “leadership in edibles following the acquisition of Endeavor,” yet gross margin compressed due to ramp-up costs.
• Restructuring of U.S.-related investments, notably Parallel and SkyMint, progressed with clear paths to resolution anticipated in 2026 following delayed litigation and state-level proceedings.
• Employee engagement initiatives, including performance-based compensation, merit increases, and well-being programs, targeted retention and alignment with strategic goals.

Industry glossary

• ERP (Enterprise Resource Planning): Integrated software system used to manage and automate core business processes across finance, supply chain, and operations.
• AGCO (Alcohol and Gaming Commission of Ontario): Regulatory authority overseeing liquor and cannabis operations in Ontario.
• EU GMP (European Union Good Manufacturing Practice): Certification standard required for companies exporting pharmaceutical-grade cannabis to European markets.

Full Conference Call Transcript

Zachary George: Welcome to SNDL’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 $18,000,000. 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 2025, both our Retail and Operations segments continued 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 One Centimeters, 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 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. I will now turn the call over to Alberto Paredero-Quiros for more insight on our fourth quarter and full year financial performance. Thank you, Zachary. 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.

Alberto Paredero-Quiros: For definitions of these measures, please refer to SNDL Inc.'s Management Discussion and Analysis document. Our fourth quarter financial results demonstrate strong profitability improvements 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 translated to a 110 basis point increase in gross margin, reaching a new quarterly record of 27.8%.

This strong gross margin performance, combined with efficiency improvements across retail and corporate SG&A, resulted in record quarterly adjusted operating income of $12.8 million, while 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 SunStream 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 a 120 basis point increase in gross margin, translated 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-store efficiency gains and 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 full year adjusted operating income achieving breakeven for the first time in our history. We are 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 multiyear 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 multiyear trend, the slowdown observed in cannabis during 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 are 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 gross profit.

At the same time, our Cannabis segment contributed to gross 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 cultivation facility undertaken to support international growth. The Investment segment saw 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 2024. The $7.5 million contribution in the fourth quarter reflects both the benefit of these cost reductions and a $3.2 million benefit from share-based compensation, as a decline in our share price during the fourth quarter partially offset 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 newer store openings, as reflected in the working capital and other components of page seven, respectively. On a full year basis, the benefits from improved earnings and strong working capital management more than offset the investments made to support new store openings. On the following page, we can see the seasonality effects in our free cash flow generation. The first part of the year is typically impacted by lower revenue levels and working capital build ups, while the second half of the year benefits from the opposite dynamic. And supported by a particularly strong second half, we more than doubled 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 and Beyond banner and continued growth in our private label offerings, both of which deliver 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% 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-store operations, translated 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 and 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 a 190 basis point improvement in gross 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 Enviva acquisition in the baseline starting in 2024, net revenue in 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 cultivation facility.

For the full year, the segment delivered record net revenue of $144.7 million, representing growth of 32%, supported by the Indiva acquisition and continued growth in international sales. Gross profit of $32.9 million and a gross margin of 22.8% were also new for the 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 under-absorbed overhead investments. While Cannabis Operations remains 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 SNDL.

Over to you, Zachary, for additional comments related to our strategic priorities.

Zachary George: Let's now turn to the progress we have made recently against our three strategic priorities: growth, profitability, and people. Starting with growth, each of our cannabis and liquor retail segments gained 20 basis points of market share year over year. Cannabis Retail achieved this through strong execution, new store openings, and conversions to our successful Value Buds banner. Liquor Retail also demonstrated solid execution in a challenging environment, supported by private label growth and the resilience of our Wine and Beyond banner. As previously mentioned, we increased our capital expenditures and working capital investments to support the opening of three additional cannabis stores and two new Wine and Beyond locations in the fourth quarter.

Our Cannabis Operations segment also contributed meaningfully, delivering 32% full year revenue growth, driven primarily by our leadership in edibles following the acquisition of Endeavor as well as continued growth in international sales. Profitability is a strategic priority where we made substantial progress not only throughout full year 2025, but also in the fourth quarter, as demonstrated by nearly $13 million in adjusted operating income and $10 million in free cash flow delivered in Q4. The previously highlighted improvements in gross margin were a key driver of this performance, alongside our continued focus on G&A optimization.

In this regard, our Retail segments delivered full year combined efficiency improvements of $7.1 million in G&A reductions, and our corporate restructuring program has already surpassed the committed $20 million in annualized savings, even ahead of the implementation of the third and final phase of the initiative. Last but not least, under our people strategic priority, we initiated our annual performance-to-pay process in the fourth quarter, designed to reward employee performance based on both overall business results and individual contributions. We also delivered merit increases ahead of the holiday season across our facilities and retail teams, ensuring market competitiveness and reinforcing a consistent and transparent compensation approach.

In addition, we completed our second annual employee engagement survey, gathering valuable insights from across the organization to further enhance our employee value proposition. Building on these insights, we expanded our employee engagement initiatives to include mental and physical well-being as well as diversity, equity, and inclusion, reinforcing our commitment to a safe, inclusive, and supportive workplace. Before concluding this presentation, we would like to share how we monitor our performance relative to our peer group, as we remain focused on delivering superior performance and shareholder returns.

Looking at the most recent trailing four quarters reported by this group, and normalizing for equivalent definitions, we can see that SNDL Inc. has climbed the ranks and has positioned itself firmly within the top tier in terms of profitability on an absolute basis. We believe that this progress, combined with the many opportunities ahead of us and our best-in-class balance sheet and significant cash position, creates a compelling investment case. Once again, I would like to thank our entire team for their contributions and our shareholders for their continued trust and support. I am proud of what our team accomplished in 2025, and I am confident in our ability to unlock additional value in the years ahead.

With that, I will now turn the call back to the operator for the analyst Q&A session.

Alberto Paredero-Quiros: Thank you.

Operator: We will now open for questions. Please press star then 11 to ask a question and wait for your name to be announced. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 11 again. One moment for questions. Our first question comes from Frederico Gomes with ATB Core Mark Capital Markets. You may proceed.

Frederico Gomes: Hi. Good morning. Thanks for taking my questions. First question on the cannabis retail segment, same-store sales decline that we saw this quarter and your comment about the market slowdown in the second half. Can you talk more about what is behind that slowdown? Is it related to competitive pressures at retail, overall macro conditions, or maybe just the natural state of the Canadian market becoming more mature at this point? Thank you.

Alberto Paredero-Quiros: Hi, Frederico. Good morning. Thank you for your question. Yes. So we have noticed, particularly in the last two months of the quarter, so the months of November and December, absolute declines in the market. We attribute that to multiple factors. Certainly, there is an element of saturation in retail doors across most provinces, particularly where we have the biggest footprint, like Alberta. But in Ontario as well, we are starting to see that dynamic playing out. There are different dynamics as well in terms of what we are lapping and what the industry is lapping from heavy, aggressive promotional period in the prior year.

In 2024 and 2025, we are seeing pretty healthy growth rates based on more aggressive price competition. Obviously, we are lapping that, and we believe that not only ourselves, but many other retailers in the industry that are focused a little bit more on profitability and mix improvements, we see margin expansions, but we are seeing as well some reduction in traffic and top line. There is as well a certain dynamic of some doors starting to shut down. We were getting to a dynamic with a lot of independents or some independents reaching their five-year rent commitments, and they are realizing that this is a competitive task and competitive marketplace.

Some of the larger operators are starting to build that scale, and it is difficult to compete against those, and as a result of that, as I said, the market in certain areas is starting to shrink, or some doors are starting to shut down. The industry is consolidating as well. So that is another element, not necessarily impacting the market, but clearly the dynamics in the industry. But in general, we think that it is, as I said, saturation in the market and price points.

Frederico Gomes: Thank you very much for that. Second question, still on the cannabis retail segment, specifically on M&A. So first, when do you expect the acquisition of the One Centimeters stores in Ontario to close? And in regards to your comment about the industry consolidating, do you expect your growth in cannabis retail to be mainly driven by organic new store openings, or are you more focused on the M&A side and acquiring some of these struggling players? Thank you.

Zachary George: Good morning, Frederico. It is Zachary George. Thanks for the question. And this dovetails nicely from your prior question as well. Just in terms of the One Centimeters acquisition, remaining stores in Ontario, we are just finalizing our review with the AGCO. So we expect to, at the latest, report back to shareholders in Q2 on that timing, but it should be resolved shortly. And, just in line with the deceleration of same-store sales growth that we are seeing across the space with almost every major player, if you think about this cyclically, this is exactly the time when operators start to lift their heads up and look for other ways to create value.

So we do expect intense focus on consolidation in the space. And I think that would apply to performing independents that may want to monetize their positions, but would also apply to both medium and even the largest portfolios in the Canadian marketplace. If I could just in terms of organic growth, we have a pretty active pipeline, you know, a double digit count that are under review in multiple provinces. And we have a very attractive stand-up cost for the opening of new doors. So we are looking at this from multiple perspectives and not relying on M&A outcomes to drive future growth.

Frederico Gomes: Thank you. Appreciate that. If I could just ask one final question. Could you just remind us about the status of your EU GMP certification and maybe comment about the international growth outlook for this year compared to 2025 as you expand that capacity? Thank you.

Zachary George: Yes. We are waiting for the last visit to our site. It has been a long process that has required some patience, but we expect at this point to have the certification complete sometime over the summer. There has been some change in the administration in Germany that has impacted as well. And in terms of our international business, we saw decent growth off a very, very small base in terms of 2025 versus 2024. And we are in the process of developing relationships and building strong partnerships, but it is still early days. So we do expect material growth, but, again, it is a very small part of the business today.

That is a top three priority in terms of future capital deployment as well.

Frederico Gomes: Thank you. I will hop back in the queue.

Operator: Thank you. Our next question comes from Aaron Thomas Grey with Alliance Global Partners. You may proceed.

Aaron Grey: Hi. Thanks for the questions. Maybe touching on retail but in terms of liquor here. Obviously, you still have some challenges within the broader category outside of yourselves, but some highlights for you guys. You guys did have one quarter during the fiscal year of year-over-year growth, you know, return to declines made the past two, you guys are continuing to open up stores as well. So maybe just given your outlook, given you are still making investments in liquor, there are some structural challenges. As you look into 2026, how are you seeing the broader liquor retail? Do you think it is in position to start to stabilize on a year-over-year basis? Thank you.

Alberto Paredero-Quiros: Thank you, Aaron, for the question. So, yes, actually, throughout the year, as you saw in the first quarter, we have reported growth in 2025 that was driven primarily by the shift of Easter compared to the prior year. So on a normalized basis, we have seen a pretty consistent around about 3% revenue decline and about 4% to 5% market decline in the category. It is very hard to predict where that is going to go. The first part or the first couple of months of 2026, we are seeing similar declines in the market.

At the same time, there are a couple of areas within our portfolio that are showing very good strength, and this is where we are focusing our investment. Particularly, if you look at our Wine and Beyond banner, despite the market declines, mid single digits, we are seeing that banner growing healthy. It is a very different business model compared to the rest of the independent network. Ours is a larger scale format, significantly different type of offerings, much broader portfolio base. That resonates very well with consumers, and that is why, as a result of that clear differentiation and unique offering that we have, we are seeing positive growth.

It is still in the low single digits, but it is growth rates in the market, and as I said, we see a competitive advantage in that front, and that is where we are deploying the capital, both from a CapEx perspective opening the doors, but as well the inventory associated with those store openings. And then we have as well our private label. One clear dynamic that we are starting to observe as well is the loss in purchasing power. It is making consumers more price-conscious, and they are looking for products that offer very good price points with good qualities as well. We have been expanding our private label offerings that continue to gain penetration.

It has been already several years of increases in market share from our private label offering, and that is an area where we are still building additional relationships with producers, and we are expecting to continue making investments and expanding our portfolio on that front because, as I said, that is what is right now resonating with the consumers, and we are seeing the stronger demand. And that part of the portfolio as well is growing in relative terms to the rest of the business, and in absolute terms as well. So that is where we are focusing.

We believe that we still have opportunities to manage elements of growth within our portfolio despite the fact that the market we still anticipate to decline in the low to mid single digits for the next several quarters.

Aaron Grey: Okay. Great. Appreciate that color. That is helpful. Second question for me just on some of your U.S. exposure, particularly with SunStream. Just if you could provide us an update in terms of some potential outcomes, as we hopefully come to some resolutions either with Parallel or Skymet here in 2026. I know in the past, you have talked about potential changes you might need to be made to best optimize some of the U.S. assets. So, in terms of how you are looking at SunStream, the U.S. assets, and how to best optimize those in 2026, as hopefully we come to some resolutions there. Thanks.

Zachary George: Absolutely, Aaron. Thank you for the question. So, the portfolio has been simplified quite significantly. It is really three positions. In the case of cannabis, I think you have been following the liquidation of that portfolio. We have seen a return of capital recently as that position gets monetized and capital repatriated. And then the two larger positions of interest would be in Parallel and SkyMint. Parallel is going through a foreclosure process in the state of Florida, and SkyMint is in receivership in Michigan. For almost the entirety of 2025, the foreclosure process related to Parallel was delayed because of litigation that was in place.

There was a key settlement to that litigation in December, and so we think there is now a path to resolve that foreclosure, and we will likely see it sometime in Q2 or just after. So we are finally heading towards a resolution here after a multiyear process. Again, the reason behind these delays and the inefficiencies really comes down to the lack of access to the federal bankruptcy courts in the United States. And so once you are relegated to these other insolvency proceedings at the state level, they are much less predictable, and the adjudication can provide unique outcomes. So we are pleased that we will actually land this plane, so to speak, in 2026.

But it has been a frustrating process, and we are eager to have it wrapped up.

Aaron Grey: Okay. Great. Appreciate the color then. I will go ahead and jump back to the

Operator: Thank you. This concludes the question and answer session. I would now like to turn the conference back over to Zachary George for any closing remarks.

Zachary George: Thank you, and thanks for joining our call today. We look forward to updating you in the near future. Have a great day. Thank you. This concludes today's conference call.

Operator: You may disconnect your lines. Thank you for participating, and have a pleasant day.

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