High Tide Reports First Quarter 2024 Financial Results Featuring Record Revenue, Record Adjusted EBITDA, and Third Consecutive Quarter of Positive Free Cash Flow as well as Break-Even Net Income
- Revenue increased to $128.1 million in the first fiscal quarter of 2024, representing an 8% year-over-year increase.
- Adjusted EBITDA reached $10.4 million, a 90% increase year-over-year and 25% sequentially.
- The company achieved breakeven net income and generated record income from operations.
- High Tide remains the second-largest cannabis retailer in North America by store count.
- The company's adjusted EBITDA margin increased to 8.1%, marking significant improvements.
- Canna Cabana held over 19% of the cannabis retail market share in Alberta and 9% in Ontario.
- The company has 165 locations, over 1.32 million Cabana Club members, and a global customer database surpassing 5 million.
- The rollout of the ELITE loyalty program saw membership reach approximately 32,000, a 237% increase year-over-year.
- Cash on hand as of January 31, 2024, totalled $28.7 million, reflecting strong financial stability.
- None.
Insights
The reported increase in revenue and gross profit for High Tide Inc. indicates a positive trajectory for the company's financial health. An 8% year-over-year revenue growth and a 12% increase in gross profit are notable, particularly in the context of a cannabis industry that has seen significant volatility. The company's ability to maintain consistent salary costs as a percentage of revenue, alongside a reduction in general and administrative expenses, suggests effective cost control measures. This is further exemplified by the 90% year-over-year increase in Adjusted EBITDA and an improved margin, which is significant in assessing the company's operational efficiency and profitability.
From a market perspective, High Tide's claim of being the second-largest cannabis retailer in North America by store count, along with its growing market share in key Canadian provinces, positions it as a strong player in the industry. The expansion of its ELITE loyalty program and the record income from its Cabanalytics platform demonstrate a diversified revenue stream, which can be appealing to investors looking for companies with multiple growth avenues. However, the challenge remains in sustaining these growth rates in a competitive and regulatory environment that is constantly evolving.
The financial results of High Tide Inc. reflect a solid performance in terms of free cash flow, which is a important indicator of a company's financial strength and liquidity. Generating $3.6 million in free cash flow in the quarter, despite a reduction in accounts payable and accrued liabilities, is a strong sign of operational cash generation. The breakeven net income compared to a loss in the previous fiscal year's first quarter is also a positive sign, particularly for a company in the cannabis sector where profitability has been elusive for many players.
Investors may view the 16th consecutive quarter of positive Adjusted EBITDA as a sign of stability and consistent management execution. However, it is essential to consider the underlying drivers of this performance and whether it is sustainable in the long term. The company's focus on organic growth and cost control, as opposed to growth through acquisition, may be seen as a conservative strategy that could pay off in maintaining financial health but may limit rapid expansion compared to competitors who choose a more aggressive acquisition strategy.
High Tide's financial results have implications beyond just numbers; they reflect the company's ability to navigate a complex legal and regulatory landscape. The cannabis industry is subject to stringent regulations, which can impact both the cost structure and revenue potential of companies operating within it. High Tide's reported increase in Adjusted EBITDA margin suggests that the company is effectively managing these challenges. Additionally, the company's strong balance sheet and free cash flow profile may provide it with the flexibility to adapt to potential regulatory changes or capitalize on new market opportunities as they arise.
It is also worth noting that the company's expansion plans and market share goals must align with provincial and federal regulations, which can vary significantly across jurisdictions. The ability to achieve a 15% market share while expanding to 300 retail stores will depend on navigating these legal complexities effectively. Investors should monitor regulatory developments as they can have a material impact on the company's operations and financial performance.
First Quarter Results Include Revenue of
This news release constitutes a "designated news release" for the purposes of the Company's prospectus supplement dated August 31, 2023, to its short form base shelf prospectus dated August 3, 2023.
- The Company is Now the Second-Largest Cannabis Retailer in
North America by Store Count1 - High Tide Remains the Highest Revenue Generating Cannabis Company Reporting in Canadian Dollars2
- The Company Generated
$3.6 Million $5.4 Million $13.3 Million Dollars - The Company Generated Breakeven Net Income With Fully Diluted Earnings Per Share of
$0.00 $(0.05) $2.8 Million $(3.9) Million - 16th Consecutive Quarter of Positive Adjusted EBITDA4, Representing a
90% Increase Year-Over-Year and25% Sequentially, Marking the Company's 6th Straight Quarter of Record Positive Adjusted EBITDA - The Company's Adjusted EBITDA Margin of
8.1% Marked Large Increases vs4.7% Year-Over-Year, and From6.6% Sequentially - During the First Fiscal Quarter of 2024, Canna Cabana Held Over
19% of the Cannabis Retail Market Share inAlberta and9% inOntario . Across the Five Provinces in Which the Company Has a Presence, Canna Cabana Represented Over10% of the Market Share in Dollars While Only Representing Approximately4.7% of the Total Cannabis Retail Store Count in Those Provinces5 - The Company Remains the Largest Non-Franchised Cannabis Retailer in
Canada With 165 locations and Over 1.32 Million Cabana Club Members, Approximately 32,000 ELITE Members and a Global Customer Database Surpassing 5 Million
First Fiscal Quarter 2024 – Financial Highlights:
- Revenue increased to
$128.1 million $118.1 million 8% year-over-year and1% sequentially - Gross profit increased to
$36.0 million $32.2 million 12% year-over-year and9% sequentially - Gross profit margin in the three months ended January 31, 2024, was
28% , representing an increase from26% in the fourth fiscal quarter of 2023 and27% during the entirety of 2023 - Adjusted EBITDA increased to
$10.4 million $5.5 million 90% compared to the same period in 2023 and25% sequentially. Adjusted EBITDA margin increased to8.1% , representing a significant increase from4.7% year-over-year and6.6% sequentially - Salaries, wages, and benefits represented
12% of revenue in the first fiscal quarter of 2024, which was consistent year-over-year and sequentially - Given the strong cost controls the Company has been implementing, general and administrative expenses represented
4.4% of revenue in the first fiscal quarter of 2024, which improved from6.3% year-over-year and5.3% sequentially - Revenue from the Cabanalytics Business Data and Insights platform, including ad revenue, was a record
$7.3 million $6.6 million $6.8 million 11% and8% respectively - For locations operational throughout the first fiscal quarter of 2024 and 2023, same-store sales increased by
7% year-over-year. Sequentially, same-store sales remained consistent across Canna Cabana while total cannabis retail sales acrossCanada , excludingQuebec , were down6% , including the impact of new store growth6 - The Company continued the rollout of ELITE, the first-of-its-kind cannabis paid loyalty program in
Canada , with membership reaching approximately 32,000, representing an increase of237% year-over-year and14% since January 29, 2024, which is the fastest pace of onboarding since ELITE was launched in late 2022 - Cash on hand as of January 31, 2024, totalled
$28.7 million $23.7 million $30.1 $2.8 million
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1 As reported by ATB Capital Markets based on store counts as of February 8, 2024 |
2 Based on reporting by New Cannabis Ventures as of March 15, 2024. For the New Cannabis Ventures' senior listing, segmented cannabis-only sales must generate more than |
3 The Company defines free cash flow as net cash provided by (used in) operating activities minus sustaining capex minus lease liability payments. Sustaining Capex is defined as leasehold improvements and maintenance spending required in the existing business. The most directly comparable financial measure is net cash provided by operating activities, as disclosed in the consolidated statement of cash flows. It should not be viewed as a measure of liquidity or a substitute for comparable metrics prepared in accordance with IFRS. |
4 Adjusted EBITDA is a non-IFRS financial measure |
5 Based on data for the months of November 2023 & December 2023 and Hifyre data for January 2024, excluding the province of |
6 Based on data for the months of August to December 2023 and Hifyre data for January 2024, excluding the province of |
"I am very proud to announce that High Tide has reached break-even net income this quarter, which is a critical milestone in our ongoing corporate trajectory and is a rarity in the global cannabis space. While there has been industry-wide softening of Canadian cannabis sales in the post-holiday months and having made essentially no acquisitions in over a year, I am proud to report that our Company continues to grow organically and has never had a sequential decline in revenue since going public in 2018. Our focus on responsible growth is leading to robust free cash flow generation, which has totalled over
"Our ELITE program continues to be the biggest differentiator in our innovative discount club model and is yielding results ahead of our expectations. We welcomed new ELITE members at the fastest pace since inception, and our Cabana Club now includes approximately 32,000 paid members as part of the overall membership base, which now exceeds 1.32 million members and growing. Accordingly, we see a tremendous opportunity to continue upgrading many more base members to ELITE. We have reached over
First Quarter 2024 – Operational Highlights (Nov 1- Jan 31):
- The Company opened 7 new stores: 1 in
British Columbia , 2 inAlberta , 1 inSaskatchewan , 1 inManitoba and 2 inOntario - The Company entered
Ontario 's third-largest city,Mississauga , after spearheading efforts to convince the city council to opt into cannabis retail sales - The Company successfully completed a restructuring of approximately
$8.9 million $1.0 million - The Company reported that certain officers, directors, and consultants led by the Company's Founder and Chief Executive Officer, in the aggregate, acquired 125,917 common shares in the capital of High Tide on the open market between November 20 and November 21 at an average price of
$1.88
Subsequent Events (Feb 1 - present):
- As of March 15, 2024, memberships in the Cabana Club loyalty program increased to over 1.32 million, up from 975,000 members as of March 18, 2023, and 1.28 million as of January 29, 2024, representing increases of
35% and3% , respectively - As of March 15, 2024, ELITE memberships have grown to approximately 32,000 members, up from 28,000 as of January 29, 2024, representing an increase of
14% sequentially - The Company announced the opening of 2 new stores in
Ontario - The Company strengthened its Canadian supply chain through a limited distribution agreement with Manitoba Liquor and Lotteries
- For the second time in three years, High Tide was recognized as a top 10 ranked company in the diversified industries sector by the TSX Venture 50
- The Company announced that it has entered into a definitive agreement pursuant to which High Tide will acquire all IP, including trademarks and other assets of the Queen of Bud cannabis and lifestyle brand
- The Company grew its World Vision sponsorship support to 330 children internationally after committing to sponsoring two additional children for every new store that opens in
Canada
Selected financial information for the first quarter ended January 31, 2024:
(Expressed in thousands of Canadian Dollars)
Three months ended January 31 | ||||||||||||
2024 | 2023 | Change | ||||||||||
$ | $ | |||||||||||
Revenue | 128,068 | 118,076 | 9 % | |||||||||
Gross Profit | 35,994 | 32,181 | 12 % | |||||||||
Gross Profit Margin | 28 % | 27 % | 1 % | |||||||||
Total Operating Expenses | (33,202) | (36,103) | (8 %) | |||||||||
Adjusted EBITDA | 10,435 | 5,500 | 90 % | |||||||||
Income (loss) from Operations | 2,792 | (3,922) | 171 % | |||||||||
Net loss | (5) | (3,862) | 100 % | |||||||||
Loss per share (Basic and Diluted) | (0.00) | (0.05) | 99 % | |||||||||
The following is a reconciliation of Adjusted EBITDA to Net Loss:
Three Months Ended | |||||||||
2024 | 2023 | ||||||||
Net (loss) income | (5) | (3,862) | |||||||
Income/deferred tax recovery | (233) | (1,236) | |||||||
Accretion and interest | 1,743 | 1,814 | |||||||
Depreciation and amortization | 6,848 | 7,986 | |||||||
EBITDA 7 | 8,353 | 4,702 | |||||||
Foreign exchange loss (gain) | 5 | (15) | |||||||
Transaction and acquisition costs | 515 | 664 | |||||||
Gain revaluation of put option liability | (300) | (1,261) | |||||||
Share-based compensation | 795 | 1,436 | |||||||
Loss (gain) on revaluation of marketable securities | 77 | (8) | |||||||
Other losses | 755 | - | |||||||
Loss (gain) on extinguishment of financial liability | 235 | (18) | |||||||
Adjusted EBITDA 7 | 10,435 | 5,500 | |||||||
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7 Earnings before interest, taxes, depreciation, and amortization ("EBITDA") and Adjusted EBITDA. These measures do not have a standardized meaning prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other issuers. Non-IFRS measures provide investors with a supplemental measure of the Company's operating performance and, therefore, highlight trends in the Company's core business that may not otherwise be apparent when relying solely on IFRS measures. Management uses non-IFRS measures in measuring the financial performance of the Company. |
Free Cash Flow ³ | Q1 | Q4 | Q3 | Q2 |
Net cash provided by (used in) operating activities | 6,873 | 9,637 | 7,545 | 1,365 |
Sustaining Capex | (511) | (1,080) | (705) | (625) |
Lease Liability Payments | (2,754) | (2,870) | (2,789) | (2,691) |
Free Cash Flow | 3,608 | 5,687 | 4,051 | (1,951) |
3 The Company defines free cash flow as net cash provided by (used in) operating activities minus sustaining capex minus lease liability payments. Sustaining Capex is defined as leasehold improvements and maintenance spending required in the existing business. The most directly comparable financial measure is net cash provided by operating activities, as disclosed in the consolidated statement of cash flows. It should not be viewed as a measure of liquidity or a substitute for comparable metrics prepared in accordance with IFRS. |
Outlook
High Tide continues to lead the Canadian cannabis retail landscape as the largest non-franchised retailer across
The Company currently holds an average of over
The Company currently has 120 stores equipped with its Fastendr technology. The Company anticipates completing this rollout in the remainder of its store portfolio prior to the end of this fiscal year. With the recently announced acquisition of the Queen of Bud brand, the Company looks forward to developing and launching innovative high-margin cannabis and consumption accessory offerings to its ELITE and Cabana Club membership base.
The Company has generated over
High Tide Earnings Event Webcast
The Company will host a webcast and conference call to discuss the Financial Statements at 11:30 AM (Eastern Time) on Monday, March 18, 2024.
Webcast Link for High Tide Earnings Event: https://events.q4inc.com/attendee/213860866
Participants may pre-register for the webcast by clicking on the link above prior to the beginning of the live webcast. Three hours after the live webcast, a webcast replay will be available at the same link above.
Participants who wish to ask questions during the event may do so through the call-in line, the access information for which is as follows:
Participant Details:
Global Dial-In Numbers: https://www.netroadshow.com/events/global-numbers?confId=59676
Participant Access Code: 146693
*Participants will need to enter the participant access code before being met by a live operator*
ATM PROGRAM QUARTERLY UPDATE
Pursuant to the Company's at-the-market equity offering program (the "ATM Program") that allows the Company to issue up to
Pursuant to an equity distribution agreement dated August 31, 2023, entered into among the Company, ATB Capital Markets Inc. and ATB Capital Markets
The Company intends to use the net proceeds of the ATM Program, if any, and at the discretion of the Company, to fund strategic initiatives it is currently developing, to support the growth and development of the Company's existing operations, funding future acquisitions as well as working capital and general corporate purposes.
Common Shares issued pursuant to the ATM Program are issued pursuant to a prospectus supplement dated August 31, 2023 (the "Canadian Prospectus Supplement") to the Company's final base shelf prospectus dated August 3, 2023, filed with the securities commissions or similar regulatory authorities in each of the provinces and territories of
The ATM Program is effective until the earlier of (i) the date that all Common Shares available for issue under the ATM Program have been sold, (ii) the date the Canadian Prospectus Supplement in respect of the ATM Program or Canadian Shelf Prospectus is withdrawn and (iii) the date that the ATM Program is terminated by the Company or Agents.
ABOUT HIGH TIDE
High Tide, Inc. is the leading community-grown, retail-forward cannabis enterprise engineered to unleash the full value of the world's most powerful plant and is the second-largest cannabis retailer in
Bricks & Mortar Retail: Canna Cabana™ is the largest non-franchised cannabis retail chain in
Retail Innovation: Fastendr™ is a unique and fully automated technology that integrates retail kiosks and smart lockers to facilitate a better buying experience through browsing, ordering and pickup.
E-commerce Platforms: High Tide operates a suite of leading accessory sites across the world, including Grasscity.com, Smokecartel.com, Dailyhighclub.com, and Dankstop.com.
CBD: High Tide continues to cultivate the possibilities of consumer CBD through Nuleafnaturals.com, FABCBD.com, blessedcbd.de and blessedcbd.co.uk.
Wholesale Distribution: High Tide keeps that cannabis category stocked with wholesale solutions via Valiant™.
Licensing: High Tide continues to push cannabis culture forward through fresh partnerships and license agreements under the Famous Brandz™ name.
High Tide consistently moves ahead of the currents, having been named one of
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
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8 As reported by ATB Capital Markets based on store counts as of February 8, 2024 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release may contain "forward-looking information" and "forward-looking statements" within the meaning of applicable securities legislation. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events. The forward-looking statements herein include, but are not limited to, statements regarding:
The Company's business objectives and milestones and the anticipated timing of, and costs in connection with, the execution or achievement of such objectives and milestones (including, without limitation, proposed acquisitions, expansions and store openings); the Company's future growth prospects and intentions to pursue one or more viable business opportunities; the development of the Company's business and future activities following the date hereof; expectations relating to market size and anticipated growth in the jurisdictions within which the Company may from time to time operate or contemplate future operations; expectations with respect to economic, business, regulatory, or competitive factors related to the Company or the cannabis industry generally; the market for the Company's current and proposed product offerings, as well as the Company's ability to capture market share; the distribution methods expected to be used by the Company to deliver its product offerings; the Company's strategic investments and capital expenditures, and related benefits; changes in general and administrative expenses; future business operations and activities and the timing and performance thereof; the future tax liability of the Company; the estimated future contractual obligations of the Company; the future liquidity and financial capacity of the Company and its ability to fund its working capital requirements and forecasted capital expenditures; the competitive landscape within which the Company operates and the Company's market share or reach; the Company adding the number of additional cannabis retail store locations the Company proposes to add to the Company's business upon the timelines indicated herein, and the Company remaining on a positive growth trajectory; same-store sales continuing to increase; the Company making meaningful increases to its revenue profile; the Company completing the development of its cannabis retail stores; the announcement of new
Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. Although the Company believes that the expectations reflected in these statements are reasonable, such statements are based on expectations, factors, and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including but not limited to the risk factors discussed under the heading "Non-Exhaustive List of Risk Factors" in Schedule A to our current annual information form, and elsewhere in this press release, as such factors may be further updated from time to time in our periodic filings, available at www.sedarplus.ca and www.sec.gov, which factors are incorporated herein by reference. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement and reflect the Company's expectations as of the date hereof and are subject to change thereafter. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results, or otherwise, or to explain any material difference between subsequent actual events and such forward-looking information, except as required by applicable law.
CAUTIONARY NOTE REGARDING FUTURE ORIENTED FINANCIAL INFORMATION
This press release may contain future oriented financial information ("FOFI") within the meaning of applicable securities legislation about prospective results of operations, financial position or cash flows, which is subject to the same assumptions, risk factors, limitations, and qualifications as set out in the above "Cautionary Note Regarding Forward-Looking Statements". FOFI is not presented in the format of a historical balance sheet, income statement or cash flow statement. FOFI does not purport to present the Company's financial condition in accordance with IFRS as issued by the International Accounting Standards Board, and there can be no assurance that the assumptions made in preparing the FOFI will prove accurate. The actual results of operations of the Company and the resulting financial results will likely vary from the amounts set forth in the analysis presented, and such variation may be material (including due to the occurrence of unforeseen events occurring subsequent to the preparation of the FOFI). The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments as of the applicable date. However, because this information is highly subjective and subject to numerous risks, readers are cautioned not to place undue reliance on the FOFI as necessarily indicative of future results. Except as required by applicable securities laws, the Company undertakes no obligation to update such FOFI.
Importantly, the FOFI contained in this press release are, or may be, based upon certain additional assumptions that management believes to be reasonable based on the information currently available to management, including, but not limited to, assumptions about: (i) the future pricing for the Company's products, (ii) the future market demand and trends within the jurisdictions in which the Company may from time to time conduct the Company's business, (iii) the Company's ongoing inventory levels, and operating cost estimates, and (iv) the Company's net proceeds from the ATM Program and future financings. The FOFI or financial outlook contained in this press release do not purport to present the Company's financial condition in accordance with IFRS as issued by the International Accounting Standards Board, and there can be no assurance that the assumptions made in preparing the FOFI will prove accurate. The actual results of operations of the Company and the resulting financial results will likely vary from the amounts set forth in the analysis presented in any such document, and such variation may be material (including due to the occurrence of unforeseen events occurring subsequent to the preparation of the FOFI). The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments as at the applicable date. However, because this information is highly subjective and subject to numerous risks including the risks discussed under the heading above entitled "Cautionary Note Regarding Forward-Looking Statements" and under the heading "Risk Factors" in the Company's public disclosures, FOFI or financial outlook within this press release should not be relied on as necessarily indicative of future results.
Readers are cautioned not to place undue reliance on the FOFI, or financial outlook contained in this press release. Except as required by Canadian securities laws, the Company does not intend, and does not assume any obligation, to update such FOFI.
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SOURCE High Tide Inc.
FAQ
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