High Tide Reports Third Quarter 2023 Financial Results Featuring Positive Free Cash Flow of $4.1 Million and Fourth Consecutive Quarter of Record Revenue and Adjusted EBITDA of $124.4 Million and $10.2 Million, Respectively
- Positive free cash flow of $4.1 million
- Increase in revenue by 30% year-over-year
- None.
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 Has Achieved Positive Free Cash Flow1 of
$4.1 Million - Same-Store Sales Increased by
19% Year-Over-Year and8% Sequentially. Calculated Daily Same-Store Sales Increased by5% , Representing the Eighth Consecutive Quarter of Same-Store Sales Growth - The Company Remains the Largest Non-Franchised Cannabis Retailer in
Canada With 156 Locations and Surpasses 1.1 Million Cabana Club Members, Including 3 Million US Customers and a Global Customer Database Surpassing 4.6 Million - The Company Further Enhanced the Growth Trajectory of its Cabana ELITE Paid Membership Program Which Grew to Over 18,800 Members as of Today, Representing a
39% Increase from Q2, Growing at a Faster Pace Than the Previous Two Quarters - 14th Straight Quarter of Positive Adjusted EBITDA2 of
$10.2 Million 140% Year-Over-Year and55% Sequentially, Including a One-Time Return of$2.4 Million - High Tide Maintains Canadian Cannabis Retail Market Share Excluding Quebec3 at
9.5% , Through Continued Organic Growth - High Tide Remains the Highest Revenue Generating Cannabis Company Reporting in Canadian Dollars4, and is the Fastest Growing Retailer in the
Americas as Reported by The Financial Times5
__________________________________________________ |
1 Free Cash Flow is a non-IFRS measure. This measure as well as other non-IFRS measures reported by the Company, are defined in the EBITDA and Free Cash Flow sections of this news release |
2Adjusted EBITDA is a non-IFRS financial measure 3Based on Statistics Canada for the months of May 2023 & June 2023 and Hifyre data for July 2023, excluding the province of 4Based on reporting by New Cannabis Ventures as of September 14, 2023. For the New Cannabis Ventures' senior listing, segmented cannabis-only sales must generate more than |
Third Fiscal Quarter 2023 – Financial Highlights:
- Revenue increased to
$124.4 million $95.4 million 30% year-over-year and5% sequentially - Free cash flow was
$4.1 million $2.0 - million in the second fiscal quarter of 2023, and totalled
$1.3 million - Gross profit increased to
$34.6 million $25.8 million 34% year-over-year and10% sequentially - Gross profit margin in the three months ended July 31, 2023, was
28% , consistent with previous several quarters. The Company notes that gross margins earned in its bricks-and-mortar stores once again ticked higher sequentially - Adjusted EBITDA² increased to
$10.2 million $2.4 million Manitoba 's SRF) in the third fiscal quarter of 2023 compared to$4.2 million $6.6 million 140% year-over-year and55% sequentially - Continued cost-saving measures implemented by the Company resulted in a decrease in general and administrative expenses as a percentage of revenue to
5.2% in the third fiscal quarter of 2023, an improvement from6.6% during the same period in 2022 and was consistent sequentially - Salaries, wages and benefits represented
11.1% of revenue in the third fiscal quarter of 2023, showcasing an improvement from12.0% during the same period in 2022 and11.8% sequentially. This was achieved by realizing operating efficiencies, including the initial benefits from implementing the Fastendr technology in the Company's stores - Sales from Cabanalytics business data and insights platform increased to
$6.5 million $5.5 million 19% year-over-year and3% sequentially - For locations operational throughout the third fiscal quarter of 2023 and 2022, same-store sales increased by
19% year-over-year and8% sequentially. Calculated daily same-store sales increased by5% , representing the eighth consecutive quarter of same-store sales growth - The Company continued the rollout of ELITE, the first-of-its-kind cannabis paid loyalty program in
Canada , with membership reaching over 18,800 members as of today, representing an increase of 5,300 members or39% since June 13, 2023, growing at a faster pace than the previous two quarters - Loss from operations, which included
$8.5 million ( in the third fiscal quarter of 2023, compared to$0.7) million ( during the same period in 2022, and$4.7) million ( sequentially, representing a reduction in losses of$2.6) million 86% and75% , respectively - Net loss was
( in the third fiscal quarter of 2023, compared to$3.6) million ( during the same period in 2022 and$2.7) million ( sequentially, driven by a decrease in income arising from revaluation of derivative liabilities during this quarter$1.6) million - Cash on hand as of July 31, 2023, totalled
$25.7 million $18.3 40% year-over-year and14% sequentially without obtaining any external funding during the quarter and spending over$1 million
"I'm thrilled to report that our third fiscal quarter was the best in High Tide's history since our inception, as we met our goal of generating positive free cash flow of
"As announced earlier today, we continue to innovate, amplify and extract additional value from our existing data insights infrastructure with the launch of 'Cabanalytics Consumer Insights,' or 'CCI,' which will provide our club members with robust data on consumer behaviour regarding the most current, hottest cannabis as well as ancillary products and brands through a magazine-style, monthly digitized publication. CCI is an extension of our highly successful Cabanalytics business and data insights platform, which will now be distributed to our ever-increasing membership base of over 1.1 million loyal ELITE and Cabana Club members here in
Third Fiscal Quarter 2023 – Operational Highlights (May 1- July 31):
- Organic retail store expansion continued with 2 new Canna Cabana locations: 1 in
Alberta and 1 inOntario - The Company held its Annual General and Special Meeting of Shareholders, where all members of the Board of Directors were re-elected with near unanimous support
- The Company continues to have higher-margin Cabana Cannabis Co products in
Saskatchewan ,Manitoba andOntario , with 13 white-label SKUs currently being sold in these markets - The Company maintained its status as the highest revenue-generating cannabis company in Canada⁴
Subsequent Events (August 1 - present):
- As of September 14, 2023 memberships in the Cabana Club loyalty program have increased to over 1.1 million up from 750,000 members as of September 14, 2022, and 1,040,000 as of June 14, 2023, representing an increase of
47% year-over-year and6% sequentially - As of September 14, 2023 ELITE memberships have grown to over 18,800 members up 5,300 from 13,500 as of June 14, 2023, representing an increase of
39% sequentially - Organic retail store expansion continued with 2 new Canna Cabana locations in
Ontario - The Company filed a
$100 million $30 million U.S. dollars) of common shares from treasury to the public from time to time, at the Company's discretion and subject to regulatory requirements. The Company notes that its previous ATM program expired with approximately75% of the facility undrawn - On August 1, 2023, the Company appointed Sergio Patino as permanent Chief Financial Officer
- The Company now sponsors 312 children internationally, through World Vision as per its previously stated commitment to sponsor two children for every new store opened
Selected financial information for the third quarter ended July 31, 2023:
(Expressed in thousands of Canadian Dollars)
Three months ended July 31 | Nine Months Ended July 31 | |||||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||
$ | $ | |||||||||||||
Revenue | 124,352 | 93,354 | 30 % | 360,564 | 248,604 | 45 % | ||||||||
Gross Profit | 34,578 | 25,755 | 34 % | 98,330 | 71,434 | 38 % | ||||||||
Gross Profit Margin | 28 % | 27 % | 1 % | 27 % | 29 % | (2 %) | ||||||||
Total Operating Expenses | (35,240) | (30,425) | (16 %) | (105,551) | (89,828) | (18 %) | ||||||||
Adjusted EBITDA | 10,181 | 4,246 | 140 % | 22,276 | 9,555 | 133 % | ||||||||
Loss from Operations | (662) | (4,670) | 86 % | (7,221) | (18,394) | 61 % | ||||||||
Net loss | (3,574) | (2,717) | (32 %) | (9,147) | (18,346) | 50 % | ||||||||
Loss per share (Basic and Diluted) | (0.04) | (0.04) | 0 % | (0.12) | (0.31) | (61 %) | ||||||||
The following is a reconciliation of Adjusted EBITDA to Net Loss:
Three Months Ended July 31 | Nine Months Ended July 31 | |||||||||
2023 | 2022 | 2023 | 2022 | |||||||
Net (loss) income | (3,574) | (2,717) | (9,147) | (18,394) | ||||||
Income taxes (recovery) | 204 | 731 | (3,069) | (1,133) | ||||||
Accretion and interest | 1,931 | 1,470 | 5,555 | 4,883 | ||||||
Depreciation and amortization | 8,493 | 7,182 | 24,179 | 21,920 | ||||||
EBITDA (1) | 7,054 | 6,666 | 17,518 | 7,276 | ||||||
Foreign exchange loss (gain) | 31 | 120 | 18 | 324 | ||||||
Transaction and acquisition costs | 801 | 1,014 | 1.849 | 2,271 | ||||||
(Gain) loss revaluation of derivative liability | (73) | (6,078) | (2,477) | (7,331) | ||||||
Loss (gain) on extinguishment of debenture | - | (140) | - | (255) | ||||||
Other gains | 18 | - | 68 | - | ||||||
Impairment loss | - | - | - | 89 | ||||||
Share-based compensation | 2,350 | 1,734 | 5,318 | 5,988 | ||||||
Loss (gain) on revaluation of marketable securities | - | 146 | (18) | 409 | ||||||
Gain on extinguishment of financial liability | - | 784 | - | 784 | ||||||
Adjusted EBITDA (1) | 10,181 | 4,246 | 22,276 | 9,555 | ||||||
Note: | |
(1) | Earnings before interest, taxes, depreciation, and amortization ("EBITDA") and Adjusted EBITDA. These measures do not have a standardised 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 (²) | Q3 2023 | Q2 2023 | Q1 2023 |
Net cash provided by (used in) operating activities | 7,545 | 1,365 | 2,114 |
Sustaining Capex | (705) | (625) | (246) |
Lease Liability Payments | (2,789) | (2,691) | (2,715) |
Free Cash Flow | 4,051 | (1,951) | (847) |
Note: | |
(2) | 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 is the largest Canadian non-franchised bricks-and-mortar cannabis retailer, with 156 Canna Cabana locations operating across the country and a loyalty base exceeding 1.1 million Cabana Club members. Earlier this year, the Company announced its goal of achieving positive free cash flow by the end of calendar 2023. The Company is pleased to report that with its strong Q3 results, it has met this goal 5 months ahead of the previously communicated timeline. Similarly, the Company discloses that its current revenue run rate exceeds
Having demonstrated that its current operations can generate meaningful free cash flow, the Company plans to return to disciplined and responsible growth both organically and through M&A while remaining free cash flow positive, moving forward towards reaching its long-term goal of operating 250 locations across
The Company continues to generate stable gross margins, driven by its bricks-and-mortar margins ticking higher over the last six quarters. The Company plans to focus on its recently launched initiatives, such as CCI, ELITE membership sales, and higher margin white-label offerings, including the continued increased adoption of the Company's Fastendr kiosks, helping realize additional operational efficiencies leading to enhanced profitability.
The Company is encouraged by recent news coming out of
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 Friday, September 15, 2023.
Webcast Link for High Tide Earnings Event: https://events.q4inc.com/attendee/996785173
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:
Joining by Telephone:
Participant access code: 457161
*Participants will need to enter the participant access code before being met by a live operator*
ATM PROGRAM QUARTERLY UPDATE
The Company's at-the-market equity offering program (the "ATM Program") that allowed the Company to issue up to
Effective August 31, 2023, the Company has launched the offering of a new ATM program to raise up to
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 will be 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. High Tide (HITI) is uniquely-built around the cannabis consumer, with wholly-diversified and fully-integrated operations across all components of cannabis, including:
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 Brand™ 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.
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); 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 Company's strategic investments and capital expenditures, and related benefits; changes in general and administrative expenses; future Business operations and activities and the timing 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 distribution methods expected to be used by the Company to deliver its product offerings; the competitive landscape within which the Company operates and the Company's market share or reach; the performance of the Company's business and the operations and activities of the Company; 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 Company's ability to continue to generate consistent free cash flow from operations and from financing activities; the Company's ability to maximize shareholder value; the Company's ability to obtain, maintain, and renew or extend, applicable authorizations, including the timing and impact of the receipt thereof; the realization of cost savings, synergies or benefits from the Company's recent and proposed acquisitions, and the Company's ability to successfully integrate the operations of any business acquired within the Company's business; the anticipated sales from continuing operations; Cabana Club and Cabana ELITE loyalty programs membership continuing to increase; the Company hitting its forecasted revenue and sales projections; the intention of the Company to complete the ATM Program and any additional offering of securities of the Company; the aggregate amount of the total proceeds that the Company will receive pursuant to the ATM Program and/or any future offering; the Company's expected use of the net proceeds from the ATM Program and/or any future offering; the listing of Common Shares offered in the ATM Program and/or any future offering; the Company continuing to grow its online retail portfolio through further strategic and accretive acquisitions; the ability of the Company's initiatives, such as CCI, ELITE membership sales, and higher margin white-label offerings, including the continued increased adoption of the Company's Fastendr kiosks, to succeed and to realize additional operational efficiencies and lead to enhanced profitability; legislative changes related to the rescheduling of Cannabis in
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.
View original content to download multimedia:https://www.prnewswire.com/news-releases/high-tide-reports-third-quarter-2023-financial-results-featuring-positive-free-cash-flow-of-4-1-million-and-fourth-consecutive-quarter-of-record-revenue-and-adjusted-ebitda-of-124-4-million-and-10-2-million-respectively-301928440.html
SOURCE High Tide Inc.
