The Company Remains the Largest Non-Franchised Cannabis Retailer in
This news release constitutes a "designated news release" for the purposes of the Company's prospectus supplement dated
- The Company Generated
$9.4 Million of Positive Free Cash Flow2 in the Second Fiscal Quarter. The Company has Generated$22.7 Million of Positive Free Cash Flow in the Past Four Quarters, Which Represents a Trailing Free Cash Flow Yield of Over 8% Compared to the Company's Enterprise Value - The Company Generated Positive Net Income of
$0.2 Million , Improving From($1.6) Million Year-Over-Year and Break-Even Sequentially - High Tide Remains the Highest Revenue Generating Cannabis Company Reporting in Canadian Dollars3, and for the First Time, has Reached 12-Month Trailing Revenue Level Exceeding
$500 Million - The Company Now Exceeds More than 1.43 Million Members of the
Cabana Club , an Increase of over 38% Year-Over-Year and 8% Sequentially - The Company Has Surpassed 44,000 ELITE Members, an Increase of 226% Year-Over-Year and 38% Sequentially, Representing its Fastest Pace of Growth Since Inception
- 17th Consecutive Quarter of Positive Adjusted EBITDA4 of
$10.0 Million , Representing a 52% Increase Year-Over-Year and (4%) Sequentially, Driven by aSeasonally Slower Quarter , With Two Fewer Days - The Company Reported Adjusted EBITDA Margin of 8.1%, Marking a 45% Increase Year-Over-Year and Consistent Sequentially, Despite Two Fewer Days in the Second Fiscal Quarter
- The Company's Market Share was 20% in
Alberta and 10% in Ontario During the Second Fiscal Quarter of 2024. Across the Five Provinces Where It Operates, its Market Share Reached 10.9%, an Increase from 9.9% Year-over-Year and 10.4% Sequentially5, While Only Representing 4.8% of the Total Cannabis Retail Store Count6 - Annualized Retail Sales Represented Over
$1,500 Per Square Foot Across the Canna Cabana Store Network During the Second Fiscal Quarter of 2024
Second Fiscal Quarter 2024 – Financial Highlights:
- Revenue increased to
$124.3 million in the second fiscal quarter of 2024 compared to$118.1 million during the same period in 2023, representing an increase of 5% year-over-year and (3)% sequentially, given this quarter had two fewer days and is also a seasonally slower quarter. 12-month trailing revenue exceeded$500 million for the first time in the Company's history - Gross profit increased to
$35.3 million in the second fiscal quarter of 2024 compared to$31.6 million during the same period in 2023, representing an increase of 12% year-over-year and (2)% sequentially, given this quarter had two fewer days - Gross profit margin in the three months ended
April 30, 2024 , was 28.4%, representing its highest level in the past nine quarters. This compares to 26.7% during the same period in 2023 and 28.1% sequentially - Adjusted EBITDA increased to
$10.0 million in the second fiscal quarter of 2024 compared to$6.6 million during the same period in 2023, representing an increase of 52% year-over-year and (4)% sequentially, given this quarter had two fewer days - Adjusted EBITDA margin increased to 8.1% in the second fiscal quarter of 2024, compared to 5.6% during the same period in 2023 and was consistent sequentially
- Salaries, wages, and benefits represented 12.4% of revenue in the second fiscal quarter of 2024, which was largely consistent year-over-year and sequentially
- Given the strong cost controls the Company has been implementing, general and administrative expenses represented 4.5% of revenue in the second fiscal quarter of 2024, which improved from 5.2% year-over-year and was consistent sequentially
- The Company generated positive net income of
$0.2 million in the second fiscal quarter of 2024, which included a non-cash impact from depreciation of$7.5 million . Net income improved from$(1.6) million in the same period last year and compared to break-even sequentially - Earnings per fully diluted share were (
$0.00 ) in the second fiscal quarter of 2024, compared to$(0.02) in the same period last year and break-even sequentially - Cabanalytics Business Data and Insights platform, advertising revenue, and other revenue, which includes management fees, interest income and rental income, was a record
$9.0 million for the second fiscal quarter of 2024, compared to$6.7 million in the same period last year, and$7.8 million sequentially, representing increases of 35% and 15% respectively - For locations operational throughout the second fiscal quarter of 2024 and 2023, same-store sales increased by 4% year-over-year. Given this quarter had two fewer days, same-store sales were (2%) sequentially. Calculated daily, same-store sales ticked slightly higher than the previous quarter. The Company notes that it significantly outperformed total cannabis industry retail sales across the five provinces where it operates, which were (4.4%) sequentially, including the impact of new store growth7
- The Company continued the rollout of ELITE, the first-of-its-kind cannabis paid loyalty program in
Canada , with membership surpassing 44,000, representing an increase of 226% year-over-year and 38% sinceMarch 15, 2024 , which is the fastest pace of onboarding since ELITE was launched in late 2022 - Cash on hand as of
April 30, 2024 , totaled$34.5 million , an all-time record, compared to$22.5 million as ofApril 30, 2023 , and$28.7 million as ofJanuary 31, 2024 , representing an increase of 54% year-over-year and 20% sequentially
"I am thrilled to report that in an environment where many cannabis companies, including some of our retail competitors, have been forced to seek bankruptcy protection, our team has been able to deliver positive net income in Q2, while also generating record-breaking free cash flow. In fact, over the past four quarters, we have generated
We remain the highest revenue-generating cannabis company reporting in Canadian dollars with Adjusted EBITDA up 52%, bricks-and-mortar revenue up 11% and consolidated revenue up 5% year-over-year, despite industry sales being down 4% during the same period. All of this has allowed us to end the quarter with a record cash position of
"On top of achieving net profitability and record free cash flow, our
It is also worth noting that investors seem to be catching onto High Tide's superior operational performance, something that is reflected in our 12-month stock trajectory and the fact that High Tide is amongst the best-performing Canadian cannabis stocks over this time frame. Our Canadian scale and experience position us well to participate in the German commercial cannabis pilot projects once they are launched. All of this, combined with continuing regulatory reform in the U.S. and
Second Quarter 2024 – Operational Highlights (
- The Company opened 5 new Canna Cabana locations in
Ontario - 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 it has acquired all IP, including trademarks and other assets of the Queen of Bud cannabis and lifestyle brand
- The Company is pleased to announce that it has closed on the remaining interest of
NuLeaf Naturals, LLC ("NuLeaf"), not held by High Tide. As described in the Company's news release datedNovember 29, 2021 , NuLeaf's members were granted an option to put to High Tide the remaining shares in NuLeaf not held by High Tide (the "Put Option") at an enterprise value equal to the trailing twelve months of EBITDA multiplied by 7.1. Notice of the intention to exercise the Put Option was delivered by NuLeaf's members onJune 2, 2023 , and the transaction was completed onApril 5, 2024 . High Tide had previously assigned its ownership interest in NuLeaf to it's subsidiary,High Tide USA, Inc. , so the remaining 20% interest was also acquired byHigh Tide USA, Inc. The aggregate purchase price for the remaining 20% interest in NuLeaf was One MillionFive Hundred Seventy-Five Thousand U.S. Dollars ($1,575,000 USD ) (the "Purchase Price"). High Tide agreed to pay the Purchase Price to the members in cash in fifteen (15) equal monthly installments of One Hundred andFive Thousand U.S. Dollars ($105,000 USD ), beginning onApril 7, 2024 . - The Company also announced that on
April 20, 2024 '4/20', it generated just under$2 million in total gross revenues across all retail platforms, representing a 35% increase from the previous Saturday. The Company's Canadian bricks-and-mortar stores reported a 30% increase, while sales across its e-commerce platforms (Grasscity.com, Smokecartel.com, Dailyhighclub.com, Dankstop.com, Nuleafnaturals.com, FABCBD.com, BlessedCBD.co.uk, and BlessedCBD.de) reported an increase of 119% over the previous Saturday - Various Executives of the Company participated in the
International Cannabis Business Conference inBerlin, Germany and theBenzinga Capital Conference inHollywood, Florida
Subsequent Events (
- The Company opened an additional 4 Canna Cabana locations in
Ontario sinceApril 30, 2024 - The Company grew its
World Vision sponsorship support to 344 children internationally after committing to sponsoring two additional children for every new store that opens inCanada - On
May 1, 2024 , the Company announced the appointment ofMayank Mahajan to the role of Chief Financial Officer - As of
June 13, 2024 , memberships in theCabana Club loyalty program increased to over 1.43 million, up from 1,040,000 members as ofJune 14, 2023 , and 1.32 million as ofMarch 15, 2024 , representing increases of 38% and 8%, respectively - As of
June 13, 2024 , ELITE memberships have grown to over 44,000 members, up from 32,000 as ofMarch 15, 2024 , representing increases of 226% year-over-year and 38% sequentially - Fastendr retail kiosks have been installed in 130 Canna Cabana locations, up from 120 in the previous quarter, with more installations underway
- The Company has entered into a binding subscription agreement with arm's length institutional credit providers for
$15 million in debt financing. Pursuant to the terms of the subscription agreements, the funds will be drawn in two tranches: (i)$10 million at closing, expected on or beforeJune 30, 2024 and (ii)$5 million inNovember 2024 - The Company sold 1,055,900 common shares to one institutional investor through the ATM program for gross proceeds in the amount of
$3.2 million
Selected financial information for the second quarter ended
(Expressed in thousands of Canadian Dollars)
Three Months Ended April 30 | Six Months Ended | |||||
2024 | 2023 | Change | 2024 | 2023 | Change | |
$ | $ | $ | $ | |||
Free cash flow | 9,383 | (1,951) | 581 % | 12,991 | (2,798) | 564 % |
Revenue | 124,259 | 118,136 | 5 % | 252,327 | 236,212 | 7 % |
Gross Profit | 35,299 | 31,569 | 12 % | 71,293 | 63,751 | 12 % |
Gross Profit Margin | 28 % | 27 % | 1 % | 28 % | 27 % | 1 % |
Total Operating Expenses | (33,312) | (34,211) | (3) % | (66,514) | (70,314) | (5) % |
Income (loss) from operations | 1,987 | (2,642) | 175 % | 4,779 | (6,563) | 173 % |
Adjusted EBITDA | 10,041 | 6,589 | 52 % | 20,476 | 12,089 | 69 % |
Adjusted EBITDA margin | 8 % | 6 % | 2 % | 8 % | 5 % | 3 % |
Net income (loss) | 171 | (1,568) | 111 % | 166 | (5,429) | 103 % |
Loss per share (Basic) | (0.00) | (0.02) | 50 % | (0.01) | (0.07) | 86 % |
The following is a reconciliation of Adjusted EBITDA to Net Loss:
Three Months Ended | Six Months Ended | |||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||
Net income (loss) | 171 | (1,568) | 166 | (5,430) | ||||||||
Income/deferred tax (recovery) expense | (878) | (2,041) | (1,111) | (3,277) | ||||||||
Accretion and interest | 1,712 | 1,759 | 3,455 | 3,573 | ||||||||
Depreciation and amortization | 7,505 | 7,699 | 14,353 | 15,685 | ||||||||
EBITDA (1) | 8,510 | 5,849 | 16,863 | 10,551 | ||||||||
Foreign exchange (gain) loss | (5) | 2 | - | (13) | ||||||||
Finance, transaction and other costs | 1,314 | 435 | 1,829 | 1,099 | ||||||||
(Gain) loss revaluation of put option liability | (110) | (1,288) | (410) | (2,549) | ||||||||
Other loss | 337 | - | 337 | - | ||||||||
Share-based compensation | 549 | 1,532 | 1,344 | 2,968 | ||||||||
Loss (gain) on revaluation of marketable securities | - | (19) | 77 | (27) | ||||||||
(Gain) loss on revaluation of debenture | (240) | - | 515 | - | ||||||||
Gain on extinguishment of financial liability | (314) | 78 | (79) | 60 | ||||||||
Adjusted EBITDA (1) | 10,041 | 6,589 | 20,476 | 12,089 | ||||||||
Note: |
(1) Earnings before interest, taxes, depreciation, and amortization ("EBITDA") and Adjusted EBITDA 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 (²) | Q2 2024 | Q1 2024 | Q2 2023 |
Cash flow from operating activities | 8,032 | 9,363 | 5,493 |
Changes in non-cash working capital | 4,777 | (2,490) | (4,128) |
Net cash provided by operating activities | 12,809 | 6,873 | 1,365 |
Sustaining capex | (528) | (511) | (625) |
Lease liability payments | (2,898) | (2,754) | (2,691) |
Free cash flow | 9,383 | 3,608 | (1,951) |
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 condensed interim consolidated statements of cash flows. It should not be viewed as a measure of liquidity or a substitute for comparable metrics prepared in accordance with IFRS. The Company has revised how it calculates Free Cash Flow from the previously disclosed definition to further clarify for investors the subset of Capex that relates to growth versus sustaining Capex and to better reflect the cash flow generation from ongoing operations of the existing business. The Company believes this new calculation more accurately represents the cash generation activities of the Company from ongoing operations and Free Cash Flow available for growth. 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. |
Outlook
High Tide is the largest non-franchised cannabis retailer in
The Company's
The Company's market share in Q2 rose to 10.9% from 9.9% year-over-year, while only representing 4.8% of the bricks-and-mortar store count in the provinces where it operates. The Company anticipates its market share to continue its upward trajectory, given its organic store pipeline, ongoing M&A discussions and competitor closures. The Company's long-term goal is to hit 15% market share in the provinces where it operates, and to reach 300 Canna Cabana locations nationwide.
The recent regulatory change in
The Company has proven its free cash flow capabilities, having generated over
The Company continues to monitor legislative and regulatory developments in
High Tide Earnings Event Webcast
The Company will host a webcast and conference call to discuss the Financial Statements at
Webcast Link for High Tide Earnings Event: https://events.q4inc.com/attendee/433539943
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=65906
Participant Access Code: 301725
*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
The Company intends to use the net proceeds of the ATM Program 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
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
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.
Brands: High Tide's industry-leading and consumer-facing brand roster includes Queen of Bud, Cabana Cannabis Co,
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
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
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
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.
____________________________ |
1As reported by |
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. |
3 Based on reporting by |
4 Adjusted EBITDA is a non-IFRS financial measure |
5 Based on data for the months of February and |
6 Based on data from industry sources and provincial regulators |
7 Based on data for the months of February and |
8 As reported by |
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