High Tide Reports Third Quarter 2024 Financial Results Featuring Record Revenue of $131.7 Million, and 2nd Consecutive Quarter of Positive Net Income
The Company Also Reports 5th Consecutive Quarter of Positive Free Cash Flow With Trailing Free Cash Flow Totaling
This news release constitutes a "designated news release" for the purposes of the Company's prospectus supplement dated
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High Tide Remains the Highest Revenue Generating Cannabis Company Reporting in Canadian Dollars2, Delivers Quarterly Revenue of$131.7 Million, an All-Time Record and an Increase of 6% Year-Over-Year and Sequentially and Reaches an Annualized Run Rate Exceeding$525 Million
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Income From Operations Was
$3.1 Million , Marking Sizeable Improvements From$(0.7) Million During the Same Period Last Year and$2.0 Million Sequentially. The Company Also Generated Positive Net Income of$0.8 Million , Improving From$(3.6) Million Year-Over-Year and$0.2 Million Sequentially
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The Company Now Exceeds 1.55 Million Members of the
Cabana Club , an Increase of over 41% Year-Over-Year and 8% Sequentially. The Company Has Reached 57,000 ELITE Members, an Increase of 203% Year-Over-Year and 30% Sequentially, Representing its Fastest Pace of Growth Since Inception -
Same Store Sales Increased By 1% Year-Over-Year and 5% Sequentially. When
Calculated Daily , Same Store Sales Increased by 3% Sequentially. FromOctober 2021 toJune 2024 , Same Store Sales at Canna Cabana are up 118%, While the Average Operator in the Five Provinces Where the Company Operates has Experienced a 21% Decline3
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The Company Generated
$3.1 Million of Positive Free Cash Flow in the Third Fiscal Quarter. The Company has Generated$21.8 Million of Positive Free Cash Flow in the Trailing Four Quarters, Which Represents a Free Cash Flow Yield of Over 9% Compared to the Company's Enterprise Value as of Market Close onSeptember 13, 2024
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During May and
June 2024 , Canna Cabana Held a 21% Share of the Cannabis Retail Market inAlberta and 11% inOntario . Across the Five Provinces in Which the Company Has a Presence, Canna Cabana Represented 12% Market Share in Dollars While Only Representing 5% of the Total Cannabis Retail Store Count in Those Provinces 4
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Annualized Retail Sales Per Square Foot Were
$1,658 Across the Canna Cabana Store Network During the Third Fiscal Quarter of 2024,Higher Than Best-In-Class Retailers Like Wal-Mart , Target, Canadian Tire and Lululemon5
Third Fiscal Quarter 2024 – Financial Highlights:
- Revenue increased to
$131.7 million in the third fiscal quarter of 2024, an all-time record, compared to$124.4 million during the same period last year, representing an increase of 6% year-over-year and sequentially - Gross profit increased to
$35.5 million in the third fiscal quarter of 2024, compared to$34.6 million during the same period last year, representing an increase of 3% year-over-year and was consistent sequentially - Gross profit margin in the three months ended
July 31, 2024 , was 27%, compared to 28% in the same period last year and sequentially - 18th consecutive quarter of positive Adjusted EBITDA6, which was
$9.6 million in the third fiscal quarter of 2024 compared to$10.2 million during the same period last year, which included a$2.4 million positive impact from the removal of the SRF inManitoba and compared to$10.0 million sequentially. Prior to customary adjustments, the Company generated$8.9 million in EBITDA, which is the highest of any quarter in the Company's history - Adjusted EBITDA margin was 7.3%, which increased from 6.3% during the same period last year, excluding the impact of the SRF and was 8.1% sequentially
- Given the strong cost controls the Company has been implementing, general and administrative expenses represented 3.7% of revenue in the third fiscal quarter of 2024, which improved from 5.2% during the same period last year and 4.5% sequentially and was the lowest level in four years
- Salaries, wages, and benefits represented 13% of revenue in the third fiscal quarter of 2024. This marked an increase compared to 11% during the same period last year and 12% sequentially driven by the 11 organic store openings during the quarter, which need significant staffing requirements while ramping up to maturity
- The Company generated positive net income of
$0.8 million in the third fiscal quarter of 2024. Net income improved from$(3.6) million in the same period last year and from$0.2 million sequentially. Income from operations was$3.1 million , marking sizeable improvements from$(0.7) million during the same period last year and from$2.0 million sequentially - Earnings per fully diluted share were
$0.01 in the third fiscal quarter of 2024, compared to$(0.04) in the same period last year and$(0.00) sequentially - Cabanalytics Business Data and Insights platform, advertising revenue, and other revenue, which includes management fees, interest income, and rental income, was
$9.0 million , an all-time record, for the third fiscal quarter of 2024, compared to$6.7 million in the same period last year, and$9.0 million sequentially, representing an increase of 36% compared to the same period last year and was up 1% sequentially - Cash and cash equivalents as of
July 31, 2024 totaled$35.3 million , an all-time record, compared to$25.7 million as ofJuly 31, 2023 and$34.5 million as ofApril 30, 2024 representing an increase of 37% from the same period last year and 2% sequentially
"Over the last year, the High Tide team has presented investors with compelling proof points as to how we're different than other retailers, and our third quarter results offer even further evidence of this. Our numbers continue to drive home the fact that we are a well-managed, innovative company that has grown responsibly while continuing to build value for shareholders. Numbers don't lie and this quarter's record revenue, positive net income and free cash flow, for the fifth consecutive quarter, sit in stark contrast to some of our big-name competitors recently filing for bankruptcy protection or shutting down completely. Unlike these competitors, we are generating strong free cash flow from our operations, which has been powering our organic growth trajectory in recent months. This has allowed us to grow our cash on hand balance to
"With 21 new Cabanas launched from the profits of our existing store network, we have already surpassed the low end of our previously communicated target of adding 20 to 30 new sites this year. Given our current momentum, I believe we can approach the high end of this projection. This rapid store growth and a 118% jump in same store sales since the launch of our innovative and disruptive discount club model has contributed to our significant increase in market share, which has reached 12% across the five Canadian provinces where we operate, up from 5% three years ago. Our
Third Quarter 2024 – Operational Highlights (
- The Company opened 11 new Canna Cabana locations - 4 in
Alberta , 1 inSaskatchewan , and 6 in Ontario - On
May 1, 2024 , the Company announced the appointment of Mayank Mahajan to the role of Chief Financial Officer - The Company welcomed the announcement by Alberta Gaming Liquor and Cannabis (AGLC) that it has amended its Retail Cannabis Store Handbook to allow private label cannabis sales
- The Company entered into a binding subscription agreement with arm's length institutional credit providers for
$15 million in debt financing - 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
Subsequent Events (
- The Company opened 3 new Canna Cabana locations in
Ontario - The Company closed its previously announced asset purchase, pursuant to an asset purchase agreement dated
June 25, 2024 , whereby High Tide acquired a retail cannabis store in Mississauga,Ontario , for$600,000 in cash - The Company grew its
World Vision sponsorship support to 366 children internationally after committing to sponsoring two additional children for every new store that opens inCanada - The Company announced the initial closing of its previously disclosed
$15 million subordinated debt facility - The Company announced the re-launch of the website of its flagship Canadian bricks-and-mortar retail brand, Canna Cabana, which represents more than 90 per cent of High Tide's revenue
- Fastendr retail kiosks have been installed in 140 Canna Cabana locations, up from 130 in the previous quarter, with all remaining installations expected to be completed by the end of September
- The Company announced the launch of Queen of Bud branded white label products in
British Columbia ,Alberta ,Saskatchewan ,Manitoba andOntario - The Company announced that it has entered into a joint venture with Positive Intent Events (PIE) to establish a leading position in
Canada's nascent cannabis hospitality sector. The announcement followedAlberta's announcement to allow cannabis pop-ups at adult-only events
Selected financial information for the second quarter ended
(Expressed in thousands of Canadian Dollars)
|
|
Three months ended |
|
Nine Months Ended |
||||||||
|
|
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
|
|
$ |
|
$ |
|
∆ |
|
$ |
|
$ |
|
∆ |
Free cash flow(i) |
|
3,092 |
|
4,051 |
|
(24) % |
|
16,083 |
|
1,253 |
|
1184 % |
Cash from operating activities |
|
6,213 |
|
7,545 |
|
(18) % |
|
25,895 |
|
11,025 |
|
135 % |
Revenue |
|
131,685 |
|
124,352 |
|
6 % |
|
384,011 |
|
360,564 |
|
7 % |
Gross profit |
|
35,454 |
|
34,578 |
|
3 % |
|
106,747 |
|
98,330 |
|
9 % |
Gross profit margin(ii) |
|
27 % |
|
28 % |
|
(1) % |
|
28 % |
|
27 % |
|
1 % |
Total operating expenses |
|
(32,399) |
|
(35,240) |
|
8 % |
|
(98,913) |
|
(105,551) |
|
6 % |
Income (loss) from operations |
|
3,055 |
|
(662) |
|
562 % |
|
7,834 |
|
(7,221) |
|
209 % |
Adjusted EBITDA(iii) |
|
9,614 |
|
10,181 |
|
(6) % |
|
30,090 |
|
22,273 |
|
35 % |
Adjusted EBITDA margin(iv) |
|
7 % |
|
8 % |
|
(1) % |
|
8 % |
|
6 % |
|
2 % |
Net Income (loss) |
|
825 |
|
(3,574) |
|
123 % |
|
991 |
|
(9,147) |
|
111 % |
Basic and diluted income (loss) per share |
|
0.01 |
|
(0.04) |
|
125 % |
|
0.00 |
|
(0.12) |
|
100 % |
(i) |
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. |
(ii) |
Gross profit margin - a non-IFRS financial measure. Gross profit margin is calculated by dividing gross profit by revenue. |
(iii) |
Adjusted EBITDA - a non-IFRS financial measure. A reconciliation of the Adjusted EBITDA to Net income (loss) is found under "Select financial highlights and operating performance" section in the Company's MD&A. |
(iv) |
Adjusted EBITDA margin - a non-IFRS financial measure. This metric is calculated as adjusted EBITDA divided by revenue. |
The following is a reconciliation of Adjusted EBITDA to Net Loss:
|
2024 |
2023 |
2022 |
|||||
|
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
Q4 |
Net Income (loss) |
825 |
171 |
(5) |
(31,805) |
(3,717) |
(1,568) |
(3,862) |
(52,503) |
Income/deferred tax (recovery) expense |
671 |
(878) |
(233) |
(4,571) |
204 |
(2,041) |
(1,236) |
(1,782) |
Accretion and interest |
1,681 |
1,712 |
1,743 |
1,632 |
1,931 |
1,759 |
1,814 |
782 |
Depreciation and amortization |
5,678 |
7,505 |
6,848 |
8,583 |
8,493 |
7,699 |
7,986 |
8,249 |
EBITDA |
8,855 |
8,510 |
8,353 |
(26,161) |
6,911 |
5,849 |
4,702 |
(45,254) |
Foreign exchange (gain) lose |
19 |
(5) |
5 |
(152) |
31 |
2 |
(15) |
(14) |
Finance and other costs |
12 |
1,314 |
515 |
691 |
801 |
435 |
664 |
2,444 |
(Gain) loss revaluation of put option liability |
(159) |
(110) |
(300) |
544 |
73 |
(1,288) |
(1,261) |
(3,166) |
Other loss |
(6) |
337 |
- |
37 |
18 |
- |
- |
- |
Loss (gain) on extinguishment of debenture |
- |
- |
- |
- |
- |
- |
- |
609 |
Impairment loss |
- |
- |
- |
34,265 |
- |
- |
- |
48,592 |
Share-based compensation |
881 |
549 |
795 |
(284) |
2,350 |
1,532 |
1,436 |
2,091 |
Loss (gain) on revaluation of marketable securities |
12 |
- |
77 |
(13) |
- |
(19) |
(8) |
81 |
(Gain) loss on revaluation of debenture |
- |
(240) |
755 |
(505) |
- |
- |
- |
(366) |
(Gain) loss on extinguishment of financial liability |
- |
(314) |
235 |
(60) |
- |
78 |
(18) |
- |
Adjusted EBITDA(i) |
9,614 |
10,041 |
10,435 |
8,362 |
10,184 |
6,589 |
5,500 |
5,017 |
(i) Adjusted EBITDA is a non-IFRS financial measure |
|
|
Q3 2024 |
|
Q2 2024 |
|
Q1 2024 |
|
Q4 2023 |
|
Q3 2023 |
Cash flow from operating activities |
|
8,928 |
|
8,032 |
|
9,363 |
|
7,207 |
|
8,395 |
Changes in non-cash working capital |
|
(2,715) |
|
4,777 |
|
(2,490) |
|
2,430 |
|
(850) |
Net cash provided by operating activities |
|
6,213 |
|
12,809 |
|
6,873 |
|
9,637 |
|
7,545 |
Sustaining capex |
|
(279) |
|
(528) |
|
(511) |
|
(1,080) |
|
(705) |
Lease liability payments |
|
(2,842) |
|
(2,898) |
|
(2,754) |
|
(2,870) |
|
(2,789) |
Free cash flow |
|
3,092 |
|
9,383 |
|
3,608 |
|
5,687 |
|
4,051 |
Outlook
Through its Canna Cabana brand, High Tide is the largest cannabis retailer in
The Company's
The Company's market share in dollars during the first two months of the quarter rose to 12% from 10% a year ago while only representing 5% of the bricks-and-mortar store count in the provinces where it operates. The Company anticipates its market share trajectory to continue trending upward, given its robust organic store pipeline and continued competitor closures. As previously communicated, 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.
Given
The Company has been free cash flow positive over the past five quarters, having generated approximately
The Company continues to monitor legislative and regulatory developments in
Webcast Link for High Tide Earnings Event:
https://events.q4inc.com/attendee/471302144
Participants are encouraged to 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 replay of the webcast 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:
Global Dial-In Numbers: https://www.netroadshow.com/events/global-numbers?confId=65906
Participant Access Code: 604413
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, 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
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 cannabis retail chain in
Retail Innovation: Fastendr™ is a unique and fully automated technology that employs retail kiosks to facilitate a better buying experience through browsing, ordering and pickup.
Consumption Accessories: High Tide operates a suite of leading accessory e-commerce platforms 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™, Daily High Club™, Vodka Glass™, Puff Puff Pass™, Dopezilla™, Atomik™, Hue™, Evolution™ and more.
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 increases to its revenue profile; the Company completing the development of its cannabis retail stores; the Company's ability to remain free cash flow positive; free cash flow allowing the Company to finance its growth with internal cash flows; the Company achieving sustained growth while remaining free cash flow positive; 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;
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.
_____________________________ |
1 Market share reflects the months of May & June, 2024 per publicly available |
2 Based on publicly available data from |
3 Based on publicly available data from |
4 Based on publicly available data for the months of May & |
5 Data sourced from most recent public filings of the mentioned retailers |
6 Adjusted EBITDA is a non-IFRS financial measure |
7 As reported by ATB Capital Markets based on store counts as of |
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