High Tide Reports Q1 2022 Financial Results

High Tide Inc., a leading retail-focused cannabis company with bricks-and-mortar as well as global e-commerce assets, filed its financial results for the first fiscal quarter of 2022, ended January 31, 2022, the highlights of which are included in this news release. The consolidated financial statements for the three months ended January 31, 2022 and the accompanying management’s discussion and analysis can be accessed by visiting the Company’s website at www.hightideinc.com, and its profile pages on SEDAR at www.sedar.com, and EDGAR at www.sec.gov.

Fiscal First Quarter 2022 – Financial Highlights

• Revenue increased to $72.2 million in the first quarter of 2022 compared to $38.3 million in the same quarter last year. Sequentially, revenue increased by 34% compared to the fourth quarter of 2021.
• Gross profit increased by 56% to $23.0 million in the first quarter of 2022 compared to $14.8 million in the same quarter last year. Sequentially, gross profit increased by 31% compared to the fourth quarter of 2021.
• Gross profit margin in the first quarter of 2022 was 32% compared to 39% in the same quarter last year. Sequentially, gross profit margin decreased by 1% compared to the fourth quarter of 2021.
• Adjusted EBITDA^[1] for the first quarter of 2022 was $3.0 million compared to $4.6 million for the same quarter last year. Sequentially, Adjusted EBITDA increased by 80% compared to the fourth quarter of 2021.
• Geographically in the first quarter of 2022, $52.4 million of revenue was earned in Canada, $17.4 million in the United States and $2.3 million internationally. Compared to the first quarter of 2021, revenue increased by 53% in Canada, 346% in the United States, and 1,016% internationally. Sequentially, revenue earned increased by 22% in Canada, 65% in the United States, and 455% internationally, compared to the fourth quarter of 2021.
• Annual run rate revenue in the United States is now $75 million, and total annual run rate revenue outside of Canada is now $85 million.
• Segment-wise in the first quarter of 2022, $71.0 million of revenue was generated by Retail, $1.2 million by Wholesale, and an immaterial amount by Corporate.
• Cabanalytics data sales were $4.7 million in the first quarter of 2022 compared to $1.5 million for the same quarter last year. Sequentially, Cabanalytics data sales increased by 17% compared to the fourth quarter of 2021.
• For locations operational throughout the first fiscal quarter of 2022 and 2021, same-store sales decreased by 1%. Sequentially, same-store sales increased by 13% from the fourth fiscal quarter of 2021 to the first fiscal quarter of 2022.
• In assessing performance at the end of the quarter compared to prior to the implementation of the discount club model, on a same-store sales basis, the Company’s stores in the month of January 2022 were on a run rate which was 22% higher than revenue generated by these stores in October 2021, despite the fact that the overall size of the Canadian retail cannabis market was reported to be 3% lower in January 2022 compared to October 2021. Given the success of the discount club model, the Company anticipates same-store sales to continue to increase in the second fiscal quarter of 2022 and beyond.
• Cash on hand as of January 31, 2022 was $10.1 million.

“I’m proud of our team delivering such a strong quarter in a challenging business environment. This past quarter’s results, showcasing 34% sequential revenue growth and 80% sequential increase in Adjusted EBITDA, re-affirms our exponential, yet sustained growth trajectory. We continue to execute on our business plan quarter after quarter by strategically expanding our business in Canada and internationally through organic growth and accretive M&A across our diversified ecosystem. Our forward-thinking approach makes us a leader amongst our peer group in Canada, as we keep introducing innovative retail concepts such as our discount club model, while remaining agile and pivoting quickly when needed due to the constantly evolving dynamics in the global cannabis landscape,” said Raj Grover, President and Chief Executive Officer of High Tide.

“With these results, we have now achieved the second-highest quarterly revenue figure ever reported by a Canadian cannabis company that reports in Canadian dollars, and with our growth plans for the remainder of this year, we remain confident in further meaningful increases to our revenue profile. As Canada’s largest cannabis retailer, we continue to consolidate the bricks-and-mortar market at attractive multiples while simultaneously growing our e-commerce business portfolio. From same-store sales increases to the rapid growth in our Cabana Club loyalty program, including generating higher consolidated gross margins through our complimentary ecosystem, we continue to raise the bar on our operational execution. Our recent entry into Germany positions us well to take advantage of significant growth opportunities in Europe’s largest cannabis market. Our imminent entry into British Columbia and ongoing expansion in Ontario will further propel our growth over the next few quarters. We practically doubled our EBITDA this quarter and believe this growth will continue to accelerate as we remain hyper focussed in executing on our business plan,” added Mr. Grover.

First Fiscal Quarter 2022 – Operational Highlights

• Membership in the Cabana Club loyalty program increased to over 381,000 members as of January 31, 2022, from 245,000 at the launch of the Company’s discount club model.
• The Company opened 6 new Canna Cabana locations: 3 in Saskatchewan, 2 in Alberta, and 1 in Ontario.
• On November 29, 2021, the Company acquired an 80% interest in NuLeaf Naturals LLC, with an option to acquire the remaining 20% within three years of closing.
• The Company announced a definitive agreement to acquire 100% of Bud Room Inc., including Fastendr™ retail kiosk and smart locker technology, on January 5, 2022.

Subsequent Events

• Retail store expansion continued with 3 new Canna Cabana locations: 2 in Alberta and 1 in Ontario. The Company’s total store count as of today is 113 across Canada.
• Cabana Club membership increased to 451,419 members as of today, representing an increase of 84.3% since the launch of the discount club model on October 20, 2021.
• The Company closed the acquisition of Bud Room Inc. on February 10, 2022, securing ownership of Fastendr™ retail kiosk and smart locker technology.
• The Company celebrated the milestone of 420,000 Cabana Club members by launching an exclusive car giveaway contest, the results of which will be announced on April 20, 2022.
• The Company announced a definitive agreement to acquire Crossroads Cannabis, which includes four established retail cannabis stores in Ontario, on March 3, 2022. The transaction is expected to close in the coming weeks.
• The Company was recognized as one of the top 10 performing diversified industries stocks in the 2022 TSX Venture 50™, which is comprised of the top 50 companies from over 1,600 companies on the TSX Venture Exchange.
• The Company’s subsidiary, FAB CBD, launched a Subscribe-and-Save discount program in the United States on March 7, 2022.
• The Company’s subsidiary, Blessed CBD, launched online sales of its premium hemp-derived CBD products in Germany on March 9, 2022.
• The Company launched cannabis delivery on demand through its Canna Cabana locations in Ontario, Manitoba, and Saskatchewan on February 22, 2022, and in Alberta on March 8, 2022.
• All five Canna Cabana locations in Ottawa have been equipped with Fastendr™ technology, which is helping to further differentiate the Company’s already-unique retail concept. The Company expects to have at least 15 additional Canna Cabana locations equipped with this exciting technology by the end of April.