High Tide Inc., the high-impact, retail-forward enterprise built to deliver real-world value across every component of cannabis, released today its financial results for the third fiscal quarter of 2023 ended July 31, 2023, the highlights of which are included in this news release. The full set of consolidated financial statements for the three and nine months ended July 31, 2023, and the accompanying management’s discussion and analysis can be accessed by visiting the Company’s website at www.hightideinc.com, its profile pages on SEDAR+ at www.sedarplus.ca, and EDGAR at www.sec.gov.
Third Fiscal Quarter 2023 – Financial Highlights:
- Revenue increased to $124.4 million in the third fiscal quarter of 2023 compared to $95.4 million during the same period in 2022, representing an increase of 30% year-over-year and 5% sequentially
- Free cash flow was $4.1 million in the third fiscal quarter of 2023 compared to ($2.0)
- million in the second fiscal quarter of 2023, and totalled $1.3 million for the first nine months of this fiscal year. This significant improvement was mainly driven by the rapid increases in the Company’s same-store sales growth resulting from the continued momentum of its discount club model and its strong focus on implementing cost control measures
- Gross profit increased to $34.6 million in the third fiscal quarter of 2023 compared to $25.8 million during the same period in 2022, representing an increase of 34% year-over-year and 10% 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 (including a one-time return of $2.4 million from Manitoba’s SRF) in the third fiscal quarter of 2023 compared to $4.2 million during the same period in 2022 and $6.6 million in the second fiscal quarter of 2023, representing an increase of 140% year-over-year and 55% 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 from 6.6% 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 from 12.0% during the same period in 2022 and 11.8% 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 in the third fiscal quarter of 2023 from $5.5 million during the same period in 2022, representing an increase of 19% year-over-year and 3% sequentially
- For locations operational throughout the third fiscal quarter of 2023 and 2022, same-store sales increased by 19% year-over-year and 8% sequentially. Calculated daily same-store sales increased by 5%, 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 or 39% since June 13, 2023, growing at a faster pace than the previous two quarters
- Loss from operations, which included $8.5 million of non-cash depreciation and amortization expenses improved to ($0.7) million in the third fiscal quarter of 2023, compared to ($4.7) million during the same period in 2022, and ($2.6) million sequentially, representing a reduction in losses of 86% and 75%, respectively
- Net loss was ($3.6) million in the third fiscal quarter of 2023, compared to ($2.7) million during the same period in 2022 and ($1.6) million sequentially, driven by a decrease in income arising from revaluation of derivative liabilities during this quarter
- Cash on hand as of July 31, 2023, totalled $25.7 million, compared to $18.3 in the same period of 2022, representing an increase of 40% year-over-year and 14% sequentially without obtaining any external funding during the quarter and spending over $1 million on capital expenditures
“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 $4.1 million this quarter, five months ahead of our previously communicated timeline and hence becoming less reliant on macro and industry conditions. This record FCF generation was a result of continued increases in our same-store sales growth, which have continuously outpaced the national average and totalled a tremendous 114% over the last seven quarters. This quarter also included record revenue and adjusted EBITDA for our Company, including reaching almost half a billion dollars in annual run-rate sales.”
“Through our laser-focused execution, we continue to prove the strength of our innovative discount club model, which, in our opinion, is the best cannabis retail concept in the country. The Canna Cabana brand continues to gain popularity and is fast becoming a household name in Canada, given that our average store in the country now generates $2.8 million versus the national average of our peers, excluding Quebec, which is just $1.2 million. Our core bricks-and-mortar business line is supported by our uniquely diversified cannabis ecosystem and over 4.6 million global customers in Canada, US, UK and the EU. Our ELITE customer base growth accelerated during this quarter, as we continue to focus on more in-store ELITE offerings and related inventory,” said Raj Grover, President and Chief Executive Officer of High Tide.
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 in Ontario
- 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 and Ontario, 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 and 6% 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 final short form base shelf prospectus which includes an at-the-market (ATM) equity offering program that allows the Company to issue up to $30 million (or the equivalent in 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 approximately 75% 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
