High Tide (HITI) Q2 2024 earnings summary

Executive summary

• Achieved record free cash flow of CAD 9.4 million in Q2 2024 and CAD 22.7 million over the past four quarters, with a trailing free cash flow yield over 8% of enterprise value.

• Positive net income of CAD 0.2 million, improving from a loss of CAD 1.6 million year-over-year, despite CAD 7.5 million in non-cash depreciation and amortization.

• 17th consecutive quarter of positive adjusted EBITDA, reaching CAD 10 million, up 52% year-over-year, with an 8.1% margin.

• Revenue reached CAD 124.3 million, up 5% year-over-year, with brick-and-mortar segment up 11% and maintaining market leadership in Canadian cannabis retail.

• Cabana Club loyalty program surpassed 1.43 million members, with paid Elite memberships up 226% year-over-year and 38% sequentially, now at 44,000 members.

Financial highlights

• Gross profit rose to CAD 35.3 million, up 12% year-over-year; gross margin reached 28.4%, the highest in nine quarters.

• Adjusted EBITDA margin increased to 8.1%, up from 5.6% year-over-year and consistent sequentially.

• Free cash flow for the past 12 months totaled CAD 22.7 million, yielding over 8% on enterprise value.

• Ended the quarter with a record CAD 34.5 million in cash, up 54% year-over-year and 20% sequentially.

• Earnings per share: (CAD 0.00) in Q2 2024, compared to (CAD 0.02) in Q2 2023.

Outlook and guidance

• Targeting 20–30 new store openings in 2024, with 10 opened year-to-date, and potential to exceed this through M&A.

• Focused on disciplined expansion, especially in Ontario, with a long-term goal of 300 stores in Canada and 15% market share in operating provinces.

• Expects continued growth in loyalty memberships and high-margin product launches, especially in Alberta.

• Monitoring regulatory changes in Germany and the U.S. for future international expansion.