High Tide (HITI) Q3 2024 earnings summary

Executive summary

• Achieved record quarterly revenue of CAD 131.7 million, up 6% year-over-year and sequentially, with brick-and-mortar segment leading growth and positive net income for the second consecutive quarter.

• Free cash flow positive for five consecutive quarters, generating CAD 3.1 million in Q3 and CAD 21.8 million over the past year.

• Market share reached 12% in core provinces, up from 10% a year ago, with a goal to reach 15%; Cabana Club membership grew to 1.55 million, and ELITE paid tier reached 57,000 members.

• Store count increased to 183, with 11 new stores opened in Q3 and a target to reach the upper end of 20-30 new stores for 2024.

• Opened 3 additional stores post-quarter, surpassing the low end of the annual store opening target.

Financial highlights

• Net income improved to CAD 800,000 in Q3, up from a loss of CAD 3.6 million last year; EPS was CAD 0.01, up from (0.04) last year.

• Adjusted EBITDA was CAD 9.6 million, up 24% year-over-year (excluding one-time items), with a margin of 7.3%.

• Gross margin was 27%, down 1% from last quarter and Q3 last year, reflecting competitive pricing.

• G&A expenses were 3.7% of revenue, the lowest in four years, and total expenses fell by CAD 2.8 million year-over-year.

• Cash balance at quarter end was CAD 35.3 million, the highest ever, up 37% year-over-year.

Outlook and guidance

• Confident in reaching the upper end of 20-30 new stores in 2024, maintaining organic growth strategy into 2025.

• Long-term plan to increase white label product sales to 20-25% of total, up from current 2.5-3% in cannabis.

• Monitoring international expansion opportunities, especially in Germany, with plans to apply for licensing as soon as regulations allow.

• Anticipates continued upward market share trajectory and aims for 15% market share and 300 locations nationwide.

• Plans to remain free cash flow positive and use operational cash to fund growth.