CALGARY, AB, Sept. 14, 2021 /CNW/ - High Tide Inc.
("High Tide" or the "Company") (NASDAQ: HITI)
(TSXV: HITI) (FSE: 2LYA), a retail-focused cannabis corporation
enhanced by the manufacturing and distribution of consumption
accessories, filed its financial results for the third fiscal
quarter of 2021 ending July 31, 2021,
the highlights of which are included in this news release. The full
set of Condensed Interim Consolidated Financial Statements and
Management's Discussion and Analysis can be viewed by visiting High
Tide's website at www.hightideinc.com, its profile page on SEDAR at
www.sedar.com, and its profile page on EDGAR at www.sec.com.
The Company will host a conference call to discuss the results
at 6:00pm Eastern Time on
September 14, 2021.
Third Quarter 2021 – Financial
Highlights:
- Revenue increased by 99% to $48.1
million in the three months ended July 31, 2021, compared to $24.1 million in the same quarter last year. The
third quarter of 2021 financial results incorporate the acquisition
of META Growth Corp. ("Meta") on November
18, 2020, Smoke Cartel, Inc. ("Smoke Cartel") on
March 24, 2021, Fab Nutrition, LLC.
("FABCBD") on May 10, 2021, and DHC
Supply LLC. ("DHC") on July 6,
2021.
- As of today, Cabana Club membership has grown by 45% to
approximately 221,127 (June 28, 2021
– 151,240) due in large part to the success of our 'One Stop Shop'
accessories promotion.
- Gross profit increased by 75% to $16.7
million in the three months ended July 31, 2021, compared to $9.5 million in the same quarter last year.
- Gross profit margin in the three months ended July 31, 2021, was 35% compared to 40% in the
same quarter last year.
- Adjusted EBITDA(1) for the three months ended
July 31, 2021, was $1.5 million compared to $3.4 million for the same quarter last year. The
decrease in adjusted EBITDA was primarily due to expenses related
to the up listing of the Company's stock to Nasdaq including
directors' and officers' liability insurance premiums, Nasdaq
listing fees, one-time professional fees, and additional human
resources to support the integration of newly acquired companies.
As a result of the up listing to Nasdaq, the Company became a
non-venture issuer resulting in higher compliance
requirements.
- Geographically in the three months ended July 31, 2021, $38.4
million of revenue was earned in Canada, $9.6
million in the United
States and an immaterial amount internationally.
- Revenue from the United States
increased to $9.6 million, compared
to $5.7 million for the second
quarter of 2021, representing a 69% increase sequentially.
- Segment-wise in the three months ended July 31, 2021, $46.3
million of revenue was generated by Retail, $1.8 million by Wholesale, and an immaterial
amount by Corporate.
- Cash on hand as of July 31, 2021,
totaled $26.6 million compared to
$7.5 million as of October 31, 2020.
1 Adjusted EBITDA is a non-IFRS
financial measure.
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"Since our inception over a decade ago there has never been a
more opportunistic time for our company's growth. Over the past
year, we have been making strategic moves to successfully advance
our rising portfolio of companies. We believe we can continue to
build upon this momentum and capture a sizeable share of the
cannabis market globally. I'm proud of our team's efforts
this quarter which resulted in revenue increasing once again by 99
percent over last year and 18 percent sequentially, despite market
disruptions due to pandemic related lockdowns and a very aggressive
pricing strategy adopted by some value players. In Ontario,
the largest cannabis market in Canada, due to pandemic related restrictions,
our stores were closed for in-person shopping for about half of the
second quarter with only click-and-collect and delivery
permitted. Despite these challenges we have been able to
remain EBITDA positive by increasing our revenue at a pace
consistent with previous quarters," said Raj Grover, President and
Chief Executive Officer of High Tide. "This last quarter saw us
continue our organic growth momentum by opening seven new retail
locations across Canada with a
total of 93 locations today. While the Canadian retail market
remains competitive, our one stop cannabis shop concept is very
well received. This is evidenced by the fact that our Cabana Club
membership grew by over 69,000 during the last quarter. We are very
excited to have announced earlier today our new value focussed
cannabis concept that is ready to be deployed in value sensitive
markets. Beyond our bricks and mortar organic growth, we doubled
down on more accretive e-commerce acquisitions last quarter, in the
consumption accessories and hemp-derived CBD space, with a
particular focus on the U.S. market. With these acquisitions our
portfolio now includes three of the top five most popular online
platforms for consumption accessories in the world. I remain
excited about our e-commerce pipeline and look forward to sharing
more good news on the M&A front in the very near future," added
Mr. Grover.
Third Quarter 2021 – Operational
Highlights:
- The Company completed the acquisition of FABCBD on May 10, 2021, and Daily High Club ("DHC") on
July 6, 2021, enhancing the Company's
e-commerce business.
- The Company announced the filing of Form 40-F with the U.S.
Securities and Exchange Commission fulfilling a significant
milestone for the NASDAQ listing.
- The Company completed a 15:1 share consolidation on
May 14, 2021, and began trading on
the Nasdaq on June 2, 2021, under the
symbol "HITI".
- The Company was added to three prominent ETFs: Cannabis ETF
("THCX"), AdvisorShares Pure Cannabis ETF ("YOLO"), and Horizons
Marijuana Life Sciences Index ETF ("HMMJ").
- The Company closed an oversubscribed bought deal equity
financing on May 26, 2021, for gross
proceeds of $23.2 million.
- The Company announced the elimination of its senior secured
debt.
- The Company completed the sale of KushBar retail cannabis
assets to Halo for $5.7 million.
- The Company announced its plan to acquire leading online
retailer DS Distribution Inc., ("DankStop") to continue rapid
expansion into the Unites States.
- The Company announced plans to increase its presence in
Saskatchewan through acquisition
of a Regina retail store portfolio.
- The Company opened seven cannabis retail locations under the
Canna Cabana banner: two in Ontario, four in Alberta, and one in Saskatchewan.
Subsequent Events:
- The Company completed the acquisition of all the common shares
of 102105699 Saskatchewan Ltd., (operating as 102 Saskatchewan) for
$2.7 million.
- The Company opened four new Canna Cabana stores, three in
Ontario, and one in Alberta.
- The Company completed the acquisition of 100% of DankStop for
US$3.85 million.
- The Company was added to the prominent ETF: ETFMG Alternative
Harvest ETF ("MJ").
- The Company announced the elimination of all its META
convertible debentures.
- The Company entered into two white label partnerships with
Heritage Cannabis Holdings and Loosh Inc.
- The Company finalized and revealed the store design for its new
cannabis retail value outlets, "Cannabis Chop Club".
Selected financial information for the three and nine months
ended July 31, 2021:
(Expressed in thousands of Canadian Dollars)
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Three months ended
July 31
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Nine months ended
July 31
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2021
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2020
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Change
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2021
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2020
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Change
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$
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$
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$
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$
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Revenue
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48,069
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24,103
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99%
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127,256
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58,389
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118%
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Gross
Profit
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16,679
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9,539
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75%
|
46,445
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22,087
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110%
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Gross Profit
Margin
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35%
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40%
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(5)%
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36%
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38%
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(2)%
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Total Operating
Expenses
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(23,946)
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(7,915)
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203%
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(60,268)
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(22,424)
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169%
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Adjusted
EBITDA
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1,540
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3,397
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(55)%
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10,862
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4,348
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150%
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Net (loss) income
from Operations
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(7,267)
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1,624
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(547)%
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(13,823)
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(337)
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4001%
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Net (loss)
income
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(1,750)
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3,826
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(146)%
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(30,861)
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(5,031)
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513%
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(Loss) earnings per
share (Basic and Diluted)
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(0.03)
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0.25
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(112)%
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(0.79)
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(0.33)
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139%
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The following is a reconciliation of Adjusted EBITDA to Net
Income/(Loss):
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Three Months Ended
July 31,
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Nine Months Ended
July 31,
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2021
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2020
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2021
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2020
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Net (loss)
income
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(1,750)
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3,827
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(30,861)
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(5,031)
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Income taxes
(recovery)
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224
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316
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688
|
393
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Accretion and
interest
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1,095
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2,456
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6,635
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6,719
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Depreciation and
amortization
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8,299
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1,771
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22,107
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4,585
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EBITDA
(1)
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7,868
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8,370
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(1,431)
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6,666
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Foreign
exchange
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(28)
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4
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66
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(17)
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Transaction and
acquisition costs
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1,939
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193
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4,409
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988
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Debt restructuring
gain
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-
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-
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(1,145)
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-
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Revaluation of
derivative liability (2)
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(5,919)
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67
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8,553
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(247)
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(Gain) Loss on
extinguishment of debenture
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-
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(3,576)
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516
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(3,390)
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Impairment
loss
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57
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-
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57
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247
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Share-based
compensation
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508
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2
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2,578
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101
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Revaluation of
marketable securities
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112
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(1,663)
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256
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-
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Gain on disposal of
property and equipment
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(2,997)
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-
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(2,997)
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-
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Adjusted EBITDA
(1)
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1,540
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3,397
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10,862
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4,348
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(1)
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Earnings before
interest, taxes, depreciation, and amortization ("EBITDA") and
Adjusted EBITDA. These measures do not have a standardized meaning
prescribed by IFRS and are therefore unlikely to be comparable to
similar measures presented by other issuers. Non-IFRS measures
provide investors with a supplemental measure of the Company's
operating performance and therefore highlight trends in Company's
core business that may not otherwise be apparent when relying
solely on IFRS measures. Management uses non-IFRS measures in
measuring the financial performance of the Company.
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(2)
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The Company recorded
a gain from the revaluation of derivative liability of $5,919
during the third quarter of 2021 (2020: loss of $67). This
non-cash accounting charge primarily relates to warrants issued to
Windsor Private Capital in connection with the loan agreement
entered into on January 6, 2020. The cashless exercise
feature in the warrants creates a derivative liability which is
required to be revalued each reporting period.
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Outlook
High Tide continues to have a leading position in the Canadian
bricks and mortar cannabis market with 93 locations across the
country. Given the number of locations currently being built
out, most notably in Ontario and
Saskatchewan, the Company expects
to be at approximately 110 stores by the end of calendar 2021,
despite some delays experienced in securing building permits. The
Company has made good progress on its application to enter the
British Columbia market, and now
expects that to occur by end of our 2021 fiscal year.
While competition has increased given material growth in store
counts in Ontario and Alberta and the concurrent rise of value
players, the Company is focused on maintaining and growing its
market share. We have begun leveraging our unique positioning
within accessories to attract and retain more customers, and this
approach has already yielded meaningful increases to our top line
over the past few months. Just this week we announced two
initiatives to expand our revenue streams.
First, we entered into private label partnerships for our
upcoming house-branded shatter and THC gummies. These will be
our first white label products, which we expect will provide margin
enhancing opportunities. We are also in negotiations with
Canadian licensed producers to bring select products from the
FABCBD catalogue into our store network and look forward to
expanding into other categories in due course as market dynamics
evolve.
Second, we announced the launch of our new retail value concept,
"Cannabis Chop Club", which will offer exclusive deals and
wholesale prices to specifically address value-sensitive markets.
The Company's goal is to convert at least five existing stores by
the end of the calendar year, with the first new builds expected to
be completed in early calendar 2022.
E-Commerce remains a key focus for High Tide. The Company's
recent acquisitions in this area are performing well, and we expect
to gain more momentum on this front. We are currently in
discussions with multiple parties across a variety of end markets,
with a particular focus on e-commerce within the growing ancillary
and hemp derived CBD markets. With a current annual run rate of
revenues in the U.S. exceeding $50
million, we believe we are excellently positioned to lever
our U.S. customer base to also sell cannabis once permissible by
federal regulations and/or exchange policies – and the Company
intends to continue growing its U.S. presence in the meantime.
Conference Call Dial-In Information:
US/CANADA Participant Toll-Free
Dial-In Number: (888) 869-1189
US/CANADA Participant
International Dial-In Number: (706) 643-5902
Conference ID: 6717339
In order to join the conference call, all speakers and
participants will be required to provide the Conference ID listed
above.
About High Tide Inc.
High Tide is a retail-focused cannabis company enhanced by the
manufacturing and distribution of consumption accessories. The
Company is the largest Canadian retailer of recreational cannabis
as measured by revenue, with 93 current locations spanning
Ontario, Alberta, Manitoba and Saskatchewan. High Tide's retail segment
features the Canna Cabana, NewLeaf Cannabis, Meta Cannabis Co., and
Meta Cannabis Supply Co. banners, with additional locations under
development across the country. High Tide has been serving
consumers for over a decade through its established e-commerce
platforms including Grasscity.com, Smokecartel.com,
Dailyhighclub.com, and Dankstop.com and more recently in the
hemp-derived CBD space through CBDcity.com and FABCBD.com as well
as its wholesale distribution division under Valiant Distribution,
including the licensed entertainment product manufacturer Famous
Brandz. High Tide's strategy as a parent company is to extend and
strengthen its integrated value chain, while providing a complete
customer experience and maximizing shareholder value. Key industry
investors in High Tide include Tilray Inc. (TSX: TLRY) (Nasdaq:
TLRY) and Aurora Cannabis Inc. (TSX: ACB) (Nasdaq: ACB).
For more information about High Tide Inc., please
visit www.hightideinc.com and its profile page on SEDAR
at www.sedar.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this news release are forward-looking
information or forward-looking statements, including, but not
limited to (i) the Company's application to list on the NASDAQ;
(ii) the Company's plans to adjust its business model and pursue
expansion opportunities in the United
States and Europe (iii) the
Alcohol and Gaming Commission of Ontario's intentions to increase the pace of
Retail Store Authorizations it issues from 20 to 30 a week; (iv)
the Company's expectation to reach 30 open stores in Ontario by September, 30, 2021; (v) the
Company's expectations to profitably open new stores in
Alberta, including several
locations in the month of April; (vi) the Company's belief that it
is well positioned to take advantage of the growing ancillary and
hemp derived CBD markets in the United
States and estimates regarding its current revenue run rate
in the United States, pro forma
for the Smoke Cartel acquisition, to be over $25 million as of the date of this release; (vii)
the Company's expectations to further expand the Company's
operations in the United States
through discussions with various parties across the federally
permissible ecosystem in the United
States; and (viii) the Company's belief that its application
to list its shares on the Nasdaq may accelerate the Company's
growth. Such information and statements, referred to herein as
"forward-looking statements" are made as of the date of this
news release or as of the date of the effective date of information
described in this news release, as applicable. Forward-looking
statements relate to future events or future performance and
reflect current estimates, predictions, expectations, or beliefs
regarding future events. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or
performance (generally, forward-looking statements can be
identified by use of words such as "outlook", "expects", "intend",
"forecasts", "anticipates", "plans", "projects", "estimates",
"envisages, "assumes", "needs", "strategy", "goals", "objectives",
or variations thereof, or stating that certain actions, events or
results "may", "can", "could", "would", "might", or "will" be
taken, occur or be achieved, or the negative of any of these terms
or similar expressions, and other similar terminology) are not
statements of historical fact and may be forward-looking
statements.
Such forward-looking statements are based on assumptions that
may prove to be incorrect, including but not limited to the
Company's ability to execute on its business plan and that the
Company will have sufficient funds to execute on its strategic
growth objectives in 2021, including the ability of the Company to
pursue and finance the potential acquisitions and new store
openings referenced in this release; the Company's ability to
successfully list its shares on the Nasdaq; and that the
Company will not be required to implement any measures to address
unanticipated developments (including developments relating to
COVID-19) affecting the Company's business, which could adversely
affect the Company's proposed business plan. However, there can be
no assurance that any one or more of the governments, industry,
market, operational or financial targets as set out herein will be
achieved. Inherent in the forward-looking statements are known and
unknown risks, uncertainties and other factors that could cause
actual results, performance or achievements, or industry results,
to differ materially from any results, performance or achievements
expressed or implied by such forward-looking statements.
The forward–looking statements contained herein are current as
of the date of this news release. Except as required by law, High
Tide does not have any obligation to advise any person if it
becomes aware of any inaccuracy in or omission from any
forward-looking statement, nor does it intend, or assume any
obligation, to update or revise these forward-looking statements to
reflect new events or circumstances. Any and all forward-looking
statements included in this news release are expressly qualified by
this cautionary statement, and except as otherwise indicated, are
made as of the date of this news release.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This news release does not constitute an offer to sell or
a solicitation of an offer to buy any of the securities in
the United States of America. The
securities have not been and will not be registered under the
United States Securities Act of 1933 (the
"1933 Act") or any
state securities laws and may not be offered or sold within
the United States or to U.S.
Persons (as defined in the 1933 Act) unless registered under the
1933 Act and applicable state securities laws, or an exemption from
such registration is available.
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SOURCE High Tide Inc.