CALGARY, AB, June 28, 2021 /PRNewswire/ - 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 second fiscal quarter of 2021
ending April 30, 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.
Second Quarter 2021 – Financial Highlights:
- Revenue increased by 99% to $40.9
million in the three months ended April 30, 2021, compared to $20.6 million in the same quarter last year. The
second quarter of 2021 financial results incorporate the
acquisition of META Growth Corp. on November
18, 2020, and Smoke Cartel, Inc. on March 24, 2021.
- Gross profit increased by 93% to $15.0
million in the three months ended April 30, 2021, compared to $7.8 million in the same quarter last year.
- Gross profit margin in the three months ended April 30, 2021, was 37% compared to 38% in the
same quarter last year.
- Adjusted EBITDA(1) for the three months ended
April 30, 2021, was $4.7 million compared to $1.8 million for same quarter last year.
- Geographically in the three months ended April 30, 2021, $35.0
million of revenue was earned in Canada, $5.7
million in the United
States and $0.2 million
internationally.
- Segment-wise in the three months ended April 30, 2021, $38.4
million of revenue was generated by Retail, $2.5 million by Wholesale, and an immaterial
amount by Corporate.
- Cash on hand as at April 30,
2021, totaled $29.4 million
compared to $7.5 million as at
October 31, 2020.
"I am extremely proud of our results this quarter, especially
given the macro backdrop we faced. In Ontario, the largest cannabis market in
Canada, due to pandemic related
restrictions, our stores were closed for in-person shopping
throughout most of the second quarter with only click-and-collect
and delivery permitted by regulations," said Raj Grover, President
and Chief Executive Officer. "Even during this difficult market
environment, we continued to advance our bricks and mortar and
online business. Despite the challenges and our continued rapid
growth, we were able to increase not only our revenue, but also our
Adjusted EBITDA sequentially to a new record of $4.7 million. This is a clear testament to the
strength of our operations and our management team's ability to
outperform in tougher markets. It also highlights the robustness of
our unique and diversified ecosystem which includes omni-channel
retail of cannabis, consumption accessories and hemp derived CBD
products as well as manufacturing and distribution of licensed and
proprietary consumption accessories. Ontario has now moved to allow in-store
shopping with capacity limits which should bolster sales, coupled
with our recent acquisitions of FABCBD and Daily High Club, we
expect to deliver continued revenue and EBITDA growth in the third
quarter," added Mr. Grover.
Second Quarter 2021 – Operational Highlights:
- The Company completed the acquisition of Smoke Cartel, Inc. on
March 24, 2021, enhancing the
Company's e-commerce business.
- Over $23.0 million of debt
converted into the Company's common shares.
- The Company closed an oversubscribed bought deal equity
financing on February 22, 2021, for
gross proceeds of $23.0 million.
- The Company launched the sale of hemp derived CBD products on
Grasscity.
- The Company extended the maturity date and reduced the related
interest rate from 10% to 7% of convertible debt with strategic
partner.
- The Company reported sales of approximately $0.8 million on Cannabis holiday "420."
- The Company filed a base shelf prospectus in the amount of
$100,000,000.
- The Company opened thirteen cannabis retail locations under the
Canna Cabana and META banners: five in Ontario and eight in Alberta.
Subsequent Events:
- Approximately 151,240 (Q121 – 96,629) members have joined
Cabana Club to date, with over 50% of our average daily
transactions are conducted by Club members.
- The Company completed the acquisition of 80% of Fab Nutrition,
LLC (operating as FABCBD) for US$20.6
million. The Company has the option to acquire the remaining
20% over a 3-year period.
- The Company closed an oversubscribed bought deal equity
financing on May 26, 2021, for gross
proceeds of $23.2 million.
- 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 two prominent ETFs: Cannabis ETF
('THCX") and AdvisorShares Pure Cannabis ETF ("YOLO").
- The Company announced the elimination of its senior secured
debt.
- The Company opened three new stores in Alberta.
- Through the COVID-19 pandemic, all retail branded locations
have remained operational, despite the complex conditions facing
the retail industry across Canada.
On Friday June 11, 2021, the Company
stores in Ontario reopened to
in-store shopping at 15% capacity as per revised provincial
regulations.
- The Company announced the acquisition of DHC Supply LLC
(operating as Daily High Club) for US$10.0
million. The transaction is expected to close
imminently.
Selected financial information for the three and six months
ended April 30, 2021:
(Expressed in thousands of Canadian Dollars)
|
Three Months
Ended
April
30,
|
Six Months
Ended
April
30,
|
|
2021
$
|
2020
$
|
%
Change
|
2021
$
|
2020
$
|
% Change
|
Revenue
|
40,868
|
20,571
|
99%
|
79,187
|
34,286
|
131%
|
Gross
profit
|
14,998
|
7,755
|
93%
|
29,766
|
12,548
|
137%
|
Total operating
expenses
|
(19,509)
|
(7,599)
|
157%
|
(36,322)
|
(14,509)
|
150%
|
Adjusted
EBITDA(a)
|
4,720
|
1,733
|
166%
|
9,322
|
951
|
880%
|
Net (loss) income
from operations
|
(4,511)
|
156
|
(2992%)
|
(6,556)
|
(1,961)
|
234%
|
Net loss
|
(12,266)
|
(4,912)
|
150%
|
(29,111)
|
(8,857)
|
229%
|
Loss per share
(basic)
|
(0.02)
|
(0.02)
|
0%
|
(0.06)
|
(0.04)
|
50%
|
(a)
|
Adjusted EBITDA is a
non-IFRS financial measure.
|
The following is a reconciliation of Adjusted EBITDA to Net
Loss:
|
Three Months
Ended
April
30,
|
Six Months
Ended
April
30,
|
|
2021
|
2020
|
2021
|
2020
|
Net loss
|
(12,266)
|
(4,912)
|
(29,111)
|
(8,858)
|
Income
taxes
|
(124)
|
162
|
464
|
77
|
Accretion and
interest
|
2,838
|
2,529
|
5,540
|
4,263
|
Depreciation and
amortization
|
7,714
|
1,545
|
13,808
|
2,814
|
EBITDA
(1)
|
(1,838)
|
(676)
|
(9,299)
|
(1,704)
|
Foreign
exchange
|
5
|
(17)
|
94
|
(21)
|
Transaction and
acquisition costs
|
889
|
173
|
2,470
|
795
|
Debt restructuring
(gain) loss
|
-
|
-
|
(1,145)
|
-
|
Revaluation of
derivative liability (2)
|
3,988
|
125
|
14,472
|
(314)
|
(Gain) Loss on
extinguishment of debenture
|
-
|
186
|
516
|
186
|
Impairment
loss
|
-
|
247
|
-
|
247
|
Share-based
compensation
|
1,517
|
72
|
2,070
|
99
|
Revaluation of
marketable securities
|
159
|
1,663
|
144
|
1,663
|
Adjusted EBITDA
(1)
|
4,720
|
1,773
|
9,322
|
951
|
(1)
|
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.
|
|
|
(2)
|
The Company recorded
a loss from the revaluation of derivative liability of $3,988
during the second quarter of 2021 (2020: loss of $125). 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. The increase
in our share price during the quarter resulted in an increase in
the derivative liability.
|
Outlook
High Tide continues to have a leading position in the Canadian
bricks and mortar cannabis market with 87 locations across the
country. The Company is focused on expanding its footprint in
Ontario and expects to increase
its store count in the province from 18 today, and reach 30 open
stores by September 30, 2021, the
date on which the cap that any one retailer can own is set to
increase from 30 to 75. COVID related restrictions in the
second quarter limited the Company's stores in Ontario to click and collect and delivery
only, which negatively impacted sales. On June 11, 2021, in store shopping resumed in our
stores in Ontario. While still early, we have seen a boost in
sales as a result – which would be consistent with our prior
experience coming out of the previous two lockdowns in the
province. The Company also expects to enter British Columbia in the coming months.
In addition to continued expansion in Canadian bricks and mortar
cannabis, the Company expects further growth ahead as a result of
its U.S.-focused businesses. Specifically, the second
quarter's results included only 37 days of contribution from Smoke
Cartel. Since the end of the second quarter, High Tide has
closed the acquisition of FABCBD and expects to close the
acquisition of Daily High Club imminently. We believe that
strengthening our unique cannabis ecosystem across the value chain
by geography and segment offers meaningful synergy opportunities
and creates a stronger company which is better positioned to thrive
regardless of short-term dynamics in any one area.
The Company has been actively following developments in the U.S.
cannabis sector, and while it appears that further liberalisation
regarding the federal regulatory and legislative environment is
possible, our immediate strategy does not rely on regulatory
change. Despite this, we remain just one transaction away
from entering the bricks and mortar retail market in the U.S. when
federally permissible. High Tide believes it is well
positioned to take advantage of the growing ancillary and hemp
derived CBD markets and estimates its current revenue run rate in
the U.S., pro forma for the announced acquisitions, to be
approximately $50 million
today.
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 most profitable Canadian retailer of recreational
cannabis as measured by Adjusted
EBITDA,[1] with 87 current locations
spanning Ontario, Alberta, Manitoba, and Saskatchewan. High Tide's retail segment
features the Canna Cabana, KushBar, Meta Cannabis Co., Meta
Cannabis Supply Co., and NewLeaf Cannabis 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 and Smokecartel.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.
______________________________
|
1 Adjusted EBITDA is a non-IFRS
financial measure.
|
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SOURCE High Tide Inc.