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.
1 Adjusted EBITDA is a non-IFRS financial measure.
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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version on businesswire.com: https://www.businesswire.com/news/home/20210628005828/en/
Media Inquiries Omar Khan Senior Vice President, Corporate and
Public Affairs omar@hightideinc.com Investor Inquiries Vahan
Ajamian Capital Markets Advisor vahan@hightideinc.com
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