High Tide Reports Second Quarter 2021 Financial Results Featuring a 99% Increase in Revenue and Another Record Adjusted EBITDA of $4.7 Million
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.
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.
- 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)
The following is a reconciliation of Adjusted EBITDA to Net Loss:
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, 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.
Original press release
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