High Tide Posts 99% Higher Revenue, Record Adjusted EBITDA Of CA$4.7M

High Tide Inc. HITI HITI reported its financial results Monday for the second quarter of fiscal 2021 with revenue of CA$40.9 million ($33.12 million), up by 99% quarter over quarter. The quarterly results include the merger with META Growth Corp. in an all-stock transaction and the acquisition of Smoke Cartel, Inc. for $8 million.

Out of a total CA$40.9 million in revenues, CA$35 million came from the company’s operations in Canada, CA$5.7 million from the U.S. and the remaining CA$200,000 was earned internationally.

Second Quarter Earnings Highlights

• Gross profit was CA$15 million, compared to CA$7.8 million in the same period of 2020;
• Gross profit margin in the period was 37%, which compares to 38% in the same quarter last year;
• Adjusted EBITDA was a gain of CA$4.7 million, versus CA$1.8 million in the second quarter of the prior year;
• Its net loss for the quarter amounted to CA$12.27 million, or CA$0.02 loss per share, compared to a loss of CA$4.91 million, or CA$0.02 loss per share in the comparative period of 2020;
• At the end of the reporting period, High Tide held CA$29 million in cash on hand compared to CA$7.5 million.

“I am extremely proud of our results this quarter, especially given the macro backdrop we faced,” Raj Grover, President, and CEO stated. “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. Even during this difficult market environment, we continued to advance our bricks and mortar and online business.” 

Grover highlighted that in spite of these difficulties the company managed to improve not only revenue, bit also adjusted EBITDA reaching a new record high.

“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,” Grover added.

Second-Quarter Operational Milestones 

• More than CA$23 million of debt was transformed into the company’s shares;
• The company completed an oversubscribed bought deal equity financing, raising CA$23 million in gross proceeds;
• It opened 13 retail stores under the Canna Cabana and META banners in Canada, and started the sale of hemp-derived CBD products on Grasscity;

Post-Quarter Business Highlights 

• Completed the purchase of 80% of Fab Nutrition, LLC (operating as FABCBD) for $20.6 million, with the option to buy the remaining 20% in the next three years;
• Completed CA$23.2 million bought deal equity financing;
• Commenced trading on NASDAQ;
• It joined two ETFs: Spinnaker ETF Series The Cannabis ETF THCX and AdvisorShares Pure Cannabis ETF YOLO;
• It resolved its senior secured debt;
• Announced the acquisition of DHC Supply LLC (operating as Daily High Club) for $10 million.

Outlook 

· A retail-focused cannabis company plans to open 12 more stores in Ontario by the end of September to reach 30 in total;

· High Tide also aims to reach British Columbia in the following months;

· It is just one transaction close to operating in the bricks and mortar retail market in the U.S. in case of federal legalization; 

· Its current revenue run rate in the U.S., pro forma for the announced acquisitions is projected to be around CA$50 million. 

Price Action 

High Tide’s shares closed Monday’s market session 1.68% lower at $8.19 per share.

Photo by Tim Foster on Unsplash