Mr. Raj Grover reports

HIGH TIDE REPORTS THIRD QUARTER 2023 FINANCIAL RESULTS FEATURING POSITIVE FREE CASH FLOW OF $4.1 MILLION AND FOURTH CONSECUTIVE QUARTER OF RECORD REVENUE AND ADJUSTED EBITDA OF $124.4 MILLION AND $10.2 MILLION, RESPECTIVELY

High Tide Inc. today released its financial results for the third fiscal quarter of 2023 ended July 31, 2023, the highlights of which are included in this news release. The full set of consolidated financial statements for the three and nine months ended July 31, 2023, and the accompanying management's discussion and analysis can be accessed by visiting the company's website, and its profile pages on SEDAR+ and EDGAR.

Third fiscal quarter 2023 -- financial highlights:

• Revenue increased to $124.4-million in the third fiscal quarter of 2023, compared with $95.4-million during the same period in 2022, representing an increase of 30 per cent year over year and 5 per cent sequentially.
• Free cash flow was $4.1-million in the third fiscal quarter of 2023, compared with negative $2.0-million in the second fiscal quarter of 2023, and totalled $1.3-million for the first nine months of this fiscal year. This significant improvement was mainly driven by the rapid increases in the company's same-store sales growth resulting from the continued momentum of its discount club model and its strong focus on implementing cost control measures.
• Gross profit increased to $34.6-million in the third fiscal quarter of 2023, compared with $25.8-million during the same period in 2022, representing an increase of 34 per cent year over year and 10 per cent sequentially.
• Gross profit margin in the three months ended July 31, 2023, was 28 per cent, consistent with previous several quarters. The company notes that gross margins earned in its bricks and mortar stores once again ticked higher sequentially.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased to $10.2-million (including a one-time return of $2.4-million from Manitoba's SRF) in the third fiscal quarter of 2023, compared with $4.2-million during the same period in 2022 and $6.6-million in the second fiscal quarter of 2023, representing an increase of 140 per cent year over year and 55 per cent sequentially.
• Continued cost-saving measures implemented by the company resulted in a decrease in general and administrative expenses as a percentage of revenue to 5.2 per cent in the third fiscal quarter of 2023, an improvement from 6.6 per cent during the same period in 2022, and was consistent sequentially.
• Salaries, wages and benefits represented 11.1 per cent of revenue in the third fiscal quarter of 2023, showcasing an improvement from 12.0 per cent during the same period in 2022 and 11.8 per cent sequentially. This was achieved by realizing operating efficiencies, including the initial benefits from implementing the Fastendr technology in the company's stores.
• Sales from Cabanalytics business data and insights platform increased to $6.5-million in the third fiscal quarter of 2023 from $5.5-million during the same period in 2022, representing an increase of 19 per cent year over year and 3 per cent sequentially.
• For locations operational throughout the third fiscal quarter of 2023 and 2022, same-store sales increased by 19 per cent year over year and 8 per cent sequentially. Calculated daily same-store sales increased by 5 per cent, representing the eighth consecutive quarter of same-store sales growth.
• The company continued the rollout of Elite, the first-of-its-kind cannabis paid loyalty program in Canada, with membership reaching over 18,800 members as of today, representing an increase of 5,300 members or 39 per cent since June 13, 2023, growing at a faster pace than the previous two quarters.
• Loss from operations, which included $8.5-million of non-cash depreciation and amortization expenses, improved to $700,000 in the third fiscal quarter of 2023, compared with $4.7-million during the same period in 2022 and $2.6-million sequentially, representing a reduction in losses of 86 per cent and 75 per cent, respectively
• Net loss was $3.6-million in the third fiscal quarter of 2023, compared with $2.7-million during the same period in 2022 and $1.6-million sequentially, driven by a decrease in income arising from revaluation of derivative liabilities during this quarter.
• Cash on hand as of July 31, 2023, totalled $25.7-million, compared with $18.3 in the same period of 2022, representing an increase of 40 per cent year over year and 14 per cent sequentially, without obtaining any external funding during the quarter and spending over $1-million on capital expenditures.

"I'm thrilled to report that our third fiscal quarter was the best in High Tide's history since our inception, as we met our goal of generating positive free cash flow of $4.1-million this quarter, five months ahead of our previously communicated timeline, and hence becoming less reliant on macro and industry conditions. This record FCF generation was a result of continued increases in our same-store sales growth, which have continuously outpaced the national average and totalled a tremendous 114 per cent over the last seven quarters. This quarter also included record revenue and adjusted EBITDA for our company, including reaching almost half a billion dollars in annual run-rate sales. Through our laser-focused execution, we continue to prove the strength of our innovative discount club model, which, in our opinion, is the best cannabis retail concept in the country. The Canna Cabana brand continues to gain popularity and is fast becoming a household name in Canada, given that our average store in the country now generates $2.8-million versus the national average of our peers, excluding Quebec, which is just $1.2-million. Our core bricks and mortar business line is supported by our uniquely diversified cannabis ecosystem and over 4.6 million global customers in Canada, U.S., U.K. and the EU. Our Elite customer base growth accelerated during this quarter, as we continue to focus on more in-store Elite offerings and related inventory," said Raj Grover, president and chief executive officer of High Tide.

"As announced earlier today, we continue to innovate, amplify and extract additional value from our existing data insights infrastructure with the launch of Cabanalytics Consumer Insights or CCI, which will provide our club members with robust data on consumer behaviour regarding the most current, hottest cannabis, as well as ancillary products and brands through a magazine-style, monthly digitized publication. CCI is an extension of our highly successful Cabanalytics business and data insights platform, which will now be distributed to our ever-increasing membership base of over 1.1 million loyal Elite and Cabana Club members here in Canada, and eventually extended to our unmatched global customer database of 4.6 million, including three million U.S. customers. Subject to applicable regulatory approvals, this presents another high-margin opportunity for our company through targeted ad revenue generation, which will also help to further solidify the loyalty loop with our club members, as well as product innovators, brand manufacturers and licensed producers. Gross margins have remained stable for several quarters, and our general and administrative expenses have continued to come down as a percentage of revenue for the last few quarters and over the past few years. Our over a decade-long industry experience, innovative thinking and operational mindset with a strong focus on cost controls have led to superior profitability metrics with every passing quarter. I'm also excited about the recent news coming out of the U.S. concerning the potential rescheduling of cannabis and the possibility of a senate banking committee markup of the Safe Banking Act within the next month. We are highly confident we'll be able to move swiftly into the U.S. with our tried, tested and perfected, innovative discount club model. I couldn't be more proud of our team for their focus, dedication and hard work this past quarter to get us where we are today. However, with the U.S. and German potential cannabis opportunities on the horizon, we are only just getting started and the best is yet to come for High Tide," added Mr. Grover.

Third fiscal quarter 2023 -- operational highlights (May 1 to July 31):

• Organic retail store expansion continued with two new Canna Cabana locations: one in Alberta and one in Ontario.
• The company held its annual general and special meeting of shareholders, where all members of the board of directors were re-elected with near unanimous support.
• The company continues to have higher-margin Cabana Cannabis Co. products in Saskatchewan, Manitoba and Ontario, with 13 white-label SKUs (stock-keeping units) currently being sold in these markets.
• The company maintained its status as the highest revenue-generating cannabis company in Canada.

Subsequent events (Aug. 1 to present):

• As of Sept. 14, 2023, memberships in the Cabana Club loyalty program have increased to over 1.1 million, up from 750,000 members as of Sept. 14, 2022, and 1.04 million as of June 14, 2023, representing an increase of 47 per cent year over year and 6 per cent sequentially.
• As of Sept. 14, 2023, Elite memberships have grown to over 18,800 members, up 5,300 from 13,500 as of June 14, 2023, representing an increase of 39 per cent sequentially.
• Organic retail store expansion continued with two new Canna Cabana locations in Ontario.
• The company filed a $100-million final short form base shelf prospectus, which includes an at-the-market (ATM) equity offering program that allows the company to issue up to $30-million (or the equivalent in U.S. dollars) of common shares from treasury to the public from time to time, at the company's discretion and subject to regulatory requirements. The company notes that its previous ATM program expired with approximately 75 per cent of the facility undrawn.
• On Aug. 1, 2023, the company appointed Sergio Patino as permanent chief financial officer.
• The company now sponsors 312 children internationally, through World Vision, as per its previously stated commitment to sponsor two children for every new store opened.

An attached table shows a reconciliation of adjusted EBITDA to net loss.

Outlook

High Tide is the largest Canadian non-franchised bricks and mortar cannabis retailer, with 156 Canna Cabana locations operating across the country and a loyalty base exceeding 1.1 million Cabana Club members. Earlier this year, the company announced its goal of achieving positive free cash flow by the end of calendar 2023. The company is pleased to report that with its strong Q3 results, it has met this goal five months ahead of the previously communicated timeline. Similarly, the company discloses that its current revenue run rate exceeds $500-million and thus has achieved its goal of reaching this milestone by the end of its 2023 fiscal year.

Having demonstrated that its current operations can generate meaningful free cash flow, the company plans to return to disciplined and responsible growth both organically and through M&A (merger and acquisition), while remaining free cash flow positive, moving forward toward reaching its long-term goal of operating 250 locations across Canada.

The company continues to generate stable gross margins, driven by its bricks and mortar margins ticking higher over the last six quarters. The company plans to focus on its recently launched initiatives, such as CCI, Elite membership sales and higher-margin white-label offerings, including the continued increased adoption of the company's Fastendr kiosks, helping realize additional operational efficiencies leading to enhanced profitability.

The company is encouraged by recent news coming out of the United States with respect to the potential rescheduling of cannabis and the possibility of a senate banking committee markup of the Safe Banking Act within the next month. The company remains poised to bring its tried, tested and perfected innovative discount club model to the U.S. market as soon as permissible.

High Tide earnings event webcast

The company will host a webcast and conference call to discuss the financial statements at 11:30 a.m. Eastern Time on Friday, Sept. 15, 2023.

Participants may preregister for the webcast prior to the beginning of the live webcast. Three hours after the live webcast, a webcast replay will be available.

Participants who wish to ask questions during the event may do so through the call-in line, the access information for which is as follows.

Participant details

Joining by telephone

Canada (toll-free):  1-833-950-0062

Canada (local):  1-226-828-7575

United States (local):  1-404-975-4839

United States (toll-free):  1-833-470-1428

Participant access code:  457161

Participants will need to enter the participant access code before being met by a live operator.

ATM program quarterly update

The company's at-the-market equity offering program, which allowed the company to issue up to $40-million (or the equivalent in U.S. dollars) of common shares from treasury to the public from time to time, at the company's discretion and subject to regulatory requirements, as required pursuant to National Instrument 44-102, Shelf Distributions, and the policies of the TSX Venture Exchange, expired on May 22, 2023. The company announces that, during its third fiscal quarter ended July 31, 2023, the company did not issue any common shares over the TSX-V or Nasdaq Capital Market pursuant to the ATM program.

Effective Aug. 31, 2023, the company has launched the offering of a new ATM program to raise up to $30-million (or the equivalent in U.S. dollars) of common shares from treasury to the public from time to time, at the company's discretion and subject to regulatory requirements, as required pursuant to National Instrument 44-102, Shelf Distributions, and the policies of the TSX-V. As of the date of this news release, no shares have been issued through this program.

The company intends to use the net proceeds of the ATM program, if any and at the discretion of the company, to finance strategic initiatives it is currently developing, to support the growth and development of the company's existing operations and to finance future acquisitions, as well as for working capital and general corporate purposes.

Common shares issued pursuant to the ATM program will be issued pursuant to a prospectus supplement dated Aug. 31, 2023 (the Canadian prospectus supplement), to the company's final base shelf prospectus dated Aug. 3, 2023, filed with the securities commissions or similar regulatory authorities in each of the provinces and territories of Canada (the Canadian shelf prospectus) and pursuant to a prospectus supplement dated Aug. 31, 2023 (the U.S. prospectus supplement), to the company's U.S. base prospectus dated Aug. 3, 2023 (the U.S. base prospectus), included in its registration statement on Form F-10 and filed with the U.S. Securities and Exchange Commission (the SEC). The Canadian prospectus supplement and Canadian shelf prospectus are available for download from SEDAR+, and the U.S. prospectus supplement and the U.S. base prospectus and registration statement are accessible via EDGAR on the SEC's website.

The ATM program is effective until the earlier of: (i) the date that all common shares available for issue under the ATM program have been sold; (ii) the date the Canadian prospectus supplement in respect of the ATM program or Canadian shelf prospectus is withdrawn; and (iii) the date that the ATM program is terminated by the company or agents.

About High Tide Inc.

High Tide is the leading community-grown, retail-forward cannabis enterprise engineered to unleash the full value of the world's most powerful plant. High Tide is uniquely built around the cannabis consumer, with wholly diversified and fully integrated operations across all components of cannabis, including:

• Bricks and mortar retail: Canna Cabana is the largest non-franchised cannabis retail chain in Canada, with 156 current locations spanning British Columbia, Alberta, Saskatchewan, Manitoba and Ontario, and growing. In 2021, Canna Cabana became the first cannabis discount club retailer in Canada.
• Retail innovation: Fastendr is a unique and fully automated technology that integrates retail kiosks and smart lockers to facilitate a better buying experience through browsing, ordering and pickup.
• E-commerce platforms: High Tide operates a suite of leading accessory sites across the world, including Grasscity, Smokecartel, Dailyhighclub and Dankstop.
• CBD (cannabidiol): High Tide continues to cultivate the possibilities of consumer CBD through Nuleafnaturals, FABCBD, blessedcbd and blessedcbd.
• Wholesale distribution: High Tide keeps that cannabis category stocked with wholesale solutions via Valiant.
• Licensing: High Tide continues to push cannabis culture forward through fresh partnerships and licence agreements under the Famous Brand name.

High Tide consistently moves ahead of the currents, having been named one of Canada's top-growing companies in both 2021 and 2022 by The Globe and Mail's Report on Business Magazine, and was ranked No. 1 in the retail category on the Financial Times list of Americas' Fastest Growing Companies for 2023.

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