Mr. Raj Grover reports
HIGH TIDE REPORTS 2020 FINANCIAL RESULTS FEATURING A 166% INCREASE IN REVENUE AND RECORD ADJUSTED EBITDA OF $8.0 MILLION
High Tide Inc. filed its year-end 2020 financial results on March 1, 2021, the highlights of which are included in this news release. The full set of consolidated financial statements and management's discussion and analysis can be viewed by visiting High Tide's website or its profile page on SEDAR.
The company will host a conference call to discuss results at 8:30 a.m. Eastern Time on March 2, 2021.
2020 fiscal year -- financial highlights:
Revenue increased by 118 per cent to $24.9-million in the fourth quarter of 2020 and by 166 per cent to $83.3-million for the year ended Oct. 31, 2020. Note that the quarter does not include any contribution from Meta Growth Corp., the acquisition of which closed subsequent to the end of the quarter.
- Gross profit increased by 112 per cent to $8.7-million in the fourth quarter of 2020 and by 172 per cent to $30.8-million for the year ended Oct. 31, 2020.
- Gross profit margin in the fourth quarter was 35 per cent (1) and 37 per cent for the fiscal year ended Oct. 31, 2020.
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the fourth quarter was $3.6-million and $8.0-million for the year ended Oct. 31, 2020.
- Geographically in the fourth quarter of 2020, $20.6-million of revenue was earned in Canada, $4.1-million in the United States and $200,000 internationally. For the year ended Oct. 31, 2020, $68.4-million of revenue was earned in Canada, $14.3-million in the United States and $600,000 internationally.
- Segment-wise in the fourth quarter of 2020, $22.6-million of revenue was generated by retail, $2.2-million by wholesale and an immaterial amount by corporate. For the year ended Oct. 31, 2020, $75.0-million of revenue was generated by retail, $7.9-million by wholesale and $400,000 by corporate, which compares with $24-million, $6.69-million and $600,000, respectively, for the previous year.
- Cash on hand as at Oct. 31, 2020, totalled $7.5-million. The company's cash balance has subsequently increased to approximately $38-million as of today.
"Despite the global slump in retail sales associated with the pandemic, and thanks to the tireless efforts of our team, we closed the year with approximately $8-million in adjusted EBITDA, making 2020 the best year in High Tide's history," said Raj Grover, president and chief executive officer. "We continued to run our operations tightly, ending the year off with the record levels of revenue and adjusted EBITDA. We are excited about our trajectory in the United States and continue to prioritize and look for opportunities in that market. Our integrated value chain which includes cannabis bricks and mortar stores, e-commerce platforms for consumption accessories and hemp-derived CBD products, along with manufacturing and distribution of licensed and proprietary consumption accessories, experienced sizeable growth on all fronts. We plan to continue to further strengthen our chain through organic growth and strategic acquisitions creating even more value for our shareholders. Since the end of the fiscal year, we have already nearly doubled our size in Canada with the closing of the Meta Growth acquisition. For the fiscal first quarter of 2021 we expect to report revenue in the range of $37-million to $38-million," added Mr. Grover.
Fiscal fourth quarter 2020 -- operational highlights:
In August, 2020, the company opened a Canna Cabana location in popular year-round tourist destination of Banff, Alta.
In October, 2020, Meta Growth shareholders overwhelmingly approved High Tide's acquisition of Meta Growth.
- Underscoring the strong bond to the company's brand, over 50 per cent of the company's bricks and mortar revenue during the fiscal fourth quarter came from Cabana Club members.
The company completed the acquisition of all the issued and outstanding shares of Meta Growth, after which it became the largest cannabis retailer in Canada as measured by revenue. As of the date of this news release, the company's portfolio includes a total of 72 branded retail cannabis locations in Ontario, Manitoba, Alberta and Saskatchewan.
The company's common shares moved up to the TSX Venture Exchange.
Cannabis retail locations under the Canna Cabana and Meta banners, which subsequent to the end of the year, included: one in Guelph, Ont., one in Toronto, and two in Calgary, Alta.
- The company submitted an initial application to list on the Nasdaq.
The company extended the maturity date on a $10.0-million credit facility with Windsor Capital to Dec. 31, 2021, with a subsequent one-year extension to Dec. 31, 2022, and a reduction of interest rate from 11.5 per cent to 10.0 per cent.
- The company entered into a loan agreement for $6.75-million maturing on Dec. 31, 2024, of an undrawn balance on a $20.0-million credit facility obtained through the acquisition of Meta Growth. Additionally, the company extended maturity of Meta's existing debt to Dec. 31, 2024, and a reduction of all-inclusive interest rate from 12.5 per cent to 10.0 per cent.
- The company entered into an agreement to acquire all the issued and outstanding shares of Smoke Cartel Inc. for $8.0-million (U.S.).
- The company closed an oversubscribed bought-deal equity financing for gross proceeds of $23-million.
After the year ended Oct. 31, 2020, approximately $29-million of debt converted into the company's common shares.
Through the COVID-19 pandemic, all retail branded locations have remained operational, despite the complex conditions facing the retail industry across Canada. The company has been nimble and adapted to frequently changing regulations -- often at a municipal level -- including launching delivery services to continue serving customers.
(1) The decrease in gross profit margin was driven primarily by the company's closure of the remaining Smoker's Corner locations resulting in a one-time inventory write-off of $252 and a true-up of a United States sales tax provision related to Grasscity in the amount $396. Adjusting for these items, gross margin for the fourth quarter of 2020 would have been 38 per cent.
SELECTED FINANCIAL INFORMATION FOR THE FOURTH QUARTER AND YEAR ENDED OCT. 31, 2020
(expressed in thousands of dollars)
Three months ended Oct. 31 Year ended Oct. 31
2020 2019 2020 2019
Revenue $24,876 $11,409 $83,265 $31,294
Gross profit 8,727 4,114 30,812 11,316
Total operating expenses 7,594 10,740 30,016 31,190
Adjusted EBITDA (loss) 3,626 (5,968) 7,974 (16,264)
Income (loss) from operations 1,133 (6,626) 796 (19,874)
Net (loss) (1,324) (15,428) (6,354) (26,292)
(Loss) per share (basic) (0.01) (0.07) (0.03) (0.13)
(Loss) per share (diluted) (0.01) (0.07) (0.03) (0.13)
With the transaction of Meta Growth having closed, the company has solidified its leadership position in Canada. High Tide remains focused on the Ontario market. While pandemic restrictions are causing a delay in construction in much of the province, the company is encouraged by the Alcohol and Gaming Commission of Ontario's decision on Feb. 16, 2021, to increase the pace of retail store authorizations it issues from 20 to 30 a week. The company expects to reach 30 open stores in the province by Sept. 30, 2021, the date on which the cap that any one retailer can own is set to increase from 30 to 75.
While competition is increasing in the Alberta cannabis market, the company has still been able to find pockets of areas where it believes it can profitably open new stores. With the slowdown in construction in Ontario, the company has increased the pace of buildouts in Alberta and expects several locations to open in the province this month. The company is also optimistic regarding the recent announcement by the Alberta Gaming and Liquor Commission, that it is considering recommending regulatory and legislative changes that will be favourable to licensed cannabis retailers. The company is also in discussions regarding potential tuck-in acquisitions of retail stores in Canada.
The company has been actively following developments in the U.S. cannabis sector, and while it appears that further liberalization regarding the federal regulatory and legislative environment is possible, the company's immediate strategy does not rely on regulatory change. Despite this, the company remains just one transaction away from entering the brick-and-mortar retail market in the United States when federally permissible. High Tide believes it is very 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 Smoke Cartel acquisition, to be over $25-million today. The company is in discussions with various parties across the federally permissible ecosystem in the U.S., which could help further expand its operations -- and believes that its current financial health and application to list its shares on the Nasdaq may help accelerate its growth.
The company will hold a conference call Tuesday, March 2, 2021, at 8:30 a.m. Eastern Standard Time. Call-in details are as follows:
U.S./Canada participant toll-free dial-in number: 833-570-1148
U.S./Canada participant international dial-in number:
Conference ID: 7898014
In order to join the conference call, all speakers and participants will be required to provide the conference ID listed above.
Encore replay information (available until March 9, 2020):
Toll-free encore dial-in number: 855-859-2056
Encore dial-in number: 404-537-3406
Conference ID: 7898014
In addition to the toll-free number listed above, participants can also dial 800-585-8367 to access encore.
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 largest Canadian retailer of recreational cannabis as measured by revenue, with 70 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 numerous consumption accessory businesses including e-commerce platforms Grasscity and CBDcity, and its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz.
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