Mr. Raj Grover reports
HIGH TIDE REPORTS FIRST QUARTER 2021 FINANCIAL RESULTS FEATURING A 179% INCREASE IN REVENUE AND RECORD ADJUSTED EBITDA OF $4.6-million
High Tide Inc. has filed its financial results for the first fiscal quarter of 2021 ending Jan. 31, 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 or its profile page on SEDAR.
First quarter 2021 -- financial highlights:
Revenue increased by 179 per cent to $38.3-million in the first quarter of 2021 compared with $13.7-million in the same quarter last year. The first quarter of 2021 financial results incorporate the acquisition of Meta Growth Corp. on Nov. 18, 2020.
- Gross profit increased by 208 per cent to $14.8-million in the first quarter of 2021 compared with $4.8-million in the same quarter last year.
- Gross profit margin in the first quarter of 2021 was 39 per cent compared with 35 per cent in the same quarter last year.
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) for the first quarter of 2021 was $4.6-million compared with negative $800,000 for same quarter last year.
- Geographically in the first quarter of 2021, $34.2-million of revenue was earned in Canada, $3.9-million in the United States and $200,000 internationally.
- Segment-wise in the first quarter of 2021, $36.8-million of revenue was generated by retail, $1.5-million by wholesale and an immaterial amount by corporate.
- Cash on hand as at Jan. 31, 2021, totalled $16.6-million compared with $7.5-million as at Oct. 31, 2020. The company's cash balance has subsequently increased to approximately $33-million as of today.
"I am extremely proud of our team for delivering the highest quarterly profit in High Tide's history. Despite facing the same challenges that all retailers have confronted during this pandemic, we recently crossed the 80-store milestone across Canada. Between the commencement of our application to list on the Nasdaq and the subsequent filing of the 40-F form with the [Securities and Exchange Commission], and securing the acquisition of Smoke Cartel, the first quarter of 2021 has seen our team deliver on significant milestones that will drive future growth," said Raj Grover, president and chief executive officer. "Over the past few months, we have worked diligently to integrate Meta Growth into the High Tide family and, as a result, have already achieved 71 per cent of our targeted synergies. As market dynamics continue to evolve in Canada, we are taking aggressive steps to adjust our business model, where appropriate, while pursuing expansion opportunities in the United States and Europe that would have an immediate positive impact on EBITDA," added Mr. Grover.
Fiscal first quarter 2021 -- operational highlights:
The company completed the acquisition of Meta Growth and became the leading Canadian cannabis retailer by annualized revenue;
- The company's common shares moved up to the TSX Venture Exchange;
- 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. As of the date of this press release, the $6.75-million facility remains undrawn;
- Approximately $7.4-million of debt converted into the company's common shares;
- The company opened three cannabis retail locations under the Canna Cabana and Meta banners: one in Guelph, Ont., one in Toronto, Ont., and one in Calgary, Alta.
The company closed an oversubscribed bought deal equity financing for gross proceeds of $23-million;
- After the first quarter of 2021, approximately $23-million of debt converted into the company's common shares;
- The company announced filing of Form 40-F with the U.S. Securities and Exchange Commission fulfilling a significant milestone for the Nasdaq listing;
- The company completed the acquisition of Smoke Cartel Inc. for $8.0-million (U.S.);
- Between Feb. 1, 2021, and the date of this press release, the company opened nine cannabis retail locations: seven in Alberta and two in Ontario;
- 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.
SELECTED FINANCIAL INFORMATION FOR THE
FIRST QUARTER ENDED JAN. 31, 2021
(expressed in thousands of dollars)
Three months ended Jan. 31,
Revenue $38,319 $13,715
Gross profit 14,768 4,793
Total operating expenses (16,813) (6,910)
Adjusted EBITDA (1) 4,602 (821)
(Loss) from operations (2,045) (2,117)
Net (loss) (16,845) (3,945)
(Loss) per share (basic) (0.04) (0.02)
(Loss) per share (diluted) (0.02) (0.02)
(1) Adjusted EBITDA is a non-IFRS (international
financial reporting standard) financial measure.
With the transaction of Meta having closed, the company has solidified its leadership position in Canada. High Tide remains focused on the Ontario market. While pandemic restrictions caused 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 for 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 more locations to open in the province next month.
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 bricks-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.
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 80 branded retail cannabis 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.com and CBDcity.com, and 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 Aphria Inc. and Aurora Cannabis Inc.
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