Mr. Raj Grover reports
HIGH TIDE REPORTS THIRD QUARTER 2020 FINANCIAL RESULTS FEATURING $2.1 MILLION OF OPERATING INCOME
High Tide Inc. has released its financial and operating results for the third quarter of fiscal 2020 ending July 31, 2020.
Third quarter 2020 -- financial highlights:
Revenue for the three months ended July 31, 2020, increased by 180 per cent to $23.20-million from $8.29-million for the same quarter last year.
- Segment-wise for the three months ended July 31, 2020, revenue was earned 89 per cent ($20.54-million) by retail, 11 per cent ($2.63-million) by wholesale and an immaterial percentage (40,000) by corporate, which compares with 80 per cent ($6.64-million), 17 per cent ($1.42-million) and 3 per cent (230,000), respectively, for the same period of 2019.
- Geographically for the three months ended July 31, 2020, revenue was earned 75 per cent ($17.41-million) in Canada, 23 ($5.32-million) in the United States and 2 per cent ($480,000) internationally, which compares with 79 per cent ($6.51-million), 20 per cent ($1.63-million) and 1 per cent ($150,000), respectively, for the same quarter last year.
- Gross profit for the three months ended July 31, 2020, increased by 202 per cent to $9.23-million from $3.06-million for the same period of 2019.
Gross profit margin for the three months ended July 31, 2020, increased to 40 per cent from 37 per cent for the same quarter last year.
- Income from operations for the three months ended July 31, 2020, was $2.11-million compared with a loss from operations of $4.04-million for the same period of 2019.
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the three months ended July 31, 2020, was $3.96-million compared with an adjusted EBITDA loss of $3.37-million for the same quarter last year.
- Cash and cash equivalents as at July 31, 2020, increased to $7.11-million from $810,000 as at Oct. 31, 2019.
"This exceptional combination of quarterly financial metrics, specifically the record levels and continued growth trends in revenue, gross profit margin, operating income, positive adjusted EBITDA and net income, reinforces our conviction that High Tide is one of the top performing cannabis companies in Canada today. High Tide's diversified and integrated businesses, including its best-in-class e-commerce platform, were strategically positioned to generate the company's strongest results since inception," said Raj Grover, president and chief executive officer. "Our dedicated and passionate employees worked together to achieve these outstanding results and they should feel extremely proud of their hard work in this collective accomplishment. I am very thankful to our shareholders and stakeholders for their ongoing support of our strategy and we remain committed to achieving the highest standard in Canadian cannabis retail," added Mr. Grover.
Third quarter 2020 -- operational highlights:
The company's diversified businesses continue to gain momentum in this challenging economic environment, with the best-in-class Grasscity e-commerce platform driving continued growth in market share and daily transaction volume across North America.
- Through the COVID-19 pandemic, existing Canna Cabana and KushBar locations have remained operational, despite the complex conditions facing the retail industry across Canada.
The company opened four new Canna Cabana retail locations in Ontario: Niagara Falls, Toronto -- Parliament, Burlington and Toronto -- Bayview, bringing the current total to seven branded stores in the province.
- The company restructured $10.8-million of debt into an interest-free debenture due in 2025.
- The company opened a KushBar store in Medicine Hat, Alta.
- Currently, there are approximately 57,000 members of Cabana Club, which has resulted in over 50 per cent of the company's average daily retail cannabis transactions being conducted by Club members.
- As of the date of this news release, the company's portfolio includes a total of 37 branded retail cannabis locations in Ontario, Alberta and Saskatchewan.
- The company opened a Canna Cabana store in the year-round tourist destination of Banff, Alta.
- The company entered into a definitive arrangement agreement to acquire all the issued and outstanding shares of Meta Growth Corp., subsequent to which it will become the largest cannabis retailer in Canada with annualized pro forma revenue of approximately $148-million. The investor presentation that provides an overview of the transaction will be updated to include High Tide's and Meta Growth's recent financial results and will be available on their respective websites.
- The company amended the asset purchase agreement with Halo Labs to focus on three KushBar operating stores for a revised sale price of $5.7-million, which is subject to the requisite regulatory approvals.
- The company extended maturity of a $2.0-million loan to Sept. 30, 2021, in consideration for warrants.
SELECTED FINANCIAL INFORMATION FOR THE THREE AND NINE MONTHS ENDED JULY 31, 2020
(expressed in thousands of dollars)
Three months ended July 31 Nine months ended July 31
2020 2019 2020 2019
Revenue $23,204 $8,288 $56,435 $19,885
Gross profit 9,228 3,060 21,393 7,202
Total operating expenses 7,118 7,098 21,169 20,450
Adjusted EBITDA (loss) 3,961 (3,369) 5,346 (10,204)
Income (loss) from operations 2,110 (4,038) 224 (13,248)
Net income (loss) 4,268 (3,724) (4,630) (10,864)
Income (loss) per share (basic) 0.02 (0.02) (0.02) (0.06)
Income (loss) per share (diluted) 0.02 (0.02) (0.02) (0.06)
High Tide remains focused on the fundamentals of profitable retail, while continuing to leverage cannabis and its related accessories through the company's manufacturing and e-commerce business portfolio. High Tide's diverse mix of consumer channels provides access to layered insights and context unavailable to competitors, providing the company with an advantage in understanding the development of North American and global cannabis user preferences in real time.
The company believes that achieving positive cash flow from operations, the restructuring of $10.8-million of debt into an interest-free debenture due in 2025 and the pending acquisition of Meta Growth has strongly positioned High Tide to execute on its strategic growth objectives for the remainder of fiscal 2020 and beyond. The company is well financed and operationally prepared to further its expansion in Ontario, as Canada's largest and most underserved market.
About High Tide Inc.
High Tide is a retail-focused cannabis corporation enhanced by the manufacturing and distribution of cannabis lifestyle accessories. Its premier Canadian retail brand Canna Cabana spans 34 locations in Ontario, Alberta and Saskatchewan, with additional locations under development across Canada. High Tide has been serving cannabis consumers for over a decade through its numerous lifestyle accessory enterprises including e-commerce platforms Grasscity and CBDcity, lifestyle and licensed entertainment brand manufacturer Famous Brandz, and its wholesale distribution divisions RGR Canada Inc. and Valiant Distribution.
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