Connect with us

Hi, what are you looking for?

Friday, Mar 29, 2024
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

Cannabis

High Tide reports second consecutive quarter record revenue in Q1 2023

The company reported a 64 per cent improvement in year-over-year free cash flow

High Tide to launch Cabana Cannabis Co. products in Ontario
Photo via High Tide

High Tide Inc. (NASDAQ: HITI) (TSXV: HITI) (FSE: 2LYA) is reconsidering expanding its store footprint and instead, it aims to achieve free cash flow generation by the end of this year.

On Tuesday, the company announced its financial results for the first fiscal quarter of this year and reported an increase in revenue of 64 per cent year over year (YoY) and 9 per cent sequential increase to $118.1 million in the first fiscal quarter of 2023.

The company has also reported a 64 per cent improvement in year-over-year free cash flow, increasing from negative $6.3 million to negative $2.3 million.

Gross profit increased by 40 per cent YoY and 9 per cent sequentially to $32.2 million. The gross profit margin in the quarter was 27 per cent, consistent with the previous three quarters. Adjusted EBITDA was $5.5 million, up 86 per cent YoY and 10 per cent sequentially.

Salaries, wages, and benefits represented 12 per cent of revenue, while general and administrative expenses represented 6 per cent. Cabanalytics data sales rose to $6.6 million, while same-store sales increased by 52 per cent YoY and 4 per cent sequentially.

High Tide continued to roll out ELITE, Canada’s first-of-its-kind cannabis-paid loyalty program and its membership reached approximately 9,500. The company had cash on hand of $23.7 million as of Jan. 31, 2023.

High Tide reports second consecutive quarter record revenue of $118M

Table via High Tide.

Read more: High Tide begins selling cannabis seeds in the U.S. via e-commerce platforms

Read more: High Tide launches paid membership program ‘Cabana Elite’

High Tide made several significant operational highlights in Q1 2023

The company expanded its retail store footprint by adding eight new Canna Cabana locations in British Columbia, Manitoba and Ontario. High Tide also acquired Jimmy’s, which added two more retail cannabis stores in British Columbia.

Furthermore, the company maintained its status as the highest revenue-generating cannabis company in Canada. Additionally, the company launched cannabis seed sales through its subsidiaries, namely GrassCity, Smoke Cartel, Daily High Club and Dankstop e-commerce platforms.

High Tide launched “ELITE,” a paid membership loyalty program for cannabis, which is the first of its kind in Canada. The company signed an LOI with Sanity Group, a Berlin-based health and life science company, to position itself better to take advantage of potential German adult-use cannabis legalization opportunities. Lastly, the company continued to roll out its higher margin Cabana Cannabis Co products in Ontario, Manitoba and Saskatchewan.

Read more: High Tide opens third Canna Cabana pot shop in Vancouver

Read more: High Tide launches its NuLeaf Naturals multicannabinoid oil in Ontario

High Tide aims to be one of the first pot Canadian companies to generate free cash

“While we would never overlook a compelling M&A opportunity, we are now adding to our strategic mission the goal of becoming one of the first cannabis companies in Canada to generate free cash flow from operations by the end of this calendar year,” said CEO Raj Grover.

“We believe this is not only something that current market conditions demand but that doing so will mitigate risks as we navigate through uncertainty and give our shareholders an advantage.”

“Although we can leverage various financial tools at our disposal to continue to gobble up market share through acquisitions, we believe that at this time, a more measured and nuanced approach is appropriate for our company and its shareholders and will ultimately lead to maximizing shareholder value, something that we so adamantly strive for,” said Grover.

High Tide has 151 locations and over 975,000 Cabana Club members. The company has revised its target for adding new retail locations in 2023 due to current market conditions. Instead, the company aims to achieve free cash flow generation by the end of this year. High Tide launched Cabana ELITE, its premium paid membership, in November and has already onboarded approximately 9,500 members.

The company has slowed new store growth and deployed its Fastendr technology in 120 locations across Canada, with plans to license it in the US in late 2023. High Tide is also launching white-label products in Ontario, Manitoba, and Saskatchewan, with more SKUs to come, resulting in steady and higher gross margins in the future.

Company stock stayed flat on Tuesday at $1.57 on the Canadian Ventures Exchange.

 

Follow Mugglehead on Twitter

Like Mugglehead on Facebook

Natalia@mugglehead.com

 

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Cannabis

The group was established last year and formally announced by the government on Friday

Gold

The mid-tier miner produced 61,495 more gold ounces last year than 2022

Gold

Adjusted earnings before interest, taxes, depreciation and amortization rose by 33 per cent YoY as well to US$53.36 million

Cannabis

Its subsidiary Valiant will be distribute merchandise for the Manitoba Liquor and Lotteries Corporation