High Tide Reports $34.5M Cash Position, Sells 1,400 Shares In Q2, Expands Cannabis Footprint

High Tide Inc. HITI indicators, particularly the sustained positive free cash flow and improvement in net income, suggest a financial recovery and enhanced investment appeal, signaling potential value for investors. High Tide reported $9.4 million in free cash flow for the second fiscal quarter 2024.

The trailing free cash flow yield relative to the company's enterprise value exceeded 8%. Net income for the quarter was $0.2 million, marking a significant improvement from a $1.6 million loss year-over-year.

This means that the company is generating a high cash rate compared to its overall market value.

Revenue And Profitability

Revenue for the quarter increased by 5% to $124.3 million, with gross profit reaching $35.3 million, a 12% increase from the previous year.

Adjusted EBITDA for the quarter was $10 million, representing a 52% increase year-over-year. The adjusted EBITDA margin was consistent sequentially at 8.1%.

"Our team has delivered positive net income and a record-breaking $22.7 million in free cash flow over the past four quarters," said Raj Grover, founder and CEO of High Tide.

"We managed to grow our store count and increase our Canadian market share to 10.9%. We remain the second largest global cannabis retailer by store count and have ended the quarter with a record cash position of $34.5 million while setting a target to open up to 30 new stores by year-end," Grover continued.

Strategic Developments

The quarter saw the opening of new Canna Cabana locations and the acquisition of intellectual property from the Queen of Bud brand. High Tide completed the acquisition of the remaining interest in NuLeaf Naturals, LLC, aligning with its growth strategy, which includes plans to open 20-30 new locations by year-end.

Membership in the Cabana Club loyalty program increased to over 1.43 million, a 38% rise year-over-year. ELITE membership grew to 44,000, a 226% increase.

Market share in Alberta and Ontario was 20% and 10% respectively, with an overall market share of 10.9% across the provinces where it operates.

High Tide plans further expansion through organic growth and potential mergers and acquisitions, supported by a strong cash position of $34.5 million.

Equity Offering

High Tide Inc. issued 1,400 common shares under its at-the-market equity offering program (ATM Program) during the second fiscal quarter of 2024, raising $3,000 across the TSX Venture Exchange and Nasdaq, with nominal commissions paid to ATB Capital Markets Inc. and ATB Capital Markets USA Inc.

The net proceeds from the ATM Program are intended to fund strategic initiatives, support operational growth, finance future acquisitions, and cover general corporate expenses.

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