High Tide Announces Unaudited 2021 Financial Results Featuring a 118% Increase in Revenue and Record Adjusted EBITDA of $12.4 Million
CALGARY, Alberta, January 27, 2022–(BUSINESS WIRE)–High Tide Inc. (“High Tide” or the “Company”) (NASDAQ: HITI) (TSXV: HITI) (FSE: 2LYA), a leading retail-focused cannabis company with bricks and mortar as well as global e-commerce assets, announces its year end unaudited 2021 financial results on January 27, 2022. Due to personnel challenges arising from the pandemic, the Company has not been able to finalize its income tax provision to date. However, it anticipates completing the work related to this matter and filing its full set of audited consolidated financial statements and management’s discussion and analysis (the “Annual Financials”) on its website at www.hightideinc.com, and its profile pages on SEDAR at www.sedar.com, and EDGAR at www.sec.gov on or before January 31, 2022. The Company does not expect any balances to be materially changed from those outlined in this press release with the exception of: (i) the income tax expense; (ii) net loss; (iii) and comprehensive loss.
The Company will host a webcast and conference call to discuss their unaudited results and outlook at 6:00 PM Eastern Time today, Thursday, January 27, 2022.
2021 Fiscal Year – Financial Highlights1:
- Revenue increased by 118% to $181.1 million for the year ended October 31, 2021, and increased sequentially by 12% to $53.9 million in the fourth quarter of 2021. Note that the quarter only includes 12 days of contribution from Blessed CBD, and does not include any contribution from NuLeaf Naturals. The Company is forecasting to generate revenue for the first fiscal quarter of 2022 in excess of $70 million which, as of today, would be the third-highest quarterly revenue figure achieved by a Canadian cannabis company.
- Outside of Canada revenue run-rate increased from approximately $11 million at the start of the 2021 fiscal year to approximately $80 million today.
- Gross profit increased by 108% to $64.0 million for the year ended October 31, 2021, and increased sequentially by 5% to $17.6 million in the fourth quarter of 2021.
- Gross profit margin was 35% for the year ended October 31, 2021, and was 33% in the fourth quarter of 2021. Note that the Company strategically launched a discount club model for its retail stores on October 20, 2021, which resulted in a slight decline in the gross profit margin for the fourth quarter of 2021.
- Adjusted EBITDA2 was a record $12.4 million for the year ended October 31, 2021, and was $1.6 million for the fourth quarter of 2021.
- Geographically for the year ended October 31, 2021, $150.5 million of revenue was earned in Canada (an increase of 120%), $29.7 million in the United States (an increase of 109%), and $0.9 million internationally (an increase of 45%). Revenue increased sequentially to $42.9 million in Canada (an increase of 12%), $10.6 million in the United States (an increase of 11%), and $0.4 million internationally (an increase of 247%) in the fourth quarter of 2021.
- Cabanalytics data sales from the entire retail ecosystem, including bricks and mortar and e-commerce platforms, were $12.2 million for the fiscal year ended October 31, 2021, compared to $2.2 million for the fiscal year ended October 31, 2020. Sequentially, Cabanalytics data sales increased to $4.2 million in the fourth fiscal quarter of 2021 compared to $3.8 million in the third fiscal quarter of 2021.
- For locations operational throughout the 2021 and 2020 fiscal years, same-store sales decreased by 16%. Excluding the same-store sales from the Ontario locations, the same-store sales for the remaining locations decreased by 3%. This metric captures the Company’s early stores, particularly in Ontario, which were destined to have increased competition. Sequentially, same-store sales increased by 7% from the third fiscal quarter to the fourth fiscal quarter of 2021. Given the success of the discount club model, the Company anticipates same-store sales to accelerate in the first fiscal quarter of 2022 and beyond.
- Cash on hand as of October 31, 2021 totaled $14.0 million, compared to $7.5 million as of October 31, 2020.
“I’m very pleased to report that High Tide continued to raise the bar in the Canadian and International cannabis industry throughout last year by achieving exponential revenue growth, record EBITDA generation, market share gains and adding top tier entrepreneurial talent to our Company. This tremendous achievement was made possible due to the tireless efforts of our entire team despite the on-going headwinds we face due to the pandemic. 2021 was a very special year for our growth as we further extended and strengthened our bricks and mortar footprint as well as our online retail ecosystem as we rapidly grew our business across all three of the segments we operate in: THC, CBD and consumption accessories. Our continued growth in THC sales is especially impressive given the increasingly competitive Canadian retail landscape. With the launch of our innovative discount club model, which is the first of its kind in North America and is tailored to our Company’s retail ecosystem, we continue to rapidly gain Canadian retail market share. Given the current growth trajectory we believe that our Cabana Club loyalty program can eventually reach 750,000 members,” said Raj Grover, President and Chief Executive Officer of High Tide. “I am also equally excited about our international growth trajectory as through strategic and accretive acquisitions we grew our outside of Canada run rate to over $80 million from just $11 million at the start of fiscal 2021. We now have 3 million international customers in our database which is up drastically from 650,000 at the start of the year. We expect to report over $70 million in sales for Q1 2022 which would result in High Tide achieving the third-highest quarterly revenue level amongst all Canadian cannabis companies.”
We are achieving this massive growth while remaining EBITDA positive for seven consecutive quarters. Our goal is to lead the global cannabis industry across all business segments in which we operate, and I remain excited for our growth prospects throughout 2022 and beyond.
Raj Grover, President and Chief Executive Officer of High Tide
I want to extend my sincere thanks and appreciation to all our amazing team members for their hard work, our board of directors for their continued guidance, our partners and vendors for their continued support and our loyal customers and shareholders that have supported us throughout 2021. Despite all the success we experienced last year, I firmly believe the best is yet to come for High Tide.
Fiscal Fourth Quarter 2021 – Operational Highlights3:
- The Company increased its database of international customers to approximately 3 million today, from approximately 650,000 at the beginning of the 2021 fiscal year. Membership in the Cabana Club loyalty program increased to over 379,000 members today, from 65,000 members at the beginning of the 2021 fiscal year. Since the launch of the Company’s discount club model on October 20, 2021, the Cabana Club has grown by 55%.
- The Company announced its strategy to convert all of its locations to an innovative discount club model, which is the first of its kind in North America and is tailored to the Company’s retail ecosystem. This shift helped to significantly increase memberships in its Cabana Club loyalty program.
- The Company opened 15 new stores: 11 in Ontario, 2 in Saskatchewan, 1 in Alberta, and 1 in Manitoba.
- The Company closed on a non-dilutive credit line, which included access to $10 million initially and a $15 million accordion feature, subject to certain conditions, for a potential total of $25 million4.
- The Company completed the acquisition of all the common shares of 102105699 Saskatchewan Ltd., (operating as 102 Saskatchewan), which included a portfolio of five locations in Regina, Saskatchewan, of which one was operational and four were unbuilt, for $2.7 million.
- The Company completed the acquisition of 100% of DS Distribution Inc., (operating as DankStop) for US$3.9 million.
- The Company announced the elimination of all its META convertible debentures.
- The Globe and Mail’s Report on Business magazine recognized the Company as one of Canada’s top growing companies for 2021, with an audited growth rate of 733% over three years.
- The Company entered the UK market through the acquisition of an 80% interest in Enigmaa Ltd., operating as Blessed CBD, for GB£9.1 million, with an option to acquire the remaining 20% within three years of closing.
- The Company completed the acquisition of an 80% interest in NuLeaf Naturals, LLC for US$31.2 million, with an option to acquire the remaining 20% within three years of closing.
- The Company entered into a definitive agreement to acquire 100% of Bud Room Inc. (“Bud Room”) and all rights to the customized Fastendr™ retail kiosk and smart locker technology and Bud Room’s retail cannabis store located at 1910 St. Laurent Blvd in Ottawa, Ontario for $3.6 million.
- The Company announced an at-the-market offering of up to $40.0 million (“the ATM Program”) for strategic initiatives, which includes the deployment of Fastendr™ technology across the Company’s retail stores.
- The Company opened 6 new stores: 3 in Saskatchewan, 2 in Ontario, and 1 in Alberta.
- The Company acquired an additional cannabis development permit for a site in Saskatoon, Saskatchewan, from the same entity as the previously-acquired portfolio of retail locations in Regina, Saskatchewan, for $100,000.
- The Company closed its CBDcity website in order to focus on integrating and expanding its own brands, which include NuLeaf Naturals, FAB CBD, and Blessed CBD.
- The Company continues to experience gains in same-store sales despite having dozens of its stores currently impacted by COVID-19-related closures, reduced hours, and staff shortages.
Selected financial information for the fourth quarter and year ended October 31, 2021:
(Expressed in thousands of Canadian Dollars)
High Tide continues to have a leading position in the Canadian bricks and mortar cannabis market with 109 locations across the country. The Company’s launch of an innovative discount club model in its retail stores near the end of the fourth fiscal quarter of 2021 has delivered encouraging results to-date, with same-store sales having continued to accelerate throughout the first fiscal quarter of 2022. In large part because of this, High Tide expects to report at least $70 million of revenue in the first fiscal quarter of 2022, which would equate to an annual run rate of over $280 million. By the end of the 2022 calendar year, the Company intends to grow its Canadian retail store portfolio to at least 150 locations, with a primary focus on the Province of Ontario. The Company also plans to enter the British Columbia market in the near-term, and will continue growing strategically in other Provinces where it currently operates. Although High Tide’s bricks and mortar retail operations continue to face significant challenges as a result of the ongoing COVID-19 pandemic, the Company is confident that it will be able to remain on a positive growth trajectory.
Beyond growing its bricks and mortar retail footprint and same-store sales, the Company also plans to introduce customized Fastendr™ technology which it expects will both drive greater efficiency, by lowering overhead and labour costs, and improve the customer experience. Throughout 2022, High Tide will deploy the customized Fastendr™ retail kiosk and smart locker technology at its stores across Canada. The Company also anticipates that it will be able to launch its exclusive lineup of Cabana Cannabis Co. white label products by the end of March, 2022. In Alberta, where Canna Cabana is the Province’s largest retail cannabis chain, High Tide will launch delivery services once provincial regulations permitting such operations come into effect on March 8, 2022.
The Company also has firm plans to build upon its existing momentum in the international hemp-derived CBD and consumption accessories e-commerce sectors, where it made six acquisitions during the 2021 calendar year and grew outside of Canada revenue run rate by over seven times, to approximately $80 million. Throughout 2022, High Tide will continue to integrate and expand CBD brands that it acquired in 2021, including NuLeaf Naturals, FAB CBD, and Blessed CBD. The Company also plans to launch subscription boxes through FAB CBD in the near-term, and will significantly expand the reach of Blessed CBD over the coming months by entering the German and US markets. In addition to growing its brands which are already in-house, High Tide intends to continue growing its online retail portfolio through further strategic and accretive acquisitions.
Webcast and Conference Call:
The Company will host a webcast and conference call to discuss their unaudited results and outlook at 6:00 PM (Eastern Time) today, Thursday, January 27, 2022.
Webcast Link for High Tide Earnings Event: https://events.q4inc.com/attendee/701958923
Participants may pre-register for the webcast by clicking on the link above prior to the beginning of the live webcast. Three hours after the live webcast, a replay of the webcast will be available at the same link above.
Participants may access the audio of the High Tide earnings event through either the new webcast format, or the conference call line below. However, any participant who wishes to ask a question must access the event via conference call, as the webcast does not support live questions.
Canada Dial-In Number (Toll-Free): +1 833 950 0062
Canada Dial-In Number (Local): +1 226 828 7575
United States Dial-In Number (Toll-Free): +1 844 200 6205
United States Dial-In Number (Local): +1 646 904 5544
Dial-In Number for All Other Locations: +1 929 526 1599
Participant Access Code: 037197
*Participants will need to enter the participant access code before being met by a live operator*
ABOUT HIGH TIDE INC.
High Tide is a leading retail-focused cannabis company with bricks and mortar as well as global e-commerce assets. The Company is the largest Canadian retailer of recreational cannabis as measured by revenue5, with 109 current locations spanning Ontario, Alberta, Manitoba and Saskatchewan, and was featured in the third annual Report on Business Magazine’s ranking of Canada’s Top Growing Companies in 2021. The Company is also North America’s first and only cannabis discount club retailer, featuring Canna Cabana, Meta Cannabis Co., and Meta Cannabis Supply Co. banners, with additional locations under development across the country. High Tide has been serving consumers for over a decade through its established e-commerce platforms including Grasscity.com, Smokecartel.com, Dailyhighclub.com, and Dankstop.com and more recently in the hemp-derived CBD space through Nuleafnaturals.com, FABCBD.com, and BlessedCBD.co.uk, as well as 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.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
CAUTIONARY NOTE REGARDING FUTURE ORIENTED FINANCIAL INFORMATION
This press release may contain future oriented financial information (“FOFI”) within the meaning of Canadian securities legislation, about prospective results of operations, financial position or cash flows, based on assumptions about future economic conditions and courses of action, which FOFI is not presented in the format of a historical balance sheet, income statement or cash flow statement. The FOFI has been prepared by management to provide an outlook of the Company’s activities and results and has been prepared based on a number of assumptions including the assumptions discussed under the heading above entitled “Cautionary Note Regarding Forward-Looking Statements” and assumptions with respect to the costs and expenditures to be incurred by the Company, capital expenditures and operating costs, taxation rates for the Company and general and administrative expenses. Management does not have, or may not have had at the relevant date, firm commitments for all of the costs, expenditures, prices or other financial assumptions which may have been used to prepare the FOFI or assurance that such operating results will be achieved and, accordingly, the complete financial effects of all of those costs, expenditures, prices and operating results are not, or may not have been at the relevant date of the FOFI, objectively determinable.
Importantly, the FOFI contained in this press release are, or may be, based upon certain additional assumptions that management believes to be reasonable based on the information currently available to management, including, but not limited to, assumptions about: (i) the future pricing for the Company’s products, (ii) the future market demand and trends within the jurisdictions in which the Company may from time to time conduct the Company’s business, (iii) the Company’s ongoing inventory levels, and operating cost estimates, (iv) the Company’s net proceeds from the ATM Program, (v) the Company’s unaudited financial results for the year ended October 31, 2021, and (vi) the Annual Financials’ results not materially changing from what has been disclosed herein, except as outlined herein. The FOFI or financial outlook contained in this press release do not purport to present the Company’s financial condition in accordance with IFRS as issued by the International Accounting Standards Board, and there can be no assurance that the assumptions made in preparing the FOFI will prove accurate. The actual results of operations of the Company and the resulting financial results will likely vary from the amounts set forth in the analysis presented in any such document, and such variation may be material (including due to the occurrence of unforeseen events occurring subsequent to the preparation of the FOFI). The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management’s best estimates and judgments as at the applicable date. However, because this information is highly subjective and subject to numerous risks including the risks discussed under the heading above entitled “Cautionary Note Regarding Forward-Looking Statements” and under the heading “Risk Factors” in the Company’s public disclosures, FOFI or financial outlook within this press release should not be relied on as necessarily indicative of future results.
Readers are cautioned not to place undue reliance on the FOFI, or financial outlook contained in this press release. Except as required by Canadian securities laws, the Company does not intend, and does not assume any obligation, to update such FOFI.
1 All financial highlights outlined herein are provided on an unaudited basis.
2 Adjusted EBITDA is a non-IFRS financial measure.
3 All financial highlights outlined herein are provided on an unaudited basis.
4 Largely due to implementing its discount club model, and related changes to near-term EBITDA, as it stands currently, the Company is not able to draw more than the $4 million dollars already obtained on the line and will be required to repay the funds by May 1, 2022. The Company currently anticipates that it will be in line with all related covenants to resume withdrawing on the debt facility at the end of fiscal Q4 2022 or potentially sooner.
5 On an unaudited basis.