Core Viewpoint - High Tide Inc. is expanding its retail presence with the opening of a new Canna Cabana store in Kitchener, Ontario, which will enhance its market position in the cannabis industry and reflects the company's commitment to disciplined growth amidst a changing macroeconomic environment [1][3][4]. Group 1: Store Expansion and Market Position - The new Canna Cabana store in Kitchener will begin selling recreational cannabis products on April 16, 2025, bringing the total number of Canna Cabana locations to 195 across Canada, with 80 in Ontario [1]. - The store is strategically located in a high-visibility area with a young and growing population, which is expected to drive strong sales and establish Canna Cabana as a leading cannabis retailer in the neighborhood [2]. - Existing locations in Kitchener have outperformed competitors, indicating a positive market reception and potential for continued success with the new store opening [2]. Group 2: Financial Strategy and Shareholder Rights Plan - The company emphasizes the importance of maximizing free cash flow and is prepared to adjust the pace of new store openings to protect its balance sheet and capitalize on strategic opportunities [4]. - High Tide's board has adopted a Shareholder Rights Plan to ensure compliance with cannabis laws and fair treatment of shareholders in the event of a takeover bid, which will be in effect for three years if ratified [5][6]. - The Shareholder Rights Plan has been accepted for filing by the TSX Venture Exchange, pending ratification by shareholders within six months [7]. Group 3: Company Overview and Achievements - High Tide is recognized as the second-largest cannabis retailer globally by store count and operates a fully integrated business model across various components of the cannabis industry [9]. - The company has been acknowledged as one of Canada's Top Growing Companies for four consecutive years and ranked number one in the retail category on the Financial Times list of Americas' Fastest Growing Companies for 2023 [13].

Core Insights - The article serves as an introduction to "The Cannabis Report," which focuses on the cannabis industry and includes insights from an experienced analyst and consultant in the field [1]. Industry Overview - The cannabis industry is highlighted as a growing sector with increasing interest from investors and analysts [1]. - The report aims to provide technical stock analysis, option strategies, small cap strategies, and insights into emerging markets within the cannabis sector [1]. Analyst Background - The analyst has a decade of experience in the cannabis industry and has contributed to notable publications such as High Times Magazine [1]. - A book titled "Cannabis in the Ancient Greek and Roman World" has been published by the analyst, indicating a depth of knowledge in the historical context of cannabis [1].

Financial Data and Key Metrics Changes - High Tide reported record revenue for Q1 at $142.5 million, an increase of 11% year-over-year and 3% sequentially, reaching an annual run rate of approximately $570 million [38] - Adjusted EBITDA was $7.1 million, down 32% year-over-year and 14% sequentially due to initiatives aimed at future growth [45] - Consolidated gross margins were 25% in Q1, down from 28% year-over-year and 26% sequentially, impacted by the illicit market and the launch of the Cabana Club loyalty program [42][43] Business Line Data and Key Metrics Changes - The brick-and-mortar segment led revenue growth, up 17% year-over-year, representing the fastest growth in five quarters [16][38] - Same-store sales increased by 5% year-over-year, with a remarkable 142% increase from October 2021 to December 2024 [12][39] - The Cabanalytics Business Data and Insights Platform generated record revenue of $11.3 million, up 49% year-over-year [42] Market Data and Key Metrics Changes - High Tide maintained an 11% market share in total sales across the five provinces where it operates, consistent with previous performance [17] - The average Canna Cabana store achieved an annual revenue run rate of $2.7 million, significantly higher than the average peer revenue of $1.3 million [40] Company Strategy and Development Direction - High Tide aims to expand its store count to 300 locations in Canada and enter the German medical cannabis market [14][30] - The company is focusing on organic growth while remaining open to strategic M&A opportunities [25] - The Cabana Club loyalty program is a key component of the growth strategy, with a target of reaching 2.5 million members [14][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the cannabis industry being recession-resistant, despite economic volatility [18][66] - The company is optimistic about future growth, particularly in the German market, and is exploring various partnership opportunities [32][56] - Management noted that working capital investments turned free cash flow negative this quarter but expects to be free cash flow positive for the fiscal year [26][46] Other Important Information - High Tide's White Label strategy is showing promise, with over $0.5 million in sales from the Queen of Bud brand [27] - The company has successfully launched the Cabana Club globally, now boasting 5.66 million members [16] Q&A Session Summary Question: Changes in Germany's market conditions - Management confirmed commitment to enter the German medical cannabis market and is exploring alternative partnerships beyond Purecan due to recent political developments [52][56] Question: Consumer behavior and market share dynamics in Canada - Management indicated long-term ambitions to reach at least a 15% market share in Canada, with strong same-store sales growth and resilience against inflation [62][66] Question: Timeline for entering the German market - Management stated that they are in discussions with multiple partners and expect to enter the market in a couple of months, emphasizing the importance of selecting the right partner [75][76] Question: Impact of tariffs on business - Management reassured that 99% of their business does not cross the US-Canada border, minimizing tariff impacts, and that most accessories are sourced domestically [78][80] Question: E-commerce segment performance - Management acknowledged short-term headwinds in the e-commerce segment but remains optimistic about long-term growth potential, especially with the global Cabana Club initiative [92][95]

Company Performance - High Tide Inc. reported a quarterly loss of $0.02 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.01, marking an earnings surprise of -100% [1] - The company posted revenues of $100.25 million for the quarter ended January 2025, exceeding the Zacks Consensus Estimate by 4.46% and showing an increase from $94.76 million year-over-year [2] - Over the last four quarters, High Tide has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Outlook - High Tide shares have declined approximately 23.6% since the beginning of the year, compared to a decline of -4.1% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is -$0.01 on revenues of $100.85 million, and for the current fiscal year, it is -$0.04 on revenues of $413.24 million [7] Industry Context - The Medical - Products industry, to which High Tide belongs, is currently ranked in the bottom 44% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact High Tide's stock performance [5]

[Financial Statements](index=4&type=section&id=Financial%20Statements) [Consolidated Statements of Financial Position](index=4&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Financial%20Position) As of January 31, 2025, High Tide's total assets were $235.7 million, a decrease from $246.2 million on October 31, 2024, primarily due to a reduction in cash and cash equivalents. Total liabilities also decreased to $90.6 million from $100.7 million, largely driven by the repayment of notes payable. Consequently, total shareholders' equity remained relatively stable at $145.1 million Statement of Financial Position Highlights (in thousands of CAD) | Financial Position | Jan 31, 2025 ($) | Oct 31, 2024 ($) | | :--- | :--- | :--- | | **Total Current Assets** | 73,732 | 85,789 | | Cash and cash equivalents | 33,341 | 47,267 | | **Total Non-Current Assets** | 161,931 | 160,419 | | Intangible assets and goodwill | 92,467 | 92,816 | | **Total Assets** | **235,663** | **246,208** | | **Total Current Liabilities** | 45,828 | 61,480 | | Current portion of notes payable | 724 | 13,974 | | **Total Non-Current Liabilities** | 44,735 | 39,216 | | **Total Liabilities** | **90,563** | **100,696** | | **Total Shareholders' Equity** | **145,100** | **145,512** | [Consolidated Statements of Loss and Comprehensive Loss](index=6&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss) For the three months ended January 31, 2025, the company's revenue increased by 11.2% year-over-year to $142.5 million. However, gross profit slightly decreased to $35.4 million from $36.0 million. A rise in operating expenses led to a significant drop in income from operations to $67 thousand from $2.8 million in the prior year. The company reported a net loss of $2.7 million, a substantial increase from the $5 thousand net loss in the same period last year Income Statement Summary (in thousands of CAD) | Metric | Q1 2025 ($) | Q1 2024 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 142,461 | 128,068 | +11.2% | | Gross Profit | 35,440 | 35,994 | -1.5% | | Income from Operations | 67 | 2,792 | -97.6% | | Net Loss | (2,689) | (5) | N/A | | Basic and Diluted EPS | (0.03) | — | N/A | [Consolidated Statements of Changes in Equity](index=8&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total shareholders' equity experienced a slight decrease from $145.5 million at October 31, 2024, to $145.1 million at January 31, 2025. The decrease was primarily driven by the net loss for the period of $2.8 million (attributable to owners), which was largely offset by share-based compensation of $1.2 million and positive cumulative translation adjustments Changes in Equity (in thousands of CAD) | Description | Amount ($) | | :--- | :--- | | **Balance, October 31, 2024** | **145,512** | | Net loss for the period | (2,689) | | Share-based compensation | 1,175 | | Issuance of shares through ATM (net) | 5 | | Options and Warrants exercised | 216 | | Cumulative translation adjustment | 881 | | **Balance, January 31, 2025** | **145,100** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, the company experienced a net cash decrease of $13.9 million. While operations generated $0.7 million in cash, this was significantly lower than the $6.9 million generated in Q1 2024. Cash used in investing activities was $2.7 million for asset purchases. Financing activities resulted in a net cash outflow of $12.0 million, primarily due to the repayment of $13.4 million in notes payable, partially offset by proceeds from new secured debentures Cash Flow Summary (in thousands of CAD) | Activity | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | 682 | 6,873 | | Net cash used in investing activities | (2,741) | (2,076) | | Net cash used in financing activities | (11,992) | (6,196) | | **Net (decrease) in cash** | **(13,926)** | **(1,436)** | | **Cash, beginning of period** | 47,267 | 30,121 | | **Cash, end of period** | **33,341** | **28,685** | - A significant financing outflow was the repayment of notes payable amounting to **$13.4 million**, while the company raised **$4.4 million** from secured debentures[10](index=10&type=chunk) [Notes to the Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Interim%20Consolidated%20Financial%20Statements) [General Information and Accounting Policies](index=12&type=section&id=Note%201-4%20General%20Information%20and%20Accounting%20Policies) High Tide Inc. is a retail-focused cannabis company with operations in Canada, the US, and Europe. These unaudited condensed interim consolidated financial statements were prepared in accordance with IAS 34 and are consistent with the accounting policies of the most recent annual statements. The company adopted amendments to IFRS 16 and IAS 1, which did not have a material impact - The company is a retail-focused cannabis entity with brick-and-mortar stores and global e-commerce assets, listed on Nasdaq, TSXV, and FSE[11](index=11&type=chunk) - The financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting[13](index=13&type=chunk) - The company's subsidiaries operate with functional currencies including the Canadian dollar, U.S. dollar, Euro, and British Pound Sterling[16](index=16&type=chunk)[19](index=19&type=chunk) [Revenue and Segment Performance](index=16&type=section&id=Note%206%20%26%2022%20Revenue%20and%20Segment%20Performance) Total revenue for Q1 2025 reached $142.5 million, an 11.2% increase from $128.1 million in Q1 2024. The growth was driven by the Bricks and Mortar segment, which saw revenue climb to $135.7 million. Conversely, the E-commerce segment's revenue fell to $6.7 million from $12.4 million. Geographically, Canadian revenue grew substantially, while US revenue declined. The Bricks and Mortar segment generated $2.3 million in operating income, whereas the E-commerce segment posted a $2.2 million operating loss Revenue by Segment and Geography (Q1 2025 vs Q1 2024, in thousands of CAD) | Category | Q1 2025 ($) | Q1 2024 ($) | Change (%) | | :--- | :--- | :--- | :--- | | **Segment** | | | | | Bricks and Mortar | 135,714 | 115,701 | +17.3% | | E-commerce | 6,747 | 12,367 | -45.4% | | **Geography** | | | | | Canada | 135,714 | 115,701 | +17.3% | | USA | 6,458 | 11,815 | -45.3% | | International | 289 | 552 | -47.6% | | **Total Revenue** | **142,461** | **128,068** | **+11.2%** | Income from Operations by Segment (Q1 2025, in thousands of CAD) | Segment | Income (Loss) from Operations ($) | | :--- | :--- | | Bricks and Mortar | 2,290 | | E-commerce | (2,223) | | **Total** | **67** | [Asset Analysis](index=17&type=section&id=Note%207%2C%208%2C%2010%20Asset%20Analysis) The company's asset base is dominated by non-current assets, particularly intangible assets and goodwill ($92.5 million). Property and equipment increased slightly to $28.2 million due to additions. Inventory levels rose to $30.4 million from $29.3 million at the end of the previous fiscal year. No impairment indicators were identified for intangible assets during the quarter - The net book value of Property and Equipment increased to **$28.2 million** as of Jan 31, 2025, from **$27.5 million** at Oct 31, 2024, with additions of **$2.6 million** during the quarter[29](index=29&type=chunk) - Intangible assets and goodwill stood at **$92.5 million**. The company evaluated for impairment indicators during the quarter and determined none were present[31](index=31&type=chunk) - Total inventory increased to **$30.4 million** as of Jan 31, 2025, up from **$29.3 million** at Oct 31, 2024[33](index=33&type=chunk) [Liabilities and Equity Analysis](index=19&type=section&id=Note%2013%2C%2014%2C%2015%2C%2017%20Liabilities%20and%20Equity%20Analysis) Total liabilities decreased, primarily due to a significant reduction in notes payable from $14.0 million to $0.8 million after a $13.0 million loan was paid in full. The company increased its long-term debt by issuing an additional $5.0 million in secured debentures. Share capital saw a minor increase from equity financing through the ATM program and exercises of options and warrants - Notes payable decreased dramatically to **$0.8 million** from **$14.0 million**, as a **$13.0 million** loan to OCN was paid in full on December 31, 2024[36](index=36&type=chunk) - The company issued an additional **$5.0 million** of secured debentures at a **10%** discount on November 30, 2024, increasing the total face value to **$15.0 million**[40](index=40&type=chunk) - The company raised **$52 thousand** through its at-the-market (ATM) equity program during the quarter[44](index=44&type=chunk) [Financial Instruments and Risk Management](index=26&type=section&id=Note%2021%20Financial%20Instruments%20and%20Risk%20Management) The company manages financial risks including credit, liquidity, interest rate, and foreign currency risk. Liquidity risk is managed through operational cash flow and financing. A maturity analysis shows contractual cash outflows of $37.1 million due in 2025. The company is exposed to interest rate risk on its variable-rate borrowings and foreign currency risk on its net monetary assets denominated in USD, EUR, and GBP Maturity of Financial Liabilities (Undiscounted, in thousands of CAD) | Period | Amount ($) | | :--- | :--- | | 2025 | 37,084 | | 2026-2027 | 24,786 | | 2028-2029 | 27,969 | | 2030 and beyond | 17,771 | | **Total** | **107,610** | - Approximately **56%** of the company's borrowings are at a fixed interest rate. A **+/- 1.0%** change in variable rates would impact annual interest payments by approximately **+/- $120 thousand**[67](index=67&type=chunk) - The company has net monetary assets exposed to foreign currency fluctuations, primarily in GBP and EUR, and net monetary liabilities in USD[68](index=68&type=chunk) [Other Key Disclosures](index=30&type=section&id=Note%2023%2C%2025%2C%2028%20Other%20Key%20Disclosures) The company engages in related party transactions, including a lease for office and warehouse space from a company controlled by the President & CEO. Capital management objectives focus on profitable growth, shareholder returns, and financial flexibility. Subsequent to the quarter's end, the company announced it has paused the acquisition of Purecan GmbH, which was intended to facilitate its entry into the German market - The company leases office and warehouse space from Grover Properties Inc., a company related to the President & CEO, with annual lease payments of **$386 thousand**[72](index=72&type=chunk) - The company's capital management strategy aims to maintain a flexible capital structure to fund growth and meet obligations through cash flow and financing[77](index=77&type=chunk) - Subsequent to the quarter end, on February 25, 2025, the company paused its acquisition of Purecan GmbH to explore alternative arrangements for its German market expansion[82](index=82&type=chunk)

Financial Performance - Revenue for the first fiscal quarter of 2025 reached $142.5 million, marking an 11% increase year over year and a 3% increase sequentially, setting an all-time record [3][4] - Gross profit was $35.4 million, with a gross profit margin of 25%, down from 28% year over year [7][9] - The company reported a net loss of $2.7 million, compared to break-even in the prior year [7][9] Operational Highlights - Same store sales increased by 5% year over year, the fastest growth rate in the past four quarters [4][5] - The Cabana Club loyalty program surpassed 5.66 million global members, with Canadian membership exceeding 1.76 million, a 33% increase year over year [4][14] - The company held an 18% market share in Alberta and 10% in Ontario during November and December 2024 [4] Strategic Initiatives - The company is expanding its Cabana Club loyalty program globally, with a focus on international markets, including the German medical cannabis market [6][16] - Plans to open an additional 20-30 locations in Canada during calendar 2025, aiming for a total of 300 locations [13] - The company has launched 29 SKUs under the Queen of Bud brand since its acquisition in March 2024 [8] Market Position - High Tide remains the highest revenue-generating cannabis company reporting in Canadian dollars, with its bricks-and-mortar segment accounting for 95% of consolidated revenue [4][27] - The company has been recognized as a top 50 company by the TSX Venture Exchange for two consecutive years and ranked number one in the retail category on the Financial Times list of Americas' Fastest Growing Companies for 2023 [31]

Core Insights - High Tide Inc. will release its financial and operational results for the quarter ended January 31, 2025, on March 17, 2025, after market close [1] - A webcast will be held on March 18, 2025, at 11:30 AM Eastern Time to discuss the results and future outlook [2] Company Overview - High Tide is a leading retail-forward cannabis enterprise and the second-largest cannabis retailer globally by store count, with 194 locations across Canada [4][11] - The company operates various components of the cannabis industry, including retail, e-commerce, and wholesale distribution [4][5][6] Retail Operations - Canna Cabana™ is the largest cannabis retail chain in Canada and was the first cannabis discount club retailer globally [4] - High Tide employs Fastendr™, an automated technology for a better retail experience [5] Product Offerings - High Tide has a diverse brand portfolio, including Queen of Bud™, Cabana Cannabis Co™, and Daily High Club™, among others [6] - The company is also involved in the CBD market through various platforms [6] Recognition and Growth - High Tide has been recognized as one of Canada's Top Growing Companies for four consecutive years and ranked number one in the retail category on the Financial Times list of Americas' Fastest Growing Companies for 2023 [8]

Core Viewpoint - High Tide Inc. is expanding its retail presence in Ontario with the opening of two new Canna Cabana locations, enhancing accessibility to recreational cannabis products for both locals and tourists [1][4]. Group 1: New Store Openings - The Canna Cabana store in Collingwood, ON will start selling recreational cannabis products on March 13, 2025, while the Cambridge, ON location will open on March 17, 2025 [1]. - These openings will be the 193rd and 194th Canna Cabana locations in Canada, and the 78th and 79th in Ontario [1]. Group 2: Strategic Location Benefits - The Collingwood store is strategically located in a high-traffic area, attracting approximately 400,000 unique visitors annually, and serves as the first cannabis store encountered by travelers entering the town [2]. - The Cambridge store is positioned at a major intersection with a strong residential base and limited competition, benefiting from significant foot traffic from nearby commercial establishments [3]. Group 3: Company Commitment and Vision - The CEO of High Tide expressed excitement about the expansion, emphasizing the commitment to making legal cannabis more accessible and affordable across Canada [4]. - High Tide aims to enhance the shopping experience through its innovative discount club model and exclusive member benefits, reinforcing its position as a leading cannabis retailer [5]. Group 4: Company Overview - High Tide is recognized as the second-largest cannabis retailer globally by store count, with a focus on community-driven, retail-forward operations [7]. - The company operates the largest cannabis retail chain in Canada, with 194 locations across various provinces, and was the first cannabis discount club retailer in the world [7]. Group 5: Additional Company Initiatives - High Tide is also involved in retail innovation through its Fastendr technology, which enhances the buying experience via automated kiosks [8]. - The company operates several e-commerce platforms for cannabis consumption accessories and continues to explore opportunities in the CBD market [9][10].

Company Performance - High Tide Inc. (HITI) closed at $2.40, reflecting a +1.69% change from the previous trading day's closing, outperforming the S&P 500's daily gain of 0.55% [1] - Over the past month, shares of High Tide Inc. have decreased by 19.73%, underperforming the Medical sector's gain of 0.52% and the S&P 500's loss of 5.56% [2] Earnings Estimates - The consensus estimate for High Tide Inc.'s upcoming quarterly revenue is $95.97 million, representing a 1.28% increase from the same period last year [2] - For the annual period, Zacks Consensus Estimates project earnings of -$0.04 per share and revenue of $413.24 million, indicating no change in earnings and an 8.39% increase in revenue compared to the previous year [3] Analyst Sentiment - Recent revisions to analyst estimates for High Tide Inc. are crucial as they reflect near-term business trends, with positive revisions indicating optimism about the company's outlook [3] - The Zacks Rank for High Tide Inc. is currently 5 (Strong Sell), with the Zacks Consensus EPS estimate remaining unchanged over the past month [5] Industry Context - The Medical - Products industry, which includes High Tide Inc., has a Zacks Industry Rank of 134, placing it in the bottom 47% of over 250 industries [6] - The performance of individual industry groups is measured by the Zacks Industry Rank, with top-rated industries outperforming the bottom half by a factor of 2 to 1 [6]

Core Insights - High Tide Inc. (NASDAQ: HITI) is identified as a best-in-class specialty retailer with significant growth potential and a competitive business model that positions it to capture substantial market share in various ecosystems [1] Group 1: Company Overview - High Tide Inc. operates in the specialty retail sector and is noted for its strong growth prospects [1] - The company is equipped with a competitive business model that enhances its ability to gain market share [1] Group 2: Investment Perspective - The analysis reflects a value investing approach, emphasizing the importance of strategic advantages and innovation in evaluating companies [1] - The focus is on identifying potential multibaggers, indicating a long-term investment outlook [1]