High Tide Q4 Earnings Call Highlights

Core Business Performance - The core Canadian retail business demonstrated strength with same-store sales growth of 5.5%, contributing to a 15% year-over-year growth in the brick-and-mortar segment [1] - High Tide added 27 stores in 2025, reaching a total of 218 locations, and plans to add another 20-30 stores in 2026, targeting over 350 locations long-term [7][8] Financial Highlights - Fourth-quarter revenue rose 19% year-over-year and 10% sequentially, primarily driven by the brick-and-mortar segment, with consolidated gross margin at 26% [3] - Record performance was reported with revenue of CAD 164 million and Adjusted EBITDA of CAD 12.4 million, implying an annualized revenue run rate exceeding CAD 650 million [4][8] - Adjusted EBITDA increased by 51% year-over-year and 17% sequentially, with a record Adjusted EBITDA margin of 9.4% in the brick-and-mortar segment [2] Operational Efficiency - Salaries and wages fell to 11.5% of revenue, the lowest level in nine quarters, while general and administrative expenses were 4.3% of revenue [2] - Annualized revenue per square foot was CAD 1,775 in the quarter, with market share across five provinces increasing to 12% from 11% a year earlier [10] Loyalty and Membership Growth - Cabana Club membership reached 2.5 million, up 45% year-over-year, with a long-term target raised to 3 million members [9] - The Canadian ELITE member count reached 151,000, up 107% year-over-year, indicating increased shopping frequency and larger basket sizes among these members [9] Acquisition Impact - The Remaxion acquisition contributed nearly CAD 10 million in revenue but pressured margins due to inventory and expiry issues, with improvements expected by late Q2/Q3 [6][11] - High Tide is diversifying supply routes beyond Portugal, citing new sourcing strategies that could reduce costs by 30%-40% [14] Cash Flow and Balance Sheet - Free cash flow for Q4 was CAD 1.3 million, with a total of CAD 12.12 million for the full fiscal year, supporting internal funding for store expansion [16] - Total debt stood at CAD 65.5 million, with cash and cash equivalents at CAD 47.9 million and no upcoming maturities for over two years [17] Market Opportunities - The company is exploring partnerships with U.S. operators following an executive order on cannabis rescheduling, while also considering potential CBD-related policy changes that could benefit its U.S. CBD brands [17][18]