High Tide (US:HITI)2025-09-16 16:30Financial Data and Key Metrics Changes - Revenue for Q3 reached an all-time high of $149.7 million, up 14% year over year and 9% sequentially [19] - Gross margin percentage was 27%, consistent with Q3 last year and up from 26% sequentially [21] - Adjusted EBITDA was a record $10.6 million, up 11% year over year and 32% sequentially [22] - Free cash flow of $7.7 million grew 148% year over year, marking the second highest level since disclosure began [8][24] Business Line Data and Key Metrics Changes - Bricks-and-mortar revenue was a record, up 18% year over year, with same-store sales growth accelerating to 7.4% [5][19] - Bricks-and-mortar adjusted EBITDA reached an all-time high of $12.7 million, up 42% year over year [7][22] - E-commerce business continues to underperform, with less than 3% of consolidated revenues, prompting management to implement a turnaround strategy [23][46] Market Data and Key Metrics Changes - Canna Cabana's market share across five operating provinces reached 12%, the highest since legalization [6] - In Germany, the company started with a 16% market share, leveraging relationships with licensed producers [12][17] Company Strategy and Development Direction - The company aims to expand its footprint in Germany through the acquisition of Remexian, which adds significant revenue and EBITDA to operations [10][14] - Plans to continue opening 20 to 30 new locations in Canada, focusing on organic growth while considering potential acquisitions [40] - The strategy includes leveraging existing relationships with licensed producers to enhance supply chain efficiency and market presence [12][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued strength of the bricks-and-mortar business, with no signs of slowing down in same-store sales [6][30] - The company is optimistic about future growth opportunities in both Canadian and German markets, with plans to capitalize on the eventual adult-use market in Germany [13][14] - Management acknowledged challenges in the e-commerce segment but remains committed to turning it around [23][46] Other Important Information - The company closed a $30 million junior subordinated loan with Kronos, validating its strategy and execution [16] - The acquisition of Remexian was structured to generate value for shareholders while providing growth opportunities [15] Q&A Session Summary Question: How much of the recent acceleration in same-store sales is due to industry improvement versus market share gains? - Management indicated that the company has the best retail model, contributing to the acceleration in same-store sales, with competitor closures playing a minor role [28][30] Question: What is the company's philosophy on capital allocation post-Remexian transaction? - Management highlighted the need for working capital to support Remexian's growth and emphasized the focus on organic store openings while considering M&A opportunities [36][40] Question: How confident is the company in executing a turnaround in the e-commerce business? - Management acknowledged the underperformance of the e-commerce segment but expressed optimism about new initiatives and partnerships to drive sales [45][46] Question: What is the expected gross margin for Remexian compared to the existing business? - Management indicated that Remexian's gross margin is in the mid-20s, with expectations to improve it through better procurement strategies [42][66] Question: How are newer stores performing relative to prior cycles? - Management reported that newer stores are ramping up sales faster than expected, benefiting from the strong brand recognition [58][59] Question: Are other provinces catching up to Ontario in terms of store performance? - Management confirmed that same-store sales are growing in every province, with improvements noted in Saskatchewan [70]