High Tide (US:HITI)2026-01-30 17:32Financial Data and Key Metrics Changes - High Tide reported record revenue of CAD 164 million for Q4 2025, representing a 19% year-over-year increase and a 10% sequential increase [7][26] - The annual revenue run rate exceeded CAD 650 million, with record Adjusted EBITDA of CAD 12.4 million, up 51% year-over-year [7][28] - Consolidated gross margins were 26% in Q4, consistent with the previous year, while Adjusted EBITDA margins reached a new record of 9.4% [27][28] Business Line Data and Key Metrics Changes - The brick-and-mortar segment led revenue growth, achieving a 15% year-over-year increase, driven by same-store sales growth of 5.5% [7][26] - Cabanalytics, the business data and insight platform, generated CAD 13.1 million in Q4, up 20% year-over-year [26] - The adjusted EBITDA for the brick-and-mortar segment was CAD 14.1 million, highlighting strong cost controls and operational efficiency [28] Market Data and Key Metrics Changes - Canna Cabana's market share in the five provinces increased to 12%, up from 11% a year ago, while total industry sales in these provinces grew by only 4% [11][12] - The average Canna Cabana store generated an annual revenue run rate of CAD 2.6 million, significantly higher than the peer average of CAD 1.2 million [11] - The company added 27 stores in 2025, with plans to add another 20-30 stores in 2026, despite increased competition [8][24] Company Strategy and Development Direction - High Tide aims to continue organic growth through store expansion and enhancing its brand presence, with a robust pipeline of new store locations [8][24] - The company is exploring M&A opportunities, particularly in light of the retail shakeout in the cannabis industry, with discussions ongoing regarding potential acquisitions [8][56] - High Tide's strategy includes leveraging relationships with licensed producers to enhance procurement and operational efficiencies, particularly in the German medical cannabis market through the acquisition of Remaxion [16][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, particularly in the German market, despite short-term challenges related to inventory and supply chain issues [16][22] - The company remains confident in its ability to outperform competitors and capitalize on market opportunities, especially as weaker operators exit the market [14][54] - Management highlighted the importance of the Cabana Club loyalty program, which has seen significant growth, contributing to customer retention and brand loyalty [10][47] Other Important Information - High Tide generated CAD 12 million in free cash flow for the fiscal year, meeting its goal of remaining positive [9][32] - The company has a strong balance sheet with total debt of CAD 65.5 million and CAD 47.9 million in cash and cash equivalents [32] - An impairment of CAD 23.6 million was recorded for the e-commerce segment, reflecting challenges faced in that area [29] Q&A Session Summary Question: Impact of inventory issues in Germany on Q1 results - Management acknowledged that inventory issues in Portugal would impact Q1 results but expressed optimism for recovery in subsequent quarters [36][38] Question: Brick-and-mortar business margins - Management confirmed that brick-and-mortar margins have increased for four consecutive quarters, driven by strong sales and operational efficiencies [41][46] Question: M&A environment and competitor exit - Management noted that smaller competitors are exiting the market, creating opportunities for potential acquisitions, and expressed confidence in High Tide's growth strategy [55][56] Question: Budtender training and engagement - Management emphasized the importance of budtender training and engagement to enhance customer experience and brand loyalty [64][66] Question: Remaxion's performance and future prospects - Management reported improved performance in January and expressed confidence in achieving higher gross margins as new biomass is procured [67][70]