High Tide (US:HITI)2026-03-18 16:30Financial Data and Key Metrics Changes - Revenue for Q1 was CAD 178.3 million, up 25% year-over-year, marking the fastest growth in 10 quarters and a 9% sequential increase [5][24] - Adjusted EBITDA was CAD 11.5 million, up 62% year-over-year, representing the fastest growth in 2 years [5][26] - Free Cash Flow for Q1 was CAD 2.9 million, a significant improvement from -CAD 1.9 million in Q1 last year and more than double the CAD 1.3 million generated in Q4 [9][26] Business Line Data and Key Metrics Changes - The domestic core brick-and-mortar segment generated CAD 150 million in revenue, achieving a CAD 600 million annual run rate, with gross margins reaching 28%, the highest level in over three years [11][24] - The international business, particularly Remexian, reported revenue of EUR 25 million in Q1, averaging over EUR 8 million a month, with February alone generating EUR 12 million [6][40] - The adjusted EBITDA margin for the brick-and-mortar segment was 9% in Q1, consistent with the previous quarter [26] Market Data and Key Metrics Changes - Market share in the five provinces where the company operates increased to 12% during November and December, up from 11% a year ago [12] - Total industry sales in the five provinces were up 3% year-over-year, while total Canna Cabana sales increased by 14% during the same period [14] Company Strategy and Development Direction - The company plans to add 20-30 stores in Canada during the calendar year, focusing primarily on Ontario, while also exploring M&A opportunities [15][46] - Long-term goals include increasing sales from white label products to approximately 20% from the current 1.6% [16] - The company aims to expand its ecosystem into other international markets, particularly the UK, within the next twelve months [21][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a slowdown in the Canadian market but expressed confidence in outperforming competitors due to strong execution and strategic location selection [34] - The company remains optimistic about the Remexian business and anticipates improved profitability as Canadian biomass begins to arrive in Germany [8][41] - Management noted that general and administrative expenses represented just 4.1% of revenue, marking a six-quarter low, indicating strong cost controls [21] Other Important Information - The company generated CAD 42.6 million in Adjusted EBITDA over the past 12 months, indicating strong profitability [22] - New advisory positions were created to provide strategic guidance on various matters, including real estate and e-commerce technology [23] Q&A Session Summary Question: Impact of winter storms on same-store sales - Management confirmed that same-store sales were impacted mostly in the last 10 days of January due to severe weather, but they still posted positive growth [32][34] Question: Plans for entering the UK market - Management is actively meeting with key players in the UK and is not in a rush to enter the market, aiming for a transaction within the next 12 months [35][36] Question: February sales performance in Germany - Management noted that February's sales of EUR 12 million were the highest since acquiring Remexian, but cautioned that this level may not be consistently repeatable [40][41] Question: Future growth in brick-and-mortar margins - Management expressed optimism about maintaining margins due to white label initiatives and ELITE sales, despite competitive pressures [50][52] Question: Changes in e-commerce platforms - Management implemented several changes in their e-commerce strategy, resulting in a sequential increase in revenue for the first time in two years [55][56] Question: Impact of medical reimbursement changes on recreational market - Management indicated that changes in the medical cannabis program are unlikely to significantly impact the recreational market [59] Question: Growth expectations in the German market - Management highlighted significant growth in the German market, with increasing patient numbers and pharmacy participation [61][62] Question: Concerns about irrational competitive behavior - Management acknowledged the potential for competitive pressures but emphasized their strategy of steady pricing and margin management [66][68] Question: New store growth strategy - Management confirmed plans to open 20-30 stores, focusing on organic growth while also considering M&A opportunities [72][74]