High Tide Inc. Q4 FY2024 earnings call

• Revenue for the year was a record $522.3 million, up 7% from fiscal 2023, with Q4 revenue at $138.3 million, a 9% year-over-year increase. - Added 29 new stores in 2024, with plans to add 20-30 more in 2025, mostly organically. - Cabana Club memberships in Canada reached 1.72 million, with 73,000 ELITE members, and global Cabana Club members totaled 5.32 million. - Announced acquisition of a majority stake in Purecan, a profitable German medical cannabis importer, which is highly accretive. - Same-store sales in Canadian core cannabis retail operations rose 3% sequentially in Q4, with a cumulative 130% increase since launching the discount club model three years ago. - Cabana Club global launch expected to reach revenue breakeven in 6 months and adjusted EBITDA breakeven in 12 months.

For the fiscal year ended October 31, 2024, High Tide's revenue reached an all-time high of $522.3 million, up 7% compared to fiscal 2023. The bricks-and-mortar segment led growth, with Q4 revenue at $138.3 million, a 9% year-over-year increase. The bricks-and-mortar segment grew 12% year-over-year. The Cabanalytics business data and insights platform, advertising revenue, and other revenue totaled $10.9 million in Q4 2024, up 48% year-over-year. The recently announced acquisition of a majority stake in Purecan, a profitable German medical cannabis importer and wholesaler, is a key segment move. Purecan is already profitable with adjusted EBITDA margins of 29%.

• Expect to remain free cash flow positive in 2025 while continuing to grow the business. - Plan to add 20-30 stores organically in 2025. - Cabana Club global launch expected to reach revenue breakeven within 6 months of launch and adjusted EBITDA breakeven within 12 months. - Acquisition of Purecan is highly accretive and expected to strengthen the core business and deepen relationships with Canadian licensed producers.

• Illicit market resurgence poses a challenge in the cannabis retail space. - Regulatory changes in hemp-derived THC markets in the US are fluid and difficult to navigate. - Intense competitive pressures in the Canadian cannabis market, with some competitors entering creditor protection, which could impact market dynamics.

Q: Matt Bottomley asked about market share revisions in Alberta and Ontario.

A: Raj Grover stated the 12% market share was revised down to 11% due to revised data from Statistics Canada, but dynamics in the markets haven't changed.

Q: Frederico Gomes inquired about pricing in the Canadian market and plans for the hemp-derived THC market.

A: Raj Grover said they're holding the line on gross margins due to competitive pressures, and hemp-derived THC market is being monitored but is immaterial to revenue currently.

Q: Bill Kirk asked about deciding products for the German market and appetite for other countries.

A: Raj Grover mentioned they'll bring in best brands from Canada, including white label products, and Germany is the first step with plans to expand to other European markets and Australia.

Q: Andrew Semple asked about store growth mix and Canadian market recovery.

A: Raj Grover said store growth is mostly organic, with M&A as incremental, and while sales have picked up, the Canadian market remains challenging due to illicit market and competitive pressures.