High Tide Inc. Q1 FY2026 earnings call

• Fiscal 2026 off to great start, revenue up 25% YOY to $178.3M, adjusted EBITDA up 62% YOY. • Domestic core bricks and mortar segment outperforms peers with rising margins, fifth straight quarter of sequential gross margin gains to 28%. • International business (Ramexian) picking up steam, Q1 revenue $25M, February revenue $12M. • Generated $2.9M free cash flow in Q1, highest trailing five quarters free cash flow at $16.8M. • Canna Cabana has 2.58M Kamana Club members, 162,000 Elite members. • Added 27 stores in past 12 months, mostly organically. • U.S. CBD e-commerce business stabilized with sequential increase, drag on adjusted EBITDA smallest in four quarters. • Looking to expand ecosystem into other international markets, starting with UK.

Revenue for the quarter was $178.3 million, up 25% year-over-year, growing at its fastest pace in 10 quarters and up 9% sequentially. Adjusted EBITDA was $11.5 million, up 62% year over year. Domestic core bricks and mortar segment: Revenue was $150 million in Q1, a $600 million annual run rate. Generated fifth straight quarter of sequential gains in gross margin to 28%, adjusted EBITDA margin 9%. Canadian bricks and mortar business, Canna Cabana: 2.58 million Kamana Club members across Canada, up 47% year-over-year; Elite members up 100% year-over-year to 162,000. International business (Ramexian): Q1 revenue $25 million, averaging over $8 million a month; February revenue $12 million, preliminary gross margins 20%. U.S. CBD e-commerce business: Stabilized and ticking higher, generating first sequential increase in two years with gains in CBD and accessories businesses, drag on consolidated adjusted EBITDA smallest in four quarters.

• Target to add 20 to 30 stores in Canada this calendar year, mostly organically. • Maintain target to exceed 350 stores across Canada. • Long-term plan to have 20% of sales from white label products versus 1.6% currently. • Look for supplemental M&A opportunities. • U.S. CBD e-commerce business has potential with industry group and potential regulatory changes.

• Uncertainty regarding actual outcomes differing from forward-looking statements. • Risks related to import permit delays in Ramexian's operations. • Market slowdown in Canadian cannabis market affecting sales. • Competitive pressures in the cannabis industry impacting market share. • Uncertainty around regulatory changes for CBD industry and its impact on U.S. e-commerce business.

Q: About same store sales performance in Canada during the quarter despite winter storms, what was the impact and trend quarter to date?

A: Same store sales impacted mostly in last 10 days of January and extended into February due to once-in-a-lifetime winter storm in Ontario; macro consumer outlook a driver, but same store sales were up in January too, and growth slowdown may pressure marginal players.

Q: Regarding entering UK market in next 12 months, what are expectations, funding, and asset multiples?

A: Meeting key players in UK, prospecting, not in rush, UK market growing 60%-100% YOY, not cash-strapped, prospecting key players.

Q: On Germany, February sales $12M and 20% gross margin, message and gross margin range going forward?

A: Encouraged by Ramexian trend but biomass still in Portugal, March numbers slightly softer; gross margin range 20-25% once Canadian sales in Germany land.

Q: Back in Canada, 20-30 organic store opening plan, focus on markets?

A: Focus on Ontario but also growing in Alberta, Saskatchewan; Ontario has room to add more stores, other markets also have growth potential.

Q: Bricks and mortar gross margins, market slowdown impact?

A: White label and elite sales to back up gross margins, elite growing 100% YOY, but competitive pressure may slightly affect, but expect to continue some margin expansion.

Q: E-commerce platforms recovery, changes implemented and trend since quarter ended?

A: Appointed VP of technology, relaunched platforms, seeing conversion, orders up, 5% quarter over quarter increase in segments, trend continuing into Q2.

Q: Canada lowering medical reimbursement amounts, impact on recreational market?

A: Medical industry shrinking, not competing with recreational, recreational already competitive, change in medical side not impacting recreational.

Q: Germany's medical cannabis availability, expectation as market matures?

A: Market growing, 227 tons annualized, patient numbers up, Ramexian at 10% of market, more pharmacies offering cannabis, market still massive.

Q: Market slowdown in Canada, reasons and competitive behavior?

A: Due to inflation, potential recession, illicit market picking up; competitors may have irrational behavior, but Hightide sticking to strategy, not raising prices drastically.

Q: New store growth in Canada with industry slowdown, 20-30 store plan?

A: Finding organic locations difficult, may be at lower end of target, focusing on M&A this year to take over existing stores.

Q: Push to get members to elite subscription status, how?

A: A little bit of everything - marketing, sales, advertising, as members see value in everyday discounts and exclusive product selection.