High Tide, Inc. ((TSE:HITI)) has held its Q4 earnings call. Read on for the main highlights of the call.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
High Tide, Inc. Reports Positive Sentiment in Earnings Call
High Tide, Inc.’s latest earnings call was marked by a generally positive sentiment, with the company celebrating record-breaking revenue and significant free cash flow growth. Key achievements included the successful expansion of the Cabana Club and strategic international acquisitions. However, the discussion also highlighted some challenges, such as slow same-store sales growth, pressure on gross margins, and increased operating expenses. The Canadian cannabis market was noted as being particularly competitive, with significant pressures from the illicit market impacting operations.
Record-Breaking Revenue and Growth
High Tide, Inc. reported an all-time high revenue of $522.3 million for the year, representing a 7% increase compared to fiscal 2023. Q4 revenue was $138.3 million, up 9% year-over-year, with an annualized run rate exceeding $550 million, showcasing the company’s robust growth trajectory.
Free Cash Flow Success
The company delivered positive free cash flow for six consecutive quarters, generating $22 million in fiscal 2024. This marks a remarkable increase of 217% over fiscal 2023, underscoring High Tide’s financial discipline and operational efficiency.
Cabana Club Expansion
Cabana Club membership saw significant growth, reaching 1.72 million in Canada, a 34% increase year-over-year. Globally, membership now stands at 5.32 million, with a strong presence in the US and EU, highlighting the brand’s international appeal.
Strategic Acquisition in Germany
In a strategic move, High Tide acquired a majority stake in Purecan, a profitable German medical cannabis importer. This acquisition, with impressive adjusted EBITDA margins of 29%, positions High Tide well for growth in the European market.
Canadian Market Share Increase
Despite operating only 5% of the store count, High Tide successfully increased its market share in five Canadian provinces, averaging 11% during fiscal Q4, up from 10% the previous year, demonstrating effective market penetration.
Same Store Sales Growth Challenges
Same-store sales were up by only 0.4% year-over-year in Q4, reflecting a broader market slowdown and indicating potential areas for strategic improvements.
Gross Margin Pressures
Consolidated gross margins remained steady at 26% in Q4 but were slightly below the 27% reported in Q3, highlighting ongoing pressure in maintaining profitability levels.
Increased Operating Expenses
Salaries and wages rose to 12.4% of revenue in Q4, up from 11.6% in the same quarter last year, attributed to the company’s rapid store growth and expansion efforts.
Cannabis Market Challenges
The Canadian cannabis market remains highly competitive, with significant pressures from the illicit market, posing challenges for legal operators like High Tide to navigate.
Forward-Looking Guidance
Looking ahead, High Tide plans to continue its expansion strategy by adding 20 to 30 new stores in 2025. The company aims to maintain its positive free cash flow position and expand its market share both domestically and internationally. The successful acquisition of a majority stake in Purecan is expected to bolster High Tide’s presence in the German medical cannabis market, supporting its growth trajectory.
In conclusion, High Tide, Inc.’s earnings call painted a promising picture of the company’s future, despite acknowledging certain challenges. The positive sentiment was driven by record revenue, free cash flow success, and strategic expansions. Investors and market watchers can expect High Tide to continue its growth path, leveraging its strengths to overcome market challenges.
