High Tide Revenue Surges 37% in Fiscal Year 2023

The Three Key Takeaways:

  1. Revenue Increase: High Tide Inc.’s revenue rose by 37% in fiscal year 2023, reaching $487.7 million.
  2. Financial Health Improvement: The company saw a 40% rise in free cash flow and a 110% increase in adjusted EBITDA, showing better cash management and efficiency.
  3. Retail Growth and Plans: High Tide maintains its position as a leading non-franchised cannabis retailer in Canada, but we will keep an eye on same store sale growth.

High Tide Inc. (NASDAQ: HITI) (TSXV: HITI), reported its financial results for the fiscal year and fourth fiscal quarter ended October 31, 2023. The company, a player in Canada’s cannabis market, saw its revenue rise by 37% to $487.7 million for the fiscal year 2023, with a 2% sequential increase in the fourth quarter.

High Tide financial health is evidenced by a 40% increase in free cash flow from $4.1 million in the third fiscal quarter to $5.7 million in the fourth fiscal quarter, indicating improved cash flow management and operational efficiency. High Tide’s gross profit for the year increased by 30% to $131.3 million, maintaining a gross margin around 27%.

Significantly, High Tide adjusted EBITDA showed a notable year-over-year increase of 110% to $30.6 million. This metric, reflecting earnings before interest, taxes, depreciation, and amortization, points to the company’s operational effectiveness and cost management, as indicated by reduced expenses in salaries, wages, benefits, and general administration relative to revenue.

Retail operations also grew, with a 13% year-over-year and 3% sequential increase in same-store sales. High Tide continues to be the largest non-franchised cannabis retailer in Canada, with 163 locations and a customer base of 4.9 million across Canada, the United States, and Europe. Membership growth in the Cabana Club and the Cabana ELITE paid program suggests an uptrend in consumer engagement and loyalty.

However, High Tide faced challenges, particularly in its e-commerce segment, where a global post-pandemic slowdown led to non-cash impairment charges mainly related to goodwill. Despite this, the impact on overall revenue was limited.

Looking forward, High Tide plans to expand its retail presence in Canada to 300 stores, encouraged by regulatory changes in Ontario. This expansion plan, combined with a strong cash position and reduced debt, seems to set the stage for continued growth in the cannabis market.

My Take as an Independent Analyst

As an independent analyst, my assessment recognizes clear progress within the company. However, there is room for more substantial growth, particularly in same-store sales. Ideally, same-store sales should mirror the overall growth rate of the cannabis industry. This alignment would indicate the company is capitalizing effectively on the broader market expansion and maintaining its competitive edge.

In summary, High Tide Inc.’s fiscal year 2023 performance demonstrates its ability to grow revenue and manage expenses effectively in a competitive cannabis industry. The company’s strategies and operational execution have led to increased profitability and market presence, positioning it for future growth.

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