• Annual Revenue: $522.3 million, up 7% compared to fiscal 2023.
• Q4 Revenue: $138.3 million, up 9% year-over-year.
• Free Cash Flow: $22 million in fiscal 2024, up 217% over fiscal 2023.
• Q4 Free Cash Flow: $5.9 million, up 4% year-over-year.
• Store Count: Added 29 new stores in 2024, with plans for 20-30 more in 2025.
• Same-Store Sales: Increased 3% sequentially in Q4.
• Gross Margin: 26% in Q4 2024, consistent with Q4 2023.
• Adjusted EBITDA: $8.2 million for Q4, down 1% year-over-year.
• Cash Balance: $47.3 million as of October 31, 2024.
• Cabana Club Membership: 1.72 million members in Canada, up 34% year-over-year.
• International Cabana Club Members: 5.32 million globally.
• Debt: Total debt of $27 million with no maturities due for almost three years.

• Warning! GuruFocus has detected 4 Warning Signs with HITI.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• High Tide Inc (NASDAQ:HITI) achieved record-breaking revenue of $522.3 million for the fiscal year, marking a 7% increase compared to fiscal 2023.
• The company added 29 new stores in 2024, more than doubling the number added in 2023, with plans to add another 20 to 30 locations in 2025.
• High Tide Inc (NASDAQ:HITI) has delivered positive free cash flow for six consecutive quarters, with a significant increase of 217% over fiscal 2023.
• The Cabana Club membership numbers reached new highs in Canada with 1.72 million members, showing an 11% sequential increase and 34% growth year-over-year.
• The acquisition of a majority stake in Purecan, a profitable German medical cannabis importer, is expected to strengthen High Tide Inc (NASDAQ:HITI)'s position in the fast-growing German market.

Negative Points

• Despite the revenue growth, adjusted EBITDA was down 1% year-over-year and 14% sequentially, reflecting the impact of new store openings.
• Consolidated gross margins slightly declined to 26% in Q4 2024, compared to 27% in Q3, due to strategic pricing to drive volumes.
• The Canadian cannabis market remains highly competitive, with pressures from the illicit market and a slowdown in industry sales.
• Salaries and wages as a percentage of revenue increased to 12.4% in Q4, reflecting the rapid pace of store growth and the need for upfront investments in new locations.
• The e-commerce segment accounted for only 5.6% of consolidated revenue in Q4, with anticipated lower gross margins as part of the global Cabana Club rollout strategy.

Q & A Highlights

Q: Can you explain the market dynamics in Alberta and Ontario, and any changes in market share? A: There have been no changes in retail dynamics in Alberta or Ontario. The revision from 12% to 11% market share is due to updated data from Statistics Canada. We are actually up from 10% last year to 11% this quarter year-over-year.

Q: What are your plans for investment in the German market, especially with regulatory changes? A: There is no significant CapEx required for our investment in Germany. We have acquired a majority stake in Purecan, which is already profitable with 29% EBITDA margins. The main expense will be working capital requirements. We are confident in capturing significant market share in the German medical cannabis market.

Q: Could you discuss the pricing strategy in the Canadian market and potential changes in 2025? A: The Canadian market is highly competitive, and we are holding the line on gross margins to maintain our competitive edge. As more competitors exit the market, we anticipate opportunities to increase gross margins. However, we are not planning immediate price increases.

Q: What is your perspective on the hemp-derived THC market in the U.S., and do you have any plans for it? A: We have a few SKUs in the hemp-derived THC market, but it is not a major focus due to regulatory uncertainties. Our revenue from this segment is currently small, and we are prioritizing other core business opportunities.

Q: How do you plan to select brands and products for the German market? A: We aim to build the largest medical cannabis menu in Germany, including Canadian brands, our own white label products, and various grades of cannabis. We are leveraging our procurement expertise and strong relationships with Canadian LPs to capture market share.

Q: What is your outlook for opening new stores in 2025, and how does M&A fit into this plan? A: We plan to open 20 to 30 new stores organically in 2025. M&A opportunities will be considered in addition to this target, but organic growth remains our primary focus due to its cost-effectiveness and strategic benefits.

Q: Have you observed any recovery in cannabis demand in Canada towards the end of 2024, and what are your expectations for 2025? A: We have seen some recovery in demand, with strong performance in Q4. However, the market remains challenging due to illicit market pressures and competitive dynamics. We expect continued growth but remain cautious about market conditions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.