Cannabis retailer High Tide reports small loss, positive free cash flow

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Canadian cannabis retailer High Tide reported positive free cash flow of 4.1 million Canadian dollars ($3 million) for its third fiscal quarter of 2023, an important milestone as financing becomes harder to come by in the marijuana industry.

The positive free cash flow comes well ahead of High Tide’s financial forecast.

“I’m thrilled to report that our third fiscal quarter was the best in High Tide’s history since our inception, as we met our goal of generating positive free cash flow of CA$4.1 million this quarter, five months ahead of our previously communicated timeline and hence becoming less reliant on macro and industry conditions,” CEO Raj Grover said in a statement.

“This record (free cash flow) generation was a result of continued increases in our same-store sales growth, which have continuously outpaced the national average and totaled a tremendous 114% over the last seven quarters.”

High Tide, founded in 2009, reported a net loss of CA$3.6 million in the three months ended July 31, up from CA$2.7 million for the same period in 2022, largely stemming from a revaluation of derivative liabilities during this quarter.

Total revenue grew 30.4% year-over-year to CA$124.4 million in the quarter.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was CA$10.2 million, up 140% year-over-year.

It was the 14th straight quarter of positive adjusted EBITDA, High Tide said in its news release.

High Tide also said it remains the largest nonfranchised cannabis retailer in Canada, with 156 stores and 9.5% of the nation’s marijuana retail market share, excluding Quebec, which operates a retail monopoly in the province.

By category, revenue for the May-July quarter was:

  • CA$107 million in cannabis sales, up 35% over the same quarter last year.
  • CA$10.7 million in consumption accessories, up from CA$10.3 million.
  • CA$6.5 million in data analytics sales, an increase from CA$5.5 million year-over-year.

By geography, High Tide’s sales in the quarter were:

  • CA$112 million in Canada, up 38.8% from CA$80.7 million for the same quarter last year.
  • CA$12 million in the United States, down from CA$12.7 million.
  • CA$448,000 from other international markets, down from CA$1.9 million one year earlier.

Earlier this year, the Financial Times reported that High Tide was the fastest growing retailer in North America.

The company’s cash on hand was CA$25.7 million as of July 31.

High Tide shares trade as HITI on the TSX Venture Exchange and Nasdaq.