High Tide Inc.

At this time, I would like to welcome everyone to the High Tide Inc. Fourth Quarter Fiscal Year 2020 Financial and Operational Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Instructions will be provided at that time for you to queue up for questions. I will now turn the call over to your host, Christelle Deveaux, Director of Corporate Governance. Ms. Deveaux, please go ahead.

Thank you very much, Mary. Good morning, everyone, and welcome to High Tidings Quarterly Earnings Call. Joining me on the call today are Mr. Raj Grover, President and CEO, and Rahim Kanji, CFO. Earlier today, the company released its financial and operational results for the fiscal fourth quarter and year ended October 31, 2020. These results are available on the company's website and on CDAR. Before we begin, I'd like to remind everyone that certain statements made on today's call may contain forward-looking information within the meaning of applicable securities laws. Such statements may include estimates, projections, goals, forecasts, or assumptions which are based on current expectations and are not representative of historical facts or information. We want to be clear that such forward-looking statements represent the company's beliefs about future events, plans, or objectives, which are inherently uncertain and are subject to numerous risks and uncertainties that may cause the actual results or performance to differ materially from such statements. Additional information about both the material factors and assumptions forming the basis of our forward-looking statements and risks in which could cause actual results or performance to differ materially, and the material factors or assumptions that were applied to make certain conclusions, forecasts, or projections in forward-looking statements on the call is contained both in readily available document, available bond requests, and in our regulatory filings available on CDAR under the company's profile. HITI does not undertake any duty to publicly announce the results of any revisions to any forward-looking statements in this call or to update or supplement any information provided in today's call. In addition, on this call, we will refer to supplemental non-GAAP accounting measures, including adjusted EBITDA, which do not have any standardized meaning as prescribed by IFRS. We believe this non-IFRS financial measure assists management and investors in understanding and analyzing our business trends and performance. Please refer to our earnings press release for a calculation of these measures and reconciliations for most directly comparable measures calculated and presented in accordance with IFRS. These non-IFRS measures should not be considered superior to as a substitute for or as an alternate to and should be considered in conjunction with the IFRS financial measures presented on the financial statements listed on CDAR. It is now my pleasure to introduce Mr. Raj Grover, President and CEO of Hightide. Thank you. Mr. Grover, you may begin.

Thank you, Crystal, and good morning, everyone. Welcome to Hightide Inc.' 's financial results conference call for the fourth quarter ended October 31, 2020. I'll start this call by providing an overview of our results and other key developments in the fourth quarter. Rahim will discuss the financials in depth, and after that would be pleased to answer any questions you may have. In a way, this call marks the end of an era as it represents the last quarter before the closing of our acquisition of Meta Growth Corp. While I'm extremely proud of our results for the quarter, the reality is our company has been truly transformed on every level since then. We're a larger, stronger, healthier company than we were just a handful of months ago, which makes me so excited for the future. I'll get to that in a minute. We had already provided some disclosure regarding our top line to the market, declaring our expectations that it would be ahead of highest analyst estimate. Today, we are reporting record revenue of $24.9 million for the fourth quarter, which is an increase of 118% over the same quarter last year. Gross profit increased to $8.7 million, up 112% over the same quarter last year. Gross profit for the year was $30.8 million versus $11.3 million in the prior year. Adjusted EBITDA for Q4 2020 was $3.6 million compared to a negative $6 million in the same quarter last fiscal year. This was the strongest quarter ever generated by a Canadian cannabis retailer. and was also above the highest analyst expectations. We announced the acquisition of Meta in late August, and what a difference six months make. This is a vastly different company from where it was just six months ago. I'd like to touch on the advances we've made across several aspects of the company. First off, the entire scope of our operations has been magnified. Prior to announcing the acquisition of Meta, we had 34 open stores. While that made us a leader at that time, we now have 72 branded stores across the country. We're in a different league today. Our proven profitability has also become evident. Six months ago, our last reported trailing revenue was $54 million and EBITDA was negative $8 million. Today, we just reported revenue of $83 million for fiscal 2020 and adjusted EBITDA of positive $8 million. Investors are seeing clear evidence of profitable growth already, and again, this is before we doubled in size. Not only has our presence in Canadian bricks and mortar retail multiplied, but so have our U.S. operations. At the end of August, based on the last reported quarter, which was the fiscal second quarter of 2020, ended April, Hightide's U.S. operations were on an $11 million run rate. Today, if you were to take the U.S. revenue Reported for a fourth fiscal quarter and add smoke cartel it translates to a run rate of about 25 million dollars Expanding in the US is a key component of our strategy going forward We have been beefing up our management team to make sure we have the right pieces in place to succeed and I would like to highlight three key members who recently joined our team Omar Khan joined high tide as senior vice president of corporate and public affairs in January Omar is among Canada's most prominent cannabis public affairs strategist and has extensive experience in networks across Canada, the United States, and Europe. Also, earlier this year, we were pleased to announce the appointment of Andrea Elliott to our board of directors as an independent director. Andrea has over 20 years of executive retail experience and is currently executive vice president at Moose Knuckles, a successful global Canadian luxury outerwear brand. We're already greatly benefiting from our expertise in retail. In November last year, we also announced that Vahan Ajaymian joined Hightide as Vice President Capital Markets. Vahan was one of the pioneers in equity research of the cannabis sector and has been a thought leader in the space. Speaking of our capital markets profile, that's also increased by leaps and bounds. Six months ago, our shares were listed on the CSC. While the CSC were great partners during our early days, We uplisted to the TSX Venture Exchange concurrent with the closing of the Meta transaction in November. In December, we were the first Canadian retailer, cannabis retailer, anywhere to announce that we submitted an initial application to list on the NASDAQ. We have started receiving and addressing comments from NASDAQ and our application is proceeding well. Perhaps more important than where investors can buy shares is the ease at which they can buy them. Our liquidity has exploded. offering a more efficient market for investors. During the last 10 trading days in August, we were averaging a little over 1 million shares a day traded across our primary Canadian, US, and German exchanges. By the end of February, we were averaging 19 million shares a day across these exchanges. The average value of our shares traded has increased since then from less than a quarter of a million dollars a day to over $12.5 million. This increased liquidity is providing confidence for both institutional and retail investors and is helping us attract capital as well as helping with potential M&A targets.