High Tide Inc.

Good morning, my name is Ina and I will be your conference operator today. At this time, I would like to welcome everyone to the Hightide First Fiscal Quarter 2026 Unaudited 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. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number 2. Thank you. Mr. Brownlee, you may begin your conference.

Thank you, Operator. Good morning, everyone, and welcome to High Tidings Quarterly Earnings Call. Joining me on the call today are Mr. Raj Grover, President and Chief Executive Officer, and Mr. Mike Mahajan, Chief Financial Officer. On March 17, 2026, the company released financial and operational results for the fiscal quarter that ended January 31, 2026. Before we begin, please let me remind you that during the course of this conference call, HITI's management may make statements including with respect to management's expectations or estimates of future performance. All such statements other than statements of historical facts constitute forward-looking information or forward-looking statements within the meaning of the applicable securities laws and are based on assumptions, expectations, estimates, and projections as of the date hereof. Specific forward-looking statements include, without limitation, all disclosures regarding future results of operations, economic conditions, and anticipated courses of action. For more information on the company's risks and uncertainties related to forward-looking statements, please refer to the company's press release dated March 17, 2026, our latest annual information form, and our latest management discussion and analysis, each filed with securities regulatory authorities at cedarplus.ca or on EDGAR at www.sac.gov forward slash EDGAR or on the company's website at www.hightideinc.com and which are hereby incorporated by reference herein. Although these forward-looking statements reflect management's current beliefs and reasonable assumptions based on the currently available information to management as of the date hereof, we cannot be certain that the actual results will be consistent with the forward-looking statements in the future. There can be no assurance that actual outcomes will not differ materially from these results. Accordingly, we caution you not to place undue reliance upon such forward-looking results. For any reconciliation of non-IFRS measures, measures being discussed, Please consult our latest management discussion and analysis filed on CEDAR Plus and EDGAR. It is now my pleasure to introduce Mr. Raj Grover, President and Chief Executive Officer of Hightide. Thank you, Mr. Grover. You may begin.

Thank you, Carter, and good morning, everyone. Welcome to Hightiding's Financial Results Conference Call for the first fiscal quarter that ended January 31, 2026. I'll begin with some high-level comments about the quarter and our strategy before Mayung dives deeper into the financials. Fiscal 2026 is off to a great start, and I'm excited for what still lies ahead. Revenue for the quarter was $178.3 million, up 25% year-over-year, growing at its fastest pace in 10 quarters and up 9% sequentially. One quarter into the year, and we are at a revenue run rate exceeding $700 million. Also at $11.5 million, our adjusted EBITDA was up 62% year over year, marking the fastest pace of growth in two years. Our domestic core bricks and mortar segment continues to outperform at peers with rising margins, which have now increased sequentially for five straight quarters and hitting 28%. At the same time, our newer international business is now picking up steam and reaching new highs since we acquired a majority interest in it. Let's recap how Germany is going. The Ramexian transaction closed on September 2, 2025. Revenue for the two months it contributed to Q4 results was just under $10 million, averaging $5 million a month. In Q1, Ramexian's revenue was $25 million, averaging over $8 million a month. In February alone, Ramexian sold 2.6 tons of medical cannabis and generated $12 million of revenue, which was a record since we acquired a majority stake in the company. Additionally, preliminary gross margins improved to 20% in February. While we caution that any one month's performance may not be consistently repeatable, it nevertheless gives us a strong degree of confidence that looking ahead, Ramexian should be able to deliver results far ahead of the metrics used during the valuation period for the transaction. What gives me extra comfort is that February's strength was even before we start seeing the results of our strategy fully coming together. As mentioned on our last conference call, we have already begun sourcing tons of biomass from Canada at best-in-class terms, which are significantly better than what Romexian was procuring on its own or through brokers. Given import permit delays, this biomass probably won't start reaching Germany for about a month, and after that is when we anticipate a sustained improvement in profitability at Romexian. So I'm glad to say that it's all coming together. Of course, growing the Ramexian business, especially with meaningful inventory still stalled in Portugal and deposits for new biomass from Canada, which will go direct, requires working capital investments. Despite a modest drag in Q1 from Ramexian, I'm very proud to report that Hightower generated free cash flow on a consolidated basis. Q1 free cash flow was $2.9 million, marking a huge reversal from negative $1.9 million in Q1 last year and more than double the $1.3 million generated in Q4. We like to look at free cash flow generation over a longer term to get a better sense of the trend. To that point, despite constantly opening new stores, which act as a drag initially, including 7 and Q1 alone, we have now generated $16.8 million of free cash flow on a trailing basis, which is the highest level in the past five quarters. The engine of this free cash flow has been our core Canadian bricks and mortar business, Canna Cabana, which, backed by our innovative discount club model, continues to expand. We are now at 2.58 million Kamana Club members across Canada, up 47% year-over-year, marking the fastest growth rate in 10 quarters. Elite is growing even faster, up 100% year-over-year and reaching 162,000 members. These numbers give us confidence that we will reach our long-term goals of 3 million members in Canada, with over a million being elite. Our loyalty-based discount club is the largest in all of cannabis and truly the envy of the industry. It features everyday discounts for members, as well as unique promotions such as our $100,000 420 giveaway, which was launched two weeks ago. Our store's financial performance continued to be very strong. Bricks and motor revenue was $150 million in Q1, a $600 million annual run rate. Backed by higher margin initiatives gaining steam, the segment generated its fifth straight quarter of sequential gains in gross margin, reaching 28% in Q1, which was the highest level in over three years. The segment's adjusted EBITDA margin maintained its high at 9% in the quarter. Our retail KPIs remain very impressive. Despite the extremely harsh weather, particularly in Ontario in January, we were able to still post positive same-store sales increases during the quarter on a year-over-year basis. Chaining our monthly same-store sales increases since launching our innovative discount club model in October of 2021, Canna Cabana was up 149% to December 2025. In contrast, the increase in total sales in the five provinces where we operate has mirrored the increase in the number of stores, implying that the average operator has had flat sales during this period. Our market share within the five provinces where we operate was 12% during November and December, which was up from 11% a year ago and 10% two years ago. Excluding stores open for less than six months, which are still ramping up, our annualized revenue per square foot in Q1 was $1,728, once again above many leading blue-chip retailers. In December, the average Kanakabana store was on an annual revenue run rate of $2.5 million, which was 1.9 times a peer average at $1.3 million. In Ontario, the largest province and focused for future growth, our outperformance was even more pronounced. Excluding stores open less than six months, which are still ramping up, our average Ontario store was on a $2.9 million annual run rate, which was 2.6 times our peers at $1.1 million. For the 12 months ended December 2025, total industry sales in the five provinces where we operate were up 3% year over year. In contrast, total Canna Cabana sales were up 14% during this period. We've added 27 stores in the past 12 months, almost all organically. The key factors of our selection criteria is location and lease terms, as these are key pillars of sustained superior financial performance, and these decisions are set for years once they are made. We are happy with how our new stores are performing, but the ramp is naturally slower due to increased competition and a broader slowdown in industry growth rates. Despite the drag from new stores, it is very heartening to see the increases in gross profit and EBITDA in this segment. We are confident that these newer stores will gain traction and add to our financial profile in the quarters ahead. Regarding the outlook, we reiterate our target to add 20 to 30 stores in Canada during this calendar year, consistent with what we have achieved over the past two years. We expect this to be done mostly organically. We continue to look for supplemental M&A opportunities which can add shareholder value. We maintain our target to exceed 350 stores across the country with new locations being additive to the total addressable market of consumers we can sign up to our loyalty programs. As we scale up, the contribution from our higher margin white label products will become more meaningful. Over the long term, we plan to reach approximately 20% of our sales coming from our white label products versus 1.6% currently. As always, these will continue to be made only by quality licensed producers and largely represent differentiated products like our strong performing Queen of Bud brand. Turning to our U.S. CBD e-commerce business, we are pleased to report that we are one of the founders of National Compassionate Care Council, an industry group aiming to shape U.S. federal cannabis policy following rescheduling efforts. It focuses on integrating cannabinoid therapies into mainstream medicine through research, education, and patient-focused advocacy. We believe this could be a meaningful opportunity for New Leaf and Phab CBD, especially given that the U.S. is poised to launch CBD pilot projects through Medicare. While we are bullish on this opportunity, we don't feel that the market has ascribed any value to it, and we know that Frederico Gomez at ATB Cormark published a report on the potential that this change could have on our business. While we are waiting for the regulations to be unveiled, there are already early signs that our e-commerce segment as a whole has stabilized and is even ticking higher. Generating its first sequential increase in two years in Q1, with gains in both the CBD and accessories businesses, the segment's drag on consolidated adjusted EBITDA was also the smallest in four quarters. So there are reasons for optimism, both in terms of the current trajectory of our e-commerce businesses and the potential to turbocharge our CBD businesses in particular. That said, we have several options regarding future steps, including ongoing conversations to explore potential transactions. As always, we will look to what surfaces the most value for our shareholders. At the same time, we continue to evaluate opportunities to take our Kanakabana brand into the U.S. through licensing agreements. While we are in conversations with operators of different sizes, this will take time, and we're being thoughtful regarding possible structure and partners. Coming back to Romexian, we entered into this transaction for the long term. We are only just getting started on the synergies, and while still present today, the issue of getting product out of Portugal will only alleviate from here going forward, which should boost margins versus what we reported in the past two quarters. Again, we note that a similarly sized German importer and distributor recently entered into an acquisition by a public company at a valuation significantly higher than our transaction with Romexian. And a reminder that as the pricing for the put-in call options with Ramexian's minority shareholders are set at 3.6 or 4 times, depending on the timing of the exercise, the future accretion for the remainder of the company is already locked in for high-type shareholders. Ramexian continues to gain prominence within the German medical cannabis market. Despite the volume of biomass in Portugal still waiting to be released, Ramexian was able to significantly increase its market share of German imports from 6.5% for the three months ended September 2025 to 10.3% for the three months ended December 2025. As alluded to previously, total shipments since then have accelerated, with the average monthly shipments for January and February up 25% versus the three months ended December. And this is before we start to see the benefits of the tonnage procured in Canada starting to arrive and enhance the segment's financial results. While there could be some headwinds in Germany, particularly regarding a new law governing the details surrounding medical cannabis access, we are encouraged by the ongoing debate in the German Parliament and are hopeful that the ultimate changes are likely to be more benign than what had been feared last year. Meanwhile, Romexian continues to gain momentum. We are already a leader in Germany, and as our strategy is starting to yield results there, we are looking to expand our ecosystem into other international markets. In particular, we are already meeting with key players in the UK with the aim of entering into a transaction in that country within the next 12 months. Another highlight of our quarterly results I would like to touch on was our strong cost controls. In particular, general and administration expenses represented just 4.1% of revenue, marking a six-quarter low. In conclusion, we are on the right track with many milestones achieved and many more ahead. We have now generated $42.6 million in adjusted EBITDA over the past 12 months, making us as profitable as we've ever been with expectations that all three of our segments will post gains in the quarters ahead. Hightide's future looks bright, and it's worldwide. Thank you to our global team for making it all happen and for where we will go in the quarters ahead. On that front, I'm pleased to highlight that earlier this month, Kathleen Skerritt and Menashe Kestenbaum joined our board of directors. We also created two new advisory positions with David Wallisch and Philip Earnest to provide strategic guidance to management on matters including real estate, business development, artificial intelligence, e-commerce technology, and community and stakeholder engagement. Welcome to our Hightight family. I look forward to working with you all and achieving even greater heights ahead. With that, I'll turn it over to Mayank for his comments and a deeper dive into the numbers.