High Tide Inc.

Welcome to your conference call. Please continue to stand by. Your conference will begin in approximately five minutes. Thank you. Thank you. Thank you for watching. Thank you for watching. Good morning. My name is Ina and I will be your conference operator today. At this time, I would like to welcome everyone to Hightide Inc.'s third fiscal quarter 2026, an audited 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 the time for you to queue up for the question and answer session. I'll now turn the call over to your host. Please proceed.

Thank you, operator. Good morning, everyone, and welcome to High Tide Inc.'s quarterly earnings call. Joining me on the call today are Mr. Raj Grover, President and Chief Executive Officer, and Mr. Mayank Mahajan, Chief Financial Officer. On September 14, 2026, the company released financial and operational results for the fiscal quarter that ended July 31, 2026. Before we begin, please let me remind you that during the course of this conference call, High Tides Management may make statements including what affects the 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, and 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 September 14, 2026, our latest annual information form, and our latest management discussion and analysis, each filed with securities regulatory authorities at CRplus.ca or on EDGAR at www.sec.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 measured and discussed, please consult our latest management discussion and analysis filed on CDERplus 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 Hightide Inc.'s Financial Results Conference Call for the third fiscal quarter that ended July 31, 2026, which I'm extremely proud to say was the best quarter in our company's history. In fact, our financial performance was so strong, we felt it necessary to release guidance one business day after the quarter ended with even the low end of our initial forecast exceeding even the most aggressive analyst estimates. Yesterday, we released our full results, which were closer to the high end of the guidance ranges we provided and included many other new positive highlights. Investors can see from these results that not only are we growing our top line, but this growth is now clearly showing up in our bottom line. Specifically, compared to Q2, our gross profit dollars grew two and a half times faster than our operating expenses. As a result, 60% of the increase in gross margin flowed down to operating income, which was up 43% sequentially and 133% year over year. The operating income we generated in Q3 of $8.7 million was more than we generated during the first two quarters of the fiscal year combined. Talk about positive momentum. This growth continued all the way to the bottom of the income statement. We generated record net income of $12.7 million this quarter. Even excluding the fair value change in derivative liability, which helped us this quarter, adjusted net income was $2.2 million, up 186% sequentially and 157% year over year. More and more is showing up in the bottom line, which is what we want to see and what we have been promising our investors. This progress didn't just happen because we pulled the switch in Q3. It is the result of what we've been doing for years. It is the result of the hard work we have been putting in quarter after quarter and year after year. I'll point to three things specifically. First, owning the customer. With 2.73 million loyal members of Cabana Club across the country, we are up over 11 times from when we launched the Discount Club model in October 2021. Second, growing revenue. from $8 million of sales per our first annual report in 2018 to an annual run rate of approximately $800 million today. And third, finding ways to increase the profitability of our sales and having very tight cost controls as evidenced by us setting an all-time low this quarter in both trailing GNA as a percentage of revenue and trailing salaries and wages as a percentage of revenue. We are a product of our environment regarding the competitive dynamics within the Canadian cannabis market. All we can do is try to be proactive and make bold yet calculated moves to try to stay ahead of the curve. Others can struggle to play copycat and try to catch up from behind, but our amazing team is always plotting our next big move and exploiting our competitive advantages in new ways. Particularly after our Q3 results, I believe that investors can see where the ship is heading. Similarly, we can't always control what the capital markets are doing. All we can do is run our operations tightly and make sure we are disciplined in terms of capital deployment to maximize value for our shareholders. And again, I think the data shows that we are succeeding. Even adjusting for the portion of Remexian that we don't currently own, our revenue grew 2.5 times faster than our share count over the past year and adjusted EBITDA grew 3.9 times faster. While I don't think we are getting much credit for the improvement in per share metrics in the marketplace, I believe it's just a matter of time, especially if our net income continues to ramp as I expect it will. Trading at an EB to EBITDA multiple of 5.4 times the EBITDA we just reported annualized, we see the current setup as more of an opportunity than a risk. We've always been prudent in managing our affairs and operations to insulate us from being reliant on our share price for survival. That is why we are still here while so many of our peers have disappeared over the years. We have demonstrated for a few years now that we can increase our store count and grow our business organically, including investing in working capital, all from our internally generated free cash flow and not rely on external equity injections. This was apparent again this quarter. Driven by $7 million of free cash flow in Q3, which was our second highest level in nine quarters, our cash balance increased by $10.6 million during the quarter. Similarly, we have managed our balance sheet extremely carefully. We have no meaningful debt maturities for three years, and we still have $25 million available to be drawn on our revolver with Banco Montreal. So the way we see it, we have no issues regarding fueling our operations or addressing debt that would have to require raising equity near these levels. We have built something truly special and totally unique at Hightide, a global leader in cannabis. In Canada, we have the preeminent model and brand with 232 stores and revenue on an annual run rate of approximately $650 million. In Germany, our volumes are still ramping and we continue to set new records a year into our transaction. Two engines of growth, both running with power, making Hightide the undisputed leader in the two largest federally regulated cannabis markets on earth. While we are continuing to eye other markets and evaluate partners, we are prioritizing discipline in our approach. We won't feel compelled to make a deal just to say we did or to meet a date on a calendar. There are multiple conversations currently ongoing with players of different sizes, but we won't pull the trigger until we are sure that it's the right opportunity at the right time and right price for our shareholders. Having already demonstrated how our procurement prowess can directly drive market leadership in a short amount of time in Germany, we are seeing prudent operators recognize the value and wisdom in wanting to partner with Hightide rather than compete with us. With 118 stores we are still planning to add in Canada and Germany scaling so impressively, we have a lot of future growth lined up based on what we already have in hand, so we don't feel the itch to rush into the next transaction too quickly. While we are evaluating opportunities and are engaged in negotiations and market due diligence every day, the strength of our current business positions as well. We aren't desperate to make a risky move and just hope it works. As highlighted in our press release, Q3 was a milestone quarter with almost every key consolidated metric hitting a new all-time high. Specifically, revenue of $199 million was an all-time high and up 33% year-over-year, representing the fastest growth rate in 13 quarters. Each of our bricks and mortar and medical cannabis distribution segments posted new records. Gross profit was a record $52.7 million, up 32% year-over-year. Each of our bricks-and-mortar and medical cannabis distribution segments posted new records. Adjusted EBITDA of $16.2 million was an all-time high and up 52% year-over-year. Each of our bricks-and-mortar and medical cannabis distribution segments posted new records, while our consolidated adjusted EBITDA margin of 8.2% marked the highest level in 12 quarters. Income from operations was a record $8.7 million and up 133% year over year. Each of our bricks and mortar and medical cannabis distribution segments posted new records. Cash flow from operations before changes in non-cash working capital was a record $11.9 million and up 44% year over year. I'll now give an overview of our two segments, following which Mayank will dive deeper into the financials. In Canada, Canada Cabana continues to lead the way, fueled by the continued expansion of our loyalty program, the Cabana Club. We are now at 2.73 million Cabana Club members across Canada, up 27% year-over-year. We continue to move forward towards a long-term goal of 3 million members in Canada. Elite also continue to post gains up 62% over the past year, and now exceeding 186,000 members that pay us $35 a year to shop in our stores. They say imitation is the highest form of flattery and we are definitely seeing that in the Canadian cannabis landscape. Competitors are seemingly panicking and increasingly starting to copy pieces of our model which has created tighter conditions in many areas. We are the originators of the discount club model that continues to take market share and we have scale. Accordingly, we believe we will come out of this period even stronger. But with the disruptions in the market, smaller operators are likely to suffer and possibly be wiped out. At the same time, even without illicit operators, the number of stores in key markets such as Ontario and Alberta have increased by 5% over the past 12 months, reversing the trends of flattening or retrenching that we were seeing a year or so ago. Meanwhile, consumers are being tighter with their wallets given macroeconomic uncertainty and creeping inflation. Putting all this together, it isn't easy times out there, which we have seen translate to negative same-store sales among our public and private peers. While we see a few more months of touch-and-go conditions ahead, we were pleased to see our same-store sales be consistent with the prior year for the full quarter and that June and July each posted gains. The key is we are not losing any customers. On a same store basis, our transaction count was up 1.1%, which is being offset by slightly thinner baskets, as well as some price compression at the wholesale level. Customers are continuing to see us as their go-to destination for cannabis. Again, we are a product of our environment, and all we can do is aim to outperform the market, and our longer-term trend of outperformance is clear. Chaining our monthly same-store sales increases since October 2021, Tana Cabana was up 171% to June 2026. In contrast, as the increase in total sales in the five provinces where we operate has not kept pace with the increase in the number of stores, the average operator has experienced a 1% sales decline during this period. Excluding British Columbia, where we have been at the regulatory cap of eight stores for years, our market share within the other four provinces where we operate was 14% during May and June, which was up versus 13% a year ago. Looking ahead, we see a 15% market share as a milestone, not a ceiling. Excluding stores open less than six months, which are still ramping up, our annualized revenue per square foot in Q3 was $1,721, once again above many leading blue chip retailers. In June, the average Kanakabana store was on an annual revenue run rate, I'm gonna stop here. In June, the average Kanakabana store was on an annual revenue run rate of $2.6 million of product sales, which was 1.8 times our peer average at $1.4 million. In Ontario, the largest province and our focus 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 $2.8 million annual run rate, which was 2.4 times our peers at $1.2 million. For the 12 months ended June 2026, total industry sales in the five provinces where we operate were up 3% year over year. In contrast, total canna cabana sales were up 10% during this period. With 14 already completed, we believe we can achieve our goal of adding 20 cabanas during this calendar year and reiterate our long-term target to reach 350 locations across the country. This growth, combined with Rumexian's current trajectory, makes us more confident than ever that we will breach the $1 billion revenue mark in the not-too-distant future. Speaking of Ramexian, let's turn to Germany, where we demonstrated significant strength and growth in Q3. Ramexian sold 10.2 tons of medical cannabis in this quarter, up 35% sequentially and 165% higher than the pace Ramexian was on when the transaction closed a year ago. Ramexian's financial metrics also posted impressive growth driven by the increased volumes. Revenue of $38.2 million was up 21% sequentially, but with cost controls and operating leverage, adjusted EBITDA grew almost twice as fast, up 38% sequentially to $4.4 million, representing a record 12% adjusted EBITDA margin. Looking at the broader German market, we see incredible appetite for medical cannabis, and Canadian medical cannabis products in particular. According to data from Statistics Canada, the value of medical cannabis exported from Canada to Germany reached a record level of $49.4 million in July. Looking at the three-month average, we are now at a $517 million annual run rate, up 62% versus a year ago. For us, this shows that we have even more room to continue ramping volumes up to a higher absolute tonnage level given our superb team on the ground in Germany and unparalleled ability to procure cannabis at best-in-class terms given our scale and free agent status. However, with the market growing so quickly, it may be challenging to ramp our market share as fast as we had previously thought. On that front, I note that Bee Farm significantly restated industry imports for the March quarter, which translated to Ramexian having a market share of 10.5%. While Ramexian has experienced impressive growth since March, it will be interesting to see where the industry was for the three months ended June and where our market share shakes out. In conclusion, Q3 was once again the best quarter in our company's history with new all-time records set across the board. With $25 million of dry powder available for growth from our revolver with Bank of Montreal, we have the resources to keep growing without relying on external equity. I am so grateful to each and every one of our team members globally. They are working hand-in-hand, hustling and executing every day, and I'm so proud of all the efforts, energy, and dedication that they bring to Hightide quarter after quarter. Without our superb team, we would have not come this far, and I'm confident that they will take us to even newer heights in the years ahead. With that, I'll turn it over to Mayank for his comments and a deeper dive into the numbers.