High Tide Q2 2026 Earnings Call Transcript – High Tide (NASDAQ:HITI)
On Tuesday, High Tide (NASDAQ:HITI) discussed second-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
Full Transcript
Jenny (Operator)
Good morning. My name is Jenny and I will be your conference operator today. At this time, I would like to welcome everyone to High Tide Inc. second fiscal quarter 2026 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 that time for you to queue up for questions. I will now turn the call over to your host.
Carter
Thank you, operator. Good morning everyone and welcome to High Tide, Inc. 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 June 15, 2026, the Company released financial and operational results for the fiscal quarter that ended April 30, 2026. Before we begin, please let me remind you that during the course of this conference call, High Tide’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 security 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 June 15, 2026, our latest annual information form and our latest management discussion and analysis, each filed with securities regulatory authorities at sedarplus.ca or on Edgar at www.sec.gov/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 Sedar plus and Edgar. It is now my pleasure to introduce Mr. Raj Grover, President and Chief Executive Officer of High tide. Thank you, Mr. Grover. You may begin.
Raj Grover (President and Chief Executive Officer)
Thank you, Carter and good morning everyone. Welcome to High Tide Inc. financial results conference call for the second fiscal quarter that ended April 30, 2026. I’ll begin with some high level comments about the quarter and our strategy before Mayank dives deeper into the financials. The High Tide team built on top of the strength we demonstrated in Q1 and took the company to new heights in Q2 as it is typically the slowest quarter from a seasonal perspective and given three fewer days, Q2 is usually our weakest quarter.
I’m extremely proud to report that not only was this our best Q2 ever, but looking at the financial highlights, it was the best overall quarter we have ever reported to our shareholders. There was strength across the board as we set new all time records in revenue, gross profit, income from operations and adjusted ebitda. These all time highs were supported by both our core bricks and mortar Canadian cannabis business as well as ReMaxion, which generated record levels of tonnage revenue, gross margin and adjusted EBITDA in Q2.
Let’s drill into the highlights. Our consolidated revenue for the quarter was $179.3 million, putting us on an annualized pace well ahead of $700 million. Revenue was up 30% year over year, growing at its fastest pace in 11 quarters. Our bricks and mortar segment saw cannabis, hemp derived products and other revenue post an 8% gain year over year at $48.4 million. Our consolidated gross profit set an all time record. This grew even faster than revenue, up 36% year over year, representing the fastest pace of growth in 12 quarters.
Sequentially, gross profit was up 9% despite this quarter having three fewer days to make sales at 27%. Our consolidated gross profit margin set an eight quarter high and was up over 200 basis points. Sequentially our bricks and mortar segment posted a sequential gain, but the real standout was our medical cannabis distribution segment which generated gross profit margin of 27% which was more than double the 12% it generated in Q1. Since we first disclosed our plans to enter the German medical cannabis market, we had identified our unparalleled ability to be able to procure cannabis at best in class terms and now I am thrilled to see this showing up in our financial results. Income from operations was a record $6.1 million in Q2, up a truly impressive 554% year over year and 157% sequentially, highlighting the degree of operating leverage in the business and and the extent to which we run a tight ship. Adjusted EBITDA of $13.9 million was an all time high. This was up 73% year over year, marking its fastest pace of growth in nine quarters and up 21% sequentially, our adjusted EBITDA margin of 8% set an eight quarter high again.
While Q2 is typically the seasonally slowest quarter of the year and and with three fewer days, I am proud that we were still able to hit key milestones of positive net income and free cash flow this quarter. Adjusted for non cash fair value charges of derivative liabilities and excluding non controlling interest, we generated net income of $0.01 per fully diluted share, which was a huge reversal from a loss of 4 cents in the prior year and a loss of 2 cents.
Sequentially. Excluding the non cash impact from derivative liabilities which largely arise from the outperformance of ReMaxion’s results, we believe we are at the point where we can sustainably generate positive net income going forward. Free cash flow was $1.5 million in Q2. While this was lower than what we had generated in Q1 this year and Q2 last year, the devil is in the details Cash flow from operating activities prior to changes in non cash working capital was $8.8 million, which was a seven quarter high.
However, setting the multiple all time records I just reviewed required investments in working capital to grow the business. Specifically, we invested $4.3 million in working capital, which was the largest quarterly investment we’ve made during the past six years. As we always say, we believe it’s most appropriate to look at a longer period of free cash flow to smooth out such variability. From working capital changes over the past 12 months, we have now generated $13.4 million in free cash flow.
All of this execution doesn’t just happen by accident or because a rising tide is lifting all boats across the industry. That’s clearly not the case when you compare our performance versus our peers. We work hard and exceed our own expectations ahead of our own internal timelines. Having been legally selling to cannabis consumers for approaching 20 years now, we understand all aspects of our ever changing business very well. We don’t follow the herd.
We don’t sit on our hands. As markets evolve, we’ve made bold moves, but thoughtful and calculated ones, not rash decisions. And these have been paying off. Whether it’s a differentiated discount club model or our entry into the German medical cannabis market. Our innovative moves have carved out a successful winning strategy and others are struggling to play catch up later. The ReMaxion Transaction closed on September 2, 2025 and we have used our unparalleled ability to procure cannabis from Canada to boost the company’s results, just like we said we would.
Revenue for the two months it contributed to Q4 results was just under $10 million, averaging $5 million a month in Q1. Remexian’s revenue was $25 million, averaging over $8 million a month this quarter, ReMaxion generated $31.6 million, averaging over $10.5 million a month. In terms of volumes, ReMaxion sold 7.6 tons of medical cannabis during the three months ended March 2026 with which was up 85% from the three months ended September 2025 and we have more than doubled our market share in the two quarters since the transaction to 14.1% from 6.5%.
We believe we are heading towards 20% market share in Germany in the long term. Scaling the top line and boosting market share was an important element of our German strategy and I’m thrilled with how well and how quickly it is playing out. But the other key component of our strategy was how we could get better terms given our relationships with licensed producers, not just volume for volume’s sake. Again, success here was already demonstrated this quarter.
We are at the point where industry participants are seeing what we’ve done in Germany in such a short time frame and are reaching out to us as their potential partner of choice. Accordingly, we have had a lot of inbound interest from multiple partners in various jurisdictions including the uk. The Cabana Club is the most differentiated concept globally. As other markets inevitably go adult use, we believe our model will be dominant in those markets as well.
While there are competitive pressures both from illicit operators and legal competitors as well as our core customers wallets being impacted by overall macroeconomic conditions, we are nevertheless taking measures to improve this metric in the coming quarters. Our long term trend of outperformance is clear chaining our monthly same store sales increases. Since launching our innovative Discount Club model in October 2021, Cana Cabana was up 161% to March 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 7% sales decline during this period. Our market share within the five provinces where we operate was 12% during February and March, which was consistent with a year ago. Excluding British Columbia where we have been at a regulatory cap of eight stores for two and a half years.
I note that our market share was up 14% across the four provinces during February and March, which was up versus 13% a year ago. Excluding stores open less than six months, which are still ramping up, our annualized revenue per square foot in Q2 was $1,620, once again above many leading blue chip retailers. In March, the average Canacabana store was on an annual revenue run rate of $2.4 million of product sales, which was double our peer average at $1.2 million.
I believe the fact that the team that is closest to the operations and sees what we are building has been buying more shares and is a very strong signal in our conviction and one I truly appreciate. With that, I’ll turn it over to Mayank for his comments and A Deeper Dive into the Numbers
Mayank Mahajan
Once again, we demonstrated improving cost controls at high tide. In Q2, general and administrative expenses represented just 4% of revenue, marking the lowest level in seven quarters. This metric was 4.2% a year ago and 4.1% sequentially. Adjusted EBITDA was $13.9 million for the quarter, this was up an outstanding 73% year over year, marking its fastest pace of growth in nine quarters. Our consolidated adjusted EBITDA margin also set an eight quarter high at 8%.
Thank you,
Operator
Caroline, is it open?
Bill Turk (Equity Analyst at Ross Capital Partners)
Good morning, everybody. So my question to start is how has remexian’s tonnage performed in May? And the bigger part of the question here is going to be with May and half of June. Now, our numbers would suggest you’re completely through that older sourced or backlogged inventory. And if that’s the case, how does sourcing and cost of product change and what does it mean for international margins
Raj Grover (President and Chief Executive Officer)
I don’t think it materially affects us or affects us at all in terms of really bringing the margins down. I’m pretty comfortable telling you that margins can remain around 25%. Perfect, Raj. Thank you.
Bill Turk (Equity Analyst at Ross Capital Partners)
And then for a second question, it looks like Ontario has asked a competitor of yours to relinquish control of its retail operations in the province. How would that change the competitive environment? And would you be interested in any
Raj Grover (President and Chief Executive Officer)
But it’s definitely something that we are watching very closely. Bill. Thank you, Raj.
Bill Turk (Equity Analyst at Ross Capital Partners)
I’ll jump back in the queue.
Operator
Thank you. Your next question is from Derek Lassard from td. Your line is now open.
Derek Lassard (Equity Analyst at TD)
Yeah. Good morning, Raj, and congrats to you and the team on a really incredible quarter. I just, basically, if I’m, if I’m nitpicking here, I’d say probably, you know, I’d point to maybe the modest same store sales weakness, but maybe just help us quantify how much of the same store sales pressure is coming from trade down sold formats or volume versus underlying demand softness.
Raj Grover (President and Chief Executive Officer)
Derek Lassard (Equity Analyst at TD)
Right, Raj? To be clear. Yeah, again, I’m just, I was nitpicking. So you’re right, it’s not all bad. So. And then maybe just a Follow up to that. Just on the bricks and mortar margin. Just curious on how you’re thinking about the sustainability there. Just maybe given that slightly softer consumer backdrop at this moment.
Raj Grover (President and Chief Executive Officer)
But we think that there will be slight pressure on brick and mortar gross margins. Not too much, but we will adjust it accordingly. Remember, we’re playing this game for the long term. We’re going to get to 350 stores. I believe our brick and mortar margins in the long term will get to 30%. So we’ll be much higher than where we are today. But in the short term we may have to reduce our margins a little bit to compete.
Derek Lassard (Equity Analyst at TD)
Yeah. Remember Raj, that imitation is the sincerest form of flattery that mediocrity can pay to greatness. Well said, Derek. Thank you. Appreciate it.
Operator
Thank you. Your next question is from Ben Stonkes from Haywood. Your line is now open.
Ben Stonkes
Hey, morning guys. This is Ben on for Neil. Congrats on the great quarter as what you’re seeing in the uk. I know last quarter you mentioned the goal of entering through an M and A transaction within the next 12 months and that you’re engaging with some of the larger players over there. Curious as to whether there’s been any progress on that front and how those conversations have been developing.
Raj Grover (President and Chief Executive Officer)
So you know, our, as we previously communicated, our objective remains to complete a transaction within the next few quarters. But that said, Ben, we’re being very disciplined and selective. We’re focused on finding the right partner, the right strategic fit and a transaction structure that creates meaningful long term value for shareholders. So we’re not going to rush into anything. But conversations are going well.
Ben Stonkes
Raj Grover (President and Chief Executive Officer)
But I think we can still remain free cash flow positive as we build our business, although it’s going to be lumpy from quarter to quarter.
Ben Stonkes
Yeah, that’s great. Thanks for that. Congrats again on the quarter and I’ll hop back in the queue.
Operator
Thank you. Your next question is from Luke Cannon from Canaccord. Your line is now open.
Luke Cannon
Raj Grover (President and Chief Executive Officer)
I don’t understand how that is possible and why other buyers would pay such multiples. We don’t do that. We’re very, very disciplined. And I think you’ll see more of similar types of these acquisitions from us in the coming quarters.
Luke Cannon
Raj Grover (President and Chief Executive Officer)
Luke Cannon
Great. Maybe actually just following up on that last piece. So in the outlook in the press release for this quarter, the final sentence is about you intending to expand into additional European markets. If we go back one quarter ago, that outlook was more specific to the uk. So what I guess has changed from last quarter to this quarter from looking at M and A in Europe.
Raj Grover (President and Chief Executive Officer)
So we’re still evaluating those markets, but I believe my interest still keenly lies in the UK at the moment.
Luke Cannon
Raj Grover (President and Chief Executive Officer)
Luke Cannon
Got it. Thanks. I’ll pass line.
Operator
Brennan
Raj Grover (President and Chief Executive Officer)
Brennan
Operator
Okay, perfect. That’s great color. I’ll jump back in queue. Thank you. Thank you. There are no further questions at this time. Please proceed with the closing remarks.
Raj Grover (President and Chief Executive Officer)
Thank you, operator. And thank you to everyone for your interest and continued support for High Tide. We’re very proud of what we’ve achieved this quarter and remain excited about the road ahead. With that, I will ask the operator to close the line. Have a great day, everyone.
