High Tide Reports Record Revenue but Faces Cash Flow Challenges
High Tide Inc. (NASDAQ:HITI) reported record fiscal third-quarter revenue of C$198.8 million, a 33% year-over-year increase, and operating income rose sharply to C$8.7 million from the prior year's level. However, net cash provided by operating activities declined slightly to C$10.1 million compared to C$10.7 million in the same period last year. The company’s operating cash flow before changes in non-cash working capital improved 44% to C$11.9 million but was offset by a significant unfavorable swing of approximately C$4.2 million due to increased absorption from working-capital adjustments. High Tide has expanded its operations, opening and acquiring four Canadian stores during the quarter while also growing sales at its German medical-cannabis subsidiary, Remexian. Despite these gains, same-store sales remained flat at Canna Cabana, suggesting that new locations are carrying much of the growth burden. Over nine months, working-capital absorption totaled C$5.7 million due to increased receivables and prepaid expenses, partially offset by higher payables. The company reported a non-IFRS free cash flow of C$7.0 million for the quarter, down from C$7.7 million in the prior year. While High Tide has improved its operating profitability, concerns remain about whether it can sustain strong cash conversion as expansion continues.
Tickers: $HITI
Topics: cash flow expansion operating income revenue