High Tide Inc (HITI) 2023 Q3 法說會逐字稿

Good morning. My name is Carla, and I will be your conference operator today. At this time, I would like to welcome everyone to High Tide Inc.'s third quarter of 2023 unaudited financial and operational results conference call. (Operator Instructions)

早安.我叫卡拉，今天我將擔任你們的會議操作員。此時，我謹歡迎大家參加 High Tide Inc. 2023 年第三季未經審計的財務和營運績效電話會議。 （操作員說明）

I will now turn the call over to your host, Krystal Dafoe. Please go when you're ready.

現在我將把電話轉給主持人克里斯塔爾·達福 (Krystal Dafoe)。準備好後請走。

Very good. Thank you, operator. Good morning, everyone, and welcome to the High Tide Inc., quarterly earnings call. Please note that all earnings discussed on this call are presented on an unaudited basis. Joining me on the call today are Mr. Raj Grover, President and Chief Executive Officer; and Mr. Sergio Patino, Chief Financial Officer.

非常好。謝謝你，接線生。大家早安，歡迎參加 High Tide Inc. 季度財報電話會議。請注意，本次電話會議討論的所有收益均未經審計。今天與我一起參加電話會議的還有總裁兼執行長 Raj Grover 先生；以及財務長 Sergio Patino 先生。

On September 14, 2023, company released unaudited highlights from its financial and operational results for the third quarter that ended July 31, 2023. 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.

2023 年9 月14 日，本公司發布了截至2023 年7 月31 日的第三季未經審計的財務和營運業績要點。在我們開始之前，請允許我提醒您，在本次電話會議期間，High Tide 管理層可能會做出以下決定：聲明，包括管理層對未來業績的預期或估計。

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 the future results of operations, economic conditions, and anticipated courses of actions. 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, 2023.

除歷史事實陳述外，所有此類陳述均構成適用證券法含義內的前瞻性資訊或前瞻性陳述，並基於截至本協議日期的假設、預期、估計和預測。具體的前瞻性陳述包括但不限於有關未來營運績效、經濟狀況和預期行動方案的所有揭露。有關公司與前瞻性陳述相關的風險和不確定性的更多信息，請參閱公司日期為 2023 年 9 月 14 日的新聞稿。

Our latest annual information form and our latest management's discussion and analysis each filed with securities regulatory authorities at sedar.com or on EDGAR at www.sec.gov or on the company's website at hightideinc.com, which are hereby incorporated by reference herein. Although these forward-looking statements reflect management's current beliefs and reasonable assumption based on the current information currently available 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.

我們最新的年度資訊表以及我們最新的管理層討論和分析均已透過 sedar.com 或 EDGAR www.sec.gov 或公司網站 hightideinc.com 向證券監管機構提交，特此透過引用併入。儘管這些前瞻性陳述反映了管理階層目前的信念和基於截至本報告日期管理層目前可獲得的資訊的合理假設，但我們不能確定未來的實際結果將與前瞻性陳述一致。無法保證實際結果不會與這些結果有重大差異。

Accordingly, we caution you not to place undue reliance upon such forward-looking statements and results or any reconciliation of non-GAAP measures measured and discussed. Please consult our latest management discussion and analysis filed on SEDAR and EDGAR.

因此，我們提醒您不要過度依賴此類前瞻性陳述和結果或衡量和討論的非公認會計原則措施的任何調節。請查閱我們關於 SEDAR 和 EDGAR 的最新管理討論和分析。

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.

現在我很高興向您介紹 High Tide 總裁兼執行長 Raj Grover 先生。謝謝。格羅佛先生，您可以開始了。

Thank you, Krystal, and good morning, everyone. Welcome to High Tide Inc.'s financial results conference call for the third quarter ended July 31, 2023. I will begin with some big picture comments regarding the quarter and our strategy before Sergio and I dig deeper into the numbers.

謝謝你，克里斯塔爾，大家早安。歡迎參加 High Tide Inc. 截至 2023 年 7 月 31 日的第三季財務業績電話會議。在 Sergio 和我深入研究這些數據之前，我將首先對本季度和我們的策略進行一些總體評論。

Those of you who have tracked our company for some time have seen our execution. And that time and time, again, we do what we say we are going to do. We have a long history of under promising and overdelivering in a big way at High Tide, and it was no different this time. Specifically, early this year, we publicly stated our goal to be free cash flow positive by the end of the calendar year. Last night, we announced that we achieved this goal in a meaningful way, with $4.1 million in free cash flow, and with this being the July quarter, we reached this milestone five months ahead of schedule.

那些長期關注我們公司的人已經看到了我們的執行力。一次又一次，我們說到做到。長期以來，我們在 High Tide 上都有承諾不足和交付過多的情況，這次也不例外。具體來說，今年年初，我們公開表示我們的目標是在年底前實現自由現金流為正。昨晚，我們宣布我們以有意義的方式實現了這一目標，擁有 410 萬美元的自由現金流，而且在 7 月季度，我們提前五個月實現了這一里程碑。

Not only is this a very impressive feat in its own right, but being free cash flow positive considerably insulates us from whatever the capital markets bring, and it is rare for companies in this industry on both sides of the border to achieve this significant milestone. Over the past several years, we have proven that we know how to grow. We have put up strong same-store sales numbers above our peers, organically built dozens of locations, and entered into a lot of M&A along the way to building the largest business by revenue and market share in Canadian cannabis.

這不僅本身就是一項令人印象深刻的壯舉，而且自由現金流為正可以使我們免受資本市場帶來的任何影響，而且邊境兩側的該行業公司很少能實現這一重要里程碑。過去幾年，我們已經證明我們知道如何成長。我們的同店銷售數據高於同行，有機地建立了數十個地點，並進行了大量併購，以建立加拿大大麻收入和市場份額最大的業務。

This has been driven by our continuous innovative thinking, which led to the launch of our unique discount club model. Two years ago, our ELITE paid membership tier almost a year ago. And as announced yesterday, the unveiling of Cabanalytics Consumer Insights. CCI is an extension of a highly successful Cabanalytics business and data insights platform, which subject to relevant provincial and federal regulations. We expect we'll provide another high margin opportunity for our company through targeted ad revenue generation. This should also help further solidify our relationship and loyalty loop with our club members, product innovators, brand manufacturers, and licensed producers.

這是我們不斷創新思維的推動，從而推出了我們獨特的折扣俱樂部模式。兩年前，我們的菁英付費會員等級大約一年前。正如昨天宣布的那樣，Cabanalytics 消費者洞察的發布。 CCI 是非常成功的 Cabanalytics 業務和資料洞察平台的延伸，受相關省和聯邦法規的約束。我們預計，我們將透過有針對性的廣告創造收入為公司提供另一個高利潤機會。這也將有助於進一步鞏固我們與俱樂部會員、產品創新者、品牌製造商和授權生產商的關係和忠誠度循環。

We have never posted a sequential decrease in revenue while now generating 14 straight quarters of positive adjusted EBITDA. Last night's results prove that our existing operations can also generate meaningful free cash. And now that we have clearly demonstrated this, we plan to shift a little further across the spectrum towards growth this quarter and into 2024. We plan to remain free cash flow positive going forward, although the amount may fluctuate in any given quarter as we pick along the spectrum of growth and cash flow generation as well as keeping working capital changes in mind amongst other considerations.

我們從未公佈過營收連續下降的情況，同時現在已連續 14 個季度實現正調整 EBITDA。昨晚的結果證明，我們現有的業務也可以產生有意義的自由現金。既然我們已經清楚地證明了這一點，我們計劃在本季度和 2024 年進一步向增長方向轉變。我們計劃未來保持自由現金流為正，儘管該金額可能在我們選擇的任何特定季度內波動沿著增長和現金流產生的範圍，並在其他考慮因素中牢記營運資本的變化。

We also made another promise to the market at the beginning of the year that our annual revenue run rate would exceed $0.5 billion by the end of the fiscal year. While we were almost dead during Q3, our current run rate has us exceeding that threshold today. Once again, ahead of our previously communicated timeline. Our same-store sales have been very strong and continue to outpace our peers. With no acquisitions this quarter or last quarter, I highlight that these results were generated entirely from our organic operations.

我們也在年初向市場再次承諾，到本財年結束時，我們的年收入運行率將超過5億美元。雖然我們在第三季幾乎死了，但我們目前的運行率今天已經超過了這個閾值。再次提前我們之前溝通的時間表。我們的同店銷售非常強勁，並繼續領先同行。由於本季或上季沒有收購，我強調這些結果完全來自我們的有機營運。

Further, while the market added close to 100 locations since the end of April, we only added four stores, yet we maintained our national market share of 9.5%, excluding the province of Quebec in Q3. Putting it all together, our stores in Ontario, Canada's largest cannabis market generated 3.4 times the revenue of our provincial peers in June. Nationally, our stores were on a run rate of $2.8 million in June compared to the national average of our peers, excluding Quebec of just $1.2 million.

此外，雖然自 4 月底以來市場增加了近 100 家門市，但我們只增加了 4 家門市，但第三季我們保持了 9.5% 的全國市場份額（不包括魁北克省）。總而言之，我們在加拿大最大的大麻市場安大略省的商店 6 月的收入是省內同行的 3.4 倍。在全國範圍內，我們商店 6 月份的營業額為 280 萬美元，而全國同行的平均營業額（不包括魁北克省）僅為 120 萬美元。

Our customer reach continues to expand as we now have over 1.1 million loyal Cabana Club members, which remains by far the largest bricks-and-mortar cannabis loyalty program in the country. ELITE sign-ups have accelerated exactly as predicted as we continue to add more ELITE-focused in-store offerings and related inventory into our retail network. We added 5,300 ELITE members since the Q2 call totaling over 18,800 members today. Whereas on our Q2 call, we announced that we added 4,000 members and similarly 3,500 members on our Q1 call. As a reminder, not only does ELITE help further solidify customer loyalty, but it represents a high-margin recurring revenue stream for shareholders.

我們的客戶範圍不斷擴大，我們現在擁有超過 110 萬名忠實的 Cabana Club 會員，這仍然是迄今為止全國最大的實體大麻忠誠度計劃。隨著我們繼續在我們的零售網路中添加更多以精英為中心的店內產品和相關庫存，精英註冊的速度正如預期的那樣加速。自第二季電話會議以來，我們增加了 5,300 名精英會員，今天會員總數超過 18,800 名。在第二季電話會議上，我們宣布增加了 4,000 名會員，在第一季電話會議上同樣增加了 3,500 名會員。提醒一下，ELITE 不僅有助於進一步鞏固客戶忠誠度，也為股東帶來了高利潤的經常性收入來源。

Our innovation does not stop at ELITE. Continued innovation is in our DNA. Yesterday morning, we announced that we have taken the core of our Cabanalytics business and data insights platform and launch of Cabanalytics Consumer Insights, a digital monthly publication. CCI will consist of a magazine-style extensive report, which highlights market trends, analyze multiple different ways, providing data-driven insights regarding what brands and products are trending in our international ecosystem by category, price point, potency, et cetera, as well as educational and block style features relevant to cannabis enthusiasts and Acadia curious alike, and this will be provided for free to our customers every month.

我們的創新不止於 ELITE。持續創新是我們的基因。昨天早上，我們宣布我們已經採取了 Cabanalytics 業務和數據洞察平台的核心，並推出了數位月刊 Cabanalytics Consumer Insights。 CCI 將包括一份雜誌式的廣泛報告，重點介紹市場趨勢，分析多種不同的方式，並按類別、價格點、效力等提供有關我們國際生態系統中哪些品牌和產品趨勢的數據驅動見解作為與大麻愛好者和阿卡迪亞好奇相關的教育和區塊風格功能，這將每月免費提供給我們的客戶。

CCI will also feature product innovation from LPs, the hottest consumption accessories and cannabinoid brands throughout each issue and eventually other aspects of the cannabis ecosystem, such as cannabis seeds, growing equipment, and hydroponics. Subject to regulatory approvals, we expect that we will be able to, over time, charge these companies to advertise to reach this captive and targeted extremely relevant base of 1.1 million users and growing. Eventually, we plan to roll this out to our 4.6 million total customers worldwide, including 3 million customers in the US.

CCI 也將在每一期中介紹 LP 的產品創新、最熱門的消費配件和大麻素品牌，並最終介紹大麻生態系統的其他方面，例如大麻種子、種植設備和水耕法。在獲得監管部門批准的情況下，我們預計，隨著時間的推移，我們將能夠向這些公司收取廣告費，以吸引 110 萬用戶，並不斷成長。最終，我們計劃將其推廣到全球 460 萬客戶，其中包括 300 萬美國客戶。

As you can see, while most operators are trying to play catch-up, we are constantly innovating seeing how else we can leverage our strengths and points of differentiation and have it create more benefits, for both our customers and our shareholders.

正如您所看到的，雖然大多數營運商都在努力追趕，但我們仍在不斷創新，看看如何利用我們的優勢和差異化點，為我們的客戶和股東創造更多利益。

Another obvious point of differentiation in our unique ecosystem is Fastendr, which we will touch upon shortly. So big picture, you can see that we are doing great in Canada due to our model and the strength of our team. Now that there's a prospect of very real reform in the US, we are excited to one day, hopefully soon, successfully export our innovative discount club model with all of these innovative and exciting features there as well.

我們獨特的生態系統中另一個明顯的差異點是 Fastendr，我們很快就會談到。從大局來看，您可以看到，由於我們的模式和團隊的實力，我們在加拿大做得很好。現在美國有望進行真正的改革，我們很高興有一天（希望很快）能夠成功地向美國出口我們的創新折扣俱樂部模式，以及所有這些創新和令人興奮的功能。

I will now go over the highlights from the financials, and Sergio will do a deeper dive. Revenue for the quarter was $124.4 million, just shy of $500 million annual run rate and up 30% year over year and 5% sequentially, led by our same-store sales, which were up 8% sequentially. Over the last seven quarters, our same-store sales are up a tremendous 114%. Consolidated gross margins were 28% in Q3, whereas they were 27% in each of the preceding four quarters. Once again, it was the margins in our bricks-and-mortar cannabis business in Canada, which accounts for 90% of our total revenue that posted sequential gains again for the sixth straight quarter.

我現在將回顧財務方面的亮點，塞爾吉奧將進行更深入的探討。本季營收為 1.244 億美元，略低於 5 億美元的年運行率，年增 30%，環比增長 5%，其中同店銷售額環比增長 8%，帶動了增長。在過去 7 個季度中，我們的同店銷售額大幅成長了 114%。第三季的綜合毛利率為 28%，而前四季的綜合毛利率均為 27%。我們加拿大實體大麻業務的利潤率再次連續第六個季度連續成長，該業務占我們總收入的 90%。

You will recall that we highlighted the results of our meaningful cost controls during last quarter's conference call. These efforts to constantly tighten our ship are ongoing. Our SG&A as a percentage of revenue has fallen in each of the past three consecutive quarters from 7% in Q4 2022 to just 5% in Q3 2023. At the same time, the investments we have made in deploying our proprietary Fastendr technology are bearing fruit. Increasing adoption of Fastendr has contributed towards reducing our salaries, wages, and benefits as a percentage of revenue to just 11.1% this quarter, down from 12% a year ago and 11.8% sequentially. All these percentage points add up as we flowed down to a stronger EBITDA figure.

您可能還記得，我們​​在上個季度的電話會議上強調了有意義的成本控制的結果。這些不斷收緊我們船舶的努力正在進行中。過去三個季度，我們的銷售、管理費用佔營收的百分比連續下降，從2022 年第四季的7% 降至2023 年第三季的僅5%。同時，我們在部署Fastendr 專有技術方面的投資正在取得成果。 Fastendr 的採用率不斷提高，導致本季度我們的工資、工資和福利佔收入的比例降至 11.1%，低於一年前的 12% 和上一季的 11.8%。所有這些百分點加起來，我們就得出了更強勁的 EBITDA 數據。

Adjusted EBITDA for the quarter was a record $10.2 million. For context, we generated adjusted EBITDA of $14.6 million during all of fiscal 2022. We are tremendously pleased with this figure and note that it is up 140% year over year and 55% from Q2, which was already a record level at that time. Note that this includes a one-time benefit from the elimination of the social responsibility fee in Manitoba of $2.4 million this quarter. Even without this figure, adjusted EBITDA would have been $7.8 million, still a record level.

本季調整後 EBITDA 達到創紀錄的 1,020 萬美元。就背景而言，我們在2022 財年全年的調整後EBITDA 為1460 萬美元。我們對此數字非常滿意，並注意到它同比增長140%，比第二季度增長55%，這在當時已經是創紀錄的水平。請注意，這包括本季曼尼托巴省取消社會責任費帶來的一次性收益 240 萬美元。即使沒有這個數字，調整後的 EBITDA 也將達到 780 萬美元，仍然是創紀錄的水平。

Finally, our loss from operations, which I note, includes $8.5 million of noncash depreciation and amortization was only $662,000 this quarter within striking distance of breakeven. This was also a big improvement from $4.7 million in Q3 last year and $2.6 million in Q2 of this year. Competition continues to create struggles for many of our peers, more of which are unfortunately going out of business.

最後，我注意到，我們的營運損失包括 850 萬美元的非現金折舊和攤銷，本季僅為 66.2 萬美元，接近盈虧平衡。這也比去年第三季的 470 萬美元和今年第二季的 260 萬美元有了很大的進步。競爭繼續給我們的許多同行帶來困境，不幸的是，其中更多的企業正在倒閉。

Accordingly, opportunities, large and small, keep coming our way. Some of which have been quite high profile. We have shown over the past several years that whether companies are thriving, just alive, or in creditor protection. We know how to buy businesses intelligently on terms that best suit our needs, making sure that we make moves that make sense for our shareholders and not chase and do whatever it takes to always be the highest bidder at any cost. With next month, marking the fifth anniversary of cannabis legalization in Canada, we expect that such opportunities will only accelerate. So we believe there will be ample M&A candidates out there, many of which are worth buying at attractive and accretive multiples. Accordingly, we expect to be more active in M&A in the coming months.

因此，大大小小的機會不斷向我們襲來。其中一些已經相當高調。在過去的幾年裡，我們已經展示了公司是否正在蓬勃發展，是否還活著，或者是否受到債權人保護。我們知道如何以最適合我們需求的條件明智地購買企業，確保我們採取的行動對我們的股東有意義，而不是不惜一切代價追逐和不擇手段地永遠成為最高出價者。下個月是加拿大大麻合法化五週年，我們預計這類機會只會加速。因此，我們相信將會有大量的併購候選者，其中許多都值得以具有吸引力和增值倍數的價格購買。因此，我們預計未來幾個月的併購活動將更加活躍。

Once again, we have proven that our existing business has the scale and strength to generate meaningful free cash flow. Looking ahead, it's time to responsibly step a little harder on the gas towards organic growth, while still remaining free cash flow positive. We have signed several high-quality leases, particularly in Ontario, including many in the new and exciting market of Mississauga, which we are currently building out, supported by this internal free cash generation. These quarterly results, which were best in our history, and a robust outlook for our business could not have been achieved without the dedication of our strong team. In particular, I would like to congratulate Sergio Patino, who was recently appointed as our permanent Chief Financial Officer. I'm excited for what more we can do together. Sergio, over to you for your comments.

我們再次證明，我們現有的業務具有產生有意義的自由現金流的規模和實力。展望未來，是時候負責任地加大力度推動有機成長，同時仍保持自由現金流為正值。我們已經簽署了幾項高品質的租約，特別是在安大略省，其中包括許多在密西沙加這個令人興奮的新市場的租約，我們目前正在內部自由現金生成的支持下建立該市場。如果沒有我們強大團隊的奉獻精神，就不可能實現我們歷史上最好的季度業績和強勁的業務前景。我要特別祝賀 Sergio Patino，他最近被任命為我們的永久財務長。我很高興我們可以一起做更多事情。塞爾吉奧，請您發表評論。

Thank you, Raj, and hello, everyone. Q3 was another fantastic quarter for High Tide and thrilled to be part of that team that continues to execute so well on his objectives, including now meeting the critical goals of becoming free cash flow positive to the tune of $4.1 million, marking a significant improvement versus the prior two quarters. We kept growing the top line with industry leading result, while highlighting that these revenues can flow to generate more and more cash to shareholders.

謝謝你，拉吉，大家好。第三季度對High Tide 來說是另一個精彩的季度，很高興成為該團隊的一員，該團隊繼續出色地執行他的目標，包括現在實現自由現金流為410 萬美元的關鍵目標，這標誌著與前兩季。我們持續以業界領先的業績成長營收，同時強調這些收入可以為股東帶來越來越多的現金。

Let's take a deeper dive into the numbers. As Raj mentioned, revenue for the quarter was $124.4 million up 30% year over year and 5% sequentially. The primary driver of this growth was the strain of that was same-store sales, which is the lifeblood of any retail business. Same-store sales were up 19% year over year and 8% sequentially. Even taking into account the higher number of days this quarter versus Q2. Our daily -- our average daily sales were up 5% sequentially, representing an annualized rate exceeding 20%.

讓我們更深入地研究一下這些數字。正如 Raj 所提到的，該季度營收為 1.244 億美元，年增 30%，環比成長 5%。這種成長的主要驅動力是同店銷售的壓力，這是任何零售業務的命脈。同店銷售額較去年同期成長 19%，較上季成長 8%。即使考慮到本季比第二季更多的天數。我們的日均銷售額較上季成長了 5%，年化成長率超過 20%。

As mentioned, consolidated gross margins ticked higher this quarter to 28% versus 27% in each of the past four quarters. Putting it all together, consolidated gross margin dollars rose by 10% sequentially to $34.6 million, double the 5% revenue growth and amplifying our overall profitability. Once again, our cost control were very apparent this quarter. While gross margins increased by $3 million sequentially or $600,000, excluding the benefit from the Manitoba SRF change one time. In fact, total expenses, excluding fixed and noncash costs such as depreciation, amortization, and share-based compensation, went down by $600,000. In particular, professional fees fell by $893,000 sequentially as we did more work in-house and didn't enter into any M&A this quarter.

如前所述，本季綜合毛利率上升至 28%，而過去四個季度每季的綜合毛利率均為 27%。總而言之，綜合毛利率環比增長 10%，達到 3,460 萬美元，是 5% 收入增長的兩倍，並增強了我們的整體盈利能力。本季我們的成本控制再次非常明顯。毛利率環比增加了 300 萬美元，即 60 萬美元（不包括曼尼托巴省 SRF 一次變更帶來的收益）。事實上，不包括折舊、攤提和股權激勵等固定成本和非現金成本的總支出下降了 60 萬美元。特別是，由於我們在內部做了更多工作並且本季沒有進行任何併購，專業費用連續下降了 893,000 美元。

Operational efficiency as well as increasing adoption of Fastendr by our customers resulted in salaries and wages and benefits also falling by $110,000 sequentially despite the higher revenue and three more dating in the quarter. Salaries, wages, and benefits also fell to 11.1% of revenue in Q3 as a percentage of revenue, down from 12% in Q3 '22 and from 11.8% sequentially.

儘管本季度收入增加且約會次數增加了 3 次，但營運效率以及客戶越來越多地採用 Fastendr 導致薪資和福利也環比下降了 110,000 美元。第三季度，薪資、薪資和福利佔收入的比例也下降至 11.1%，低於 22 年第三季的 12% 和上一季的 11.8%。

G&A expenses as a percentage of revenue has been on a declining trend over the past several quarters. That represents 5.2% of revenue in Q3 equal to Q2 levels and down from 6.6% in Q3 last year. Adjusted EBITDA in Q3, which included a one-time benefit of $2.4 million from the elimination of the social responsibility fee in Manitoba, was $10.2 million this quarter. This was up 140% year over year and 55% sequentially.

過去幾個季度，一般管理費用佔收入的百分比一直呈下降趨勢。這佔第三季營收的 5.2%，與第二季的水平持平，低於去年第三季的 6.6%。第三季調整後 EBITDA 為 1,020 萬美元，其中包括曼尼托巴省取消社會責任費帶來的 240 萬美元一次性收益。這一數字年增 140%，季增 55%。

Cash flow from operations before the impact of noncash working capital was a record of $8.4 million, up 258% year over year and 53% sequentially. Investments in noncash working capital were just $850,000 this quarter, which was lower than our usual average versus an investment of $4.1 million in the prior quarter, which was higher than our typical level.

在非現金營運資本影響之前，營運現金流量創歷史新高 840 萬美元，年增 258%，季增 53%。本季非現金營運資本投資僅 85 萬美元，低於我們通常的平均水平，而上一季的投資為 410 萬美元，高於我們的典型水平。

Without receiving any external funding, our overall cash balance grew by $3.2 million over the course of Q3 ending the quarter at $25.7 million, which is the most we have had at the end of the quarter and in two years. Our total debt stands at $37.7 million, which is just 1.4 times the $27.3 million in adjusted EBITDA we generate over the last -- over the past four quarters.

在沒有獲得任何外部資金的情況下，我們的整體現金餘額在第三季度增長了 320 萬美元，截至本季度達到 2570 萬美元，這是我們在本季度末和兩年來的最高水平。我們的總債務為 3770 萬美元，只是我們過去四個季度調整後 EBITDA 2730 萬美元的 1.4 倍。

You will note that we recently refreshed our shelf prospectus after our old one had expired. This includes a $3 million (sic - please see press release, "$30 million") ATM supplement. I stress that this doesn't mean that we plan to raise the funds significantly. This is a good facility to have set up as it allows us to obtain financing when and as needed. Investors will recall how we were very disciplined last time with our old ATM program having expired after 25 months with about three quarters of it being unused. In closing, Q3 was in -- was not only another record, but also the best quarter in High Tide's history. The future looks bright, both regarding our core Canadian bricks-and-mortar business as well as regarding prospects to take our winning model into the US down the road.

您會注意到，在舊招股說明書到期後，我們最近更新了我們的貨架招股說明書。其中包括 300 萬美元（原文如此，請參閱新聞稿，「3000 萬美元」）ATM 補助。我強調，這並不意味著我們計劃大量籌集資金。這是一個很好的設施，因為它使我們能夠在需要時獲得融資。投資人會記得我們上次是如何非常遵守紀律的，我們的舊 ATM 程序在 25 個月後到期，其中約四分之三未被使用。最後，第三季不僅創下了新紀錄，也是 High Tide 史上最好的季度。無論是我們在加拿大的核心實體業務，還是未來將我們的成功模式引入美國的前景，未來都是光明的。

With that, I will now turn the call over to the operator to open the lines for the question-and-answer session.

這樣，我現在將把電話轉給接線員，以打開問答環節。

(Operator Instructions) Matt Bottomley, Canaccord Genuity.

（操作員說明）Matt Bottomley，Canaccord Genuity。

Good morning. Thanks for taking the time for some questions. Yeah, I just wanted to get maybe a little more granular if you have any insights on when you say putting your pedal to the metal on some of these store openings and some of the opportunities that may happen on M&A. So you have a high-level goal of reaching about 250 locations. It's about 60% higher than today. So just any commentary on the cadence of that. Maybe what we should expect in calendar Q4 for the potential and the mix of M&A versus maybe organic lease openings?

早安.感謝您抽空回答一些問題。是的，我只是想更詳細地了解您何時說要全力以赴開設一些新店以及併購中可能出現的一些機會。因此，您的總體目標是涵蓋約 250 個地點。比今天高出約 60%。所以只是對此節奏的任何評論。也許我們應該對第四季度的潛力以及併購與有機租賃空缺的組合有何期待？

Good morning, Matt. Thank you for your question. So Matt, so far this calendar year in eight months, we've opened six stores, which is a very much not like typical High Tide what we've done previously. But we remain very disciplined, Matt, as you know, because our focus has completely been on free cash flow generation. And now that we've proven that our stores can generate meaningful cash, we're going to go back to growth, but in a very disciplined and responsible way. But we're coming pretty close to the end of the year here and getting building permits is I like to work at lightning-fast speed sometimes, but it doesn't always happen that way.

早安，馬特。謝謝你的問題。馬特，今年到目前為止的八個月裡，我們已經開設了六家商店，這與我們之前所做的典型的高潮非常不同。但正如你所知，馬特，我們仍然非常自律，因為我們的重點完全是自由現金流的產生。現在我們已經證明我們的商店可以產生有意義的現金，我們將恢復成長，但將以非常自律和負責任的方式。但我們已經接近年底了，獲得建築許可證是我有時喜歡以閃電般的速度工作，但並非總是如此。

Sometimes it can take one to two to three months to just get building permits. So we feel we can get another four to six locations organically by the end of this calendar year. And going forward next year, we're definitely going to up the [ante] on the pace of the stores organically. I can tell you that we have secured over 14 to 16 leases, high-quality leases, about five of them in Mississauga -- actually six of them in Mississauga now already in our hands. But we're going to pace out this development because when you open up these stores, they don't start generating EBITDA right away. And you have a bit of a EBITDA burn for the first three to four to six months. And again, we want to be responsible about free cash flow generation. So we're going to pace out this growth. But as our cash grows and as the environment, the macro environment overall get gets healthy, we can totally increase the pace a lot more.

有時可能需要一到兩到三個月的時間才能獲得建築許可證。因此，我們認為到今年年底，我們可以有機地再獲得四到六個地點。展望明年，我們肯定會有機地加快商店的步伐。我可以告訴你，我們已經獲得了超過 14 到 16 個高品質的租約，其中大約有 5 個位於密西沙加——實際上，其中 6 個位於密西沙加，現在已經在我們手中。但我們將加快這一發展步伐，因為當你開設這些商店時，它們不會立即開始產生 EBITDA。在前三到四到六個月裡，你的 EBITDA 會有所損失。再說一遍，我們希望對自由現金流的產生負責。因此，我們將加快這一成長速度。但隨著我們的現金成長，隨著環境、宏觀環境整體變得健康，我們完全可以加快步伐。

So to just wrap this question up, four to six more stores by the end of this calendar year. And then going forward organically, we think we can build another close to 15 to 20 next year. And we are back on to M&A. We have a very exciting location coming up in BC. We think it's going to be our number one location in British Columbia. We know that BC might open up the market further from 8 stores to 12 to 16 stores. So we are going to start getting active on M&A because, as you know, Fire & Flower opportunity was one with a lot of stores, but there's many of the operators that are facing hardships. And we have some really good opportunities to pick up these stores at attractive and accretive multiples.

因此，為了解決這個問題，到今年年底，將增加四到六家商店。然後有機地向前推進，我們認為明年我們可以再建造近 15 到 20 個。我們又回到了併購。我們將在 BC 省設立一個非常令人興奮的地點。我們認為這將成為我們在不列顛哥倫比亞省的第一地點。我們知道BC可能會進一步開放市場，從8家店到12到16家店。因此，我們將開始積極進行併購，因為如您所知，Fire & Flower 的機會是擁有許多商店的機會，但許多業者都面臨困難。我們有一些非常好的機會以有吸引力且增值的倍數收購這些商店。

Got it. Appreciate that. And then just one more for me on the margin profile. So some of your outlook commentary suggesting that the cost savings initiatives and some of the other things you've done in-store, like with the kiosks, are expected to help continue incremental margin improvement. Just, maybe it's more housekeeping, but the $2.4 million that came in from Manitoba this quarter. If you kind of normalize for that because I assume it's not happening again, it seems like EBITDA and I'm assuming everything flows down to adjusted EBITDA. I'm assuming it's a 100% margin for that refund. If you normalize for that, I calculate you guys did about a 6% to 6.5% EBITDA margin. Do you think that is sustainable going forward as a new base? Or would you expect some volatility on that metric?

知道了。感謝。然後再提供我一份關於保證金概況的內容。因此，您的一些展望評論表明，成本節約舉措和您在店內所做的一些其他事情（例如自助服務終端）預計將有助於繼續提高利潤率。只是，也許更多的是內務管理，但本季來自曼尼托巴省的 240 萬美元。如果你對此進行正常化，因為我認為這種情況不會再次發生，那麼似乎 EBITDA 並且我假設一切都會流向調整後的 EBITDA。我假設退款的保證金是 100%。如果你將其標準化，我計算出你們的 EBITDA 利潤率約為 6% 至 6.5%。您認為作為一個新基地可持續發展嗎？或者您預計該指標會出現一些波動嗎？

So great question, Matt. Let me tell you that I'm super excited about our EBITDA margin trajectory. So if you go back five quarters, our EBITDA margin was just sitting at about 3%. And again, that was -- we're dealing with Nasdaq-related expenses, and Canadian market is tight when it comes to gross margins in general and then our innovative discount club model, we're a value-focused operator. So margins at March, we had to very tightly control our margins. But I'm very excited about the fact that we've gone up from just 3% in EBITDA margins to, if you know, if you take the normalized margins after the $2.4 million as RFP that we got included this quarter, our EBITDA margins have risen to 6.3%. And if you include that, our EBITDA margins have gone up to 8.2%.

這是一個很好的問題，馬特。讓我告訴你，我對我們的 EBITDA 利潤率軌跡感到非常興奮。因此，如果你回顧五個季度，我們的 EBITDA 利潤率僅為 3% 左右。再說一次，我們正在處理與納斯達克相關的費用，而加拿大市場總體毛利率吃緊，然後我們創新的折扣俱樂部模式，我們是一家注重價值的運營商。因此，三月的利潤率，我們必須非常嚴格地控制我們的利潤率。但令我感到非常興奮的是，我們的 EBITDA 利潤率已從 3% 上升到，如果你知道的話，如果你考慮本季度我們納入的 240 萬美元 RFP 後的標準化利潤率，我們的 EBITDA 利潤率已升至6.3%。如果算上這一點，我們的 EBITDA 利潤率已上升至 8.2%。

So we are not exciting trajectory for EBITDA margins. We think we can take this to 10% to 12% long term, at least that is our goal. We've announced CCI, which will be a high-margin opportunity in time. Fastendr will also contribute once we can start licensing that. And I would like Sergio to touch a little bit on our gross margin trajectory. Sergio, do you want to talk about the gross margins a little bit?

因此，我們對 EBITDA 利潤率的軌跡並不感到興奮。我們認為，從長遠來看，我們可以將這一比例提高到 10% 到 12%，至少這是我們的目標。我們已經宣布了 CCI，這將是一個及時的高利潤機會。一旦我們開始獲得許可，Fastendr 也將做出貢獻。我希望塞爾吉奧能談談我們的毛利率軌跡。 Sergio，您想談談毛利率嗎？

Yes. So I guess from that projection point of view, somewhere around 26, 27 going forward would be a good guideline. And as you properly mentioned, the adjusted gross margin this quarter was about 26%, removing the Manitoba SRF, which is slightly lower than the prior two quarters, which were more on the mid 26% to 27% with a good trajectory going forward. I should also mention that the new -- the couple of new components that were a highlighted in the remarks, the CCI, the Consumer Insights, the Fastendr licensing becomes -- as those two products becomes a reality, we expect margins to start ticking upwards steadily, and it will help us to get to that 27 points.

是的。所以我想從預測的角度來看，未來 26、27 左右將是一個很好的指導方針。正如您所提到的，本季調整後的毛利率約為26%，除去曼尼托巴SRF，該毛利率略低於前兩個季度，前兩個季度的毛利率更多在26% 至27% 之間，未來發展軌跡良好。我還應該提到，新的——在評論中強調的幾個新組件，CCI、消費者洞察、Fastendr 許可——隨著這兩種產品成為現實，我們預計利潤率將開始上升並穩步前進，這將幫助我們達到27分。

All right. Thanks both for all the color. Appreciate it.

好的。感謝兩位提供的所有顏色。欣賞它。

Andrew Partheniou, Stifel.

安德魯·帕特尼奧，斯蒂菲爾。

Hi. Thanks for taking my questions, and congrats on the great quarter here. Just wanted to talk a little bit about the competitive environment. You talked about other operators having some challenges. I'm wondering, have you started to see any store closures around your existing store locations yet? And if so, how do you think that's benefited your same-store sales growth? How do you see that going forward? Would you -- would it be fair to assume that we're really in the early innings here and it could continue?

你好。感謝您回答我的問題，並祝賀這個季度的出色表現。只是想談競爭環境。您談到其他業者面臨一些挑戰。我想知道，您是否已經開始看到現有商店周圍的商店關閉了？如果是這樣，您認為這對您的同店銷售成長有什麼好處？您如何看待未來的發展？您是否可以公平地假設我們確實處於早期局並且可以繼續下去？

Hi, Andrew. Thank you for your question. So Andrew, our same-store sales trajectory has been on rapid, rapid growth over the last seven quarters or so. As I highlighted in my prepared remarks, we've grown our same-store sales by 114% over the last seven quarters. And you're absolutely correct with the five-year legalization anniversary coming up. A lot of these leases are coming up for renewal, and operators are deciding not to do so. And suddenly find out that one of our locations start operating more optimally and we look. And there's an independent that shut down or a smaller operator that is not in business anymore or even these days, major chains like Fire & Flower that are not meaningfully around anymore, and ownerships are changing. So I think that is going to continue, Andrew.

嗨，安德魯。謝謝你的問題。安德魯，在過去七個季度左右的時間裡，我們的同店銷售軌跡一直在快速成長。正如我在準備好的發言中所強調的那樣，過去七個季度我們的同店銷售額成長了 114%。合法化五週年紀念日即將到來，您的說法完全正確。許多租約即將到期，但營運商決定不這樣做。突然發現我們的一個地點開始以更優化的方式運營，我們開始尋找。有些獨立的業者已經關閉，或者較小的業者已經不再營業，甚至現在，像 Fire & Flower 這樣的大型連鎖店已經不再存在，所有權正在改變。所以我認為這種情況將會持續下去，安德魯。

Good gauges that we grew, our same-store sales at a rate of 5% when calculated daily. It was exactly the same thing this quarter. Sequentially, we grew our same-store sales by 8%. When calculated daily, we grew by 5%. Compounded, it's still 20% annual growth. So any retailers, if this is any retailer's dream come true. If this continues, I would be happy if I was growing at half that rate, it is still very positive growth. But again, we know that more opportunities are coming in this regard. But I would be -- I can be very certain to put an exact number in front of you. But like I said, we go down to [2.5%] same-store sales growth. That is still a victory in my mind since we've already grown 114% over the last seven quarters.

我們成長的指標很好，以每日計算，我們的同店銷售額成長率為 5%。本季的情況完全相同。隨後，我們的同店銷售額成長了 8%。以日計算，我們成長了 5%。複合後，年增長率仍為 20%。所以任何零售商，如果這是任何零售商的夢想成真的話。如果這種情況繼續下去，如果我能以一半的速度成長，我會很高興，這仍然是非常積極的成長。但我們再次知道，這方面將會有更多的機會。但我可以非常肯定地把一個確切的數字擺在你們面前。但正如我所說，我們將同店銷售成長降至 [2.5%]。在我看來，這仍然是一場勝利，因為我們在過去七個季度中已經成長了 114%。

And we still have at least a 100-store opportunity in Canada alone. This is all before we even enter the US market. So as those 100 stores get built or get acquired and they start to grow, then you know the same-store sales growth engine is going to start working again.

光是在加拿大我們就有至少 100 家商店的機會。這都是我們進入美國市場之前的事。因此，當這 100 家商店建成或被收購並開始成長時，您就知道同店銷售成長引擎將再次開始發揮作用。

Thanks for that color. And then maybe switching gears. You outlined the US opportunity and of course, now, it seems to be topical. Could you outline any kind of catalysts or conditions that you're looking for to enter into the US and as well, what are the things that you would not compromise on to enter the US, such as maybe a listing?

謝謝那個顏色。然後也許會切換齒輪。您概述了美國的機遇，當然，現在它似乎成為熱門話題。您能否概述您想要進入美國的任何類型的催化劑或條件，以及您在進入美國時不會妥協的事情有哪些，例如上市？

Yeah, Andrew. Let me say from the start, okay. We are not going to compromise our Nasdaq listing. It's a price listing. It's every operator's dream to one day trade on the Nasdaq. While we've been trading on the Nasdaq for the last three years, and we're not about to put it at risk today, just to enter the US market. We've got a lot of growth ahead of us in Canada alone. Let me tell you this, that I cannot express my excitement enough or what our business would look like when we can enter the US. And this may happen in the medium term.

是的，安德魯。我從一開始就說，好吧。我們不會損害我們在納斯達克的上市。這是一個價格表。在納斯達克進行當日交易是每個交易者的夢想。雖然我們過去三年一直在納斯達克進行交易，但今天我們不打算冒險，只是為了進入美國市場。光是在加拿大，我們就有很大的成長空間。讓我告訴你，我無法表達我的興奮或當我們進入美國時我們的業務會是什麼樣子。這可能會在中期發生。

Now, again, I'd like to be cautious and sort of making big statements. I'm confident about my business model. But again, we are at the mercy of rescheduling happening and the SAFE Banking Act taking place. And also here that if the SAFE Banking Act goes through, there's possibilities for us, Nasdaq -- exchanges such as Nasdaq to allow plant-touching businesses, and the same can happen with rescheduling as well. So we're very, very hopeful these things can take place, but we're not absolutely counting on it because we've got another 100-store growth ahead in Canada alone.

現在，我想再次保持謹慎並發表重大聲明。我對我的商業模式充滿信心。但我們再次受到重新安排和《安全銀行法》實施的影響。同樣，如果《安全銀行法》獲得通過，我們納斯達克等交易所就有可能允許接觸植物的業務，而重新安排也可能發生同樣的情況。因此，我們非常非常希望這些事情能夠發生，但我們並不絕對指望它，因為僅在加拿大我們就將再增加 100 家商店。

But to answer your question, we are not going to sacrifice our Nasdaq listing. Nasdaq gives us that liquidity that we are very excited about. And given all of the momentum in the US, we might very well get this opportunity sooner than what we were hoping originally. So we are very, very focused. Our government relations team is closely monitoring the progress of both rescheduling and the SAFE Banking Act through our membership in the National Cannabis Industry Association and discussions with other industry players and media. It's ongoing. So we're keeping a close eye. We'll see how this whole thing pans out, but we're excited one way or the other. We don't do anything in the US for the next two years. We can probably add $200 to $300 million in Canada alone.

但為了回答你的問題，我們不會犧牲我們在納斯達克的上市。納斯達克為我們提供了令我們非常興奮的流動性。鑑於美國的所有勢頭，我們很可能會比我們最初希望的更早獲得這個機會。所以我們非常非常專注。我們的政府關係團隊透過我們國家大麻工業協會的會員資格以及與其他行業參與者和媒體的討論，密切關注重新安排和《安全銀行法》的進展。它正在進行中。所以我們正在密切關注。我們將會看到整件事的結果如何，但無論如何我們都很興奮。未來兩年我們不會在美國做任何事。光是在加拿大，我們就可能增加 2 億至 3 億美元。

Appreciate that color. I'll get back in the queue.

欣賞那個顏色。我會回到隊列中。

Scott Fortune, ROTH MKM.

斯科特·福瓊，羅斯·MKM。

Yeah. Good morning and thank you for the questions. Congratulations on continuing to execute. As you said going forward here but wanted to continue on the US side since we're down here in the US and focusing on that positive momentum, you mentioned you have the Schedule III, potential rescheduling there, SAFE Banking. We get a garland memo that can kind of maybe open up to the upliftings to the US, but more importantly, how do you prioritize and say this does come onboard in '24 or you have operating moving US? How do you look at it strategically moving into the US with replicating your model you've done in Canada and then prioritizing the opportunity of continued growth in Canada with the opportunity in US? Just kind of give us some thoughts of what you're thinking about that for the future there, Raj. That would be great.

是的。早安，謝謝你的提問。恭喜你繼續執行。正如您所說的繼續前進，但希望繼續在美國方面，因為我們在美國這裡並專注於這種積極的勢頭，您提到您有附表三，那裡有可能重新安排，安全銀行業務。我們收到了一份花環備忘錄，可能會為美國帶來振奮，但更重要的是，你如何優先考慮並說這確實會在 24 年出現，或者你已經在美國運作？您如何看待策略性地進入美國，複製您在加拿大所做的模式，然後優先考慮加拿大持續成長的機會和美國的機會？ Raj，請告訴我們您對那裡未來的想法。那太好了。

Hi, Scott, and thank you for your question. So, Scott, look, Canada is the immediate focus, and we have a lot of growth ahead of us. And I don't think US happens tomorrow morning or overnight, but let's just say it was to happen mid next year, some time. We have built some great relationships in the US. We've been cannabis operators for the last 15 years almost. And we know all of the players big-, medium-, and small-sized operators in the US. We've been speaking to multiple operators to execute on an option style agreement. But we've held on to it very responsibly because we didn't want to issue more equity or raise dilutive capital right now, just to put a deposit down on a portfolio of stores. But I can very confidently tell you that we've got more than a couple of operators in our Rolodex that we can execute on and enter the United States and convert all of those existing stores into our winning discount club model.

你好，斯科特，謝謝你的問題。所以，史考特，你看，加拿大是目前的焦點，我們前面還有很多成長空間。我不認為美國會在明天早上或晚上發生，但我們只能說這會在明年年中的某個時候發生。我們在美國建立了一些良好的關係。在過去 15 年裡，我們幾乎一直從事大麻經營。我們認識美國所有的大、中、小型業者。我們一直在與多家業者洽談，以執行期權式協議。但我們非常負責任地持有它，因為我們現在不想發行更多股票或籌集稀釋資本，只是為了在商店投資組合上存入押金。但我可以非常自信地告訴你，我們的 Rolodex 中有不止幾個運營商，我們可以執行並進入美國，並將所有這些現有商店轉變為我們獲勝的折扣俱樂部模式。

So that will be our approach going into the US. We're not going to wait building stores in the US organically one at a time. We've got a better strategy, and I don't want to give up a whole bunch of that strategy on this call today. But I can tell you that we remain very, very confident for when the US opportunity arises. US will take priority for us because that is the most exciting market for us, absolutely. But in the meanwhile, we're going to continue to crush it in Canada and continue to build more momentum in Canada because the more size and scale we get in this country, the more we're able to -- we've tried, tested, and perfected our model here. So now it's plug and play for us in the US. We know exactly what to do. We are fighting at half the gross margins here in Canada and winning. Given -- once we get the opportunity to plant a flag in the US, I think we'll be exceeding our expectations, but we'll leave it up to when that actually happens. But we will prioritize US growth over everything when that opportunity arises.

這將是我們進入美國的方法。我們不會等待在美國有機地一次開設一家商店。我們有一個更好的策略，我不想在今天的電話會議上放棄整個策略。但我可以告訴你，當美國機會出現時，我們仍然非常非常有信心。美國將優先考慮，因為這絕對是我們最興奮的市場。但同時，我們將繼續在加拿大粉碎它，並繼續在加拿大建立更大的勢頭，因為我們在這個國家的規模和規模越大，我們就越有能力——我們已經嘗試過了，在這裡進行了測試並完善了我們的模型。所以現在它對我們在美國來說是即插即用的。我們清楚知道該怎麼做。我們正在與加拿大一半的毛利率作戰並取得勝利。鑑於——一旦我們有機會在美國插上一面旗幟，我認為我們將超出我們的預期，但我們將把它留給實際發生的時間。但當機會出現時，我們將優先考慮美國的成長。

Got it. Appreciate that color. That's helpful. And then real quick shift. You saw good acceleration on the ELITE member growth. Obviously, that pickup is continuing going forward. Is that primarily tied to expanding the product offering for those ELITE customers? Just a little bit color on what driving that pickup in terms of future cadence or targeted subscribers that you look you keep them onboard with the ELITE offering there.

知道了。欣賞那個顏色。這很有幫助。然後是真正的快速轉變。您看到了精英會員成長的良好加速。顯然，這種提振仍在持續。這主要與擴大為那些精英客戶提供的產品有關嗎？就未來的節奏或目標訂閱者而言，稍微說明一下推動這種拾取的因素，您認為您可以讓他們繼續使用那裡的精英產品。

Yeah. Absolutely, Scott. So over the last couple of calls, we've mentioned that ELITE sign-ups cannot grow overnight because 1% to 2% of our existing inventory at that time, let's just take last quarter, for example, we're reflecting a lead products. So you know, when you have such good products in the stores, you're showcasing these member prices work versus market prices and you just have 1% of the ELITE inventory, yes, the ramp-up is going to be slow and steady.

是的。當然，斯科特。因此，在過去的幾次電話會議中，我們提到精英註冊量不可能一夜之間增長，因為當時我們現有庫存的 1％ 到 2％，讓我們以上個季度為例，我們正在反映領先產品。所以你知道，當你在商店裡有這麼好的產品時，你會展示這些會員價格與市場價格的比較，而且你只有 1% 的精英庫存，是的，成長將是緩慢而穩定的。

But as we continue to focus on ELITE, which remains a major focus of our company, last quarter, we signed 5,500 members instead of 4,000 the prior quarter, and I believe roughly 3,500 the quarter before. And this was because we added more ELITE-focused inventory, more ELITE-focused in-store offerings, which is making very difficult for our customers to say no to ELITE memberships.

但隨著我們繼續專注於 ELITE（這仍然是我們公司的主要關注點），上個季度我們簽約了 5,500 名會員，而不是上一季的 4,000 名，我相信上一季約為 3,500 名。這是因為我們增加了更多以 ELITE 為中心的庫存，更多以 ELITE 為中心的店內產品，這使得我們的客戶很難拒絕 ELITE 會員資格。

We're also in incentivizing our bartenders to do so, which they are very excited about. So we feel that this momentum is going to continue, and we will have more and more sign-ups going forward. And again, I want to remind the listeners and our investors that ELITE remains to be over a 70% gross margin opportunity for our company. So as these sign-ups grow and we get this cash in advance for the entire year from our customers, it is also going to help our margins and cash flow going forward.

我們也激勵我們的調酒師這樣做，他們對此感到非常興奮。所以我們覺得這種勢頭將會持續下去，而且我們將會有越來越多的註冊用戶。我想再次提醒聽眾和我們的投資者，ELITE 仍然為我們公司提供超過 70% 的毛利率機會。因此，隨著註冊量的成長，我們提前從客戶獲得全年的現金，這也將有助於我們未來的利潤和現金流。

I appreciate. Congrats again. I'll jump back in the queue.

我很欣賞。再次恭喜。我會跳回到隊列中。

Frederico Gomes, ATB Capital Markets.

Frederico Gomes，ATB 資本市場。

Hi. Good morning. Congratulations on a great quarter. Thank you for taking my questions. Just still on capital allocation. I guess, now that you have reached the free cash flow target, how are you looking at that use of cash that you're going to build? You mentioned plenty of M&A opportunities. So does that mean that you plan to do those using cash instead of shares as you have done in the past? And then, I guess, just what sort of cash, cash in your balance sheet, are you looking to build, and you would be comfortable with? Thank you.

你好。早安.恭喜您度過了一個美好的季度。感謝您回答我的問題。只是仍在資本配置上。我想，現在您已經達到了自由現金流目標，您如何看待將要建立的現金用途？您提到了很多併購機會。那麼這是否意味著您計劃像過去那樣使用現金而不是股票來進行這些操作？然後，我想，您想要建立什麼樣的現金，資產負債表中的現金，您會感到滿意？謝謝。

Hi, Fred. Thank you for that question. So Fred, let me tell you this. I'm very happy with our cash position where it's sitting today, but I'm absolutely thrilled about it. I've said it previously that we -- our company, our size that is generating $0.5 billion in annual run rate sales should have a -- close to $50 million sitting in the bank, and we're not there today. And although we are very fortunate to have a bank line and connect for supporting us to that credit facility, which is an extreme rarity in Canadian cannabis, I don't know of any other operator or many other retail operators that have secured such a line, it's not easy to get additional financing. And is it also restrictive in a way of due to financial covenants that we have to maintain minimum cash balances with the bank.

嗨，弗雷德。謝謝你提出這個問題。弗雷德，讓我告訴你這一點。我對我們今天的現金狀況感到非常滿意，但我對此絕對感到興奮。我之前說過，我們——我們的公司，我們的年銷售額為 5 億美元的規模，應該有——接近 5000 萬美元的存款存在銀行里，但我們今天還沒有。儘管我們非常幸運地擁有銀行額度並連接以支持我們獲得該信貸額度，這在加拿大大麻中極為罕見，但我不知道有任何其他運營商或許多其他零售運營商獲得了這樣的額度，獲得額外融資並不容易。由於財務契約，我們必須在銀行維持最低現金餘額，這是否也是一種限制？

In this case, we're sitting at around $9.5 million, $10 million that we cannot touch. So we're really only left with $10 million to $15 million. We have so many opportunities ahead of us, and we want to remain disciplined. We had an ATM facility open for the last 25 months. And they only used 25% of that facility just to really manage dilutive capital versus non-dilutive. So when some of these M&A opportunities present, we are going to have to act and mostly stock. I am not sitting on a war chest today, although the intention is as our equity prices grow and become stronger, yes, we want to act upon raising more capital because we've proven we are successful operators. We know we have the best model in the country. Now, all we need is a little bit of additional cash where we can start doing these things more comfortably.

在這種情況下，我們的資產約為 950 萬美元，我們無法觸及 1000 萬美元。所以我們實際上只剩下 1000 萬到 1500 萬美元了。我們面前有很多機會，我們希望保持紀律。我們有一個 ATM 設施在過去 25 個月內一直開放。他們只使用該設施的 25% 來真正管理稀釋資本與非稀釋資本。因此，當出現一些併購機會時，我們將不得不採取行動，並且主要是儲備股票。我今天並不是坐在戰爭基金上，儘管目的是隨著我們的股價上漲並變得更強，是的，我們希望採取行動籌集更多資金，因為我們已經證明我們是成功的運營商。我們知道我們擁有全國最好的模型。現在，我們所需要的只是一點額外的現金，這樣我們就可以開始更輕鬆地做這些事情了。

But because we've been responsible in the past, we want to do exactly that red and like I said, we have some restrictive covenants because of the situation in the cannabis industry where banks are keeping it tight currently. And we have to -- we cannot touch $9.5 million to $10 million, although that also gives us security because that money is just sitting in the bank, but we don't have access to too much capital. So we may have to use shares going forward. But we're only going to touch opportunities that are going to yield tremendous value for our shareholders.

但因為我們過去一直負責任，所以我們想要做到這一點，就像我說的，由於大麻產業目前銀行保持緊縮的情況，我們有一些限制性契約。我們必須——我們不能動用 950 萬到 1000 萬美元，儘管這也給我們帶來了安全感，因為這些錢只是存在銀行里，但我們無法獲得太多資本。所以我們未來可能得使用股票。但我們只會抓住那些能為我們的股東帶來巨大價值的機會。

We're not looking to just dilute our shareholders for anything that comes our way. As I mentioned, the Fire & Flower opportunity happened, and we don't always want to be the highest bidder on the table, right? Whether we would have raised additional cash to facilitate that or paid it out in all stuff. We know what we can get at this time, and we've been very, very responsible with that.

我們不希望僅僅因為我們遇到的任何事情而稀釋我們的股東的權益。正如我所提到的，“火與花”機會出現了，我們並不總是想成為報價最高的競標者，對吧？我們是否會籌集額外的現金來促進這一點，還是將其全部支付。我們知道此時我們能得到什麼，我們非常非常負責。

So going forward, it may be a little bit of a hybrid for both, but we're going to be very selective. Even when we're issuing stock, we're going to be selective on the best opportunities only.

因此，展望未來，這可能會有點混合，但我們會非常有選擇性。即使我們發行股票，我們也會只選擇最好的機會。

Let me just add just one point here on the capital allocation. The main priority that we have right now or one of the key components is in addressing that debt, which is the debenture we're looking at amending the payment terms as priority one before we start allocating cash to different alternatives. And the second one is extending the maturity of the notes payable to at about $50 million. So those are key components that we want to resolve here within the next 90 days or so before the end of the year.

關於資本配置，我只補充一點。我們現在的主要優先事項或關鍵組成部分之一是解決該債務，即在我們開始將現金分配給不同替代方案之前，我們正在考慮將修改付款條件作為首要任務的債券。第二個是將應付票據的期限延長至約 5,000 萬美元。因此，這些是我們希望在今年年底前的 90 天內解決的關鍵問題。

Thank you. That's great color. And then just my second question, just on margins. So when you look at the brick-and-mortar retail margins, I guess another impressive quarter as you have been expanding that at a pace of 1% every quarter. I guess for the past four or five quarters. So do you think this trend is going to continue and what are some levers that you're pulling to drive those increases? How much of it may be just increasing prices, and how much of it is just related to some of your other measures in terms of white label products and the ELITE program? I was just curious what you're doing to drive that increase. And I know that you mentioned at 26%, 27% gross margin. That's a good outlook. But just thinking about that a brick-and-mortar retail expansion. I know maybe that's a little bit too conservative, so thanks for any color there. Thanks.

謝謝。那顏色真棒。然後是我的第二個問題，只是邊緣問題。因此，當你看看實體零售利潤率時，我猜這又是一個令人印象深刻的季度，因為你每季都以 1% 的速度擴張。我想過去四、五個季度都是如此。那麼您認為這種趨勢會持續下去嗎？您正在利用哪些槓桿來推動這些成長？其中有多少可能只是價格上漲，有多少只是與您在白標產品和精英計劃方面的其他一些措施有關？我只是好奇你正在做什麼來推動這一成長。我知道你提到了 26%、27% 的毛利率。這是一個很好的前景。但只要想想實體零售的擴張。我知道這可能有點太保守了，所以感謝那裡的任何顏色。謝謝。

Sure, Fred. So Fred, we're not going to be aggressively expanding, like we've expanded 1% a quarter over the last six quarters now. In our brick-and-mortar stores, we've lost a little bit on the e-commerce side, just to keep our e-commerce business relevant for when the switch window, when we flip the switch again, and we're back to e-commerce growth, we're just making sure that we can balance both at this time. But our members are really enjoying our concept.

當然，弗雷德。所以弗雷德，我們不會像過去六個季度每季擴張 1% 那樣積極擴張。在我們的實體店中，我們在電子商務方面損失了一些，只是為了保持我們的電子商務業務與開關窗口時的相關性，當我們再次打開開關時，我們會回來對於電子商務的增長，我們只是確保此時能夠平衡兩者。但我們的會員真的很喜歡我們的理念。

As you can see, we grew by another 6% in our membership base from 1,000,040 to 1.1 million Cabana Club members now. So we don't want to overly be aggressive on margin expansion. We will be actually slowing down a little bit and stabilizing our margins a little bit. So we can continue to gain market share because what we've learned from our model, the more tighter we remain on the market, we see a lot of the noise and a lot of the smaller operators starting to get out of the race simply because they cannot compete. So if we sit on a horse and start expanding our margins, then we are not that competitive with everybody else. So we want to kind of remain stable.

正如您所看到的，我們的會員數量又增加了 6%，從 1,000,040 名增加到現在的 110 萬名 Cabana Club 會員。因此，我們不想在利潤率擴張方面過於激進。我們實際上會放慢一點速度並穩定我們的利潤率。因此，我們可以繼續獲得市場份額，因為我們從我們的模型中了解到，我們在市場上的地位越緊，我們就會看到很多噪音，許多較小的運營商開始退出競爭，僅僅是因為他們無法競爭。因此，如果我們騎在馬上並開始擴大利潤，那麼我們與其他人相比就沒有競爭力。所以我們希望保持穩定。

We had a lot of levers that we can pull, such as ELITE sign-ups, which is also contributing towards the margin. We have white label offerings that are also contributing towards the margin. And we -- and then we're also increasing product prices, and we can always do that. And we are going to generate more exclusive ELITE inventory, which will also have on our house branded products, which will give us another margin expansion opportunity.

我們有許多可以利用的槓桿，例如菁英註冊，這也有助於提高利潤。我們的白標產品也有助於提高利潤。我們 - 然後我們也提高產品價格，我們總是可以做到這一點。我們將產生更多獨家精英庫存，這些庫存也將出現在我們的自有品牌產品上，這將為我們帶來另一個利潤擴張機會。

But we have other levers to pull to when it comes to margin growth likes to, as Sergio mentioned, when Fastendr licensing becomes a reality and we can start licensing in the US, we don't really need to push brick-and-mortar margins very aggressively. We can always go do that. We're also looking at our e-commerce margins right now, which we've had very, very tightly. We're going to slightly expand them as well. So we've got a lot of different levers we can pull and not only just keep pushing product prices up in our ecosystem, but as operators fail or cannot make it or don't renew their leases here in Canada. Suddenly, we're the only game in town, you can bet on it that margins are going to continue to go up.

但當談到利潤成長時，我們還有其他槓桿可以利用，正如 Sergio 所提到的，當 Fastendr 許可成為現實並且我們可以開始在美國獲得許可時，我們真的不需要推動實體利潤非常激進。我們總是可以去做那件事。我們現在也關注我們的電子商務利潤率，我們的利潤率非常非常低。我們也將稍微擴展它們。因此，我們有很多不同的槓桿可以拉動，不僅會不斷推高我們生態系統中的產品價格，而且還會隨著運營商失敗或無法成功或不續簽加拿大的租約而上漲。突然間，我們成為城裡唯一的遊戲，你可以打賭利潤率將繼續上升。

Thank you very much for the color.

非常感謝你的顏色。

Andrew Semple, Echelon Wealth Partners.

安德魯‧森普爾 (Andrew Semple)，埃施朗財富合夥人。

Hi there. Congrats on the strong beats and High Tide's first quarter of positive free cash flow. You mentioned that with achieving positive free cash flow, you'd review the pace of, I guess organic growth and store development. We recently saw three stores opened in Ontario over the last month and a half. So it appears to be a pretty good sign that you're, again, maybe perhaps accelerating your investments into stores. Could you maybe talk about your outlook for new store openings for the balance of this fiscal year and going into next year?

你好呀。恭喜 High Tide 第一季的強勁表現和正自由現金流。您提到，隨著實現正的自由現金流，您會審查有機成長和商店開發的步伐。我們最近看到在過去的一個半月裡，安大略省開了三家商店。因此，這似乎是一個非常好的跡象，表明您可能再次加速對商店的投資。您能否談談本財年剩餘時間和明年新店開幕的展望？

Hi, Andrew. Thank you for your question. So yes, the balance of this year, again, we only have 3.5, 4 months left now. And Andrew, building permits is sometimes our biggest challenges. Like we've had the Mississauga leases for quite some time now, but we're waiting on building permits. We have six very attractive locations that we are waiting to build there, and that is high priority for us. But I don't even think we're going to be able to get to all six this year. We maybe get two to three in Mississauga, in Ontario, and another two to three; one in BC for sure that we are working on. And I'm super excited to share that location with everybody and maybe one or two additional ones in Ontario.

嗨，安德魯。謝謝你的問題。所以，是的，今年的剩餘時間，我們現在只剩下 3.5、4 個月了。安德魯，建築許可有時是我們最大的挑戰。就像我們在密西沙加的租約已經有一段時間了，但我們正在等待建築許可證。我們有六個非常有吸引力的地點正在等待在那裡建造，這對我們來說是重中之重。但我甚至不認為今年我們能夠達到全部六個。我們可能會在安大略省的密西沙加得到兩到三個，另外還有兩到三個； BC省肯定有一個我們正在努力。我非常高興能與大家分享這個位置，也許還有安大略省的一兩個其他地方。

So overall, we think we can do four to six locations by the end of this year. And now that we have free cash flow generation, of course, we want to keep in mind that we're always free cash flow positive going forward, although the delta is going to vary, the quantum is going to vary. We were -- I was extremely happy that we got to $4.1 million this quarter, but I cannot sacrifice growth going forward every quarter. And our whole recipe for success has been a size and scale. It's like the chicken and egg. If we wouldn't have built this fast, this sufficiently, we wouldn't get to free cash flow today. We wouldn't have these exceeding EBITDA trajectory that we are on right now, right? So what we're going to do is we're going to be very disciplined and responsible in our approach.

總的來說，我們認為到今年年底我們可以開設四到六個地點。現在我們已經有了自由現金流，當然，我們要記住，我們的自由現金流始終為正，儘管增量會有所不同，但數量也會有所不同。我非常高興我們本季達到了 410 萬美元，但我不能犧牲未來每季的成長。我們成功的秘訣就是規模和規模。這就像先有雞還是先有蛋。如果我們不能這麼快、這麼充分地建設，我們今天就不會獲得自由現金流。我們不會有現在這樣超過 EBITDA 的軌跡，對吧？因此，我們要做的就是在我們的方法中非常自律和負責任。

We are going to look at some M&A. So we can start getting momentum on both sides. You'll see about four to six locations added this year, and then you're going to see another 15, 20 organically next year. Maybe a little more, but definitely another 10, 15, maybe in M&A next year.

我們將關註一些併購。這樣我們就可以開始為雙方帶來動力。今年您將看到增加約 4 到 6 個地點，明年您將看到另外 15、20 個有機地點。也許會多一點，但絕對是另外 10、15 個，也許明年會在併購中。

Great. Great, that's very helpful. And then just wanted to switch gears maybe with the lots of Fire & Flower in the marketplace. I'm wondering if you've seen any inbound calls from the LPs on your data licensing business, given it's now definitely one of the largest stock offerings in the industry. And maybe a bolt-on question to that, too, would be whether you've received any early indications of interest from potential advertising partners for the new Cabanalytics Consumer Insights offering that you'll be launching here in the near term?

偉大的。太好了，這非常有幫助。然後只是想換個方向，也許市場上有很多“Fire & Flower”。我想知道您是否看到來自有限合夥人對您的數據許可業務的來電，因為它現在絕對是業內最大的股票發行之一。也許還有一個緊要的問題是，您是否已收到潛在廣告合作夥伴對您近期將在此處推出的新 Cabanalytics Consumer Insights 產品感興趣的任何早期跡象？

Sure, Andrew. So Andrew, Cabanalytics business and data insights has been an extremely successful program for us. But unfortunately, some of our customers, which are licensed producers mostly, a lot of them are facing CCAA and there's a lot of pressure on that end. Initially, when we were opening stores, we can generate data from all of these stores. And we were really ramping up on our Business Insights platform. Well that has really slowed down now and stabilized, although I'm happy that it's not got in negative territory because I can't control what happens on our customer side.

當然，安德魯。因此，Andrew、Cabanalytics 業務和數據洞察對我們來說是一個非常成功的專案。但不幸的是，我們的一些客戶（主要是授權生產商）很多都面臨 CCAA，這方面的壓力很大。最初，當我們開設商店時，我們可以產生所有這些商店的數據。我們確實在加強我們的商業洞察平台。嗯，現在確實已經放緩並穩定下來，儘管我很高興它沒有進入負值區域，因為我無法控制客戶方面發生的情況。

So what we did is we decided to leverage our overall Cabanalytics ecosystem. We saw that we have 1.1 million members of the Cabana Club, no one else does. We have 4.6 million international customers, no one else does. And the best way to solidify the loyalty loop with our club members is by constantly reinforcing panic about as lowest-price ecosystem that they've come to love and trust and also solidify our relationships with all of the brands and product manufacturers that would want to have a platform like CCI to showcase and promote their successful brands.

因此，我們決定利用我們的整個 Cabanalytics 生態系統。我們看到我們的 Cabana 俱樂部有 110 萬會員，沒有其他人有。我們擁有 460 萬國際客戶，無人能及。鞏固與我們的俱樂部會員的忠誠度循環的最佳方法是不斷強化對他們喜愛和信任的最低價格生態系統的恐慌，並鞏固我們與所有想要的品牌和產品製造商的關係。擁有像CCI 這樣的平台來展示和推廣他們的成功品牌。

So CCI is going to be a high-margin business for us, of course, subject to federal regulations because there's a lot of federal and provincial regulations in play when it comes to marketing and advertising opportunities with licensed producers. But we can act on CBD, we can act on accessories today, we can act on seats today, and we have so much consumer level data across the cannabis value chain through our diversified international cannabis ecosystem. But this is going to be an exciting project for us, and I haven't been so excited about a project in a while since ELITE. So this is going to be our next winning project. And I feel that this is going to further make LPs very excited to work with us and CBD and accessory companies, very, very excited to showcase their success in this magazine-style publication that we are launching.

因此，CCI 對我們來說將是一項高利潤業務，當然，要遵守聯邦法規，因為在與許可生產商的營銷和廣告機會方面，有很多聯邦和省級法規在發揮作用。但我們可以對CBD 採取行動，我們今天可以對配件採取行動，我們今天可以對座椅採取行動，並且透過我們多元化的國際大麻生態系統，我們在大麻價值鏈上擁有如此多的消費者層面的數據。但這對我們來說將是一個令人興奮的項目，自從 ELITE 以來我已經有一段時間沒有對一個項目如此興奮了。所以這將是我們的下一個獲獎項目。我覺得這將進一步讓 LP 非常高興與我們以及 CBD 和配件公司合作，非常非常興奮地在我們即將推出的雜誌式出版物中展示他們的成功。

Raj, I guess the first part of the question was about the wholesale business. We have seen any interest in the wholesale business due to Fire & Flower going out. And I guess I could answer the first part is no, we haven't seen it. And one of the things that I should highlight as part of the due diligence that we did it through that active potential acquisition. This is a line of business that we want to be very careful in terms of the margins, low margins and high exposure to AR. So we're very, very careful there. Anyway, so you want to add something on that part?

Raj，我想問題的第一部分是關於批發業務的。由於 Fire & Flower 的退出，我們看到了對批發業務的興趣。我想我可以回答第一部分是否定的，我們還沒看到。作為盡職調查的一部分，我應該強調的一件事是我們透過積極的潛在收購做到了這一點。這是一個我們希望在利潤率、低利潤率和高風險暴露方面非常謹慎的業務線。所以我們在那裡非常非常小心。不管怎樣，你想在這部分添加一些東西嗎？

No. You're totally right, Sergio. Look, Andrew, the wholesale part of the schedule is extremely tiny for us. It's really facilitating the existing stores that we have in Saskatchewan, but we're rapidly growing. But it's not our focus. It's a low margin business. We're not overly concerned one way or the other on this business coming our way, in a very big way. And these assets were also purchased by a private operator, which was publicly disclosed. So it's not like the wholesale business is shut down, and the LPs have stopped doing business with them.

不，你完全正確，塞爾吉奧。安德魯，你看，日程安排中的批發部分對我們來說非常小。這確實為我們在薩斯喀徹溫省的現有商店提供了便利，但我們正在快速成長。但這不是我們的重點。這是一項低利潤業務。對於這項業務的發展，我們並不過度擔心，而且是在很大程度上。而這些資產也是由一家私人業者購買的，這一點已公開披露。因此，批發業務並沒有關閉，有限合夥人也不再與他們開展業務。

We are still growing in our wholesale business in Saskatchewan, but it's a really tiny portion of our overall portfolio. And we've always been a retail-focused company, as you know, Andrew, from the very beginning. So it doesn't matter to us one way or the other. And we continue to focus in our regional operations.

我們在薩斯喀徹溫省的批發業務仍在成長，但這只是我們整體業務的一小部分。正如你所知，安德魯，從一開始我們就一直是一家專注於零售的公司。所以這對我們來說並不重要。我們繼續專注於我們的區域業務。

That's very helpful. I'll get back into queue. Thanks for taking my questions.

這非常有幫助。我會回到隊列中。感謝您回答我的問題。

Thank you, Andrew. (Operator Instructions)

謝謝你，安德魯。 （操作員說明）

We have no further questions at this time. So with that, I will turn the session back over to you, High Tide Chief Executive Officer, Raj Grover, for final comments.

目前我們沒有進一步的問題。因此，我將把會議交回給您，High Tide 執行長 Raj Grover，請您發表最後的意見。

Thank you, operator, and thank you to everyone for your interest and continued support for High Tide. We're very proud of what we achieved this quarter and remain excited about the road ahead.

謝謝運營商，也感謝大家對 High Tide 的關注和持續支持。我們對本季所取得的成就感到非常自豪，並對未來的道路感到興奮。

With that, I will ask the operator to close the line. Have a great day, everyone.

這樣，我會要求接線員關閉線路。祝大家有個美好的一天。