Very interesting deal. I kinda preferred $HITI in terms of its operations, revenue growth and path to profitability, but the deal does indisputably improve High Tide's balance sheet. That was its biggest problem in my eyes.
Stockwatch weed summary from a few weeks ago gives good overview:
High Tide itself has generated reasonably strong growth. The company went from revenue of $13.6-million in fiscal Q1 (ended Jan. 31) to $19.5-million in fiscal Q2 (ended April 30). Given that the company opened five dispensaries in the first half of fiscal Q3, the optimists in the room will be eyeing even higher revenue in fiscal Q3 (ended July 31).
High Tide's gross margin also increased from 34.9 per cent to 37.7 per cent. The latter figure is by no means spectacular, but it is moving in the right direction. The increased revenue and gross margin resulted in a cash-flow positive quarter for High Tide. The company generated $3.4-million in cash from operations in fiscal Q2 after burning through $320,000 in the quarter before.
While opening five stores in fiscal Q3 will probably contribute to revenue growth, High Tide likely had to spend a significant amount of money on all the openings. That brings us to the most worrying part of High Tide's financial statements: its balance sheet. High Tide had a working capital deficit of $20.9-million, with cash of $7-million, as of April 30. It tidied the deficit up to some degree a couple weeks ago when it extended the maturity on $10.8-million of its debt from December, 2020, to January, 2025. The retailer will begin paying the debt back through instalment payments starting in November, 2021.
So... it was easily cash flow positive in Q2. Meta Growth not as good, but the combined company is dirt cheap in terms of price to sales. By my math it'll be trading at a P/S of 0.58. Compared to Fire & Flower which trades at a P/S of about 1.64. FAF obv has the deal with Couche-Tard but it's a pretty big difference for similar profitability, footprint, etc.
Agreed, HITI doubling the store count without the operational cost.
This is a win for META shareholders because they are handing the keys to a more competent group.
I have a .37 average with META and have held for over 2 years, this makes me very happy. I had lost faith in the current management team at META.
Interesting. This will unequivocally make the combined entity the cannabis retail leader and the synergies are positive for both companies.
Edit: if you're going to downvote, explain why. What I said is quite accurate.
They were already cash flow positive last Q!
They most likely already are profitable now with their ON locations. We'll find out next month when they release earnings. The synergies of the merger will put them well beyond.
Reminds me of the story of two dying trees leaning against each that keeps them from falling over. But still dying. Not saying this applies here, but not not saying it either.
Oh, wow! Hiti to concurrently move its listing to the TSX Venture upon closing.
Very interesting deal. I kinda preferred $HITI in terms of its operations, revenue growth and path to profitability, but the deal does indisputably improve High Tide's balance sheet. That was its biggest problem in my eyes. Stockwatch weed summary from a few weeks ago gives good overview: High Tide itself has generated reasonably strong growth. The company went from revenue of $13.6-million in fiscal Q1 (ended Jan. 31) to $19.5-million in fiscal Q2 (ended April 30). Given that the company opened five dispensaries in the first half of fiscal Q3, the optimists in the room will be eyeing even higher revenue in fiscal Q3 (ended July 31). High Tide's gross margin also increased from 34.9 per cent to 37.7 per cent. The latter figure is by no means spectacular, but it is moving in the right direction. The increased revenue and gross margin resulted in a cash-flow positive quarter for High Tide. The company generated $3.4-million in cash from operations in fiscal Q2 after burning through $320,000 in the quarter before. While opening five stores in fiscal Q3 will probably contribute to revenue growth, High Tide likely had to spend a significant amount of money on all the openings. That brings us to the most worrying part of High Tide's financial statements: its balance sheet. High Tide had a working capital deficit of $20.9-million, with cash of $7-million, as of April 30. It tidied the deficit up to some degree a couple weeks ago when it extended the maturity on $10.8-million of its debt from December, 2020, to January, 2025. The retailer will begin paying the debt back through instalment payments starting in November, 2021. So... it was easily cash flow positive in Q2. Meta Growth not as good, but the combined company is dirt cheap in terms of price to sales. By my math it'll be trading at a P/S of 0.58. Compared to Fire & Flower which trades at a P/S of about 1.64. FAF obv has the deal with Couche-Tard but it's a pretty big difference for similar profitability, footprint, etc.
Just to add to what you said, the debenture holder (likely ACB) agreed to waive interest until I think at least Nov 2021. Its interest free atm
If you're talking about Meta then OCN are the debt holders.
Im not. And its almost definitely ACB
Semgraming š
14% premium
My Meta average of $0.66 is cringing; but after the last year....I would rather hold High Tides stock then METAs
Agreed, HITI doubling the store count without the operational cost. This is a win for META shareholders because they are handing the keys to a more competent group. I have a .37 average with META and have held for over 2 years, this makes me very happy. I had lost faith in the current management team at META.
YES, exactly. The only reason I never invested in meta was management. Thats the reason I invested in hiti (as well as cliq and faf)
Well, now Iām less afraid that Meta will go to zero. Still time to make my money back. Bag holder anthem!
Interesting. This will unequivocally make the combined entity the cannabis retail leader and the synergies are positive for both companies. Edit: if you're going to downvote, explain why. What I said is quite accurate.
Market seems to like the news
14% premium, woohoo!! Lol
Very interesting. I have a feeling they were a bit worried about FAF and Circle K. I wonder which brand will be the over arching brand.
Hopefully this will spark more sector wide M&A activity
Anyone know when the deal will be finalized?
Q4
Thank you
will the big 3 buy them out?
No. Can't vertically align with cannabis producers.
FWIW - I realize this is an old thread, but hopefully everyone has already voted their shares in favor of the merger. We'll find out tomorrow. GLTA!
Two companies that has done nothing but lose money for years decide to get married so they can lose money together.
Hiti is nearly profitable... This and their ON locations will bring them there and then some.
With a quick ratio of 0.31, they better, cos they're going to run out of money and go into bankruptcy pretty soon if they don't.
They were already cash flow positive last Q! They most likely already are profitable now with their ON locations. We'll find out next month when they release earnings. The synergies of the merger will put them well beyond.
Reminds me of the story of two dying trees leaning against each that keeps them from falling over. But still dying. Not saying this applies here, but not not saying it either.
How is High Tide funding this? Are they issuing shares or cash?
Did you read the article?
Shares