Q2 Earnings call summary HITI Long term position

SUMMARY :

Despite the seasonally weaker quarter, it was the company's best quarter, which speaks volumes about HITI's increased operating efficiency.

Gms on medical cannabis 27%

Key Strengths of High Tide's Q2 FY2026

1. Strong Revenue Growth

• Record revenue of CAD $179.3 million.
• Approximately 30% year-over-year growth, representing one of the strongest growth rates in recent quarters.

2. Accelerating EBITDA Growth

• Record Adjusted EBITDA of CAD $13.9 million.
• EBITDA increased by approximately 73% year over year, significantly outpacing revenue growth, which indicates improving operating leverage and efficiency.

3. Positive Net Income

• The company reported positive net income and positive earnings per share (EPS).
• In the cannabis industry, profitability remains a major challenge for many companies, making High Tide's continued profitability particularly noteworthy.
• Management expects sustainable NET INCOME

4. Positive Free Cash Flow

• High Tide generated positive free cash flow and strong operating cash flow.
• This reduces the need to raise capital through equity issuances, helping to limit shareholder dilution.

5. Germany Continues to Exceed Expectations

• German subsidiary Remexian Pharma GmbH generated a record CAD $31.6 million in revenue.
• Gross margin improved to 27%.
• Management stated that several internal targets were achieved roughly 90 days ahead of schedule.

6. Rapid Expansion of the Customer Base

• The Cabana Club loyalty program surpassed 2.65 million members, up 39% year over year.
• ELITE memberships exceeded 178,000, up 84% year over year.
• This growing membership ecosystem strengthens customer loyalty, improves data analytics capabilities, and enhances High Tide's competitive advantage in retail.
• The stated goal is to exceed 1 million elite members in the long term.

7. Significant Banking Support

• The company secured a new credit facility of up to CAD $40 million from Bank of Montreal.
• Access to financing from a major Canadian bank is an important signal of financial credibility and stability in the cannabis sector.
• This has led to an increase in institutional interest in the stock which will be reflected as the company's fundamentals continue to improve.

8. Market Leadership

• High Tide continues to hold approximately 12% of the Canadian cannabis retail market in the provinces where it operates.
• The company is also steadily gaining market share in the German medical cannabis market.
• Raj is targeting 20% market share in Germany and I personally believe 30% is achievable in the long term for several reasons.

Most Bullish Takeaways

If I had to identify nine most bullish developments from the quarter, they would be:

1. 73% growth in Adjusted EBITDA, demonstrating strong operational execution.
2. Remexian's 27% gross margin, showing that the German business is scaling successfully and profitably.
3. The new CAD $40 million credit facility, which provides growth capital without diluting shareholders.
4. SNDL will have to sell some of its assets because it has violated regulations for years, and I wouldn't be surprised if it had to pay a hefty fine for breaking the law for so long. These assets will be carefully evaluated by Hiti for purchase.
5. Possible increase in the cap in Ontario from 150->300 which Raj calls "a dream come true" bringing the number of canna cabana shops +500, but we'll have to see how things evolve
6. The medical branch is growing throughout Europe, a constantly growing market, where Raj intends to be the leader in every country in which it operates (Germany, UK to follow).
7. GMS have reached an all-time high. Raj states that due to competition, they will shrink slightly in the medium term in order to gain market share, but thanks to initiatives such as increasing ELITE/WHITE LABEL inventory from the current 2% to 25%, GMS will exceed 30% in the long term, also driven by Remexian's improved efficiency.
8. Raj has stated his intention to enter the US, but for now he's focused on the European medical market and I support that.
9. He says there's no rush to pursue multiple objectives at once, but rather to focus on one market at a time, strengthen its position by positioning itself as a leader, and move on to the next.

Together, these results suggest that High Tide is evolving from a pure growth story into a profitable growth company, a transition that investors often reward with higher valuation multiples over time.

HITI is becoming the definition of non-stop execution and deserves more credit for this. Remexian's goal is clear: gain more market share to satisfy this insatiable and ever-growing demand, in order to reach 20-30% market share in the long term and then achieve pricing determination with a consequent increase in GMS and profitability.

Still think **HITI** is vastly undiscovered.

Despite an increase in CAPEX linked to the expansion, the company continues to generate FCF+ and expects to increase net income thanks to ongoing synergies.

Raj is carefully evaluating expansion into another jurisdiction (UK), choosing the right partner for the long term.

The UK is the European market that excites him the most.

The UK medical market appears more interesting than the German one because High Tide could own the entire chain (from production directly to the patient). This is the medical system in which it is structured, which makes it exciting and unique in some respects.

I might be biased because HITI is my largest position by a wide margin, but that’s not why I’m saying this. Execution here has simply been exceptional. The numbers speak for themselves, the customer wins speak for themselves, and the pace of announcements speaks for itself.

Every analyst covering the company has a Buy rating

Canaccord Genuity → Buy, Target $US 5.50

Haywood → Buy, Target $US 5.90

Roth → Buy, target $US 5.00

TD Cowen → Buy, target $6.5 CAD

ATB CAPITAL Target 7$CAD

Long term