Neil Gilmer

Neil Gilmer asked about the impact of inventory issues in Portugal on Remaxion's Q1 results and gross margins, and then inquired about the drivers and sustainability of the expanding gross margins in High Tide's Canadian brick-and-mortar business.

Answer

CEO Raj Grover explained that the Portugal issue impacted Q4 and will continue into Q1 and early Q2, but the company is diversifying its supply chain through Malta, Czechia, and direct Germany routes. He highlighted the low acquisition multiple of 3.64x for Remaxion due to these temporary issues and expressed long-term bullishness. Regarding brick-and-mortar margins, Mr. Grover confirmed four consecutive quarters of increases, driven by ELITE sales, same-store sales growth, the white label portfolio, and overall brand strength, noting the Cabana Club's explosive growth and the segment's record Adjusted EBITDA margin of 9.4%.

Neil Gilmer from Haywood Securities inquired about the impact of inventory issues in Portugal on Remaxion's Q1 margins and the long-term outlook for the German medical cannabis business. He also asked about the drivers and sustainability of expanding gross margins in High Tide's Canadian brick-and-mortar segment.

Answer

CEO Raj Grover explained that the Portugal inventory issue would continue to impact Q1 and early Q2, but the company is diversifying supply chains through Malta, Czechia, and direct German routes, expecting significant improvement from Q3 onwards. He highlighted new biomass procurement at 30-40% lower costs. Regarding Canadian brick-and-mortar margins, Mr. Grover attributed the four consecutive quarters of increases to ELITE sales, same-store sales growth, the white label portfolio, and overall brand strength, driven by the rapidly expanding Cabana Club and ELITE loyalty programs.