Neil Gomer

Neil Gomer inquired about High Tide's capital allocation strategy post-Remexian acquisition, including investment needs for German market growth and the approach to reaching 300 Canadian stores (organic vs. M&A). He also asked about the expected resolution timeline for Portugal supply chain issues affecting Remexian and Remexian's gross profit margin profile.

Answer

Raj Grover (President, CEO, High Tide) explained that significant working capital is required for Remexian's growth, with half of the Kronos financing allocated for this. For Canadian store expansion, he emphasized continued organic growth in high-quality locations, aiming for 250-260 stores organically in a couple of years, with M&A potentially accelerating the path to 300. He anticipated Portugal supply issues to ease by November and estimated Remexian's gross margin in the mid-20s, with potential for improvement by leveraging High Tide's Canadian LP relationships.

Neil Gomer from Haywood Securities asked about High Tide's capital allocation philosophy following the Remexian transaction, including investment needs for growth in the German market. He also inquired whether the target of exceeding 300 Canadian stores would be achieved primarily through organic growth or potential acquisitions. Gomer further sought visibility on the resolution of supply chain issues in Portugal affecting Remexian and asked about Remexian's gross profit margin relative to High Tide's existing 27%.

Answer

Raj Grover, President and CEO of High Tide, stated that Remexian's exponential growth requires significant working capital, with half of the $30 million Kronos financing allocated for this. He confirmed continued organic store openings (20-30 annually) in high-quality locations, aiming for 250-260 stores organically in a couple of years, with M&A potentially accelerating the path to 300. Grover estimated that Portugal's supply issues, which significantly slowed July and August, should normalize from November onwards. He noted Remexian's gross margins are in the mid-20s (25-26%), with potential for improvement by leveraging High Tide's Canadian LP relationships.