- Net revenue of $23.2 million compared to $26.9 million in Q2
2019 and $25.2 million in Q1 2020
- Adult-use recreational net revenue sequentially grew 16% to
$15.0 million from $12.9 million in Q1 2020
- Ended quarter with $41.2 million in cash and short-term
investments
- First shipped its Rec 2.0 products with Trailblazer Torch
vape cartridges in December 2019, followed by Edison Feather
ready-to-go distillate vape pens and Edison Bytes, cannabis-infused
chocolates, in February 2020
- Expect Edison PAX ERA distillate cartridges to start
shipping in Q2 calendar 2020
- Subsequent to quarter-end, received licensing for the
remainder of Phase 5, which includes a dedicated edibles and
derivatives facility
- Announced a corporate action plan intended to boost
containment of the COVID-19 virus and protect the health of
employees as well as maintain sufficient business continuity to
meet anticipated demand for its products during this
period
Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), the parent
company of Organigram Inc. (together, the “Company” or
“Organigram”), a leading licensed producer of cannabis, is pleased
to announce its results for the second quarter ended February 29,
2020 (“Q2” or “Q2 2020”).
(in 000s)
Q2 2020
Q2 2019
% Change
Select Key Financial Metrics
Gross revenue
27,309
33,473
-18%
Excise taxes
(4,088)
(6,539)
-37%
Net revenue
23,221
26,934
-14%
Cost of sales
15,811
10,890
45%
Gross margin (GM) before fair value
changes to biological assets & inventories
7,410
16,044
-54%
Fair value changes to biological assets
& inventories
3,878
(8,086)
nm*
Gross margin
11,288
7,958
42%
Sales, marketing, general &
administrative (excluding share-based compensation, or
“SG&A”)
14,018
5,741
144%
Net loss from continuing ops
(6,833)
(6,386)
7%
GM before fair value changes to biological
assets & inventories as % of net revenue
32%
60%
-28%
SG&A as a % of net revenue
60%
21%
39%
Adjusted EBITDA1
(1,098)
13,256
-108%
Adjusted EBITDA as a % of net revenue2
(5)%
49%
nm*
* not meaningful
Select Balance Sheet Metrics (in
000s)
February 29, 2020
August 31, 2019
% Change
Cash and short-term investments
41,239
47,935
-14%
Biological assets and inventories
140,831
113,796
24%
Other current assets
26,264
34,550
-24%
Accounts payable and other current
liabilities **
111,582
43,864
154%
Working capital **
96,752
152,417
-37%
Property, plant and equipment
279,109
218,470
28%
Long-term debt **
295
46,067
-99%
Total assets
502,276
428,525
17%
Total liabilities
124,175
101,519
22%
Shareholders’ equity
378,101
327,006
16%
** In accordance with IFRS, the Company has classified the
long-term portion of the BMO term loan ($76.4 million) to current
liabilities as the Company was in violation of one of the financial
covenants contained in the agreement governing the term loan. The
Company obtained a waiver from its lenders that waives compliance
with this covenant until May 30, 2020. See “Liquidity and Capital
Resources” section in this press release.
“Our second quarter results reflect continued execution despite
ongoing industry challenges,” said Greg Engel, CEO. “We introduced
new products such as our Edison Bytes chocolates, Edison Limelight
dried flower and Trailblazer vape pens and continue to elevate the
Canadian consumer’s cannabis experience. These products have been
well received with strong customer demand to date and we look
forward to further roll-outs in the space.”
The Company continues to diversify its revenue streams. During
the quarter traditional Rec 1.0 products in the adult-use
recreational space represented 52% of net revenue (91% in Q2 2019).
New Rec 2.0 products (chocolates, vape pens) in the adult-use
recreational space represented 13% of net revenue (0% in Q2 2019).
Wholesale sales to other large Canadian Licensed Producers
represented 24% (0% in Q2 2019) with Canadian medical sales
representing 10% (9% in Q1 2019) and international sales
representing 1% (0% in Q2 2019). The Company continues to pursue
additional opportunities to expand its product mix and customer
base.
Key Financial Results for the Second Quarter Fiscal
2020
- Net Revenue:
- Q2 2020 net revenue of $23.2 million compared to $26.9 million
in Q2 2019 primarily due to: lower recreational flower and oil
sales volumes compared to Q2 2019 when the timing of large pipeline
fill orders to Alberta and Ontario occurred to fulfill supply
shortages following the legalization of adult-use recreational
cannabis sales; lower average net selling price from increased
competition; and evolving consumer preferences, for which a
provision for returns and price adjustments was recorded in Q2
2020, mostly related to cannabis oil. This was partially offset by
the launch of Rec 2.0 products (vape products and cannabis-infused
chocolates), and higher medical revenues as well as wholesale and
international revenues, which had not occurred in the prior
comparative quarter.
- Cost of Sales:
- Q2 2020 cost of sales of $15.8 million compared to Q2 2019 cost
of sales of $10.9 million.
- Higher cost of sales in Q2 2020 was primarily due to: higher
post-harvest costs, initial production inefficiencies resulting
from the launch of vapes and chocolates (which may persist in the
near term), and inventory provisions and write-offs of
approximately $1.3 million.
- Gross Margin before fair value changes to biological assets and
inventories sold:
- Q2 2020 gross margin before fair value changes to biological
assets and inventories of $7.4 million, or 32% of net revenue,
compared to $16.0 million in Q2 2019, or 60% of net revenue.
- Lower gross margin and lower gross margin as a percentage of
net revenue in Q2 2020 were largely due to lower net revenue and
higher cost of sales as described above.
- Gross Margin:
- Q2 2020 gross margin of $11.3 million compared to Q2 2019 gross
margin of $8.0 million, largely due to a net non-cash fair value
gain on biological assets and inventories sold of $3.9 million in
Q2 2020 versus a net non-cash fair value loss of $8.1 million in Q2
2019.
- Sales, Marketing, General and Administrative Expenses
(“SG&A”):
- Q2 2020 SG&A of $14.0 million compared to $5.7 million in
Q2 2019 as the Company invested more in the marketing and promotion
of its product portfolio while also scaling its operations for the
launch of its Rec 2.0 line of products.
- Q2 2020 SG&A represented 60% of net revenue compared to 21%
in Q2 2019 primarily due to higher SG&A expenses in Q2 2020 and
higher net revenue in Q2 2019 (both as described above).
- Adjusted EBITDA2:
- Q2 2020 negative adjusted EBITDA of $1.1 million compared to Q2
2019 adjusted EBITDA of $13.3 million.
- Q2 2020 negative adjusted EBITDA was largely impacted by higher
cost of sales and SG&A expenses in Q2 2020 as described
above.
- Net Loss from Continuing Operations:
- Q2 2020 net loss of $6.8 million, or $(0.041) per share on a
diluted basis, compared to Q2 2019 net loss of $6.4 million, or
$(0.049) per share, largely due to higher SG&A expenses in Q2
2020 as described above.
Key Commentary on Q2 2020 Results vs Q1 2020
- Q2 2020 net revenue of $23.2 million compared to Q1 2020 net
revenue of $25.2 million, with adult-use recreational sales up
approximately $2.1 million or 16% offset by a decrease in wholesale
revenue. Q2 2020 net revenue of $23.2 million was largely comprised
of $15.0 million in sales to the adult-use recreational market,
$2.4 million in sales to the medical market, $5.6 million in
wholesale revenue, and $0.2 million in international sales. This
compared to Q1 2020 net revenue of $25.2 million, largely comprised
of $12.9 million in sales to the adult-use recreational market,
$2.7 million in sales to the medical market, $9.2 million in
wholesale revenue, and $0.3 million in international sales.
- Q2 2020 cash and “all-in” costs of cultivation of $0.53 and
$0.75 per gram of dried flower harvested3, respectively, decreased
from $0.61 and $0.87 per gram in Q1 2020, respectively, as more
economies of scale were realized with expanded cultivation capacity
and as the yield per plant4 increased from 150 grams in Q1 2020 to
155 grams in Q2 2020.
- Q2 2020 cost of sales remained flat at $15.8 million from Q1
2020 (despite lower net revenue in Q2 2020 compared to Q1 2020) due
to higher post-harvest costs due to: a lower percentage of less
costly wholesale product sold (as wholesale is packaged in bulk
without any specific labeling and excise stamps); and the launch of
Rec 2.0 products in Q2 2020, as the Company scales and optimizes
production and packaging.
- Q2 2020 gross margin before fair value changes to biological
assets and inventory decreased to $7.4 million, or 32% of net
revenue, from Q1 2020 gross margin before fair value changes of
$9.3 million, or 37%, largely due to inventory provisions and
write-offs of approximately $1.3 million.
- Q2 2020 gross margin of $11.3 million remained stable with Q1
2020 gross margin, largely due to lower non-cash fair value changes
in biological assets and inventories in Q1 2020, which offset
higher net revenue and a stable cost of sales figure from quarter
to quarter.
- Q2 2020 SG&A of $14 million, or 60% of net revenue,
compared to Q1 2020 SG&A of $9.4 million, or 37% of net
revenue, as Q2 2020 included higher costs related to a large brand
marketing campaign and costs related to the launch of Rec 2.0
products.
- Q2 2020 negative adjusted EBITDA5 of $1.1 million compared to
Q1 2020 adjusted EBITDA of $4.9 million. Q2 2020 negative adjusted
EBITDA was impacted by a lower gross margin before fair value
changes to biological assets and inventories (described above) and
higher SG&A compared to Q1 2020 (described above).
Adult-Use Recreational Launch 2.0 (“Rec 2.0”) – Derivative
and Edible Products
- Organigram shipped the first of its Rec 2.0 products on or
about December 17, 2019 including Trailblazer Spark, Flicker and
Glow 510-thread Torch vape cartridges followed by its first
shipment of Edison + Feather ready-to-go distillate pens on or
about February 20, 2020. Powered by Feather technology, Edison vape
pens are ready-to-use inhalation-activated pens that are designed
to offer adult consumers a simple and intuitive user
experience.
- The Company continues to expect to launch Edison + PAX ERA®
distillate cartridges, its premium line of vape products, in Q2
calendar 2020.
- The Company also began shipping the first of its premium
cannabis-infused chocolates, Edison Bytes, which are truffles in
both milk and dark chocolate formulations on or about February 20,
2020. The chocolates are available to Canadian adult consumers as
single chocolates containing 10 mg of THC each and as a set of two
truffles containing 5 mg THC each.
- As previously announced, Organigram’s researchers have
developed a proprietary nano-emulsification technology that is
anticipated to provide an initial absorption of the cannabinoids
within 10 to 15 minutes. The team of researchers transformed this
emulsification into a solid form, turning it into a dissolvable
powder which can be added to a liquid of a consumer’s choice. The
Company is no longer able to provide guidance on specific launch
timing for its powdered beverage product (previously expected to
launch in Q2 calendar 2020) due to the uncertainty of the impact
and duration of the COVID-19 situation.
Phase 4 Expansion
- The complete Phase 4 expansion of the Moncton Campus facility
represents a total of 77,000 kg per year of additional annual
target production capacity6 and has been divided into a series of
stages (4A: 25,000 kg; 4B: 28,000 kg; and 4C: 24,000 kg).
- Construction of Phases 4A and 4B has been completed and
licensing approval from Health Canada received for total target
licensed cultivation capacity of 89,000 kg per year6 (once fully
operational) as of the date of this press release. The Company’s
management has decided to fill these new rooms at a slower pace in
response to lower than anticipated consumer demand at this time
(which the Company believes is largely due to the lack of an
adequate retail store network) and due to a reduced workforce at
the Moncton Campus facility (to boost COVID-19 containment
efforts). The Company will continue to closely monitor market
conditions and the evolving pandemic.
- As first disclosed with the release of Organigram’s Q4 Fiscal
2019 results on November 25, 2019, the Company’s management made a
strategic decision to delay final completion of Phase 4C (the final
stage of the Phase 4 expansion), previously targeted for the end of
calendar 2019, largely due to lower than anticipated consumer
demand noted above and to more effectively manage and prioritize
cash flow as well as potentially use the space in Phase 4C for
other opportunities (if strategic and/or market factors
dictate).
- The estimated capital cost to complete Phase 4, such that 4C
can be occupied and used for other potential purposes, was
approximately $2 million as of quarter-end.
Phase 5 Under Refurbishment
- Phase 5, once fully operational, is expected to add significant
functionality to the Moncton Campus including additional
post-harvesting rooms (including drying rooms), additional
extraction capacity, and a dedicated derivatives and edibles
facility.
- During the quarter, the Company received Health Canada’s
approval for the licensing of the expanded site perimeter,
including Phase 5, as well as approval for the operations area that
houses the Company’s chocolate production line. Additional drying
and storage areas were also added to the License.
- Subsequent to quarter-end, the Company received Health Canada’s
licensing approval for the remainder of Phase 5. The license
amendment includes the approval of a two-floor production facility
designed to support all processing activity as well as dedicated
spaces for packaging of flower, pre-rolls, vape pens and powdered
beverages. The amendment to the License also allows for new
purpose-built harvest and drying rooms and support areas for
quality assurance, maintenance and sanitation.
- The estimated capital cost to complete Phase 5 was
approximately $11 million as at quarter-end, largely related to the
installation of certain equipment in the edibles and extraction
area. Although the Company intends to complete the build-out of
Phase 5, funds will be expended at a slower pace to balance
near-term priorities with respect to COVID-19.
COVID-19 Corporate Action Plan
- On April 7, 2020, Organigram announced the temporary layoff of
approximately 45 per cent of its workforce or approximately 400
employees primarily to help boost COVID-19 containment efforts. The
Company has offered voluntary layoffs to certain staff and those
that accepted made up the majority of the layoffs. In some cases,
due to the impacts of COVID-19, some administrative, support and
other functions were deemed non-essential to the short-term needs
of the business. The temporary layoffs were initiated on March 24,
2020 and the Company will continuously monitor the evolving
situation.
- Lump-sum payments (equating to approximately two weeks worth of
work) have been paid to the affected employees to help bridge the
gap to available government programs. In addition, the Company will
absorb the employee paid portion of health, dental and short-term
disability premiums for all employees during this difficult time.
The impact of these temporary layoffs will result in a one-time
charge of approximately $0.6 million during the month of April
2020, which is primarily associated with the lump sum payments
provided to these employees7.
- The Company plans to maintain an experienced group of employees
at its Moncton facility with skills flexible enough to work on
various production and packaging lines to help fulfill the
anticipated provincial demand levels.
- Organigram, which operates one facility in Moncton, New
Brunswick as well as offices in Moncton, Toronto and Ottawa, has
already taken actions as recommended by Public Health Agency of
Canada and the provincial Public Health authorities which include,
but are not limited to: the establishment of an Emergency Response
Team; the implementation of a work from home policy, physical
distancing protocols; restrictions on large gatherings and travel;
increased sanitation; and mandatory reporting of any employee
absences, including any COVID-19 symptoms.
Outlook
- During the temporary lay-off of employees due to COVID-19,
Organigram expects reductions to cultivation, harvest, production
and packaging capacity but plans to supplement with inventories on
hand to meet anticipated demand. Specifically, the Company will be
focused on leveraging the automated and the most efficient lines of
production and will deprioritize products with lower margins and/or
that require higher manual labour.
- The Company believes it has sufficient inventory levels to
supplement reduced harvest plans and enough contingency staff to
keep packaging capacity intact in order to meet anticipated demand
in the short-term. The Company also remains comfortable with its
current inventory levels from external suppliers (e.g. vape product
hardware, packaging materials) and has not experienced any
significant disruptions to date.
Liquidity and Capital Resources
- Organigram had $41.2 million in cash and short-term investments
at quarter-end. The Company believes its current capital sources,
expected future capital sources and its ability to manage cash flow
and working capital levels will allow it to meet its current and
future obligations, to meet expected debt service requirements, and
to fund its operating and capital expenditure plans.
- Working capital as at quarter-end, of $96.8 million compared to
$152.4 million as at August 31, 2019, was largely due to an IFRS
requirement to classify the long-term portion of the BMO term loan
($76.4 million) to current liabilities as the Company was in
non-compliance with one of its financial covenants. The Company
obtained a covenant waiver from its lenders that waives compliance
with the financial covenant in question until May 30, 2020 and is
currently negotiating an amendment to its credit facility agreement
in an effort to address this matter. While the Company believes it
will be successful in negotiating the amendment, there can be no
guarantee that an amendment will be secured on terms favourable to
the Company or at all.
- The Company reported approximately $85.2 million in current and
long-term debt as at quarter-end, which primarily represents the
carrying value of its term loan in its credit facility with BMO and
a syndicate of lenders. As of the date of this press release, $30.0
million remains undrawn on the term loan in its credit
facility.
- The credit facility also includes a $25 million revolver for
general corporate and working capital purposes. Availability under
the revolver is based on a percentage of the trade receivables at
the end of each month and is undrawn as of the date of this press
release.
- On December 4, 2019, Organigram announced it had established an
ATM program pursuant to a prospectus supplement to its base shelf
prospectus. The supplement allowed the Company to issue up to $55
million (or its U.S. dollar equivalent) of common shares from
treasury from time to time, at the Company’s discretion. The
Company issued approximately 16.2 million Common Shares pursuant to
the ATM Program during the three months ended February 29, 2020 for
gross proceeds of approximately $55.0 million at a weighted average
price of $3.39 per Common Share. Net proceeds realized were $52.9
million after agents’ commissions, regulatory and legal and
professional fees. Proceeds were raised in both USD (for shares
sold through the NASDAQ) and CAD (for shares sold through the TSX)
and the weighted average share price was calculated using the spot
rate on the day of settlement. The Company has used, and intends to
continue to use, the net proceeds to fund capital projects, for
general corporate purposes and to repay indebtedness. The ATM
Program was completed prior to quarter-end.
Capital Structure
(in 000s)
February 29, 2020
August 31, 2019
Current and long-term debt
$85,203
$49,576
Shareholders’ equity
378,101
327,006
Total debt and shareholders’ equity
$463,304
$376,582
Outstanding common shares
173,079
156,196
Options
9,253
8,833
Restricted share units
999
842
Performance share units
132
-
Total fully-diluted shares
183,463
165,872
Outstanding basic and fully diluted share count as at April 9,
2020 is as follows:
(in 000s)
April 9, 2020
Outstanding common shares
173,079
Options
8,971
Restricted share units
963
Performance share units
132
Total fully diluted shares
183,146
Second Quarter Fiscal 2020 Conference Call
The Company will host a conference call to discuss its results
with details as follows:
Date:
April 14, 2020
Time:
8:00 a.m. Eastern Standard Time
Toll
Free (North America) Dial-In Number:
1-866-211-4093
International Dial-In Number:
647-689-6727
Webcast:
https://event.on24.com/wcc/r/2158457/26EA11F1C003A07ED88A32124DC3CB15
A replay of the webcast will be available within 24 hours after
the conclusion of the call at https://www.organigram.ca/investors
and will be archived for a period of 90 days following the
call.
Non-IFRS Financial Measures
This news release refers to certain financial performance
measures (including yield per plant (in grams), target production
capacity, adjusted EBITDA and cash and “all-in” cost of
cultivation) that are not defined by and do not have a standardized
meaning under International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board. These
non-IFRS financial performance measures are defined below. Non-IFRS
financial measures are used by management to assess the financial
and operational performance of the Company. The Company believes
that these non-IFRS financial measures, in addition to conventional
measures prepared in accordance with IFRS, enable investors to
evaluate the Company’s operating results, underlying performance
and prospects in a similar manner to the Company’s management. As
there are no standardized methods of calculating these non-IFRS
measures, the Company’s approaches may differ from those used by
others, and accordingly, the use of these measures may not be
directly comparable. Accordingly, these non-IFRS measures are
intended to provide additional information and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. Please refer to the
Company’s Q2 2020 MD&A for definitions and, in the case of
adjusted EBITDA, a reconciliation to IFRS amounts.
About Organigram Holdings Inc.
Organigram Holdings Inc. is a NASDAQ Global Select Market and a
Toronto Stock Exchange (“TSX”) listed company whose wholly owned
subsidiary, Organigram Inc., is a licensed producer of cannabis and
cannabis-derived products in Canada.
Organigram is focused on producing high-quality, indoor-grown
cannabis for patients and adult recreational consumers in Canada,
as well as developing international business partnerships to extend
the Company's global footprint. Organigram has also developed a
portfolio of adult use recreational cannabis brands including The
Edison Cannabis Company, Ankr Organics and Trailblazer.
Organigram's primary facility is located in Moncton, New Brunswick
and the Company is regulated by Health Canada under the Cannabis
Act (Canada) and the Cannabis Regulations (Canada).
This news release contains forward-looking information.
Forward-looking information, in general, can be identified by the
use of forward-looking terminology such as “outlook”, “objective”,
“may”, “will”, “could”, “would”, “might”, “expect”, “intend”,
“estimate”, “anticipate”, “believe”, “plan”, “continue”, “budget”,
“schedule” or “forecast” or similar expressions suggesting future
outcomes or events. They include, but are not limited to,
statements with respect to expectations, projections or other
characterizations of future events or circumstances, and the
Company’s objectives, goals, strategies, beliefs, intentions,
plans, estimates, forecasts, projections and outlook, including
statements relating to the Company’s plans and objectives including
around amendments to its credit facility, availability and sources
of any future financing; expectations regarding the impact of
COVID-19, expectations around temporary layoffs; expectations
around market and consumer patters related to existing and new
product forms; plans for further construction in phases 4c and 5
and uses of spaces therein; timing for launch of new product forms,
or estimates or predictions of actions of customers, suppliers,
partners, distributors, competitors or regulatory authorities;
statements regarding the future market of the Canadian cannabis
market and, statements regarding the Company’s future economic
performance. These statements are not historical facts but instead
represent management beliefs regarding future events, many of
which, by their nature are inherently uncertain and beyond
management control. Forward-looking information has been based on
the Company’s current expectations about future events.
Forward-looking information involves known and unknown risks,
uncertainties and other factors that may cause actual events to
differ materially from current expectations. Important factors -
including the heightened uncertainty as a result of COVID-19
including any impact on production or operations, impact on demand
for products, effect on third party suppliers, service providers or
lenders; general economic factors; receipt of regulatory approvals
or consents and any conditions imposed upon same and the timing
thereof, ability to meet regulatory criteria which may be subject
to change, change in regulation including restrictions on sale of
new product forms, timing to receive any required testing results
and certifications, results of final testing of new products,
timing of new retail store openings, being inconsistent with
preliminary expectations, changes in governmental plans including
related to methods of distribution and timing and launch of retail
stores, timing and nature of sales and product returns, customer
buying patterns and consumer preferences not being as predicted
given this is a new and emerging market, material weaknesses
identified in the Company’s internal controls over financial
reporting, the completion of regulatory processes and registrations
including for new product forms, market demand and acceptance of
new product forms, unforeseen construction or delivery delays
including of equipment, increases to expected costs, competitive
and industry conditions, customer buying patterns and crop yields -
that could cause actual results to differ materially from the
Company's expectations are disclosed in the Company's documents
filed from time to time under the Company’s issuer profile on the
Canadian Securities Administrators’ System for Electronic Document
Analysis and Retrieval (“SEDAR”) at www.sedar.com and reports and
other information filed with or furnished to the United States
Securities and Exchange Commission (“SEC”) and available on the
SEC’s Electronic Document Gathering and Retrieval System (“EDGAR”)
at www.sec.gov including the Company’s most recent MD&A and AIF
available from time to time. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date of this news release. The Company disclaims any
intention or obligation, except to the extent required by law, to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
1 Adjusted EBITDA and adjusted EBITDA as a percentage of net
revenue (adjusted EBITDA margin %) are non-IFRS financial measures
not defined by and do not have any standardized meaning under IFRS;
please refer to the Company’s Q2 2020 MD&A for definitions and
a reconciliation to IFRS.
2 Adjusted EBITDA is a non-IFRS financial measure not defined by
and does not have any standardized meaning under IFRS; please refer
to the Company’s Q2 2020 MD&A for definitions and a
reconciliation to IFRS.
3 Cash and “all-in” costs of cultivation per gram of dried
flower harvested are non-IFRS measures that are not defined by and
do not have any standardized meaning under IFRS. “Cost of
cultivation” per gram harvested includes “cash” costs such as
direct labour, direct materials and manufacturing overhead (e.g.
maintenance) as well as “non-cash” expenses such as employee
share-based compensation for cultivation employees and depreciation
related to buildings and equipment of the production facility. Cost
of cultivation does not include packaging costs, which are added to
arrive at the cost for inventory, nor distribution costs
(shipping), both of which are included in the cost of sales. Thus,
readers are cautioned against comparing cost of cultivation per
gram harvested with cost of sales for the same period(s) for at
least two reasons: (1) Cost of sales includes packaging costs and
distribution (shipping) costs which “Cost of cultivation” does not,
and (2) there is a delay between when product is harvested and when
it is sold which can be one or two quarters (or longer with
extraction material). Cost of cultivation also does not include
indirect production costs, which are expensed directly against
gross margin.
4 Yield per plant (in grams) is a non-IFRS operational
performance measure not defined by and does not have any
standardized meaning under IFRS; please refer to the Company’s Q2
2020 MD&A for definition.
5 Adjusted EBITDA is a non-IFRS financial measure not defined by
and does not have any standardized meaning under IFRS; please refer
to the Company’s Q2 2020 MD&A for definitions and a
reconciliation to IFRS amounts.
6 Target production capacity is a non-IFRS operational
performance measure not defined by and does not have any
standardized meaning under IFRS; please refer to the Company’s Q2
2020 MD&A for definition.
7 These numbers are subject to change as additional employees
elect to take a temporary layoff in response to COVID-19. In the
event that these employees are not recalled, and the employment
relationship is deemed terminated the Company would remain liable
for termination and/or severance payments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200414005281/en/
For Investor Relations enquiries: Amy Schwalm Vice-President,
Investor Relations amy.schwalm@organigram.ca 416-704-9057 For Media
enquiries: Ray Gracewood Senior Vice President, Marketing and
Communications rgracewood@organigram.ca 506-645-1653
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