Continued growth in net revenue and increased
market share
- Achieved a 7% share of market in the recreational cannabis
market in Q4, up from 5.4% in Q3 2021, positioning Organigram as
the #4 licensed producer and the momentum continues with a 7.9%
share of market as of October.1
- 24% growth in gross revenue to $36.2 million in Q4 2021 from Q3
2021 and 43% from the same prior-year period
- 22% growth in net revenue to $24.9 million in Q4 2021 from Q3
2021 and 22% from the same prior-year period
- 36% growth in recreational net revenue to $22.9 million in Q4
2021 from Q3 2021 and 52% from the same prior-year period
- Launched 16 new stock-keeping units (SKUs) in the recreational
channel
- SHRED was the #1 most-searched brand on the Ontario Cannabis
Store website (OCS.ca) for 11 out of the last 12 months. 2
- Launched Edison JOLTS, an ingestible extract lozenge that is
the #1 SKU 3 in its category
- Launched SHRED’ems cannabis-infused gummies in early August
which have quickly gained momentum, reaching a 5.8%4 market share
of the gummy category
- Unrestricted cash and short-term investment balance of $172
million and debt of $0.3 million, ensures the Company is
well-resourced to execute its growth strategy
Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), the parent
company of Organigram Inc. (together, the “Company” or
“Organigram”), a leading licensed producer of cannabis, announced
its results for the fourth quarter ended August 31, 2021 (“Q4
Fiscal 2021”).
“The results in Q4 Fiscal 2021 demonstrate the momentum we have
achieved from our efforts to lead innovation and increase
efficiencies. In the quarter, we introduced exciting new products
that were embraced by consumers and we achieved higher crop yields
at a lower cost” said Beena Goldenberg, Chief Executive Officer.
“We are particularly pleased with our market share gains in the
quarter to become a #4 LP and will build on these successes into
Fiscal 2022.”
Ms. Goldenberg concluded, "We are excited for what Fiscal 2022
holds for Organigram. Looking ahead, we expect to continue our
momentum as we maintain our focus on increased points of
distribution, bringing new, impactful and innovative products such
as Edison Jolts, SHRED and SHRED’ems to market, and improve our
ability to fulfill the growing demand for our products.”
Select Key Financial Metrics (in $000s
unless otherwise indicated)
Q4-2021
Q4-2020
% Change
Gross revenue
36,182
25,389
43
%
Excise taxes
(11,317
)
(4,989
)
127
%
Net revenue
24,865
20,400
22
%
Cost of sales
25,867
29,007
(11
)%
Gross margin before fair value changes to
biological assets & inventories sold
(1,002
)
(8,607
)
(88
)%
Fair value changes to biological assets
& inventories sold
4,353
(20,149
)
(122
)%
Gross margin
3,351
(28,756
)
(112
)%
Adjusted gross margin*
3,017
6,156
(51
)%
Adjusted gross margin %*
12
%
30
%
(60
)%
Selling (including marketing), general
& administrative expenses**
13,562
10,830
25
%
Adjusted EBITDA*
(4,818
)
(2,320
)
(108
)%
Net loss
(25,971
)
(38,590
)
(33
)%
Net cash used in operating activities
(7,699
)
(7,676
)
—
%
* Adjusted gross margin, adjusted gross margin % and adjusted
EBITDA are non-IFRS financial measures not defined by and do not
have any standardized meaning under IFRS; please refer to the
Company’s Q4 Fiscal 2021 MD&A for definitions and a
reconciliation to IFRS. ** Excluding non-cash share-based
compensation.
Select Balance Sheet Metrics (in
$000s)
AUGUST 31, 2021
AUGUST 31, 2020
% Change
Cash & short-term investments
183,555
74,728
146
%
Biological assets & inventories
48,818
71,759
(32
)%
Other current assets
28,242
23,717
19
%
Accounts payable & accrued
liabilities
23,436
17,486
34
%
Current portion of long-term debt
80
11,595
(99
)%
Working capital
234,349
141,123
66
%
Property, plant & equipment
235,939
247,420
(5
)%
Long-term debt
230
103,671
(100
)%
Total assets
554,017
435,127
27
%
Total liabilities
74,212
135,600
(45
)%
Shareholders’ equity
479,805
299,527
60
%
“We move into Fiscal 2022 with a robust balance sheet that
provides us with the ability to fund important growth initiatives
such as the CoE we have launched with BAT. This will allow us to
continue our advances in product development and plant science and
drive revenue growth,” added Derrick West, Chief Financial Officer.
“We will also continue to invest in our facilities to create
economies of scale and cost efficiencies that will further improve
our gross margin profile.”
Key Financial Results for the Fourth Quarter Fiscal
2021
- Net revenue:
- Compared to the prior year, net revenue increased 22% to $24.9
million, from $20.4 million in Q4 Fiscal 2020. The increase was
primarily due to an increase in adult-use recreational revenue,
partly offset by the decrease in international revenue, medical
revenue, wholesale revenue to other Licensed Producers and a lower
average net selling price (“ASP”).
- Cost of sales:
- Q4 Fiscal 2021 cost of sales decreased by 11% to $25.9 million,
from $29.0 million in Q4 Fiscal 2020. The decrease was primarily
due to the current quarter's reduction to inventory write-offs and
provisions, along with reductions to the fixed unabsorbed overhead
expenses.
- Gross margin before fair value changes to biological assets,
inventories sold, and other charges:
- Gross margin improved in Q4 Fiscal 2021 from Q4 Fiscal 2020
largely due to higher net revenue and lower cost of sales as
described above.
- Gross margin:
- Q4 2021 gross margin increased to a positive result from
negative Q4 2020 gross margin largely due to higher Q4 2021 gross
margin before fair value changes to biological assets and
inventories sold as described above, as well as net non-cash
positive fair value changes to biological assets and inventories
sold in Q4 2021 versus negative changes in Q4 2020.
- Adjusted gross margin5:
- Q4 Fiscal 2021 adjusted gross margin was $3.0 million, or 12%
of net revenue, compared to a negative $0.7 million, or 4%,
negative adjusted gross margin during the preceding quarter (Q3
Fiscal 2021). This improvement during the current quarter was
largely due to higher net revenues combined with lower cost of
sales that was as a direct result of the lower costs of
production.
- Selling, general & administrative (SG&A) expenses:
- Q4 Fiscal 2021 SG&A expenses increased by 26% to $13.6
million from Q4 Fiscal 2020, primarily due to increased audit fees
and general office expenses in connection with the CoE, such CoE
expenses being equally shared with BAT. Sales and marketing
expenses increased mainly due to data licensing fees that increased
as a result of the continued rollout of stores in Ontario, combined
with marketing initiatives related to the launch of the Company’s
gummy products and an increased focus on our Edison flagship
brand.
- Adjusted EBITDA6:
- Q4 Fiscal 2021 negative adjusted EBITDA decreased 48% from $9.2
million in Q3 2021 to $4.8 million. This improvement was primarily
attributed to the increase in revenues and the improved adjusted
gross margin.
- Net loss:
- Q4 Fiscal 2021 net loss was reduced to $26.0 million, compared
to a net loss of $38.6 million in Q4 Fiscal 2020, largely due to
the higher gross margin in Q4 Fiscal 2021 described above which
were partially offset by the impairment charges during the current
quarter.
- Net cash used in operating activities:
- Q4 Fiscal 2021 net cash used in operating activities of $7.7
million was the same as the prior year's comparison quarter. The
current period's deficiency was largely due to the quarter's
adjusted EBITDA deficit.
Canadian Recreational Market
Launch of Cannabis Innovators Panel
- In July 2021, Organigram launched the Cannabis Innovators
Panel, a cannabis consumer panel offering real-time insights into
consumer preferences, usage occasions, and future development
opportunities. This online panel will engage with hundreds of
participants across Canada on an ongoing basis. The panel will
contribute feedback on both existing product categories and guide
areas of future research and development, including flower, vapes,
concentrates, edibles, and pre-rolls.
SHRED’ems, cannabis-infused gummies
- SHRED’ems cannabis-infused gummies, are an extension of
Organigram’s highly popular, value-priced SHRED brand, launched to
capitalize on the existing equity of SHRED and satisfy the need for
value priced, high quality gummies. Since its launch in early
August 2021, SHRED’ems has quickly gained momentum, capturing a
5.8% national retail market share as of November 17, 2021.4
Edison JOLTS high potency THC lozenges
- Launched in August 2021, Edison JOLTS are mint flavoured, high
potency THC lozenges that combine the benefits of sublingual oil
with the convenience and portability of soft gels. Each package
contains an unprecedented 100mg of THC. JOLTS has quickly achieved
the top-selling position as the #1 LP ranking within ingestible
extracts.3
Monjour CBD-forward wellness brand
- Most recently, Organigram launched Monjour, a new CBD-forward
wellness brand dedicated to the pursuit of a daily wellness regime.
Monjour’s four initial SKUs will be shipping to stores across
Canada throughout November and are available in both vegan and
sugar-free options. Monjour offers 600mg of CBD/package.
Research and Product Development Centre of Excellence
("CoE")
- In early Q4 Fiscal 2021, the Company announced the successful
launch of the CoE, outlined in the agreement with BAT, which was
established to focus on research and product development activities
for the next generation of cannabis products, as well as
cannabinoid fundamental science, with an initial focus on CBD. The
CoE is located at the Moncton Campus, which holds the Health Canada
licenses required to conduct R&D activities with cannabis
products.
- The Company and BAT have already created a number of new
full-time product development, analytical science and innovation
related roles which is expected to ramp up in the second phase of
the CoE expansion in Fiscal 2022 when further full time employees
will be added.
- The CoE includes state of the art shared R&D, Good
Production Practices ("GPP") food preparation, sensory testing and
bio-lab research.
-
To date, the CoE remains on schedule for staffing, construction,
and project planning, and the remaining core construction projects
are anticipated to be completed by Q2 Fiscal 2022.
Plant Science, Breeding and Genomics R&D in Moncton
- Organigram’s cultivation plans focus on cultivating a pipeline
of unique and sought-after genetics, maximizing flower quality in
terms of THC yield, terpene profiles and general plant health to
meet evolving consumer demand. The Company plans to aggressively
pursue expanding its in-house breeding program, dedicating
significant R&D space for breeding, phenotyping, screening, and
various Plant Science Trials while ensuring no competing priorities
with commercial cultivation capacity.
- As part of its ongoing genetic exploration program, the Company
now benefits from leveraging BAT’s tremendous depth of expertise in
plant science and Organigram is excited about the developments in
progress.
- Organigram believes its strategic and creative product
development process is a key differentiator for the Edison
portfolio and the Company overall and looks forward to introducing
more new genetics over the next few quarters.
Outlook7
Net revenue
- Organigram currently expects Q1 Fiscal 2022 revenue to be
higher than Q4 Fiscal 2021 largely due to: stronger forecasted
market growth as COVID-19 restrictions continue to lift and the
number of retail stores continues to grow; and the Company is
better able to fulfill the demand for its revitalized product
portfolio with its increased production.
- Net revenue growth is expected from the Company’s products as
evidenced by Organigram’s growing national adult-use recreational
retail market share (“market share”) from 5.4% in Q3 to 7% in Q4.
As of October, the momentum continues and the Company has reached a
7.9% share of market, maintaining its position as the #4 LP in
Canada.
- In addition, the resumption of shipments to Canndoc in Israel
is expected to generate higher sequential revenue in Q1 Fiscal 2022
as compared to Q4 Fiscal 2021. The Company believes it is better
equipped to fulfill demand in Q1 Fiscal 2022 with larger harvests
expected as compared to Q4 Fiscal 2021. Revenues to date in Q1
Fiscal 2022 including a shipment to Canndoc that was in excess of
$3.0 million, and purchase orders received from customers, support
the Company’s expectation of revenue growth from Q4 Fiscal 2021 to
Q1 Fiscal 2022; however actual results could vary from estimates
from the date hereof until year-end.
- Organigram also expects to be positioned to generate more
revenue growth from the production of soft chews and other edible
products with the specialized equipment in the Winnipeg Facility
under the direction of EIC leadership, who bring significant
expertise in confectionery manufacturing.
Adjusted gross margins
- The Company expects to begin to see a sequential improvement in
adjusted gross margins in Q1 Fiscal 2022 and has put in place
measures that it expects will further improve margins over
time.
- The overall level of Q1 Fiscal 2022 adjusted gross margins
versus Q4 Fiscal 2021 will also be dependent on other factors,
including, but not limited to, product category and brand sales
mix.
- Organigram has identified the following opportunities which it
believes have the potential to further improve adjusted gross
margins over time:
- Economies of scale and efficiencies gained as it continues to
scale up cultivation, including the grow rooms that will be
available after completing the construction of phase 4c of the
Moncton Campus;
- Changes to its growing and harvesting methodologies and design
improvements and environmental enhancements should improve
operating conditions of the Moncton Campus, resulting in
higher-quality flower and improved yields;
- International sales have historically attracted higher margins
and are expected to represent a greater proportion of the Company's
revenue following the resumption of shipments to Canndoc Ltd.;
- More sales from 1g Edison vape cartridges that generally
attract higher margins;
- Continued investment in automation which will drive cost
efficiencies and reduce dependence on manual labor;
- Price increases to SHRED’s pre-milled flower SKUs;
- The recent launches of new products such as Edison Jolts
(ingestible extracts), SHRED'ems and most recently Monjour
represent new potential avenues of growth with expected attractive
long-term margin profiles for the Company.
SG&A Expenses8
- Q1 Fiscal 2022 SG&A is expected to be similar to Q4 Fiscal
2021. Starting with Q1 2022, research and development activities
will be shown separately from SG&A expenses.
International
- Shipments to Canndoc Ltd., which resumed during Q1 Fiscal 2022,
are expected to continue during Fiscal 2022.
- Recent political changes and cannabis election ballot
initiatives for medical and recreational use in the United States
suggest that the potential movements to U.S. federal legalization
of cannabis (THC) have increased momentum, but the timing and
outcome remain difficult to predict. Organigram continues to
monitor and develop a potential U.S. THC strategy and evaluate CBD
entry opportunities in the United States.
Liquidity and Capital Resources
- On August 31, 2021, the Company had unrestricted cash and
short-term investments balance of $184 million compared to $75
million at August 31, 2020, an increase of 145%. The increase was
primarily as a result of $65 million unit offering done November
2020, $221 million of equity proceeds received from BAT as part of
a strategic investment, net of $115 million of monies used during
fiscal 2021 towards the repayment of long-term debt and $31 million
allocated to restricted funds, to be used directly towards the
expenditures of the CoE.
- Organigram believes its capital position is healthy and that
there is sufficient liquidity available for the near to medium
term.
Capital Structure
in $000s
AUGUST 31, 2021
AUGUST 31, 2020
Current and long-term debt
310
115,266
Shareholders’ equity
479,805
299,527
Total debt and shareholders’ equity
480,115
414,793
in 000s
Outstanding common shares
298,786
194,511
Options
7,797
9,264
Warrants
16,944
—
Top-up rights
6,559
—
Restricted share units
1,186
912
Performance share units
472
120
Total fully-diluted shares
331,744
204,807
Outstanding basic and fully diluted share
count as at November 19, 2021 is as follows:
in 000s
NOVEMBER 19, 2021
Outstanding common shares
299,844
Options
8,139
Warrants
16,944
Top-up rights
6,773
Restricted share units
1,566
Performance share units
614
Total fully-diluted shares
333,880
Fourth Quarter Fiscal 2021 Conference Call
The Company will host a conference call to discuss its results
with details as follows: Date: November 23, 2021 Time: 8:00am
Eastern Time To register for the conference call, please use this
link: http://www.directeventreg.com/registration/event/4654838
To ensure you are connected for the full call, we suggest
registering a day in advance or at minimum 10 minutes before the
start of the call. After registering, a confirmation will be sent
through email, including dial in details and unique conference call
codes for entry. Registration is open through the live call.
To access the webcast:
https://event.on24.com/wcc/r/3408680/AE5B7A69C202603E882FDF25D0092F3D
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 adjusted gross margin and adjusted EBITDA) 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. 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 Q4 Fiscal 2021 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
TSX listed company whose wholly owned subsidiaries include:
Organigram Inc., a licensed producer of cannabis and
cannabis-derived products in Canada and The Edibles and Infusions
Corporation, a licensed manufacturer of cannabis-infused soft chews
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 legal adult use recreational cannabis brands including
The Edison Cannabis Company, Indi, Bag o’ Buds, SHRED and
Trailblazer. Organigram's facility is located in Moncton, New
Brunswick with another manufacturing facility in Winnipeg,
Manitoba. The Company is regulated by the Cannabis Act 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 future performance, the
Company’s positioning to capture additional market share and sales,
expectations for consumer demand, expected increase in SKUs,
expected improvement to gross margins before fair value changes to
biological assets and inventories, expectations regarding higher
revenue in Fiscal Q1 2021, the Company’s plans and objectives
including around the CoE, availability and sources of any future
financing, expectations regarding the impact of COVID-19,
availability of cost efficiency opportunities, the increase in the
number of retail stores, the ability of the Company to fulfill
demand for its revitalized product portfolio with increased
staffing, expectations around lower product cultivation costs, the
ability to achieve economies of scale and ramp up cultivation,
expectations pertaining to the increase of automation and reduction
in reliance on manual labour, expectations around the launch of
higher margin dried flower strains, expectations around market and
consumer demand and other patterns related to existing, new and
planned product forms including by EIC; timing for launch of new
product forms, ability of those new product forms to capture sales
and market share, estimates around incremental sales and more
generally estimates or predictions of actions of customers,
suppliers, partners, distributors, competitors or regulatory
authorities; continuation of shipments to Canndoc Ltd.; statements
regarding the future of the Canadian and international cannabis
markets 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 continued 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, changing listing
practices, ability to manage costs, 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 products and forms, market demand
and acceptance of new products and forms, unforeseen construction
or delivery delays including of equipment and commissioning,
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”) from time to time 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.
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. Forward looking information is subject
to risks and uncertainties that are addressed in the “Risk Factors”
section of the MD&A dated November 22, 2021 and there can be no
assurance whatsoever that these events will occur.
________________________________ 1 Source: Hifyre data, Q3 F21
vs. Q4 F21 and Oct 2021 2 Source: OCS e-commerce data, Nov 2020 to
Oct 2021 3 Source: Hifyre data, Sept 12-Nov 6, 2021 4 Source:
Hifyre data, Nov 17, 2021 5 Adjusted gross margin is a non-IFRS
financial measure not defined by and does not have any standardized
meaning under IFRS; please refer to the Company’s Q4 2021 MD&A
for definitions and a reconciliation to IFRS. 6 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 Q4
2021 MD&A for definitions and a reconciliation to IFRS. 7
Without limiting the generality of risk factor disclosures
referenced in the “Risk Factors” section of the Company’s Q4 Fiscal
2021 MD&A, the expectations concerning revenue, adjusted gross
margins and SG&A are based on the following general
assumptions: consistency of revenue experience with indications of
first quarter performance to date, consistency of ordering and
return patterns or other factors with prior periods and no material
change in legal regulation, market factors or general economic
conditions. The Company disclaims any obligation to update any of
the forward-looking information except as required by applicable
law. See cautionary statement in the “Introduction” section at the
beginning of the Company’s Q4 Fiscal 2021 MD&A. 8 The
forward-looking estimate of costs is based on a number of material
factors and assumptions. Please see the cautionary statement in
this press release and in the Company’s Q4 Fiscal 2021
MD&A.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211123005614/en/
For Investor Relations enquiries:
investors@organigram.ca
For Media enquiries: Megan McCrae Senior Vice President,
Marketing and Communications megan.mccrae@organigram.ca
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