- Domestic share growth in several key categories continues to be
driven by innovation excellence and industry-leading R&D.
- Organigram continues to take a leadership position in industry
fighting THC mislabelling (inflation).
- Company fortifying itself with recently announced BAT-Jupiter
$124.6 million private placement transaction strengthening balance
sheet and setting the stage for long-term growth outside of
Canada.
FISCAL 2023 HIGHLIGHTS
- At year-end, achieved the #2 position among Canadian licensed
producers driven by success of growing pre-roll business2
- Held the #1 position in the milled flower, gummies, and hash
categories2
- Held the #3 market position in Ontario, #3 in Quebec, and #1 in
the Atlantic Canada2
- Held the #3 position in dried flower, the largest category of
the Canadian cannabis market2
- Climbed from the #10 to the #3 position in pre-rolls between Q3
2023 and end of Q4 20232
- Introduced 16 SKUs in Q4 Fiscal 2023 for a total of 143 SKUs in
market
- Introduced ultra-high THC infused pre-rolls, launched
tube-style pre-rolls, and launched first whole-flower-derived THCV
products to Canadian market
- Completed expansion construction at Lac-Supérieur, with first
harvest in December 2023
- Signed first UK supply agreement with 4C Labs Ltd. ("4C Labs")
to distribute medical cannabis to UK-based patients
- Signed first German supply agreement with Sanity Group GmbH
("Sanity Group") to distribute medical cannabis to Germany-based
patients
- Accelerated focus on vapes with strategic investment into
Greentank for access to revolutionary vaporization hardware that
solves consumer pain points and may increase perceived potency
- Made first US strategic investment into Phylos for exclusive
access to high-THCV cultivars and to commence technical
collaboration to augment Organigram's growing and breeding
methodologies
- Completed initial seed-based trials at the Moncton facility,
accelerating the upcoming transition of a portion of grow rooms to
seed-based production, a strategic advantage stemming from the
Company's investment in Phylos
- Shipped record $18.9 million in international exports in Fiscal
2023, up 25% from $15.1 million in Fiscal 2022
- Achieved meaningful shipped sales growth in several product
categories in Fiscal 2023 compared to Fiscal 2022: gummies (100%),
hash (113%), all pre-rolls (54%)
- Completed $29 million capex spend on facility enhancements to
drive down production costs in Fiscal 2024 and meet consumer demand
for craft cannabis and ready-to-consume products. Realized $4.3
million in savings during Fiscal 2023, with a further $10 million
savings estimated for Fiscal 2024
Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), (the
“Company” or “Organigram”), a leading licensed producer of
cannabis, announced its results for the fourth quarter and thirteen
months ended September 30, 2023 (“Q4 Fiscal 2023” or "Fiscal
2023").
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20231218591192/en/
(Photo: Business Wire)
"In Fiscal 2023, our continued focus on innovative products that
address consumers’ evolving preferences toward convenience drove
our growth across several ready-to-consume categories like
pre-rolls and edibles, and we ended the year in the #2 market
position which we held as of November 30th," said Beena Goldenberg,
Chief Executive Officer. "Our success in innovation is exemplified
by being awarded KIND's 'Most Innovative Product' for the second
year in a row. We won in 2022 for Edison JOLTS and this year for
our SHRED X Rip-Strip hash. In Fiscal 2024 we expect improved
margins from efficiencies tied to our completed facility upgrades
and growth in higher margin categories such as craft flower and
vapes, while the $124.6 million financial commitment from BAT
expedites our plans for international growth."
FISCAL 2023 FINANCIAL HIGHLIGHTS
- Net revenue of $161.6 million, an increase of 11% over $145.8
million in Fiscal 2022
- Adjusted gross margin1 of $40.2 million, an increase of 20%
over $33.4 million in Fiscal 2022
- Adjusted gross margin percentage1 of 25% compared to 23% in
Fiscal 2022
- Adjusted EBITDA1 of $6.0 million, compared to $3.5 million in
Fiscal 2022
- Ended Fiscal 2023 with $51.8 million in cash and negligible
debt
Select Key Financial Metrics
(in $000s unless otherwise indicated)
Fiscal 2023
Fiscal 2022
% Change
Gross revenue
233,647
209,109
12%
Excise taxes
(72,008)
(63,300)
14%
Net revenue
161,639
145,809
11%
Cost of sales
136,437
119,037
15%
Gross margin before fair value changes to
biological assets & inventories sold
25,202
26,772
(6)%
Realized loss on fair value on inventories
sold and other inventory charges
(56,187)
(35,204)
60%
Unrealized gain on changes in fair value
of biological assets
68,981
40,001
72%
Gross margin
37,996
31,569
20%
Adjusted gross margin1
40,214
33,390
20%
Adjusted gross margin %1
25%
23%
9%
Selling (including marketing), general
& administrative expenses2
72,378
59,768
21%
Adjusted EBITDA1
5,951
3,484
71%
Net loss
(248,601)
(14,283)
(1641)%
Net cash used in operating activities
before working capital changes
33,262
13,334
149%
Net cash used in operating after working
capital changes
38,778
36,211
7%
1 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 “Non-IFRS Financial Measures” in this press release
for more information.
2 Excluding non-cash share-based
compensation.
KEY FINANCIAL RESULTS FOR FISCAL 2023
- Net revenue increased 11% to $161.6 million from $145.8 million
in the previous year primarily due to an increase in recreational
and international revenue, the extended reporting period, partially
offset by a decrease in medical sales
- Cost of sales was $136.4 million, compared to $119.0 million in
the previous year, primarily due to higher net revenue, and the
extended reporting period
- Gross margin before fair value changes to biological assets,
inventories sold, and other charges declined to $25.2 million from
$26.8 million in Fiscal 2022, due to higher inventory provision and
net realizable value adjustments
- Adjusted gross margin3 was $40.2 million, or 25% of net
revenue, compared to $33.4 million, or 23% in Fiscal 2022. The
improvement was primarily due to increased sales in higher margin
categories and higher international sales
- SG&A expenses increased to $72.4 million, compared to $59.8
million in Fiscal 2022.
- Annual SG&A expenses as a percent of net revenue increased
from 41% to 44.8%, primarily due to the implementation of the
Company's enterprise resource planning ("ERP") program
- Adjusted EBITDA4 was $6.0 million for Fiscal 2023, compared to
$3.5 million in Fiscal 2022
- Net loss was $248.6 million, compared to $14.3 million in
Fiscal 2022, primarily due to impairments on PP&E, intangibles,
and goodwill
- Net cash used in operating activities before working capital
changes was $38.8 million, compared to $36.2 million in Fiscal
2022. The year over year increase to cash used in operating
activities is primarily due to the higher ERP implementation
expense in the current period.
“We are pleased with our year-over-year Adjusted EBITDA growth
of 71% and remain optimistic about our growth potential on the back
of many successfully completed initiatives in Fiscal 2023,” added
Paolo De Luca, Interim Chief Financial Officer and Chief Strategy
Officer. “With our investments in differentiated advantages yet to
be fully realized, such as THCV, cost-savings from seed-based
production and novel vape hardware technology, we remain laser
focused on leading the industry in Canada and beyond. Our recently
announced private placement financing, at a significant premium,
underscores the valuable franchise we are creating at Organigram
centered around sustainable long-term competitive advantages, and
bolsters our balance sheet to ensure financial flexibility as
opportunities continue to arise.”
FISCAL 2023 CANADIAN RECREATIONAL MARKET
INTRODUCTIONS
Holy Mountain - A new value brand from Organigram
launched in November, 2022, with an initial lineup of dried flower
strains and value pressed hash
Monjour Twilight Tranquility - A sugar-free soft-chew in
pear, plum, and lavender flavours, containing CBD, CBN, CBG, and
sold in a pack of 25
SHRED X Rip-Strip Hash - This botanical terpene-infused
hash is unlike any other on the market – with 10 pre-cut strips of
hash available in a 2g format. This product is a new
ultra-convenient hash offering from SHRED that is available in the
legendary Tropic Thunder and new Blueberry Blaster flavour
profiles
SHRED X Heavies - Infused with both diamonds and
distillate, this is the first infused pre-roll offering from
Organigram that will have a potency of over 40%. The infusion of
botanical terpenes further enhances the natural terpene profiles of
the blends, taking them to new and delicious heights
SHRED'ems Grapple Juice Gummies - Grapple Juice gummies
are vegan-friendly indica gummies with a mouthwatering grape and
apple medley. Each pack contains four gummies, infused with 2.5 mg
of THC and 2.5 mg of CBG
Holy Mountain GMO Tropical Reign (28g) - Organigram
introduced one of its newest high THC cultivars, Tropical Reign, in
large format 28g bags, under its Holy Mountain brand. Tropic Reign
THC levels are testing as high as 27.6%
Edison Limelight x Cobra Milk Combo Pack - Cobra Milk is
a high potency cultivar from Organigram. This product combines
Cobra Milk and Limelight pinners in a combo pack for consumers who
value quality and variety
SHRED Dartz and Holy Smokes - These tube-style pre-rolls
mark the inception of 0.4g pre-rolls for Organigram, crafted using
the state-of-the-art, high-speed Cantos tube-style rolling machine,
complemented by cutting-edge packaging capabilities
SHRED’ems Guava Lime Go–Time - This exotic new flavour
profile, bursting with guava and lime flavours provides a unique
cannabinoid experience with an initial 1:1 THC:THCV (10mg THC +
10mg THCV) ratio per pack. An entry point for those looking to
experience this new minor cannabinoid.
SHRED All Dressed - An aromatic mix of three best-selling
milled blends: Tropic Thunder, Gnarberry & Funkmaster
SHRED Rainbow Oz. - Four colourful 7g pouches of SHRED's
best-selling blends: Tropic Thunder, Gnarberry, Funk Master &
Dessert Storm.
SHRED'ems POP! Orangezilla Float - 40 mg CBD & 10 mg
THC per pack: These sativa gummies are sure to please with an
unmistakable orange pop and vanilla flavour profile
Monjour Quiet Chamomile - Each gummy features 25mg of CBD
and 5mg of CBN. This large format, high potency, sugar-free gummy
pack is a delicious blend of soothing chamomile and peaceful
pomegranate
Holy Mountain Purple Punch-Out!! - Purple PunchOut joins
the legendary Holy Mountain line-up and is packed with sweet grape
and berry aromas. These mesmerizing buds are light green, flecked
with orange pistils and are made up of dominant terps
b-Carophyllene, limonene and humulene coming in at 24-30% THC
RESEARCH AND PRODUCT DEVELOPMENT
Product Development Collaboration ("PDC") and Centre of
Excellence ("CoE")
- Organigram and British American Tobacco p.l.c. continue to work
together through their PDC on new workstreams to develop innovative
technologies in the edible, vape and beverage categories in
addition to new disruptive inhalation formats aimed at addressing
the biggest consumer pain points that exist in the category today.
Organigram is preparing to deliver new products in these spaces and
the launch priority includes gummies which will feature a new
nano-emulsion technology
- The PDC is conducting clinical pharmacokinetic studies which
will provide Organigram with the ability to make claims regarding
the onset and half-life of these products
Follow-on Strategic Investment from BAT and creation of
"Jupiter" Investment Pool
- In March of 2021, BAT invested ~$221 million into Organigram
which has served to propel product innovations resulting from CoE
at Organigram's Moncton facility
- On November 6, 2023 Organigram announced a $124.6 million
follow-on investment from BAT and the creation of the "Jupiter", a
strategic investment pool designed to expand Organigram’s
geographic footprint and capitalize on emerging growth
opportunities
INTERNATIONAL
- In Fiscal 2023, the Company completed international shipments
totaling $18.9 million, an increase of 25% over Fiscal 2022
- The Company continues to monitor and develop a potential U.S.
entry strategy, backed by the "Jupiter" investment pool, that could
include THC, CBD and other minor cannabinoids. The Company is also
monitoring recreational legalization opportunities in European
jurisdictions based on the size of the addressable market and
recent regulatory changes.
- In Fiscal 2023, Organigram signed additional supply agreements
to distribute medical cannabis to 4C Labs for patients located in
the UK, and Sanity Group for patients located in Germany. Shipments
to these new jurisdictions are expected to commence and continue in
Fiscal 2024, while the Company also expects continued shipments to
Israel and Australia.
STRATEGIC INVESTMENTS
Greentank
- In March 2023, Organigram announced it has entered into a
product purchase agreement (“Purchase Agreement”) with Greentank a
leading vaporization technology company and a subscription
agreement (“Subscription Agreement”) with Greentank’s parent
company. The Purchase Agreement provides Organigram with an
exclusivity period in Canada for a new technology incorporated into
510 vape cartridges (along with other formats) for use with
cannabis, including the development of a custom all-in-one device
that will be proprietary to Organigram. Pursuant to the terms of
the Subscription Agreement Organigram subscribed for preferred
shares for an aggregate subscription price of $4.0 million USD
(~$5.5 million CAD) representing an approximate 2.6% interest in
Greentank. Organigram’s investment combined with the Purchase
Agreement is expected to transform Organigram’s current and future
vapour hardware lineup across its portfolio of recreational brands.
Greentank enabled vapes will solve clogging and flavour performance
issues associated with vapes, elevating the consumer experience by
generating unique aerosols which can efficiently deliver consistent
performance, increased potency, and superior flavour from start to
finish.
Phylos
- In May 2023, Organigram announced that it reached agreement
with Phylos, a U.S. cannabis genetics company and provider of
production ready seeds, based in Portland, Oregon, to initiate a
wide-ranging technical and commercial relationship in Canada. This
innovation relationship is expected to further support Organigram’s
industry leading cultivation efforts in Canada with patent-pending
foundational technologies and genetics. In the future, subject to
receipt of any required approvals and permits, Organigram intends
to export THCV products to select legal international markets.
Under the terms of the loan agreement, Organigram will advance up
to US $8 million to Phylos in three tranches. Organigram advanced
Phylos an initial US $3.25 million on the initial closing date of
the loan agreement (the "Initial Closing Date") with a commitment
to fund up to an additional US $4.75 million over two tranches
within 12 and 24 months from the Initial Closing Date, upon the
completion of certain milestones. Subsequent to Organigram's 2023
year end, the first milestone was achieved and US $2.75 million was
advanced to Phylos. This transaction strengthens Organigram’s
capabilities as follows:
- Provides exclusive access to high potency whole plant derived
THCV in Canada based on Phylos’ genetics platform;
- Allows Organigram to modernize cannabis production and employ
seed-based production at scale;
- Provides access to new, proprietary genetic identification
tools that are expected to enable efficient and rapid development
of unique, proprietary cultivars driven by consumer preferences;
and
- Enables Organigram to develop seed-based F1 hybrid genetics for
key Organigram brands such as SHRED, providing future opportunities
to offer ‘turn-key’ U.S. and International licensing of seed-based
genetics and an established cannabis brand when and where
legal.
LIQUIDITY AND CAPITAL RESOURCES
- On September 30, 2023, the Company had cash and short-term
investments of $51.8 million compared to $125.4 million at August
31, 2022. The decrease is primarily a result of cash used in
operating activities of $38.8 million, capital expenditures of
$29.1 million and investments of $10.5 million (including
transaction costs) in Greentank and Phylos
- In November 2023, Organigram announced a $124.6 million dollar
follow-on investment from BAT of which $83.1 million will be used
to create “Jupiter,” a strategic investment pool designed to expand
Organigram’s geographic footprint and capitalize on emerging
international growth opportunities with the remaining $41.5 million
for general corporate purposes, subject to shareholder
approval
- Organigram believes its capital position is healthy and that
there is sufficient liquidity available for the near to medium
term.
Select Balance Sheet Metrics (in
$000s)
SEPTEMBER 30, 2023
AUGUST 31,
2022
% Change
Cash & short-term investments
(excluding restricted cash)
33,864
98,607
(66)%
Biological assets & inventories
80,953
68,282
19%
Other current assets
49,596
54,734
(9)%
Accounts payable & accrued
liabilities
20,007
40,864
(51)%
Current portion of long-term debt
76
80
(5)%
Working capital
133,545
166,338
(20)%
Property, plant & equipment
99,046
259,819
(62)%
Long-term debt
79
155
(49)%
Total assets
298,455
577,107
(48)%
Total liabilities
26,832
69,049
(61)%
Shareholders’ equity
271,623
508,058
(47)%
INDUSTRY COMMENTARY AND OUTLOOK5
Industry
The Canadian industry as a whole continues to grow. BDSA
forecasts Canadian total sales rising at a 2022-27 CAGR of 4.6% to
nearly $7.2 billion in 2027. However, the industry in Canada
remains saddled by a high excise tax regime and in some cases,
restrictive regulations.
Capital availability (equity or otherwise) in the industry,
including to Canadian licensed producers ("LPs"), is materially
diminished from only a few years ago. The impact is being felt
directly as certain LPs are either shuttering certain money-losing
operations, closing down entirely, or entering creditor protection.
Others with maturing debt financings who are unable to pay back
principle amounts are seeking forbearance or obtaining short-term
extensions on their debt.
Organigram's recently announced financing, subject to
shareholder approval, for $124.6 million at a significant premium
to its trading price is an anomaly that speaks to the intrinsic
value of the underlying business.
The Company, which is current on all its excise tax remittances,
is aware of other LPs who are in arrears6, which is effectively
acting as a source of alternative financing as taxes are collected
from provincial distributors but not remitted to the Canada Revenue
Agency on the required date7. It is the Company's understanding
that the CRA has already begun to hold LPs accountable for their
tax payment arrears.
The industry has also been affected by THC mislabelling
(inflation). The Company, through its own independent testing of
packaged product in the market, has seen certain SKUs with labelled
THC percentages that are overstated by greater than 50% (e.g.
labelled product shows 30% THC vs. actual THC when tested at a
credible third-party lab is 17%). The Company believes that recent
initiatives by both Health Canada8 and certain provincial boards9
will eventually help mitigate this unfair practice.
Notwithstanding the above issues the Company has and continues
to take measures to fortify itself as market forces prevail and the
strongest survive. These include:
- Strong balance sheet with excess cash reserves at all
times;
- Investment in production efficiencies including automation to
drive long-term margins;
- Investment in R&D, innovation, and product differentiation
to drive competitive defensible advantages; and
- Focus on consumer segmentation, need states and delivering
brands & products tailored to meeting their needs.
Net revenue
- Organigram currently expects Fiscal 2024 revenue to be higher
than that of Fiscal 2023. This expectation is largely due to
ongoing sales momentum, stronger forecasted market growth, the
Company's expanded product line in multiple segments, increased
throughput in Moncton Campus and Winnipeg facilities and
contributions from the completed expansion at the Lac-Supérieur
facility;
- In addition, the anticipated continuation of shipments to
Israel, Australia, as well as new supply agreements signed in
Fiscal 2023 with Sanity Group in Germany and 4C Labs in the UK, are
expected to generate higher revenue in Fiscal 2024 as compared to
Fiscal 2023; and
- The Company believes it is better equipped to fulfill demand in
Fiscal 2024 with larger harvests and greater efficiencies from
automation compared to Fiscal 2023.
Adjusted gross margins10
- The Company expects to see an improvement in adjusted gross
margins in Fiscal 2024 and has put measures in place that it
expects will further improve margins over time
- The extent of the adjusted gross margin improvement in fiscal
2024 will also be dependent on other factors such as product
category and brand sales mix, provincial mix, and international
sales levels
- Organigram has identified the following opportunities which it
believes have the potential to further improve adjusted gross
margins over time:
- Enhanced growing and harvesting methodologies, and design and
environmental improvements in Moncton, which have resulted in
higher-quality flower and improved yields;
- Facility enhancements and the completion of Fiscal 2023's capex
projects, combined with anticipated savings related to the partial
transition to seed-based production, estimated to reduce costs by
$10 million in Fiscal 2024;
- Anticipated growth in the vape category due to the near-term
launch of Greentank S1 enabled vapes and THCV vapes;
- Expansion of the Lac-Supérieur facility which yielded its first
harvest in December 2023;
- Increased investment in building brand equity for the Company's
Trailblazer brand, geared toward growth in the mainstream segment;
and
- Additional innovative product launches to support key brands:
SHRED, Monjour, Holy Mountain, Edison, and Tremblant to create new
potential avenues for growth;
Adjusted EBITDA11
- The Company expects to continue to report increasing positive
Adjusted EBITDA on year-over-year basis, recognizing that quarterly
results may fluctuate
Cash flow
- The Company is adjusting its prior guidance of generating
positive free cash flow ("FCF") during Calendar 2023. The Company
expects that FCF is achievable in H2 Fiscal 2024.
CAPITAL STRUCTURE
in $000s
SEPTEMBER 30, 2023
AUGUST 31,
2022
Current and long-term debt
155
235
Shareholders’ equity
271,623
508,058
Total debt and shareholders’ equity
271,778
508,293
in 000s
Outstanding common shares
81,162
78,454
Options
2,830
2,763
Warrants
4,236
4,236
Top-up rights
2,035
1,898
Restricted share units
881
586
Performance share units
261
66
Total fully-diluted shares
91,405
88,003
Outstanding basic and fully diluted share count as at December
15, 2023 is as follows:
in 000s
DECEMBER 15, 2023
Outstanding common shares
81,162
Options
2,796
Warrants
—
Top-up rights
977
Restricted share units
881
Performance share units
261
Total fully-diluted shares
86,077
Q4 FISCAL 2023 FINANCIAL HIGHLIGHTS
- Net revenue of $46.0 million, up 1% from $45.5 million in Q4
Fiscal 2022
- Adjusted Gross Margin1 of $7.9 million or 17%, compared to
$10.4 million, or 23%, in Q4 Fiscal 2022
- Adjusted EBITDA of $(2.4) million, compared to $3.2 million in
Q4 Fiscal 2022
Select Key Financial Metrics
(in $000s unless otherwise indicated)
Q4-2023
Q4-2022
% Change
Gross revenue
71,458
65,657
9%
Excise taxes
(25,418)
(20,177)
26%
Net revenue
46,040
45,480
1%
Cost of sales
42,885
36,718
17%
Gross margin before fair value changes to
biological assets & inventories sold
3,155
8,762
(64)%
Realized loss on fair value on inventories
sold and other inventory charges
(15,901)
(10,191)
56%
Unrealized gain (loss) on changes in fair
value of biological assets
21,751
15,677
39%
Gross margin
9,005
14,248
(37)%
Adjusted gross margin1
7,939
10,362
(23)%
Adjusted gross margin %1
17%
23%
(26)%
Selling (including marketing), general
& administrative expenses2
21,572
15,657
38%
Adjusted EBITDA1
(2,360)
3,232
(173)%
Net loss
(32,991)
(6,144)
(437)%
Net cash used in operating activities
before working capital changes
16,423
1,979
730%
Net cash used in operating after working
capital changes
17,017
19,695
(14)%
1 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 “Non-IFRS Financial Measures” in this press release
for more information.
KEY FINANCIAL RESULTS FOR THE FOURTH QUARTER 2023
- Net revenue increased 1% to $46.0 million, from $45.5 million
in Q4 Fiscal 2022 primarily due to the extended reporting
period
- Cost of sales increased to $42.9 million, from $36.7 million in
Q4 Fiscal 2022, primarily as a result of lower margins due to lower
international sales relative to recreational sales, and the
extended reporting period
- Gross margin before fair value changes to biological assets,
inventories sold, and other charges declined to $3.2 million from
$8.8 million in Q4 Fiscal 2022, primarily due to higher inventory
provisions and net realizable value adjustments
- Adjusted gross margin was $7.9 million, or 17% of net revenue,
compared to $10.4 million, or 23%, in Q4 Fiscal 2022, primarily due
to product mix
- SG&A expenses increased to $21.6 million from $15.7 million
in Q4 Fiscal 2022, primarily due the extended reporting period
- Adjusted EBITDA was $(2.4) million compared to $3.2 million in
Q4 Fiscal 2022
- Net loss was $33.0 million, compared to a net loss of $6.1
million in Q4 Fiscal 2022. The quarterly increase was primarily due
to impairments on PP&E and goodwill, increased cost of sales,
and operating expenses
- Net cash used in operating activities before working capital
changes was $16.4 million, compared to $2.0 million in Q4 Fiscal
2022
ADJUSTED GROSS MARGIN AND ADJUSTED EBITDA
RECONCILIATION
Adjusted Gross Margin Reconciliation
(in $000s unless otherwise indicated)
Q4-2023
Q4-2022
Fiscal 2023
Fiscal 2022
Net revenue
$
46,040
$
45,480
$
161,639
$
145,809
Cost of sales before adjustments
38,101
35,118
121,425
112,419
Adjusted gross margin
7,939
10,362
40,214
33,390
Adjusted gross margin %
17
%
23
%
25
%
23
%
Less:
Provisions (recoveries) of inventories and
biological assets
532
1,600
5,678
4,048
Provisions to net realizable value
4,252
—
9,334
498
Incremental fair value component on
inventories sold from acquisitions
—
—
—
Unabsorbed overhead
—
—
—
709
Gross margin before fair value
adjustments
3,155
8,762
25,202
28,135
Gross margin % (before fair value
adjustments)
7
%
19
%
16
%
19
%
Add:
Realized loss on fair value on inventories
sold and other inventory charges
(15,901
)
(10,191
)
56,187
35,204
Unrealized gain on changes in fair value
of biological assets
21,751
15,677
(68,981
)
(40,001
)
Gross margin
9,005
14,248
12,408
23,338
Gross margin %
20
%
31
%
8
%
16
%
Adjusted EBITDA Reconciliation
(in $000s unless otherwise indicated)
Q4-2023
Q4-2022
Fiscal 2023
Fiscal 2022
Net loss as reported
$
(32,991
)
$
(6,144
)
$
(248,601
)
$
(14,283
)
Add/(deduct):
Financing costs, net of investment
income
(923
)
(364
)
(3,692
)
(1,058
)
Income tax recovery
(2,279
)
(299
)
(3,812
)
(88
)
Depreciation, amortization, and (gain)
loss on disposal of property, plant and equipment (per statement of
cash flows)
5,581
7,570
26,606
31,487
Normalization of depreciation add-back due
to changes in depreciable assets resulting from impairment
charges
3,037
—
3,037
—
Impairment of intangible assets
6,951
—
44,856
—
Impairment of property, plant and
equipment
11,918
2,245
165,255
4,245
Share of loss (gain) from investments in
associates and impairment loss (recovery) from loan receivable
(51
)
528
938
1,614
Unrealized (gain) loss on changes in fair
value of contingent consideration
(466
)
317
(3,364
)
(2,621
)
Realized loss on fair value on inventories
sold and other inventory charges
15,901
10,191
56,187
35,204
Unrealized gain on change in fair value of
biological assets
(21,751
)
(15,677
)
(68,981
)
(40,001
)
Share-based compensation (per statement of
cash flows)
1,208
2,809
5,727
5,127
COVID-19 related charges, net of
government subsidies and insurance recoveries
(407
)
—
(407
)
(335
)
Legal provisions
—
—
(75
)
(310
)
Share issuance costs allocated to
derivative warrant liabilities and change in fair value of
derivative liabilities and other financial assets
413
(3,415
)
(4,372
)
(32,650
)
Incremental fair value component of
inventories sold from acquisitions
—
—
—
1,363
ERP implementation costs
2,415
1,793
7,687
3,203
Transaction costs
580
(188
)
1,463
2,384
Provisions (recoveries) and net realizable
value adjustments related to inventory and biological assets
4,784
1,600
15,012
4,546
Research and development expenditures, net
of depreciation
3,720
2,266
12,487
5,657
Adjusted EBITDA
$
(2,360
)
$
3,232
$
5,951
$
3,484
FOURTH QUARTER AND FULL YEAR FISCAL 2023 CONFERENCE
CALL
The Company will host a conference call to discuss its results
with details as follows: Date: December 19, 2023 Time: 8:00 am
Eastern Time
To register for the conference call, please use this link:
https://conferencingportals.com/event/XWQpOvKk
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://events.q4inc.com/attendee/990999128
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, 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. Adjusted
EBITDA is a non-IFRS measure that the Company defines as net income
(loss) before: financing costs, net of investment income; income
tax expense (recovery); depreciation, amortization, reversal of/or
impairment, (gain) loss on disposal of property, plant and
equipment (per the consolidated statement of cash flows);
share-based compensation (per the consolidated statement of cash
flows); share of loss from investments in associates and impairment
loss (recovery) from loan receivable; unrealized loss (gain) on
changes in fair value of contingent consideration; change in fair
value of derivative liabilities; expenditures incurred in
connection with research & development activities (net of
depreciation); unrealized (gain) loss on changes in fair value of
biological assets; realized loss on fair value on inventories sold
and other inventory charges; provisions and impairment of
inventories and biological assets; provisions (recoveries) to net
realizable value of inventories; government subsidies and insurance
recoveries; legal provisions (recoveries); incremental fair value
component of inventories sold from acquisitions; ERP implementation
costs; transaction costs; and share issuance costs. Adjusted EBITDA
is intended to provide a proxy for the Company’s operating cash
flow and derive expectations of future financial performance for
the Company, and excludes adjustments that are not reflective of
current operating results.
Adjusted gross margin is a non-IFRS measure that the Company
defines as net revenue less cost of sales, before the effects of
(i) unrealized gain (loss) on changes in fair value of biological
assets; (ii) realized fair value on inventories sold and other
inventory charges; (iii) provisions (recoveries) and impairment of
inventories and biological assets; (iv) provisions to net
realizable value; and (v) unabsorbed overhead relating to
underutilization of the production facility grow rooms and
manufacturing equipment, most of which is related to non-cash
depreciation expense, from net revenue. Adjusted gross margin % is
calculated by dividing adjusted gross margin by net revenue.
Management believes that these measures provide useful information
to assess the profitability of our operations as it represents the
normalized gross margin generated from operations and excludes the
effects of non-cash fair value adjustments on inventories and
biological assets, which are required by IFRS.
The most directly comparable measure to Adjusted EBITDA,
calculated in accordance with IFRS is net income (loss) and
beginning on page 11 of this press release is a reconciliation to
such measure. The most directly comparable measure to adjusted
gross margin calculated in accordance with IFRS is gross margin
before fair value changes to biological assets and inventories sold
and beginning on page 10 of this press release is a reconciliation
to such measure.
About Organigram Holdings Inc.
Organigram Holdings Inc. is a NASDAQ Global Select Market and
TSX listed company whose wholly-owned subsidiaries include
Organigram Inc. and Laurentian Organic Inc. licensed producers of
cannabis and cannabis-derived products in Canada, and The Edibles
and Infusions Corporation, a licensed manufacturer of
cannabis-infused edibles 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 Edison, Big Bag O’ Buds, SHRED, Monjour and Trailblazer.
Organigram operates facilities in Moncton, New Brunswick and
Lac-Supérieur, Québec, with a dedicated 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
including international 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 adjusted gross margins, Adjusted EBITDA and
net revenue in Fiscal 2023 and beyond, expectations regarding
cultivation capacity, 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
relating to greater capacity to meet demand due to increased
capacity at the Company’s facilities, 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 and Laurentian; 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., Cannatrek Ltd. and
Medcan; 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.
This news release contains information concerning our industry
and the markets in which we operate, including our market position
and market share, which is based on information from independent
third-party sources. Although we believe these sources to be
generally reliable, market and industry data is inherently
imprecise, subject to interpretation and cannot be verified with
complete certainty due to limits on the availability and
reliability of raw data, the voluntary nature of the data gathering
process, and other limitations and uncertainties inherent in any
statistical survey or data collection process. We have not
independently verified any third-party information contained
herein.
Forward-looking information involves known and unknown risks,
uncertainties and other factors that may cause actual events to
differ materially from current expectations. These risks,
uncertainties and factors include: 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; the Company's ability to
meet regulatory criteria which may be subject to change; change in
regulation including restrictions on sale of new product forms;
change in stock exchange listing practices; the Company's ability
to manage costs, timing and conditions to receiving 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 those 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; change in customer buying patterns; and
changes in crop yields. These and other risk factors 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 December 19, 2023 and there can be no assurance
whatsoever that these events will occur.
______________________________
1 As a result of a change in its fiscal year-end from August
31st to September 30th the 2023 fiscal year consists of 13 months
and the quarter ended September 30th consists of four months.
Fiscal 2022 comparatives are for the 12 months and three months
ended August 31, 2022 respectively.
2 Multiple Sources: (Hifyre, Weedcrawler, Provincial Boards,
Internal Modelling) as of September 30, 2023
3 Adjusted gross margin is a non-IFRS financial measure not
defined by and does not have any standardized meaning under IFRS;
please refer to “Non-IFRS Financial Measures” in this press release
for more information.
4 Adjusted EBITDA is a non-IFRS financial measure not defined by
and does not have any standardized meaning under IFRS; please refer
to “Non-IFRS Financial Measures” in this press release for more
information.
5 The disclosure in this section is subject to the risk factors
referenced in the “Risk Factors” section of the Company’s Q4 Fiscal
2023 MD&A, which is available in the Company's profile at
www.sedar.com. Without limiting the generality of the foregoing,
the expectations concerning revenue, adjusted gross margins and
SG&A are based on the following general assumptions:
consistency of revenue experience with indications of fourth
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 Fiscal 2023 MD&A.
6 Source:
https://mjbizdaily.com/unpaid-cannabis-tax-in-canada-balloons-to-almost-ca200-million/
7 Source:
https://mjbizdaily.com/canadas-taxman-targets-cannabis-excise-debts/
8 Source:
https://www.canada.ca/en/health-canada/services/drugs-medication/cannabis/industry-licensees-applicants/updates-cannabis-industrial-hemp/2023-07-data-gathering-program.html
9 Source:
https://stratcann.com/news/ocs-to-begin-temporary-thc-testing-program-in-2024/
10 Adjusted gross margin is a non-IFRS financial measure not
defined by and does not have any standardized meaning under
IFRS;
please refer to “Non-IFRS Financial Measures” in this press
release for more information.
11 Adjusted EBITDA is a non-IFRS financial measure not defined
by and does not have any standardized meaning under IFRS; please
refer to “Non-IFRS Financial Measures” in this press release for
more information.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231218591192/en/
For Investor Relations enquiries:
Max Schwartz, Director of Investor Relations
investors@organigram.ca
For Media enquiries:
Paolo De Luca, Interim Chief Financial Officer and Chief
Strategy Officer paolo.deluca@organigram.ca
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