Group 1 - IM Cannabis Corp. will be delisted from the CSE at market close on June 2, 2025 [1][2][3] - The company will continue to trade on Nasdaq after the delisting [1][2]

IM Cannabis (IMCC) Q1 2025 Earnings Call May 15, 2025 09:00 AM ET Company Participants Anna Taranko - Director - Investor & Public RelationsOren Shuster - CEO & ChairmanUri Birenberg - Chief Financial Officer Conference Call Participants None - Analyst Operator Good morning, and welcome to I'm Cannabis' First Quarter twenty twenty five Earnings Conference Call. Today's conference call is being recorded. At this time, I would like to turn the conference over to Anna Taranko, Director of Investor and public r ...

Financial Data and Key Metrics Changes - In Q1 2025, the company achieved a net profit with an 87% improvement in gross margin compared to Q1 2024 [5] - Adjusted EBITDA in Q1 2025 resulted in a profit of $600,000, an improvement of almost $3,000,000 from an adjusted EBITDA loss of $2,200,000 in Q1 2024 [8] - Revenues for Q1 2025 were $12,500,000, a 4% increase from $12,100,000 in Q1 2024, primarily driven by growth in Germany [8][10] - Gross profit for Q1 2025 was $3,400,000, a 94% increase from $1,800,000 in Q1 2024 [10] - Net profit for Q1 2025 was approximately $200,000, compared to a loss of $6,000,000 in Q1 2024, marking a $6,200,000 improvement [11] Business Line Data and Key Metrics Changes - The German business grew by 569% compared to Q1 2024, significantly offsetting a 66% revenue decline in Israel [6][8] - The company launched 12 new strains in Germany, contributing approximately €3,000,000 or 39% of cannabis flower sales in that market [5] - The decline in Israeli revenue was attributed to the cancellation of the Orenin deal, resulting in a decrease of approximately $3,500,000 compared to Q1 2024 [9] Market Data and Key Metrics Changes - Germany's share of total revenue in Q1 2025 increased to 62%, reflecting favorable market conditions and growing demand [9] - The cost of revenue decreased by 12% to $9,100,000 in Q1 2025, down from $10,300,000 in Q1 2024 [9] Company Strategy and Development Direction - The company is focusing on execution and resource allocation to areas with the highest return on investment (ROI) [5] - The strategic shift towards the German market is evident, with significant growth in that region while managing operational efficiencies [6][8] Management's Comments on Operating Environment and Future Outlook - Management expressed pride in the team's efforts and noted that the efficiencies and integration from the past two years are starting to reflect in financial results [6][11] - The company aims to continue executing its strategy and maintain profitability moving forward [7] Other Important Information - Total assets as of March 31, 2025, were $44,934,000, an increase of 15% from $39,188,000 as of December 31, 2024 [11] - Total liabilities increased by 16% to $41,761,000 as of March 31, 2025, compared to $36,042,000 as of December 31, 2024 [12] Q&A Session Summary Question: Importance of the upcoming meeting for accepting 25% ownership of Focus - Management indicated that this is a long process on the regulatory side and is crucial for clearing balances between companies and moving long-term loans to equity [17][18] - The need to hold 100% of the Focus shares is based on tax regulations to avoid issues with tax authorities [19]

Core Points - IM Cannabis Corp. has received a notification from Nasdaq indicating non-compliance with Listing Rule 5550(b)(1) due to insufficient stockholders' equity of US$2,184,722 as of December 31, 2024, below the required US$2.5 million [2][3] - The company has 45 days to submit a compliance plan to regain Nasdaq listing compliance, with a potential extension of up to 180 days if accepted [4][5] - The company is pursuing the acquisition of the remaining 26% interest in Focus Medical Herbs Ltd. from Ewave Group Ltd., which involves related parties [7][16] - The purchase price for the remaining interest in Focus has been determined at NIS 818,740, to be settled through the issuance of common shares [8][17] - Approval for the Focus Transaction will be sought from disinterested shareholders at the upcoming annual general and special meeting scheduled for May 23, 2025 [9][18] Company Overview - IM Cannabis Corp. operates in the medical cannabis sector, providing premium products to patients in Israel and Germany, leveraging a data-driven approach and a global supply chain [18][19] - The company has a comprehensive ecosystem in Israel, including importation, distribution, retail pharmacies, and logistical hubs, while in Germany, it operates through Adjupharm GmbH [19]

Financial Data and Key Metrics Changes - The company reported a total revenue of $54 million for 2024, an increase of $5.2 million or 11% compared to $48.8 million in 2023 [25] - Adjusted EBITDA in Q4 2024 was a profit of $0.5 million, a significant improvement of almost $5 million from a loss of $4.3 million in Q4 2023 [13][35] - The net loss for 2024 was $11.8 million compared to $10.2 million in 2023, while the net loss in Q4 2024 was $1.2 million compared to $3.5 million in Q4 2023 [35][36] Business Line Data and Key Metrics Changes - Sales in Germany increased by over 183% in 2024, reaching $15.5 million, with Germany accounting for 40% of total revenue in the second half of 2024 compared to 11% in all of 2023 [15][25] - In Israel, revenue decreased by $4.8 million net, primarily due to the cancellation of the Oranim deal, which resulted in a revenue decrease of approximately $8.5 million compared to 2023 [25][27] - The company launched or relaunched 27 strains across six brands in Israel in 2024, maintaining top-line sales despite the challenges [17] Market Data and Key Metrics Changes - The German market has shown extraordinary growth since the partial legalization in April 2024, with a significant increase in sales velocity [8][15] - The company added three new suppliers and launched 16 new strains in 2024, indicating a strong operational focus on the German market [12][14] Company Strategy and Development Direction - The company focused on full integration and active cost management to drive efficiencies, reducing overall operating expenses by $4 million or 17% in 2024 [11] - The strategic shift towards the German market has proven effective, with plans to continue building a strong supply chain to support growth in 2025 [10][20] - The company aims to maintain efficiency while investing in growth, particularly in Germany, while not expecting significant growth in the Israeli market [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational improvements made in 2024, setting a solid foundation for growth in 2025, with Q1 expected to be the best quarter in sales to date in Germany [19][40] - The competitive landscape in Germany is dynamic, with expectations of price compression, but management believes margins will not decline significantly [50][52] Other Important Information - The company cleared out slow-moving non-premium stock, impacting cost of sales and gross margin, but does not anticipate similar write-offs in 2025 [18] - Total operating expenses for 2024 were $18.7 million, down from $22.6 million in 2023, reflecting improved operational efficiency [34] Q&A Session Summary Question: Dynamics affecting growth in Germany in Q4 - Management acknowledged delays in Q4 but indicated that Q1 looks promising, attributing the slowdown to supply chain building processes [46] Question: Changes in competitive dynamics in Germany - Management noted that the German market is competitive, with ongoing price compression, but does not foresee significant changes in leading competitors [48][50] Question: Margin profile expectations amid price compression - Management expects margins to remain stable or improve, despite the challenges faced in 2024 due to inventory issues [52][54] Question: Stability of the Israeli market - Management does not foresee significant growth in the Israeli market, focusing resources primarily on the German market [57]

Financial Data and Key Metrics Changes - The company reported a total revenue of $54 million for 2024, an increase of $5.2 million or 11% compared to $48.8 million in 2023 [25] - Adjusted EBITDA in Q4 2024 was a profit of $0.5 million, a significant improvement of almost $5 million from a loss of $4.3 million in Q4 2023 [13][35] - The net loss for 2024 was $11.8 million compared to $10.2 million in 2023, while the net loss in Q4 2024 was $1.2 million compared to $3.5 million in Q4 2023 [35][36] Business Line Data and Key Metrics Changes - Sales in Germany increased by over 183% in 2024, reaching $15.5 million, with Germany accounting for 40% of total revenue in the second half of 2024 compared to 11% in all of 2023 [15][25] - In Israel, revenue decreased by $4.8 million net, primarily due to the cancellation of the Oranim deal, which resulted in a revenue decrease of approximately $8.5 million compared to 2023 [25][27] - Excluding the Oranim revenue in 2023, there was a 12% increase in revenue in Israel, amounting to approximately $3.7 million [25] Market Data and Key Metrics Changes - The German market has shown extraordinary growth since the partial legalization in April 2024, with a significant increase in sales velocity [8][15] - The company imported 11 new strains in Germany in the second half of 2024, contributing to an expected sales increase of about 14% [12] - The Israeli market is expected to remain stable with no significant growth anticipated unless regulatory changes occur [57] Company Strategy and Development Direction - The company focused on full integration and active cost management to drive efficiencies, reducing overall operating expenses by 17% to $18.7 million in 2024 [11] - A strong supply chain is being built to support growth in Germany for 2025, with a strategic shift towards external growth while maintaining operational efficiency [20][39] - The company aims to leverage its integrated supply chain to achieve the best sales quarter in Germany in Q1 2025 [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory in Germany, despite some delays in Q4 2024, with Q1 2025 expected to show strong performance [46] - The competitive landscape in Germany is dynamic, with ongoing price compression anticipated, but management does not foresee a significant decline in margins [50][52] - The Israeli market is viewed as stable, with a focus on growth primarily in Germany [57] Other Important Information - The company has reduced its total operating expenses significantly, achieving a 42% decrease in Q4 2024 compared to Q4 2023 [34] - The company plans to finance its operations through existing and future working capital resources and available credit facilities [39] Q&A Session Summary Question: What dynamics slowed growth in Germany in Q4? - Management indicated that Q4 saw some delays but expects a strong Q1 2025, attributing the slowdown to the ongoing process of building a stable supply chain [46] Question: How is the competitive dynamic in Germany changing? - Management noted that the German market is very dynamic with ongoing competition, but they do not foresee significant changes among leading competitors [49] Question: What is the outlook for margins given price compression? - Management believes margins will not decline significantly and may even improve, despite the price compression in the market [52][54] Question: How is the Israeli market expected to evolve? - Management does not foresee significant growth in the Israeli market, expecting it to remain stable unless regulatory changes occur [57]

Financial Performance - Q4 2024 revenue increased by 25% to $13.3M compared to Q4 2023, with annual revenue growth of 11% to $54.0M[7] - IMC Germany revenue surged by 183% in 2024, totaling $15.5M compared to $5.5M in 2023[7] - Adjusted EBITDA for Q4 2024 was $0.5M, a significant improvement from a loss of $4.3M in Q4 2023, marking an 87% reduction in annual losses to $1.1M from $8.0M[7] - Revenue for the year ended December 31, 2024, was CAD 54,031,000, an increase of 10% compared to CAD 48,804,000 in 2023[18] - Gross profit after fair value adjustments decreased to CAD 8,451,000 in 2024 from CAD 9,846,000 in 2023, representing a decline of 14.1%[18] - The operating loss for 2024 was CAD 10,234,000, an improvement from a loss of CAD 12,792,000 in 2023[18] - Net loss from continuing operations for 2024 was CAD 11,771,000, compared to CAD 10,228,000 in 2023, indicating a 15.1% increase in losses[18] - Total comprehensive loss for 2024 was CAD 13,206,000, compared to CAD 10,853,000 in 2023, reflecting a 21.6% increase in comprehensive losses[19] Expenses and Liabilities - Operating expenses decreased by 42% in Q4 2024 to $3.5M, and by 17% annually to $18.7M from $22.6M in 2023[9] - General and administrative expenses fell by 27% to $8.0M in 2024 from $11.0M in 2023, with a 64% decrease in Q4 expenses[9] - Total operating expenses for 2024 were CAD 18,685,000, down 17.5% from CAD 22,638,000 in 2023[18] - Selling and marketing expenses decreased to CAD 7,069,000 in 2024 from CAD 10,788,000 in 2023, a reduction of 34.1%[18] - Total liabilities increased by 3% to $36.0M as of December 31, 2024, compared to $35.1M in 2023, influenced by the Oranim agreement cancellation[14] Assets and Equity - Total assets decreased by 19.7% to $39.2M as of December 31, 2024, from $48.8M in 2023, largely due to the cancellation of the Oranim deal[14] - As of December 31, 2023, total shareholders' equity was CAD 13,700, a decrease from CAD 23,797 as of January 1, 2023, reflecting a comprehensive loss of CAD 10,853[22] - As of December 31, 2024, total shareholders' equity is projected to be CAD 3,146, reflecting a significant decrease from CAD 13,700[23] Cash Flow - Cash and cash equivalents as of December 31, 2024, were $0.9M, down from $1.8M in 2023[14] - Cash flows used in operating activities for 2023 totaled $1,077 thousand, a significant improvement from $8,075 thousand in 2022, reflecting a decrease in cash outflow of approximately 86.7%[24] - The cash at the end of the year was $863 thousand, down from $1,813 thousand at the end of 2022, reflecting a decline of approximately 52.4%[25] Future Outlook and Strategy - The company anticipates Q1 2024 to be the best quarter in sales to date in Germany, driven by operational efficiencies and inventory clearance[28] - The company is focusing on sustainable and profitable growth in its highest value markets, specifically Israel and Germany, amidst the challenges posed by the Israel-Hamas war[28] - The company aims to improve its EBITDA as operational efficiencies continue to materialize, indicating a focus on financial performance[28] - The Company faces inherent risks and uncertainties that may cause actual results to differ materially from forward-looking statements, including regulatory compliance and market conditions[30] - The Company does not intend to update future-oriented financial information unless required by applicable securities laws, indicating a cautious approach to financial forecasting[35] Risks and Challenges - The Company is unable to amplify its commercial and brand power to become a global high-quality cannabis player, which may hinder its competitive position[31] - The demand and momentum in the Company's Israeli and German operations are expected to be unfavorable, impacting overall performance[31] - The Company may not realize the stated efficiencies and synergies as a global organization, affecting its operational effectiveness[31] - The Company is at risk of not achieving sustainable profitability or increasing shareholder value, which could impact investor confidence[30] - The Company may not be able to take advantage of the partial legalization of medicinal cannabis in Germany, limiting growth opportunities[30]

Core Insights - IM Cannabis Corp. reported a 25% increase in Q4 2024 revenue compared to Q4 2023, with total revenues for 2024 reaching CAD 54.0 million, an 11% annual increase [6][7] - The company achieved a positive adjusted EBITDA of CAD 0.5 million in Q4 2024, a significant improvement from a loss of CAD 4.3 million in Q4 2023 [6][7] - Operating expenses decreased by 42% in Q4 2024 compared to Q4 2023, contributing to improved financial performance [6][7] Financial Performance - Q4 2024 revenue was CAD 13.3 million, up from CAD 10.7 million in Q4 2023, driven by a 183% increase in revenue from Germany [6][7] - Annual revenue for 2024 was CAD 54.0 million, compared to CAD 48.8 million in 2023, with a notable increase in German revenue contributing CAD 15.5 million [6][7] - Gross profit for 2024 was CAD 8.5 million, down from CAD 9.8 million in 2023, primarily due to a one-time inventory clearance of approximately CAD 3.8 million [7] Cost Management - General and administrative expenses decreased by 27% in 2024, totaling CAD 8.0 million compared to CAD 11.0 million in 2023 [7] - Selling and marketing expenses also saw a reduction of 34%, amounting to CAD 7.1 million in 2024 [7] - Total operating expenses for 2024 were CAD 18.7 million, down from CAD 22.6 million in 2023, reflecting effective cost management strategies [7] Operational Highlights - The company reported a significant reduction in net losses, with a net loss from continuing operations of CAD 11.8 million in 2024, compared to CAD 10.2 million in 2023 [7] - The cancellation of the Oranim deal negatively impacted revenue by approximately CAD 8.5 million, particularly affecting operations in Israel [7] - Cash and cash equivalents as of December 31, 2024, were CAD 0.9 million, down from CAD 1.8 million in the previous year [7] Future Outlook - The CEO expressed optimism for Q1 2025, anticipating it to be the best quarter in sales to date in Germany, supported by operational efficiencies and inventory clearance benefits [3][6] - The company aims to leverage its strategic and operational improvements to achieve sustainable growth in its key markets, particularly in Germany and Israel [3][12]

Core Insights - IM Cannabis Corp. will report its operational and financial results for Q4 and full year 2024 on March 31, 2025, before market opens [1] - A Zoom web conference will be held on the same day at 9:00 a.m. ET to discuss the results, followed by a Q&A session for investors [2] Company Overview - IM Cannabis Corp. is a leading international cannabis company focused on providing premium cannabis products to medical patients in Israel and Germany, two of the largest medical cannabis markets [3] - The company aims for sustainable and profitable growth in its highest value markets, leveraging a data-driven approach and a globally sourced product supply chain [3] - IM Cannabis is committed to responsible growth and compliance with strict regulatory environments to enhance its commercial and brand power [3] Operational Ecosystem - In Israel, IM Cannabis operates through a partnership with Focus Medical Herbs Ltd., which imports and distributes cannabis to medical patients, utilizing proprietary data and patient insights [4] - The company also runs medical cannabis retail pharmacies, online platforms, distribution centers, and logistical hubs in Israel to ensure safe delivery and quality control of its products [4] - In Germany, IM Cannabis operates through Adjupharm GmbH, distributing cannabis to pharmacies for medical cannabis patients [4]

Auditor Change - IM Cannabis Corp changed its auditor from Kost Forer Gabbay & Kasierer (member of Ernst & Young Global) to Fahn Kanne & Co Grant Thornton Israel effective January 16, 2025 [1] - The change was made at the company's request and approved by the board of directors based on the audit committee's recommendation [1] - The predecessor auditor resigned on the same date and the successor auditor will serve until the next annual shareholders meeting [1] - No reservations, modified opinions or reportable events were noted in the predecessor auditor's reports for the most recent financial year or subsequent periods [2] Company Overview - IM Cannabis Corp is an international cannabis company operating in Israel and Germany, two of the largest medical cannabis markets [3] - The company focuses on sustainable and profitable growth in these high-value markets through a data-driven approach and global supply chain [3] - In Israel, the company operates through subsidiaries that import, distribute and retail medical cannabis, supported by proprietary data and patient insights [4] - The Israeli ecosystem includes retail pharmacies, online platforms, distribution centers and logistical hubs to ensure safe delivery and quality control [4] - In Germany, the company operates through Adjupharm GmbH, distributing cannabis to pharmacies for medical patients [4] Business Strategy - The company is committed to responsible growth and compliance with strict regulatory environments [3] - It aims to amplify commercial and brand power to become a global high-quality cannabis player [3] - The company leverages a transnational ecosystem powered by data and global supply chains [3] - It focuses on sustainable profitability while driving growth in the German market [5]