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Organigram (OGI) - 2024 Q3 - Quarterly Report
OGIOrganigram (OGI)2024-08-13 11:25
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Financial Performance - For Q3 Fiscal 2024, Organigram reported financial results for the three and nine months ended June 30, 2024, with comparative data from May 31, 2023[1]. - The Company reported a net revenue of 41,060,anincreaseof2541,060, an increase of 25% or 8,275 from Q3 Fiscal 2023's 32,785,primarilydrivenbya32,785, primarily driven by a 7,265 increase in recreational cannabis revenue[26]. - The gross margin before fair value adjustments for Q3 Fiscal 2024 was 13,887,representing3413,887, representing 34% of net revenue, compared to 496 or 2% in the prior year, reflecting improved operating efficiencies[30]. - Adjusted EBITDA for Q3 Fiscal 2024 was 3,465,asignificantincreaseof3,465, a significant increase of 6,379 from an adjusted EBITDA loss of 2,914inQ3Fiscal2023[42].−TheCompanyachievedanetincomeof2,914 in Q3 Fiscal 2023[42]. - The Company achieved a net income of 2,818 in Q3 Fiscal 2024, a substantial improvement from a net loss of 213,451inQ3Fiscal2023,attributedtohigheradjustedgrossmargins[42].−Organigram′sgrossrevenuefortheninemonthsendedJune30,2024,was213,451 in Q3 Fiscal 2023, attributed to higher adjusted gross margins[42]. - Organigram's gross revenue for the nine months ended June 30, 2024, was 177.3 million, an increase of 9% from 162.2millioninthesameperiodof2023,reflectingachangeof162.2 million in the same period of 2023, reflecting a change of 15.1 million[77]. - Net revenue decreased slightly to 115.1millionfortheninemonthsendedJune30,2024,comparedto115.1 million for the nine months ended June 30, 2024, compared to 115.6 million in the prior year, primarily due to a decline in international and medical sales[78]. - Adjusted EBITDA improved significantly to 2.4millionfortheninemonthsendedJune30,2024,comparedtoalossof2.4 million for the nine months ended June 30, 2024, compared to a loss of 2.9 million in the same period of 2023[77]. Production and Harvesting - The Company harvested 21,420 kg of flower in Q3 Fiscal 2024, representing a 15% increase compared to Q3 Fiscal 2023[23]. - The Company achieved a 28% increase in yield per plant versus Q3 Fiscal 2023, and a 12.8% increase versus Q2 Fiscal 2024[23]. - The Company reduced the pre-vegetation state by seven days, increasing cultivation capacity by approximately 2% (~1,555 kg annually)[23]. - The Company expects to yield 31,244 kg of cannabis from its biological assets as of June 30, 2024, an increase from 26,917 kg as of September 30, 2023[132]. Market Position and Strategy - The SHRED brand produced over 200millioninannualretailsalesasoftheendofQ2Fiscal2024,securingthe3marketposition[21].−TheCompanyholdsthe1marketpositioninthehashcategoryasofJune30,2024,followingtheacquisitionoftheLac−SupeˊrieurFacility[21].−OrganigramistargetinginternationalexpansionwithshipmentsofbulkcannabistoGermany,Australia,andtheUK[24].−TheCompanyisfocusedonexpandingitsproductofferings,includingnewcannabisformatsandvapourproducts,tomeetconsumerdemand[9].−OrganigramispursuingEU−GMPcertification,withexpectationsforsuccessfulcompletionoftheauditandcertificationissuance[9].CostManagementandEfficiency−ExpectationsforFiscal2024includerevenuegrowth,improvedadjustedgrossmargin,andeffectivemanagementofselling,generalandadministrativeexpenses[9].−Costofsalesdecreasedto200 million in annual retail sales as of the end of Q2 Fiscal 2024, securing the 3 market position[21]. - The Company holds the 1 market position in the hash category as of June 30, 2024, following the acquisition of the Lac-Supérieur Facility[21]. - Organigram is targeting international expansion with shipments of bulk cannabis to Germany, Australia, and the UK[24]. - The Company is focused on expanding its product offerings, including new cannabis formats and vapour products, to meet consumer demand[9]. - Organigram is pursuing EU-GMP certification, with expectations for successful completion of the audit and certification issuance[9]. Cost Management and Efficiency - Expectations for Fiscal 2024 include revenue growth, improved adjusted gross margin, and effective management of selling, general and administrative expenses[9]. - Cost of sales decreased to 27,173 in Q3 Fiscal 2024 from 32,289inQ3Fiscal2023,primarilyduetolowercostperunitandreducedinventoryprovisions[29].−Generalandadministrativeexpensesdecreasedto32,289 in Q3 Fiscal 2023, primarily due to lower cost per unit and reduced inventory provisions[29]. - General and administrative expenses decreased to 9,700 in Q3 Fiscal 2024 from 14,483intheprioryear,mainlyduetolowertechnologyandinsurancecosts[32].−Organigramexpectstorealizeapproximately14,483 in the prior year, mainly due to lower technology and insurance costs[32]. - Organigram expects to realize approximately 10 million in annual savings from operational efficiencies initiated in Fiscal 2024[52]. Investments and Financing - The company closed an offering on April 2, 2024, raising gross proceeds of 28.8millionbyselling8,901,000unitsatapriceof28.8 million by selling 8,901,000 units at a price of 3.23 per unit[39]. - Organigram announced a strategic investment of €14 million (~C21million)inSanityGroup,whichincludesaminoritystakeacquisitionandanunsecuredconvertiblenote[46].−TheCompanycompletedaUnitOfferingonApril2,2024,raisingtotalgrossproceedsof21 million) in Sanity Group, which includes a minority stake acquisition and an unsecured convertible note[46]. - The Company completed a Unit Offering on April 2, 2024, raising total gross proceeds of 28.8 million, with net proceeds of $26.3 million[107]. Risks and Challenges - The company is actively managing risks related to supply chain disruptions and regulatory changes impacting the cannabis industry[11]. - The Company is monitoring the impact of geopolitical events, such as the ongoing conflict in Israel, on its supply chain and market demand[9]. - The Israeli government has initiated an Anti-Dumping Investigation regarding the Company's cannabis exports, with a preliminary determination finding dumping by all Canadian exporters[167]. - The Company continues to monitor the impact of the Israel-Hamas war on its business operations and accounts receivable collections[168]. Internal Controls and Compliance - The Company has identified material weaknesses in internal control over financial reporting, which have not been remediated as of June 30, 2024[154]. - Management is committed to implementing changes to its internal controls, with ongoing remedial activities expected to continue throughout Fiscal 2024[156]. - The Company has engaged external audit specialists to assist in evaluating internal controls and designing remediation plans[157].