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Organigram (OGI) - 2025 Q3 - Earnings Call Transcript

2025-08-13 13:00

Financial Data and Key Metrics Changes - In Q3 fiscal 2025, gross sales increased by 73% year over year and 7.2% sequentially, reaching a record $110.2 million [28] - Net revenue also reached a record high, growing 72% year over year and 7.9% sequentially to $70.8 million [28] - Adjusted EBITDA for the quarter was $5.7 million, a 64% increase year over year [34] - Net loss for the quarter was $6.3 million compared to net income of $2.8 million in the prior year period [35] - Cash flow from operations was $14.6 million, a significant improvement from cash used of $3.7 million in the prior year [35] Business Line Data and Key Metrics Changes - Organigram maintained its position as the number one licensed producer in Canada with an 11.6% market share, leading in pre-rolls and vapes [7] - In the vape segment, Organigram held a 20.4% market share, while in the pre-roll segment, it held 8.3% [7] - The company achieved its highest edibles market share of 18.2% in the last twelve months [11] - International revenue reached $7.4 million, a 208% year over year increase [22] Market Data and Key Metrics Changes - The Canadian recreational cannabis market grew by 6.6% year over year, reaching $1.4 billion in retail sales [7] - Organigram's market share in flower increased to 10.6%, up 60 basis points from Q2 [7] - The beverage market share held by Organigram was 6.2% as of June [12] Company Strategy and Development Direction - The company is focused on balancing domestic and international market demands while expanding its product offerings [27] - Organigram is enhancing its operational capacity and efficiency, with significant investments in its facilities [16][20] - The company is optimistic about the long-term potential of the cannabis beverage market, especially with favorable regulatory changes in Canada [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a gross margin of approximately 35% for the full year, driven by seasonal throughput and synergies from the Motif acquisition [41][43] - The company remains cautious about shifting too much supply to international markets at the expense of domestic brands [29] - Management highlighted ongoing improvements in operational efficiency and the potential for margin expansion in the coming quarters [34][31] Other Important Information - The company is awaiting EU GMP certification, which is expected to enhance international sales and margins [26][56] - Management noted that approximately 27% of Moncton's harvest was seed-based, contributing to lower production costs [26] Q&A Session Summary Question: Outlook on gross margins and expected expansion - Management confirmed the expectation of a 35% average gross margin for the year, driven by seasonal throughput and synergies from the Motif acquisition [41][43] Question: Cultivation capacity and balancing domestic vs international demand - Management discussed ongoing capacity expansion projects and the reevaluation of previous investment plans to optimize production for both domestic and international markets [45][48] Question: Timing and impact of EU GMP certification - Management indicated that while the timing of the certification is uncertain, it will significantly enhance margins and reduce delays in product delivery [56][58] Question: Investment opportunities in the U.S. and potential federal reform - Management expressed excitement about the U.S. market but emphasized that current focus remains on international markets due to existing legal frameworks [66][67]