IM Cannabis (US:IMCC)2024-08-14 17:27Financial Data and Key Metrics Changes - Revenue for Q2 2024 increased by 11.7% to $14.8 million compared to $13.2 million in Q2 2023, driven by a 129% growth in Germany [10][11] - Average selling price per gram of dried flower rose by 21% to $6.09 in Q2 2024 [10][11] - Gross profit decreased by 75.6% to $0.8 million in Q2 2024, primarily due to inventory clearance and slow-moving stock accruals [12][13] - Non-IFRS adjusted EBITDA loss widened to $2.3 million in Q2 2024 from a loss of $0.5 million in Q2 2023 [13] Business Line Data and Key Metrics Changes - Total dried flower sold in Q2 2024 was approximately 2,333 kilograms, up from 2,128 kilograms in Q2 2023 [11] - The Israeli business is focusing on premium and ultra-premium markets, with new product launches aimed at enhancing market presence [8][9] Market Data and Key Metrics Changes - The German cannabis market is projected to reach approximately $1.5 billion in total sales in 2024 and grow to about $3.7 billion by 2027 [5] - IM Cannabis Corp. reported a 200% increase in sales in Germany in Q2 2024 compared to Q1 2024, reflecting the impact of legalization [6][16] Company Strategy and Development Direction - The company is reallocating resources to support growth in the German market, focusing on building a stable supply chain and enhancing team capabilities [7][9] - The strategy includes launching premium brands in Germany and leveraging existing supply channels from Israel [18][20] Management's Comments on Operating Environment and Future Outlook - Management highlighted the significant growth potential in the German market following legalization, emphasizing the need for adequate supply to meet demand [4][16] - The company is optimistic about its ability to navigate the competitive landscape in Germany, citing established relationships with pharmacies and a strong brand presence [26][27] Other Important Information - The planned reverse merger with Kadimastem was terminated, allowing the company to focus on its cannabis operations [9] - Cash and cash equivalents decreased to $0.7 million as of June 30, 2024, down from $1.8 million at the end of 2023 [14] Q&A Session Summary Question: Supply sourcing for the German market - Management acknowledged supply as a key issue in Germany and confirmed plans to increase orders and introduce new suppliers [17][18] Question: Impact of supply from Israel on the Israeli market - The company clarified that the supply sent from Israel would not detract from opportunities in Israel, as they focus on different market segments [19][20] Question: Infrastructure and cash outlays for German market growth - Management expressed confidence in their ability to support operations and cash flow for growth in the German market [22][23] Question: Key factors for success in the German market - Management attributed success to established market presence, strong relationships with pharmacies, and increased supply following legalization [25][26] Question: Future gross margin outlook - Management indicated that current gross margin reductions were due to inventory clearance, but they expect improvements in future quarters [28][31]