Organigram (US:OGI)2022-01-11 18:37Financial Data and Key Metrics Changes - The first quarter of fiscal 2022 achieved record net revenue of $30.4 million, a 57% increase compared to Q1 fiscal 2021 [9][25] - Gross revenue grew 75% year-over-year to $44.3 million, primarily driven by higher recreational net revenue [25] - Cost of sales increased only 21% year-over-year to $28 million, leading to an improved gross margin of $610,000 compared to a loss of $16.7 million in Q1 2021 [27][25] - The adjusted EBITDA loss was reduced from $5.7 million in Q1 2021 to $1.9 million in Q1 2022, with a net loss decreasing from $34.3 million to $1.3 million [28][29] Business Line Data and Key Metrics Changes - The SHRED brand continued to be the most popular flower brand, with significant sales growth and market share increase [10][11] - SHRED'ems gummies ranked number three in sales and volume of units sold shortly after their introduction [12] - The Edison brand maintained strong market share, with new high potency strains launched to meet consumer demand [15] Market Data and Key Metrics Changes - OrganiGram held a 7.5% market share in the Canadian recreational market, up from 4.4% a year ago [9] - Market share increased to 7.6% in December, with the company holding the number one position in the flower category and moving up in gummies and pre-rolls [13] - The legal market now accounts for 53% of sales compared to 47% for the illicit market, indicating a shift in consumer preference [100] Company Strategy and Development Direction - The company completed an acquisition of Laurentian, enhancing its product portfolio and geographic presence in Quebec [8][24] - Investment in Hyasynth Biologicals was increased to $10 million, aiming to leverage biosynthesis for cannabinoid production [20][21] - The company plans to expand its capacity to 75,000 kilograms annually, which is expected to improve margins and meet growing demand [44][81] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving positive adjusted EBITDA by Q3 of fiscal 2022, supported by the Laurentian acquisition [29] - The company is cautious about Q2 due to seasonal factors and potential COVID-related restrictions impacting retail operations [66] - Management noted sustained demand for the SHRED brand and the importance of expanding distribution to meet consumer needs [49] Other Important Information - The company harvested approximately 11,600 kilograms of flower in Q1 2022, a 197% increase from the prior year [26] - The acquisition of Laurentian is expected to add $17 million in annual net revenue and $6 million in EBITDA [24] - The company is exploring international expansion opportunities, including potential markets in Europe and Australia [102] Q&A Session Summary Question: What drove the significant increase in market share? - Management attributed the growth to increased consumer interest in the SHRED brand and successful product launches in the gummies category [37][38] Question: What is unique about the Laurentian Organics acquisition? - Laurentian focuses on premium hash products with strong margins, which has driven consumer appreciation [39][40] Question: What is the outlook for Q2 sales? - Management indicated that Q2 is typically the lowest quarter due to seasonal factors, but expects significant year-over-year growth [64][66] Question: How does the company view pricing pressure in the market? - Management noted that while there has been price compression in the flower category, they have maintained pricing on SHRED due to strong demand [59][60] Question: What is the company's strategy for the U.S. market? - The company is monitoring U.S. market developments and will explore opportunities when the timing is right, focusing on CBD offerings and other adjacencies [107]