Organigram (US:OGI)2020-01-15 03:23Financial Data and Key Metrics Changes - Net revenue for Q1 2020 was $25.2 million, more than doubling from the prior year quarter [35] - Adjusted EBITDA returned to positive at $4.9 million, representing 19% of net revenue [39] - Cost of cultivation per gram decreased to $0.87, with cash component at $0.61, down from $0.94 and $0.66 respectively in Q4 2019 [9][36] - Gross margin before fair value changes was $9.3 million, or 37% of net revenue [37] Business Line Data and Key Metrics Changes - Revenue from the adult-use recreational market was $12.9 million, with $2.7 million from the medical market and $9.5 million from wholesale and international markets [35] - The company has seen strong sales traction for its vape products, with reorders from provinces [46] Market Data and Key Metrics Changes - The company noted that recreational cannabis sales are highly correlated with the number of retail stores, particularly in Ontario, which is expected to see significant growth in store openings [22] - Alberta has a robust retail network with approximately 375 stores, leading to higher spending on cannabis products compared to Ontario [24] Company Strategy and Development Direction - The company is focused on expanding its product offerings in the Rec 2.0 market, including chocolates and vape products, with plans to introduce new strains [21][14] - The company is strategically delaying the completion of Phase 4C to better align with consumer demand and manage cash allocation [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in the cannabis market, particularly with the opening of new retail stores [22] - The company believes it is well-capitalized and positioned to navigate financial distress in the industry, focusing on cost control and prudent spending [26] Other Important Information - The company received licensing approval for its chocolate production line and plans to introduce cannabis-infused chocolate products by the end of March [12] - The company has established an at-the-market equity program to enhance financial flexibility, raising approximately $22.4 million to date [33] Q&A Session Summary Question: What product categories are performing better in the Rec 2.0 market? - Management noted strong demand for vape products and pre-orders for edibles, indicating positive consumer response [46] Question: How does the competitive environment look with cash-strapped competitors? - Management acknowledged price drops from competitors but emphasized their low cost of cultivation and quality product as differentiators [48] Question: What is the outlook for wholesale revenues? - Management indicated continued demand for wholesale products, with a focus on diversifying revenue streams [54] Question: How is the market share trending by region? - Management reported growing market share in most provinces, with a strong position in Alberta and Nova Scotia [59] Question: What is the expectation for operating expenses moving forward? - Management expects operating expenses to decline as a percentage of revenue but did not provide specific dollar growth expectations [82]