IM Cannabis (US:IMCC)2025-03-31 19:11Financial Data and Key Metrics Changes - The company reported a total revenue of $54 million for 2024, an increase of $5.2 million or 11% compared to $48.8 million in 2023 [25] - Adjusted EBITDA in Q4 2024 was a profit of $0.5 million, a significant improvement of almost $5 million from a loss of $4.3 million in Q4 2023 [13][35] - The net loss for 2024 was $11.8 million compared to $10.2 million in 2023, while the net loss in Q4 2024 was $1.2 million compared to $3.5 million in Q4 2023 [35][36] Business Line Data and Key Metrics Changes - Sales in Germany increased by over 183% in 2024, reaching $15.5 million, with Germany accounting for 40% of total revenue in the second half of 2024 compared to 11% in all of 2023 [15][25] - In Israel, revenue decreased by $4.8 million net, primarily due to the cancellation of the Oranim deal, which resulted in a revenue decrease of approximately $8.5 million compared to 2023 [25][27] - The company launched or relaunched 27 strains across six brands in Israel in 2024, maintaining top-line sales despite the challenges [17] Market Data and Key Metrics Changes - The German market has shown extraordinary growth since the partial legalization in April 2024, with a significant increase in sales velocity [8][15] - The company added three new suppliers and launched 16 new strains in 2024, indicating a strong operational focus on the German market [12][14] Company Strategy and Development Direction - The company focused on full integration and active cost management to drive efficiencies, reducing overall operating expenses by $4 million or 17% in 2024 [11] - The strategic shift towards the German market has proven effective, with plans to continue building a strong supply chain to support growth in 2025 [10][20] - The company aims to maintain efficiency while investing in growth, particularly in Germany, while not expecting significant growth in the Israeli market [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational improvements made in 2024, setting a solid foundation for growth in 2025, with Q1 expected to be the best quarter in sales to date in Germany [19][40] - The competitive landscape in Germany is dynamic, with expectations of price compression, but management believes margins will not decline significantly [50][52] Other Important Information - The company cleared out slow-moving non-premium stock, impacting cost of sales and gross margin, but does not anticipate similar write-offs in 2025 [18] - Total operating expenses for 2024 were $18.7 million, down from $22.6 million in 2023, reflecting improved operational efficiency [34] Q&A Session Summary Question: Dynamics affecting growth in Germany in Q4 - Management acknowledged delays in Q4 but indicated that Q1 looks promising, attributing the slowdown to supply chain building processes [46] Question: Changes in competitive dynamics in Germany - Management noted that the German market is competitive, with ongoing price compression, but does not foresee significant changes in leading competitors [48][50] Question: Margin profile expectations amid price compression - Management expects margins to remain stable or improve, despite the challenges faced in 2024 due to inventory issues [52][54] Question: Stability of the Israeli market - Management does not foresee significant growth in the Israeli market, focusing resources primarily on the German market [57]