Organigram Archives - Green Market Report

Share prices for Organigram Holdings Inc. (Nasdaq: OGI) (TSX: OGI) were up nearly 8% in early Thursday trading after results illustrated the company’s financial discipline, as it trimmed losses and posted revenues that beat expectations for the first quarter ending November 30, 2022.

The Canadian cannabis company reported net revenue of $43.3 million, up 43% from $30.4 million in the same time period last year. This beat Yahoo Finance’s average analysts’ $30.37 million estimate by more than $10 million. Organigram attributed the rise to an “increase in adult-use recreational and international revenue, partly offset by a decrease in medical sales.”

Organigram posted a net income of $6.1 million in the first quarter, versus a net loss of $1.3 million in the same time frame last year. The company said that the transition to positive net income is mainly due to higher gross margin from higher revenues, lower per-unit production costs, decreased inventory provisions, and unabsorbed overheads.

“Our first quarter of fiscal 2023 demonstrates the success of our expansion at Moncton and continuing productivity improvements in fiscal 2022,” CEO Beena Goldenberg said in a statement. “In the quarter, we achieved a record harvest and the lowest cost of cultivation in the history of the company. We maintained our market position and are confident our disciplined approach to operations and innovation will drive further success in the rest of the year.”

The company posted an adjusted gross margin of $12.8 million in the first quarter – 30% of net revenue – which was up from $5.5 million (18% of revenue) in the same time period last year.

Selling, general & administrative (SG&A) in the first quarter rose to $15.7 million from $12.6 million in the same quarter last year.

Adjusted EBITDA income was $5.6 million versus a loss of $1.9 million in the first quarter last year, pointing to the increase in adjusted gross margins due to the higher volume of products sold and lower cultivation and post-harvest costs.

Stifel analysts said in a report this morning, “We are encouraged with today’s results which provide a glimpse into the potential for OGI’s platform as the company leans into its expanded Moncton facility and benefits from the doubling of its Laurentian (hash) facility towards the end of FY23. As a result, we expect shares to outperform today.”

Organigram said it believes its capital position is healthy and that sufficient liquidity is available for the near to medium term. The company had unrestricted cash and short-term investments worth around $95 million, versus $99 million as of August 31, 2022. The decrease is primarily a result of capital expenditures of $8.4 million, “which was partly offset by cash generated in operating activities of $3.5 million.”

Outlook for 2023

Organigram expects this year’s revenue to be higher than that of fiscal 2022.

The expectation, it wrote in a press release, is largely due to “ongoing sales momentum, stronger forecasted market growth, the company’s expanded product line in multiple segments, greater capacity to meet demand at the Moncton Campus, increased throughput at the Winnipeg facility and contributions from the Lac-Supérieur facility.”

Additionally, business with Canndoc in Israel as well as Cannatrek and Medcan in Australia is expected to generate higher sequential revenue this year versus last year. Organigram said that it is better equipped to fulfill demand this year with larger harvests expected versus last, supported by a new multi-year agreement with Canndoc that contemplates shipping up to 20,000 kilograms of dried flower.

Organigram generated positive cash flows from operating activities during the first quarter, “which was achieved primarily due to positive adjusted EBITDA and a reduction to receivables.” And while the company expects to continue to generate positive adjusted EBITDA, periods when it achieves significant increases in sales will result in increases in receivables and this will negatively impact cash from operating activities.

Organigram has a $29 million capex budget, and if completed as planned during the fiscal year, the company expects to generate positive free cash flows by the end of calendar 2023.

Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI) delivered its results for the first fiscal quarter ending November 30, 2021, with revenue increasing 57% to $30.4 million, from $19.3 million for the same time period last year. This beat the Yahoo Finance average analyst estimate for revenue of just $23.9 million.

Organigram said the increase was primarily due to an increase in adult-use recreational revenue and international revenue, partly offset by lower average selling price due to product mix and a decrease in medical revenue. Organigram also trimmed its net loss to $1.3 million, versus last year’s net loss of $34.3 million. The company attributed it to the higher gross margin in the current quarter along with fair value adjustments on biological assets and inventories sold.

“We are also pleased with our continued progress at improving economies of scale in our operations, thus reducing operating costs and driving significant improvements in adjusted gross margin and adjusted EBITDA,” added Goldenberg. “While we previously projected to achieve positive adjusted EBITDA in Q4, with the purchase of Laurentian that will be accelerated to Q3 Fiscal 2022.”

Outlook

Looking ahead, Organigram said it expects the fiscal second-quarter revenue to be significantly higher than last year. The company said it is basing this forecast on stronger forecasted market growth and the increasing number of retail stores. In addition to that, Organigram said it is better able to fulfill the demand for its revitalized product portfolio with increased production, and revenue contributions from its newly acquired Laurentian facility. Net revenue growth is expected as the company’s adult-use recreational retail market share jumped from 4.4% in Q1 of Fiscal 2021 to 7.5% in Q1 of Fiscal 2022.

Organigram said it also expects to be positioned to generate more revenue growth from the production of soft chews and other edible products with the specialized equipment in the Winnipeg Facility under the direction of EIC leadership, who bring significant expertise in confectionery manufacturing. In Fiscal 2022, line extensions will be introduced to the company’s popular SHRED’EMS gummy and Edison Jolt lozenge SKUs.

The company also expects to realize additional revenue through the recent acquisition of Laurentian. Over the last two months of calendar 2021, Laurentian has been averaging an annual net revenue run rate of $17 million and an annual EBITDA run rate of $6 million. The Company will make growth capital expenditures at Laurentian which have the potential to further increase EBITDA generation. Laurentian’s hash and artisanal craft cannabis products complement the Company’s product line and will benefit from the company’s direct sales team and national distribution.

In addition, the resumption of shipments to Canndoc in Israel is expected to generate higher sequential revenue in Fiscal 2022 as compared to Fiscal 2021. The company believes it is better equipped to fulfill demand in Fiscal 2022 with larger harvests expected as compared to Fiscal 2021. Revenues in Fiscal 2022 to date including a shipment to Canndoc that was in excess of $3.0 million, and purchase orders received from customers, support the company’s expectation of revenue growth from Fiscal 2021 to Fiscal 2022.

Organigram Holdings Inc. (NASDAQ: OGI) reported its results for the fiscal fourth-quarter ending August 31, 2021, with revenue increasing 22% to $24.9 million, from $20.4 million in the same time period for 2020. Organigram said the increase was primarily due to an increase in adult-use recreational revenue, partly offset by the decrease in international revenue, medical revenue, wholesale revenue to other Licensed Producers, and a lower average net selling price. The stock was jumping over 10% in early trading on the results and was lately selling at $2.06.

The company also reported a net loss of $26.0 million, which was an improvement over last year’s net loss of $38.6 million. the company said this was largely due to the higher gross margin in the quarter which was partially offset by the impairment charges during the current quarter. The quarter also reported that the negative adjusted EBITDA decreased 48% from $9.2 million in the third fiscal quarter to $4.8 million. This improvement was primarily attributed to the increase in revenues and the improved adjusted gross margin.

“The results in Q4 Fiscal 2021 demonstrate the momentum we have achieved from our efforts to lead innovation and increase efficiencies. In the quarter, we introduced exciting new products that were embraced by consumers and we achieved higher crop yields at a lower cost” said Beena Goldenberg, Chief Executive Officer. “We are particularly pleased with our market share gains in the quarter to become a #4 LP and will build on these successes into Fiscal 2022.”

Looking Ahead

Organigram said it is forecasting its fiscal first quarter of 2022 revenue to be higher than the fourth quarter and attributed this to stronger forecasted market growth as COVID-19 restrictions continue to lift and the number of retail stores continues to grow; and the company is better able to fulfill the demand for its revitalized product portfolio with its increased production.

“Net revenue growth is expected from the company’s products as evidenced by Organigram’s growing national adult-use recreational retail market share (“market share”) from 5.4% in Q3 to 7% in Q4. As of October, the momentum continues and the company has reached a 7.9% share of market, maintaining its position as the #4 LP in Canada.”

“In addition, the resumption of shipments to Canndoc in Israel is expected to generate higher sequential revenue in Q1 Fiscal 2022 as compared to Q4 Fiscal 2021. The Company believes it is better equipped to fulfill demand in Q1 Fiscal 2022 with larger harvests expected as compared to Q4 Fiscal 2021. Revenues to date in Q1 Fiscal 2022 including a shipment to Canndoc that was in excess of $3.0 million, and purchase orders received from customers, support the Company’s expectation of revenue growth from Q4 Fiscal 2021 to Q1 Fiscal 2022; however actual results could vary from estimates from the date hereof until year-end.”

Organigram also expects to be positioned to generate more revenue growth from the production of soft chews and other edible products with the specialized equipment in the Winnipeg Facility under the direction of EIC leadership, who bring significant expertise in confectionery manufacturing.

Ms. Goldenberg concluded, “We are excited for what Fiscal 2022 holds for Organigram. Looking ahead, we expect to continue our momentum as we maintain our focus on increased points of distribution, bringing new, impactful, and innovative products such as Edison Jolts, SHRED, and SHRED’ems to market, and improve our ability to fulfill the growing demand for our products.”

Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI) released its results for the third quarter ending May 31, 2021, with revenue growing 31% over last year to $29.1 million. This was an increase of 51% from the second quarter. The net loss fell 96% to just $4 million from last year’s $89 million. The stock was trading higher by 6%  in early trading and was lately selling at $2.83.

Organigram attributed the increase in revenue to higher adult-use recreational net revenue and higher wholesale revenue (from other licensed producers) in the quarter. Last year’s third quarter adult-use recreational net revenue was reduced by a provision for product returns and pricing adjustments of $3.0 million (net of excise) of which the majority was largely due to slow-moving oil and certain flower products.

“We are pleased with the growth in revenue in Q3 as we were better staffed to fulfill the demand for our revitalized product portfolio, which continues to resonate well with consumers,” said Paolo De Luca, Chief Strategy Officer. “The ongoing investment in our genetics and cultivation program has yielded some exciting new dried flower products with more genetics and derivative product launches planned for the near term. Sales are trending higher to date in Q4 supported by a strong outlook for the industry as the number of cannabis retail stores continues to grow and existing stores are permitted to re-open their doors to customers.”

The cost of sales decreased from last year and this was primarily due to almost $30.0 million in inventory write-offs and provisions as well as charges related to a reduced workforce due to COVID-19 which were all incurred in the third quarter of 2020. SG&A increased over last year and Organigram said this was largely due to increased staffing and office costs related to the establishment of the CoE as well as the EIC acquisition, higher cultivation related research and development costs as well as higher audit fees (in connection with the company’s regulatory requirement to obtain an integrated audit opinion for the first time for its Fiscal 2021 annual financial statements).

Outlook

Organigram said it currently expects fourth-quarter 2021 revenue to be higher than the third quarter largely due to stronger forecasted market growth as COVID-19 restrictions lift (permitting cannabis retail stores to reopen to foot traffic) and the number of retail stores continuing to grow.  The company said it is better able to fulfill the demand for its revitalized product portfolio with increased staffing. In a statement, the company said,  “Revenues to date and purchase orders received from customers support the company’s expectation of revenue growth from Q3 2021 to Q4 2021; however actual results could vary from estimates from the date hereof until year-end. In addition, the company expects to generate a new and incremental revenue stream from the first sales of soft chews expected in Q4 2021.”

Solid Financials

On April 1, 2021, Organigram repaid all outstanding balances (approximately $58.5 million) under its credit agreement with BMO and a syndicate of lenders, which will result in annual interest savings of $2.7 million. Currently, the company has $222 million in cash and short-term investments (including restricted funds). Organigram believes it has sufficient cash and short-term investments to support its current plans, including the budget of $38 million for the completion of Phase 4C and the Moncton Campus design improvements, and to also support the corresponding growth to its working capital assets and still maintain sufficient liquidity and financial flexibility.