Year-to-date Canadian recreational business
grew 10% versus prior year driven by continued focus on
consumer-centric products and brands
Strategic investments in Phylos and Greentank
strengthen Organigram’s position as an industry leader in cannabis
innovation, solidifying long-term competitive advantage
HIGHLIGHTS
- Recreational net revenue was $92.5 million for the nine months
ended May 31, 2023, an increase of $8.0 million over the same
prior-year period
- Increased sequential net revenue from Canadian recreational
business by 7% vs. Q2 driven by continued success in hash and
rebound in flower
- Organigram regained the #3 position in May and held it through
June with 6.7% national market share1
- Held the #1 position in milled flower, the #1 position in
concentrates, and moved into the #2 position in gummies nationally
in May1
- International sales for the first nine months of fiscal 2023 of
$18.4 million exceeded the $9.5 million realized for the same
prior-year period by 94%
- Completed first U.S. investment in Phylos Bioscience Inc.
("Phylos") to commercialize THCV and transition a portion of
production capacity to more cost-effective and consistent
seed-based production over time
- Completed investment in Green Tank Technologies Corp.
("Greentank") for initial exclusive access to new vapour heating
technology
- Product Development Collaboration with BAT moving rapidly
toward product commercialization
- SHRED brand is one of the largest cannabis brands in the
Canadian market approaching $190 million in retail sales in the
last 12-months2
- Successfully launched 28 SKUs in the quarter for a total of 127
in market
- Completed ramp up of SHRED X Rip Strip production and
distribution to meet strong consumer demand
- Announced supply agreement with Sanity Group GmbH ("Sanity
Group") to supply medical cannabis to the promising German
market
- Strong balance sheet with $75 million in cash and negligible
debt
Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), (the
“Company” or “Organigram”), a leading licensed producer of
cannabis, announced its results for the third quarter ended May 31,
2023 (“Q3 Fiscal 2023”). All financial information in this press
release is expressed in thousands of Canadian dollars ("$"), except
for references to $ millions.
“During the quarter, we continued to demonstrate our responsible
leadership in the Canadian cannabis industry," said Beena
Goldenberg, Chief Executive Officer. “We focused on the ongoing
execution of our strategy of sustainable long-term growth by
delivering disruptive consumer-focused innovations, while driving
costs out of our operation and improving productivity. We are very
pleased with the growth of our Canadian recreational business and
our outlook moving into next year remains positive with the
foundation now in place to deliver continued growth.”
In Q3, the Company observed the increasingly common practice of
THC-inflation, what it believes to be the practice by some licensed
producers of inflating THC values on their labels though selective
sampling and lab shopping. At the same time there is no
standardized testing for cannabis potency regulated by Health
Canada which has resulted in inconsistent practices designed to
inflate THC potency. For example, in one large national retail
chain, the total number of SKUs labelled 30%+ THC increased
ten-fold since last year3. Organigram was disproportionately
negatively impacted by THC-inflation this quarter due its strength
in flower categories and this had a profound impact on the size of
the impairment the Company took this quarter. Organigram remains
confident that is has positioned itself for long term success
through responsible capital stewardship, a commitment to efficient
operations, and industry leading R&D bolstered by an impressive
list of strategic partners who share Organigram's commitment to
innovation.
Select Key Financial Metrics
(in $000s unless otherwise indicated)
Q3-2023
Q3-2022
% Change
Gross revenue
48,409
55,173
(12
)%
Excise taxes
(15,624
)
(17,058
)
(8
)%
Net revenue
32,785
38,115
(14
)%
Cost of sales
32,289
29,440
10
%
Gross margin before fair value changes to
biological assets & inventories sold
496
8,675
(94
)%
Realized fair value on inventories sold
and other inventory charges
(13,588
)
(7,386
)
84
%
Unrealized gain on changes in fair value
of biological assets
8,395
6,353
32
%
Gross margin
(4,697
)
7,642
(161
)%
Adjusted gross margin1
6,074
9,298
(35
)%
Adjusted gross margin %1
19
%
24
%
(21
)%
Selling (including marketing), general
& administrative expenses2
19,033
17,469
9
%
Net loss
(213,451
)
(2,787
)
7559
%
Adjusted EBITDA1
(2,914
)
583
(600
)%
Net cash used in operating activities
before working capital changes
(14,847
)
(3,984
)
273
%
Net cash used in operating activities
after working capital changes
(5,515
)
(6,372
)
(13
)%
1 Adjusted gross margin, adjusted gross margin % and Adjusted
EBITDA are non-IFRS financial measures not defined by and do not
have any standardized meaning under IFRS; please refer to “Non-IFRS
Financial Measures” in this press release for more information.
2 Excluding non-cash share-based compensation.
Select Balance Sheet Metrics (in
$000s)
MAY 31, 2023
AUGUST 31,
2022
% Change
Cash & short-term investments
(excluding restricted cash)
52,735
98,607
(47
)%
Biological assets & inventories
81,832
68,282
20
%
Other current assets
45,829
54,734
(16
)%
Accounts payable & accrued
liabilities
34,349
40,864
(16
)%
Current portion of long-term debt
80
80
—
%
Working capital
140,626
166,338
(15
)%
Property, plant & equipment
110,384
259,819
(58
)%
Long-term debt
100
155
(35
)%
Total assets
348,515
577,107
(40
)%
Total liabilities
46,528
69,049
(33
)%
Shareholders’ equity
301,987
508,058
(41
)%
“Our results for the third quarter of Fiscal 2023 were impacted
by a reduction in sales in two of our higher margin categories of
international sales and ingestible extracts," added Derrick West,
Chief Financial Officer. "Further, to address the impact of THC
inflation, which forced us to adjust our pricing to remain
competitive, we intentionally accelerated adjustments to growing
conditions to increase whole flower THC levels to meet consumer
demand. This temporarily reduced our flower yields, negatively
impacting our margins on all flower categories. In the last month
of the quarter, we returned to above average yields while
maintaining increased whole flower THC levels. We believe that
based on this progress we will return to positive Adjusted EBITDA
in Q4 Fiscal 2023.”
Key Financial Results for the Third Quarter 2023
- Compared to the prior period, net revenue decreased 14% to
$32.8 million, from $38.1 million in Q3 Fiscal 2022. The decrease
was primarily due to a reduction recreational flower sales.
- Q3 Fiscal 2023 cost of sales increased to $32.3 million, from
$29.4 million in Q3 Fiscal 2022, primarily as a result of a $2.8
million net realizable value adjustment on low potency flower
repurposed as inputs to Organigram's growing derivatives business
and a $2.8 million provision for excess and unsaleable
inventories.
- Gross margin before fair value changes to biological assets,
inventories sold, and other charges:
- Q3 Fiscal 2023 margin declined to $0.5 million from $8.7
million in Q3 Fiscal 2022, negatively impacted in the quarter by
lower net revenue, and the $5.6 million in inventory
provisions.
- Q3 Fiscal 2023 adjusted gross margin was $6.1 million, or 19%
of net revenue, compared to $9.3 million, or 24%, in Q3 Fiscal
2022. The decline is attributable to lower net flower revenue, a
higher cost of sales, and the impact due to the restriction of sale
imposed by Health Canada on Edison JOLTS.
- Selling, general & administrative (SG&A) expenses:
- Q3 fiscal 2023 SG&A expenses increased to $19.0 million
from $17.5 million in Q3 Fiscal 2022. The increase in expenses was
primarily due to higher audit and legal fees, and ERP
implementation costs.
- During Q3 Fiscal 2023, as a consequence of the Company's market
capitalization trading significantly below its shareholders'
equity, combined with the current quarter's operational results,
management determined that there were economic indicators of
impairment warranting a calculation of the recoverable amount of
its assets.
- The impairment test considers several factors including
forecasted operational cash flows (net of tax impact), on-going
investments into working capital and sustaining capital
expenditures, post tax discount rates, terminal value growth rate
and this analysis resulted in the recognition of an impairment loss
of $191,242.
- The loss was allocated to intangible assets and goodwill in the
amount of $37,905 and $153,337 in relation to property, plant and
equipment.
- A meaningful contributing factor to the conditions that led to
the quantum of the impairment charge related to the impact to
flower sales and margins due to THC inflation. When considering the
significant sales and margin that flower product categories (dried
flower, milled flower, pre-rolls, IPR and international flower
sales) contribute to Organigram's financial results, this was a key
driver to the amount of the impairment loss.
- Impairment losses recorded on the Company's property, plant,
and equipment are expected to result in an approximate 5%
improvement to the gross margin rate moving forward, controlling
for other factors.
- Q3 Fiscal 2023 net loss was $213.5 million, compared to a net
loss of $2.8 million in Q3 Fiscal 2022 as a result of the recorded
impairment.
- Q3 Fiscal 2023 Adjusted EBITDA was negative $2.9 million
compared to $0.6 million Adjusted EBITDA in Q3 Fiscal 2022. The
decline is primarily attributable to lower net flower revenue,
lower adjusted gross margin, and higher SG&A expenses.
- Net cash used in operating activities before working capital
changes:
- Q3 Fiscal 2023 net cash used in operating activities was $5.5
million, compared to $6.4 million cash used in Q3 Fiscal 2022,
which was primarily due to favorable changes in working capital,
partially offset by lower adjusted EBITDA.
The following table reconciles the Company's Adjusted EBITDA to
net loss.
Adjusted EBITDA Reconciliation
(in $000s unless otherwise indicated)
Q3-2023
Q3-2022
Net (loss) income as reported
$
(213,451
)
$
(2,787
)
Add/(Deduct):
Financing costs, net of investment
income
(903
)
(234
)
Income tax expense (recovery)
(1,302
)
308
Depreciation, amortization, and (gain)
loss on disposal of property, plant and equipment (per statement of
cash flows)
6,975
6,515
Impairment of intangible assets
37,905
—
Impairment of property, plant and
equipment
153,337
—
Share of loss from investments in
associates and impairment loss from loan receivable
287
193
Unrealized loss (gain) on changes in fair
value of contingent consideration
(2,892
)
(3,422
)
Realized fair value on inventories sold
and other inventory charges
13,588
7,386
Unrealized (gain) loss on change in fair
value of biological assets
(8,395
)
(6,353
)
Share-based compensation (per statement of
cash flows)
1,325
761
COVID-19 related charges, net of
government subsidies and insurance recoveries
—
(335
)
Legal provisions (recoveries)
—
(310
)
Share issuance costs allocated to
derivative warrant liabilities and change in fair value of
derivative liabilities
(1,322
)
(5,904
)
Incremental fair value component of
inventories sold from acquisitions
—
700
ERP implementation costs
2,561
1,410
Transaction costs
538
1,424
Provisions (recoveries) and impairment of
inventories and biological assets and provisions of inventory to
net realizable value
5,578
(77
)
Research and development expenditures, net
of depreciation
3,257
1,308
Adjusted EBITDA
$
(2,914
)
$
583
The following table reconciles the Company's adjusted gross
margin to gross margin before fair value changes to biological
assets and inventories sold:
Adjusted Gross Margin Reconciliation
(in $000s unless otherwise indicated)
Q3-2023
Q3-2022
Net revenue
$
32,785
$
38,115
Cost of sales before adjustments
26,711
28,817
Adjusted gross margin
6,074
9,298
Adjusted gross margin %
19
%
24
%
Less:
Write-offs and impairment of inventories
and biological assets
2,823
(83
)
Provisions to net realizable value
2,755
6
Incremental fair value component on
inventories sold from acquisitions
—
700
Gross margin before fair value
adjustments
496
8,675
Gross margin % (before fair value
adjustments)
2
%
23
%
Add:
Realized fair value on inventories sold
and other inventory charges
(13,588
)
(7,386
)
Unrealized gain on changes in fair value
of biological assets
8,395
6,353
Gross margin
(4,697
)
7,642
Gross margin %
(14
)%
20
%
Canadian Recreational Market Introduction Highlights
As an industry leader and pure-play cannabis company, Organigram
remains committed to delivering consumer focused innovations and
products to the Canadian market. Q3 Fiscal 2023 saw the
introduction of a record-breaking 28 new SKUs to the market for
Organigram.
SHRED X Rip Strip Hash
- SHRED X Rip Strips, launched on February 27, 2023, delivers
hash to a new generation of consumers with 10 pre-cut, botanical
terpene-infused hash Rip Strips that can be easily rolled into any
joint.
SHRED'ems Grapple Juice Gummies
- Grapple Juice gummies are vegan-friendly indica gummies with a
mouthwatering grape and apple medley. Each pack contains 4 gummies,
infused with 2.5 mg of THC and 2.5 mg of CBG.
Holy Mountain GMO Tropical Reign (28g)
- Organigram has introduced one of its newest high THC cultivars,
Tropical Reign, in large format 28g bags, under its Holy Mountain
brand. Tropic Reign THC levels are testing as high as 27.6%.
Edison Limelight x Cobra Milk Combo Pack
- Cobra Milk is a new high potency cultivar from Organigram. This
product combines Cobra Milk and Limelight pinners in a combo pack
for consumers who value quality and variety.
Holy Mountain Live Resin Vapes
- Pure live resin vape carts in a 510 format to capture the
flower’s sweet, earthy and floral aromas.
SHRED X Heavies Infused Pre-Rolls
- Currently Canada's most potent infused pre-rolls clocking in at
over 40% THC, infused with botanical terpenes, diamonds, and
distillate
Research and Product Development
Product Development Collaboration ("PDC") and Centre of
Excellence ("CoE")
- Both the PDC and Organigram's commercial business are seeing
significant benefits both from a scientific development standpoint
and in terms of revenue driving commercial capability. The in house
extraction laboratory capabilities have resulted in imminent
commercialization of high potency THCV extract derived from
exclusive whole plant THCV flower, followed by THCV isolate for use
in Organigram's portfolio later this summer.
- Organigram has been able to test and learn about the inclusion
of several minor cannabinoids, which has allowed it to expand into
more complex minor cannabinoid stacks across several brand
portfolios in the Company's high speed, high throughput Winnipeg
Facility. The focus in all facilities has been rapid transfer from
R&D to commercial process to allow Organigram to fine tune
manufacturing operations in real time.
- The PDC is in late stage development of a suite of emulsions,
novel vapour formulations, flavour innovations, and packaging
solutions which are planned to be used alone, and in combination
across the Organigram portfolio of products.
- The broad focus messaged previously has been the development of
improved cannabinoid delivery, rapid and predictable onset and
products that target and satisfy a range of mood states. For
ingestible innovations, Organigram is currently beginning
recruitment for clinical studies after completing the initial
research and development, so that the Company can quantify and
substantiate the benefit of these innovations in a clinical
setting. Moving to clinical studies has been a key and significant
milestone in the development journey, and will provide a broad and
robust dataset validating our development so far allowing
Organigram to complete a number of work streams.
- Included in these clinical studies will be an ingestible
beverage format, with the inclusion of Organigram's emulsion
innovation. This is an exciting development for Organigram, as the
Company plans to enter the beverages category via a test launch in
the near future.
- Extensive evaluation of novel vape formulation aerosols versus
existing inhalation products in the category has been completed.
The supporting scientific data provides an industry leading vapour
data set that will serve as part of a foundation for future
development activities, including consumer safety, product quality
and performance.
- In the ingestibles space Organigram has completed and optimized
its in-house emulsions designed for improved bioavailability and
faster onset, and these are currently going through pre-clinical
validation studies.
- Organigram is aiming to test and learn this technology via a
small market launch in New Brunswick this fall and will be leading
with an easy to understand and consumer relevant functional claim
relating to onset that the Company believes will provide a
significant consumer benefit. The manufacturing trials of this
nano-emulsion-based gummy are already complete in our Winnipeg
facility as Organigram is now moving to large-scale runability
trials to allow for appropriate stability and validation prior to
test launch.
- The Biolab is continuing the development of genetic toolboxes
for research of key cannabis traits, which will accelerate R&D
activities and has already been used to support several plant
science discoveries that will eventually benefit Organigram’s
existing plant portfolio and long term growing strategies.
Immediate discovery has yielded early stage gender typing
capability and the Company is moving towards identification of
disease markers in the Cannabis plant with the goal of helping
accelerate rapid screening programs and continue optimizing the
quality and viability of Organigram flower.
Strategic Investment in Greentank
- On March 31, 2023, Organigram announced that it had entered
into a product purchase agreement (the "Purchase Agreement") with
Greentank a leading vaporization technology company and a
subscription agreement with Greentank's parent company, Weekend
Holdings Corp. ("WHC"). The Purchase Agreement provides Organigram
with an exclusivity period in Canada for the new technology
incorporated into 510 vape cartridges (along with other formats)
for use with cannabis, including the development of a custom
all-in-one device that will be proprietary to Organigram. Under the
terms of the subscription agreement, Organigram has subscribed for
preferred shares for an aggregate subscription price of US$4.0
million representing an approximate 2.6% interest in WHC.
Organigram’s investment combined with the Purchase Agreement is
expected to transform the Company's current and future vapour
hardware lineup across its portfolio of recreational brands. The
exclusivity period is until that date which is 18-months from the
date of Organigram’s initial shipment of Greentank’s 510 vape
cartridges to the Ontario Cannabis Retail Corporation and March 31,
2024 in the case of non-510 vapes.
Strategic Investment in Phylos Bioscience
- On May 25, 2023, Organigram announced its first strategic U.S.
investment in Phylos, a cannabis genetics company and provider of
production ready seeds, based in Portland, Oregon, to initiate a
wide-ranging technical and commercial relationship in Canada. Under
the terms of the agreement, Organigram will advance up to US $8
million to Phylos in three tranches structured as a convertible
loan. Organigram advanced Phylos an initial US $3.25 million on the
initial closing date of the agreement with a commitment to fund up
to an additional US $4.75 million over two tranches within 12 and
24 months from the initial closing date, upon the completion of
certain milestones. This innovation relationship is expected to
further support Organigram’s industry leading cultivation efforts
in Canada with patent-pending foundational technologies and
genetics that will support the Company's commercialization efforts
of THCV, a novel minor cannabinoid, and propel Organigram's
initiative to begin converting a portion of its cultivation space
to seed based production, which is anticipated to drive cost
savings and yield more consistent and robust cultivars.
International
- In Q3 Fiscal 2023, the Company reported international shipments
totaling $1.7 million to Australia.
- In May 2023, the Company signed an agreement with Sanity Group
to supply medical cannabis to the German market.
- Recent political changes and cannabis election ballot
initiatives for both medical and recreational use in the United
States suggest that the potential movements to U.S. federal
legalization of cannabis (THC) remain difficult to predict. In
addition to its recent investment in U.S. domiciled Phylos, the
Company continues to monitor and develop a potential U.S. entry
strategy that could include THC, CBD and other minor cannabinoids.
The Company continues to monitor recreational legalization
opportunities in European jurisdictions with a particular focus on
German opportunities based on the size of the addressable market
and recent regulatory changes.
Liquidity and Capital Resources
- On May 31, 2023, the Company had unrestricted cash of $53
million and restricted cash of $22 million for a total of $75
million. During the fiscal year the Company utilized cash for
capital expenditures of $22 million, investments of $11 million in
Greentank and Phylos, and $5 million in working capital
changes.
- For Fiscal 2023 the Company had approximately $10 million in
remaining capex committed to the three facilities.
- Organigram believes its capital position is healthy and that
there is sufficient liquidity available for the near to medium
term.
Capital Structure
in $000s
MAY 31, 2023
AUGUST 31,
2022
Current and long-term debt
180
235
Shareholders’ equity
301,987
508,058
Total debt and shareholders’ equity
302,167
508,293
in 000s
Outstanding common shares
321,970
313,816
Options
11,737
11,051
Warrants
16,944
16,944
Top-up rights
8,274
7,590
Restricted share units
3,618
2,346
Performance share units
1,065
265
Total fully-diluted shares
363,608
352,012
Outstanding basic and fully diluted share count as at July 13,
2023 is as follows6:
in 000s
JULY 13, 2023
Outstanding common shares
80,499
Options
2,917
Warrants
4,236
Top-up rights
2,061
Restricted share units
896
Performance share units
263
Total fully-diluted shares
90,872
Outlook7
The following outlook provides a description of management's
expectations regarding the Company's Q4 Fiscal 2023 performance and
may not be appropriate for other purposes. Actual results may vary
based on a variety of factors. See "Cautionary Note Regarding
Forward-Looking Statements" in this press release.
Net revenue
- Organigram currently expects Q4 Fiscal 2023 net revenue to be
higher than that of Q3 Fiscal 2023. This expectation is largely due
to growth OF the Company's expanded product line across multiple
categories, with a heavy focus on infused and tube-style
pre-rolls.
Adjusted gross margins8
- The Company expects to have adjusted gross margins increase in
Q4, 2023, with cost savings initiatives realized, improved
throughput from automation, and increased flower yields.
- Organigram has identified sales mix opportunities including
increasing sales from the higher-margin province of Quebec, and
increased sales from higher-margin derivative products.
Adjusted EBITDA9
- The Company expects to achieve positive Adjusted EBITDA in Q4
Fiscal 2023.
Cash flow
- While the Company expects to resume generating positive
Adjusted EBITDA, periods when the Company achieves significant
increases to sales will result in increases to receivables and this
will negatively impact cash from operating activities. The Company
forecasts a remaining cash capex spend of approximately $10 million
for Fiscal 2023 and if completed as planned during Fiscal 2023, the
Company expects to generate positive free cash flows ("FCF") by the
end of calendar 202310.
Third Quarter Fiscal 2023 Conference Call
The Company will host a conference call to discuss its results
with details as follows:
Date: July 14, 2023
Time: 8:00 am Eastern Time
To register for the conference call, please use this link:
https://conferencingportals.com/event/RUyBPhzX
To ensure you are connected for the full call, we suggest
registering a day in advance or at minimum 10 minutes before the
start of the call. After registering, a confirmation will be sent
through email, including dial in details and unique conference call
codes for entry. Registration is open through the live call.
To access the webcast:
https://events.q4inc.com/attendee/444750435
A replay of the webcast will be available within 24 hours after
the conclusion of the call at https://www.organigram.ca/investors
and will be archived for a period of 90 days following the
call.
Non-IFRS Financial Measures
This news release refers to certain financial performance
measures (including adjusted gross margin, adjusted gross margin %,
Adjusted EBITDA and free cash flow) that are not defined by and do
not have a standardized meaning under International Financial
Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board. Non-IFRS financial measures are used by
management to assess the financial and operational performance of
the Company. The Company believes that these non-IFRS financial
measures, in addition to conventional measures prepared in
accordance with IFRS, enable investors to evaluate the Company’s
operating results, underlying performance and prospects in a
similar manner to the Company’s management. As there are no
standardized methods of calculating these non-IFRS measures, the
Company’s approaches may differ from those used by others, and
accordingly, the use of these measures may not be directly
comparable. Accordingly, these non-IFRS measures are intended to
provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. Adjusted EBITDA is a non-IFRS measure that
the Company defines as net income (loss) before: financing costs,
net of investment income; income tax expense (recovery);
depreciation, amortization, reversal of/or impairment, (gain) loss
on disposal of property, plant and equipment (per the statement of
cash flows); share-based compensation (per the statement of cash
flows); share of loss from investments in associates and impairment
loss from loan receivable; change in fair value of contingent
consideration; change in fair value of derivative liabilities;
expenditures incurred in connection with research & development
activities (net of depreciation); unrealized (gain) loss on changes
in fair value of biological assets; realized fair value on
inventories sold and other inventory charges; provisions and
impairment of inventories and biological assets; provisions to net
realizable value of inventories; COVID-19 related charges;
government subsidies; legal provisions; incremental fair value
component of inventories sold from acquisitions; transaction costs;
and share issuance costs. Adjusted EBITDA is intended to provide a
proxy for the Company’s operating cash flow and derive expectations
of future financial performance for the Company, and excludes
adjustments that are not reflective of current operating
results.
Adjusted gross margin is a non-IFRS measure that the Company
defines as net revenue less cost of sales, before the effects of
(i) unrealized gain (loss) on changes in fair value of biological
assets; (ii) realized fair value on inventories sold and other
inventory charges; (iii) provisions and impairment of inventories
and biological assets; (iv) provisions to net realizable value; (v)
COVID-19 related charges; and (vi) unabsorbed overhead relating to
underutilization of the production facility and equipment, most of
which is related to non-cash depreciation expense.
Adjusted gross margin % is a non-IFRS measure that the Company
calculates by dividing adjusted gross margin by net revenue.
Management believes that this adjusted gross margin and adjusted
gross margin % both provide useful information to assess the
profitability of our operations as it represents the normalized
gross margin generated from operations and excludes the effects of
non-cash fair value adjustments on inventories and biological
assets, which are required by IFRS.
The most directly comparable measure to Adjusted EBITDA,
calculated in accordance with IFRS is net income (loss) and
beginning on page 4 of this press release is a reconciliation to
such measure. The most directly comparable measure to adjusted
gross margin calculated in accordance with IFRS is gross margin
before fair value changes to biological assets and inventories sold
and beginning on page 5 of this press release is a reconciliation
to such measure.
Free cash flows is a non-IFRS financial performance measure that
deducts capital expenditures from net cash provided by operating
activities. The Company believes this to be a useful indicator of
its ability to operate without reliance on additional borrowing or
usage of existing cash.
Free cash flows is intended to provide additional information
only and does not have any standardized definition under IFRS and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. Free cash
flows is not necessarily indicative of operating profit or cash
flow from operations as determined under IFRS. Other companies may
calculate this measure differently.
About Organigram Holdings Inc.
Organigram Holdings Inc. is a NASDAQ Global Select Market and
TSX listed company whose wholly-owned subsidiaries include
Organigram Inc. and Laurentian Organic Inc. licensed producers of
cannabis and cannabis-derived products in Canada, and The Edibles
and Infusions Corporation, a licensed manufacturer of
cannabis-infused edibles in Canada.
Organigram is focused on producing high-quality, indoor-grown
cannabis for patients and adult recreational consumers in Canada,
as well as developing international business partnerships to extend
the Company’s global footprint. Organigram has also developed a
portfolio of legal adult-use recreational cannabis brands,
including Edison, Holy Mountain, Big Bag O’ Buds, SHRED, Monjour
and Trailblazer. Organigram operates facilities in Moncton, New
Brunswick and Lac-Supérieur, Québec, with a dedicated manufacturing
facility in Winnipeg, Manitoba. The Company is regulated by the
Cannabis Act and the Cannabis Regulations (Canada).
Cautionary Note Regarding Forward Looking Statements
This news release contains forward-looking information.
Forward-looking information, in general, can be identified by the
use of forward-looking terminology such as “outlook”, “objective”,
“may”, “will”, “could”, “would”, “might”, “expect”, “intend”,
“estimate”, “anticipate”, “believe”, “plan”, “continue”, “budget”,
“schedule” or “forecast” or similar expressions suggesting future
outcomes or events. They include, but are not limited to,
statements with respect to expectations, projections or other
characterizations of future events or circumstances, and the
Company’s objectives, goals, strategies, beliefs, intentions,
plans, estimates, forecasts, projections and outlook, including
statements relating to the Company’s future performance, the
Company’s positioning to capture additional market share and sales
including international sales, expectations for consumer demand,
expected increase in SKUs, expected improvement to gross margins
before fair value changes to biological assets and inventories,
expectations regarding adjusted gross margins, Adjusted EBITDA and
net revenue in Fiscal 2023 and beyond, the Company's ability to
generate consistent free cash flow from operations, expectations
regarding cultivation capacity, the Company’s plans and objectives
including around the CoE and the Company's Bio Lab facility,
availability and sources of any future financing, expectations
regarding the impact of COVID-19, availability of cost efficiency
opportunities, the increase in the number of retail stores, the
ability of the Company to fulfill demand for its revitalized
product portfolio with increased staffing, expectations relating to
greater capacity to meet demand due to increased capacity at the
Company’s facilities, expectations around lower product cultivation
costs, the ability to achieve economies of scale and ramp up
cultivation, expectations pertaining to the increase of automation
and reduction in reliance on manual labour, expectations around the
launch of higher margin dried flower strains, expectations around
market and consumer demand and other patterns related to existing,
new and planned product forms including by EIC and Laurentian;
timing for launch of new product forms, ability of those new
product forms to capture sales and market share, estimates around
incremental sales and more generally estimates or predictions of
actions of customers, suppliers, partners, distributors,
competitors or regulatory authorities; continuation of shipments to
Canndoc Ltd., Cannatrek Ltd., Medcan and Sanity Group GmbH;
expectations around federal legalization of cannabis in the U.S.,
statements regarding the future of the Canadian and international
cannabis markets and, statements regarding the Company’s future
economic performance. These statements are not historical facts but
instead represent management beliefs regarding future events, many
of which, by their nature are inherently uncertain and beyond
management control. Forward-looking information has been based on
the Company’s current expectations about future events.
This news release contains information concerning our industry
and the markets in which we operate, including our market position
and market share, which is based on information from independent
third-party sources. Although we believe these sources to be
generally reliable, market and industry data is inherently
imprecise, subject to interpretation and cannot be verified with
complete certainty due to limits on the availability and
reliability of raw data, the voluntary nature of the data gathering
process, and other limitations and uncertainties inherent in any
statistical survey or data collection process. We have not
independently verified any third-party information contained
herein.
Forward-looking information involves known and unknown risks,
uncertainties and other factors that may cause actual events to
differ materially from current expectations. These risks,
uncertainties and factors include: the heightened uncertainty as a
result of COVID-19, including any continued impact on production or
operations, impact on demand for products, effect on third party
suppliers, service providers or lenders; general economic factors;
receipt of regulatory approvals or consents and any conditions
imposed upon same and the timing thereof; the Company's ability to
meet regulatory criteria which may be subject to change; change in
regulation including restrictions on sale of new product forms;
timing for federal legalization of cannabis in the U.S. and
changing regulatory conditions; change in stock exchange listing
practices; the Company's ability to manage costs, timing and
conditions to receiving any required testing results and
certifications; results of final testing of new products; timing of
new retail store openings being inconsistent with preliminary
expectations; changes in governmental plans including those related
to methods of distribution and timing and launch of retail stores;
timing and nature of sales and product returns; customer buying
patterns and consumer preferences not being as predicted given this
is a new and emerging market; material weaknesses identified in the
Company’s internal controls over financial reporting; the
completion of regulatory processes and registrations including for
new products and forms; market demand and acceptance of new
products and forms; unforeseen construction or delivery delays
including of equipment and commissioning; increases to expected
costs; competitive and industry conditions; change in customer
buying patterns; and changes in crop yields. These and other risk
factors are disclosed in the Company's documents filed from time to
time under the Company’s issuer profile on the Canadian Securities
Administrators’ System for Electronic Document Analysis and
Retrieval (“SEDAR”) at www.sedar.com and reports and other
information filed with or furnished to the United States Securities
and Exchange Commission (“SEC”) from time to time on the SEC’s
Electronic Document Gathering and Retrieval System (“EDGAR”) at
www.sec.gov, including the Company’s most recent MD&A and AIF.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
news release. The Company disclaims any intention or obligation,
except to the extent required by law, to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. Forward looking information is subject
to risks and uncertainties that are addressed in the “Risk Factors”
section of the MD&A dated July 13, 2023 and there can be no
assurance whatsoever that these events will occur.
1 Multiple sources (Hifyre, Weedcrawler, OCS wholesale sales and
e-commerce orders, shipped sales data and provincial boards
data)
2 Hifyre data extracted July 5, 2023
3 Cabannalytics - Ontario Retail, Sept-April, 2023
4 Adjusted gross margin is a non-IFRS financial measure not
defined by and does not have any standardized meaning under IFRS;
please refer to “Non-IFRS Financial Measures” in this press release
for more information.
5 Adjusted EBITDA is a non-IFRS financial measure not defined by
and does not have any standardized meaning under IFRS; please refer
to “Non-IFRS Financial Measures” in this press release for more
information.
6 The number of common shares, options, warrants, top-up rights,
restricted share units and performance share units outstanding of
the Company as at July 13, 2023 is adjusted to reflect the share
consolidation at a ratio of four (4) pre-consolidation common
shares for every post-consolidation common share which took effect
on July 5, 2023.
7 The disclosure in this section is subject to the risk factors
referenced in the “Risk Factors” section of the Company’s Q3 Fiscal
2023 MD&A, which is available on SEDAR under the Company's
profile at www.sedar.com, and has been furnished to the United
States Securities and Exchange Commission on Form 6-K and is
available on EDGAR on www.sec.gov. Without limiting the generality
of the foregoing, the expectations concerning revenue, adjusted
gross margins and SG&A are based on the following general
assumptions: consistency of revenue experience with indications of
fourth quarter performance to date, consistency of ordering and
return patterns or other factors with prior periods and no material
change in legal regulation, market factors or general economic
conditions. The Company disclaims any obligation to update any of
the forward-looking information except as required by applicable
law. See "Cautionary Note Regarding Forward Looking Statements" in
this press release.
8 Adjusted gross margin is a non-IFRS financial measure not
defined by and does not have any standardized meaning under IFRS;
please refer to “Non-IFRS Financial Measures” in this press release
for more information.
9 Adjusted EBITDA is a non-IFRS financial measure not defined by
and does not have any standardized meaning under IFRS; please refer
to “Non-IFRS Financial Measures” in this press release for more
information.
10 Free cash flow is a non-IFRS financial measure not defined by
and does not have any standardized meaning under IFRS; please refer
to “Non-IFRS Financial Measures” in this press release for more
information.
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version on businesswire.com: https://www.businesswire.com/news/home/20230713792265/en/
For Investor Relations enquiries, please contact: Max
Schwartz, Director of Investor Relations
investors@organigram.ca
For Media enquiries, please contact: Paolo De Luca, Chief
Strategy Officer paolo.deluca@organigram.ca
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