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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Organigram Holdings Inc | NASDAQ:OGI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.055 | 2.96% | 1.91 | 1.88 | 1.91 | 1.94 | 1.84 | 1.89 | 1,208,299 | 00:57:18 |
Achieves positive Adjusted EBITDA two quarters earlier than expected driven by record high net revenue for the Company of $31.8 million and a top 3 national market share position among Canadian LPs.
HIGHLIGHTS
Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), the parent company of Organigram Inc. (together, the “Company” or “Organigram”), a leading licensed producer of cannabis, announced its results for the second quarter ended February 28, 2022 (“Q2 Fiscal 2022”).
“The culture of innovation and consumer focus we are building at Organigram has enabled us to not only create brands that are embraced by consumers, but continually innovate within those brands and across multiple product lines. We expect that leveraging these brands will allow us to continue to drive market share,” said Beena Goldenberg, Chief Executive Officer. “In addition to our continued success at building beloved brands, our ability to increase sales in international markets and capitalize on our accretive acquisitions, such as Laurentian and EIC, continue to contribute to our solid gains in market presence and sales growth."
“We are also progressing well with the Laurentian integration. In less than three months we have been able to significantly increase distribution and begin to implement the synergies planned at acquisition. Automation to optimize production is also underway and expected to be complete by the end of Fiscal 2022,” added Goldenberg.
Select Key Financial Metrics (in $000s unless otherwise indicated)
Q2-2022
Q2-2021
% Change
Gross revenue
43,934
19,292
128 %
Excise taxes
(12,098)
(4,649)
160 %
Net revenue
31,836
14,643
117 %
Cost of sales
24,955
31,146
(20) %
Gross margin before fair value changes to biological assets & inventories sold
6,881
(16,503)
nm
Realized fair value on inventories sold and other inventory charges
(5,314)
(7,208)
nm
Unrealized gain (loss) on changes in fair value of biological assets
7,502
6,516
nm
Gross margin
9,069
(17,195)
nm
Adjusted gross margin1
8,255
(680)
nm
Adjusted gross margin %1
26 %
(5) %
nm
Selling (including marketing), general & administrative expenses2
13,998
10,329
36 %
Adjusted EBITDA1
1,556
(7,840)
nm
Net loss
(4,047)
(66,389)
nm
Net cash used in operating activities
(803)
(10,430)
nm
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 the Company’s Q2 Fiscal 2022 MD&A for definitions and a reconciliation to IFRS. 2 Excluding non-cash share-based compensation. nm - not meaningful
Select Balance Sheet Metrics (in $000s)
FEBRUARY 28, 2022
AUGUST 31, 2021
% Change
Cash & short-term investments
150,745
183,555
(18) %
Biological assets & inventories
56,187
48,818
15 %
Other current assets
29,627
28,242
5 %
Accounts payable & accrued liabilities
25,551
18,952
35 %
Current portion of long-term debt
80
80
— %
Working capital
189,597
234,349
(19) %
Property, plant & equipment
240,924
235,939
2 %
Long-term debt
192
230
(17) %
Total assets
585,102
554,017
6 %
Total liabilities
71,716
74,212
(3) %
Shareholders’ equity
513,386
479,805
7 %
“The additional revenue from Laurentian, and continued growth in recreational and B2B sales, combined with improving margins through improved operational efficiencies, allowed us to achieve positive Adjusted EBITDA two quarters earlier than originally projected,” stated Derrick West, Chief Financial Officer. "Our strong balance sheet and cash position as well as the completion of our facility expansion to meet market demand, positions us well to deliver sustained value to our shareholders.”
Key Financial Results for the Second Quarter Fiscal 2022
The following table reconciles the Company's adjusted EBITDA.
Adjusted EBITDA Reconciliation (in $000s unless otherwise indicated)
Q2-2022
Q2-2021
Net loss as reported
$ (4,047)
$ (66,389)
Add/(Deduct):
Financing costs, net of investment income
(217)
669
Income tax recovery
(97)
—
Depreciation, amortization, and gain (loss) on disposal of property, plant and equipment (per statement of cash flows)
11,024
5,222
Impairment of intangible assets
—
—
Impairment of property, plant and equipment
2,000
—
Share of loss and impairment loss from loan receivable and investments in associates
499
844
Unrealized (gain) loss on changes in fair value of contingent consideration
666
154
Realized fair value on inventories sold and other inventory charges
5,314
7,208
Unrealized gain (loss) on change in fair value of biological assets
(7,502)
(6,516)
Share-based compensation (per statement of cash flows)
877
1,167
COVID-19 related charges, net of government subsidies
—
(2,709)
Legal provisions
—
500
Share issuance costs allocated to derivative warrant liabilities and change in fair value of derivative liabilities
(10,633)
37,659
Incremental fair value component of inventories sold from acquisitions
663
—
Acquisition transaction costs
1,148
—
Provisions and impairment of inventories and biological assets and provisions of inventory to net realizable value
711
13,549
Research and development expenditures
1,150
802
Adjusted EBITDA
$ 1,556
$ (7,840)
The following table reconciles the Company's adjusted gross margin:
Adjusted Gross Margin Reconciliation (in $000s unless otherwise indicated)
Q2-2022
Q2-2021
Net revenue
$ 31,836
$ 14,643
Cost of sales before adjustments
23,581
15,323
Adjusted Gross margin
8,255
(680)
Adjusted Gross margin %
26 %
(5) %
Less:
Provisions (recoveries) and impairment of inventories and biological assets
686
10,050
Provisions to net realizable value
25
3,499
Incremental fair value component on inventories sold from acquisitions
663
—
Unabsorbed overhead
—
2,274
Gross margin before fair value adjustments
6,881
(16,503)
Gross margin % (before fair value adjustments)
22 %
(113) %
Add/(Deduct):
Realized fair value on inventories sold and other inventory charges
(5,314)
(7,208)
Unrealized gain on changes in fair value of biological assets
7,502
6,516
Gross margin(1)
9,069
(17,195)
Gross margin %(1)
28 %
(117) %
Canadian Recreational Market
SHRED X 510 vape cartridges
SHRED X kief-infused blends
Edison new strains
SHRED'ems line extensions
Big Bag O' Buds line extension
Research and Product Development
Product Development Collaboration ("PDC") and Centre of Excellence ("CoE")
Plant Science, Breeding and Genomics R&D in Moncton
Strategic Investment in Hyasynth Biologicals Inc. ("Hyasynth")
International
Liquidity and Capital Resources
Capital Structure
in $000s
FEBRUARY
28, 2022
AUGUST
31, 2021
Current and long-term debt
272
310
Shareholders’ equity
513,386
479,805
Total debt and shareholders’ equity
513,658
480,115
in 000s
Outstanding common shares
313,690
298,786
Options
7,783
7,797
Warrants
16,944
16,944
Top-up rights
6,382
6,559
Restricted share units
1,352
1,186
Performance share units
269
472
Total fully-diluted shares
346,420
331,744
Outstanding basic and fully diluted share count as at April 11, 2022 is as follows:
in 000s
APRIL 11, 2022
Outstanding common shares
313,690
Options
7,764
Warrants
16,944
Top-up rights
6,541
Restricted share units
1,352
Performance share units
269
Total fully-diluted shares
346,560
Outlook5
Net revenue
Adjusted gross margins
Second Quarter Fiscal 2022 Conference Call
The Company will host a conference call to discuss its results with details as follows: Date: April 12, 2022 Time: 8:00am 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/457187993
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 and adjusted EBITDA) 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. Please refer to the Company’s Q2 Fiscal 2022 MD&A for definitions and, in the case of adjusted EBITDA, a reconciliation to IFRS amounts.
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, 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).
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, expectations for consumer demand, expected increase in SKUs, expected improvement to gross margins before fair value changes to biological assets and inventories, expectations regarding gross margins in Fiscal 2022, the Company’s plans and objectives including around the CoE, 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. and Cannatrek Ltd.; 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.
Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual events to differ materially from current expectations. Important factors - including 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, ability to meet regulatory criteria which may be subject to change, change in regulation including restrictions on sale of new product forms, changing listing practices, 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 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, customer buying patterns and crop yields - that could cause actual results to differ materially from the Company's expectations 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 April 11, 2022 and there can be no assurance whatsoever that these events will occur.
____________________________
1 Hifyre data extract from March 25, 2022 2 Adjusted gross margin is a non-IFRS financial measure not defined by and does not have any standardized meaning under IFRS; please refer to the Company’s Q2 2022 MD&A for definitions and a reconciliation to IFRS. 3 Adjusted EBITDA is a non-IFRS financial measure not defined by and does not have any standardized meaning under IFRS; please refer to the Company’s Q2 2022 MD&A for definitions and a reconciliation to IFRS. 4 Hifyre data extract from March 25, 2022 5 The disclosure in this section are subject to the risk factors referenced in the “Risk Factors” section of the Company’s Q2 Fiscal 2022 MD&A, which is available in the Company's profile at www.sedar.com. 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 second 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 statement in the “Introduction” section at the beginning of the Company’s Q2 Fiscal 2022 MD&A. 6 Hiyre data extract from April 4, 2022
View source version on businesswire.com: https://www.businesswire.com/news/home/20220412005509/en/
For Investor Relations enquiries, please contact: investors@organigram.ca
For Media enquiries, please contact: Megan McCrae, Senior Vice President, Marketing and Communications megan.mccrae@organigram.ca
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