Im Cannabis Corp ((TSE:IMCC)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for IM Cannabis Corp reflected a generally positive sentiment, highlighting significant growth and improvements, particularly in the German market. The company reported a reduction in operating expenses and a move towards positive EBITDA. However, challenges such as decreased revenue in Israel, increased cost of sales, and a slight increase in net loss for the year were also noted.
Extraordinary Growth in German Market
Following the partial legalization of cannabis in Germany in April 2024, IM Cannabis experienced extraordinary growth in this market. Sales in Germany increased by over 183% in 2024 compared to 2023, reaching $15.5 million. This remarkable growth led to Germany accounting for 40% of the company’s total revenue in the second half of 2024, a significant increase from 11% in 2023.
Improvement in EBITDA
IM Cannabis reported a notable improvement in its adjusted EBITDA, with a gain of $0.5 million in Q4 2024 compared to a loss of $4.3 million in Q4 2023. For the full year, the adjusted EBITDA loss decreased from $8 million in 2023 to $1.1 million in 2024, marking an improvement of almost $7 million.
Significant Reduction in Operating Expenses
The company achieved a significant reduction in operating expenses, which were cut by $4 million or 17% in 2024, bringing the total to $18.7 million. This follows a previous reduction of 43% in 2023, resulting in a total decrease of 53% since 2022.
Successful Cost Management and Efficiency
IM Cannabis demonstrated successful cost management and efficiency, with a 42% decrease in operating expenses in Q4 2024 compared to Q4 2023. Additionally, general and administrative expenses and selling and marketing expenses were reduced by 27% and 34%, respectively, in 2024 compared to 2023.
Decreased Revenue in Israel
Despite the growth in Germany, the company faced challenges in Israel, where revenue decreased by $4.8 million net. This decline was primarily due to the cancellation of the Oranim deal, which resulted in a decrease in revenue of approximately $8.5 million compared to 2023.
Increased Cost of Revenue
The cost of revenue for 2024 increased by $7.6 million or 20% compared to 2023. This increase was mainly due to a rise in material costs of approximately $8.1 million, including clearing all raw materials of approximately $3.9 million.
Net Loss for the Year
IM Cannabis reported a net loss of $11.8 million in 2024, compared to $10.2 million in 2023. The diluted loss per share for 2024 was $4.51, slightly higher than the loss of $4.45 per share in 2023.
Cash and Cash Equivalents Decrease
The company’s cash and cash equivalents decreased to $0.9 million as of December 31, 2024, down from $1.8 million at the end of 2023, indicating a reduction in liquidity.
Forward-Looking Guidance
Looking ahead to 2025, IM Cannabis plans to leverage its integrated supply chain in Germany to drive further growth while maintaining operational efficiency. The company aims to build on its recent achievements, including a significant turnaround in Q4 2024 with an adjusted EBITDA gain and a substantial reduction in operating expenses. The focus will be on sustaining growth in the German market, which has become a major revenue driver.
In conclusion, the earnings call for IM Cannabis Corp painted a picture of a company on the rise, with significant growth in the German market and improved financial metrics. While challenges remain, particularly in Israel and with increased costs, the company’s strategic focus on Germany and operational efficiency bodes well for future performance.