OrganiGram Holdings ((TSE:OGI)) has held its Q1 earnings call. Read on for the main highlights of the call.
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During the latest earnings call, OrganiGram Holdings expressed a generally positive sentiment, highlighting robust growth in market share and international sales. The company celebrated successful product launches and noted improvements in operational efficiency. Despite these successes, challenges in the competitive edibles market and seasonal impacts on margins were acknowledged, alongside an increased net loss due to accounting adjustments.
Strong Market Share Growth
Organigram reported a significant expansion in its national market share, increasing by 500 basis points year-over-year and 100 basis points sequentially. The company now holds the number one position in the vapes and pre-rolls categories on a national level, marking a notable achievement in its market positioning.
Successful Product Launches
The Edison Sonics gummy was highlighted as a successful new product, with demand surpassing initial expectations. This product became a top 10 offering in markets such as New Brunswick and BC, demonstrating Organigram’s effective product development strategies.
International Expansion
International sales have been a key growth area for Organigram, with sales increasing 2.3 times year-over-year to $3.3 million. The company is particularly optimistic about future growth in Germany, supported by the anticipated EU GMP certification of its Moncton facility.
Operational Efficiency Improvements
The company has made strides in operational efficiency, notably with the Winnipeg distribution optimization resulting in $400,000 in annual savings. The Motif acquisition is expected to deliver $10 million in annualized savings within 24 months, with early benefits already seen in manufacturing and sales.
Competitive Edibles Market
Challenges were noted in the edibles market, where Organigram faced a decline in market share. This was attributed to the influx of low-cost single-count gummies and price compression, posing a significant competitive challenge.
Seasonal Impact on Margins
Organigram experienced a decrease in its adjusted gross margin from 37% to 33% sequentially. This decline was mainly due to seasonally lower volumes and competitive pressures in the gummy category, affecting overall profitability.
Increased Net Loss
The company reported a net loss of $23 million for the quarter, compared to $15.8 million in the previous year. This increase was primarily due to a $18.9 million fair value loss related to BAT top-up rights, reflecting ongoing financial adjustments.
Guidance for Fiscal 2025
Looking ahead, Organigram provided guidance for fiscal 2025, projecting a 17% increase in net revenue to $42.7 million from the same quarter last year, driven by strong performances from its flagship brands SHRED and BOXHOT. The company anticipates its adjusted gross margin to stabilize around 35%, with $5 million in savings from the Motif acquisition expected in fiscal 2025. Organigram also aims for positive cash flow from operations by year’s end, bolstered by international expansion and increased flower output.
In summary, the earnings call from OrganiGram Holdings highlighted a mix of successes and challenges. The company has achieved significant market share growth, particularly in the vapes and pre-rolls categories, and is making strides in international markets. However, competitive pressures in the edibles segment and seasonal effects on margins present ongoing challenges. Looking forward, the company is optimistic about its fiscal 2025 prospects, expecting further market share gains, operational savings, and positive cash flow.
