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, 2021 (“Q2 2021”).
“Although Q2 2021 results were challenged by industry dynamics, COVID-19 and staffing limitations at our facility, we believe there are excellent prospects ahead for the industry, Organigram and our shareholders,” said Greg Engel, Chief Executive Officer of Organigram. “Nearer term, we are currently tracking to generate higher revenue in Q3 2021 as our new product portfolio continues to gain traction and we become better staffed to fulfill demand. Our recent acquisition of The Edibles and Infusions Corporation positions us to generate revenue from the largest single category of edibles, soft chews or gummies. We also see the potential for meaningful gross margin improvement over time as we revitalize our dried flower portfolio with new Edison and Indi strains and execute on a number of opportunities including the refinement of our cultivation, post harvesting and packaging processes. Longer term, we are extremely excited about developing innovative and appealing products to consumers in collaboration with BAT. All of this is made possible and supported by strong liquidity and a balance sheet that is largely debt-free.”
Select Key Financial Metrics (in $000s) unless otherwise indicated | Q2 2021 | Q2 2020 | % Change |
Gross revenue | 19,292 | 27,309 | -29% |
Excise taxes | (4,649) | (4,088) | 14% |
Net revenue | 14,643 | 23,221 | -37% |
Cost of sales | 31,146 | 15,811 | 97% |
Gross margin before fair value changes to biological assets, inventories sold, and other charges | (16,503) | 7,410 | -323% |
Fair value changes to biological assets, inventories sold, and other charges | (692) | 3,878 | -118% |
Gross margin | (17,195) | 11,288 | -252% |
Adjusted gross margin* | (680) | 8,449 | -108% |
Adjusted gross margin %* | -5% | 36% | -41% |
SG&A** | 11,131 | 14,018 | -21% |
Adjusted EBITDA* | (8,642) | (59) | nm |
Net loss | (66,389) | (6,833) | 872% |
Net cash provided used in operating activities | (10,430) | (10,894) | -4% |
nm – not meaningful |
* 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 2021 MD&A for definitions and a reconciliation to IFRS. |
** Sales and marketing and general and administrative expenses (“SG&A”) excluding non-cash share-based compensation. |
Select Balance Sheet Metrics (in $000s) | 28-Feb-21 | 31-Aug-20 | % Change |
Cash & short-term investments | 71,123 | 74,728 | -5% |
Biological assets & inventories | 43,374 | 71,759 | -40% |
Other current assets | 17,757 | 23,717 | -25% |
Accounts payable & accrued liabilities | 13,808 | 17,486 | -21% |
Current portion of long-term debt | 6,048 | 11,595 | -48% |
Working capital | 112,398 | 141,123 | -26% |
Property, plant & equipment | 240,253 | 247,420 | -3% |
Long-term debt | 52,759 | 103,671 | -49% |
Total assets | 392,764 | 435,127 | -10% |
Total liabilities | 125,535 | 135,600 | -7% |
Shareholders’ equity | 267,229 | 299,527 | -11% |
Key Financial Results for the Second Quarter Fiscal 2021
Canadian Adult-Use Recreational Market
Rec 1.0
Higher Margin Edison and Indi Dried Flower Strains
Value segment offerings
Rec 2.0
Cannabis-Infused Chocolates
Vapes
Research and Product Development
Outlook
Net Revenue
Adjusted Gross Margins
Selling, general and administrative (SG&A) expenses
International
Liquidity and Capital Resources
Capital Structure
in $000s | 28-Feb-21 | 31-Aug-20 |
Current and long-term debt | 58,807 | 115,266 |
Shareholders’ equity | 267,229 | 299,527 |
Total debt and shareholders’ equity | 326,036 | 414,793 |
in 000s |
|
|
Outstanding common shares | 234,811 | 194,511 |
Options | 7,981 | 9,029 |
Warrants | 16,989 | - |
Restricted share units | 1,192 | 893 |
Performance share units | 481 | 127 |
Total fully-diluted shares | 261,454 | 204,560 |
Outstanding basic and fully diluted share count as at April 11, 2021 is as follows:
in 000s | 11-Apr-21 |
Outstanding common shares | 298,233 |
Options | 7,921 |
Warrants | 16,951 |
Restricted share units | 1,185 |
Performance share units | 467 |
Total fully-diluted shares | 324,756 |
Second Quarter Fiscal 2021 Conference Call
The Company will host a conference call to discuss its results with details as follows:
Date: April 13, 2021
Time: 8:00am Eastern Time
To register for the conference call, please use this link:
http://www.directeventreg.com/registration/event/1957647
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://event.on24.com/wcc/r/3079347/ADF4D345BD5DF5386FDEF631BD132518
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 2021 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 a Toronto Stock Exchange listed company whose wholly owned subsidiaries include Organigram Inc., a licensed producer of cannabis and cannabis-derived products in Canada and The Edibles and Infusions Corporation, a cannabis infused soft chew and confectionary manufacturer 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 adult use recreational cannabis brands including The Edison Cannabis Company, Indi, Bag o’ Buds, SHRED and Trailblazer. Organigram's primary facility is located in Moncton, New Brunswick with another leased manufacturing facility in Winnipeg, Manitoba. The Company is regulated by Health Canada under the Cannabis Act (Canada) 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, expected improvement to gross margins before fair value changes to biological assets and inventories, expectations regarding higher revenue, the Company’s plans and objectives including around its credit facility, availability and sources of any future financing; expectations regarding the impact of COVID-19, expectations around market and consumer demand and other patterns related to existing, new and planned product forms including by EIC; 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; expectations regarding Good Agricultural Practice certification by the Control Union Medical Cannabis Standard (“CUMCS”), and resumption of shipments to Canndoc Ltd.; statements regarding the future 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 to receive 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, successful completion of the inspection for the Good Agricultural and Collecting Practices certification by CUMCS, 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”) and available 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 available from time to time. 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.
1 January, February, and March 2021 as well as November and December 2020 |
2 Based on the outstanding balance of approximately $58.5 million at the time of repayment |
3 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 2021 MD&A for definitions and a reconciliation to IFRS. |
4 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 2021 MD&A for definitions and a reconciliation to IFRS. |
Last Trade: | US$1.75 |
Daily Change: | -0.07 -3.85 |
Daily Volume: | 310,891 |
Market Cap: | US$181.650M |
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