Announces Earnings Call for Fiscal Q4 and
Full Year 2019 Results
Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), the parent
company of Organigram Inc. (the “Company” or “Organigram”), a
leading licensed producer of cannabis, provided a corporate update
today and announced details for its fiscal fourth quarter ended
August 31, 2019 (“Q4 2019”) and full year 2019 conference call. The
Company is scheduled to report its fourth quarter and full year
earnings results for its fiscal year ended August 31, 2019 on
Monday, November 25, 2019 before market open.
Fiscal Fourth-Quarter and Full Year 2019
For the fiscal full year 2019, the Company expects to report
year-over-year growth in net revenue of approximately 547% to about
$80.4 million as well as positive adjusted EBITDA for the year. Net
revenue (after excise taxes) for Q4 2019 is expected to be
approximately $16.3 million, which reflects about $20.0 million of
shipments in the quarter and about $3.7 million in provisions for
product returns and pricing adjustments. Lower Q4 2019 net revenue
(compared to third quarter net revenue of approximately $24.8
million) and about $1.6 million of packaging and inventory
adjustments (charged to cost of sales) in the quarter are expected
to contribute to negative adjusted EBITDA for Q4 2019.
For Q4 2019, the Company also expects to report sequential
improvement in the cost of cultivation per gram and overall
harvested volume as its yield per plant returned to normalized
levels following a temporary decline in the third quarter of fiscal
2019 (“Q3 2019”). As first discussed in its third quarter earnings
report, the cannabinoid content in Organigram’s harvested flower
and sweet leaf has continued to reach all-time highs and the
Company has identified what it views as an optimal balance of high
yields and high cannabinoid content.
“While Q4 2019 did not meet our overall expectations, we have
not only emerged as one of the national leaders in the industry
with significant growth expected in net revenue and strong market
share, we expect to report positive adjusted EBITDA for the year,”
said Greg Engel, CEO. “And we remain relentlessly focused on
running a profitable business which earns attractive returns on
investment for our shareholders over the near and long term. We are
encouraged by Ontario’s recent announcement to expand the retail
network and believe this should be an important catalyst to drive
further growth for us and the industry as a whole.”
The lack of a sufficient retail network and slower than expected
store openings in Ontario continued to impact sales in Q4 2019 and
were further exacerbated by increased industry supply. The majority
of the product returns and price adjustments (of about $3.7
million) was largely due to returns and price adjustments for two
slower selling SKUs sold to the Ontario Cannabis Store (OCS),
comprised of a bespoke order of lower THC dried flower intended to
fulfill a supply gap in the market earlier this year and THC oil
which has seen less than anticipated demand in the adult-use
recreational market.
Organigram has and continues to build excised finished product
across a variety of SKUs and is ready to onboard the addition of
the second wave of Ontario retail licensed lottery winners (both
traditional and First Nations licenses granted or available). These
stores should triple the existing retail network currently
available in Ontario. The first few of these new stores are
expected to open shortly.
Market Share and Retail Sell Through
Organigram believes market share is an important indication of
success for a licensed producer (“LP”) as sell through to end
consumers is a strong predictor of long-term sustainable revenue.
This is particularly relevant for LPs with strong distribution like
Organigram which has sales in all 10 Canadian provinces.
The Company receives market share results from some Canadian
provinces. Based on this information and other data points that are
accessible to the Company, Organigram believes it has an enviable
market share in the national adult-use recreational market. In
Ontario, Organigram continues to be one of the major players in
this market. On the first anniversary of adult-use recreational
legalization, the Company noted the OCS reported its Edison brand
had the top three selling pre-rolls in the province with its City
Lights, Rio Bravo and Casablanca strains taking the top three
positions, respectively1. In addition, Rio Bravo and Casablanca
were highlighted as two of the top five strains ordered on the OCS
website.2
“Since we were one of the first success stories following
legalization, we had early visibility of product sell through. As
such, we are already well underway in aligning our strategy and
production mix to emerging consumer preferences,” said Mr. Engel.
“We have also piloted ‘limited time’ offers of other strains. Two
in particular have been met with exceptional customer feedback:
Edison Limelight (sativa) and Edison El Dorado (hybrid) and as
such, we are incorporating these new strains into our core
offerings.”
Liquidity and Balance Sheet
The Company believes it has sufficient liquidity and capital to
fund operations and complete the expansion of its Moncton
Campus.
As at the end of Q4 2019, the Company expects to report about
$47.9 million in cash and short-term investments and about $49.6
million in current and long-term debt, which primarily represents
the carrying value of its term loan. Subsequent to Q4 2019, an
additional $15.0 million was drawn on its term loan leaving about
$50.0 million in available capacity of the total term loan of
$115.0 million. The Company also has a revolver of up to $25.0
million available to be drawn against specified receivables.
On November 4, 2019, the Company filed a preliminary base-shelf
prospectus for an amount up to $175.0 million through the issuance
of common shares, preferred shares, debt securities, subscription
receipts, warrants or units. In order to take advantage of raising
funds by way of the base-shelf prospectus, the Company would be
required to file a final base-shelf prospectus and one or more
prospectus supplements. The purpose of filing the base-shelf
prospectus is to shorten the timeline to raise funds for growth
opportunities and working capital.
Outlook
At this point in the first quarter of fiscal 2020 (ending
November 30, 2019) (“Q1 2020”), the Company has shipped more sales
compared to the same point in Q4 2019. The Company believes it is
neither possible nor prudent to provide any further guidance given
the dynamic forces and uncertainty in the industry today.
Beyond fiscal Q1 2020, the Company remains on track to launch
vape pens in mid-December followed by cannabis-infused chocolate
products in calendar Q1 2020 and now expects its shelf stable,
water-compatible, flavorless nano-emulsion powdered beverage
product in calendar Q2 2020 based on expected licensing for the
production area and equipment delivery and commissioning schedules.
Organigram submitted new product notifications to Health Canada for
a vape pen portfolio and cannabis infused chocolates last
month.
The Company also received its research and development license
from Health Canada last month to conduct further in-house research,
including taste testing, to strive for the optimal consumer
experience.
Important Information Regarding Financial Statement Figures
Cited
The preliminary estimated financial results and other data for
the three months and fiscal year ended August 31, 2019 set forth
above are unaudited and subject to the completion of the Company's
financial closing procedures. This data has been prepared by, and
is the responsibility of, the Company's management. Organigram's
independent registered public accounting firm, Deloitte LLP, is in
the process of performing year-end audit procedures with respect to
the accompanying preliminary financial results and other data, and
accordingly does not express an opinion or any other form of
assurance with respect thereto. The Company currently expects that
its final results of operations and other data will be consistent
with the estimates set forth above, but such estimates are
preliminary and Organigram's actual results of operations and other
data could differ materially from these estimates due to the
completion of its fiscal year-end audit procedures, final
adjustments, and other developments that may arise between now and
the time such annual audited consolidated financial statements for
the year ended August 31, 2019 are released.
The Company defines adjusted EBITDA as net income (loss)
excluding interest income (expense), accretion, income taxes,
depreciation, amortization, changes in fair value of inventory
sold, changes in fair value of biological assets, share-based
compensation, changes in fair value of financial instruments, gains
and losses on deemed disposal, and non-cash impairment of equity
investments, goodwill and intangible assets.
Fiscal Q4 and Full Year 2019 Conference Call
The Company is scheduled to report its fourth quarter and full
year earnings results for its fiscal year ended August 31, 2019 on
Monday, November 25, 2019 before market open. The Company will host
a conference call to discuss its results:
Date: November 25, 2019
Time: 8:00 a.m. Eastern Time
Toll Free (North America) Dial-In Number: 1-866-211-4093
International Dial-In Number: 647-689-6727
Webcast:
https://event.on24.com/wcc/r/2081952/4BA98522DEFFE3F5758620EC23384882
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.
******
About Organigram Holdings Inc.
Organigram Holdings Inc. is a NASDAQ Global Select and TSX
listed company whose wholly owned subsidiary, Organigram Inc., is a
licensed producer of cannabis and cannabis-derived products 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
The Edison Cannabis Company, Ankr Organics and Trailblazer.
Organigram's primary facility is located in Moncton, New Brunswick
and the Company is regulated by the Cannabis Act and the Cannabis
Regulations (Canada).
This news release contains forward-looking information. Often,
but not always, forward-looking information can be identified by
the use of words such as “plans”, “expects”, “estimates”,
“intends”, “anticipates”, “believes” or variations of such words
and phrases or state that certain actions, events, or results
“may”, “could”, “would”, “might” or “will” be taken, occur or be
achieved. Forward-looking information involves known and unknown
risks, uncertainties and other factors that may cause actual
results, events, performance or achievements of Organigram to
differ materially from current expectations or future results,
performance or achievements expressed or implied by the
forward-looking information contained in this news release. Risks,
uncertainties and other factors involved with forward-looking
information could cause actual events, results, performance,
prospects and opportunities to differ materially from those
expressed or implied by such forward-looking information include
actual product sell-through and returns, ability to comply with the
terms and conditions of its credit facility from time to time,
costs of construction, emerging industry trends, actual audited
results and including risks as disclosed in the Company’s most
recent annual information form, management’s discussion and
analysis and other Company documents filed from time to time on
SEDAR (see www.sedar.com) and filed or furnished to the Securities
and Exchange Commission on EDGAR (see www.sec.gov). Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
Although the Company believes that the assumptions and factors used
in preparing the forward-looking information in this news release
are reasonable, undue reliance should not be placed on such
information and no assurance can be given that such events will
occur. The forward-looking information included in this news
release are made as of the date of this news release and the
Company disclaims any intention or obligation, except to the extent
required by law, to update or revise any forward-looking
information, whether as a result of new information, future events
or otherwise. We seek safe harbor.
For more information about Organigram please visit
www.Organigram.ca
1 https://ocs.ca/blogs/shopping-at-ocs/top-sellers-of-2019
2 https://ocs.ca/blogs/shopping-at-ocs/infographic
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version on businesswire.com: https://www.businesswire.com/news/home/20191111005672/en/
For Investor Relations enquiries, please contact: Amy Schwalm
Vice President, Investor Relations amy.schwalm@organigram.ca (416)
704-9057
For media enquiries, please contact: Ray Gracewood Senior Vice
President, Marketing and Communications rgracewood@organigram.ca
(506) 645-1653
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