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Organigram Reports First Quarter Fiscal 2020 Results  

January 14, 2020 GMT

MONCTON, New Brunswick--(BUSINESS WIRE)--Jan 14, 2020--

Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), the parent company of Organigram Inc. (the “Company” or “Organigram”), a leading licensed producer of cannabis, is pleased to announce its results for the first quarter ended November 30, 2019 (“Q1” or “Q1 2020”).

(in 000s)

Q1-2020

Q1-2019

% Change

Select Key Financial Metrics

 

 

 

Gross revenue

28,448

14,479

96%

Excise taxes

(3,295)

(2,040)

62%

Net revenue

25,153

12,439

102%

Cost of sales

15,811

3,618

337%

Gross Margin (GM) before fair value changes to biological assets & inventories

9,342

8,821

6%

Fair value changes to biological assets & inventories

1,852

42,925

(96%)

Gross margin

11,194

51,746

(78%)

Sales & marketing and general & administrative (SG&A)

9,418

4,528

108%

Net income (loss) from continuing ops

(863)

29,517

(103%)

GM before fair value changes to biological assets & inventories as % of net revenue

37%

71%

(34%)

SG&A as a % of net revenue

37%

36%

1%

 

 

 

 

Adjusted EBITDA 2

4,867

6,839

(29%)

Adjusted EBITDA as a % of net revenue 2

19%

55%

(36%)

Select Balance Sheet Metrics (in 000s)

November 30, 2019

August 31, 2019

% Change

Cash & Short-Term Investments

34,132

47,935

(29%)

Biological Assets & Inventories

125,206

113,796

10%

Other Current Assets

32,427

34,550

(6%)

A/P and Other Current Liabilities

48,972

43,864

12%

Working Capital

142,793

152,417

(6%)

Property, Plant & Equipment

261,083

218,470

20%

Long-Term Debt

78,418

46,067

70%

Total Assets

469,484

428,525

10%

Total Liabilities

140, 663

101,519

39%

Shareholders’ Equity

328,821

327,006

1%

“Despite ongoing industry challenges, we are pleased with solid Q1 2020 results and our return to positive adjusted EBITDA during the quarter, said Greg Engel, CEO. Our team was also successful in shipping the first of our Rec 2.0 products as planned and on schedule in December of 2019. We also look forward to the launch of the remainder of our vape pen portfolio followed soon after by our premium cannabis-infused chocolate products. In addition to an exciting line-up of 2.0 products, we are rolling out a couple of new core strains, such as our high THC Edison Limelight, across the country following their success as limited-time-offers in smaller markets.”

Key Financial Results for the First Quarter Fiscal 2020

Key Commentary on Q1 2020 Results vs Q4 2019

Adult-Use Recreational Launch 2.0 (“Rec 2.0”) – Derivative and Edible Products

Phase 4 Expansion

Phase 5 Under Refurbishment

Outlook

Liquidity and Capital

Capital Structure

(in $000s except for share amounts)

November 30, 2019

August 31, 2019

 

 

 

Current and long-term debt

$ 84,499

$ 49,576

Shareholders’ equity

328,821

327,006

Total debt and shareholders’ equity

$ 413,320

$ 376,582

Outstanding common shares

156,243

156,196

Options

9,086

8,833

Restricted share units

1,061

842

Performance share units

142

-

Total fully-diluted shares

166,532

165,872

Outstanding basic and fully diluted share count as at January 12, 2020 is as follows:

(in 000s)

January 12, 2020

Outstanding common shares

Options

Restricted share units

Performance share units

163,571

9,538

1,061

142

Total fully-diluted shares

174,312

First Quarter Fiscal 2020 Conference Call

The Company is scheduled to report its first quarter fiscal 2020 results on Tuesday, January 14, 2020 after market close. The Company will host a conference call to discuss its results:

Date: January 14, 2019
Time: 5:00 p.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/2152232/54B24C07755D838D71560C08FF6CC73E

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 EBITDA, adjusted EBITDA as a percentage of net revenue and cash and “all-in” cost of cultivation) 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. These non-IFRS financial performance measures are defined below. 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 Q1 2020 MD&A for definitions and reconciliations to IFRS amounts.

About Organigram Holdings Inc.

Organigram Holdings Inc. is a NASDAQ Global Select Market and a Toronto Stock Exchange (“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 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 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 plans and objectives including around timing for launch of new product forms, or estimates or predictions of actions of customers, suppliers, partners, distributors, competitors or regulatory authorities ;statements regarding the market future of the Canadian cannabis market 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 receipt of regulatory approvals or consents and conditions imposed upon 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, 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 patters and consumer preferences not being as predicated 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 product forms, market demand and acceptance of new product forms, unforeseen construction or delivery delays including of equipment, 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 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 Q1 2020 MD&A for definitions and a reconciliation to IFRS.

2 Adjusted EBITDA and adjusted EBITDA as a percentage of net revenue are non-IFRS financial measures not defined by and do not have any standardized meaning under IFRS; please refer to the Company’s Q1 2020 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 Q1 2020 MD&A for definitions and a reconciliation to IFRS.

4 Cash and “all-in” costs of cultivation per gram of dried flower harvested are non-IFRS measures that are not defined by and do not have any standardized meaning under IFRS. “Cost of cultivation” per gram harvested includes “cash” costs such as direct labour, direct materials and manufacturing overhead (e.g. maintenance) as well as “non-cash” expenses such as employee share-based compensation for cultivation employees and depreciation related to buildings and equipment of the production facility. Cost of cultivation does not include packaging costs, which are added to arrive at the cost for inventory, nor distribution costs (shipping), both of which are included in the cost of sales. Thus, readers are cautioned against comparing cost of cultivation per gram harvested with cost of sales for the same period(s) for at least two reasons: (1) Cost of sales includes packaging costs and distribution (shipping) costs which “Cost of cultivation” does not, and (2) there is a delay between when product is harvested and when it is sold. Sometimes that delay is one or two quarters (and longer with extraction material). Cost of cultivation also does not include indirect production costs, which are expensed directly against gross margin.

5 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 Q1 2020 MD&A for definitions and a reconciliation to IFRS amounts.

6 QUICK TAKE - Cannabis - Cowen’s THC Tracker: U.S. Brands - Cowen and Company, March 29, 2019

7 Target production capacity once licensed and fully operational; several factors can cause actual capacity and cost to differ from estimates. See “Risk Factors” in the Company’s Q1 2020 MD&A.

8 Target production capacity once licensed and fully operational; several factors can cause actual capacity and cost to differ from estimates. See “Risk Factors” in the Company’s Q1 2020 MD&A.

9 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 Q1 2020 MD&A for definitions and a reconciliation to IFRS.

View source version on businesswire.com:https://www.businesswire.com/news/home/20200114005811/en/

CONTACT: For Investor Relations enquiries, please contact:Amy Schwalm

Vice-President, Investor Relations

amy.schwalm@organigram.ca

416-704-9057For Media enquiries, please contact:Ray Gracewood

Senior Vice President, Marketing and Communications

rgracewood@organigram.ca

506-645-1653

KEYWORD: NORTH AMERICA CANADA

INDUSTRY KEYWORD: HEALTH PHARMACEUTICAL

SOURCE: Organigram Holdings Inc.

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PUB: 01/14/2020 04:00 PM/DISC: 01/14/2020 04:01 PM

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