Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Organigram Reports Record Fourth Quarter and Full Year Fiscal 2022 Results


Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), (the "Company" or "Organigram"), a leading licensed producer of cannabis, announced its results for the fourth quarter and year ended August 31, 2022 ("Q4 Fiscal 2022" or "Fiscal 2022").

"In Fiscal 2022, our innovative product launches, comprehensive retail distribution, sales execution, and operational excellence helped Organigram become a leading consumer products company in the cannabis sector," said Beena Goldenberg, Chief Executive Officer. "During the year, we increased and optimized production to meet consumer demand, drove market share gains nationally and solidified our position as serious competitors in several new categories. In Fiscal 2023 we expect continued success as we build on the high recognition of our brands, our track record of innovation and our proven ability to execute.

Select Key Financial Metrics
(in $000s unless otherwise indicated)

 

Q4-2022 

 

Q4-2021

 

 % Change

 

Fiscal 2022 

 

Fiscal 2021

 

% Change 

Gross revenue

 

65,657

 

 

36,182

 

 

81

%

 

209,109

 

 

109,859

 

 

90

%

Excise taxes

 

(20,177

)

 

(11,317

)

 

78

%

 

(63,300

)

 

(30,696

)

 

106

%

Net revenue

 

45,480

 

 

24,865

 

 

83

%

 

145,809

 

 

79,163

 

 

84

%

Cost of sales

 

36,718

 

 

25,867

 

 

42

%

 

119,037

 

 

103,567

 

 

15

%

Gross margin before fair value changes to biological assets & inventories sold

 

8,762

 

 

(1,002

)

 

974

%

 

26,772

 

 

(24,404

)

 

210

%

Realized loss on fair value on inventories sold and other inventory charges

 

(10,191

)

 

(7,286

)

 

40

%

 

(35,204

)

 

(35,721

)

 

(1

)%

Unrealized gain (loss) on changes in fair value of biological assets

 

15,677

 

 

11,639

 

 

35

%

 

40,001

 

 

31,726

 

 

26

%

Gross margin

 

14,248

 

 

3,351

 

 

325

%

 

31,569

 

 

(28,399

)

 

211

%

Adjusted gross margin1

 

10,362

 

 

3,017

 

 

243

%

 

33,390

 

 

3,563

 

 

837

%

Adjusted gross margin %1

 

23

%

 

12

%

 

92

%

 

23

%

 

5

%

 

360

%

Selling (including marketing), general & administrative expenses2

 

15,657

 

 

12,415

 

 

26

%

 

59,768

 

 

45,727

 

 

31

%

Adjusted EBITDA1

 

3,232

 

 

(4,818

)

 

167

%

 

3,484

 

 

(27,643

)

 

113

%

Net loss

 

(6,144

)

 

(25,971

)

 

76

%

 

(14,283

)

 

(130,704

)

 

89

%

Net cash used in operating activities

 

(19,695

)

 

(7,699

)

 

156

%

 

36,211

 

 

28,589

 

 

27

%

1 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 "Non-IFRS Financial Measures" in this press release for more information.
2 Excluding non-cash share-based compensation.
3 During Fiscal 2022, certain reclassifications have been made to the prior periods comparative figures to enhance comparability with the current period amounts, none of the reclassifications resulted in a change to net loss or shareholders' equity. See Note 29 of the Financial Statements.

 

Select Balance Sheet Metrics (in $000s)

 

AUGUST 31,
2022

 

AUGUST 31,
2021

 

% Change

Cash & short-term investments (excluding restricted cash)

 

98,607

 

183,555

 

(46

)%

Biological assets & inventories

 

68,282

 

48,818

 

40

%

Other current assets

 

54,734

 

28,242

 

94

%

Accounts payable & accrued liabilities

 

40,864

 

18,952

 

116

%

Current portion of long-term debt

 

80

 

80

 

?

%

Working capital

 

166,338

 

234,349

 

(29

)%

Property, plant & equipment

 

259,819

 

235,939

 

10

%

Long-term debt

 

155

 

230

 

(33

)%

Total assets

 

577,107

 

554,017

 

4

%

Total liabilities

 

69,049

 

74,212

 

(7

)%

Shareholders' equity

 

508,058

 

479,805

 

6

%

"We are pleased with record net revenue and the third consecutive quarter of positive Adjusted EBITDA achieved in Q4 Fiscal 2022. This is a reflection of our disciplined approach, the execution by our team and our success at integrating acquisitions," added Derrick West, Chief Financial Officer. "We enter Fiscal 2023 well-capitalized and with a proven strategy to continue to generate shareholder value."

Key Financial Results for the Fourth Quarter and Fiscal 2022

The following table reconciles the Company's Adjusted EBITDA to net income (loss).

 

Adjusted EBITDA Reconciliation
(in $000s unless otherwise indicated)

 

Q4-2022

 

Q4-2021

 

Fiscal 2022

 

Fiscal 2021

Net loss as reported

 

$

(6,144

)

 

$

(25,971

)

 

$

(14,283

)

 

$

(130,704

)

Add/(Deduct):

 

 

 

 

 

 

 

 

Financing costs, net of investment income

 

 

(364

)

 

 

(286

)

 

 

(1,058

)

 

 

2,106

 

Income tax expense (recovery)

 

 

(299

)

 

 

?

 

 

 

(88

)

 

 

?

 

Depreciation, amortization, and (gain) loss on disposal of property, plant and equipment (per statement of cash flows)

 

 

7,570

 

 

 

17,349

 

 

 

31,487

 

 

 

33,459

 

Impairment of intangible assets

 

 

?

 

 

 

1,701

 

 

 

?

 

 

 

1,701

 

Impairment of property, plant and equipment

 

 

2,245

 

 

 

?

 

 

 

4,245

 

 

 

?

 

Share of loss and impairment loss from loan receivable and investments in associates

 

 

528

 

 

 

4,162

 

 

 

1,614

 

 

 

6,363

 

Unrealized loss (gain) on changes in fair value of contingent consideration

 

 

317

 

 

 

3,392

 

 

 

(2,621

)

 

 

3,558

 

Realized loss on fair value on inventories sold and other inventory charges

 

 

10,191

 

 

 

7,286

 

 

 

35,204

 

 

 

35,721

 

Unrealized (gain) loss on change in fair value of biological assets

 

 

(15,677

)

 

 

(11,639

)

 

 

(40,001

)

 

 

(31,726

)

Share-based compensation (per statement of cash flows)

 

 

2,809

 

 

 

1,150

 

 

 

5,127

 

 

 

3,896

 

COVID-19 related charges, net of government subsidies and insurance recoveries

 

 

?

 

 

 

(892

)

 

 

(335

)

 

 

(8,147

)

Legal provisions

 

 

?

 

 

 

1,050

 

 

 

(310

)

 

 

2,750

 

Share issuance costs allocated to derivative warrant liabilities and change in fair value of derivative liabilities

 

 

(3,415

)

 

 

(6,001

)

 

 

(32,650

)

 

 

29,828

 

Incremental fair value component of inventories sold from acquisitions

 

 

?

 

 

 

?

 

 

 

1,363

 

 

 

?

 

ERP implementation costs

 

 

1,793

 

 

 

?

 

 

 

3,203

 

 

 

?

 

Transaction costs

 

 

(188

)

 

 

?

 

 

 

2,384

 

 

 

?

 

Provisions and impairment of inventories and biological assets and provisions of inventory to net realizable value

 

 

1,600

 

 

 

2,619

 

 

 

4,546

 

 

 

19,904

 

Research and development expenditures, net of depreciation

 

 

2,266

 

 

 

1,262

 

 

 

5,657

 

 

 

3,648

 

Adjusted EBITDA

 

$

3,232

 

 

$

(4,818

)

 

$

3,484

 

 

$

(27,643

)

The following table reconciles the Company's adjusted gross margin to gross margin before fair value changes to biological assets and inventories sold:

         

Adjusted Gross Margin Reconciliation
(in $000s unless otherwise indicated)

 

Q4-2022

 

Q4-2021

 

Fiscal 2022

 

Fiscal 2021

Net revenue

 

$

45,480

 

 

$

24,865

 

 

$

145,809

 

 

$

79,163

 

Cost of sales before adjustments

 

 

35,118

 

 

 

21,848

 

 

 

112,419

 

 

 

75,600

 

Adjusted Gross margin

 

 

10,362

 

 

 

3,017

 

 

 

33,390

 

 

 

3,563

 

Adjusted Gross margin %

 

 

23

%

 

 

12

%

 

 

23

%

 

 

5

%

Less:

 

 

 

 

 

 

 

 

Provisions (recoveries) and impairment of inventories and biological assets

 

 

1,600

 

 

 

1,997

 

 

 

4,048

 

 

 

15,039

 

Provisions to net realizable value

 

 

?

 

 

 

622

 

 

 

498

 

 

 

4,865

 

Incremental fair value component on inventories sold from acquisitions

 

 

?

 

 

 

?

 

 

 

1,363

 

 

 

Unabsorbed overhead

 

 

?

 

 

 

1,400

 

 

 

709

 

 

 

8,063

 

Gross margin before fair value adjustments

 

 

8,762

 

 

 

(1,002

)

 

 

26,772

 

 

 

(24,404

)

Gross margin % (before fair value adjustments)

 

 

19

%

 

 

(4

)%

 

 

18

%

 

 

(31

)%

Add/(Deduct):

 

 

 

 

 

 

 

 

Realized loss on fair value on inventories sold and other inventory charges

 

 

(10,191

)

 

 

(7,286

)

 

 

35,204

 

 

 

35,721

 

Unrealized gain on changes in fair value of biological assets

 

 

15,677

 

 

 

11,639

 

 

 

(40,001

)

 

 

(31,726

)

Gross margin

 

 

14,248

 

 

 

3,351

 

 

 

21,975

 

 

 

(20,409

)

Gross margin %

 

 

31

%

 

 

13

%

 

 

15

%

 

 

(26

)%

Canadian Recreational Market Introductions

SHRED Dankmeister XL Bong Blends

Sour Blue Razzberry

Holy Mountain

Research and Product Development

Product Development Collaboration ("PDC") and Centre of Excellence ("CoE")

Plant Science, Breeding and Genomics R&D in Moncton

International

Liquidity and Capital Resources

Capital Structure

in $000s

 

AUGUST 31,
2022

 

AUGUST 31,
2021

Current and long-term debt

 

235

 

310

Shareholders' equity

 

508,058

 

479,805

Total debt and shareholders' equity

 

508,293

 

480,115

in 000s

 

 

 

 

Outstanding common shares

 

313,816

 

298,786

Options

 

11,051

 

7,797

Warrants

 

16,944

 

16,944

Top-up rights

 

7,590

 

6,559

Restricted share units

 

2,346

 

1,186

Performance share units

 

265

 

472

Total fully-diluted shares

 

352,012

 

331,744

Outstanding basic and fully diluted share count as at November 28, 2022 is as follows:

in 000s

 

NOVEMBER 28,
2022

Outstanding common shares

 

313,857

Options

 

11,998

Warrants

 

16,944

Top-up rights

 

8,393

Restricted share units

 

3,797

Performance share units

 

1,103

Total fully-diluted shares

 

356,092

Outlook7

Net revenue

Adjusted gross margins8

Adjusted EBITDA

Cash flow

Fourth Quarter and Full Year Fiscal 2022 Conference Call

The Company will host a conference call to discuss its results with details as follows:
Date: November 29, 2022
Time: 8:00 am Eastern Time
To register for the conference call, please use this link:
https://conferencingportals.com/event/RUyBPhzX

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://events.q4inc.com/attendee/926817268

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. Adjusted EBITDA is a non-IFRS measure that the Company defines as net income (loss) before: financing costs, net of investment income; income tax expense (recovery); depreciation, amortization, reversal of/or impairment, (gain) loss on disposal of property, plant and equipment (per the statement of cash flows); share-based compensation (per the statement of cash flows); share of loss from investments in associates and impairment loss from loan receivable; change in fair value of contingent consideration; change in fair value of derivative liabilities; expenditures incurred in connection with research & development activities (net of depreciation); unrealized (gain) loss on changes in fair value of biological assets; realized loss on fair value on inventories sold and other inventory charges; provisions and impairment of inventories and biological assets; provisions to net realizable value of inventories; COVID-19 related charges; government subsidies; legal provisions; incremental fair value component of inventories sold from acquisitions; transaction costs; and share issuance costs. Adjusted EBITDA is intended to provide a proxy for the Company's operating cash flow and derive expectations of future financial performance for the Company, and excludes adjustments that are not reflective of current operating results.

Adjusted gross margin is a non-IFRS measure that the Company defines as net revenue less cost of sales, before the effects of (i) unrealized gain (loss) on changes in fair value of biological assets; (ii) realized fair value on inventories sold and other inventory charges; (iii) provisions and impairment of inventories and biological assets; (iv) provisions to net realizable value; (v) COVID-19 related charges; and (vi) unabsorbed overhead relating to underutilization of the production facility and equipment, most of which is related to non-cash depreciation expense. Management believes that this measure provide useful information to assess the profitability of our operations as it represents the normalized gross margin generated from operations and excludes the effects of non-cash fair value adjustments on inventories and biological assets, which are required by IFRS.

The most directly comparable measure to Adjusted EBITDA, calculated in accordance with IFRS is net income (loss) and beginning on page 4 of this press release is a reconciliation to such measure. The most directly comparable measure to adjusted gross margin calculated in accordance with IFRS is gross margin before fair value changes to biological assets and inventories sold and beginning on page 5 of this press release is a reconciliation to such measure.

About Organigram Holdings Inc.

Organigram Holdings Inc. is a NASDAQ Global Select Market and TSX listed company whose wholly-owned subsidiaries include Organigram Inc. and Laurentian Organic Inc. licensed producers of cannabis and cannabis-derived products in Canada, and The Edibles and Infusions Corporation, a licensed manufacturer of cannabis-infused edibles 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 Edison, Big Bag O' Buds, SHRED, Monjour and Trailblazer. Organigram operates facilities in Moncton, New Brunswick and Lac-Supérieur, Québec, with a dedicated manufacturing facility in Winnipeg, Manitoba. The Company is regulated by the Cannabis Act 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 including international sales, expectations for consumer demand, expected increase in SKUs, expected improvement to gross margins before fair value changes to biological assets and inventories, expectations regarding adjusted gross margins, Adjusted EBITDA and net revenue in Fiscal 2023 and beyond, expectations regarding cultivation capacity, the Company's plans and objectives including around the CoE, availability and sources of any future financing, expectations regarding the impact of COVID-19, availability of cost efficiency opportunities, the increase in the number of retail stores, the ability of the Company to fulfill demand for its revitalized product portfolio with increased staffing, expectations relating to greater capacity to meet demand due to increased capacity at the Company's facilities, expectations around lower product cultivation costs, the ability to achieve economies of scale and ramp up cultivation, expectations pertaining to the increase of automation and reduction in reliance on manual labour, expectations around the launch of higher margin dried flower strains, expectations around market and consumer demand and other patterns related to existing, new and planned product forms including by EIC and Laurentian; 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; continuation of shipments to Canndoc Ltd., Cannatrek Ltd. and Medcan; statements regarding the future of 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.

This news release contains information concerning our industry and the markets in which we operate, including our market position and market share, which is based on information from independent third-party sources. Although we believe these sources to be generally reliable, market and industry data is inherently imprecise, subject to interpretation and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process, and other limitations and uncertainties inherent in any statistical survey or data collection process. We have not independently verified any third-party information contained herein.

Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual events to differ materially from current expectations. These risks, uncertainties and factors include: 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; the Company's ability to meet regulatory criteria which may be subject to change; change in regulation including restrictions on sale of new product forms; change in stock exchange listing practices; the Company's ability to manage costs, timing and conditions to receiving 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 those 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; 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; change in customer buying patterns; and changes in crop yields. These and other risk factors 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") from time to time 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. 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. Forward looking information is subject to risks and uncertainties that are addressed in the "Risk Factors" section of the MD&A dated November 28, 2022 and there can be no assurance whatsoever that these events will occur.

_______________________________
1 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 "Non-IFRS Financial Measures" in this press release for more information.
2 Hifyre data extract from October 18, 2022
3 OCS wholesale sales and e-commerce orders shipped data: Q4 FY 22 and Provincial Boards Data: CNB, NSLC, PEILCC, Q4 FY ?22
4 Weedcrawler, FY22
5 Adjusted gross margin is a non-IFRS financial measure not defined by and does not have any standardized meaning under IFRS; please refer to "Non-IFRS Financial Measures" in this press release for more information.
6 Adjusted EBITDA is a non-IFRS financial measure not defined by and does not have any standardized meaning under IFRS; please refer to "Non-IFRS Financial Measures" in this press release for more information.
7 The disclosure in this section is subject to the risk factors referenced in the "Risk Factors" section of the Company's Q4 Fiscal 2022 MD&A, which is available in the Company's profile at www.sedar.com. Without limiting the generality of the foregoing, the expectations concerning revenue, adjusted gross margins and SG&A are based on the following general assumptions: consistency of revenue experience with indications of fourth quarter performance to date, consistency of ordering and return patterns or other factors with prior periods and no material change in legal regulation, market factors or general economic conditions. The Company disclaims any obligation to update any of the forward-looking information except as required by applicable law. See cautionary statement in the "Introduction" section at the beginning of the Company's Fiscal 2022 MD&A.
8 Adjusted gross margin is a non-IFRS financial measure not defined by and does not have any standardized meaning under IFRS; please refer to "Non-IFRS Financial Measures" in this press release for more information.


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