Net revenue

Why are Organigram shares trading higher today? Posts Record Q2 Net Revenues, Still Among Top Canadian LPs

Organigram Holdings Inc. OGI OGIthe parent company of cannabis company Organigram Inc, announced its results for the second quarter ended February 28, 2022.

Q2 2022 Financial Highlights

  • Achieved gross revenues of $43.9 million, up 128% compared to the same period of the previous year and in line with the period of the previous year, despite the impact of seasonality.
  • Compared to the previous year, net revenues increased 117% to $31.8 million, $14.6 million in the second quarter of fiscal 2021, due to an increase in adult recreational revenue and international revenue.
  • Cost of sales decreased 20% to $25 millioncompared to $31.1 million for the prior year period.
  • Gross margin before changes in fair value of biological assets, inventory sold and other charges improved to $6.9 million from negative $16.5 million in the same quarter last year , primarily due to higher net revenues and lower cost of sales, as described above.
  • Gross margin increased to a positive result compared to negative gross margin in the second quarter of 2021.
  • Adjusted gross margin was $8.3 millionor 26% of net revenue, compared to negative $0.7 million, or -5%, in the prior year quarter.
  • Selling, general and administrative expenses up to $14 million of $10.3 million in the second quarter of 2021, mainly due to higher expenses to support business growth combined with the acquisition of Laurentian.
  • Adjusted EBITDA improved to positive $1.6 million compared to negative $7.8 million in the same quarter of 2021.
  • Net loss was $4 millioncompared to a net loss of $66.4 million in the second quarter of 2021.
  • Net cash used in operating activities was $5.3 million.

Second Quarter 2022 Business Highlights

  • Achieved 8.2% market share in February 2022, third place among Canadian licensed producers for the second month in a row.
  • Hold No. 1 position in dried flowers, the largest category, representing about half of the Canadian cannabis market.
  • Launch of 18 new products, including extensions to the SHRED’ems gum line and two new Edison-branded premium strains, bringing the total number of base SKUs on the market to 69.
  • Shipped 1,692 kilograms of high-margin flowers to Israel and Australia, marking the highest quarterly international B2B shipments in company history.
  • Acquisition of Quebec hash and artisanal cannabis producer Laurentian, an immediately accretive transaction providing the Company with an expanded product portfolio and increased presence in Quebec.
  • Increased investment in Hyasyntha pioneer in cannabinoid science.
  • Launch of SHRED-X vapes, 510 vape cartridges with flavor profiles inspired by the unique flavors of SHRED crushed flower products.
  • Received a $6.3 million investment from BAT through the exercise of its rights under an investor rights agreement with BAT, to enhance its ownership interest in the Company from 18.8% to 19.4% as of the date hereof.
  • Subsequent to the end of the quarter, took advantage of the high visibility of the SHRED brand to launch two new products. SHRED-X Kief Infused Blends are a 50%/50% blend of kief and the popular SHRED Ground Flower.

Management commentary

“The culture of innovation and customer focus that we are building at Organigram has enabled us to not only create brands that are embraced by consumers, but also to continuously innovate within those brands and across multiple product lines. We anticipate that leveraging these brands will allow us to continue to grow our market share,” said Beena Goldenberg, Company CEO. “In addition to our continued success in building beloved brands, our ability to increase sales in international markets and capitalize on our accretive acquisitions, such as Laurentian and EIC, continues to contribute to our strong earnings in terms of market presence and sales growth. »

price action

Organizational chart shares traded up 10.07% at $1.64 per share during the pre-market session on Tuesday morning.

Photo: Courtesy of Markus Winkler at Unsplash