- 2019 net revenue grew 547% to $80.4 million from $12.4
million in 2018
- 2019 gross margin before fair value changes to biological
assets and inventory grew 575% to $37.9 million or 47% of net
revenue from $5.6 million or 45% of net revenue in 2018
- 2019 net loss from continuing operations of $9.5 million
compared to net income from continuing operations of $22.1 million
in 2018 largely due to non-cash fair value changes to biological
assets and inventories
- 2019 adjusted EBITDA1 of $19.9 million or 25% of net revenue
compared to negative $1.0 million in 2018
- Sales in all 10 provinces – estimated YTD market share
nationally of approximately 10% in the Canadian adult-use
recreational cannabis market2
- Expect improved Q1 fiscal 2020 outlook from Q4 2019 with
higher net revenue and adjusted gross margin and lower SG&A3 as
a percentage of net revenue
- Phase 4C, the final phase of Moncton Campus facility
expansion with respect to cultivation estimated at 70% complete;
completion of 4C has been paused until more clarity on retail
expansion in Canada
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 fourth quarter and fiscal year ended August 31,
2019 (“Q4” or “Q4 2019”).
(in 000s)
Q4-2019
Q4-2018
% Change
Fiscal 2019
Fiscal 2018
% Change
Select Key Financial Metrics
Gross revenue
19,235
3,190
503%
97,547
12,429
685%
Excise taxes
(2,945)
-
n/m
(17,134)
-
n/m
Net revenue
16,290
3,190
411%
80,413
12,429
547%
Cost of sales (incl. indirect
production)
15,543
1,586
880%
42,521
6,814
524%
Gross Margin (GM) before fair value
changes to biological assets & inventories
747
1,604
(53%)
37,892
5,615
575%
Fair value changes to biological assets
& inventories
(11,806)
30,846
n/m
10,577
46,018
(77)%
Gross margin
(11,059)
32,450
n/m
48,469
51,633
(6)%
Sales & marketing and general &
administrative (SG&A)
13,883
3,567
289%
33,218
10,989
202%
Net income (loss) from continuing ops
(22,456)
18,091
n/m
(9,504)
22,124
n/m
GM before fair value changes to biological
assets & inventories as % of net revenue
5%
50%
(46)%
47%
45%
2%
SG&A as a % of net revenue
85%
112%
(27)%
41%
88%
(47)%
Adjusted EBITDA4
(7,907)
292
n/m
19,900
(1,003)
n/m
Adjusted EBITDA as a % of net revenue4
n/m
9%
n/m
25%
n/m
n/m
Select Balance Sheet Metrics (in
000s)
August 31, 2019
August 31, 2018
% Change
Cash & Short-Term Investments
47,935
130,064
(63)%
Biological Assets & Inventories
113,796
64,827
76%
Other Current Assets
34,550
8,323
315%
A/P and Other Current Liabilities
43,864
11,250
290%
Working Capital
152,417
191,964
(21)%
Property, Plant & Equipment
219,046
98,639
122%
Long-Term Debt
46,067
98,473
(53)%
Total Assets
428,525
302,567
42%
Total Liabilities
101,519
117,973
(14)%
Shareholders’ Equity
327,006
184,594
77%
“Our 2019 results reflected a successful year for Organigram.
Not only did we report strong top-line growth and establish an
enviable national market share position in Canada, we generated
positive adjusted EBITDA - one of the key measures we use to
evaluate our performance,” said Greg Engel, Chief Executive
Officer. “In 2019, we increased staffing and capacity to meet
forecasted demand and maintain inventory in the market. Industry
structural issues have challenged supply and demand dynamics in the
short-term but we believe the growth opportunity in the Canadian
cannabis market remains intact.”
“As we were one of the first success stories to supply the
market in the early days of legalization, we have had visibility
for some time now on ultimate sell through to consumers and have
adapted our production mix and product strategy to align with our
understanding of emerging consumer preferences. We have great
conviction in our strategy and ability to onboard the new retail
store openings and to launch a portfolio of edible and derivative
products appealing to adult consumers. With our state-of-the-art
indoor facility and leading cultivation practices, strong brand
equity, in-house expertise and strategic partnerships and a focus
on cost management, we are well-positioned for the long term.”
Key Financial Results for the Fourth Quarter and Fiscal
2019
- Net Revenue:
- In 2019 grew 547% to $80.4 million from $12.4 million in
2018
- In Q4 2019 grew 411% from $3.2 million in Q4 2018
- Growth attributable to the legalization of adult-use
recreational cannabis in Canada. Year to date, the Company
estimates it has approximately 10% national market share based on
its analysis of available data including, but not limited to,
market share data from select provinces and various public
data.
- Gross Margin before fair value changes to biological assets and
inventories:
- In 2019 grew 575% to $37.9 million from $5.6 million in 2018
primarily due to legalization of adult-use cannabis sales
- In Q4 2019, $0.7 million compared to Q4 2018 gross margin
before fair value changes to biological assets and inventories of
$1.6 million largely due to higher cost of sales and indirect
production costs
- Gross Margin:
- In 2019 $48.5 million compared to $51.6 million in 2018 largely
due to non-cash fair value changes to biological assets and
inventories
- Q4 2019 gross margin of negative $11.1 million compared to Q4
2018 gross margin of $32.5 million, largely due to non-cash fair
value changes to biological assets and inventories
- Adjusted EBITDA5:
- In 2019 $19.9 million or 25% of net revenue compared to
negative adjusted EBITDA of $1.0 million in 2018
- Q4 2019 negative adjusted EBITDA of $7.9 million compared to Q4
2018 adjusted EBITDA of $0.3 million
- Q4 negative adjusted EBITDA was impacted by lower adjusted
gross margin (described above) and higher SG&A compared to Q4
2018 as the Company increased staffing and sales and marketing
efforts in response to the first year of legalized adult-use
recreational cannabis
- Adjusted EBITDA is one of the key metrics the Company uses in
assessing its financial performance and ability to drive return on
investment for shareholders
- Sales and Marketing and General and Administrative Expenses
(“SG&A”):
- In 2019 $33.2 million or 41% of net revenue compared to 88% in
2018 is reflective of management’s disciplined approach to
discretionary spending despite being in a high growth period
- In Q4 $13.9 million or 85% of net revenue compared to $3.6
million or 112% of net revenue in Q4 2018 as the Company scaled up
staffing and marketing activities for legalization of adult-use
recreational cannabis sales
- Net Income (Loss) from Continuing Operations:
- In 2019 net loss of $9.5 million or $(0.07) per share (diluted
basis) compared to net income of $22.1 million or $0.17 per share
in 2018 largely due to non-cash fair value changes to biological
assets and inventories
- Q4 2019 net loss of $22.5 million or $(0.14) per share on a
diluted basis compared to Q4 2018 net income of $18.2 million or
$0.12 per share largely due to non-cash fair value changes to
biological assets and inventories
Key Commentary on Q4 2019 Results vs Q3 2019
- The lack of a sufficient retail network and slower than
expected store openings in Ontario continued to impact revenue
growth in Q4 2019 and were further exacerbated by increased
industry supply. Quarter to quarter revenue is expected to continue
to be volatile due to the timing of large pipeline orders for
Ontario, in particular, where there is a centralized distribution
model and where store additions are difficult to forecast.
- Q4 2019 net revenue of $16.3 million compared to Q3 2019 net
revenue of $24.8 million. As previously reported in the Company’s
corporate update, Q4 net revenue reflected about $20.0 million of
sales and about $3.7 million in a provision for product returns and
pricing adjustments. The majority of the provision was largely
related to two slower selling stock-keeping units (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 oils which have seen less than
anticipated demand in the adult-use recreational market.
- As expected, Q4 2019 cash and “all-in” costs of cultivation of
$0.66 and $0.94 per gram of dried flower harvested6, respectively,
decreased from $0.95 and $1.29 per gram in Q3 2019 as yield per
plant increased in line with historical levels following a
temporary decrease in Q3 2019 (Q4 2019: 148 grams compared to 110
grams in Q3 2019). As a result, the Q4 2019 harvest increased to
7,434 kg from 6,052 kg in Q3 2019.
- Q4 cost of sales and indirect production increased to $15.5
million from $12.5 million in Q3 2019 largely due to higher cost
product sold in Q4 and $1.6 million in inventory adjustments and
write-offs related to legacy packaging and product that did not
meet quality standards or expired.
- Aside from the indirect production costs on a per unit basis
there was generally a higher cost of product sold in Q4 (compared
to Q3) and this was primarily due to the following factors:
- As previously disclosed and described above, yield per plant
temporarily decreased in Q3 2019 driving higher costs of
cultivation capitalized to inventory which flowed through cost of
sales in Q4 2019 (due to the lag between harvesting and sales
shipments); and
- Higher post harvest costs including greater cost allocations
capitalized to inventory in Q3 and Q4 of 2019 as the Company ramped
up staffing without the benefit of full efficiencies from scale
realized.
- Q4 gross margin before fair value changes to biological assets
and inventory decreased to $0.7 million or 5% from Q3 2019 gross
margin before fair value changes to biological assets and
inventories sold of $12.3 million or 50% largely due to lower net
revenue and higher cost of sales and indirect production costs as
described above.
- Q4 gross margin of negative $11.1 million compared to Q3 gross
margin of negative $0.2 million, largely due to fair value changes
in biological assets and inventories. Biological assets and
inventory sold are highly sensitive to many judgmental inputs. As a
result of higher post-harvesting costs (including packaging) and
better visibility on wholesale pricing on extractable cannabis the
Company has adjusted some of the inputs used which has resulted in
a reduction in the carrying value per unit in biological assets and
some of the inventory categories.
- Q4 negative adjusted EBITDA7 of $7.9 million compared to Q3
adjusted EBITDA of $7.7 million. Q4 negative adjusted EBITDA was
impacted by lower adjusted gross margin (described above) and
higher SG&A compared to Q3 2019.
- Q4 SG&A of $13.9 million or 85% as a percentage of net
revenue (85%) was higher than Q3 higher than Q3 2019 SG&A of
$9.1 million or 37% largely due to lower revenue in part from sales
returns and adjustments combined with higher than expected expenses
– the Company currently believes this is an anomaly and SG&A as
a percentage of net revenue is expected to decrease in Q1 Fiscal
2020 and beyond.
Adult-Use Recreational Launch 2.0 (“Rec 2.0”) – Derivative
and Edible Products
- The Company has chosen to initially focus on the two most
popular product forms based on US state sales data: vaporizer pens
and edible products.
- Organigram submitted new product notifications to Health Canada
for a comprehensive vape pen portfolio and cannabis infused
chocolates in October 2019.
- Organigram remains on track to launch some vape pens in
December 2019. The Company expects substantial construction of
additional in-house extraction capacity and expanded vape pen
filling space to be completed by the end of calendar 2019. However,
the Company has the capacity to fill and package vaporizer pens in
its existing facility ahead of the licensing of Phase 5.
- During the quarter, Organigram announced two innovative
partnerships with two vaporizer hardware and technology companies,
PAX Labs, Inc. and the Feather Company-branded goods to offer
vaporizer pens to all its provincial partners.
- As expected, the Company took delivery of its high speed, high
capacity, fully automated chocolate production line in October
2019. Installation has been almost completed, and the Company
expects commissioning and licensing in time for initial sales in Q1
calendar 2020. The line has a state-of-the-art chocolate molding
line and a fully integrated packaging line that includes advanced
engineering, robotics, high-speed labeling and automated carton
packing.
- The Company now expects to launch powdered beverage products in
Q2 calendar 2020 based on expected licensing timing for the
production area and equipment delivery and commissioning
schedules.
- As previously announced, Organigram has developed a proprietary
nano-emulsification technology that is anticipated to provide an
initial onset of the effects of the cannabinoids within 10 to 15
minutes. The emulsion process developed by the Organigram team
generates micro-particles that are very small and uniform, which it
expects will translate to an absorption and onset of effect that is
rapid, reliable and controlled. The Company believes the
nano-emulsion technology is stable to temperature variations,
mechanical disturbance, salinity, pH and sweeteners. The Company’s
researchers have also recently developed a way to transform this
emulsification system into a solid form, turning it into a
dissolvable powder. This shelf stable, water-compatible, flavorless
nano-emulsion formulation is also expected to provide an initial
onset of effect within 10 to 15 minutes if used in any beverage.
The powdered formulation will offer consumers a measured dose of
cannabinoids which they can then add to the appropriate beverage of
their choice, while also offering the discretion, portability and
shelf life expected of a dry powder formulation.
Update on Phase 4C Expansion
- Since the Q3 2019 earnings release, the Company received Health
Canada licensing approval for an additional 17 grow rooms for
incremental target production capacity of about 15,000 kg per year
of dried flower and sweet leaf. This brings the Company’s total
licensed target production capacity to 76,000 kg per year8.
- The Company also recently submitted the licensing amendment for
the remaining 16 rooms in Phase 4B which represent about 13,000 kg
per year of additional target production capacity. Once the
approval is received, total target production capacity is expected
to be 89,000 kg per year8.
- Construction of Phase 4C, the final phase of the Moncton Campus
expansion (related to cultivation), is estimated at 70% complete
(vs. 50% at August 31, 2019). The Company has decided to delay
final completion, previously targeted for calendar 2019 year-end,
until there is more clarity on the timing and magnitude of the
retail network expansion.
- As such, the Company’s management can more effectively manage
and prioritize cash flows and it also offers us optionality to use
a portion of the space for other opportunities (should strategic or
market factors dictate).
- The Company can complete the remaining construction on Phase 4C
in a short timeframe and may choose to do so once there is more
visibility on the retail expansion.
- If and when the Company decides to complete 100% of Phase 4C
for cultivation as currently designed, the Moncton Campus facility
is expected to have a target production capacity of 113,000 kg per
year8 of dried flower and sweet leaf, once fully licensed and
operational.
Phase 5 Under Refurbishment
- The Company is taking an already constructed 56,000 square foot
footprint within its existing facility and turning it into a
multi-functional space (“Phase 5”) with design specifications to
European Union GMP standards.
- Phase 5, once fully licensed and operational, will add
significant functionality to the Moncton Campus including
additional post-harvesting rooms (including drying rooms),
additional extraction capacity, and a dedicated derivatives and
edibles facility.
- Each area of Phase 5 has different expected construction
completion dates, however, primary construction was completed on
schedule in October 2019 and the overall schedule remains on
track.
- The estimated total capital cost is now expected to be in the
range of $60 to $65 million8 (from the previous estimate of $48
million) primarily due to a proposed additional 18,000 square feet
of production space created by utilizing a second level, increased
European GMP design costs as well as multiple automation projects
(not originally contemplated) designed to reduce reliance on manual
labour and lower operating costs in the long run. The estimate to
complete was approximately $41 million at fiscal year-end.
- Phase 5 plans include expanded vaporizer pen filling and
automated packaging, additional extraction by both CO2 and
hydrocarbons as well as additional areas for formulation including
short path distillation for edibles and vaporizer pen formulas. In
addition, Phase 5 will include a both a chocolate production and
powdered drink mixing and packaging line to support the Company’s
plans to launch a variety of these products.
Outlook
- The Canadian market is positioned for significant growth with
additional retail store openings planned in the largest markets of
Ontario and Quebec collectively representing over 60% of the
Canadian population.
- Legalization of edible and derivative products is also expected
to significantly expand the legal market from its current
state.
- 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 retailers. These stores should triple
the existing retail network currently available in Ontario. The
first few of these new stores are expected to open shortly.
Ontario’s October 2019 announcement to expand the retail network
beyond these stores should be an important catalyst to drive
further growth for Organigram and the industry. The Société
québécois du cannabis also announced plans to double its number of
stores and Alberta’s robust network of about 277 stores currently
continues to grow to meet consumer demand.
- Q1 2020 net revenue is expected to be higher than Q4 2019 on
increased sales to provinces and higher wholesale revenue.
- The Company expects increased efficiencies and economies of
scale from more capacity to decrease cultivation costs in Q1 2020
from Q4 2019. Labour costs are not expected to increase
commensurate with production, processing and sales volume.
- Q1 2020 gross margin before fair value changes to biological
assets and inventories is anticipated to be higher than Q4 2019 on
higher net revenue and lower cost of sales and indirect production
costs, including from greater expected efficiencies of scale, and
an increased proportion of higher margin wholesale revenue.
Liquidity and Capital
- As at 2019 fiscal year-end, Organigram had $47.9 million in
cash and short-term investments and generated positive adjusted
EBITDA9 of $19.9 million for the year.
- The Company reported approximately $50 million in current and
long-term debt, which primarily represents the carrying value of
its term loan in its credit facility with BMO and a syndicate of
lenders. Subsequent to Q4 2019, an additional $15 million was drawn
on its term loan leaving about $50 million in available capacity of
the total term loan of $115 million. The Company also has a
revolver of up to $25 million available to be drawn against
specified receivables.
- On November 15, 2019, the Company amended its credit facility
with BMO to: i) extend the final draw deadline of the term loan
from November 30, 2019 to March 31, 2020; ii) postpone the
commencement of principal repayments on the term loan to May 31,
2020; and iii) realign the financial covenants structure, effective
November 30, 2019, to be more consistent with industry norms up to
and including May 31, 2020, which will also provide the Company
with greater flexibility around the timing and quantum of
incremental draws. The financial covenants will revert to the
original structure on August 31, 2020.
- Included in the facility is an uncommitted option to increase
the term loan and/or revolving debt by an incremental $35 million
to a total of $175 million, subject to agreement by BMO and the
syndicate of lenders and satisfaction of certain legal and business
conditions.
- On November 4, 2019, the Company filed a preliminary base-shelf
prospectus for an amount up to $175 million through the issuance of
common shares, preferred shares, debt securities, subscription
receipts, warrants or units. The purpose of filing the base-shelf
prospectus is to shorten the timeline to raise funds for growth
opportunities and working capital.
Capital Structure
(in $000s except for share amounts)
August 31, 2019
August 31, 2018
Current and long-term debt (excluding
convert debs)
$
49,576
$
3,298
Convertible debentures
-
95,866
Shareholders’ equity
327,006
184,594
Total debt and shareholders’ equity
$
376,582
$
283,758
Outstanding common shares
156,196
125,208
Options
8,833
7,710
Warrants
-
8,087
Restricted share units
842
145
Convertible debentures (converted at
$5.42)
-
20,845
Total fully-diluted shares
165,872
161,995
Outstanding basic and fully diluted share count as at November
23, 2019 is as follows:
(in 000s)
Outstanding common shares
Options
Restricted share units
Performance share units
156,243
9,091
1,061
142
Total fully-diluted shares
166,537
Fourth Quarter and 2019 Fiscal Year 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.
Non-IFRS Financial Measures
This news release refers to certain financial performance
measures 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.
Adjusted EBITDA
This is a non-IFRS measure and the Company calculates adjusted
EBITDA from continuing operations as net income (earnings) before:
interest expense, net of investment income; income tax;
depreciation, amortization, impairment, and gain (loss) on disposal
of PP&E (per the statement of cash flows); share-based
compensation (per the statement of cash flows); share of loss and
impairment loss from investments in associates; unrealized loss
(gain) on changes in fair value of contingent consideration;
expenditures incurred in connection with the NASDAQ cross-listing;
and the fair value adjustment to biological assets and inventory.
Management believes the exclusion of the fair value adjustment is
an alternative representation of performance. The fair value
adjustment is a non-cash gain (loss) and is based on the valuation
of biological assets and inventory using a fair value less cost to
sell model. The most directly comparable measure to adjusted EBITDA
(excluding fair value adjustment to biological assets and
inventory) calculated in accordance with IFRS is net income (loss)
from continuing operations.
(in 000s)
Q4-2019
Q4-2018
Fiscal 2019
Fiscal 2018
Adjusted EBITDA
Net income (loss) from continuing
operations
$
(22,456)
$
18,091
$
(9,505)
$
22,123
Add:
Interest expense (investment income) from
continuing operations
616
3,861
9,007
8,639
Income tax expense (recovery)
(6,289)
5,653
3,628
5,653
Depreciation, amortization, impairment,
and gain (loss) on disposal of PP&E from continuing operations
(per statement of cash flows)
3,955
1,556
9,648
3,567
Less/(Add): fair value adjustment to
biological assets and net realizable value adjustment to
inventory
(11,806)
30,846
10,577
46,018
Adjusted EBITDA as Previously
Reported
$
(12,368)
$
(1,685)
$
2,201
$
(6,036)
Add:
Share-based compensation (per statement of
cash flows)
4,036
1,977
14,894
5,033
Share of loss and impairment loss from
investments in associates
1,289
-
2,211
-
Unrealized loss on changes in fair value
of contingent consideration
(864)
-
145
-
Nasdaq cross-listing expenditures
-
-
449
-
Adjusted EBITDA Revised
$
(7,907)
$
292
$
19,900
$
(1,003)
Divided by: net revenue from continuing
operations
16,290
3,213
80,413
12,429
Adjusted EBITDA margin %
n/m
9%
25%
n/m
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 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 page 10 of this press release for definitions and a
reconciliation to IFRS.
2 Based on the Company’s analysis of available data including,
but not limited to, market share from select provinces and various
public sources
3 Sales and marketing and general and administrative expenses
(excludes non-cash share-based compensation and impairment
loss)
4 Adjusted EBITDA is a non-IFRS financial measure not defined by
and does not have any standardized meaning under IFRS; please refer
to page 10 of this press release for definitions and a
reconciliation to IFRS.
5 Adjusted EBITDA is a non-IFRS financial measure not defined by
and does not have any standardized meaning under IFRS; please refer
to page 10 of this press release for definitions and a
reconciliation to IFRS.
6 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 (please
note that the Company previously included shipping expense in
“sales and marketing” in the statement of operations but revised
this presentation in Q1 Fiscal 2019). 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.
7 Adjusted EBITDA is a non-IFRS financial measure not defined by
and does not have any standardized meaning under IFRS; please refer
to page 10 of this news release for definitions and a
reconciliation to IFRS amounts.
8 Target production capacity once licensed and fully
operational; several factors can cause actual capacity and cost to
differ from estimates. See “Risks and Uncertainties” at the end of
this release.
9 Adjusted EBITDA is a non-IFRS financial measure not defined by
and does not have any standardized meaning under IFRS; please refer
to page 10 of this press release for definitions and a
reconciliation to IFRS.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191125005271/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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