Growth in production, dried flower sales, oil
sales, inventory and the announcement of numerous sales agreements
positions Organigram for successful launch of adult recreational
use market
MONCTON, NB, July 30, 2018 /CNW/ - Organigram Holdings Inc.
(TSX VENTURE: OGI) (OTCQB: OGRMF), the parent company of Organigram
Inc. (the "Company" or "Organigram"), a leading licensed producer
of medical marijuana based in Moncton,
New Brunswick, is pleased to announce its financial results
for the three and nine-months ended May 31,
2018.
"Our fiscal third quarter was transformational for the Company.
Our production capabilities have increased exponentially, we
launched our adult recreational brand strategy and have signed
agreements with a number of provinces and private retailers as well
as announcing key significant investments from both a strategic and
international perspective. As we head into the launch of the adult
use recreational market we believe Organigram is well positioned to
build upon its domestic medical business into becoming a national
player in the adult recreational market and a global player in the
medical market."
Operational Highlights
- Organigram began harvesting from its Phase 2 expansion facility
(23 grow rooms) on April 20, 2018
bringing its target production of dried flower equivalent to 22,000
kg/annum;
- In May the Company launched its adult recreational brand
strategy which included house brands such as The Edison
Cannabis Company, ANKR Organics and
Trailer Park Buds;
- In May Organigram received a "License for Controlled Drugs and
Substances" from Health Canada making the Company a Licensed
Dealer;
- In May the Company received its "Permit to Export Cannabis"
license which allowed Organigram the ability to make its first
international medical shipment to Australia (completed in July);
- Shortly after quarter-end the Company began use of its Phase 3
expansion filling six of the 16 grow rooms with the remaining rooms
filled in June and July bringing its target production of dried
flower equivalent to 36,000 kg/annum; and
- Announced strategic investments in: Hyasynth Biologicals,
Alpha-Cannabis Germany, and Eviana (see previous press releases for
more details) which all are expected to close in the calendar third
quarter.
Financial Highlights
- Record net sales for both the three-months and nine-months
ended May 31, 2018 of $3.7 million and $10.1
million respectively vs. $1.9
million and $3.6 million
respectively for 2017;
- Record sale volume of cannabis oil for the three-months ended
May 31, 2018 (768,400 milliliters) up
39% from Q2/18 (552,250) and up 452% from Q3/17 (139,200
milliliters);
- Record sales volume of dried flower (303,428 grams) for the
three-months ended up 28% from Q2/18 (237,650 grams) and up 55%
from Q3/17 (196,129 grams);
- Record yields per plant in the quarter ended May 31, 2018 (see MD&A for further
details);
- Cost of cultivation per gram of dried flower harvested of
$0.80 per gram "all-in" (direct
labour and materials, allocated overhead and depreciation) and
$0.58/gram excluding depreciation.
Note that cost of cultivation is a non-GAAP measure used by
management internally and does not include indirect production,
packaging or shipping costs (see financial statements and MD&A
for further details);
- Registered medical patients climbed to a record 15,316 by the
end of Q3 up 18% since Q2 (12,957);
- Impairment of goodwill on its 2017 acquisition of Trauma
Healing Centres in the amount of $1.2
million related to "right sizing" of the business
opportunity;
- Net interest expense of $3.7
million for the quarter primarily attributable to the
interest expense on $115 million of
convertible debentures issued on January 31,
2018; and
- Net income of $2.8 million, an
increase of 162% compared to $1.1
million in Q2-2018 and a loss of $2.3
million in Q3-2017.
Summary of Financial Results
|
Three-months
ended
May
31
|
Inc.
(Decr.)
|
Nine-months
ended
May
31
|
Inc
(Decr.)
|
(in $000 except
EPS)
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
|
|
Gross
sales
|
$
3,705
|
$1,917
|
93%
|
$
9,612
|
$ 5,593
|
72%
|
Sales recovery
(return)
|
$
21
|
$-
|
n/m1
|
$
490
|
$(2,026)
|
n/m
|
Net
sales2
|
$
3,726
|
$1,917
|
94%
|
$
10,102
|
$3,567
|
183%
|
Cost of sales (incl.
indirect production)
|
$
1,671
|
$2,097
|
-20%
|
$
5,012
|
$5,905
|
-15%
|
Gross margin
(excluding FV adjustment)
|
$
2,055
|
$(180)
|
n/m
|
$5,090
|
$ (2,338)
|
n/m
|
FV adjust. on bio
assets and inventories
|
$
10,066
|
$(578)
|
n/m
|
$
15,172
|
$ (1,634)
|
n/m
|
Gross
margin
|
$
12,121
|
$(758)
|
n/m
|
$
20,262
|
$ (3,972)
|
n/m
|
|
|
|
|
|
|
|
General and
admin
|
$1,556
|
$ 790
|
97%
|
$
4,743
|
$2,245
|
111%
|
Sales and
marketing
|
$1,754
|
$691
|
154%
|
$
4,033
|
$2,063
|
95%
|
Share-based
compensation (non-cash)
|
$1,156
|
$222
|
421%
|
$
3,056
|
$787
|
288%
|
Impairment of
goodwill
|
$1,156
|
$ -
|
n/m
|
$
1,156
|
$ -
|
n/m
|
Net financing costs
(income) 3
|
$3,679
|
$ (115)
|
n/m
|
$4,778
|
$ (211)
|
n/m
|
Net income
(loss)
|
$
2,820
|
$(2,346)
|
n/m
|
$
2,496
|
$(8,856)
|
%
|
|
|
|
|
|
|
|
EPS
(basic)
|
$
0.023
|
$(0.023)
|
n/m
|
$
0.021
|
$ (0.093)
|
n/m
|
EPS
(diluted)
|
$0.021
|
$(0.023)
|
n/m
|
$
0.019
|
$ (0.093)
|
n/m
|
|
|
|
|
|
|
|
Sales volume
of:
|
|
|
|
|
|
|
Dried cannabis flower
(gr)
|
303,428
|
196,129
|
55%
|
736,153
|
598,060
|
23%
|
Cannabis oil sold
(ml)
|
768,400
|
189,600
|
305%
|
1,739,250
|
406,000
|
328%
|
1 Not
meaningful
|
2 Net
sales consist of gross sales and sales recovery (return) and
includes dried flower and cannabis oil sales, sales of accessories
and revenues from the Company's wholly-owned subsidiary Trauma
Healing Center.
|
3 Net
financing costs consist of financing costs less any investment
income earned.
|
Balance Sheet Highlights
At the end of the third-quarter 2018 the Company reported:
- $156 million in cash and
short-term investments (up from $34
million at the August 31, 2017
year-end);
- $26.9 million in combined
biological assets and inventories (up from $5.4 million at year-end);
- $83 million in property, plant
and equipment (up from $45 million at
year-end);
- $9 million in current liabilities
(up from $6 million at year-end);
- $98 million in long-term debt and
convertible debentures (up from $3
million at year-end);
- 124.6 million outstanding shares (103.5 million at year-end);
and
- 140.5 million fully-diluted shares (114.2 million at year-end)
– including 7.8 million options (6.3 million at year-end), 8.1
million warrants (4.3 million at year-end), and 21.2 million shares
(–Nil at year-end) if the convertible debentures are converted at
their conversion price of $5.42.
Outlook
- Phase 4a (26 grow rooms) and 4b
(27 grow rooms) construction expansions began in Q4 including a
substantially complete 40-megawatt (peak capacity) substation worth
$4 million – total cost of Phases 4a
and 4b (including the $4 million spent on the substation) estimated to
be $70 million bringing target
production capacity to 89,000 kg/annum;
- Phase 4c (24 grow rooms) which has an estimated cost of
$40 million would bring target
production capacity to 113,000 – construction scheduled to begin in
January 2019;
- Organigram expects to close its previously announced
investments by the end of the quarter and is looking to augment its
domestic and global capabilities with further investments and/or
acquisitions; and
- Company is confident it will be able to announce further
provincial agreements in the adult recreational market in the
current quarter.
For more information, visit www.Organigram.ca
About Organigram Holdings Inc.
Organigram Holdings Inc. is a TSX Venture Exchange 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 the highest-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. In anticipation of the legal adult use recreational
cannabis in Canada, Organigram has
developed a portfolio of brands including The Edison Cannabis
Company, Ankr Organics and Trailer Park Buds. Organigram's primary
facility is located in Moncton, New
Brunswick and the Company is regulated by the Access to
Cannabis for Medical Purposes Regulations ("ACMPR").
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
This news release contains forward-looking information which
involves known and unknown risks, uncertainties and other factors
that may cause actual events to differ materially from current
expectations. Important factors - including the availability of
funds, consummation of definitive documentation, the results of
financing efforts, 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 on SEDAR (see
www.sedar.com). Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the
date of this press 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.
SOURCE OrganiGram