Organigram Global, Inc. Q4 FY2024 earnings call

• Fiscal 2024 was marked by 4 consecutive quarters of expanding net revenue, rising adjusted gross margins, and a 55% full-year adjusted EBITDA growth over the prior year.
• Q4 2024 saw strong adjusted EBITDA of $5.9 million and an adjusted gross margin of 37%, holding the number 2 market share in the Canadian cannabis market with 7.6% in September.
• Acquired Motif, the largest private licensed producer in Canada by market share, adding ~$86 million in run rate net revenue and bolstering positions in vapes and pre-rolls.
• Internationally, the company expanded to 8 international supply partners and completed the EU GMP audit, with expected certification in early 2025 to enhance international profitability.
• Operational wins included Q4 2024 harvesting over 23,000 kg of flower (+10% year-over-year), converting grow rooms to optimize power usage, seed-based cultivation contributing to cost savings, increased pre-roll and gummy production, and hash production rising to 1.1 million units.

In fiscal 2024, Organigram achieved sequential net revenue expansion across quarters. Domestically, the acquisition of Motif added approximately $86 million in run rate net revenue. Internationally, the company expanded to 8 international supply partners, and completion of the EU GMP audit (expected certification in early 2025) is set to make international sales more profitable. Key product segments: Flower business grew with Big Bag O' Buds brand at 25% year-over-year; pre-rolls moved from number 6 to number 3, gaining 2.4 market share points; gummies and hash held dominant positions with 20.9% and 22.6% market share respectively. SHRED brand accounted for almost 60% of total market share, while BOXHOT from the Motif acquisition contributed significantly to revenue.

• Anticipates fiscal 2025 to be a year of growth, with the Motif acquisition enhancing net revenue and earnings potential.
• Expects half of the $10 million cost synergies from the Motif acquisition to be realized in fiscal 2025.
• Aims for stabilized gross margins above 35% and positive adjusted EBITDA in most future reporting periods, with full-year adjusted EBITDA expected to exceed that of fiscal 2024.
• International sales are projected to become more profitable upon EU GMP certification in early 2025.

• International markets face increased competition from other Canadian LPs investing in these markets, potentially leading to price compression.
• Regulatory changes in Canada and the US, such as potential excise tax changes or delays in recreational cannabis pilot programs in Germany, could impact growth.
• Dependence on reputable third-party providers for market share data introduces the risk of inaccuracies.

Q: Aaron Grey from Alliance Global Partners asked about leveraging Motif's core competencies and vape innovation.

A: Beena Goldenberg responded that they are leveraging Motif's credibility in the vape category, using expertise to integrate innovations, and benefiting from synergies like ingredient cost inputs and a centralized warehouse in London.

Q: Frederico Gomes from ATB Capital Markets asked about international market competition and FAST technology feedback.

A: Beena Goldenberg mentioned international markets are competitive but EU GMP certification gives an edge; Tim Emberg stated FAST technology feedback is positive, and they're looking to use it in the U.S. Hemp Delta-9 space.

Q: Pablo Zuanic from Zuanic & Associates asked about shying away from THC in the U.S.

A: Beena Goldenberg explained they're focusing on Hemp Delta-9 as a compliant entry to the U.S. market, using Jupiter fund investments to benefit today's business.

Q: Yewon Kang from Canaccord Genuity asked about OpEx stability and Germany market growth.

A: Greg Guyatt said OpEx is expected to be relatively stable with Motif integration, and Beena Goldenberg discussed Germany's significant growth potential despite regulatory delays, with strong demand in the medical market.