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Organigram Holdings Inc. (Nasdaq: OGI) (TSX: OGI), the parent company of Organigram Inc., a leading licensed producer of cannabis, announced its results for the first quarter (Q1) of FY2022 ended November 30, 2021, yesterday as follows:

Q1 Financial Highlights

(All results are presented in Canadian dollars and compared to the previous quarter NOT the same quarter a year ago (i.e. Q1 2021) as the company reports to provide a more accurate trend the financial health of the company is undergoing. Go here to convert into other currencies.)

• Net Revenue: increased +22% to $30.4M
• Adj. Gross Margin $: increased +83% to $5.5M
  • as a % on Net Revenue: increased to 18% from 12%
• Sales, General & Admin.: declined 7% to $12.6M
• Adj. EBITDA:  improved by 60% to $(1.9)M
• Net Profit (Loss): loss decreased dramatically from $(26.0)M to $(1.3)M
• Cash on Hand: declined 8.5% to $168M

Management Commentary

Beena Goldenberg, CEO:

• “Our record-breaking results in the first quarter of Fiscal 2022 are a testament to our successful strategy to create innovative, high-quality products that align with the evolving preferences of the various segments of cannabis consumers.
• Our positive outlook for 2022 is further bolstered by the addition of Laurentian’s premium products to our portfolio...and the resumption of international sales, which will continue through the year.
• Our economies of scale continue to improve, thus reducing operating costs and driving significant improvements in adjusted gross margin and adjusted EBITDA.
• While we previously projected to achieve positive adjusted EBITDA in Q4, with the purchase of Laurentian that will be accelerated to Q3 Fiscal 2022.”

Derrick West, CFO: 

• “Our strong balance sheet and cash position will ensure that we are well-positioned to execute on our key growth initiatives for fiscal 2022. These include:
  • the expansion of our growing facility in Moncton to an annual capacity of 75,000 kilograms of flower from its current capacity of 55,000 kilograms, and
  • the build out of our Centre of Excellence in collaboration with BAT.
• These initiatives will further enhance our ability to drive innovation and solidify our position as a leading Canadian LP.”

Outlook

Net revenue

Expects a solid Q2 Fiscal 2022 revenue which will be significantly higher than Q2 Fiscal 2021, largely due to:

• stronger forecasted market growth and the increasing number of retail stores;
• being better able to fulfill the demand for its revitalized product portfolio with its increased production,
• revenue contributions from its newly acquired Laurentian facility,
• growing national adult-use recreational retail market share (“market share”) from 4.4% in Q1 of Fiscal 2021 to 7.5% in Q1 of Fiscal 2022,
• the resumption of shipments to Canndoc in Israel,
• being better equipped to fulfill greater demand in Fiscal 2022 with larger harvests expected as compared to Fiscal 2021,
• being well positioned to generate more revenue growth from the production of soft chews and other edible products with the specialized equipment in the Winnipeg Facility and
• the recent acquisition of Laurentian whose hash and artisanal craft cannabis products complement the Company’s product line and will benefit from the Company’s direct sales team and national distribution.

Adjusted gross margins

Expects to see a sequential improvement in adjusted gross margins in Q2 Fiscal 2022 and has put in place measures that it expects will further improve margins over time, namely:

• economies of scale and efficiencies gained as it continues to scale up cultivation, including the grow rooms that will be available after completing the construction of Phase 4C of the Moncton Campus;
• changes to its growing and harvesting methodologies and design improvements and environmental enhancements at its Moncton Campus which should result in higher-quality flower and improved yields;
• continued investment in automation which will drive cost efficiencies and reduce dependence on manual labor;
• international sales, which have historically attracted higher margins and are expected to represent a greater proportion of the Company’s revenue following the resumption of shipments to Canndoc Ltd.;
• continued investment in the Edison brand, including new strains and form factors such as pre-rolls and vape cartridges that generally attract higher margins;
• price increases to SHRED’s pre-milled flower SKUs;
• the recent launches of new products such as Edison Jolts (ingestible extracts), SHRED’ems, and most recently Monjour, which represent new potential avenues for growth with expected attractive long-term margin profiles; and
• increased margin contribution from the addition of the Laurentian portfolio of products.

SG&A Expenses

Q2 Fiscal 2022 SG&A is expected to increase slightly from Q1 Fiscal 2022 due to the addition of Laurentian.

International

Shipments to Canndoc Ltd., which resumed in Q1 Fiscal 2022, are expected to continue during Fiscal 2022.

Stock Performance

Organigram is a constituent in the munKNEE Pure-Play Canadian LP Pot Stock Index and, while it has performed better than all its peers except Aurora (see details here), it is DOWN -74.9% from its calendar 2021 high, DOWN -21% decline since the end of Q4, 2021 (end of August) and has continued DOWN -19% since the end of Q1, 2022 (end of November)