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Organigram Reports Record Fourth Quarter and Full Year Fiscal 2022 Results

TORONTO , November 29 /Businesswire/ - Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), (the “Company” or “Organigram”), a leading licensed producer of cannabis, announced its results for the fourth quarter and year ended August 31, 2022 (“Q4 Fiscal 2022” or "Fiscal 2022").

"In Fiscal 2022, our innovative product launches, comprehensive retail distribution, sales execution, and operational excellence helped Organigram become a leading consumer products company in the cannabis sector," said Beena Goldenberg, Chief Executive Officer. "During the year, we increased and optimized production to meet consumer demand, drove market share gains nationally and solidified our position as serious competitors in several new categories. In Fiscal 2023 we expect continued success as we build on the high recognition of our brands, our track record of innovation and our proven ability to execute.

Select Key Financial Metrics

(in $000s unless otherwise indicated)

 

Q4-2022 

 

Q4-2021

 

 % Change

 

Fiscal 2022 

 

Fiscal 2021

 

% Change 

Gross revenue

 

65,657

 

 

36,182

 

 

81

%

 

209,109

 

 

109,859

 

 

90

%

Excise taxes

 

(20,177

)

 

(11,317

)

 

78

%

 

(63,300

)

 

(30,696

)

 

106

%

Net revenue

 

45,480

 

 

24,865

 

 

83

%

 

145,809

 

 

79,163

 

 

84

%

Cost of sales

 

36,718

 

 

25,867

 

 

42

%

 

119,037

 

 

103,567

 

 

15

%

Gross margin before fair value changes to biological assets & inventories sold

 

8,762

 

 

(1,002

)

 

974

%

 

26,772

 

 

(24,404

)

 

210

%

Realized loss on fair value on inventories sold and other inventory charges

 

(10,191

)

 

(7,286

)

 

40

%

 

(35,204

)

 

(35,721

)

 

(1

)%

Unrealized gain (loss) on changes in fair value of biological assets

 

15,677

 

 

11,639

 

 

35

%

 

40,001

 

 

31,726

 

 

26

%

Gross margin

 

14,248

 

 

3,351

 

 

325

%

 

31,569

 

 

(28,399

)

 

211

%

Adjusted gross margin1

 

10,362

 

 

3,017

 

 

243

%

 

33,390

 

 

3,563

 

 

837

%

Adjusted gross margin %1

 

23

%

 

12

%

 

92

%

 

23

%

 

5

%

 

360

%

Selling (including marketing), general & administrative expenses2

 

15,657

 

 

12,415

 

 

26

%

 

59,768

 

 

45,727

 

 

31

%

Adjusted EBITDA1

 

3,232

 

 

(4,818

)

 

167

%

 

3,484

 

 

(27,643

)

 

113

%

Net loss

 

(6,144

)

 

(25,971

)

 

76

%

 

(14,283

)

 

(130,704

)

 

89

%

Net cash used in operating activities

 

(19,695

)

 

(7,699

)

 

156

%

 

36,211

 

 

28,589

 

 

27

%

1 Adjusted gross margin, adjusted gross margin % and Adjusted EBITDA are non-IFRS financial measures not defined by and do not have any standardized meaning under IFRS; please refer to “Non-IFRS Financial Measures” in this press release for more information.

2 Excluding non-cash share-based compensation.

3 During Fiscal 2022, certain reclassifications have been made to the prior periods comparative figures to enhance comparability with the current period amounts, none of the reclassifications resulted in a change to net loss or shareholders' equity. See Note 29 of the Financial Statements.

 

Select Balance Sheet Metrics (in $000s)

 

AUGUST 31,

2022

 

AUGUST 31,

2021

 

% Change

Cash & short-term investments (excluding restricted cash)

 

98,607

 

183,555

 

(46

)%

Biological assets & inventories

 

68,282

 

48,818

 

40

%

Other current assets

 

54,734

 

28,242

 

94

%

Accounts payable & accrued liabilities

 

40,864

 

18,952

 

116

%

Current portion of long-term debt

 

80

 

80

 

%

Working capital

 

166,338

 

234,349

 

(29

)%

Property, plant & equipment

 

259,819

 

235,939

 

10

%

Long-term debt

 

155

 

230

 

(33

)%

Total assets

 

577,107

 

554,017

 

4

%

Total liabilities

 

69,049

 

74,212

 

(7

)%

Shareholders’ equity

 

508,058

 

479,805

 

6

%

“We are pleased with record net revenue and the third consecutive quarter of positive Adjusted EBITDA achieved in Q4 Fiscal 2022. This is a reflection of our disciplined approach, the execution by our team and our success at integrating acquisitions,” added Derrick West, Chief Financial Officer. “We enter Fiscal 2023 well-capitalized and with a proven strategy to continue to generate shareholder value.”

Key Financial Results for the Fourth Quarter and Fiscal 2022

  • Net revenue:
    • Compared to the prior period, net revenue increased 83% to $45.5 million, from $24.9 million in Q4 Fiscal 2021. The increase was primarily due to an increase in adult-use recreational revenue, partly offset by lower average net selling price (“ASP”) due to product mix and a decrease in medical revenue.
    • For Fiscal 2022, net revenue increased 84% to $145.8 million from $79.2 million in the previous year primarily due to an increase in recreational and international revenue, partially offset by a decrease in medical sales.
  • Cost of sales:
    • Q4 Fiscal 2022 cost of sales increased to $36.7 million, from $25.9 million in Q4 Fiscal 2021, primarily as a result of the increase in sales volume in the adult-use recreational market.
    • For Fiscal 2022, cost of sales was $119.0 million, compared to $103.6 million in the previous year.
  • Gross margin before fair value changes to biological assets, inventories sold, and other charges:
    • Q4 Fiscal 2022 margin improved to $8.8 million from negative $1.0 million in Q4 Fiscal 2021.
    • In Fiscal 2022, margin improved to $26.8 million from negative $24.4 million in Fiscal 2021. Quarterly and annual improvement were both positively impacted by higher net revenue, lower cost of production and a reduction in inventory provisions and unabsorbed overhead costs.
  • Adjusted gross margin5:
    • Q4 Fiscal 2022 adjusted gross margin was $10.4 million, or 23% of net revenue, compared to $3.0 million, or 12%, in Q4 Fiscal 2021.
    • In Fiscal 2022, adjusted gross margin was $33.4 million, or 23% of net revenue, compared to $3.6 million, or 5% in Fiscal 2021.
    • The improvement in quarterly and annual results was largely due to higher overall sales volumes and improved efficiency, net of the impact of a lower average selling price.
  • Selling, general & administrative (SG&A) expenses:
    • Q4 Fiscal 2022 SG&A expenses increased to $15.7 million from $12.4 million in Q4 Fiscal 2021.
    • In Fiscal 2022, SG&A expenses increased to $59.8 million, compared to $45.7 million in Fiscal 2021.
    • Annual SG&A expenses as a percent of net revenue has decreased from 57.8% to 40.9%.
    • Both quarterly and annual increases were primarily due to acquisitions and the higher spend to support the growth in the business.
  • Adjusted EBITDA6:
    • Q4 Fiscal 2022 Adjusted EBITDA was $3.2 million compared to negative $4.8 million in Q4 Fiscal 2021.
    • Adjusted EBITDA was $3.5 million for Fiscal 2022, compared to negative $27.6 million in Fiscal 2021.
    • The improvement in quarterly and annual results is primarily attributable to the increase in adjusted gross margins due to the higher volume of products sold and lower production costs.
  • Net loss:
    • Q4 Fiscal 2022 net loss was $6.1 million, compared to a net loss of $26.0 million in Q4 Fiscal 2021.
    • In Fiscal 2022, net loss was $14.3 million, compared to $130.7 million in Fiscal 2021.
    • The quarterly and annual decrease in net loss is primarily due to the increased revenues, lower production costs and a decrease in inventory provisions and unabsorbed overheads.
  • Net cash used in operating activities:
    • Q4 Fiscal 2022 net cash used in operating activities was $19.7 million, compared to $7.7 million in Q4 Fiscal 2021.
    • In Fiscal 2022, net cash used in operating activities was $36.2 million, compared to $28.6 million in Fiscal 2021.
    • The year over year increase to cash used in operating activities is primarily due to the higher working capital needs resulting from the growth in revenues.

The following table reconciles the Company's Adjusted EBITDA to net income (loss).

 

Adjusted EBITDA Reconciliation

(in $000s unless otherwise indicated)

 

Q4-2022

 

Q4-2021

 

Fiscal 2022

 

Fiscal 2021

Net loss as reported

 

$

(6,144

)

 

$

(25,971

)

 

$

(14,283

)

 

$

(130,704

)

Add/(Deduct):

 

 

 

 

 

 

 

 

Financing costs, net of investment income

 

 

(364

)

 

 

(286

)

 

 

(1,058

)

 

 

2,106

 

Income tax expense (recovery)

 

 

(299

)

 

 

 

 

 

(88

)

 

 

 

Depreciation, amortization, and (gain) loss on disposal of property, plant and equipment (per statement of cash flows)

 

 

7,570

 

 

 

17,349

 

 

 

31,487

 

 

 

33,459

 

Impairment of intangible assets

 

 

 

 

 

1,701

 

 

 

 

 

 

1,701

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