Organigram Global, Inc. Q3 FY2024 earnings call

• Domestic Performance: Canadian recreational business grew 25% YOY; maintained over 7% market share for eight consecutive months; achieved highest market share in New Brunswick (25.8%) and Quebec (9.3%); held number one positions in milled flour, hash, and pure CBD gummies. Launched FAST nanoemulsion technology for gummies, on track to launch in fall.
• International Expansion: Invested $21M in Sanity Group to establish foothold in Europe; Sanity is a leading cannabis company in Germany with number two flower brand; signed supply agreements in Australia and U.K.
• Efficiencies and Savings: Yield increased 28% YOY and 13% QoQ; seed-based production from Phylos investment exceeded expectations; post-processing efficiencies realized; trials for reducing cannabinoid waste in edibles facility.
• Financials: Adjusted EBITDA was $3.5M in Q3 fiscal 2024 (compared to negative $2.9M in prior year); net income was $2.8M (compared to net loss of $213.5M in prior year); strong balance sheet with $89.5M cash as of June 30, 2024.

Domestic: In Q3, the Canadian recreational business grew 25% year-over-year, driving overall net revenue. Net revenue has grown sequentially every quarter of fiscal 2024, with over 9% growth versus Q2. Organigram holds various market shares in different product categories in Canada, such as 16.7% in edibles domestically. International: In Q3, Organigram made an approximately $21 million investment into German cannabis leader Sanity Group, and has signed new supply agreements with customers in Australia and the U.K. Revenue contribution: Domestic is the larger segment, while international is expanding through strategic investments and partnerships.

• Q4 expected to be largest quarter in Canadian cannabis history, with Organigram expecting continued revenue growth.
• Anticipates launch of FAST nanoemulsion gummies in fall.
• On track to meet $10M cost savings target for fiscal 2024.
• Continues to focus on international expansion and leveraging EU-GMP certification for export opportunities.

• Market competition and onerous regulations in Canada, leading to market share erosion for top LPs.
• Delays in EU-GMP certification audit and paperwork, which could impact international exports.
• Supply chain challenges in international markets, such as delays in supplying product to Sanity Group in Germany due to ramp-up time.

Q: Could you provide more color on when EU-GMP certification is expected and how capacity will be allocated between domestic and international once approved?

A: EU-GMP ready since earlier this year, awaiting German regulator audit (expected in fall), paperwork to take couple months, prioritizes international sales for higher margin then protects domestic branded sales.

Q: Can you comment on Sanity Group's growth in Germany and where the growth is coming from?

A: Sanity has seen business double since April 1, but challenge is volume to supply market as product takes 5 months from planting to harvest; excited about opportunity as Sanity has more initiatives.

Q: How does seed-based production impact margins and yield?

A: Seed-based production has shorter cycle time (70 days vs 100 days for clone-based), more turns in facility; auto flower seeds have less plant care required, leading to labor savings and margin improvement.

Q: Comment on pricing environment in Canada and market evolution?

A: Flower pricing has stabilized and picked up, seen in B2B sales and large format sales; mix issue causes average price flatness, but like-to-like on 28 gram format shows pricing pickup; edible segment facing price compression but nanoemulsion gummies expected to help differentiate.