Organigram Global, Inc. Q1 FY2025 earnings call

• Motif acquisition integration: Progressing as planned, with initial estimate of $10 million annualized savings achievable and likely to be surpassed. Early wins in manufacturing, sales, and innovation.
• Market share growth: Expanded national market share by 500 basis points year-over-year and 100 basis points sequentially in high growth segments like pre-rolls and vapes. Regionally, number one in all regions except Quebec.
• Product innovations: Launched Edison Sonics gummies with proprietary FAST nano emulsion, SHRED Heavy Slims pre-rolls. Seed-based cultivation ramped up at Moncton facility, with 21% of harvests in Q1, and plans to increase flower output with LED lighting upgrade.
• International expansion: $21 million investment in Sanity Group positions Organigram in German medical cannabis market. Anticipate increased flower shipments to Germany and other markets upon Moncton facility's EU GMP certification expected spring 2025. International sales grew to $3.3 million in Q1.
• Operational efficiencies: Achieved $400,000 annual savings in Western Canada distribution, assessing London warehouse for Ontario logistics improvement.

In Q1 fiscal 2025, net revenue was $42.7 million, a 17% year-over-year increase. The recreational business grew 15%. Adjusted gross margin was $14.3 million (33%) vs $11.2 million (31%) in the prior year. International sales increased 2.3 times year-over-year to $3.3 million. Flagship brands SHRED and BOXHOT had combined retail sales approaching $100 million for the quarter and over $385 million over 12 months. Supporting brands Big Bag O’ Buds and Debunk saw market share growth. In pre-rolls, Organigram moved from number three to number one nationally, and introduced SHRED Heavy Slims. In vapes, Organigram was number one nationally with over 22% market share. Edison Sonics gummies saw strong demand. Regionally, Organigram was number one in all regions except Quebec where it was number four.

• Adjusted gross margin expected to stabilize around 35% in fiscal 2025, with fluctuations due to seasonality.
• Adjusted EBITDA expected to outperform 2024, with larger growth in back half of fiscal 2025 due to seasonality and international shipment timing.
• SG&A as proportion of net revenue expected to decrease further with Motif operational synergies.
• International sales expected to continue increasing throughout fiscal 2025.

Q: Just on the international front, any color on types of investments or acquisitions to capitalize on international growth, geographies, etc.?

A: Germany medical market has growth potential with $21 million investment in Sanity Group. Opportunities in Australian medical market for 2.0 products like vapes/gummies. Focus on Hemp Delta-9 space in US. Jupiter investment pool to look at higher opportunity international markets.

Q: On pro-forma company, color on profitability basis for EBITDA and trends?

A: Seasonality is important; back half of year typically stronger. Motif had three weeks in Q1, expect significant consolidated earnings next quarter. Consolidated EBITDA including Organigram and Motif expected to exceed last year's, with Q3 and Q4 ramping up profitability due to volume and synergies.

Q: Thoughts on Germany medical market growth, EU GMP certification completion, and oversupply headwinds?

A: EU GMP certification in Moncton facility eliminates middleman, increases margins. Strong partnership with Sanity Group leads to increased demand. While there may be price compression, low cost and high quality product, and strategic partnerships mitigate headwinds. Expect short-term growth projections on international to be positive.