Organigram Global Inc. · TSX:OGI
Organigram Global — Q3 2023 Earnings Presentation
49 slides from Organigram Global's earnings presentation, Jul 13, 2023
Slide 1: Investor Presentation Q3 Fiscal 2023
INVESTOR PRESENTATION NASDAQ (OGI) TSX (OGI) Q3 Fiscal 2023 07 | 13 | 23 1
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT This document is current as of July 13, 2023, except where otherwise stated. The management’s discussion and analysis and other Company documents filed from quantitative reconciliation to the most directly comparable IFRS measure, see the information contained in this presentati
Slide 3: Who We Are
WHO WE ARE • Founded in 2013 • Award-winning cannabis licensed producer • Operations are spread across three provinces Our Vision: To be a respected global leader in the emerging cannabis movement Our Mission: To delight consumers with trusted brands that deliver innovative cannabis products and exp
Slide 4: Our Strategy
OUR STRATEGY INNOVATION CONSUMER FOCUS EFFICIENCY EXPANSION Leverage our brands, product portfolio and culture of innovation to: Increase Drive Deliver long-term Reach market share profitability shareholder value new markets 4
Slide 5: Organigram Key Strengths
ORGANIGRAM KEY STRENGTHS STRONG STATE-OF-THE- HIGH NATIONAL & INNOVATION EXCELLENCE IN BALANCE SHEET ART FACILITIES PERFORMING INTERNATIONAL FOCUS EXECUTION REACH • Negligible debt (less • Moncton facility is • $209M revenue in • National sales and • First to market with • Consumer insights- than $0
Slide 6: Established Trend of Revenue Growth
ESTABLISHED TREND OF REVENUE GROWTH Nine-Months FYTD Annual Revenue 2023 Revenue $ million $ million $209.1 $162.2 $145.8 $115.6 $109.8 $103.3 $97.5 CAGR 2019-2022 $86.7 $80.4 $79.1 Net revenue: 21.9%1 Gross revenue: 28.9% 1. Net revenue is a non-IFRS financial measure. See the cautionary statement
Slide 7: Significant International Sales Growth
SIGNIFICANT INTERNATIONAL SALES GROWTH $18.4 $15.1 INTERNATIONAL GROSS AND NET REVENUE1,2 $ millions High margin international sales expected to increase further in F2024 $3.8 1. International shipments do not attract Canadian Federal excise taxes and therefore gross, and net revenues are equal. 2.
Slide 8: Quarterly Update
QUARTERLY UPDATE Q3 F2023 8
Slide 9: A Leading Canadian LP
A LEADING CANADIAN LP #3 market share among Canadian LPs1 #1 share for milled flower, #1 in hash, #3 in gummies1 #1 LP in the Maritimes, #3 in Ontario, #3 in Quebec1 1. Hifyre data extracted July 5, 2023 9 9
Slide 10: Nine-Months Fiscal YTD Revenue
NINE-MONTHS FISCAL YTD REVENUE $162.2 $143.5 $115.6 $100.3 REVENUE $78.3 $78.0 $ millions $73.7 $64.1 $66.4 $54.3 1. Net revenue is a non-IFRS financial measure. See the cautionary statement regarding non-IFRS financial measures. FYTD 2019 FYTD 2020 FYTD 2021 FYTD 2022 FYTD 2023 1 Net Revenue Gross
Slide 11: Adjusted Gross Margin
ADJUSTED GROSS MARGIN Quarterly Adj. Gross Margin Nine-Months Fiscal YTD Adj. Gross Margin vs. Prior Year $32.3 $21.0 ADJUSTED GROSS MARGIN1 $ millions and % of Net Revenue $13.4 $12.8 $10.4 $9.3 $8.2 $6.1 1. Adjusted gross margin is a non-IFRS financial measure not defined under IFRS and which does
Slide 12: Adjusted EBITDA
ADJUSTED EBITDA Quarterly Adj. EBITDA Nine-Months FYTD Adj. EBITDA vs. Prior Year $8.3 $5.6 $5.6 $3.2 ADJUSTED EBITDA1 $ millions $0.6 $0.3 1. Adjusted EBITDA is a non-IFRS Financial Measure not defined by and does not have any standardized meaning under IFRS; please -$2.9 refer to the Company’s Q3
Slide 13: Q3 F2023 Highlights
Q3 F2023 HIGHLIGHTS • Recreational net revenue was $92.5 million for the nine months ended May 31, 2023, an increase of $8.0 million over the same prior-year period • Increased sequential net revenue from Canadian recreational business by 7% vs. Q2 driven by continued success in hash and rebound in
Slide 14: Strong Balance Sheet and Liquidity
STRONG BALANCE SHEET AND LIQUIDITY • Capital position is healthy, and there is sufficient liquidity available for the near to medium term • On May 31, 2023, the Company had cash and short-term investments of $75 million • Negligible debt (less than $0.2 million) 14
Slide 15: Q3 Fiscal 2023 Key Financial Metrics
Q3 FISCAL Q3 AND NINE MONTHS ENDED MAY 31, 9-months 9-months 2023 Q3 ‘23 Q3 ‘22 % Change ended ‘23 ended ‘22 % Change Gross revenue 48.4 55.2 (12%) 162.2 143.5 13% 2023 KEY Excise taxes (15.6) (17.1) (8%) (46.6) (43.1) 8% FINANCIAL Net revenue1 32.8 38.1 (14%) 115.6 100.3 15% Cost of sales 32.3 29.4
Slide 16: Fiscal 2023 Outlook
FISCAL 2023 OUTLOOK • Expecting solid Fiscal ‘23 net revenue – anticipated to be higher than Fiscal ‘22 due to: • Strong market share – positioned as the #3 LP1 as of May 2023 • Continued expansion of product portfolio in multiple segments • Focus on expansion in key growth categories of vapes and p
Slide 17: Potential Upside for Gross Margins
POTENTIAL UPSIDE FOR GROSS MARGINS • Anticipate improved economies of scale and efficiencies as cultivation and production volumes continue to increase • Leverage the increased annual capacity at Moncton facility – realizing $7 million in annualized savings in 2024 and targeting an additional $8 mil
Slide 18: Brand Portfolio
BRAND PORTFOLIO 18
Slide 19: Well-Rounded Brand Portfolio
WELL-ROUNDED BRAND PORTFOLIO NEW Pricing Value Value Value Value Premium Premium Craft Segment Pre-Milled Flower, Pre-Roll Joints, Whole Flower, Available / Hashish Infused Gummies, Whole Flower CBD & Minor Cannabinoid Pre-Roll Joints, Infused Whole Flower Planned Whole Flower Hash Infused Pre-rolls
Slide 20: Consumer Segmentation
CONSUMER SEGMENTATION: Cheap High Male Lifestyle Passionate Female Therapeutic Problem SEGMENT Premium Craft Seeker Social Dabbler Urban Trend Follower Chaser Enthusiast Believer Solver % CONSUMERS 15% 13% 6% 12% 20% 25% 10% Canada vs ATL % VOLUME Canada vs ATL 23% 12% 11% 27% 13% 3% 11% • Seeking t
Slide 21: Dynamic Brand Performance
DYNAMIC BRAND PERFORMANCE Rip Strips Sales have EXPLODED in Monjour Market Share has DOUBLED vs Organigram is the #1 LP in Concentrates Hash: Prior Year • Organigram holds 22% of national • First 2 months in market: +60,000 • Monjour holds more than half of the market share in Hash as of fiscal Q3,
Slide 22: Dynamic Brand Performance
DYNAMIC BRAND PERFORMANCE SHRED X Heavies – 40%+ THC Infused Pre-Rolls (IPRs) Tube Style Pre-Rolls • IPR's are fastest growing category in Canada • 10x 0.4g pre-rolls • Launched end of May 2023 • Huge flavor in a low-profile and familiar format • Initial traction far exceeding expectations • Excelle
Slide 23: Operations
OPERATIONS 23
Slide 24: Moncton: State-of-Art Cultivation Centre
MONCTON: STATE-OF- ART CULTIVATION CENTRE ü 85,000 kg/year of low-cost high-quality indoor flower • 500,000 sq. Ft. campus located in Moncton, NB – One of the largest indoor cannabis facilities in the world • Unique, modular, three-tier, strain-specific grow rooms with 245,000 sq. Ft. of growing spa
Slide 25: Lac Supérieur: Premium Quality Cannabis and Hash Production
LAC SUPÉRIEUR: PREMIUM QUALITY CANNABIS AND HASH PRODUCTION ü Acquired in Q2 F2021 - drove #1 market share of hash by Q1 F20231 • Located in Lac-Supérieur, Québec (near Mont-Tremblant) • Producer of hang dried, trimmed by hand, artisanal craft cannabis, and premium Afghan-style hash • 30,000 sq. ft.
Slide 26: Winnipeg: Edibles and Derivatives Facility
ü Large scale automation and innovative products driving #2 WINNIPEG: market share1 EDIBLES AND • Acquired in Q3 F2021 - Organigram achieved #3 market share in gummies and #1 in pure-CBD gummies by Q1 F20231 DERIVATIVES • Purpose-built, highly automated, 51,000 sq. ft. facility with state-of-the-art
Slide 27: Investments and Collaborations
INVESTMENTS AND COLLABORATIONS 27
Slide 28: BAT & Organigram Product Development Collaboration & Strategic Investment
B.A.T & ORGANIGRAM PRODUCT DEVELOPMENT COLLABORATION & STRATEGIC INVESTMENT TRANSACTION HIGHLIGHTS • March 2021 C$221M strategic investment from subsidiary of BAT for 19.9% equity interest1 in Organigram • Product Development Collaboration (PDC) with formation of a Center of Excellence (CoE) at our
Slide 29: Organigram & PDC Innovation Funnel
ORGANIGRAM & PDC INNOVATION FUNNEL ORGANIGRAM INNOVATION STRATEGIC PRINCIPLES Fiscal 2023 Fiscal 2024 Annual Plan Fiscal 2025 Strategic Plan 149 NEW LAUNCHES CONTINUED INNOVATION ROLL-OUT • 1 Core Disruptor per HIGH SPEED PRE-ROLL PLATFORM + + PRODUCT HASH / PRE-ROLL PIPELINE CONTINUED INNOVATION RO
Slide 30: Investment in Disruptive Vaping Technology
INVESTMENT IN DISRUPTIVE VAPING TECHNOLOGY • In March of 2023, Organigram invested C$5.5M into Greentank, a vape R&D firm and hardware manufacturer • Greentank's heating technology is the first meaningful innovation in the vape space in almost a decade • Invented a novel heating element which replac
Slide 31: Investment in Seed Genetics & THCV
INVESTMENT IN SEED GENETICS & THCV • In May of 2023, Organigram made its first investment into the U.S cannabis market by issuing a strategic convertible loan to Phylos • Phylos will enable Organigram to accelerate the launch of products containing THCV in the Canadian market – THCV provides consume
Slide 32: Investment in Disruptive Technology-Biosynthesis
INVESTMENT IN DISRUPTIVE TECHNOLOGY-BIOSYNTHESIS BIOSYNTHESIS How it works? A proprietary Biosynthesis can be used to produce cannabinoid cannabinoids that are identical to those • 49% ownership (if convertible debt converted) of Hyasynth, a manufacturing produced by the plant itself. pioneer in can
Slide 33: International
INTERNATIONAL 33
Slide 34: Key International Supply Arrangements
KEY INTERNATIONAL SUPPLY ARRANGEMENTS • Currently shipping to medical markets in Australia and Israel • In first nine months of F2023 shipped $18.4 million in flower vs. $15.1 million in full year F2022 • November 17, 2022: entered into a new multi-year Strategic Agreement with Canndoc to supply up
Slide 35: Market Outlook
MARKET OUTLOOK 35
Slide 36: Solid Projected Growth in Rec Market
SOLID PROJECTED GROWTH IN REC MARKET $6.5 $6.3 $6.0 CANADIAN ADULT-USE $5.5 RECREATIONAL MARKET – CALENDAR YEARS (excludes Medical) $ Billions Source: The Brightfield Group, September 7, 2022 2023 2024 2025 2026 36
Slide 37: 258% Growth in Retail Stores
258% GROWTH IN RETAIL STORES 3,712 285% CANNABIS RETAIL STORES • Ontario store count grew by 1,565% 1,698 • All of Canada store count grew by 285% 1565% 963 ONTARIO Source: Source: MJBizDaily, Statistics Canada, Feb. 15, 2023 102 Jul-20 Feb-23 37
Slide 38: Appendix
APPENDIX 38
Slide 39: BAT Transaction Summary
BAT TRANSACTION SUMMARY • Subsidiary of BAT subscribed for 58.3M common shares of Organigram, which represented a 19.9% equity interest in March 20211 on a post-transaction basis • Total proceeds to Organigram in March 2021 of ~C$221 million (the “Investment Proceeds”) Investment • The price per sha
Slide 40: An uplifting & vibrant value brand focused on convenience
An uplifting & vibrant value brand focused on convenience. Tropic Thunder 7g pre-milled Wild Berry Blaze SHRED’ems Gnarberry 1g 510 vape SHRED X Rip Strips 40
Slide 41: An imaginative brand with iconic strains and stellar extracts
An imaginative brand with iconic strains and stellar extracts. Holy Mountain Mac-1 3.5 g, R*ntz 3.5g, Pressed Hash 41
Slide 42: Delivering high-quality ounces in a variety of strains
Delivering high-quality ounces in a variety of strains. Pink Cookies I.C.C. Ultra Sour 42
Slide 43: CBD and minor cannabinoid gummies
CBD and minor cannabinoid gummies, designed for a personal wellness ritual. Monjour Berry Good Day Monjour Orchard Medley 43
Slide 44: A premium brand focused on flower & innovation
A premium brand focused on flower & innovation. Limelight 3.5g dried flower Edison JOLTS – Electric Lemon Cherry Limelight Bubble Hash Joints 44
Slide 45: Premium hash, inspired by the tradition of hashish
Premium hash, inspired by the timeless tradition of hashish. Tremblant 2g Hash 45
Slide 46: Craft cannabis featuring rare cultivars
Craft cannabis featuring rare cultivars grown with utmost attention and care. Laurentian Saisons 3.5 g 46
Slide 47: Q3 Fiscal 2023 Select Balance Sheet Metrics
Q3 FISCAL 2023 SELECT BALANCE SHEET METRICS SELECT BALANCE SHEET METRICS May 31, 2023 Aug 31, 2022 % Change Cash & short-term investments (excluding restricted cash) 52,735 98,607 (47)% Biological assets & inventories 81,832 68,282 20% Other current assets 45,829 54,734 (16)% In $000s unless Account
Slide 48: Q3 Fiscal 2023 Capital Structure
Q3 FISCAL 2023 CAPITAL STRUCTURE May 31, AUGUST 31, in $000s 2023 2022 Current and long-term debt 180 235 Shareholders’ equity 310,271 508,058 Total debt and shareholders’ equity 310,451 508,293 in 000s Outstanding common shares 321,970 313,816 Options 11,737 11,051 Warrants 16,944 16,944 Top-up rig
Slide 49: A Canadian Cannabis Leader
A CANADIAN CANNABIS LEADER NASDAQ (OGI) TSX (OGI) 49