OrganiGram (OGI) 12 Jan 212021 Q1 Earnings call transcript

Good morning. My name is Casey, and I'll be your operator today. At this time, I would like to welcome everyone to OrganiGram Holdings Inc.'s First Quarter Fiscal 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. please to you one question that question. follow-up ask limit one yourself and We

if any you requeue may You have further questions.

As being recorded Please go available conference Amy Schwalm, call replay to Investor would this At be Relations. President, I website. on a will OrganiGram's introduce time, like ahead. Vice and reminder, a this is

you, Casey. Thank

Strategy me Derrick West; Officer, today Chief Engel; Financial are Joining Luca. our OrganiGram's Officer, Chief Greg de Chief Executive Officer, Paolo and

adjusted that differ. will today's would other in I we differ. the various you and that during measures, other for directly our IFRS margin. see regarding report estimates which gross to more Before factors, call, These EBITDA cautionary measures release hand in will under today's like to them. and to risks will the Greg. comparable. differ information approach call Furthermore, that now this remind could adjusted calculating may financial over forward-looking not our refer begin, include meaning call are non-IFRS I and actual earnings not any Please language and measures so from certain our information cause press to from including results standardized we and assumptions Please have results about today's could review do issuers, these of actual

portfolio brand, morning, last resonating our period today. part sales store growth for as Thanks, first XXXX as most We're meaningful our the more you November. continue Ontario three the products adult recognized evidence Amy. cannabis quarter, recs thank strains on quarters to consumers. searched Good pleased for in are this we up the our few and can another strong new that ops. the one cash XX, website meet Edison November demand ended XX sequentially have reported been with to the of And recent our This we we of of XXXX. we've the And our joining from Since of us financial second as improving Edison for SKUs, February. new many cash of with fiscal and of Encouragingly, was results brands we launch We've July, before for we our about flow overall the staffing the come to of our We in existing revitalization our end three cultivation have with reinvigorate such brand. the extremely under active, from launch products. next new morning. excited new last operations and QX, products strength quarters in second introducing Since many to industry month the quarter peers, were the assets well pipeline plans. up positive we of started many ramp quarter support in XXXX, expected of to launched to our positive with contrast and of In and fiscal half flow in XX from we've generated more increased the the to that ones.

response THC particularly as largest alternative that I'll in the continue Ice will We Subsequent differentiate. strains, sizes Cream of believe flower product first ranges Indica to where higher and the new XX unique dominate THC. continue forms we gain US offerings there's market. in of THC our We're about the XX% in foreseeable Slurricane Canadian to plus potency dried a a dried more half traction. as very format value both opportunity to to on higher the Punch, in products, see we Blackberry in we We've flower flower demand larger with increased successfully number XXXX, they our focused of launched state legal with success new segment strains three to fiscal category. two by launched pre-rolls future in and portfolio, XX, and talk ICC, data, to rec also Edison quarter-end, a there margin us think moment. based on and Cake for good And or introducing even categories

expect forward we three high genetics. in cultivation Edison the to We our THC the the a we the the few to brand strains cycles least ones attract run under winners, to strongest over expect identify consumer continuous launch at them trial ultimately with, investment next of because as decide to quarters move new more result response. We

such benefits one three-tiered strain with grow continue our patient We cultivation these scale unique microclimates, where adjusted to from in to each rooms bespoke strain-specific to roll and our genetics Every grown data-backed launched in designed rooms facility number Opportunity rooms. of leverage Edison being full of new over facility. are strain. indoor our cultivation a rooms best-selling for customized grow which now offer Variables distinct to ensure Limelight process cannabinoid THC the deliberate We've quality. and optimize are and is company's up our and multiple the or cultivar strain. profile temperature and new as including of require consistent and light genetics flavor each months, before a trialed XX out to through and ultra-sour, multiple to past terpene the humidity, profile Edison a growth, high aroma protocols

nursery's originally healthy, genetics a were cannabis and sourced plants. processes premium ensure quality from high nursery. The Our help developed newest technology cultivars robust, from

spring for one high Sales and any beginning physical XXg pre-roll with offerings in of OrganiGram's offered expanded even shredded XXXX. aromas all with a each THC profiles environment strains or phenotype flavor more per our provide launched pre-roll we levels to reasons currently website the value and of in to We from the affordable for growing ramping It responded value a also product dried Ontario which is shake to also the brand originally trim our Trailblazer and one legalization in of from their Kushmas specific. terpenes for value our a cannabis quality, price and to products. the dry the of grown we to of In potency Our significantly our brand shortly. different since buds levels a an most unique was includes of or introduction of the that The do portfolio made is were of the conditions. X.Xg differentiator can results of revenue and on do pre markedly become on value flower, Particularly we to the THC have larger which SHRED, continues the searched launched category, us. high expectation launch SHRED more with the not The up stores. most competitive has believe sizes At versus Trailblazer option sizes December. store this of that in strain we milled in consumer not offerings. process XX% product cultivation of more and what At strategy will of contain with be is increasingly SHRED to continues in pandemic, flower the QX basis. both continues of QX, flower near and a dry dried is which whole indoor the end whole November are offer brand and format rec does flower large development the cannabis compete which segment COVID-XX Xg grown increasing genetics XXXX, existing I our launched under pre-milled and for recent alone. potency, are offerings Revisiting seasonal gram when on is focus differentiated the format well sell use contributed in staffing, affordable price focus growth the specifications of is same July higher limited convenience. the number terms The the and product three retail out, products same believe exceeded both onset This SHRED combine they're consumers. the and and adult quarter, including value flower on start our at on based in unique launches offers company's point. means expression. varieties, genetics Trailblazer plants and value three talk grown in was about of edition we specific properties, in Stix have

new beverage to and X.X X.X Rec a Rec products, categories. we've edible addition number innovative In of in vape, launched offerings

XXX-thread This extended after Just Torch three size consumers vape XXX for and to terpene Xg COX Trailblazer in XXX a trial new size high unique our quarter-end, and Flicker quality we format. X.Xg cartridges Xg infused offers lineup Trailblazer vaporizer. cartridges, suite and Spark, a of flavors. full the launched extract Glow cartridges Torch

mainstream in the of ERA premium for focused + Edison PAX ready-to-go cartridges. distillate pens distillate portfolio Our consumer Edison many includes vape products vape meet also and increasing on the segments. We're concentrations demand. to THC products and + our Feather

So stay category. for changes come tuned this in to

Trailblazer Our chocolate quarter. in portfolio mocha flavor cannabis-infused bar chocolate new mint and we priced, launch expect value to our flavors, both Snax, available and this includes a

equipment of the five for be allows of chocolate infusion. sections filled state-of-the-art Our each higher the of for accuracy allowing separately, bar to

listings US for We has two cannabis in in product's limited in Edison what provinces, the the We greater as both of the launched than eight future. a expanded we near flavor seen the dissolvable a the we've we've to US quarter, dark gingerbread secure end well provinces potential remaining segment believe truffles expect to RE:MIX, chocolate we the as offer available milk beverage At Bytes – could than also have listings and This time. formulations date. for distribution and Edison seen to in powder. the

proprietary but cannabinoid-infused beverage July Colorado opportunity to beverage Insights suggest This XX% possible our data cannabis supported last year. a consuming versus significant one. Edison powders market market ability of Xmg controlled edibles sales. for disturbance, potentially of current by are from improved where cannabis the a beverages, unique which recent Colorado, have nano-emulsion also to technology reliable on portability, survey in technology provides They to the RE:MIX and of available THC representing a indicate three consumers anticipated a pre-mixed It's Headset a to THC state's allowing salinity, This extended traditional have a call, CBD, add nano small formats. the popularity, our mentioned to mechanical life sachets variations, department. developed represents a recreational their that shelf absorption two the by consumers, $XXX and XXmg believe in prefer is formulation XX%, sales Canada, liquid. experience top sachets temperature would sachets also increased category more OrganiGram for XXXX CBD estimates beverages As worth very with each, pH million This compared We that is powder data The Xmg to repeating, with each. Xmg rapidly to a nanodroplets, and majority of of risen earnings a in results generates potentially discretion, beverage and experience. made emulsion Two in last And to uniform. of and of and R&D dry and Market offers solid offers from sweeteners. with to five and compared is

date consumer we many to As response said, products. our the of new we're encouraged by for

and the we However, staff, out packaging chain what staffing when on another begun up to We in in hire inventory with and our to fulfillment focused get staff significant quarter. on remain want third consumers of we they understand improving already because missed by XXX supply they order processes have early rates. with to know stock-outs. plans cultivation, up XX opportunities mostly have frustration ramp sales We've can't in

COVID-XX. from of to identified build ensure negatively demand staff. Benefits revenue core QX be to list that due out not and and production Increased be internally, equity. QX margins recognized we the of should effort to drive we've we this of distribution an expected never as a to aim economies quarter and to in SKUs the impact continue result lock dampened to efficiencies for are may to related to we industry example, maximum take staffing stock For go and in downs sales in Further, brand scale. which hire greater know do

likely the in remainder November XX, near have of the And stores third Israel's the in to Ontario updated and and stores inspection, retail delivery since a completion physical to since cannabis been of click Control expect have comply stores Cannabis by be December making agricultural imported for certification regions example, with XX, offer Canndoc For to Peel progress, densely retail to and We're standards required and Union will good in practice mix, Standard province the purchases. work and as seeking to also being traffic. availability closed as Toronto remotely, still good demand. the The been up to in-store depend of populated Medical subject quarter. our Ontario successful conducted cannabis. limited anticipate the of Israel. on been In we as have and product the production We're early certified ramping we we shipments staffing desired to accommodate to collect able of services. closed future, resume Shipments to on

fiscal In to addition number QX, margins. the which potential of upside revenue greatly enhance identified have beyond we've to opportunities a gross

gain the efficiencies more Edison We cultivation potential The for being proportion to and the our strains, we cartridges, market as unabsorbed traction expect higher our more up on portfolio fixed volume launches to higher and packaging, the higher to overhead which revenue. decline costs. dedicated with total launches impact multipack economies attract in products have gain of vape gross scale the in scale of margin pre-rolls and positively as recent of horizon, including A as over greater these comprise margins. SKUs, such is margins Xg and time of charges

cost to dependence invest automation labor. reduce on to manual We drive efficiencies in continue and

results I'll in to identified of is For to over be a I end potential position commissioned before the been have call benefit expected with of And pass new in fiscal QX Derrick pre-roll operational more wrap a through margin number up. the our by the example, financial Project, opportunities starting detail and of XXXX. fully Taskforce Packaging and machine QX as go to a now reduction cost result XXXX. the

used term investment our Greg. with credit which was investments. million, The down left to financial balance as CAD XX million. pro short-term facility agreed with our we CAD the repayment loan pay XX forma Thanks, completed quarter Starting loan of position, the CAD of during and we million cash term our of CAD December XX million short us ended our the and amendment term and part a with XXX cash X, On quarter. of on to restatement

last As support. in we with public million an quarter, offering underwritten proceeds discussed strong in we from CAD raised XX gross institutional QX

As flow this CAD last past cash provided quarter to cash quarter three generated represented net the of In increase was net second operations operations. mentioned, X.X of cash by the which compared from Greg QX, positive million the the operations to operations period. of scaled The assets XX.X legalization. Rec prior in as CAD in capital working by used ahead of we year due million X.X improvement largely prior period's

and negative QX by XX% a SG&A results a to a from QX increased XXXX from in The in wage amount from selling largely of of XX.X XX.X loss XXXX. our to sales million producer the million revenue CAD as of million margin XX.X grew and costs adult general prior negative or the X.X not to adjusted in and XXXX. QX products. of net million recur CAD of year-over-year segment Total in in wholesale mainly Canadian of related total QX. offerings CAD and CAD revenue and lower lower X.XX in and in XX.X prior-year of CAD the quarter quarter. from quarter, all. prior-year XX% the non-cash at QX grew margin per million Canndoc, diluted CAD positive unabsorbed from XX.X XXXX, Turning those CAD higher comprising to declined XXXX, necessarily the CAD insurance CAD to CAD in share charge of to versus quarter, from overall EBITDA a to XX% lower expected net at QX of significantly opportunistic greater for in XX.X on XX.X provision, a changes my a adjusted primarily revenue quarter fair QX to XXXX CAD due revenue reflected QX value million costs, was XXXX. QX net driven period volumes or average X.X CAD XXXX, The XX.X and this X.X QX XX.X use positive inventory CAD or revenue of lower XX.X million QX and rec margin as XXXX. QX million basis XXXX. a from to gross positive in prior-year lower Despite million to QX value negative gross levels of inventory sequentially primarily QX CAD QX to from XX.X of increased CAD licensed net CAD compared result Negative year's single That per price rec sold million in grew fixed IFRS being gross mostly due the higher sales higher X.XX a use XX% million QX QX million million each net in rec similar CAD revenue gross XXXX. to of million. XXXX. overhead factors quarter cost year X.X of revenue XXXX million changes The as impacting percentage legalization greater in CAD EBITDA Higher of million increase to cost and margin the concludes due production X.X cost declined and million sales the XX.X prior-year's in XXXX. this XX.X taxes to gross margin result excise in XX.X gross million CAD to the Rec of proportion revenue Adjusted of reflected was loss respectively X.X to from to in QX XX.X CAD sales prior sales of net gross a quarter, increases. adjusted due due XXXX share of total revenue largely decreased to in to gross revenue a larger due due increase buyer wholesale million net CAD due largely down million temporary in remarks. revenue a XXXX was pause in compared assets declined gross of net production revenue past largely adult past

to I'll So, back call the Greg. pass

the progress from and XX% CAD coming X,XXX again more The based And of early industry in in Australia, to province estimated Canada including of Outside for count to expand latest billion the the Ontario. to the week, than tripling to approximately cannabis market mostly of rec number X.X store last growth large as July, store continues driver the on December, A Stats and rate announced it channel. sales make we by by run authorizations retail October stores. the month. Derrick. export stores, per to stores at international permits Ontario in provinces driven retail of in for of XXXX. Canada, serve of international look continue is grew data number doubling XXX Thanks, to the the Since XX increase with was via Israel Ontario's stores markets, the

a like comments I'd the recent because developments for make States United few cannabis. about to Finally, significant are

US Democrats, positive As runoff initiatives. the that elections everyone's to aware, is the likely for pro the control Senate results, cannabis Georgia and particularly election tipped

legalization followed we our initiatives is in we CBD the ultimately on, to considerable We've market. federally patiently commercialized be legal. that the opportunities still Many will While believe, of reward time To we we believe US the R&D that will and enter the in full particular work happen, found ultimately market, to monitor THC markets continue the closely. political we new risk exploring is paths products meet and unclear but has date, when criteria, not and clear likely changed. have markets of landscape take it to timing and CBD

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up go for my questions. remarks. could line Operator, and open if prepared concludes you ahead the So, that

David And your Kideckel of the question here from line comes first from Markets. Instructions]. Capital ATB [Operator

Congrats on the quarter.

quarters at here. over and if wondering you Just the providing next looking gross can profile margin several guidance here. – that that be Greg, I'm you won't your knowing comment, just formal

versus the revenue, whether overall or can premium in segment, Just so better mix, margin. with value we X.X on it's how respect just splits products, your to should get we about product grip think here gross X.X a

It's question. great a

So, indicated, certainly, flower up of two greatest past. our we makes And segment the a the last we'd over as couple value quarters, has dried been proportion the of those quarters in the revenue. than higher seen proportion over

to program our I introducing alluded As one keys cultivars. new of earlier, is our genetics and

introduce So, we new I.C.C and as did introduce late under Black Punch, three Slurricane, I have to in new Edison forward. December, coming products mentioned, cultivars we plans Cherry and additional

So, higher in banner have margin new Edison higher of higher average are selling they THC price. the those new because a genetics

we pre-roll in increase which, this do So, pre-roll earlier up, the production for well going cost and production One early lower by pre-rolls to again, efficiency evolves, It's expect to able the had of fully continue is end on volume. those big going But commissioned quarter, automation QX, our will have on to a of a but be example. margin couple size we that due as as important reduced not shift have be to what advantage do production. quarters operational goods earlier, Edison, the about that's by looking carts pre-roll us, I COVID, as previously, us. Xg. and for to efficient we is been to start forward for also equipment, to and plan big allow mentioned as to I only – new vape reduce to Trailblazer in SKU well, going a we a margin of and than our ramping were note us talked we're higher while

but we've certainly And takes good different able these and packs as we're impacted things of that's been at which overall that is the consumer the when the from. you're come to good an well, with that think number picture, on of new – until going it look us news working time. you we've very seen program on and really pre-rolls, optimize products, the have I up our the genetics to the sort On through multi one is In impact. does response genetics genetic you mix term, conditions near a getting through new as

a to So, forward be on prove able that we're to continue we're go basis. going to confident that

think the impacted us, staffing less than because of I were on we news market in said, producing for really of go basis. things that's a in is we one products, other good as forward process up of demand terms we're which our the the

that's opportunities key have taskforce reduce will forward. but of up, And overhead be for that's those efficiently. of keys gross that and an increasing also of initiatives the that of EBITDA we for one as going think cost place identified to the efficiencies the And with other will that I'd So, isn't the working very run optimize – areas, into adjusted can David, in number and unabsorbed key just – some by quarters improve look an over of us two and last QX, efficiencies. a back believe I organization. this say, And scaling we've in some thing the the packaging packings. is last bring impact kind margins, We've specifically, to will to really we on proven reductions. at have a to And been one continue now of reduce the past that case we really

takes really there. we I but off, guess consumer investments, genetics time as say would it I that ultimately, new in and pay the demand said, meet that, I are in our So, just going summary, believe strains to these to to get new

holidays? of product in portfolio, My the have and or given of have month you the your in during these and month December have revenue question any vapes, kind to effects, X.X you even any a of products chocolates, whether in products within has noticed beverages, with out seasonality overall unusual follow-up from times just particular, to those particular of two December COVID, stuck consumer but any perspective of do that's weeks of kind of and

right, And offerings. our as Stix Certainly, good every just It's our because Christmas have chocolate one product X.Xg think it's our I distribution the on to don't no. gingerbread to a Yeah, we've that specific as too of season, milk well pre-roll we tell beverage for Edison that Bytes, was and was David. some approaches, launched early province gingerbread truffle Kushmas as question, We seasonal with flavored. yet. did a look RE:MIX of that

only has expected, And we area we to so, impact tourism disposable stuff. vape those good. more of both understand thing COVID high and areas COVID and travelers have period on revenue as during cases the say, response some would that are I to by like areas as are pens. The share that. take the driven seen also like and was The of very an in through Those people those been that things and in And not and at that. events whole

been in again, anything of have seasonal. some carriers, have people other both income to of like seasonal taking of way were a offer our seasonality market. advantage couple very unique those So, kind disposable didn't been necessarily But kind to received may areas. see the offerings, diverting overall, I a But, of well but of we was of their which think part typically some

on Congrats the quarter.

the Stifel GMP. Your from line from Partheniou Andrew comes next question of

margin. if can the on conversation continue Maybe gross we

could QX. unabsorbed reduced be the margin restaffing gross costs think But benefit in mentioned you only QX. activities I in

Just detail activities Could are unabsorbed and main wondering source production items? provide the lower you a costs and little the more utilization? of bit reconcile two these if restaffing

I'll question. turn that Derrick to over that Yeah, maybe answer to

that fixed QX. have, overhead a the During level the was CAD quarter, during capacity million. had approximately XX% at was taxes as essentially and of And unabsorbed consequence X.X costs, which depreciation operating of insurance we we

cost production to amount cultivation would into per add a And we higher a As of normally quarter. to of staggered the as during second go of direct inventory impact and basis, be direct why and then the cost getting unobserved of impact true overheads would And the the brands be QX. the of an the operating but costs benefits, margins point, later overall be of our overall Greg's would quarters' But your add some lower to well charge impact the terms these benefit in overall in cost as and subsequent that benefits QX a really the of would They providing there sales and the he comment terms was staff, a starts it lower sales. unit and planning relates that perhaps and level QX quarters. that we to more a at dollar consequence, is rooms. our on as as to margin, of utilizing

same the you that yields increase on past lowering that you're noticed of the we kind planning in to – line, talked And on quality.

what before maybe kind Do part into combine think So, can margin levels that stabilizing? be you any can that, do when guidance, any the you're yields, also won't you strains, expect gross And we you lower new levels have you higher see this of internal of formal restaffing fully taking and and context what your metric? around also us obviously, margin in the activities where once Edison goals were but staffed? kind we of can providing increase production as you remind

Maybe off and Andrew. I'll answer start that,

basis I think, before amount we which QX that that, in right, we again, – be mind our product gram in and concentrates, also trim, a the up made or material from product also the plant. stopped the had of inventory extractable of of part and harvesting and of XX% we per would on when because commented keep decreasing yields we COVID knew – we of XXXX, of

an would had investment in with. genetics. yields, to we knew was and I on that of impact It that kind So, optimize work to said. necessarily We as have wasn't it overall optimize improving THC, TFC, begin yields to to our

conditions. You don't the have ideal

number know it the impacts of rooms to really takes drop. that different the a to You And cycles point. get and

We are seeing along certainly, with the improving quarter, last THC levels. yields over

I yields as starting lot been know products, to we've before able on don't move. them pricing see treat progress very to can on market. the people names range. that see strain second continue certainly strain yield to you started we THC the of you have from the make And for One to where seen positive be And go some helpful that's street to strains. target and is the attract of – is on for differential positive basis we of room demand. that's a the question using We've is to of a them as illicit there something depending because and terms different in specific the would we the back answering both that it's a So, legal to give recently And To product by want very, very launches comment also to are in XX% part in identify to the been well your that impact XX% marketplace have been areas, People kind based accordingly. a the the returned we've product in had THC I up. necessarily relative per actually a need and response. had market a every

in look rate a answer indicated, facility utilization, now had your our just the Derrick at think staffing question, about the utilization part of up, XX% we of second to that we to facility. I when prior

domestically, So staggered by cultivation people, an just packaging this not we only we be and as forward. but only and It's continue opportunity expect on levels adding to these internationally XX to over opportunities to time, will initiative XXX a going in see not to growing increase that. again, expand progress continue QX cultivation

question comes Global Your next with Aaron Partners. Grey from line of Alliance the

results. go kind given the back the and it obviously, election kind focus of First to because, how the of around – US of at looking of kind all, want on to of it's for made I that, a been commentary lot me, you're

kind So, CPG the market of or via into of other MSOs, seen US peers your some get businesses. CBD, you've

talked potential kind you're of best in about color right today, of just more laws of you you're kind look. Or now play be see aggressive in give So, as if to of could to and it and not whether might will the evolves? And how will of some those laws you of terms a there see the way US? believe there's into liking be move given of now, federal some kind risk-rewards terms it you more uncertainty how still you seeing passed curious, in little what terms be game might the federal a wait making bit thinking about if the play

question. great It's a

I US as the always ultimately, we has believe, or change order to, consumer to products focuses investment developing of differentiated because, been our important. R&D Canada, cannabis one think, the in focus for legal in new I and the in market in whole our is alluded and offering other products again, in experience to be that illicit the going in displace market, not whether jurisdictions, or that's differentiated

look do and we've there products that's So, believe other into like markets to bring invested, that to are them license why our how take and beverage opportunities to those platforms developed we powder RE:MIX potentially the dried at that you markets. and

partner earlier, how really potential said time a and haven't I of to lot market into we frank, do the as a on right think, years found that. have I As the two over entry we just be the to spent ultimately, looking point the at And last CBD US.

regulations innovation is something future license that branded listed feel There that We've on or the look with in in that take to clear on we at to – an technology will products, And – either to itself we some company as the us, exist NASDAQ the enter our certainly. to the may US the for think, and and market. market there a some be seen to really Canadian I THC the look look about we companies developing as the regulations approach traded to our TSX option the isn't do as that as opportunity. US lend path a dual on allow. continue ourselves developing we focus the approaches we – currently relative

one second of XXXX a lot everyone's obviously, the And come looking the Ontario. started of online province towards of kind and specifically end be for we've to then, would around in see to stores more And XXXX.

of curious, within know terms come there's where a you of specific lot perspective, in So, stores specific – of in cities in retail from Toronto your in like, are stores just terms some online, how as there's So, saturation geographies, area. right? I one seeing incremental like

the maybe we're forward? to that how new sale you're in to start So, guys for might store that that like do going impact And dollar seeing like the might kind you seeing of impact Thanks. competitive you overall incremental you feel be feel going Ontario? landscape do per

yeah. a No, It's great question, Aaron.

to of additional terms same terms on revenue. every you're not generate is I bang store new think the ability in the in of

two is for key arteries seeing does couple lead there's level an Queen referenced you're example, stores what in of Yonge areas going of a Street Street, some so saturation. are there the and think I abundance major Toronto that that along where Toronto, of along you in, – to in

but saturation will not the So, level the overall at same at the store it will grow same that per the market, because time, be point. revenue of

the stores in the I or one there of think multiple store the opportunities, we only key getting I Toronto, facets. online that now And limited access today. think have core had new the upon outside when to people to keys. think or exists kind of – you that's is sales, where that look no of And stores been stores that's to growth certainly areas of a are have lots seeing is of I of happen stores are certainly and rely opportunity one

of example of per now, of then a optimization. certainly highest that of both, it's where number look a right at point has bit number year, capita and with So, where stores seen small and Alberta Alberta an we've stores they the probably of but – stores, reach number kind and did combination of a is I saturation last as the

room of way And certainly is growth. a the terms of for growth quarters, some from there a in Ontario see because happening. again, there's away couple long tremendous but happening, that where along So, saturation we happening still is

around there don't a and on still other cannabis that – especially stores. allow I municipalities, in is are would Toronto, comment of area The couple

So, the municipality to allowed each government if Ontario opt opt in you happened, or recall, out. legalization when

big on there's border of exists Toronto. of a opportunity I along think, of stores huge should north kind There's of that's some have one on stores the kind put the of now, revenue. looking Avenue, where a certainly, a I retailers Steeles to be example, think those smart kind opportunities impact municipalities right border especially would of that and for the

Your Capital. with next Kindler of Eight Graeme the question comes line from

their and I pre-roll any by machine complete the of what margin? made overhead. indication I remarks earlier for wanted year. terms a fixed you and Maybe the discreetly Packaging appreciate and the the to wanted that little respect there there's middle those in the end Can to would the the discussion in what is in comments unabsorbed follow gross gross right of mentioned modeling that you've And compare deeper. initiatives be margin. of Greg, to now? the you're give Force going a up to to I ask with dig a done call bringing to prepared the baseline adjusted the in you. internal some expected the work do the Thank will Task you year helpful. of is be That on

That equipment's required give minute it give a necessarily now. with want on to comment to pre down reducing with don't from test runs, XX XX impact. pre the rolls seen, per we and labor production We've and the producing XX will have people on I guidance I pre-roll roll to been site X. about Graeme, working during equipment. it specifically been

only near for the blends trying of example optimized. with allows our the to QX, a also multiple a couple packaging lines, different have utilizing in types is and more allows but inventory some of example, expect in and said, product for packaging, be and some designs around of us which I in really for So, in looking us just terms efficiency at impact appropriate that's shift significant but always We're an what that not our of terms we've It's the it, for directionally terms mix pouches, in consistent and part seen then, of availability. shift of packaging to of playing now. material the blended not we term. of fully still And as of

terms the things which I on in left and/or for our savings. of to to the product, in commented expect direction want have sufficient One of why was staffing in specific what on quarter. not We and is on capacity table we up. the don't the meet we prepared remarks revenue did give I product the staffing demand we're

commissioned modeling, the actually it going where get We know is running, always up one have we you to done don't to challenge you until and until automation with it's and – get equipment of what point the impact have. but and

increasing Perhaps gross you're to have initiatives, the your pre then terms and of directionally your roll terms are of which can expectations in higher of order in packaging margin the expecting are then between going what levels, terms will staffing of increasing any magnitude the there? there the most what initiative, you outsized and throughput you in sense give give impact

Again, it's a definitely would directionally, I of say, combination both.

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question line Scotiabank. comes of Your with next from the Adam Buckham

Maybe in missed of it in orders a size missed of constraints? terms in the to along purchase something result lines? the opportunities potential is to First, those of capacity, revenue of speak possible QX or as production fiscal terms

$X able fulfill were POs missed. some quarter. But in of and we in not have $X we were these the able fulfill we between weren't orders, to do million – million purchase so to Internally, QX, know we necessarily did they of completely

a are patterns of the gone has you the indicated given Obviously, a think OCS potentially but that cooling up impacts the bit eventually Secondly, coming, could off recently be the a follow in for just there already any OCS? that the date, then this do OCS? tailwind rationalizing this left from it through you of in on remarks, shifts your comments they're has seen SKU prepared some have potentially some the products in in that, much market, its with with portfolio, the OGI there team Ontario. a counts? to had that And bit buying To of could remaining retailer be the

It's good a question.

patterns, OCS, only So, we've we continuing to daily, could of think have the in will and not local seen sales first change. kind a certainly on retail by notified are order question, been to collect but going they to monitor they answer impact that as certainly have again, click your weekly shift I and delivery now of

to existing three out shipped that's could due weeks be an So, for reduced. PO, be example,

us seen in one and that not that they've we've closely happen. portfolio, of But that terms point, companies yet. your most products. could probably have with been working we So, happen of indication OCS To switching our given the our revamping active

a for we've Ontario, province us. for in been see and with and big focus that's the for we with us certainly been the two market, provinces, and really certainly, active And So, largest every Alberta doing that.

to I strategy, listing to core those it They available. So, think their be does XXX products always expect – going products. they're XXX%

commitment opportunities there products, core again, be And are from those there's so, to are products stock. will for products sure in those for to the listed make tailwind revenue tremendous because, opportunity. every always And company generate

the access requirement province now will retailers be So, a the require products them able will at carry level. those of to inventory But they store. always XX.X% in that retail listing know Ontario and any

being or run level run delisted. any to see that And environment, so, risk the you – would you in it's critical normal meet for as consistently retail companies you of

products those against are have position of the that demand companies consistently terms to are products. revenue a in supply in market great in and So, able

line of CIBC. Zamparo Your next John question from comes from the

get there's robust capitalization of the recent prospect just time. some raise, valuations at the course, sheet entering balance to sense the on and how on least. at thoughts equity And, moment. of did potentially now, wanted get the I the of a you sheet your at at levels still debt there's industry the I would balance feel but some about you to this like US, pretty And are stage, at moment.

have proceeds of positive down have our did a cash to XX portion three of short million of with CAD the XX CAD in last remaining XX after using quarter, still thing debt. of you in we pay is, cash as million one end said. of cash. the facility, million quarters again, balance investments, second And comfortable that I restricted million the debt the sheet, had At plus CAD we very We're the and operations. highlight would term CAD X flow from we But

I position on perspective, we're company our relative think to own and operating also how in our a operating as strong of a basis forward go position cash So, a and consistency. kind we're

of sense need getting the back a to to you're do gross products? And you'd a same about kind XX% probably hit of margin. to net it different plus structure now on of you XX% number, need CAD potentially think then that Just my level, line gross value more level quite million because it is in your up need what that sales, to level? you is of Or follow cost the or so is like high? to revenue, wouldn't be get margin to higher to terms now about offering cannabis previous get the the When on previous to would hit lot that top XX

is there mix I there. think a

it hate have operate, we much So, a we do as taken forced was the said, But efficient forward, of much one at a kind And us in how we've to or one COVID. operator. benefit I efficient how become on reduced more we and things certainly, operate. lot things, hand, look kind systems from to initiatives there then things going how automation, on, an able say we've I more and get staffing as the do of to with do. of been of we that some of we even was

question yes, to there; need think of be say, yes. that didn't There's there? do we need our at mix no to same be level revenue. net I I do the we mean – So, is to

labor what are SKUs, I packaging costs that your volume would and is to now Because to – selling really think important. average to a drive again, investment the really into goal certainly, revenue I to on XX it's your more per is we margin because products. going starting high significantly are well. been as go as doing that that's more genetics gram last the continue But price lower to but it's is spoke large off critically our to and right? is there, we've why this be XX earlier, months is lower, so costs mix, the program pay value, in to And over –

no been it's there's not vapes compression in We also have value as – And category categories. we've question, in seen dried well. many the price just flower seen It's categories.

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has been products lowest One margin of historically pre-roll. our

to looking improve we're automation. that dramatically So, the with

Vivien Your the of Company. line Azer comes and from next question Cowen with

There uncertainty between your category to equity continues CBD. question the CBD there in on And and the about the to I around regulatory been a FDA. around of brand quite Aaron's THC. around market development follow-up there lot has US and CBD frankly, just evidence be hasn't transferability wanted and posturing been lackluster,

THC. can why are you US? going just I regulatory pathway expand that's obviously, you constraints a strategy? understand, to around pursue the the to the But why on enter CBD appropriate So,

It's we and great CBD outlined an entered THC not why Is seen question, is the Ultimately, what have Vivien. and necessarily. there not products? have we Not US impact. transferability really between you had

where areas think there's few that's a only the I case.

And to there or to the acquire has outlined applied markets. I there And can I focus as in that Aaron's our our US may to be innovations, entering decision. you haven't Again, of that toehold to like we haven't get to to one I been, the look the FDA. we've and strategy could US why think be be ultimately, I think agree for date look a say, that is, you there a with potentially technologies to market. as in was, we that's I think to both for hire evaluated part XXX% But or response questions, look are THC people that company dried do ourselves? seen to made our with look earlier a the in across leverage transfer. strategy powder, we CBD us, someone market of a the level still kind those license uncertainty the of operator simply on we those and do is US launch to in and

still to are they think guidance is at to ingestion. I there going be out look where forms going certain of

example, some For undergo to potentially. having ingestion toxicology oral work products

a have entered clear as still the looked the possibly. CBD. at there's an of market. it we aren't But not we've So, tip on rules yet into number reasons And US opportunity to certainly

line comes James. Your Rahul the of Sarugaser Raymond from from question next

in being earlier so market quarter, last My well is in attenuated around At first stemming over we've the are all guess speaking market comments level, a are maybe since you that several share taken. least question share. more seen I somewhat, macroscopic more And quarters. your at this – we've decline seen that.

anticipate – products, should your and bottoming shares demand comments start to appreciation earlier increasing about over OrganiGram's of that time? kind market should increase you start out to you Given for that and do

POs had had we quarter. of There's many no had mentioned, in one I truly our And inconsistent As challenges unfulfilled the supply the think question. is of we've products. of I we've

November, very searched They website. it said one searched the part number SHRED sells not most is we SHRED even on an at category, similar terms challenge they that December was certain in was brand success. is of Trailblazer carry launched it in how Right? was to always quickly, out if So, launch, in then it product much of face was overwhelming when Snax, our jurisdictions our available. most in And chocolate So, – the it and OCS the that.

we so, be idea had was case. no that the And going to

seen So, opportunity production, able again, there's not or we time offerings like on Edison because new be with it's the increased our there, that out we on to said, an that sells to some believe the of every as lost been at where the in, on right And in ship search to be difficult metrics share to continue And OCS certainly, to share of able our very we just great a would kind think, increase core position we've now. SHRED products it fulfill the I look I are demand. quickly indication of market demand. because we've

demand. in you So, a kind demand fulfill what to meeting the that got levels inventory We've see of terms of better share job represent do the necessarily. in doesn't to

Just a quick follow-up a little and bit. testing

this universe in kind we're Hyasynth companies it minor somewhat cannabinoids, ace specific, in and of very referred its the market So, as particularly major and, seeing peers to comes you its to US the you are your of that focused And you given on when the to, see in is focusing do has powders? beverage material as are strategy hole, the one entering of pretty the to which that cannabinoids around specifically unique starting taken a two the biosynthesis States evolve. debt really on relative that and

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Your next question the comes from Pablo line Zuanic. of

think my One, You you on Aphria based quick you X% about numbers. do Two X%, see that? Tilray questions. how about have and when merge, share

of company As the industry ground something how problem you make itself at night? And at a like awake that or they three companies Or the keeping you manifest yourselves? to case from other said, with that's like Israel other companies shipped and not and starts is, buy that been Canndoc the Canndoc, in question, the have to merge, difference? Israel level? cherry is that second Or companies. since a things picking for other does a from It's also some two there's something it doesn't

talk of it and from compared is exporting terms about to what are that what you what Just buying stands dialogue Israel? other people to in are out the they

seen necessarily first of mean – your I have bigger question, overall we think the doesn't Pablo, marketplace, better. terms in

our multiple facilities. shuttered of larger peers have Some

perspective analysts' about may or the seen So, than it it Certainly, certainly that's what kind markets on least the be market other many about coming it. per merger se. Tilray of more Canadian is at of together, written and a potential looking at Aphria markets international from I've

certification, Israel, the to new is to and drive I forward market at differentiation mix them, they one certainly, question a as of being the time. the Canndoc, big point is positive. for first to as your QX. their think for there upon them indoor with with But supply to there's critical product for did the between To on And marketplace. certainly at be will on getting this we in response advantages and of for us sell be be has able product differentiated in that's the to was And Canndoc certainly well us right dependent working saw supplier innovative the that products indoor an we're parts. again, key And an to that and us, demand of them initial other shipment to the terms continue in that CUMCS with the hard one products, the answer we're extremely having certainly, for our continue going producer in be producer.

thank no this call. time. questions are gentlemen, there for today's now further your Ladies and and And you may you at this We participation concludes disconnect.