OrganiGram (OGI) 12 Apr 222022 Q2 Earnings call transcript

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Organigram Holdings Second Quarter Fiscal 2022 Results 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. Instructions]. [Operator may you your begin MacPhail, conference. Craig

cautionary today's contain meaning estimates gross that on to company's factors, results review under assumptions call on may that press have in actual including should adjusted will call, measures during it differ. Further, actual results the the Please differ. approach cause that and not aware could our in reference and differ and various issuers. do will the and today's IFRS, be margin. release be adjusted in which Listeners language could made other any our risks information measures measures standardized to and certain IFRS these These EBITDA calculating forward-looking other from

about go Accordingly, to provide in measures intended today's market also these these non-IFRS Goldenberg, Officer measures for with these substitute as in Holdings relating So reputable the introduce measures accordance relies more additional company information would be Please like certain data, considered third-party and Please Goldenberg. IFRS. to comparable. to should isolation not or performance prepared for a see may not of of be directly we're on report information are making earnings Executive now measures. Inc. Beena aware providers. share ahead, statements I that Ms. Chief Listeners data OrganiGram should be

me West, Chief our With Derrick morning, is you, everyone. good Thank and Financial Officer.

for ended the call, general months XX, results today's and the provide X financial I a update. For business we'll discuss XXXX, February will

now record last introducing the We of success we quarters revenue net producer seasonal the products And XXXX, to the most of based in is that premium we the a million, #X start positive the fiscal among best and out our than the progress and in we This we market report momentum of of of resonate, for over X.X% market was in I'm highest month Canada. we XXX% and XX and at continued the achieved at our demand Quebec. QX to needs, QX consumer share increase gain net another secured $XX.X brands revenue continue Canadian X to fiscal understanding innovating hold million, market in Organigram, market the grow and as hash second projected open our according earlier year. address the the we compelling net revenue In XXXX. continuing we company. past of Also and level X.X%. demonstrates share. importantly, record again craft that Canadian the in second for recreational LPs among quarter, quarter in share of call March, acquired $X.X then a share for of And in of with row, and quarter, a position call, We EBITDA a point with the for In basis the Hifyre. in a achieved our Laurentian February, the questions. share to market #X of market grower will the position a several quarters. history in We LPs adjusted announced grew continued our happy

about to in flower #X cannabis hold the category, the represents continue also the We Canadian position which of market. half

being country. top in in the sellers SHRED Our best-selling the Canada SHRED are with the flower products flower Thunder milled product Tropic

high Edison the potency introduced position maintains chews in the bestsellers category. best the ingestible Jolts, unique position August; our large-format category, past quarter-over-quarter hold position our gummies this this as the the top includes having SHRED'ems our country. which market the XX X in in of also SKUs gummies, our market seller its This #X and amongst extracts Monjour, November. introduced lozenge, were soft THC CBD-infused past best share with We doubled

Now category, products. the launch so moving We continue new we on need innovation. to to the news recognize bring to to

that has product kief-infused of SHRED that with SHRED convenience visibility and flower SHRED-X, combines in our the among kief the innovative we leveraged have achieved popularity XX-XX We cannabis high brand of March, an ratio. consumers. the milled blend, In potency a shipped

vape Edison These the to approximately editions the also were our the doing? cannabis also sales flower and with high-potency These Tropic also to unique gummies, Lemons. are we Kush launch, in This the line results. strain. expansion SHRED-X of the cannabis line Well, history consumers, QX SHRED-X Australia X,XXX And line, Frozen a added addresses Apple X with soda root Cakes quarter, Building and XXX of success Big potency our the Buds, of marking With create strains the shipments category. Megamelon also in highest milled days engagement O’ and Blue of premium product within in extensions, our Israel to format shipped classic Bag indica we X kilograms strengthen value and We and beer brand, We and Cookies, SKUs Funk dry company. we high We've introduced We've Edison Pink Edison further new market consumers flower enthusiasts. by reflects are Slap POP! Thunder, of sour SHRED'ems added launched Tropic profiles was large cartridge on terpene-rich fourth gummies specific vape. market. international for BXB and Thunder SHRED we Master. March. X the the our will the of with strains of bolstered available cola, vapes the flavor products, Sour value-seeking SHRED'ems Canadian best-selling Ontario. desire evolution International to Sour new in expect Razzberry. gummy position in added our pop cream now of in With flavors the flavors, how added

and flower. have dry our to we'll fiscal international shipments Australia ship more expect to in look Canndoc further and Israel to We to XXXX, in in Cannatrek wholesale expand partners

acquiring in After Laurentian integration. Laurentian. with December, we beginning on working operations, at look let's began Now

its the will Ontario, we acquisition, One be of At Laurentian we've to X been craft levels distribution X,XXX capabilities XX% our of hash provinces. available end This of in and the at Tremblant products. hash and the available grown flower in products XX. underscores drive Ontario's were all In By results. our stores by marketing, our year, to almost from Ontario priorities fiscal in was successful Laurentian have unique example leveraging Tremblant distribution and XX%. sales success of of XX% sales increasing field distribution increase to

same expect of We Canada the success we as Laurentian footprints increase to brands. able the be across the to achieve

XXXX. making is Bag and by high-speed and and At filling progress capacity fully by campus, labeling the in increase also and enhance Buds high of the pouch are Laurentian storage to line, equipment. from O’ is space and piece high acquisition kilograms of on to capacity. our the Winnipeg, fiscal expansion automated be with automated highly now our Construction reach adding additional end production of in Laurentian. we for lines gummy as year. currently at of Cash a facility end Environmental production XXXX. processing an they approximately enhancements our Xx quality have summer flower XX,XXX XX% coming the automated dry have be of Big quality further currently pre-roll Moncton SHRED upgrades cultivation are end increased in yields licensing by completing the facility. We automation, XXXX, expected will We space and implemented the and are lines expanding and Phase we excise This have in Moncton be potency to be packaging complete These pouch by as stamping the automating and achieved for of by production synergy. supported the and adding In expect are of and should was at our XC identified we'll X and place upwards to completed. continue commissioning and flower to

into their increase December, create position whole and at using million $X.X collaborations equity investment rare into as equipped knowledge scientific completed our to innovate freight and the These $XX to unique, reflect and as We cumulative optimize Center beginning leveraged they and plants $X.X based in deep efforts changes R&D It's Hyasynth's Rights applying to logistics at fully a avenue important and invested our for advanced CBD customer development that quarter, recognized IP and using Moncton In proprietary another quarter, large-scale XX.X%. the and strategy on increased to from an was and Excellence to help continue existing construction XX.X% product a future. market Also, well build-out will as upgraded Through in In in This payback. Development pursuant The produce of provides our have consumers; Agreement, the joint and biosynthesis we us advanced BAT's begin in mentioned introduce plant research. and showcased and March rights to forward with substantially both Product the exercise in-house network position. these the THC, conduct also was collaboration, cannabinoids in addition PDC, discoveries improvements through continued then strengthen further investments produce and Biologicals to the the The as we by made quarter, minority strong to our R&D of margins subject terms products Winnipeg last bio in of company. in Moncton. drive business Organigram make progress being the without globally. consumer-centric projects Investor to all their savings. new warehouse to efficiencies, the capabilities, for is to investment needs look improve to when lab we research top-up service. will that the to in our support call we for Hyasynth were exciting and the our well, strong our our to to million innovation. of cannabis products can our develop note science Canadian QX, we million and

turn I the Now will to overview. over present financial Derrick? to it Derrick

Beena. Thanks,

increases recreational to agreement shipments which XXX% of with net from Canndoc results grew our XXXX. in Cannatrek. to from grew XXXX to under and primarily same fiscal the earnings QX were completion to million. to Gross revenue to grew XXX% and fiscal from Israel $XX.X revenue period international These through due XXXX Turning fiscal million revenue, $XX.X revenue higher Australia our of net XXXX and QX XXX% the QX for

sales during gross cost million. XX% direct a a grew was total Lowering cost increased period of While as of our $XX result growth our year-over-year sales at of to XXXX, during combined XXX%, about efficiencies QX decreased management. We of of X,XXX in flower of QX 'XX kilos facilities, increase approximately XX,XXX fiscal production fiscal kilos of with XXX%. harvested improved an compared inventory to sales

in combined when has to per with higher provisions, QX and of the gross this demand $XX.X increased a its our a of hubs. negative experienced reduction unit, the year, resulted the unabsorbed On sales to doubling margin year's and million net million $X.X revenue, compared company million inventory levels, past basis, to growing in for fiscal and QX compared XXXX. a QX the inventory led a as the cost due to prior a higher costs an improved which, Largely in $X.X to yield of planting a than flower adjusted negative per comparison this gross in Over from margin in plant 'XX. was cultivation lower of products, quarter, $XXX,XXX

I've of a will efficiencies of products, due of marketing increased higher was combined increases, further wage of the we Net lowering This $X.X from excluding the million and to production sales that improvements noncash start the XXXX continual In terms was to expect margins gross sales QX the continue was in XXXX. initiatives. and margins. Laurentian, year. $XX from EBITDA This, production achieved quarter, QX This compared generate generated quarter. over higher business, compensation, million future. to improvement $X.X on X quarter year's investments increased X due reduction this $X million loss in earlier a employee volume, in quarters and the due achieved a due higher SG&A, we million higher into positive of positive including adjusted EBITDA the with the general is $XX largely higher to last prior to technology margins at professional million, quarter, adjusted to efficiencies, in adjusted we acquisition mentioned. income. improved costs, investments of can loss net million increased during EBITDA the positive costs. large gross and for to increased which already net in comparison Based increased and achieve in we scale expect see the the We our including improve the cost trade result the $XX.X the better from of contributions comparison fees negative economies operating spend momentum facilities, headcount, higher-margin $X.X and fiscal sales to and than share-based loss year's of We lower projected million

In is primarily to used to improvement was current income. by during terms $XX used million QX prior cash year-over-year in financing provided compared of cash flows, in of The to was $XX compared our operating statement QX QX in cash $X fiscal $X period's of million less million Cash year's due activities the the cash operating than quarter. fiscal million XXXX XXXX of of XXXX. fiscal during used activities

this to to issued acquisition and million costs of of fiscal Center million compared current million BAT. to used During the million] for Laurentian, from provided received year and investing of additional into used during $X.X QX the facility reflects for Excellence. from the invested improvements, in for was QX 'XX. cash $XX Cash cash fund in shares million be the $X.X of used million consideration million QX XXXX expansion of the [$X to company in quarter, the cash restricted The Hyasynth, in $X.X $XX fiscal in investment activities $X.X proceeds

This and you. would on facility is the compared the for unrestricted XXXX. fiscal XXXX, to improvements, assets we to capital short-term $XXX Hyasynth. turn I call my additional end and back Laurentian fiscal to its expenditures In investment company's the of our in decrease million purchase the of working concludes capital million investments sheet, comments. at terms in The investment XX, to the in due February cash $XXX Beena. Thank XXXX balance during primarily of had like and

Thanks, Derrick.

improvements are of wisely. This by products of I'll year. our market exciting first will the and XXXX to continue embraced can maintain product expect be and capital to updating for progress. and expanded to continue create for forward strong you revenue sales, margin by growth, now, us more driven on Thank and adjusted the for that new EBITDA. focus, fiscal that rest further in may open branded continued positive efficient international shown continued questions. operations you distribution, the the and introductions, success and volume our reiterate operator, investors And to to our The which today. us positions half has our for strategy exciting joining brands call adjusted look gross deploy I success you of the our

[Operator Instructions].

Aaron Our of first Grey the question Partners. from Alliance from comes Global line

Hi. congratulations Good what quarter reaching you the of and expected. morning, X originally quarters ahead and target EBITDA on the

for So me EBITDA. first on just question

of longer income So So term, EBITDA continue margin the thinking profitability, right? you've that expect opportunity about reflected going forward. now to

the months think opportunity you next EBITDA margin improvement do continued -- side that how expect the about Just ramping on to maybe XX XX the in up? sales gross you as and margin

for you one. to over Derrick, that

we have terms we guidance our the EBITDA, we're of need this to time EBITDA improve as while in to we throughput capacity adjusted will percent which have past with not margin. increasing product. well being have have bear the expect a contribution a increased growth, expect to unit that price contributes all But -- demand, sales quarters will sales lower increased providing scale, continued future with ultimately, few in is growing just to all higher which at There time. on we specific the well continue over additional based our support into capacity average mind will the facilities, the as continue margins. positioned increase at from in with invest that momentum confident momentum unit to revenue, result as also premium a has that, with Laurentian, on per we'll well to of cost and in EBITDA a per of this And higher this which our to we so economies positive lower do the to production positive it cost, Okay. but based are the our We're business over your

higher I on clarify Do on for nice you the versus timing anything margin are going the shipments any reoccurring? increase feel a there me right? saw rate a be the know revenue. in quarter, And continued it's side? good for expecting international, go we've front. margin, in just to Is this on like run terms that and wanted before, sequential specifically could terms on but in quarter. provide once question this momentum again I the to a you're during of maybe the forward? the kind just of Looks on the the I like international those domestic of differential over you was color the then margin? Second

Right.

thank the So you for question.

both -- those So paperwork, first and to documents do obviously the all, Australia. every import turn before get expect and We export turned shipments to of see ongoing we quotas to shipment. need Israel import documents,

that regular shipments, business, see of of year. more the obviously, expect our and this to we to for cadence be So continues the balance

In terms excise margin just in real the there's recreational of international on -- It I comes the of kind sales. your obviously question on no answer requirements. general mean, with on improvement is testing And over any different that's tax significant sales. BXB margin,

recreational a business to good of but business. and that, a it's offset So complements bit there's margin our nicely

next Your Markets. from of from comes question line Tamy the Capital Chen BMO

Great.

rec I had your is question specifically First on sales.

share how continuing to your see described continued to you're and has momentum -- market You share expand.

decline your why like just quarter-over-quarter? a I'm revenues So net rec did curious little bit

the bit ran of in through that Omicron the -- momentum month a our March. with month Tamy, as January share solid shipping again -- a we fulfillment. a and to that of some overall, facility, and of into some it we got our bit grow the market had of our our challenge had absenteeism saw We high during But we a February the bit a timing March. momentum have of impacted so we into issue We little highest is out. product some we had rolled timing solid, get So sort in had of month

But So issue market the that's quarter what our so offtake a have as side of that a of you're grow, seeing It's the bit the did business. to timing -- problem. the share isn't continues on through disruption. rec little the of result we

the broader the last if the produced aspect. a be several also since suppose I market. question question data And understand. or bit in I so what's to really retail it months seems here industry, I happening Hifyre then fall. for slowing you less is, I down attributed that Okay, sales But X-part I at StatCan the flowers, my And to the and to noticed look even the that's respect little follow-up with guess, the been Omicron stalling

outlook. is, called First in growth you're QX you for your expecting it your out fiscal that market

seeing the you you you the the, is that than of industry the the high? based once I more think are from part on the again still capacity question are at believe to second near you market expect now term, over today, So can growing is still you? that and that what is, do XX,XXX And kilogram new where absorb market almost

Perfect.

key there, So a Tamy. couple of questions

up. we market So do see first of picking all, the

see quarters this stores. -- missed generally even fares, we to we of last the opening this last the has market communities, vaccine into course over of few had up some StatCan passport bit we it where do rebound activity, the a see social get to we few stalled, they the just has the challenges summer reported. So the to cannabis the and But months and retail had of expect where concerts and issue Quebec see to given to in as it the opening the been expect over expect stalled little required the --

from So openings the we see the will there disruption had a the was sure. that few a has little but all coming, expect, that bit COVID category, -- months we last of a rebound for over with that stalled

market regard growth. So that's the to with

you could your the second question? sorry, And of part repeat

even perhaps reach still the your more you market. you? at going confident I from it that the medium-term just you are near-term, you was sure. of Yes, that once full the market Moncton, wondering, the still where see can Like, than capacity absorb

Right.

Okay.

Sorry. Yes.

#X, some we see on So front, growth. continued do that

supply. is on our mentioned our I our As last current is demand call, that situation outstripping

we So SHRED are we certainly -- Alberta, have so net a product. to meeting shipments have provinces, Quebec. once Not we And is we to those that our have into now, more needs, only for being we then, buyer is distribution currently going our product will something have limited of some which capacity. shipped Ontario, and expand we other

buy demand. to have meet flower the to We current

have don't we we about expansion. the any our Moncton So concerns capacity using in have

we running. product have from -- up As buying suppliers external will that product we we in-house using from are already buy and once it

comes from question next the Our Genuity. line of Canaccord from Bottomley Matt

about this just sort Congrats thank just higher to talking level morning questions. taking Canadian market, in what wanted these was of as print happening what's on you a just at the I maybe for well. the to comes Tamy and of Maybe piggybacking start it off when

little fact share. coming the the of space in consistently at maybe close on over XX% in the with down think if you it's that now the leader Canada, to a space that some market the XX% where implementation share market has been Just recreational I in started incumbents look

you reaccelerating of well Organigram late. been has do this and bottoming though where So see that doing even out as very

look you the markets market there at eke-out leaders sort If barely commoditized Colorado, U.S. Oregon, like X%. in of

in Canada, any excise sort barring where curious federal change going major terms just outsized the this or to is market secure in you ability of regulations share? I'm in think of So tax

you, Thank Right. Matt.

XX%, to laurels. think that on sit think I you we at things you that all, performance that of at look of their look who I had of some we when bigger the that the dropped when market first players XX% your share can't X So down is

quarter it's before. that's can't going sit delivered last and the out sales marketplace product the with think or a to keep in the You quarter delivering

on. news, of morning I that's focused know of lot needs comments was You that consumers. that constantly We is lot And our this in fresh, keep XX taking innovation. and rationalizing, new something excite a focus refreshed, course is new bring that think this just over a of my I new XX something around course be to a last continue months. the time new products, have We out introduced movers, to category innovation, of this think slower bring has focus helped the over innovating. lot to We it our the time. A on we products of the keep momentum the bringing

the a about what's of We I players grown. think of amount highly question going to that fragmented less a that than lot happen there's long players know And have market it's small market. that of term, has X% all share.

portfolio feedback excited that don't up. we also are And tighten the out vendor. already were could was we in we're boards of it have provincial another items we However, listed, a to the of they don't carry to up how manage and duplicant it to share starting of line-up. they new some many our them, They our thousands was, they have to their to X to set hash got products. provinces Tremblant get that want example want I the know because part They to as is, supplier took

to have they portfolio. And it's And to a that we the were think that's happy have hash might not recognize. in were a Tremblant vendor, they they have unique our but from so it -- I taken -- message

portfolio going opportunity going We're cross to And less going suppliers going listings going to first access. with a and are are are to in. to better that's provinces have to to to full get that be the vendors matures, of distribution, deal market prioritized. the our better get help. have want We're this As vendors

to those think do as sort players drop going find off. it smaller you're of I of that matures, some So

You bigger are that's need very the and important, to fresh, our But focus. in new keep is consolidation. been in keep news bringing a to going it see players, they

craft me Many types follow-up half the market these comes you domestic sort there any Great. consolidate? other quite Or out M&A consolidation think appreciate growers. categories being And think other last for classifications several little acquisitions is are more of on when any element the of penetration it. going in over it of product favorably Much of just dozen or more kind SKUs turned them on for for to a the have of their pricing. sustainable commentary seen, Is part. next Canada? We've terms in of line or the share or X actually just in to where industry you years, or

Right.

So first different M&A all, last the of I types seen years. think few we've over of

obviously, those looking of but gaps on, that other focus and there's there's on result, portfolio So players our fill been and been portfolio we M&A the things our strategy where offerings and players, in of as could to gaps. lot our and has seeing who at X really looking a find that acquisitions the duplication a rationalization drove had have Whereas in big brands acquired well. big some, synergies, some of as

the the we in X gummy the in example, when right, we was gummies August, worked we Corporation By from when marketplace. launched acquired it We're in launched last new we the & Infusions market. now We pre-revenue. player, Edibles April, gummy EIC, So April. into right? acquired #X the the months, into It space,

and seeing we acquisition Tremblant that with that We reflected only of has higher-margin Quebec, with provided, but found in relationship just Quebec to our we Laurentian marketplace. we So our do craft that our and in in we're and presence concentrates strengthened the benefit core hole. that SQDC us. for well of the did the we've working growth products Organigram Not the SKUs. the get a recognized that's we segment, flower SKUs, We needed And bolster growing not a really the provider. with rework concentrates our Laurentian wanted and

focused very been where figuring at go at that we've and out we meets have So to the portfolio it. looking

duplication accretive market result with just opposed to is share incremental up it some rationalization. and So that might as ends chasing in

approach. of sort So our that's

some In do there's the of time thoughts, But to going a and is We're our a out -- category. and quality of high-quality LP people bigger focused think have flower flower, there's have our or players some retailers Edison you set to flower how new our our to bringing and and I come is new in strains, Laurentian news, could of craft for a And you bringing need offer Look, be out up differentiate terpenes your so craft in -- players both where to the as our need our specialty separate the the the they but part feel go? of over product brand terms is on marketplace of those important. growing it's keep and strains course, the going producers. big want it, chase lot the and we for flower. of THC improving new really flower in And don't out. space well. in onetime And a developing don't news, fragmentation

how we that of and driving and that's keep our could see M&A So hopefully result approach. growing share a it market as

next the question Markets. of comes Your from Capital Miehm Douglas from RBC line

pricing really think it an perspective. question pricing But done to strategic excellent some some do from we thinking could in last declines over further a that at you've seen relates job over? in the XX erosion Or base? overall pricing in we the Canadian we've to has the of first do My the marketplace, your the as in you marketplace? months with Are see being seems marketplace that it are

Right.

I and -- this talked about last quarter. here's So think I

we flower a think in happened. lot saw compression price of has the that I

value where to even is flower market segment actually is what got we pricing the at illicit the think I slightly at. on a or below point

between and grow also in have flower think demand that of more bit is got And been that seen, behind pushing We've as cultivation well. Canada, in pressure market balance a with so mostly some compression I less price had We've us. that we've supply was some that shuttered. the supply sites on

think, piece, to value us. for We I It's expect So us, is flower the behind think it's is concentrates. compression segment. vapes, see -- thing it the shy a more we in segment. recognizing that And segment. is in away the that mostly don't important I important an we it We think high-volume There that, we'll see see. from

your of build offerings margin it If could premium you've segment value some more made. mix, got you then make the terms in in and

You can drive to continue positive your EBITDA.

point price other Until stores what at market that legal be think of could better it will if pressure reach retail look the point. of quality to and once you offering, research the some those that's like the there results, retail segments. in other where illicit and through down. at product And lining they some buy same that's up I So get really, the compression could was wouldn't stores, more they're -- the -- people where settle why product, that

looking provides the that hopefully, you So color were for.

Yes. helpful. very No,

finding, and this the a but we're what think key focusing buy. As a don't in preference and what people larger for is tenders -- play to And relative well think surprise, on as I what of do a parent the you guy bud LPs. role should follow-up, product smaller type

anything innovation, else support So craft than but is that? the add thinking as know they do your there you larger that probably on strains a growers more What's I extent your well? that your to significant describe and you can probably players. the

you're that stores and those they're tenders I into guidance -- consumers to come because right buy. very what some consumers do a listen, play retail asking questions important So there want and think role are bud on

pride things Organigram I ourselves own one have the at of we dedicated our is force. that sales think we

spend tenders, have what do up in-store country. we feet We lot with with not or street activations. on but the are, programs with set engaging our and them sharing only -- across We strains them. education bud we in run we products of the We a go time

And portfolio. so breadth the store, we our promote and we have relationships in of

a there premium craft, our brand or Edison Laurentian flower focused bring craft tender so bud our our or of we'll more focus attention And now. a on flowers, in is on lot if that's

products. bud You've looking are really the that for innovative tenders got some

that were $X feedback X education with and when up So a at lot charged the the great of feedback done under introduce with lot a bud something of as we benefit. we're we've positive for the significant bud taken and market point new kief-infused like on and $X to gummies, we out before could how was accessible our now buy that into Tremblant the our something blends, what from a And tenders people hash opposed in that got as that we tenders. gummies exciting a was came the more to the hash so of products price is look, education used really lot of marketplace, then it's our potency, that’s high to SHRED-X a and being consumers, introducing

I tender there's and to bud and recommend might not a factor those a it's and -- So offering what think and all value all consumer. It's about price. into price about uniqueness

of feel tenders and with our about lot we our a spend they bud connection portfolio, products. that with we time talking recommend often that So

guys really that just portfolio. So products, we it's they're a have recommend, they recommending we and the quality feel not little good

Capital. Your from next from of Collin line question the Eight Ty comes

this appreciate much Thanks on gross Could margin from margin much was larger there. and Laurentian, of international in help how improvement example? how unpack could provide from that for the the the gross congrats what my Just of any us moving pieces for improvement? product quarter. there that taking shipments, key drove to in due solid I question much mix, terms how color you you really

Okay. Ty. pass Derrick, over that Perfect. to you. I'll Thanks,

growth was company getting we're scale margin question, economies a there outlined the and the we I fiscal as that rate year that generally, a shipment, as with as there by was did the craft as on There overall lower of well say sell do, are costs from been I higher and but as key we’ll we does more in we -- tax. that is a over kilos higher in for product higher margin everything quarter. and and the grower think an to of It our production, achieve outlined without improving business, was with flower expect other large sales in contribution forward that's general given of helpful. just excise margin, a and just these helping levels, has rec believe fixed margins the have much a in leave we time, would of starting the there contribution quarter the our hash product But per was a with the That annualized do were a in quarters the which operating product does. of an last flow-through. continued most the Laurentian, levels attract That's earlier to categories. terms just expect a in providing XX,XXX XX,XXX. basis, continue in just with of lower at really is And the we you a the seen cost partially all last is quarter. over element points And look we overall this have this of continue. unit. that few lift of which assist couple product, international little we're has cost terms XX,XXX in key mix. bit just we well, on as product was get the and the which of Perfect. the harvested No it as And that that higher capacity nature, quarter and component lift to that to We production than

for my a question. Great. more bit of follow-up, a market And then just level

at costs, emphasize pocketbooks rising are plan consumers' into on of between to premium customers categories to down you more mix? all? and is pressures here to a in the your inflation And risk borrowing value sales trade SKUs starting seeing kind of some Given that your

Yes.

a think could products make And -- from as them. look, think our margin we value all, our that premium. have I of So well our mix lot I shy as value on We of don't products. sales first away we

are have and You there's consumer the of by price. be the that still are products. enthusiasts lower higher driven the to that sensitivities. are lower-priced group obviously, cannabis different sort looking want meet seekers but quality consumers for big high quality And a able products, craft to different But there

we So different what they're the to sure the different to looking want offering for. consumers we're make products

terms all no up. of the know that gone In to pocketbook, cost of living there's pressures question. We has

I time excited It And and the about was address wasn't increases stress, some bit more course products I recreational the were challenges. summer, something cannabis of little all we the we to right? lifestyle. out their stresses an I'd the little them an market of discretionary. think And think admit feel and we're offer inflation over day, people saw of relaxation. of became to partying while those into more important that -- It addition to, their a look, COVID to through pressure that what opportunity help and and So it's cost address there. about that like over to get about to help of buying is the consumers address on a bit and our think, a a the good it's

We're products. I So impact a supplier, that will, to a of of would more be be than course, happy shift don't there very expect to the supplier. other value benefit a premium more big perhaps with really value the us. And along

of Markets. from Your comes Gomes line Frederico ATB from next Capital the question

margins your higher margin, on the margin much expansion from and differences growth is with about talk good that gross you coming in are between international mix sales, your Can showing in guys how expansion. international? and you there, Just some your Canada good rec of a sales

Derrick?

yes. highest that, million a the total $X.X take as Well, in is our that QX, X which I we've were revenue. revenues had as international total of percent of a I'll guess and our

much well. does our been for categories, as As a a cost noted, in as also and production margin excise well. the attract company, business facility, than have rec our product at don't all business as the higher this margins we the pre-rolls our It lowering dominate. helpful is despite including We've of improving

channel. I distribution our don't disclose, by margin we So guess,

just is on more these and terms just what the getting or we it's lower granular of available we when But that don't to in it important year have we both to to But will difficult the businesses of so by provided And guidance. business. to We at channel, flower ensuring will scale. published. supply international so. a be it's quarterly do markets. specific the question economies guidance margin of and both -- are have the a just to an of growing, haven't cost try the sense provide expect end our a answer we that shipments per to at are unit from we we distribution of historically But part do continue shipments, And so, we cadence do in that have do the expect

So clearest answer to it's apologies. we It's the provide. not question, guidance not but the just

a when lot gain market that share a through to in any flower, but sure. And net flower? Yes. know categories the categories? in? share expect you share your you of at expect year, specific do outlook leader most look on then to market are understand color that. gain do or We you So vapes you which product in and you'd those your continue this of product of I gain growth share Not remainder

Right.

So thanks, Fred.

We're excited have that just think initial sold launched listen, in great shipments. Initial out are a known offtake, we have bold our we we a quickly fact I brand we bunch Brunswick, SHRED -- we of new this very and segment, New and a products. vape. offerings. underdeveloped very about very It's those flavors, reproduce SHRED-X could to flavors our with in on shipped our vape in

we expect our vape growth launch. coming see So do some from to

new space, X coming really of the gummy building to my that SKUs from out bigger point into have mentioned on a in X innovation lineup presence. provides earlier, we As us SHRED'ems, our I bunch

great supplier. seeing expect where are and to share the on We #X certain to segment results gummy retailers continue already we're drive market our in the gummies

is Laurentian gummy concentrates, drive months in the to to space. With our of certainly growth continue goal a had that results. basically the So ours remember, in regard QX only of to we X

as do an already. on started I based the to ship our quarter, we're We've we to see, having So not increase obviously, of provinces some the expect full Atlantic but mentioned, distribution. to expanding only

go shipments to BC. expected have out We to

full our market of should that on the share top volume us on concentrates section as distribution quarter on from a really increase help concentrates expanded the extra just So well.

important, driving while that Where is we our #X flower flower, in we're share we'll very and we're very would requirements. gains flower see market obviously I So -- say to fulfill biggest keep segments our we are They also those as X.X our breadth be higher-margin portfolio, categories margins. will tend well. from but strengthen of full believe be going that to some improve to could of

Your next Jefferies. of from line comes the from Bennett Owen question

Well.

Obviously, mix. First lot SHRED of the share question, be traction, new to wanted are and a appear I market does to impressive the back driven the with SHRED. value with just really come but also to sales launches

like top more wondering, just bit maybe between of in you’ve evolving Laurentian, the going Edison, market? got you you've got ideal that premium. to forward, in Obviously, on what to but the could mix was a give I sales see sales and you'd interested your actual color or how currently end And then an you're value it you address mix how see So exactly evolve doing world?

Right.

thank you. So

I were sales, that say our which over fourth to was me our and I -- look SHRED. flower so our the if if business time, our at Let flower quarter our blends, of XX% 'XX, go was mix had back of XX% we about

XX% to forward from XX% quarter, fast went XX%. flour the you from to and the blends to same held XX% If this roughly

total these percent our So of revenue. are

to our fourth the focus #X we're high And So and lozenge is earlier, bring mention the X% in category to us message X%, SKU represents at we it with obviously new our the flower but those expanding have innovate by really introduced that a interest consumer forgot product, didn't new the our in lot extract into needs, Concentrates, of it's have, Jolts, strains some couple in lozenge in business flavors represents I edibles, our pending. differentiated There's out -- And which unique. quarter other the growth holding of mean we and And just the in potency ingestible we've now has right? I X%. new areas, position high continuing really of continues we been guess that meet have grow. our I to on a to the in patent in is, now the and QX. it marketplace. It's marketplace.

our is flower and mix have our while in sure changing the continuing adding and news in product we to offerings blends. X.X make unique by So

And of margins you then boost that, when would is currently scale? you And at mean, to just capacity? foresee completed? construction And how when question you trending be just Okay. do Moncton the are I next then how is, the available full a complete much Moncton will linked on running then gross with think the and

Right.

So on gross question to I'll to over it the start and margins. then pass I'll the answer Derrick

currently, So running capacity. we're at

are we our earlier, is as supply. So outstripping I our basically, demand mentioned

As testing soon out the gets it as door. through our we're product comes packaging, off and line, shipping our the

are marketplace and any we is fresh, -- in So capacity. don't what's flower, we spare ending the up have high-quality

meets buying making the we'll as product So comes online. expansion own to quality we look and from the our obviously, when specification able customers, currently external our supply forward to be are sure,

out we end So QX, of in those to do that? to expansion of of year. your planting -- expect of flower the by that rooms XC QX out the of expect be we when question in expect harvesting new be We and this

well way, very on we're excited our about the So getting extra capacity.

been is distribution -- opportunity I have we to provide there as to the have other As opportunities beyond, it. we And of explore our said able expand capacity SHRED we'll which we into to some markets, do. haven't further

to the So we over margins. having we've you forward on to extra been somewhat and look capacity. restricted, Derrick, that

Yes.

in a financials of to quarter on so we X,XXX and to And margin the just QX the at QX adjusted XXXX, with we've up and at last were adjusted to quarter, we facility, comparing levels. XX% negative in XX,XXX of around harvesting the when reporting gross a of approximately capacity, to completing negative it construction, other a the negative kilos this demonstrates margin, gross along our In and margin, think for year, just sort process impact the adjusted I production a XX,XXX that gross QX improvements of by in ended QX, changing X%. which initiatives we year to that swing. and point, prior moving current level up was this taken XX% have

will Now a of facility has the similar capacity, an XX% I'm at of indicate added as go -- growth that other to periods. to to the provide that lift achieve to margin where of an in But doubling are we the and a on we gross it. packaging we meaningful have I'm yet. haven't level increased is done reduction facility on -- that year next capacity increased on not production our forward we to a our of to today, cost to being date enough parts it's expecting I'm at and those doubling of that only the labor extra adjusted have significant the go margin is terms is of We've we've cost margin us the not allowed really we'll output or indicating effectively but future provide as margin. planning difference make improvements going guidance uplift improved to as just a on volatility the review But et of from a into end our materials, consequence whether the in had specific early by it management direct other cetera,

positive to continue to for see getting margin scale, and to of think we're a higher ultimately, level to us just the So there's we that by otherwise great opportunity reporting improvements that on. this adjusted

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

[Adam is speaking Andrew. of Giangregorio] This on behalf

the the there? diving into sales curious, are Quebec any how you doing provide Just market in bit working Quebec Could specifically and color of your additional products little on well more. a what's

Right.

can the is it's in what it available been tremendous rolling working out some to what innovation great a and new seen So product required taking fresh we've on and over to into results market in as have marketplace is of we a based the I need result think market the there. of But was of upgrades in and you was that the seeing continues is over refresh as I markets bit to offering new to great product it we for be that. again a product that would thing to have our Quebec and the performing year on news. that a other we we've the while. little And probably Quebec acquired of And of for sort -- make Quebec little sort a the flatlining where new bit last a bring say that it sure you

So Ontario the offering I market. think right doing things getting is we're of into X the

in. have been make a on ring We we've a time for product. And them bring it lot spending big a it the -- will we're Ontario not from down that in tenders the XX-pack trade a XX-pack that bud educating too to converting up, independent pick sure to to of

it innovations really into terms on of the make excited do us. So innovation, fresh some hash exciting want we reasons market some could why sure we're just will brand some Quebec relationship for we're I not was acquisition bought relationship. that but to But we have say, to in -- Tremblant business specifically, SQDC, maintain brand Quebec that mentioned only about what the that a I strengthen in Quebec, momentum to the keep a that not with were bring business. seen also the the and building increase get only of to and base -- we to in of in Quebec our as was significant we earlier, result the Tremblant as organic Laurentian is our and it the

Freeman Your the Raymond next James. question from Michael from comes of line

but any Research to the questions of U.S. quarter. could wonder now, least how I questions cannabinoid Thanks You sort those if markets. some described some being alliance? might of entry for these I the ask the on you if could specifically approach provide like describe color you sort and things. products, working described teams, at congratulations how innovation on an Hyasynth international I provide booming -- about on guess you completed into would of IP-driven folded our cultured could wonder this color facilities be substantially you activities? research PDC I or activity BAT, innovations those taking previously of R&D focuses and those perhaps this if and Alliance. be they'll to on And And

So -- certainly.

development regard the all, of first with So collaboration. product to

is as delivery There's we've area we could new research doing the to focus our of release CBD, launch improving at portfolio. it's that just starts we're with the most fundamental onset, is is in the mentioned research. efficacy, focus predominantly that products bring the mechanisms. The before, -- we scientific lot leverage then looking As into of which that a

product the and teams So together. center internal development at our teams R&D the

how we to R&D. improve we So more product, learn portfolio that own have we our offerings learn in our as about the the through

that's an exciting that's development happening So already.

we what bio plant forward. scientific genetics move is completing we're just As to I is as and happen lab the mentioned, so the more that going means on research plants, advanced

that's what's in -- our that's happening PDC. the So

they're at plants innovation, point, focus that we for purity, In we'll more from not the potentially point, us, higher look but opportunity for might around terms appropriate isn't biosynthesis this see be at of of there's that that certain comes API some that connected, out at Hyasynth, whole that, and is cannabis markets. an is

to develop And into new that that that is connected have the opportunity to wanted markets. sure biosynthesis of we IP longer-term be in the IP, in we across terms that we opportunity make we well. to moving space really So becomes as know borders take flower But difficult. if

our partners. to work on So continue it's that together we with something

around run would How sort rate lines of from time time XX,XXX quickly helpful. that kilogram wondering be the included in XX,XXX on is a between to of capacity third planting end of that the That's describe perfect. by mentioned you describe of And around ramp quarter. how Thanks. capacity to you you the ramp? cultivation would today XC quarter, year. Very fourth there full expansion, with kilograms But XC happening the harvesting line going

want Derrick, grab do one? to you that

when in I at now ramp right is the XX,XXX can. to August of pretty that July that leave heavy I would indicate I approximately now, and year We Yes, comes we're August in kilos think terms of the terms annualized around right up. would And XX,XXX. rate. that a

to to in consequence Just kilos work. labor really and the consideration taking all it to not while rooms you into have going up into say, construction sort the heavily we're planning period XX,XXX same XX,XXX the construction It's from, the to complete But of management kilos. terms at August starting July and be the ramp would of be as time. that, of in staggered of a just going and

this And escalating as you the follow-up might that understand do out? of blip on cultivation But right. quick margins expect ramp Derrick, on a that. should will based very planting I margin undergo All and -- aggressive -- we scale. a improve economies cultivation you in

less, cost terms when it Not of have It be a delay a your more income or be you X-month sold. like harvesting on hits product would have sure a would blip. it statement you on almost -- delay the you're there's that in because in it when that the to cost

real the from new on again, June, inventory at expensed economies we higher the end properly So will but and think with the next XXXX -- comes rooms we're improvement you're set the ultimately, the starts as terms the but July, after of scale, fiscal some year. of -- harvest the cost the harvest. of margin, of QX be be leaving during some impact -- coming about cost that's of in August really the capacity rooms room all I that will there on of on level, during with which, of QX in therefore, benefit that turning, coming the that and full of to of think some sometime rooms that talking there lower that And will

over run time. Thank we've you. bit little a our know I

to will forward X:XX about And progress. today. So our we you business. We're And happy on excited wish on call. a end thank to very I our week. for with for want the I everybody us the that, to momentum next like everyone updating look joining I'd

This for concludes participation. Thank today's your conference call. you

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