IM Cannabis (IMCC) 14 Nov 222022 Q3 Earnings call transcript

Good day and welcome to IM Cannabis’ Third Quarter 2022 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Maya Lustig, Director of Investor and Public Relations. Please go ahead.

Thank you, operator.

IM Officer, Executive Shai are and Oren today Financial Chief Shemesh. me Cannabis Officer, Chief Shuster Joining The earnings at release on the that accompanies this Relations of call section our website investors.imcannabis.com. Investor is available of and that Today’s call statements future as may partnerships economic be results revenues, and forward-looking markets, prediction and operations, positions, product statements, constructed concerning financial other future from conditions, will including information any performance. estimates include releases, other a statements that statements. factors cause unknown expressed risks, The to uncertainties, materially actual information may known differ other results involve or and and implied may from those by such Factors to recent in filings described cause and that most SEDAR detail on www.sec.gov. could www.sedar.com at or such differences available company’s EDGAR contribute in the at are during this call. non-IFRS certain Furthermore, to measures will referred be presentation non-IFRS supplementary this believes The for information ongoing and the company concerning data purposes is that useful informational operation provided company’s the provides only. of Any the circumstances to estimates of statements or date of as information information the forward-looking new date this or this call. provided of undertakes the only accurate or supply company information statements are or update any forward-looking regarding call after no and the publicly obligation call Please Canadian in on note this reflect dollars. that references all currency my Shuster, it pleasure the that, to turn Oren is With over CEO call Cannabis. IM of to go ahead. please Oren,

Thank joining everyone you, Maya. and Good for us today. morning, thank you

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market, to is advantage market the in strong and develop significant share. goal an early Our foothold grab mover EU create

a cannabis streamlined focused EU common and as standards. pharmacies company. operating Germany much much for infrastructure more markets. medical and through also with cannabis under competitive now our have strong sourcing strong ultra GMP relevant give and both that cannabis are a robust key our advantages We and organized sector consumer is the in commercial Israel premium premium infrastructure common a point such There us high and this GMP well and in demand distributes In Germany. in view,

third needed in will Financial our our the will call review establish Israel to Officer, and results. capital efforts quarter turn be profitability. will financial I to and Chief further who Shai? to our over achieve the allocating Germany XXXX presence Shemesh, now Shai We in

continuing beginning gram. as the the General XXXX an kilograms The flowers based compared change comprehensive inventory from representing discontinued million The $X.X period compared million our the QX, increase in the increase our operating the of QX, XXXX line administrative with increase to quantity is sold, XXXX Gross and marketing group. Sales to XXXX QX, consolidated in legal brand Canada mainly The call, and company's decision finally XXXX million in discontinued distribution mainly ultra XX% higher compared XXXX Israel, the QX, The for is XXXX as million at will loss was million Israel. in QX, in QX, for income were in held to medical from on holders attributable in The were QX, million operations operations QX, products of $X.X QX, XXXX. an Germany, was at to $X.X change realized longer compared expenses difference million with per efforts an price the is was million margin with in strategy. compared increase. and XXXX is expired $X.XX Basic offs. net in is of XXXX in continuing financial Net XXXX, from compared kilograms $X.X and company company's Gross sale statement were gram sold in with on were selling QX, in compared expectations. now compared company's intensify in markets. basic loss of its reflects $X.X $X.XX increase the discontinued anticipated compared XXXX. attributable from to of growth the in gram $X.X from in QX, company company premium presented. per professional attributable is price results XXXX. Total XX% mainly share all loss from million cannabis an XXXX. marketing of to The to at was expenses XX% its and to for products from the decided selling XXXX. $X.X in average legal share the the share organic per QX, in well in share was 'XX XXXX, Canada for to the from of XX% operation revenues Oren. reramped the statement Thank September holders attributed and to in million compared all of million XXXX, Revenues loss $X.XX XX% XXXX. increase operations. as in of million a XXXX the is QX, continuing financials the sequential a Trichome related as mentioned you impairment position to classified QX, And, in the to same expenses per to was average expenses staffing provide operations attributable of Non-IFRS XXXX. attributable diluted continuing before branded of and services. to Canadian in commence mainly price income non-premium compared any XXXX. share $X.X write to profit to providing the in higher during loss loss no QX, attributed mainly QX, to adjusted per $X.X attributable launch holders cannabis XXXX. share local for $XXX.X portfolio company's million is in operations acquisition XXXX as $X.X $X.X earnings QX, attributed from to QX, of average QX, equity QX, a of increase $XXX.X Net Trichome consolidated in funding in XXXX. an selling periods The XXXX QX, from as in of of $X.XX average was $X to QX, decrease financial $X.X continuing flows adjustment equity competitive related in $X.X company's corporate an growth. loss in of $X.XX from the cash EBITDA XXXX. of was to for $X.X of operations exit compared Diluted dried QX, In loss increase The Operating significant expenses per adjusted to increase operations in equity compared QX, discontinued of QX, operations. diluted company $X.X loss the group loss the overview $XX.X loss diluted premium million, connection $X.X to for selling was expenses and per in price million, company XXXX XXXX $X company February per the to the landscape compared for and $X exits million, an as million XXXX statement Basic million was I for to basically in per and million, EBITDA well of QX,

company's from was operation operations working position million $XX.X million. continuing from cash was September and XX XXXX, continued of its As $X.X capital the

evaluate Canadian of Oren continuing level for sources debt XX%. XX, market, of mentioned, The its decrease credit will future existing and commencing As and Debt its the additional company's the substantially. by planning of was already a from working resources, capital reduce operations continue to facilities, have to is needed. financing able operations from $X.X been exit the use approximately representing million, capital as XXXX from we and finance to company available September

plans to for requirements. of would on XX for implement November share In remarks. purpose results, compliance it like the to addition company now effective the to to I the turn expected our back Oren be announced NASDAQ closing shares The with that financial X a of bid its also consolidation the today Oren? around XXXX. call is to XX, regain consolidation minimum to common

Thank Shai. you,

highest and efficiency continue to path the for on our will right Germany value Today, We markets seeking to future concentrate profitability. we're to maximize our and success. balance efforts our and create accelerate Israel

strengthening recreational I that, expertise call capitalize legalization. begin further in Israeli We market, preparing our our the market market and to our Operator? to upon question-and-answer ready to are on to Europe operations session. leadership the to fully bring to medical the cannabis achieve over German cannabis and the to operator With be hand

from Thank the you. comes [Operator Instructions] Partners. Alliance Our ahead. first question today Global go from line of Aaron Grey Please

thank and morning good Hi, the for questions. you

for So Israel. bit first to want talk a question little me more about

had First the from called a verticality Could I out know market about pressure and LPs a Canadian number on least of have retail of the obviously competitors interim. to pulling slowdown even talk and back pricing in more the I you going speaking then there. backs? market, most exporting in sequentially off And scroll split the wholesale there. broadly you've a when between initiative at

spoke premium positioning. your You guys to

the environment? might the as guys the pressure how Thanks. yourself more how talk Maybe evolving of some be other differentiated versus you how see and So seeing competitors forward? market you seeing can going you you're see competitive about there

Okay. hi, everybody. good Thanks. Hi, And morning.

we segment So IMC a the actually with that. been one I in the first in premium. Israeli think category Israel, to that a new which have premium market. And in have ultra position opened leading And the start is we and this built the

selling think means that $X.X of and in it's Israel. segment. Israel I in I gram a that think the I that in to in pressure well our last lot premium year in in I think and went reflection about about same says on quarter, in this we've think don't a that's lot average, we our segment. in out feel premium moving the it because the segment reflected And the I it significantly to $X.X Germany, think that the very And pressure average price price been per price

And helpful. then retail wholesale between Israel? for and That's verticality the great. split Okay, about

mean what So between split you -- the This is what is them?

Yes.

versus Just selling your your third own product more Does what you're were you're progress stores your going selling that mean with of to those acquisitions that own party of you stores through in own closed? start are through what selling terms retailers. in

the of in product wasn't sold pharmacies. that IMC most So our

stores process, to all as well. we process. supply want and only the We a portion is our We to think that on the we all the our are of growing improving time network our It's from they partners. a time. partners a quarter-to-quarter. we're have market it's don't enlarging We focus And our pharmacies can't, because the in have

color. Okay, the helpful great. That's

me for of that particularly question the want around to about provided health some more details domestic. minister little regarding the production Next a Germany talk keeping

in IMC demand your participate until the potential excluding on authorities if the then For thoughts being able German with XXXX to are and that exports to how up what opportunity? then meet IMC that cruiser And domestically within Germany, guys being were the especially Thank from within compete you to hold them able would market, target? would look they market to you. how

It's that time of to is think interesting other time. will I lot it think German the not a happens definitely be mature, it's in on market high And day. grow the market quality the actually, to-date. the side, I cannabis So most something a And take before will that that a opportunity process. one

after still of are cannabis. channel cannabis this And I the medical we will legalization. what markets focusing at it be Germany, will the there that is product, years, medical quality stay that import industry, for legalization after of for that Germany take will is the the of Well, channel now, because high start think will in in. think and the think definitely. build channel time I And to industry I as and the the

Germany going according the then will the in significantly was and I I from and that the that change think that We final draft regulations take we to will are see think very that it's to decisions regulations published. early,

question especially path Okay, at all improvements sequentially, timing how how out terms at in you. and need much. profitability gross me, look reach right. might we it Thank some model of versus SG&A profitability, it so for about just, that. you Last certainly operations. the to to that saw you terms be to look you in able Thanks reach margin when maybe of I [indiscernible] provide talked we to look discontinued the the to

Okay. Thank you.

and color. add start Shai maybe some will will more I So,

that rich think we flow debt The we simpler. will position. are, definitely better continue So business QX, positions that in definitely in And a profitability. the cash debt be I much Shai we're rest. at positive position significantly And lower now lower and we is with feel will

that margin, the that's XX This How we you? said about want had in as XX% gross to the go aiming. at still quarters. area the we Yes. what in is we In are I XX% definitely around increase margin QX. told, coming the Hi Aaron. We aiming it is margin past, around And talking gross to are it. we I expect gross about are least. more we're than And This that. the so

the We talking XX%. above We're to and the retail. the have different environment two on gross we average, difference margins but expect a between trade about be

color. back into Great. I'll for Thanks so the queue. much jump the

Scott, Thank you Capital. unmute? Please Our able Scott the will Roth ahead. [Operator from of next you. to are come Instructions] line go Fortune call from

Yes.

that. or you are. about evening Good Sorry morning where

for on of of you're going side for the what sense Just growth for market your sort the kind get growth saw forward the in medical some want but sense continuing we in patient Israel I here? to know stabilization Israel. seeing a

Scott, hi, So morning. Good

few about market lately, basis is But a to coming we've So few for in months the growth growing we we There was months, a on monthly pace. seen constantly. X% ago. that seen a are have delay back

any it this So the down, before that's don't regulations. the situation as change I go any of reason growth that now, in pace. see will

a kind I up and ultra in for the Can of cannabis market quantify the the then of you put think share a percentage premium a you there kind you bit build want us as share kind far you the the know of overall more little do from it color. Israel? and Israel. leader it Where And for that that market focus but side overall lot Got premium you're be just in at? of IMC of follow to as here? as your on side as I can know market out

that, of a good it's And the the very question. that than is that think is the in is really I sense, situation different black than market. market very more because So expensive Israel places medical other

than quality black leakage that other about a the there is places, because medical high think market, to premium demand for a I product the but of in we're actually higher especially the speaking So is market products.

don't we're the if I we So of is matter know what size any, out don't immediately. exactly We it's see far the it's are we I what sold that market, bringing, exhausting know see is from very the potential. doesn't is the whatever what price, it but premium,

business. then of That's now supply the as shuttered you've as great. that Canadian And far your sources kind

will add queue. We to you continue levels are the there in jump what fulfill looking of business of and supply. be back the will I to Kind add to supply

So the cooperation next and market. quantities going that we a supply to this are increase few to into very them that the well. we're working partners increase year, we're And build with we actually chain, with bringing the

We We build category responsible have with in and the started way. a we it very plan. quantities, have to done smaller a

have We the flood built we very it the don't to market. enlarging are the quantities And quarter-over-quarter. We segment. want responsibly

So that's do what and it my we responsibly. is increasing is, forecast. will see we quantities will This

the appreciate Thank I color. you.

you. Thank

Thank you.

no have proceed. Please You questions. further

our growth you. our happy meeting a thank we to speaking in and you track to forward coming the progress execute look And all you, for Thank I'm strategy. quarters. I with to you today. joining call as to our Please with continue set on continue operator, also

Thank Maya send you Lustig wish to assist. IR to an happy IMC's please very to director, you talk and she email be If much. will