Organigram Holdings Inc. Shows Sales Growth Amid Losses
Organigram Reports Strong Sales Growth
Cannabis grower Organigram Holdings Inc. (NASDAQ: OGI) has reported impressive third-quarter net sales totaling $51.14 million, equivalent to approximately $70.8 million Canadian dollars (CAD). This marks a significant year-over-year increase of 72%, surpassing the projected consensus of $48.33 million.
Revenue Breakdown
A substantial portion of these sales, amounting to $59.92 million, or 85%, stem from the recreational cannabis sector. This robust growth has been primarily fueled by the acquisition of Motif Labs, coupled with a surge in international sales, which saw gross revenue rise 73% to $110.2 million.
Volume and Product Performance
The volume of flower sales saw a marked increase, with total sales in grams rising 24% to 23,290 kg compared to 18,785 kg the previous year. This growth can be attributed to the success of the company’s large-format value products and a notable increase in infused pre-roll sales.
Financial Losses and Margins
Despite the sales growth, Organigram reported a loss of three cents per share, missing the consensus estimate of a one-cent loss. The adjusted gross margin stood at $24.2 million, or 34% of net revenue, compared to $14.6 million, or 36% the previous year. Excluding the Motif acquisition, the standalone adjusted gross margin was approximately 37% for the quarter.
Future Expectations
Management is optimistic about future margins, projecting improvements as synergies related to the Motif acquisition are realized in the coming quarters. Greg Guyatt, CFO of Organigram, expressed confidence in their business scaling both domestically and internationally, and the expected cost efficiencies from their recent acquisition.
Synergies from Motif Acquisition
To date, synergies from the Motif acquisition have reached $4.2 million, which is on track for an annualized estimate of approximately $11 million, with a target of $15 million within 24 months of the acquisition. Additional investments have been made into Motif to enhance expected synergy realization, increasing the annual projection from a prior estimate of $10 million.
Guidance for Future Performance
Looking ahead, Organigram forecasts an adjusted gross margin to average near 35% for the fiscal 2025 year. The company expects these margins to approach 40% in the latter half of fiscal 2026. Furthermore, they anticipate that the full-year fiscal 2025 adjusted EBITDA will exceed that of fiscal 2024, with cash flow from operations anticipated to reach breakeven or better after working capital changes.
Positive Cash Flow Expectations
In the most recent quarter, Organigram generated positive free cash flow of $5 million, and management is optimistic about generating continued positive free cash flow into the fourth quarter of 2025 and into fiscal 2026.
Stock Price Overview
Amidst these developments, OGI stock was noted to have declined 5.03%, trading at $1.510 during premarket sessions on the last check.
Frequently Asked Questions
What are the recent sales figures for Organigram?
Organigram reported third-quarter sales of $51.14 million, a 72% increase year-over-year.
What contributed to the sales growth?
The sales growth was driven largely by the acquisition of Motif Labs and increased international sales.
What is the projected gross margin for fiscal 2025?
The company forecasts an average adjusted gross margin of approximately 35% for fiscal 2025.
How much synergy has been achieved from the Motif acquisition?
Organigram reported $4.2 million in synergies to date from the Motif acquisition, on track to achieve $15 million within 24 months.
What is the current status of Organigram's stock price?
As of the last update, OGI stock was down 5.03%, priced at $1.510.
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