Organigram Holdings released third-quarter financial results for the period that ended on May 31st, 2018.
Growth in production, dried flower sales, oil sales, inventory and the announcement of numerous sales agreements positions Organigram for the successful launch of the adult recreational use market later this year (October 17 to be exact).
- Organigram began harvesting from its Phase 2 expansion facility (23 grow rooms) on April 20th, increased its target annual production capacity to 22,000 kilograms
- In May, the company launched its recreational brand strategy which included house brands such as The Edison Cannabis Company, ANKR Organics and Trailer Park Buds;
- In May, Organigram received approval from Health Canada to be a Licensed Dealer;
- In May, the company received its Export Permit which allowed Organigram to make its first international medical shipment to Australia (completed in July);
- Announced strategic investments in: Hyasynth Biologicals, Alpha-Cannabis Germany, and Eviana which all are expected to close in the calendar third quarter.
- During the quarter, Organigram recorded $2.8 million of net income on $3.7 million in revenue. This was a record high and well above the $1.9 million of revenue generated during the same period last year.
- Record sale volume of cannabis oil and sold 768,400ml, up 39% from the prior quarter and up 452% from the same period last year.
- Record sales volume of dried flower (303,428 grams), up 28% from the prior quarter and up 55% from the same period last year.
- Cost of cultivation per gram of dried flower harvested of $0.80 per gram "all-in" (direct labor and materials, allocated overhead and depreciation) and $0.58/gram excluding depreciation.
- Registered medical patients climbed to a record 15,316, up 18% from the prior quarter
- Net interest expense of $3.7 million for the quarter primarily attributable to the interest expense on $115 million of convertible debentures issued on January 31, 2018
- As of May 31st, Organigram had $156 million in cash and short-term investments, $26.9 million in combined biological assets and inventories, $83 million in property, plant and equipment, $9 million in current liabilities, and $98 million in long-term debt and convertible debentures.
It is no surprise why Organigram continues to be one of our favourite stocks. The results are impressive and with the launching of the recreational brands ahead of the recreational market opening up, we see Organigram as being well placed to capitalise on it. The shares have been under pressure, but this is more to do with being in line with an overall market decline (almost 11% in July) and not for any particular fundamental reasons.