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Cannabis Professional’s daily roundup of industry news. View archive here.

Organigram’s Q1 2020 revenue beats expectations

Organigram Holdings Inc. reported first-quarter 2020 net revenue above expectations, up 55 per cent from the prior quarter, due to a surge in the licensed cannabis producer’s wholesale transactions.

The New Brunswick-based producer posted a net loss of nearly $0.9 million in the three-month period ended Nov. 30, 2019, versus a net loss of $22.5 million in the fourth quarter of 2019. This is largely due to a drop in inventory and plant value versus the prior year, the company said.

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Organigram’s first-quarter net revenue reached $25.2 million, with $16.7 million comprised of recreational and medical market sale, and $9.5 million from wholesale and international sales. A negligible balance came from other sources, and the revenue was partly offset by roughly $1.1 million in a provision for product returns and price adjustments. The majority of this provision was THC oil products that have seen “less than anticipated demand in the adult-use recreational market,” Organigram stated in its financial report.

This compares with the prior quarter’s net revenue of $16.3 million, which was made up of $20 million in sales and a $3.7 million provision for product returns and price adjustments.

The “all-in” costs of cultivation of 61 cents and 87 cents per gram of dried flower harvested, respectively, dropped from 66 cents and 94 cents per gram in the fourth quarter of 2019 as per-plant yields rose to 152 grams in the first quarter of 2020 from 148 grams the prior quarter.

Gross margins before fair value adjustments reached 37 per cent versus 5 per cent in the prior quarter.

“We view the results in a neutral to slightly positive light for OrganiGram,” said Douglas Miehm, analyst for RBC Dominion Securities Inc., in a note.

“While revenues/EBITDA came in ahead of RBCCM and Street estimates, we note that this was due to the $9.5MM of sales into the wholesale and international markets. If wholesale sales comprised the bulk of this $9.5MM, the Street may see this as a low quality beat given the lumpiness and headwinds present in this market.”

– Marcy Nicholson

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Tilray’s shares surge after new CFO, COO are announced

The price of Tilray shares surged 22 per cent on Tuesday following the announcement that two experienced CPG executives are joining the company.

Jon Levin, who was most recently Revlon’s General Manager, U.S. Mass Markets, will become Tilray’s chief operating officer. Michael Kruteck, who served in “multiple senior financial roles at Molson Coors Beverage Company” will become CFO.

Tilray’s current CFO Mark Castaneda will take on the role of Strategic Business Development lead.

- Mark Rendell

YYS delays three stores in Alberta to focus on Ontario

Retailer YSS Cannabis announced on Tuesday that it is reallocating resources away from Alberta to focus on Ontario, deferring the construction of three stores in Alberta that were scheduled to open in Q1 2020. YYS currently runs 16 stores accross Alberta and Saskatchewan.

“This is reflective of the Company's corporate strategy of remaining nimble within this dynamic industry to facilitate the balance of new opportunities, measured growth and capital controls,” the company said in a statement.

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“YSS is in the process of screening over 100 potential locations to supplement the single lease the Company currently holds in Ontario. The initial strategy for YSS will be to identify and pursue at least three premier locations until greater clarity around the licensing timeline is understood,” the company added.

YYS also announced that Sonny Mottahed, a former calgary energy banker, has resigned from the company’s board of directors, “to focus on other business interests.”

- Mark Rendell

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