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 Fourth Quarter Fiscal 2024 Earnings Conference Call. [Operator Instructions] Thank you. Max Schwartz, you may begin your conference.

Thank you. Good morning, everyone, and thanks for joining us today. As a reminder, this conference call is being recorded, and a recording will be available on Organigram's website 24 hours after today's call. Listeners should be aware that today's call will include estimates and other forward-looking information from which the company's actual results could differ. Please review the cautionary language in our press release dated December 18, 2024, on various factors, assumptions and risks that could cause our actual results to differ. Further, reference will be made to certain non-IFRS measures during this call, including adjusted EBITDA, adjusted gross margin and adjusted gross margin percentage. These measures do not have any standardized meaning under IFRS and are intended to provide additional information and as such, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Our approach to calculating these measures may differ from other issuers, so these measures may not be directly comparable. Please see today's earnings report for more information about these measures. Listeners should be aware that the change in Organigram's year-end effective in fiscal 2023 resulted in fiscal 2023 containing 13 months and Q4 fiscal 2023 containing four months. On this call, to more accurately reflect period-over-period comparisons to the regular and current periods in fiscal 2024, references to fiscal 2023 and Q4 fiscal 2023 will be to the unaudited and unreviewed 12-month and 3-month periods ended September 30, 2023. Listeners should also be aware that the company relies on reputable third-party providers when making certain statements relating to market share data. Unless otherwise indicated, all references to market share data are sourced from Hifyre in combination with data from Weedcrawler, provincial boards, retailers and our internal sales figures. Today, we will be hearing from key members of our senior leadership team, beginning with Beena Goldenberg, Chief Executive Officer, who will provide opening remarks and commentary, followed by Tim Emberg, Chief Commercial Officer; and Greg Guyatt, Chief Financial Officer, who will review our quarterly commercial and financial results for Q4 and fiscal 2024. With that, I will now introduce Beena Goldenberg, Chief Executive Officer of Organigram Holdings, Inc. Please go ahead, Ms. Goldenberg.

Thank you, Max, and good morning, everyone. Thank you all for joining us today. This has been an exciting year for Organigram, marked by tremendous achievements, steadfast execution and significant milestones that underscore the strength of our business. Our fiscal 2024 was punctuated by four consecutive quarters of expanding net revenue, rising adjusted gross margins and a full year adjusted EBITDA growth of 55% over prior year, an accomplishment in any business environment. But these achievements are not made in isolation, and I want to take a moment to recognize the exceptional contributions of our Organigram teams across all departments and roles, their unwavering dedication and innovative ideas have driven this success. Before diving into the specifics of our Q4 performance, let's take a brief look back at some of the key highlights of fiscal 2024. In Q1, we secured a strategic investment of $124.6 million from BAT at a share price of $3.23, representing an almost 100% premium over our market price at the time. This was no small feat, particularly given the challenging capital market environment for cannabis investments. This investment was a clear testament to BAT's recognition of our operational strength and shared vision for tomorrow. The investment helped establish our $83 million Jupiter fund with which we are now actively investing in international cannabis growth opportunities, setting the stage for long-term global expansion. In Q2, we conducted our first flower shipment to Germany through our supply agreement with Sanity Group, a leader in the German cannabis market. Similarly, our inaugural U.K. bound medical flower shipment signals our growing footprint in Europe. Alongside these achievements, we signed new supply agreements in Australia and the U.K. These efforts highlight our commitment to diversifying international revenue streams and entering more high-growth markets. We also made our first Jupiter investment…

Thanks, Beena. Organigram was one of the few top LPs in Canada who managed to grow market share in our fiscal year '24 compared to fiscal year '23. Organigram expanded its overall share of the Canadian market by 0.6 points, finishing the fiscal year with a 7.6% market share in September, the highest market share we achieved all year and 7.3% for full year fiscal '24. This translated into a year-over-year growth in our adult rec shipped sales of plus 17.6%. This is approximately 3x the market growth in Canada based on the latest Hifyre data. We are extremely proud of these results as share growth and share gains like these are really tough to capture in this industry. This is not only a great reflection of our amazing commercial team and feet on the street, but our entire organization from an end-to-end played a key role in this success. As Beena mentioned, we moved into the number two market share position in Q4 prior to our acquisition of Motif and becoming the number one player nationally. There were several contributing factors to our strong fiscal year '24. First and foremost, we returned to growth in our flower business. This was extremely important to us being a top flower producer. We gained 0.4 market share points in flower in fiscal '24 and reached a 9.5% overall flower share. This was heavily driven by our Big Bag O' Buds brand, which grew at 25% year-over-year versus just 2% growth in the overall large-format segment. Our increase in quality on Big Bag and the strengthening of our overall value equation to consumers helped tremendously. This also allowed us to take price on this brand, which is something you don't see very often in this industry. Number two, we expanded our pre-roll business…

Thank you, Tim. To reiterate Max's comments at the beginning of the call regarding our change in fiscal year and fiscal 2023, the comparison periods of fiscal 2023 and Q4 fiscal 2023 will be presented as the unaudited 12- and 3-month periods ended September 30, 2023, unless otherwise indicated. With that said we had a strong Q4 and fiscal 2024 and delivered on the guidance we reiterated throughout the year of higher gross margins, higher net revenue and higher adjusted EBITDA year-over-year. In Q4, net revenue grew by 10% sequentially and 22% year-over-year to $44.7 million. In the quarter, the sequential increase in net revenue was driven by an increase in international sales and growth in our domestic recreational business. As mentioned earlier, our recreational shipped sales increased by 17.6%, a growth rate significantly higher than that of the market. At the same time, our gross margins have seen improvements owing to higher yields, increased operational efficiencies and consistent product quality on both a sequential and year-over-year basis. While yields and THC content will fluctuate over time and at this point, are somewhat dependent on business needs, the trend we have seen over the last two years has been larger yields and higher potency. We averaged 131 grams per plant in fiscal 2022, 158 grams in fiscal 2023, 175 grams in fiscal 2024 and are pleased to report a record-breaking Q4 this year with yields reaching 187 grams per plant. As yields increase, we spread our fixed costs over larger volumes, resulting in better unit economics and cultivation and higher capacity. We expect yields to continue to be high, although it is somewhat dependent on our cultivar mix, which, again, may cause fluctuations from time-to-time. Our adjusted gross margin rate has continued to improve, hitting 37% in Q4 compared to…

Thank you, Greg. This year has been a testament to our ability to execute with precision, innovate boldly and navigate an evolving cannabis landscape with resilience and foresight. From expanding our international footprint to solidifying our leadership in key domestic categories, every achievement has brought us closer to our vision of setting the gold standard in the global cannabis industry. As we move into fiscal 2025, our priorities and focus remain clear: driving growth in ready-to-consume categories and international shipments, enhancing operational efficiencies and leveraging our strategic acquisitions to deliver sustained value to our shareholders. With a robust foundation in place, market-leading brands, a focus on advocacy to shape a sustainable industry and our strong team, we are perfectly positioned to capitalize on emerging opportunities and to continue delivering exceptional results. Thank you for your continued interest in Organigram as we embark on this exciting next chapter. I will now open the call to questions.

[Operator Instructions] Your first question today comes from the line of Aaron Grey from Alliance Global Partners. Your line is open.

Hi, good morning and thank you for the questions. Congrats on the nice quarter and again on the acquisition of Motif. I want to start-off on Motif and dive a bit deeper in some of the potential synergies, right? So you spoke to on top line potential Quebec with vapes, as well as some cost synergies in terms of the extraction. I want to dig deeper because I know you guys had - been working with BAT, with the program in terms of its own innovation with vape that BAT has. So wanted to dive a bit more in terms of how you believe you can leverage the core competencies of Motif, as well as vape to really drive further innovation within the vape category in cannabis. Thank you.

Sure. Thank you, Aaron. And just we have been doing a lot of work on vape innovation, not just at the PDC, but we also had the investment in Greentank on their Quantum vape technology. And really, what we're looking for with the Motif acquisition is leveraging their credibility in the vape category to help us integrate these innovations into our portfolio. So we founded at Organigram, we needed to do some innovation to get in, but it was a tougher position when we had very little presence in the vape category. We certainly plan to leverage the expertise of the Motif team to help us build the right kind of programs to launch this innovation into the marketplace. So that is certainly a plan. But just further to your comment earlier in terms of synergies, besides ingredient cost inputs that we certainly see benefits, there are opportunities to leverage the centralized location warehouse in London, which will allow us not only to benefit from the SKUs that are in the flow-through for Ontario to get into customers more quickly. Obviously, fulfilling out of Ontario versus New Brunswick is a big advantage. But also for both the Organigram and Motif team, getting faster fulfillment into Western Canada is a big advantage that that Central location will provide us. Besides that, we see other opportunities of leveraging our strength in Atlantic Canada to help bring in Motif products there. There are some customers that we have stronger relationships than they do. And so we could leverage those relationships to help get their products launched. And similarly, they have stronger position in Western Canada. So we see opportunities to expand our presence, our net revenue from both -- through the combination of this acquisition. And we continue to find other synergies like lower insurance costs, leveraging our data programs with our customers, those kind of things that we will be continually working on to deliver on the $10 million of synergies expected in this acquisition.

That's helpful. And then just second question for me. Just embedded within the outlook commentary that Greg touched on earlier in the prepared remarks. Can you provide any color in terms of your thoughts on the overall Canadian market for growth that you expect, given that we've seen some acceleration in growth in the market this year as well as fragmentation, how much you expect that to remain. So your embedded expectation within your own for OGI as we look towards 2025 for the broader industry in Canada.

Yes sure. So overall, we're looking at the forecast for the industry in Canada to grow about 4% in the next year. So certainly slowing in order of overall market unless there is some significant regulatory change that could either unlock better movement from the illicit market or perhaps some more on-premise opportunities. So for now, slower growth expected in the industry. Where we see the opportunity is that we have a stronger base. We see the provincial boards looking to rationalize their lineups to make sure we have -- they have the most productive SKUs. And it's something that Organigram has always done, as Tim mentioned, we continue to optimize our portfolio to get the highest revenue per SKU. So we expect that in the next year, as less SKUs are available in the different provinces, we will be able to steal share from some of the smaller players that have perhaps been around longer than they should have, given their slower turns per SKU. So this is something that we see an opportunity. We expect that there might be some further rationalization in the industry. Capital markets are still tight. There's some smaller players out there that will struggle as debt comes due. We have a strong balance sheet, and we expect to leverage our relationships between ours and Motif to really not only grow with market or outpace the market, but to steal share from those that are struggling or maybe not as focused on cannabis anymore and gives us an opportunity to really expand our market position.

That's helpful color there. Thank you for the color. Congrats again ending 2024 on a strong note and best of luck for 2025.

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

Good morning. Thanks for taking my questions. Congrats on the quarter. First question on international markets. We've seen that many other LPs are also investing and trying to get into those markets. So just curious, do you see any risk that these markets get more competitive and you could see some price compression or just being harder and harder to grow internationally given the Canadian LPs are ramping investments into those markets?

Yes. Thank you, Fred, for your question. There is no question that a lot of LPs are looking to international markets because the growth there is, number one, faster than currently expected in Canada, but also, obviously, those sales don't incur the higher excise duties that the Canadian business does. So it's higher-margin product. Do I anticipate more competitive situation? Absolutely. We're seeing it in some of the markets that there is more competition. But what we really see as an opportunity, obviously, getting our EU GMP certification that we expect to get within the first quarter of 2025 is that we will be able to see a higher price than what we're currently selling into the market. So there's not many companies out there that have that certification. So others are going through converters. And by getting our certification, not only would we be able to avoid the delays that go through converters, but -- so we'll become more of an interesting supplier to several of the international customers. But also for us, this is an opportunity with Sanity Group as part of the agreement that we had through the investment with them was to increase the amount of supply to them once we have the certification. So we see this as a big opportunity. And in terms of your comments in terms of the sales, right now, there's a big demand in Germany and in Europe, in many of the international markets as they ramp from being restricted to just being medical to maybe, in some cases, some pilot recreational programs. Just Germany, in particular, as an example, you look at today, they currently anticipate that about 0.5% of their population are cannabis patients. And you compare that to Israel that's at 2% or Australia that's at 3.5%. And there's such significant opportunity just on the medical side in Germany before you even consider the possibility of those pilot programs that were enacted at least announced last week. So we see significant upside. We have great quality product. We have enough volume. So there's a lot of small craft players in Canada, but they can't supply the volumes needed in international markets nor are the EU GMP certified. So yes, there is more competitive pressures out there, but we see it as a big opportunity going into next year.

Thank you for that, Beena. Second question on your fast emotion technology and the claims that you're able to put into the packaging. Just curious what the feedback so far you're getting from consumers? Are they able to differentiate your product, just given the claims and the technology so far? And do you see any opportunity to license the technology or to use that in other markets, specifically in the U.S.?

Yes, no problem. So I'll let Tim answer the question about reaction in the marketplace first, and then I'll come back to you on opportunities in the U.S.

Thanks, Beena. So we're really in the early stages of launch. We just did our initial pipeline, and we'll have distribution out to eight provinces within the next week. So early indicators are extremely positive at Street level and from budtenders and what we're hearing back from consumers. So I can say that there's been a lot of R&D behind this technology, and it's as advertised. So the feedback so far is very, very positive. We're ramping up production to ensure we can meet the demand, and we'll probably have more of a robust feedback in the coming weeks.

And just to wrap on your question, Fred, the FAST technology, we're very excited about it. It is IP that we worked on at the PDC, and we are absolutely looking at how to leverage that IP into specifically the U.S. market in the Hemp Delta-9 space. We know that the technology works -- FAST works very well for both gummies and for beverages. And we also know that the Hemp Delta-9 market in the U.S. is really a way to get into the U.S. market in a compliant way, and we're looking forward to going into those kind of segments, the ingestible areas with a differentiated product using our FAST technology.

Great. Thank you very much.

Your next question comes from the line of Pablo Zuanic from Zuanic & Associates. Your line is open.

Thank you. Good morning, everyone. Beena, let me just follow up on that last question. So I see -- when you talk about the U.S., you're talking mostly about hemp-derived, I understood via the Jupiter fund. But when you see Canopy Growth with the Canopy USA guardrail structure and you look at SunStream SNDL with SunStream USA, there seem to be more NASDAQ-listed Canadian LPs that are finding a way to get exposure to plant-touching U.S. assets. And here you are with the Jupiter fund, a very strong balance sheet, just focusing on hemp. So can you give more clarity why shy away from THC right now? Thank you.

Sure, Pablo. So I don't think we're saying we're shying away from THC touching. It's just not as a direct opportunity as the Hemp Delta-9, which is it's a low-hanging fruit kind of way to enter the U.S. market because it's compliant because recently, that Mary Miller Amendment was not included in the Farm Bill. So we clearly are watching the regulations there. In terms of Jupiter Fund, look, our approach has always been with any of our investments, looking for active investments where we can see some benefits. So when we invested in Phylos, we got not only access to THCV high concentrate strains for the Canadian market, but we also got the seed-based technology. With the investment in OBX, we have a team that could help us on testing efficacy in the U.S. market that we obviously can't do from Canada. So while we look at Canopy USA and we look at SunStream, they're more investment, longer-term investment strategies and not actively benefiting today's business. And we'd like our investment dollars to work both for the future in terms of growth, but also for today. And so finding a way to get into plant touching might be more around leveraging our IP, things like our FAST technology that while we'll work on certainly the Hemp Delta-9 will also work in the regulated space looking at how we work leveraging some of the other IP we've developed in the PDC. So that's our approach right now. It doesn't preclude us from looking at some of those other structures, but it is, for us, the easier way in, the way we can actually consolidate revenue from the U.S. and make it work harder, our money work harder for us in the shorter term.

Thank you. That's very clear. Look, just shifting gear with the conservatives, I think up 20 points in the polls. What do we know about Poilievre's stance on cannabis? We are getting news on potential excise tax changes, but should we be concerned about big reversals coming in cannabis policy, the Conservatives take control of the government next year?

Well, that's -- it's a forward-looking guess. I would say here's our position. We certainly are a strong supporter of our C3 Industry Association, and we are reaching out to the conservatives to really talk about our industry. While historically, the Conservatives haven't been as supportive, this is an industry that grew from effectively nothing six years ago to over $5 billion on the recreational legalization. The Liberal governments help legalize it. But the truth is the Liberal government hasn't really been listening over the last several years as many recommendations have gone to address the flawed excise duty approach. And that was highlighted by the standing committee on Finance, the Competition Bureau, the Cannabis Act review. Everybody said something has to be done on the excise tax to get a sustainable industry that would not only make sure that it met the health objective, so safe product available, but keeping money out of the illicit market. And unfortunately, we haven't seen any response from the Liberal government on that. The finance -- the economic statement that came out on Monday did reference the possibility of moving to a national stamp. That would certainly help the industry and avoid some of the challenges on forecasting and inventory management. But that is still -- it's for the 2025 budget that might not ever happen. So the reality is we start again with the conservative government. We are a big business that offers lots of jobs, good tax revenue and the conservatives typically are friendly towards business. And we are working to reach out to understand their position on cannabis. We're looking for them to fix some of the things that the Liberals have left broken still in this -- in their legalization. So while the legacy that the liberals will have is legalizing cannabis, there is an opportunity for the conservatives to fix the errors and really get this thing right moving forward. So we look forward to having those discussions.

Very helpful, thank you.

Your next question comes from the line of Yewon Kang from Canaccord Genuity. Your line is open.

Hi, good morning. Thank you for the question. So my first question here is regarding the adjusted EBITDA margin this quarter. Obviously, very nice to see the sequential improvement and the reduction in overall OpEx. Just wanted to ask about looking ahead to fiscal year 2025, are you guys expecting this OpEx level in Q4 to remain stable throughout? Just looking for some commentary here to help us think about the expectations for this line item going forward. Thank you.

Good morning, Yewon. Thanks for the question. And yes, we're obviously really happy about the strong EBITDA margins that we achieved. I think looking into 2025, we expect EBITDA to be overall higher. And to achieve that, expenses will be relatively stable, although I will point out that as a result of the Motif acquisition, we will be doing some investment to make sure that, that the transaction gets integrated effectively. And then on the margin front, as I mentioned, we're expecting 35% on average looking into fiscal 2025, relatively stable. And obviously, looking at the cost synergies as well from the Motif acquisition, of which we think $5 million will be realized this year.

Got it. And just the second one here is regarding the International segment. Looking ahead to next year, obviously, Germany has seen pretty significant growth this year with the legalization that was enacted back in April. How are you guys thinking about perhaps potential additional growth opportunities in that market given that the government's second pillar plan to introduce the retail model is currently stalling and there may be regulatory delays in terms of forming a government there?

Sure. So first of all, the German market is growing quite considerably, even if they don't get to the pilot -- sort of the recreational pilot programs. We see just from the medical market opportunities. Right now, it's growing whatever, 4x to 6x higher. So there's lots of demand. What you hear from most of the players in Germany is that they have less sales on the table. They haven't had access to enough flower. The delays in getting flower through the converters into the market has been challenging for them. There's lots of out of stocks when you -- when the medical patients are looking to procure their product. So we see the opportunity in Germany is huge. There's lots of demand. And with our relationship with Sanity, we not only have some products there that are performing very well, some of our strains, but they're also looking for more inputs, more flower. And once we get our EU GMP certification, we expect that not only will we be able to supply them more product directly, but the agreement from the investment was once we get our certification that we will be providing 30% of their needs into the German market. So even if the recreational pilot projects stall, and at this point, our understanding is if the pilot programs are agreed to in advance of the next government forming, there's unlikelihood that they will go backwards on that. So we'll wait and see. As I mentioned in my remarks, the Sanity has -- will be putting in applications for three cities for Hanover, Frankfurt and Berlin, and we feel that they have a strong likelihood of achieving some of those pilot projects because of their experience in Switzerland, where they currently run two and have that experience. That being said, we'll wait and see if they do get those cities. But even if it's just days as a medical market, the demand is high. And at this point, there is almost more opportunity to ship than available flower capacity to send. So this is going to be an interesting year as we continue to see growth in the international markets.

Thank you.

And that concludes our question-and-answer session. Ms. Beena Goldenberg, I turn the call back over to you for some final closing remarks.

Well, thank you, everybody, for joining our call today. We're extremely proud of the results that we had in fiscal 2024. We're excited about the Motif acquisition that we completed subsequent to the quarter end and the integration and the opportunity that it presents us as we go into fiscal 2025. We know its mid-December and everybody is looking at a holiday season coming up. So I just want to wish everybody a happy, safe and healthy holiday season, and we look forward to updating you on our Q1 results in February. Thank you for joining our call.

This concludes today's conference call. Thank you for your participation. You may now disconnect.