OrganiGram Holdings (TSX:OGI) reported second-quarter financial results on Tuesday. The transcript from the company’s second-quarter earnings call has been provided below.
This content is powered by Benzinga APIs. For comprehensive financial data and transcripts, visit https://www.benzinga.com/apis/.
View the webcast at https://events.q4inc.com/analyst/574618022?pwd=FVnom6fM
Summary
Organigram Global Inc reported a challenging Q2 with a decline in net revenue to 59.8 million, primarily due to issues in vapes and infused pre-rolls, and competitive market pressures.
Despite challenges, the company gained market share in flower and edibles, with notable performance in products like Big Bag of Buds and Shred shots.
The completion of the Sanity acquisition marks a strategic move into the European market, with expectations for significant revenue contributions from Sanity and ongoing growth in international markets.
Operational issues in pre-roll production and vape potency were addressed, with improvements expected in Q3 and Q4, supported by new product launches and operational enhancements.
Organigram Global Inc maintains its position as the number one licensed producer in Canada by market share, with strong performance expected in the latter half of fiscal 2026 driven by both domestic and international growth.
Full Transcript
OPERATOR
Good morning, My name is Ed and I’ll be your conference operator today. At this time I would like to welcome everyone to the Organigram Global Inc Second Quarter Fiscal 2026 Earnings Conference Call. After the Speaker’s prepared remarks, there’ll be a question and answer session. Please limit yourself to one question and one follow up. You may request for additional questions. Thank you. I’ll now turn the call over to Max Schwartz, Director of Investor Relations.
Max Schwartz (Director of Investor Relations)
Thank you very much and good morning everyone. Thank you so much for joining us today. As a reminder, this call is being recorded and a replay will be available on our website within 24 hours. Today’s call will include forward looking statements. Actual results could differ materially due to a number of risk factors outlined in our filings and cautionary statements included in our Q2 fiscal 2026 press release and MD&A. We’ll also reference certain non IFRS measures such as adjusted ebitda, adjusted Gross Margin and free cash flow. Definitions and reconciliations are available in our disclosure materiallys unless otherwise noted. Market share data is sourced from High Fire Weed Crawler, Provincial Boards, retailers and our own internal sales tracking. Discussing our results today are James Yamanaka and Greg Guyet, CEO and CFO of Organigram Global respectively. Once again I welcome you to today’s call and with that I will turn the call over to James.
James Yamanaka (CEO)
Thank you Max and good morning everyone. Thank you for joining us today. It’s now been about four months since I joined Organigram and after an initial period of deep operational review across the business, my focus remains on execution, leveraging our strengths, addressing areas for improvement and fully realizing the financial and strategic contributions of Sanity Group in Q3 and beyond. Overall, the company has meaningfully repositioned itself for expansion. However, Q2 was a challenging quarter with the Canadian recreational market growth being called down from 5% to 2.2%, operational issues temporarily impacting our performance in vapes and infused pre rolls and improving but elevated levels of out of spec International Flower which we continue to work through. Before getting into our quarterly highlights, I’ll walk through these challenges and how we are addressing them in pre rolls. Coded Indica Pre-Rolls (Indica Pre-Rolls) quality inconsistencies following the internalization of pre rolled production at Aylmer and the use of new production equivalent introduced higher variability and fill rates and lower overall product consistency as we calibrated our processes. The result was lower repurchase rates and a 1.6 point share loss in overall pre rolls versus the prior period that is not acceptable to us. In response, we tightened quality control processes and implemented production changes to enhance consistency Pre rolls coming off the line today are already more consistently filled and coded and we expect to introduce IPR (Indica Pre-Rolls) coding automation in the near term to ensure consistency remains at acceptable levels. In vapes, segments of our portfolio fell below competitive benchmarks on both pricing and potency, contributing to share erosion across five 10s and all in ones. A key driver of the 6.1 point year over year share decline was our over indexing toward lower potency 1.2 gram vapes as consumer demand shifted toward higher potency 1 gram formats. To address this, we are launching higher potency offerings offerings and refreshing both product and hardware including Box Hot, Liquid Diamond, all in ones in the coming weeks. On International Flower on spec pass rates have improved from Q1 due to adjustments we’ve made to our post office processes. Quarter over quarter growth in international sales from 5 million in Q1 to 6.1 million in Q2 reflects that progress. However, there is more work to be done here to bring our on spec volumes up to international levels. We expect continued improvement in Q3, supporting both revenue and margin expansion in the back half of the year. Despite these challenge challenges, we delivered strength across a number of other areas. In flower, we gained 2.2 share points year over year driven by strong performance from big bag of buds and key cultivars such as Purple Punch out and Ultra Sour as well as very strong reception for our new root beer cultivar. These gains reflect continued improvements in flower potency, quality and consistency, strengths we expect to carry into upcoming pre roll and milled flour launches and our summer shred retail activations. In edibles, we gained 1.8 share points year over year while beverages and concentrates grew 0.7 and 3.1 3.1 points respectively. We attribute this growth to innovation including new beverage launches such as shred shots featuring our fast technology as well as continued momentum in products like Shreddham’s Max 10s and box hot with Diamonds. While we saw increased competition in mills flour and modest share declines year over year, we returned to growth sequentially and held a leading 38.9% share in that segment. Overall. Organigram remains the number one LP in Canada by market share. In Q2 we maintain leadership positions in the key markets of Ontario, British Columbia and Alberta while continuing to build momentum. In Quebec, we Now rank number three in the province reaching 11.3% market share as of the end of March, a 2.6 point increase year over year, and are the fastest growing LP in Quebec fiscal year to date. This performance has been driven by strong Quebec Vape and flower sales contributing approximately 25 million in retail sales in the province during the quarter. Across our portfolio of industry leading brands, Shred Box Hot and Big Bag of Buds were all ranked within the top eight brands nationally. Big Bag of Buds is the fastest growing flower band in the country, Box hot is a number one concentrates and number two vape brand and Shred alone would rank as a top 10 LP by its market share. Taken together with the operational remediation and product enhancements underway in vapes and infused pre rolls, we are confident in our ability to regain share and drive stronger growth in the back half. Moving on to our international business, the completion of our Sanity Group acquisition in April marks a significant milestone for Organigram, creating a combined entity with leadership positions in the world’s two largest federally legal cannabis markets, Canada and Germany. With growth initiatives underway in Switzerland, the uk, Poland and the Czech Republic, Sanity Group is expected to generate on average approximately 25 million euros in quarterly revenue over the next year and serves as a platform to scale across Europe as the market continues to evolve toward more structured medical frameworks. From an integration standpoint, Sanity Group will operate fairly independently in the first year, allowing the team to remain focused on execution and growth within its core markets while receiving strategic support and supply from global organigram resources where appropriate. Outside of Europe, we continue to supply flour to partners in Australia, where we also recently launched vape and edible SKUs under our box Hot and Edison brands, expanding beyond wholesale flower into branded sales. Our products are expected to be available to more than 4,000 pharmacies nationwide as distribution rolls out. Regarding recent cannabis rescheduling in the US we are watching closely. It is too early to determine which pathways, if any, to accessing the US medical markets are viable for us. Our two US Strategic investments will likely benefit from these developments and we continue to evaluate opportunities as the regulatory landscape evolves. Finally, with respect to EU GMP certification, in April we provided all additional documentation requested by the regular regulator to date to support the closure of all major findings identified in our certification audit. Given the increased scrutiny of licensed licensed producers seeking EU GMP status, it is difficult to predict timing, but we expect an update on certification in the coming months. Turning to operations Notwithstanding the quality control improvement we’ve already implemented in IPR production, we are seeing continued improvement in several areas. In Q2 we achieved a record quarterly harvest of over 32,000 kg supported by yield improvements, while average TFC at our Moncton facility TFC reached 29.8%, the highest level to date. Looking back at Q2 last year, our yield improvements equate to a 56% increase in capacity without expanding our facility footprint and and reducing our cultivation costs while we also continue to advance our genetics programs including the identification and deployment of powdery mildew resistant cultivars discussed last quarter, two resistant cultivars were launched in March. These advancements are contributing to lower plant care requirements, reduced input costs and improved yields. We are now expanding the program to target additional traits including terpene and aroma expression, color and broader resistance to mold and yeast. This work also dovetails with our seed based cultivation strategy which remains a key focus area in Q2. Approximately 25% of our harvest was grown from seed and we continue to evaluate opportunities to expand this approach to further reduce costs and increase consistency. Finally, in Winnipeg we continue to ramp up our beverage production line to meet the growing demand of the market and and we are already seeing a strong reception for our recently launched shred sodas which are expected to drive additional beverage growth in Q3. Overall, Q2 presented challenges that impacted our results and required us to move quickly to competitive and operational adjustments that we expect will support more sustainable performance over …
This post was originally published here
