Organigram Holdings Inc.

Q4 2021 Earnings Conference Call


spk_0: the morning and welcome to our get ghana graham holding a fourth quarter earnings conference call for the fiscal year twenty twenty one all lined with in place i need to prevent any background noise after the figures remark that will be a question and answer session with allah we you to please limit yourself to one question and one follow up question you may reach you if you have further questions as a reminder of copper and called being recorded and a transcript will be available on organic rams website lesnar should be aware that today call kabul include estimates and other forward looking information please review the cautionary language in today's press release on various factors assumption that read that could cause the company the actual results to differ furthermore during the call reference will be made to certain non i ever measures including a the diva and adjusted gross margin these measures to not have any standardized meeting under i upper and are approaching calculating measures may differ from that of other issue or and so these measure it may not be directly comparable we see today earnings report for more information about the measured would now like to introduce new be no goldenberg chief executive officer of organic graham holdings inc we go ahead made goldenberg thank you operator and good thank you for joining us today whitney is their west or chief financial officer for today call more the financial results for the three and twelve month ended aug thirty first twenty twenty one and i will provide a general fitness okay we'll then opened a call for question he began i'd like to say how pleased i am to be part of the organic grand team and hope this call with investors with organic rounds reputation for high quality products are strong brand portfolio and are proven ability to innovate and ways that make consumer the i believe we are positioned perfect fit what's more we have the strategic partner the team and the resources in place to ensure we will execute on or growth strategy or fourth quarter twenty twenty one of the dock them free program against all of our strategic and objective we achieve double digit growth and recreational revenue we introduced innovative products that will quickly embraced by consumers we continue to improve our job the gross margin we have operation through adding p p members and advance or product development collaboration with be a key also and importantly according to height by your data we grew or recreational cannabis market share and seven percent in cute or from five point four percent in huge three conditioning or gary brown as the number for lp in canada and the momentum continue our latest data showed the share of seven point nine percent at the end of october starting with our brand in the quarter we continued the revitalization of our portfolio with the introduction of sixteen midfield into the recreational market bringing the total to over one hundred new few them fiscal twenty twenty one in addition we recently introduced to bread for them gullies and cute for and are the forward wellness brand moved or subsequent to quarter and we have been refreshing our portfolio based on a on blind consumer research to ensure it of aligned with current and expected evolution thing consumer preferences the launch of shred and big bag but there's a great example of our strategy could capital migration to large format low price and hi keeps the author offering while the bag the been offered twenty eight grand of high quality flower at a consumer friendly pray shredded coconut value segment product that is the leading brand equity with unique and bold flavor profile it has captured the imagination of the candidate consumer but failed for and sixty seven percent twenty three sram has remained the number one search brand on the lcs with fight for a level of the past twelve months when it comes to addressing the about the need that the premium cannabis consumer we continue to invest in our edits and breath if they put twenty twenty one we introduce seven new hypertrophied strain that were well received by consumer moving forward to our in house genetic breeding program that while i the investment than our bent cultivation facility we plan to bring new cultivars to market with unique turpin profile and hi keith the content that consumers are looking for we often devoted significantly market marketing budget to edison to elevate new product introduction and solidified brand position and we're seeing the results of our marketing efforts according to break your survey a three thousand three hundred and fifty pamela over the august september period and inexperienced the four percent growth and brand awareness and a keep a significant increase in its numbered a social management and positive consumer sentiment course in fact over eighty percent the consumer indicated they would likely recommend edits and to a friend we will continue to invest in building or patrick brand the consumers open marketing and product development to ensure that moment and continues over time while the brett what wild we are committed to improving our mit the paper a premium product we do recognize the importance of the valued segment and it's pivotal role and converting illicit market users to the legal market that widely continue to focus on offering brands such a shred and big bad the but the consumer kicking a high quality legal product at a fair price that said you're committed to ensuring we can do so profitably will be back a bunch of always had read little margin for the segment we were able to leverage the strong consumer demand and loyalty and shred to take pride which improves the margin on the popular brand on the premium five weeks back but in time consumers will become more discerning and will start making choices based on genetic but structure flavor and aroma profile as well as other quality attributes or product development strategy anticipate the devolution and we will be ready at the shifting humor behavior happen moving on from flower in the fourth quarter we launch shred him gunny to leverage that success and brand recognition of shred threatened are available and indicates the keeper a hybrid version with exciting flavor like sour cherry punch salamanca melon and while buried late and quickly gained momentum capturing five point eight percent national market share in the gummy category as of last week this is the first product launch from our recently acquired edible than abusers corporation and demonstrate the synergies achieved from combining he i see confectionery expertise but the strength of our shred brand and are keen focus on consumer in fact the efficiency better advice and he i see also allow for them to be one of the love competitively priced gamete on the market launched in august editing jokes with another first the market offering and border that demonstrated already capability or creativity and our commitment the consumer driven innovation don't start candidates first labored quite potent p t v lozenges they are available in the package can mint flavor lost the job but ten milligrams for language for a total of one hundred milligrams per package for the eight month period ending november stick to reach the number one position within the adjustable extract category and finally that fleet me announced the later addition to our cat of a threat but of wind up with the introduction of the cpp npc thought shoes and your our new wellness brand more your they are offered him very nicely and featured medley flavor as well as been both big and friendly and sugar free format mosher offers twenty milligrams per piece and is attractively price the thirty pieces per pack motor the also produce that are yeah i think the ability in winnipeg again he has teeth highly efficient production technology means we can produce high quality local edible products at scale and could go twenty two weeks back to add even more edible products to our lineup and both thc and cbd formulation moving on to our growing facility and mountain in the past quarter we launched several initiative to increase the average change the content for plant as well as the average he'll either initiative are aligned with consumer demand for high thc and are expected to continue the improvement in our margin in queue for or your you for plant for the hundred and twenty seven graham compared to one hundred and seventeen grandson que three and one hundred and one grandson to for a fiscal twenty twenty we harvested about twelve thousand kilograms of detroit product think cute for compared to about eighty four hundred and huge three of the school twenty twenty one the increase target help to meet the growing demand for promise and for the grocery store bilbao in ontario however we are weakened capacity at our mouth in campus the higher consumer demand for products has meant that we are not able to take advantage of all the failed opportunities presented to us in order to that are captured the the opportunity leave the find it to complete the faith for the expansion of are growing facility at market and should which will significantly increase our capacity and ability can meet and my further demand this is a rare situation in the canadian cannabis industry while other canadian lp their clothing facilities we are expanding the think that speak about the prudent initial global ever growing you could structure and are compelling product offering our current annual capacity of sensibility is approximately forty thousand kilograms when the thief fourth expansion is complete the facility will have an annual capacity of approximately seventy thousand kilograms of wow they are all for making divine improvement and environment one has meant to the facility to improve yield and power quality in the fourth quarter be significantly about the bill of our center of it once or theory and malkin that we're building that part of our product development collaboration the be a t as we've been discussing prior quarter the feel we will develop the next generation a breakthrough cannabis products ip and technology of organic ran and be a key are contributing finds it researchers and product developers currently we have reached the first hundred day while filled in the project with staffing construction can project planning underway in the last eight to ten week leaf back to have the remaining clock construction project completed with the a left to be cool completed in queue to a physical twenty twenty two research collaboration healthy gun with the initial focus on t v good candidate vapor and oral product didn't really exciting opportunity this strategy should enable up to grow up market presence in canada what's more having a new ip found a collaboration and the ability to some light of the technology opens up pregnant fuckin opportunities in the us and other market finally a forger provides the financial overview and like that comment on our international failed to israel we recently her shipments the candle and week speculate for shipment of the got twenty twenty two this is a high margin revenue source for and one that provides are beating cultivars markets outside of canada over to their
spk_1: thanks i was from a strong financial position to terms of liquidity we ended fiscal two thousand twenty one with one hundred and eighty four million an unrestricted cars and short term investments compared to seventy five million at the end of fiscal two thousand and twenty this one hundred nine month increase was part nearly due to sixty five million unit offering done during a member of two thousand twenty one but two hundred twenty one million private placement as part of strategic investment firm bhp net of the allocation thirty one million too restrictive funds for the cod along with one hundred fifteen million views towards get weeping
spk_0: are strong composition and get of three hundred thousand dollars ensures will well resource to execute on our growth strategy
spk_1: as mentioned earlier this year we made the decision to complete the phase for see expansion other month in campus the budget amount for dates for she is estimated to be thirty eight million and again and fiscal que four two thousand twenty one with completion targeted joint fiscal two thousand twenty two we have sufficient resources to support these expenditures and the corresponding go to travel out that while still maintaining sufficient liquidity and financial flexibility in addition on august thirty first we found a preliminary be shop perspective which allows us to move quickly to attract even more financial flexibility if necessary to pursue attractive growth opportunities should they arise to date we have not offered any securities under the space shots was like this net cash used improperly activities was seven point seven million during to for fiscal two thousand twenty one which was black compared to the same prior year period for the fiscal two thousand twenty one year cash use was twenty eight point six million down from forty five point one million in fiscal two thousand twenty namely the resulting improved and enjoyed it net cash provided by financing a kid lean to the was twenty five thousand during to for fiscal two thousand twenty one down from forty six million for the same prior year period which have been driven by draws from the credit facility for the fiscal two thousand twenty one year cause provided by funny thing can these was a hundred and seventy four million from hundred and fifty nine to disco twenty with the current years nanometre them by the net proceeds from the equity investment net debt repayment turning to earnings results for queue for fiscal two thousand twenty one gross revenue grew twenty four percent from two three two thousand twenty one and forty three percent from the same period in fiscal two thousand twenty to thirty six point two you and net revenue grew twenty two percent front of cute three kids early twenty one and from the same period in fiscal twenty prospectively to twenty four point nine these increases germany was primarily due to higher recreational net revenue which from thirty six percent from two three and fifty two percent from the same period in two thousand twenty two to increase in sales from the flower travelers cost of sales decrease eleven percent year you're twenty six known primarily due to the current periods a lower cost of cultivation and due to the nearly eleven million and and into write offs and provisions recorded and to for last year and expected the charge allege one absorb fixed overhead and including ourselves continued to decline against country it is anticipated that we will no longer have absorbed fixed overhead and you expect his job by merging going forward the average that approximately twelve thousand kilos of cloud journey to pork fiscal two thousand and twenty one prepared to approximately eighty eight hundred kilos of flowering coupon of fiscal twenty an increase of thirty eight percent you think peace will directly relate to the trees computation tracking stopping june two three the into for fiscal two thousand and twenty one which was done to meet the growing demand for many of our new products as product part of the product portfolio the bud light nation as well as increasing she demand largely due to hiring at ready you can lower cost of scales gross margin it's you will improve to negative one million from the negative eight point six million did you for two thousand and twenty on an adjusted basis gross arguments three million compared to negative sentiment dollars a computer your two thousand twenty one we expected the price increase to shred as was lower production costs will further improve markets as teenage sweating non year based compensation increase to thirteen point six million in two for two thousand twenty one from ten point eight ninety two for two thousand and twenty largely due to the establishment of the again grant that saddam it center about someone's increased got a licensing fee to the continue to go on store the ontario
spk_0: combined that market on issue behind edison and the launch of and you can be products as well as well as higher audit and the lady professional peace in connection with the company's repertory acquired the to change and country agree on an opinion for the first time for fiscal two thousand twenty min financial state
spk_1: also as a result of programming is emergence adjusted ebitda was negative four point eight million in two for two thousand twenty one prepared to negative my to them for que three two thousand twenty one and most recent corner we also reduced or net love you have a year from thirty nine nine nine twenty six me overall we are pleased with are improving financial and mention what you're seeing
spk_0: based on this we kindly believe that we will achieve positive adjusted ebitda i ching for fiscal two thousand and twenty two this concludes my comments thank you i would like to turn the call back to being derek as you've heard today we have generated significant moment and eighty four kids got twenty twenty one against all of our strategic objectives which include achieving strong sequential revenue and valuable in addition to doubling market share innovating to bring new and exciting product to market and improving our ability to natural apply the increase demand for product portfolio we also expect the t further improvement in are adjusted gross margin as we continue to realize economies of scale from cultivation and ever price increase on track comes into effect
spk_2: we're excited for what could or twenty twenty two gold star danny brown
spk_1: looking ahead we expected continue our strongest know make them as we maintain our focus on increase point the distribution growing market share exceeding consumer any by bringing more insights driven an innovative products to market and improving our ability to refill wellington command i look forward to update you on our progress
spk_2: and now operator you may open the call for question
spk_1: thank you ma'am and as a reminder if you wish to ask a question simply by star than the number one on your on the phone keypad and he asked you to please limit yourself to one question and one follow up question you me with you if you have further questions once again if you wish to ask a question simply press star than the number one and your cell phone keypad your first question is from the line of we go them as your lens know open
spk_0: i'd martin guy that rental a quarter of thanks for are taking my question so first questions just don't know market share that you guys are obviously no good each year i really rapidly you can and an odd number for a bigger so that's positive but yeah i was just wondering aloud you plan to keep the market share games are are just how sustainable do believe they are just considering the fragmentation the market the had a competition a break them because some the module peace again game market share and then are losing some of that so what are your your your thought that take the bird rico and after your question i'm look at the we believe we have very strong dish or shred brand we see a heightened consumer interest through their search on the lps when they for the brand we see wrong consumer poland demand it's with the extent that at this point we can't supply and demand that that brand is is generating that your own we think it's a unique offer it because it has it's not simply a mill flower will while providing a ball sort of flavor profile that are resonating the fucking clue work at this point we believe there are opportunities to that end our momentum and or market share people we see that there's opportunity to thin through and the other region the across the country and currently sell most of our father in ontario and alberta
spk_1: with a little bit of shred of being sold in combat the demand is out there are how we have a plan to continue to build up the path me to be good for global demand so that's on our our shreds and thread business legally there before the off with unity and with respect to edison which you from cranium brand we need to continue to bring new to that brand and keep making sure resonate with the cannabis and thirtieth and we will do that with continuing to bring new a flower unique screen up in the marketplace and bringing found other aquatic but turns a beep
spk_0: that we have with that like rather than other product that will continue to advance that brand as the more premium brand within our portfolio though we're confident that we have a plan in place to keeping the momentum and that we have a consumer am interested in our grand and wasn't coming back for more but thank you been helpful and i'm just don't on international market for drugs relations your your shipment year round but the are you looking at any order other markets are gone and europe or in addition to israel and knotted up point you would you computer and acquisitions ledger some of those markets we can from funneled you there are making a decent you don't germany or netherlands so any in college or would help you
spk_1: yeah sure so an internet proud of renewing our resuming or shit let's let israel so we have a great partner and can dock and have an opportunity to continue for supply that market and we currently supply the australian market and are working with our partner can track in australia to continue to build out our portfolio
spk_2: oh they're the builder markets we're currently in and out it's partly the news on on germany that thing coming out makes it a market that we will continue to explore our wedding terms i'm interested in and acquisitions in other european market and at this point will continue to and value with the opportunity will continue to look at how regulations change because sometimes the new app play faster than the actual thing to happen in the regulation so will monitor it will continue to evaluate opportunity than the international market that you have that big you aren't they
spk_1: your next question is from the line all the rules or girl from human genes julienne some open grow your your lungs the woven
spk_3: good morning dina derek roy was not my myself on you to college or to that
spk_0: they too much reduced my question
spk_1: though graduation punjabi to the top line
spk_0: quarter a quarter growth as well as mark my market share a question oliver's really on margins we saw our egos wouldn't have a lot with lot of to law school and this quarter he have a meek but the expansion that he talked about been as well be changes media on absorb fixed overhead have you don't have a dog the of the little more collar jobs are you expect to margins to to improve over told the much the corners thank you are more outlets are out that all cap era as to my comp the the ball and you can have as we increase production we get economies to ill or facility we thought that benefit of the numbers improve between and in three you for twenty twenty white and with back the continue to see that offer as we have filled out worked out the with enough it and we have at it had some embark on can't let that are dry the field and we expect much the thing you a bribe improve bronze marsh gross margin as well as driving higher peak a and we all know that we get higher and i'm an average selling price as l higher thc products you know as as i talked about in in my opening we didn't have the ability it right and spread out at at in i think that and this market or most the writers are coming down but we had such high consumer demand you're able to be nice recognizing are
spk_4: or lower compare our inability to thought that the all of the field operative we were able to take afraid the greek which again will help or learned
spk_0: and finally it as locked words ill there's an opportunity it to improve our marching through improving or provincial neck right now we're heavily
spk_1: oh the real market the be the most compressed margin mark i'm an elderly expand step further offences we expect to see a good with nancy our market but when it or couple of comment but direct i'll let you yeah i just that i guess in addition we are routinely or sourcing our suppliers and to see what would you to go soon there is opportunity for brother automation encounter with regards to are outlined with ushering field flower along with a new project you one arm
spk_0: the automation of our second prevail machine and that labour saving bad for we do see some your gym improvements with are emerging as well we were leaving you for new capacity but you and for are ring in the early parts will in iraq a for the others are heavy fixed
spk_1: i'm costs component to operations and as we should be on you know economy the scales from operating she one at the current about you than it is will doubt we do think that we can drive down for a week significantly on our coffee cultivation that will allow us to have bombed you know sixteen corners or quarter improvements from two to are to are often therefore to are adjusted those mcgee can just by example going to shoot three coupons or adjusted gross margin went from negative for percent to postpone present so in one quarter or just from some to be our initial it's barbie implemented we improve i just doubles margin back sixteen percent
spk_0: oh great thanks so much of a color and then the third pivoting or to was able to smoke tobacco partnership it's a degree a given the investment have higher than the end the recognition that this was potentially a duplicate motivate motivate for that partnership was starting he buys into this or communication derived products target market by of your competitors me to give us an update and time of that partnership hobby he our products rolling out and and maybe because the of a broader update on on the person argue that guy a lot okay perfect so let me start with than the and as you said at least that the sit out this is that out we believe there's a long term opportunity to build out from the south partner set at it we actually get a strategic review of the adam investment back in the summer and out the are very happy with progress being made very happy with the i t that has been could develop and and we continued to look for up the the are there are many are our relationship with i said he turns we do believe down the road there's an opportunity around by a synthesis of some of those were can now annoyed and a look forward to updating you further on that a relationship you cheat look and in their rebuild what as for the at be a t at part of that ends up in a prominent everyday and what we deal with how we really should shit with lists are the conductor we have the center of as a as i mentioned or week that he ends up well on it's way and being el al we've hired the scientists and product developers and reach earth book from the t as well as from a organic round with that are working together and we have the build out of the centre of excellence almost complete the an athlete said we expect all the can instruction to become it by at keep you up just got one on each that include not only the and he laughed at ah fill that the bio
spk_1: and and this is the
spk_2: yes i think that so what if it'll work with our collaboration project pecan think they'll doubt you know
spk_5: that robot no around check
spk_0: laurel and paper products am and cbd products and lots of opportunity here to keeping you do you know bilbao be i'd in the audience that we think have an operative are both our companies but we would have that let nobody could take it the other markets around the world
spk_1: great thanks game particular question you burn the and growth which color
spk_0: thank you
spk_1: your next question is from the line of rubbish barack from oppenheimer your line of the woman they they forget my question so i guess just go back to our target for positive either on margins are later and your and your fiscally fiscal year it or any way to frame you know i guess what type are gross margin expect to get you to be able to achieve that target in vegas or a second question is this year is just as he will get the capacity right now that you have
spk_0: well i guess whatever revenue you know you it was it as a circle around like whatever revenues you to get you can get up there with your existing facilities
spk_1: dear why don't i pad that went over to you
spk_5: i'm as it relates to the on the margin that we would add the other adjusted at dawn that's not really got into would normally provide a know we have providing about guide with just eight upon our we are today
spk_0: the trains and and and products on that we had a him and cost analysis that's been done and our control over our as you may cause we are confident that we can i get to the coupon i just the i'm positive and time again that happening is while from becomes a scale from operating the high zero point module seventy thousand in terms of you know what what type of revenue that a results in a you're not going to of course sell anything but you produce from that some thousand kilos a year in capacity and because we're back in presenting wanted but what the ultimate sublime where the new and details number extrapolates to is really dependent strongly on the on the next out down the flower let's are being offered and dollars in mainstream are and or w you and wonder supreme also there that can be a lunch fluctuations with bad i think that you can look at some of the you know the data points on and get our side great the next years and and come up with a range for it but it's not the type of extrapolated guiding that can we could be comfortable in bomb going on record with a good time but you know we we are providing the gotten that will be at least at seventy pounds and she loves of flower by the end of the year after completing construction so that it the guide you can provide could write a very just want as much as are clearly you're liquid a position to see better than two years i were to emanate and a strategy going forward at this point for the company hello and thank you for and luck out were watching you to look at opportunities as they make they
spk_5: i am right now there's a lot of talk about you know what is the opportunity in the lab
spk_2: watch and keep moving forward and will the
spk_1: as we evaluate those regulations when or if it's right for us to move into the us market and elect so will continue to look at opportunity with what there when or organic brown not because other competitors are they are am and and look for watching what are other competitors are doing so is it something that will continue to evaluate and i say beyond you know the us early there are opportunities an anti euro that we could look at and but there are certainly opportunity to canada as well as we strengthen our position in the canadian market place so right now i'm you know we're focused on getting or foundations right right getting our business at our product portfolio the growling you know our market share and as with the acquisitions that field and are so gaps in whether it's a technique after a certain region will look at dildo gap with than a creative acquisition that nick
spk_0: great i give all the color
spk_6: your next question is from the line on how angry from alliance global five partners your lungs know open
spk_1: are you going to the questions and come back on the much your game in and problem goes margin i'm so torn doubled back my question and turn from the gross margin commentary cigarettes relates to how much can guarantee turns out ah targeting even if profitability and good for que tweet tweet you after just maybe in a bit
spk_0: maybe some target you have you know within that ah help you that break even mark maybe terms of nectar metrics or gross margin up once helpless and a model out you know how we like it's text yeah i understand the desire to get around the modeled after that there's just so many variables that can come into play whatever it's are the young would be a wonderful our our comes off into so what market in what brand there is a large range and selling price add anything on the ipod format and the brand that could lead to me to the wind in so green light and a look at it just a geologist abigail but based upon aren't getting too and the hundred level and partly which will i get to at the end of the year
spk_1: i'm in town projections complete that it out it's it's very regional that we would expect expecting to be and a dog adequately than that are popular and back to to get green lanterns of what that a black market dalek that i'm not even one not on the and be allowed to do the mottling but we do believe that weekend and significantly reduced are often the nation as we are police at a higher level going from forty seven kilos of flour to seventy thousand and is a course on what prude young's i'm from innovation with the virginian there's there's extra opportunity there that john
spk_0: and which with the go on top of that but if they're just too bearable that waiting for you to put it on one or two on but we are confident that piece on are structured the cloudy and over and expenses and the fact that to me how bad the capacity to sell arms part of the game over the you be harvested and an answer for a future that we're confident that we will be able to keep and adopted a coupon no that's awful cup commentary i think you connect on a second question to me and he doesn't really want her to market share in light of recent so just in a lot of your pizza that you know shit even more consumers damn shopping mordor on the team can regain some share games during that time so she wanted to about you guys near shaggy as consumers did she go to more shopping and brick and mortar vs online do how you're lucky to maintain mercer treaty guys have objected maybe thirst me or two books on frightening a lot of talk about you know bipartisan you have done that price read but linear kind of come to analogy terms a teacher shapes tickets i've been hundred listening and you gets sure no problem i felt so i would like to just remind everybody that one of the unique contest for organic ground is that we have our own dedicated salesforce and am in a while many of our confederate use their party and or focused day in day out an english faith in our team as l out in retail stores meeting with bartenders and and so we think that that the competitive advantage for us and will continue to build out in our presence in the stores and we were able to get our shred and counties and significantly into distribution within you know twelve weeks at launch we were out in en mass destruct
spk_1: mission across the country and except quebec but we were able to get that product out quickly and and that is it so at you talk about what happens if people start going back into stores and the reality is i think that can be a benefit for us as we know that it will help our edison brand were been kinda recommendations are poor it will do some more in store activations which we weren't able to do last year during coverage alley and so getting you know the name out getting that that contact it will help that maintain our am our our present fan and continued to driver momentum but we have that but can your educate
spk_0: action programs sweet we kicked off that program called plant lab at last year and it's a dedicated program for five hundred and learning about a quality of our our products and available to consumers and our top of that will continue to improve our key consumer communication strategies but fifteenth it's a good recall category because he kept market and of and like traditional cpg company can get consumer but there are two places we could reach consumers and that in store and it's on online and you know the installer was hampered last year with all the retail restrictions during coverage
spk_1: so we're excited about the opportunity to ramp that back out and and and continue to improve our online programs to really reach the consumers vote for edits and brand and for are out there and new products like are these and are jokes that we think have great potential could continue to drive and for probably can our product mix i like being at the very much for that cohen commentary on and give your next question is from the line of family can from be more gothic on markets yard line so open thanks the morning i'm sorry for how long ago margin again but i just want to make sure i understand on be going from the negative four percent growth margin last quarter to twelve percent on the quite quite a significant at recovery so i would that more due to changes in your product next
spk_0: ah or would that largely because you're producing more and so you you had those the car need to see our that it was a more due to the ladder
spk_1: i would say that was more yeah i'd say that the improvement of the sixteen percent i was watch tv would it's are often prevent that we achieved at the facility overshoot really really cheap for injected allow for the improve margin and that was far too operating at full capacity at the forty five kilos and and i was like
spk_0: he regain confidence as to i'm not improving cause structure and the proven to the margin on we when i was looking to another a product in the had been the in the bland than one after the out the on high selling placing whole course on be a big to prevent to the margin as well but yeah we had she known we've proven have been over the last quarter accident
spk_7: can come from improvements in the and construction
spk_1: oh thought it was important for the cautious with this was even prior to on ah getting from more production efficient that economies of scale correct which was one of the drivers along with the the sales demand for black gotta that gave us the ability to give the gardens and you just adopt the be an ear
spk_0: and for okay so it sounds like the now that you're at it producing more and as he continue to produce more years ago twenty two i cheered there's that word out of fact you have more larger movement will come from okay i'm and i i owe my next question and i'm kinda sounds like you're big bag of bugs and your stride
spk_8: i know you just heard that pricing three gone tried out a little to product line ago day in the positive margin close margin territory at this point now where is like shred after the price increase still gonna lie just outbreak like you just have a set themselves on the the margin you get off it
spk_2: dorothy products that's it thank you
spk_5: after som alla flower
spk_1: product categories around and a a a positive margin of profit margin but to get into the details out of one over the other and format sizes and at for the job the jurisdiction is
spk_0: you know not something that in the normally get into what i would indicate that damn or because of below a coffee production already achieved over the last couple quarters or what while a categories are on our public property okay thank you
spk_9: your next question is from the line off at him back home from school given your life know open
spk_0: money entered my question on committee just falling appeared cameras questionnaire jerker able to provide more color on mars i meant when the mix between value and premium was for you guys just quarter and that compares maybe like two quarters
spk_1: yeah i would say that job that shredded i'm them very popular and director know i agree for are going to graduate center we've been able to be on have demanded exceeded our production value the tiny droplets shields on the table in that situation so it was on the last couple quarters with is exerted bookmark plans of with the shred has increased on the percent of total with regards to on
spk_5: the you the bible much about iraqis
spk_1: i wonder what utter can't stand the future spend on innovation
spk_0: can jam with know that the pope is a burst on the to have more article below can make mainstream the premium brands and as well i out for some people and seventy that have been injured
spk_1: and the the opportunity to without he considered article with the put on a weekly don't the job they give you know been great go by branch but that no question or the success of a blunt to shred handler om agree the bigger person to talk on
spk_0: and your the field with the smoking but the top of an overhead costs about gotta she'll be improved murky what a great that that color direct answer just my second question so obviously enough to look over the last for five months your many of your peers canada tried to jump and immunizing their their overall portfolio such a lot or your marketshare ganesha the summer it sounds like a light on a concern in i'm sure and brand and and i'm year products to retire so if you look more specifically when are you able to provide can color on how marketers trench hundred and the premium category three guys like what to watch him in a stranger starting to see greater uptake some color they would certainly be awful of it adam thanks like question out so our focus on everything and as i mentioned the my comments earlier is really going to iran's building that consumer connection out where i get it fuck it and enough to continue to build on that that brand awareness and the loyalty factors to catch the edison answer only at the during college would eat after taking root for get five hundred recommendations with limited out wifi over the next year the
spk_1: opportunity to strengthen the net to change that jack national with our consumers on everything and now have the plans in place to introduce a new products that bring a new name for themselves not only in the brain by off the it fate at product under an assumed it to continue to build out that out the on just flower on a more and mainstream actually a applicants theory are being of out
spk_10: right you know i i think anything more than just i teach the we're talking about adding are clean for labels for adding about we're talking about adding more at his ability to the worst spring and and either thing that i think over time the candidates enthusiasm will be interested though in a little slower build another thing down but i think we have a really good plot law which the bill of the and on continue to build that brand while we were just like said it earlier leverage shred
spk_1: he you know the get those new the consumer some the illicit market coming over there a lower price offering quite a higher can eat the offering you know that one is an easier method we don't put a lot of marketing fun toward thread i think that the positioning in the market work on it's own but our investment is
spk_0: he made and into our edison brand
spk_1: and that's very kind and think hundred from the corner
spk_0: thank you your next question is from the line of douglas mean from rbc capital markets your lungs the hoping
spk_10: i'm i get his party this year gross margin question i am curious if she could comment on a if you're getting close to capacity to the forty thousand nine she moved to the seventy thousand can you tell us which could be required to get there in terms of a journey you approve is required as you during on capacity is your chance that margins
spk_11: the decline over the next court reporters before we get to queue for
spk_0: yeah he can you are obviously i am i don't really see where the margins an eternity opted for the extra capacity just believe this that's cause component in terms of line with similar to whether the party vote labour of an overhead costs and as we as humans and up in your spring those costs over and then so i'm not i'm seeing my margins are going to be interviewed when individuals a little bit with will changeovers and things as we these areas and are now and other enhancements on london's them to the possible to eat bugs on grab a soothing moving from cali bought into some down and by the end of year internship she does a flower i do not listen to me that we would have a disruption to on the monk of monthly or quarterly ca structure that would i heard the margin but i'll be on the cost of the flower girl foods are you on down you know the public followers being sold as well have a derivative products will be launched in singapore a home and i would look and some jobs along with some that the shouldn't company is a doctor we need to they're catching a larger part of the market journey and garciaparra by reading you and so that will also said the overall of merchants for the and granted in the code okay perfect and and and maybe you could comment on yeah when did a thing get you've obviously been very good at if you're a bill gates you identify and changes which in the consumer other thinking and been it maybe you could describe some of them you consumer research that them you're seeing right now and how much changed over the last let's say six or twelve months and how you intend to take advantage of that
spk_1: and that's it for me thanks sure thank you for the question so in terms of for out where we see the consumer going over the course of the next little while and we do see the evolution where consumers will start to look at not all me you know the hyatt teach the for the lowest price but will start to really care about i am aroma and flavor and well will also look at the genetics and making sure that you know it that think there's something unique and interesting about it for those the certain kind of to the approach to the candidates and do the that they want new am and and that unique different the cultivars so we think that will happen and won't be ready with our in health breeding programs that continue to provide that under our edison brand and we also see that the wellness the effect segment well continue to be a trend am we get launched are more sure our and it's you know providing cbd in that third a daily regimen we believe that them more well flow will continue to build over time and you know we have to have offering to consumers that crap aren't looking for the hide that are looking for that the one with benefit of both cbd and balance c b b t v offering am you know i i think and i am you know the are thing you know the consumer will will continue to look at edible instead of oil am in overtime i think the oil segment has declined and edible have become a nice way to get and you know get screech but am you know pacific know a ground and take over time for a don't think am and we're really excited about are edible confusion corporation because ah that acquisition has helped her get into that gummy category very quickly fell and we we have said that we have been in a last quarter we talked about our candidates innovation panel we have had at twenty five hundred consumers that we became forget better insight into trend we use that panel to understand flavors to launch in our gummy will you get to look out what we want to do i pre walls or on chocolate her we have an opportunity to continue to get into that consumer research and continue to a job for
spk_0: for you accordingly your next question is from the line of andrew by the new from steeple your lungs the open or the morning thank you for taking my courtroom and and congrats on the the door improvement from the score armed and maybe just talking about them your your your work performance are you mentioned that you took from creatures on shred i'm wondering what that good to be aboriginal so in price from the quarter and you know if you continue to take price increases onshore and where where that can go arm in tandem with
spk_1: get her premium offerings as a thank you andrew and and out so much to talk first about the an increase on shred so you know here the a brand that we were having were struggling and add that supply that the man and when that happened in upright taking prices is that a natural response we have and had our alberta price increase in market in our our get as of august than the ontario increase top of that the at the end of october so the benefit of the price increase will am or pm the are and i'm next quarter results as we continue to to grow those brand but our you know i i think you know that that should help the marginal on that land allen and you know there are other opportunities as we have applied to take them the brand to other markets around and you know ontario at the most pride compressed market for death expanding that brand in other regions will also help on our average selling price
spk_0: app for that ran when you you asked about editing am in a we feel strongly that are added thin brand and maintains a good position in the marketplace for a mainstream brands in terms of pricing and reject me to continue to provide new and excitement behind that brand than that you know that car strategy of the movie that go your twenty twenty two top of the topic consumer caught the bug hundred ad innovation it that it's a great opportunity to pit people care bill by lead towards cranium and then you know as i mentioned earlier but done that were watching for derivative both modular and are shred and an ad and into the next obviously am hire a clean and he move out of the flower a segment go work cited about the opportunity to actually look at our product portfolio moving forward thanks for dragon and maybe just continuing or know you know you you talk about ah the continuing revitalization of the at it and brand arm
spk_1: maybe just you know providing a little bit more color on on the mechanics behind that
spk_2: duly to win an excuse to it's for that
spk_5: i'm not sure that required to do that in the past you may have to switch them out
spk_12: with your existing you know legacy strange
spk_1: i'm just some color on the path forward given you know the provincial markets or earned or the provincial lab buyers are are being a little bit more stringent with bird with school things here and yet sure what part of our am a interested the have the best selling products in the marketplace at all kinds right and though i think we're we're working with the provincial board to make sure we have or best offer offering in there and portfolio the old we will work with them and
spk_0: look at it we have any slower libert and switching them out to add new skills and they're very and them
spk_1: a need for new in the category could continue to a fresh the portfolio and so that is an ongoing process that we currently do with our provincial board and and and fell we're not worried about trying to get am too many more incremental as seems we're looking at on optimizing or off length and each board to make sure we have the best selling few than the marketplace certainly when we bring him something that's unique like or editing job you know we find a way to get in incremental at you know lifting the across the board but am very funny kid ongoing you know lash live nation are often my patient of your portfolio and so as you bring new caught the bar then we retire some am and continue to refresh our portfolio
spk_12: thanks for that back and que
spk_0: thank you once again if you wish to ask a question superstar than the number one in utah the phone keypad your next question is from the line of green green learn from heath capital the lunch the open i go morning and thank you for taking my question i'm with respect to the expansion of capacity of face force the companies fill in for and charges for on absorbed fix over at the cost of sales are so i want to know what those charges are related you're given the fact that it's currently expanding capacity and what types of level of output are needed to
spk_13: to be achieved to fully absorb that over thank you very much
spk_14: yeah and i like egypt i question the alums or over was more significant in the earlier quarters on more than a consequence of the again he lived a portion of the depreciation on our our chaco business or challenging and secondly the and
spk_0: used glow worms that on on him and that those while she according to the of your quarters we had a on a much smaller amount in after coupon financials but looking forward or
spk_15: we do not accept the a buddy of be absorbed job
spk_2: over have amounts as a consequence of were using the rooms as they are available for for growing an accident so that we want the full scope of hobbit know that cause a lot of details and generally all the range of were would ya the rest of the cob naturally to our to a mortgage and so that will have an overall positive

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