Organigram Global Inc.

Good morning. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Organigram Global Second Quarter Fiscal 2025 Earnings Conference Call. After the speaker's remarks, there will be a question and answer session. We ask that you please limit yourself to one question and one follow-up. You may recue if you have any questions. Thank you. Max Schwartz, you may begin your conference.

you very much and good morning everyone thanks for joining us today as a reminder this conference call is being recorded and recording will be available on organogram'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 may 12 2025 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 repaired 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 company relies on reputable third-party providers in making certain statements relating to market share data. Unless otherwise indicated, all references to market data are sourced from Plyfire in combination with data from weed crawler provincial boards, retailers, and our internal sales figures. Today, we'll be hearing from key members of our senior leadership team, beginning with Bina Goldenberg, Chief Executive Officer, who will provide opening remarks and commentary, followed by Greg Guyot, Chief Financial Officer, who will review our financial results for Q2 fiscal 2025. With that, I will now introduce Bina Goldenberg, Chief Executive Officer of Organigram Global Inc. Please go ahead, Ms. Goldenberg.

Good morning, everyone, and thank you for joining us today for our Q2 fiscal 2025 earnings call. we're very pleased to report a record-breaking quarter by revenue, as well as some very encouraging operational results, which we anticipate will continue to improve as seasonal sales pick up in Q3 and Q4. This marks our first earnings call since rebranding to Organigram Global, a name that better reflects our evolution into a diversified, international cannabis leader. The refreshed brand identity aligns with our position as a market leader in Canada, and underscores our active expansion across Europe, Australia, and most recently, the United States. It's also the first quarter where the full impact of our motif acquisition is reflected in our financial results. Now let's start with a look at the Canadian market and how we're navigating the current landscape. In Q2, Canada's cannabis market grew 4% year over year, with the strongest momentum in vates and pre-rolls. two categories that together make up about half the market. We're especially well positioned here. By the end of the quarter, Organigram was the number one LP by market share in both, including a leading 21.7% share in vapes. When you add flour to the mix, these three categories, flour, vapes, and pre-rolls, represents around 85% of the total market. And we've built a strong dominant presence across all three. To put today's market structure in perspective, the top three LPs collectively hold just 27% of total market share, showing how fragmented and competitive many categories still are. But in categories like milk flour, gummies, hash, infused pre-rolls, and vapes, the top three control between 45% to 70% of the market. These are the segments where scale, production capability, and execution matter more, contributing to higher barriers and more concentration compared to flour and traditional pre-rolls. While part of our competitive edge lies in our ability to win and defend share in fragmented, high-volume categories like flour and traditional pre-rolls, our strategy also includes reinforcing leadership in segments like flavor-forward milk flour, where we have over a 40% share, cash, where we have a 20% share, and gummies, where we have over 17% share. These are categories where innovation is more scalable and defensible and where we continue to outperform. Our recent entry into beverages through the collective project acquisition is a strong example of this dual strategy in action. Entering a smaller, under-penetrated category with higher barriers to entry where we see clear opportunity to build a dominant position as the market evolves. Collective project beverages in Q2 represented 5.4% of the beverage market share nationally, with the majority coming from sales in Ontario. While we currently have some distribution in five other provinces, we see a path to expanding that footprint by leveraging our sales team with the goal of delivering similar sales performance as we see in Ontario. In Canada, we believe beverages have significant runway for growth. The category has matured, with better tasting products and higher consumer adoption, with the category now outpacing the growth of the overall market. We're optimistic that improved products, combined with potential future regulatory changes, like selling outside cannabis retail stores, could unlock the growth potential of the category. Importantly, the collective project acquisition also marked our entry into the U.S. hemp-derived THC beverage market. Today, our products are distributed in 10 U.S. states and carried by major retailers like Total Wine and Top Ten Liquors. The U.S. market for hemp-derived THC beverages is booming, having already surpassed $1 billion in 2024 and projected to grow to over $4 billion by 2028, according to Euromonitor International Limited. Unlike in Canada, the U.S. regulatory framework is more flexible, allowing these products to be distributed directly to consumers or in mainstream channels like liquor, grocery, or convenience stores. When the product is available where consumers already shop, it seems that consumers are buying in. As they do, we have the product meet their growing demand. In fact, a few days ago, Collector Project won recognition at the 2025 High Spirits Awards, only a few short months following the launch of the brand in the U.S. We received the Gold Award for Blood Orange Yuzu and Vanilla, and a Platinum Award for Mango, Pineapple, and Coconut, hemp-derived THC beverages. Organigram will begin consolidating revenue from U.S. beverage sales immediately, beginning to tap into the world's largest consumer cannabis market, and setting the stage for broader international growth. Further, we plan to launch beverages with our fast nanoemulsion technology soon, which we believe will give us a competitive edge in the category. The onset, duration, and offset for beverages with fast is even quicker than it is in gummies, more closely resembling alcohol. On the topic of international growth, we achieved $6.1 million in international sales in Q2, a 177% increase from Q2 of last year. We anticipate the upward trend in international sales will continue as we deepen our relationships with customers abroad, particularly Sanity Group, where we've made a significant strategic investment to secure our continuous supply to the rapidly growing German market. Germany continues to represent a large growth opportunity as approximately 10% of its 80 million population self-report cannabis use, while only 0.5% are registered medical cannabis patients. Mature medical jurisdictions experience 2 to 3% registration rates, so we believe there's still a lot of growth potential in the German medical market, notwithstanding any movement on the recreational side. Outside Germany, we continue to supply cannabis to our customers in the UK and Australia. We're also excited to share that we expect to launch branded vape products in Australia before the end of the calendar year. BoxHot, which has grown into $150 million retail sales brand domestically, is poised to become a meaningful player on the international stage. And we see this as an important step in expanding our branded footprint globally. Also factoring into our international growth plans is our Jupiter strategic investment pool. In February, we closed the final tranche of $124.6 million strategic investment we've received from British American Tobacco. for gross proceeds of $41.5 million. The Jupiter pool started off as an $83 million pool earmarked for international M&A and strategic investment opportunities. After our first two strategic investments in open book extracts in the US and Sanity Group in Germany, Jupiter has $58 million remaining. We remain active in evaluating the best deployment opportunities for this capital prioritizing strong ROI and increasing competitive advantages that will help accelerate growth in our international business. Now, moving on to motif. We're making great progress integrating the motif, team, their facilities, and their operations into the broader Organigram business. All personnel are now fully under the Organigram umbrella and collaborating across both operations and administrative functions. We've been particularly impressed by the depth of expertise and talent the Motif team brings, and we're already seeing the benefits of this combined strength, such as being able to close listing gaps in our combined portfolio thanks to a stronger, unified sales force and product lineup. Operationally, we've moved all commercial THC extraction to the Aylmer facility. That's helping us scale more efficiently and freeing up space and people in Moncton to focus on international flower. In March, we added additional shifts to Aylmer's hydrocarbon line, which now runs 24-7. With these changes, our monthly production capacity has grown significantly. We're also currently investing $800,000 in capital to further expand the extraction capacity, more than doubling our distillate production to 2,900 kilograms and our hydrocarbon isolate to 1,400 kilograms annually. The enhanced capabilities give us better cost control of our derivative inputs while increasing our B2B opportunities, helping us realize some of the key synergies of the motif acquisition. While we're very pleased with our progress and now have a view to higher synergies than previously estimated, there's more work to be done. Some ongoing projects include the integration of our ERP system, transitioning coded pre-roll production to in-house, streamlining workflow to enhance end-to-end production efficiencies across facilities, and enhancing our London warehouse facility to allow us to distribute Moncton products through London with faster turnaround, enabling us to obtain Tier 1 status for flow-through with the OCS, as well as cut freight costs and boost on-time deliveries, which should also drive demand. All in all, we're starting to feel the momentum that this integration adds to our business, and we expect to see larger contributions and synergy realization in the back half of the year. With Collective Projects, we now have another business to integrate. However, this is a much smaller asset-light business. Our focus with Collective Projects is less about integrating a large operation footprint like Motif and more on expanding the distribution of Collective Projects across Canada and the US. At the same time, we're pleased to share that we will begin bringing some beverage capabilities into our Winnipeg facility. Near the end of Q1, we committed to investing approximately $1.2 million into a beverage manufacturing line to leverage Winnipeg into a production hub for more of our ingestible products. While we continue to rely on co-manufacturing for beverages in Canada and the US, bringing some of our production in-house will help us scale up our beverage expertise experiment with novel formulations, including our fast-acting soluble technology, and address incremental demand. On the topic of capital investments, in Q2, we began the installation of upgraded high-intensity LED lights in half our Moncton grow rooms, which is currently estimated to increase our flower production capacity by roughly 7,000 kilograms annually, and is expected to be completed by June. This $9 million investment before government subsidies are applied is part of the $16 million capacity-enhancing CAPEX projects we outlined in Q1 to be phased over the next 18 months and will allow us to meet the needs of a market tightening supply and increased international demand. The other $7 million project involves leveraging our London warehouse to open up space for additional grow rooms in Moncton, which is expected to increase capacity by another 7,000 kilograms annually. The London warehouse construction and licensing is expected to be completed by the end of the fiscal year. And once completed, we will relocate inventory from Moncton, freeing up space for the construction of nine additional grow rooms. This incremental Moncton capacity enhancement is expected to commence in early fiscal 2026. In addition to ensuring we can supply our increasing domestic and international flower demand, higher capacity means spreading more of our fixed costs over a larger revenue base. And speaking of flower, a quick update on seed-based production. This is an enterprise-level innovation, which we are pioneering on a large scale to modernize cannabis production and bring it to the same level as other mature agricultural industries. Seed-based harvests from F1 stabilized seeds are robust, uniform, with dialed-in characteristics, which together result in more consistent and repeatable flower. Given the demand for consistency and quality, both at home and abroad, this lower cost and faster alternative to clone-based production has the potential to transform the way cannabis is cultivated at scale. In Q2, 22% of our harvest came from seed-based production. We continue to work with our strategic investee, Bilos Bioscience, in the U.S. to step up our efforts to stabilize strategic genetics. while we continue genomics research to identify genetic markers that influence things like resistance to powdery mildew, terpene expression, THC potency, yield, and more. Looking at where we are now and where we want to go, we have a few key areas of focus in the coming quarter. One, we will focus on accelerating international revenue growth by capitalizing on increased export volume, initiating branded international sales in the US and Australia, and leveraging our forthcoming EU GMP certification. Two, we will look to gain market share in Canada, leveraging consumer-centric innovations in the fastest-growing categories, like BoxHot Diamond Dubies, ShredX Heavy Slims, Debunk Liquid Diamond Baits, and ongoing growth in Big Bag of Buds. Three, we will increase gross margins and deliver consistent cash flow from operating activities through motif synergies, higher scale and capacity, growth in international and controlling costs. And four, as the market leader in Canada, we will continue to strongly advocate to key government officials through our enhanced government relations program, focusing not only on changes that will support our business, but the sector as a whole. Our goal is to build consensus at the federal, provincial and territorial level for the need for common sense cannabis regulations excise reform and a national export strategy that defends an industry that contributes more to the Canadian GDP than breweries or wineries and distilleries. On that note, I will turn it over to Greg to discuss our financial performance for the quarter.