OrganiGram Holdings Inc Q3 2020 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Partheniou - Stifel Nicolaus Canada Inc., Research Division - Analyst : I was hoping we could, I guess, center my questions around your production and inventory. Right now you have about $100 million in inventories and biological assets. And I'm just wondering, if you can give a breakdown of how much of that is your old strains versus the new strains that you've already launched like Limelight and those that you have yet to launch. And also, you mentioned that you guys are going to launch 18 new SKUs very shortly. How much of those 18 SKUs are new strains? Just trying to get a sense of the magnitude of the new strains coming online. And if you guys are going to be capacity constrained at all to meet demand with those new strains going forward.

Question: Andrew Partheniou - Stifel Nicolaus Canada Inc., Research Division - Analyst : Sorry, I was on mute there. Thanks for that additional color. And maybe as my follow-up, to talk a little bit about your Phase V. You guys don't have that much left for that. And it could give you maybe some greater ability to create new types of products, maybe in the concentrates area, if I'm not mistaken. Wondering when that could come online and if you guys need that Phase V in order to create products like hash for example?

Question: Andrew Partheniou - Stifel Nicolaus Canada Inc., Research Division - Analyst : Okay. And any color on the hash?

Question: Tamy Chen - BMO Capital Markets Equity Research - Analyst : Had a first housekeeping one. Just wondering, Derrek, if you're able to provide at all figures for net selling price in the overall medical market as well as -- then that selling price for flower in the Rec market? And also, if you have any pricing for your 2.0 product as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 21, 2020 / 12:00PM, OGI.TO - Q3 2020 OrganiGram Holdings Inc Earnings Call

Question: Tamy Chen - BMO Capital Markets Equity Research - Analyst : Okay. Sure. So first question is wanted to just ask specifically about the store rollout in Ontario? I know you talked about that in terms of the product launches. Because of that, it will take a bit more time to see meaningful incremental revenues. But from a store rollout perspective, that was 1 thing that I think you mentioned as a key bottleneck in rolling out more revenues for the industry as a whole. And now we are seeing Ontario increased stores. I think there's just over 100 now in the province. So I'm just wondering from your vantage point, I mean, is this something that is starting to have an incremental benefit for revenue trajectory?

Question: Tamy Chen - BMO Capital Markets Equity Research - Analyst : Okay. And my second question is, with this whole shift towards value, so I guess it's a bit of a 2-part question as my follow-up is. One, is this your view of where this industry is going in that it's going to be predominantly essentially a battle in the value segment. Or do you see there is opportunity to create brands outside of the hard value segment and how? And the second part of that question is, if we do continue to shift both flower and as well as some of the 2.0 categories into much more value from your cost perspective, I mean, is it flexible enough to participate in even additional pricing competition? Or is there a certain level where, from a cost structure perspective for you, it would become incredibly uneconomical?

Question: Matt Bottomley - Canaccord Genuity Corp., Research Division - Analyst : I just wanted to go back to one of the earlier questions. I'm trying to normalize some of the noise that was in this quarter with a lot of the noncash charges and other provisions. I'm just wondering, Greg, if you can comment on one of the silver linings here is, in the quarter, you were cash flow positive from operations. And I guess what I would like a little more color on is, how much of that is -- I know you touched on this, but timing differences of some of these positive working capital adjustments, given that for the 9-month period, obviously, it's still not a profitable enterprise. Just from operations alone, so how much of this can we expect going forward without trying to tease guidance out of you. But just given the fact that you're expecting more of a flat contribution from your recreational penetration over sales rather in the near-term period. Is this something that's sustainable going forward? Or are there other timing differences in your working capital or other factors that we need to consider?

Question: Matt Bottomley - Canaccord Genuity Corp., Research Division - Analyst : Okay. Appreciate that. And just a follow-up on one of the sort of levers here for increased revenue in the Israel exports. Can you give any color on the 6,000 kilogram commitment for orders here? What the actual time period is to that? I believe it's more than a year. And if there is certain quantities within that, that we can expect and given the licensing and everything else that come today that we can expect in the near term? And without giving pricing information, if you're unable to, can you give a magnitude with respect to what you think maybe the margin profile is on those exports versus what you're doing in Canada?

Question: Matt Bottomley - Canaccord Genuity Corp., Research Division - Analyst : Perfect. And is it fair to assume that those 3,000 kilograms if fully sold and shipped over? Would that be accretive to the existing margin profile? Or can you comment on that?