ORGANIGRAM GLOBAL INC.
For the period ended Sep 30, 2024. Filed Dec 18, 2024.
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The yearly report of certain Canadian companies, filed under a joint US and Canadian system. It is the main yearly account these companies give US investors, largely as filed in Canada.
FY2024 · Filed Dec 18, 2024
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EX-99.5 · ADJUSTED GROSS MARGIN
ADJUSTED GROSS MARGIN
Adjusted gross margin is a Non-IFRS Measure that the Company defines as net revenue less cost of sales, before the effects of: (i) unrealized gains on changes in fair value of biological assets; (ii) realized fair value on inventories sold and other inventory charges; (iii) provisions and impairment of inventories and biological assets; and (iv) provisions to net realizable value. The Company believes that this measure provides useful information to assess the profitability of the Company's operations as it represents the normalized gross margin generated from operations and excludes the effects of non-cash fair value adjustments on inventories and biological assets, which are required by IFRS. See "Cautionary Statement Regarding Certain Non-IFRS Measures". The most directly comparable measure to adjusted gross margin calculated in accordance with IFRS is gross margin before fair value adjustments.
MANAGEMENT’S DISCUSSION AND ANALYSIS | FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND THIRTEEN MONTHS ENDED SEPTEMBER 30, 202320
| Q1-F23 | Q2-F23 | Q3-F23 | Comparative Q4-2023 | Q1-F24 | Q2-F24 | Q3-F24 | Q4-F24 | 2024 | |
|---|---|---|---|---|---|---|---|---|---|
| Net revenue | $43,321 | $39,493 | $32,785 | $36,698 | $36,455 | $37,628 | $41,060 | $44,698 | $159,841 |
| Cost of sales before adjustments | 30,492 | 26,121 | 26,711 | 29,537 | 25,259 | 26,019 | 26,474 | 28,155 | 105,907 |
| Adjusted Gross margin | 12,829 | 13,372 | 6,074 | 7,161 | 11,196 | 11,609 | 14,586 | 16,543 | 53,934 |
| Adjusted Gross margin % | 30% | 34% | 19% | 20% | 31% | 31% | 36% | 37% | 34% |
| Less: | |||||||||
| Provisions of inventories and biological assets | 1,067 | 1,256 | 2,823 | 532 | 1,672 | 314 | 628 | 2,043 | 4,657 |
| Provisions to net realizable value | 62 | 2,265 | 2,755 | 4,252 | 13 | 33 | 71 | 709 | 826 |
| Gross margin before fair value adjustments | $11,700 | $9,851 | $496 | $2,377 | $9,511 | $11,262 | $13,887 | $13,791 | $48,451 |
| Gross margin % (before fair value adjustments) | 27% | 25% | 2% | 6% | 26% | 30% | 34% | 31% | 30% |
| Add: Realized fair value on inventories sold and other inventory charges | $(12,528) | $(14,170) | $(13,588) | $(15,901) | $(11,923) | $(11,062) | $(13,728) | $(15,365) | $(52,078) |
| Unrealized gain on changes in fair value of biological assets | $24,714 | $14,121 | $8,395 | $21,751 | $9,112 | $9,400 | $13,849 | $18,790 | $51,151 |
| Gross margin(1) | $23,886 | $9,802 | $(4,697) | $8,227 | $6,700 | $9,600 | $14,008 | $17,216 | $47,524 |
| Gross margin %(1) | 55% | 25% | (14)% | 22% | 18% | 26% | 34% | 39% | 30% |
Note (1): Gross margin reflects the IFRS measure per the Company’s Financial Statements.
Note (2): Comparative Q4 Fiscal 2023 results are for the unaudited and unreviewed three month period beginning July 1, 2023 and ending September 30, 2023.
Both adjusted gross margin and gross margin before fair value adjustments have improved throughout Fiscal 2024, approaching historical levels observed in first and second quarters of Fiscal 2023. Notably, the adjusted gross margin in Q4 2024 reached the highest level reported in the preceding eight quarters. This increase is attributed to several factors, including lower cultivation and post-harvest costs, reduced inventory provisions, lower depreciation resulting from impairment charges recorded in Fiscal 2023 and higher recreational cannabis revenue.
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