ORGANIGRAM GLOBAL INC.
For the period ended Mar 31, 2025. Filed May 12, 2025.
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Mar 31, 2025 · Filed May 12, 2025
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EX-99.1 · 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.
| Q3-F23 | Q4-F23 (1) | Q1-F24 | Q2-F24 | Q3-F24 | Q4-F24 | Q1-F25 | Q2-F25 | |
|---|---|---|---|---|---|---|---|---|
| Net revenue | $32,785 | $46,040 | $36,455 | $37,628 | $41,060 | $44,698 | $42,730 | $65,600 |
| Cost of sales before adjustments | 26,711 | 38,101 | 25,259 | 26,019 | 26,474 | 28,155 | 28,451 | 43,679 |
MANAGEMENT’S DISCUSSION AND ANALYSIS | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2025 AND MARCH 31, 2024 15
| Adjusted gross margin | 6,074 | 7,939 | 11,196 | 11,609 | 14,586 | 16,543 | 14,279 | 21,921 |
|---|---|---|---|---|---|---|---|---|
| Adjusted gross margin % | 19% | 17% | 31% | 31% | 36% | 37% | 33% | 33% |
| Less: | ||||||||
| Provisions and impairment of inventories and biological assets | 2,823 | 532 | 1,672 | 314 | 628 | 2,043 | 13 | 548 |
| Provisions to net realizable value | 2,755 | 4,252 | 13 | 33 | 71 | 709 | 151 | — |
| Realized fair value on inventories sold from acquisitions | — | — | — | — | — | — | — | 1,586 |
| Gross margin before fair value adjustments | 496 | 3,155 | 9,511 | $11,262 | $13,887 | $13,791 | $14,115 | $19,787 |
| Gross margin % (before fair value adjustments) | 2% | 7% | 26% | 30% | 34% | 31% | 33% | 30% |
| Add: Realized fair value on inventories sold and other inventory charges | (13,588) | (15,901) | (11,923) | (11,062) | (13,728) | (15,365) | (13,066) | (14,192) |
| Unrealized gain on changes in fair value of biological assets | 8,395 | 21,751 | 9,112 | 9,400 | 13,849 | 18,790 | 12,765 | 12,823 |
| Gross margin(2) | $(4,697) | $9,005 | $6,700 | $9,600 | $14,008 | $17,216 | $13,814 | $18,418 |
| Gross margin %(2) | (14)% | 20% | 18% | 26% | 34% | 39% | 32% | 28% |
Note 1: Q4 Fiscal 2023 results are for the four month period from June 1, 2023 through September 30, 2023 as a result of the change in year end from August 31 to September 30 approved by the Company in May 2023
Note 2: Gross margin reflects the IFRS measure per the Company’s Financial Statements
Both adjusted gross margin and gross margin before fair value adjustments have improved throughout Fiscal 2024. Notably, the adjusted gross margin in the fourth quarter of Fiscal 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 year 2023 and higher recreational cannabis revenue. In the first quarter of fiscal 2025, gross margin declined primarily due to lower unrealized gain on changes in fair value of biological assets and lower international sales. In Q2 Fiscal 2025, gross margin declined primarily due to the fair value adjustment on inventories acquired through the Motif acquisition and subsequently sold, as required under IFRS. The adjusted gross margin of 33% in Q2 Fiscal 2025 reflects Motif's margin before full synergy realization. Organigram’s standalone margin excluding Motif was 37% in Q2 Fiscal 2025.
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