Organigram Holdings Inc. (NASDAQ:OGI) Q1 2023 Earnings Call Transcript

Derrick West: Yes. I think on the bio asset, it’s the increase that we had from the last quarter and also the gain that was on the income statement as we measure the fair value growth of those assets. It was a fairly significant percent increase in the quarter to take it up to approximately $21 million now. We are planting in all our available grow rooms now in the Moncton facility. There will be small fluctuations by quarter. But without another expansion or an acquisition of other facility, this is roughly where the bio assets should reach, give or take a few million dollars. So I think that’s a fairly stabilized number. For inventories, we did see an increase as well. But I think in prior calls, Beena has mentioned a few times that we had demand that essentially outstripped our current production.

And so as soon as we have the available flower ready, it was shipped out. So we were probably running fairly lean to lean on our inventory level. So we are trying to build in a small reserve there, of flower to ensure that we can meet all sales orders as they come and then to maximize sales and profitability. So I think that inventories are more up to move slightly north from their current number. But again, I think that some of the increases in inventories are now baked into our balance sheet, but I would expect the inventories to move slightly more than what bio assets would as we look forward.

Operator: Your next question comes from the line of Aaron Grey from Alliance Global Partners. Your line is open.

Aaron Grey: Nice to see that the EBITDA improvement there. So quick question for me that I had just around the price compression and market share, specifically more so for Canada, can you just give us a reminder in terms of how you think going forward in terms of how you look to balance profitability of the SKUs you’re putting out against share? Obviously, it’s been a big momentum in terms of the gross margins that you guys have seen. Shares where you guys were out performer. It seems like they might have softened a bit in the past two months, but would love to get a reminder in terms of your outlook on how you’re looking at profit versus share? I know it’s a little bit of both, but during sometimes, you might more on one versus the other. Thank you.

Beena Goldenberg: Right. No problem, Aaron. So let me start by saying that it is important for us to continue to see revenue growth, but it’s profitable growth, right? And that’s important to us. So we are cautious. And I’ve said many times on these calls that we don’t have a problem competing in the value segment because that’s where most of the — that’s where the consumers are. However, it is not our desire to lead the race to the bottom. We had a little bit of softness at the end of this quarter on our large format 28-gram flower as a result of some additive activity coming into the Ontario market at the price floor. We did not match that, but we have made adjustments to our pricing in order to ensure we remain competitive.