IMCC - Earnings call transcript Q1 2022

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Operator

Welcome to IM Cannabis Q1 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would like to turn the conference over to Maya Lustig, Investor Relations at IM Cannabis. Please go ahead.

Maya Lustig

Thank you, operator.

IM Officer, Executive Shai are and Oren today Financial Chief Shemesh. me Cannabis Officer, Chief Shuster Joining The earnings at release on the that accompanies this Relations of call section our website investors.imcannabis.com. Investor is available of and that Today's call statements future as may partnerships, economic be results revenues, and forward-looking market, prediction and operations, position, product statements constructed concerning financial other future from conditions, will including information any performance. estimates include releases, other a statements which statements. factors cause unknown expressed risks, The to uncertainties, materially actual information may known differ other results involve or and and implied may from those by such Factors to recent in filings described cause and that most SEDAR detail on www.sec.gov. could www.sedar.com at or such differences available company's EDGAR contribute in the at are during this call. Non-IFRS certain Furthermore, to measures will referred be presentation non-IFRS supplementary these believes The for information ongoing and the company concerning data purposes is that useful informational operation provided company's the provides only. of Any the the to estimates of supply or this of as information information after forward-looking regarding date this new provided call. undertakes of only accurate or information company the statements are or update any forward-looking circumstances call date no and the publicly obligation also currency in call that all reflect Please dollars. references this Canadian note on pleasure Shuster, the to is over to call Oren With it that, CEO my Cannabis. IM of turn go ahead. please Oren,

Oren Shuster

Thank quarter us and XXXX you, Maya. thank first Hello, joining for earnings our everyone, you for call.

The first quarter was key two highlighted by factors.

the opportunities model to centralizing various of supply Israel, our global to towards third has model in we identify take margin primarily our allowing yield. the leveraging integrating transitioning with where our operational us benefits supply our operations Canadian execution, First began to expansion. source our hold, are relates for The

$XXX sequentially achieved and revenue path quarter run the on which record $XX.X exited at Notably, another rate progress yet we XX% million. increased nearly quarter of XXX% the we to profitability, million revenues, as we year-over-year the to year these the be industry will given which breakout of Taking evident second expected framework, for be and in particularly account, to we XXXX synergies. leading a global factors expect IM half two into basis. year Cannabis, Second, our

significantly a in reduced success with for sheet Taken creation. and long capital in we coming year, value the shareholder balance expenditure and tandem are strongly term positioned strong

a closed This these broader the turned that as established, make platform, and market as Before IMC's leadership collectively across progress, segments our is capacity, the to our class to early approach then IM components three those methodical with followed we integration cannabis for Anywhere and them. of I on producers series it market we We advantage domestically, to With our one our tier recreational to with of largest These of market. position is may procuring in home saw components while our world's next segments. will Cannabis our several questions. the and be of consumer acquisitions, took to of capitalize largest to world addressable of well for segments, the premium of for vision e-commerce of fragmentation actions facilities in the market and company we of cannabis infrastructure with provide expand this highlights and platform. own, are our with focused for to in a cultivating overview story. global is large its the cannabis pharmacy We believe market, we Through towards our Germany. of leading as ultra capabilities, IMC largest leading supply footprint acquisitions legal. business on within efficiencies operator review vision our you evolving a ample to allow mover as The in of have top the Israel the the focus built delivery. provided a extensive an we the each chain. cultivation country. growing brief pharmacies me and recently touch operating peering platform recent our premium that on each took as online an rapidly preferences Panaxia the Canada opening strategic by premium are each well alignment our opportunity brands, new focused on including Israel, channels. countries the sales import/export federally unique become call on generate in opportunity up direct financial And consolidate which to multi-country and in only distribution important we medical the results a and up before their provider leveraging in markets three fact I of each global

support cost We the centralized and are believe also presence. strengthening for creating a single process a distribution our customer going while create significant savings relatively now This has pharmacies. that three been brand center will hub forward seamless we

centers, certified suppliers us with from provide trade GMP the the to purchasing power also selection. ability wider and product a two provide We which acquired

third While Israeli the which the with we acquired our positive import have Canadian sold domestic popular to Israel. the Canada, products premium consumers. last ability received Israel, highly own we from our to and quarter, response for to the in provided sources year, In products began on relied the historically businesses cultivation brand, us with of products is launch our has importing we Israel in WAGNERS

addition our brand the In highly benefits recognition, are of to attractive. of Canadian importing from subsidiaries the global products economics having

from in Canadian fact, profile import other of sell products is that have that a produce the In products nearly double margin and gross suppliers. we Israel the sourced

with supply. have elevated our simply own leading our continued based meet to of traction becoming volumes new significant and have In opportunity a to gain existing brands source commercial primary increase Canada, demand, expansion margin we products. we As

price leading a brands the gain share with and Canada's Our market. WAGNERS rank Highland each cannabis brand of respective Ontario, in Grow and receiving segments, continue rapidly market in leading position their province to largest

markets new and by and formats which the competitive with mature engagement existing Canada increasing we customers. of operate, new on growth focused and are in While products is launching and we most driving the

also quarter population. new of a term, accounts near We Canadian for provinces into nearly expand to in the namely expect which the Quebec,

addition In served demonstrating products further also the to to power an markets, global as growth, Israeli to provide of avenue model. Canadian the and the operation German this

capacity, based are margin increase towards internal operational on improvements expect also focused to and we initiatives cultivation including we full volume expansion, contribute several As that reductions we of operating costs. to

the medical Europe. Finally, to we market in in lay foundation our Germany, largest continue cannabis

proprietary among in community the We the have Israeli to from our branded which established IMC track and reputation we our healthcare through our reputation products, German record, data experience brand market. medical attribute positive

providing Germany support legislative health with in strains draft the currently we brand use second market the announced of accelerated cannabis market patients best months, Germany. the adult to committed in be are potential the including in before in end and the the for the this launching of the place an is physicians the available the country's to We minister expected use take legislative of global coming We has month, legal that legalizing cannabis that process world. the the WAGNER'S largest German Earlier federally expected adult believe to in our and process year.

market take significantly have into made the the is why to years. over picking continue to forward. a process opportunity presents IMC. time. conscious German While invest is tech for massive last momentum we up, this this the decision strategic undoubtedly it we investment small our that Being will and legislative This plan infrastructure early in few appears the is going And

believe We we evolving are building prioritize will our German that which our be us cannabis foundation to in mover to cannabis allow core is market the in Germany the focus. first premium

of benefits to our begins to take We multi the are country thrilled effect. see strategy

recognition calculated We review our will results. product of opportunities the landscape, now in to on by the Shai position our Financial our when supply in are Canada over and Chief source cost evolving XXXX achieving are gross by financial margin stage ramping will our bringing turn through first sustainable Shemesh level and to afforded brand we very taking approach evaluate centralization fulfill we are operations cultivation call global and growing early to who IMC Shai. regulatory Israel in our demand in-house a and growth up in quarter where Germany, structure market potential the a to Israel, gaining yet still expansion. Officer, premium trajectory. I of the relative our command domestically optimizing the we

Shai Shemesh

Thank you Oren.

position strength. financial operate of continue We from a to

is $XX.X basic share increase of operational the in million first first associated XXXX compared quarter XXXX, XXXX to we compared million the December to loss share base, adjusted per us in $XX.X earnings in As grow million in Revenues continue was was to income first the of we're variety XX, sustainably. of Net million XX, cash The XXXX XXXX. scale increase $XX.X in provide to Diluted compared million for to of in in XXX% an primarily our share uncovering now first of financial $X.X of share will XXXX. in quarter loss that the quarter million increased per attributed with to $X.X our of XXXX. million million in cannabis a $X.X quarter revenue compared to first XX% medical operational of first in $X.X the and quarter will of quarter first quarter Israel. allow quarter quarter overview of and sold. of adjustments the to first net of the XXXX fair quarter the value compared million quarter adjusted of results. quantity approximately $XX.X of of per XXXX. $X.X the at Cash expenses $X.XX March of the first of an million quarter an $X.XX in probably were revenues in Basic a XXXX, $X.X $X.XX I improvements EBITDA profit and in expenses the in recreational Non-IFRS were per Gross XXXX, facility was compared the diluted of to of the the XXXX reduction in totaled equivalents XXXX closure million loss $X products first XXXX. of in to first first loss of at negative XXXX. in first to loss increased quarter to before in of million compared to the million Total to $X.XX was XXXX. of operating compared EBITDA XXXX. $X.X the expenses quarter quarter increase operating due first first in The $XX.X a the

beginning operations growth. year-over-year just are synergies of our by the take to We reflected consolidated effect our as sustainable revenue see

increasingly run look a will of be second us third operational rate quarter basis to adjusted we positive expect basis we expect XXXX rate on revenues And sequentially. run which approaching second previously effects improvements forward, basis and a accelerate year-over-year on we the As to while continue positive noted, a to we've we're positioning pronounced. In positive grow rapidly to the as the XXXX be in cashflow XXXX. EBITDA, of achieve the expect, of in we on quarter we quarter of

quick capital a allocation Finally, our on strategy. note

currently in to not approach for would I new and capital do take the closing deploying like While therefore do to an Oren Oren? we continue capital, call now year. acquisition not opportunistic have plan back to foresee significant to any we we coming any expenditures the remarks. turn

Oren Shuster

Thank Shai. you,

rapidly packaged in a are while point goods growth as a cannabis to the global the serving as share, capture market integrating industry. pivotal phase our fully leading We trajectory, next position consumer us IMC's of our model to for at company we components aim

The to the success that, on hand in excellence our focus market. as are of truly Canada infrastructure shareholders along to is while as our of brands began us yielding call already the will operational our realized Israel, to it session. benefits in player are track be major in that answer our Building in we cannabis generate emerge a way. diligently well-positioned long category of incrementally Our value to the we believe are brands Germany, opportunity remarkable. and for With leveraging working we products and distribution over record unique operator leadership the and premium term front question seize And all European our on Operator? unified. to I in is

Operator

Thank you.

answer and ahead. go question [Operator Aaron Alliance. question Instructions] Please comes Our will first Grey with session. We the now begin from

Aaron Grey

and and the EBITDA. see evening, good the Hi, nice improvements sequentially to on revenue

are holding first the guys question you profitability. for so So I talked me, just the about XQ

to want there. clarification some Just get

at rate You said exit positive. of XQ a run EBITDA

in little so for could a month And then think that modeling quarter, right? us kind might just you terms improved about that's the that I guess the breakeven. if be gross more talked for is it and and bit for margin, of more you the quarter-over-quarter for guidance help XQ. revenue So of

kind to much how margin us you get guide of you you. growth to sales provided? So improvement get just and just to helping expect EBITDA that Thank

Oren Shuster

question. Aaron. the Hi for Thank you

be we at end this. the as of positive that seems onwards. adjusted be the that your first of quarter meaning whole and But sure it will for the we June June there's are currently regarding question for believe quarter EBITDA if yes, say cannot from will onwards, positive for First going all, the we be to we like now

your for the regarding question, As second margin. gross

now integration each our and enjoy the We and territory of federal are the in of synergies the margin. different streaming phase gross exploiting

As be the closer we improve for we will XX% between to we And quarter, going gross XX% to should on] second it's logical XX%. on average be and are the believe we XX. margin, will forward [currently XX that around it in the

But the lower. different, retail it of our fully we us remember the to that working strategy to rest such margin the integrated for company. need build have allows gross different we in is now where as are You a areas

Aaron Grey

Thank great. That's much right, for that you color. All helpful. very

question me. Second for

market. to talk about want Just the Israeli

data So out, looking a industry. sales. in for in first in when of at But put sometimes that the volume regulators terms of if the exactly not does like the we're data with there on slowdown terms talked volume line we past the some the the it look the might that quarter of was

quarters. sequential seen your So double sales terms in you're had slowed quarter you. of seeing like prior low single we the of to does in the get in industry outlook digits overall just Thank look to down because want first what it it digit versus growth terms

Shai Shemesh

you Oren take that? to want Well,

Oren Shuster

Yes. I am.

So I This was in slower slow slower what than seen just growing. know Still seen would be past. or last two a of data in and what the a growth the great. the We it we don't what the month the day than seen recent significant in year. space is bit still market the rest year. now. we've the in the in not have don't market published But know so the be increase it is down of will doing we've is the rest

Aaron Grey

Okay. question Great. Last Thank you much. me. for very

sales up Canada's So X%.

quarter, retail data into brands, actually during good continued Third for it your party, like XX% the it bips trends gain April. showing XX% up, hyper looks shows that

sell there some selling has I And know, the been through the then into between looks provincial So can be board. disconnects but strong. like POS,

might you. of seeing there buying. in that maybe the commentary quarter of normalizing data. of any more timing the the to disconnect see rates, it's So meaningful provincial some in terms next maybe the might Thank And similar be some growth we're what POS

Oren Shuster

market in So we with more are continuing capturing the market. Canadian share

and think I are well. because the also this got are to. market executing like you is We've skews that provinces, more from they very we would performing the

market. Quebec in mention that can start significant believe we And that And the we with very situation will seen work I So we year growth. this continue just haven't also to our to Quebec. in is and yet a which

our with have enter market. to before the Quebec will that Quebec believe we continue So growth definitely I and

Aaron Grey

and go queue. back I in Thank great. will you very join ahead Okay, much. the

Operator

comes Please question from Roth go Scott next with Capital. Your ahead. Fortune

Scott Fortune

And question here. Good you thank for evening. the

the the Just up you to of Canada to international premium break prioritizing versus on from the kind brands markets premium what's but different follow there to Canada, and and within your those and priorities kind being down exported present market selling just on ultra sell Can you opportunities? that's production into volume into looking do the global premium Aaron's how Canada of of Canada? allocation or into in Canadian channels the think questions and at

Oren Shuster

Yes. question. very good It's a

integration of of the of across Canada brands and be each markets, these our that of we we of will with flower optimization allocate the skews Germany between and Canada, it this sale when synergies of that optimizing We products different all products to prioritization making we have is What aiming is allocation will to the according Israel. of are are allocation. now in the product. the Part the our in our the process each

from the This of that building part allocated that So we're And to the we be integration now. highest is overall is get. with the planning. beginning, margins will we're it what this market can the

As process beginning allocating of of question between yet, it's brands. are the not It's for this we your the now us. that mature Scott only

Scott Fortune

Great. exports the that break can in little bit, look of wise market internal And with the products then a to mix from the that and was Israeli Israel you into you're Israel dry out then sold oil sell sold there? flower differences Israel at percentage margin different versus market kind able versus there flower what

Oren Shuster

we four products What we've to launched in So stage, huge in the doing in market it And that the was we brand or done, started is a are Israeli massively of bring meaningless. success. we is the Israel, it's percentages Israel, that is to smallest WAGNERS on what more our see most product, the market. the we of in

very getting increase to getting this We're of is idea good in are process. we're And now. doing We good what is and doing it's feedbacks. And a feedbacks, Canada. the the import products,

purchasing are for We for the the the market, products for and market. Israeli market also German Canadian

process in the the the we markets Today know see are in between Canada, [CSE] then to exactly premium segments to goes fixed than of in minority because percentages with allocation limitation is out the the the XX.X% it we And to is mainly which the only being the of a of premium. of GMP, entrepreneurial high a we Canadian a is of that product. that higher phase [CSE] the today, auto have And is the So going to and market, premium market. build of products or of optimization.

Israeli quality. to the bring Israeli it that can to we Israeli every market market Israel. in the So the product can, we because to qualification is sell meet bring want market The every that we we import can will

being process a whole out build this is So phase. in

now we're as much of bring to we As qualification Israeli the [indiscernible] bringing to is as can products Israel. market

Scott Fortune

one one can. Canada quick what question the Got it. into Germany? last timing breakdown of if One products in premium I Germany, WAGNER'S revenue exporting And Germany the from just potentially your and And then last housekeeping. was what's directly?

Oren Shuster

regarding the of the new to need So process the for in irradiation has the be you And license Germany, a product of that timing to certified. to order it believe in is Germany, months. import, GMP which six we bring

order to Not of quarter. the Maybe fourth We pass product to are in third. the will about I missed now Probably the you phases the before. on regulatory be it believe quarter. regarding all through the only the the bring Sorry, process in the I the And number question. I’m that fourth again numbers. Germany. Can

Scott Fortune

Yes.

revenue was for on the contribution the quarter, from what Just the Germany quarter?

Shai Shemesh

It was $XXX,XXX.

Scott Fortune

you. thank Okay,

Shai Shemesh

We have the in it second --

Scott Fortune

the Thanks jump in Appreciate I'll back the color. for detail. the queue.

Operator

the to back Oren question-and-answer turn would like Cannabis conference of to Shuster, session. concludes remarks. closing CEO I any the over IM for This

Oren Shuster

our Thank call our to you you forward I thank continue you coming continue in you growth as Please to much. on execute with very operator today. joining the we quarters. for speaking look and our track all And Thank progress to strategy.

Operator

you The Thank attending conference presentation. for concluded. today's now is

now You disconnect. may

IM Cannabis (IMCC) 15 May 222022 Q1 Earnings call transcript