IM Cannabis Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 15, 2025

There are 9 speakers on the call.

Operator

Good morning, and welcome to I'm Cannabis' First Quarter twenty twenty five Earnings Conference Call. Today's conference call is being recorded. At this time, I would like to turn the conference over to Anna Taranko, Director of Investor and public relations. Anna?

Speaker 1

Good morning, and thank you, operator. Joining me for today's call are I'm Kanabis, chief executive officer, Orin Schuster, and chief financial officer, Uri Borgenberg. The earnings and press release that accompanies this call is available on the Investor Relations section of our website at investors.iamcannabis.com. Today's call will include estimates and other forward looking information and statements, including statements concerning future results of operations, economic conditions and anticipated courses of action and are based on assumptions, expectations, estimates and projections as the date hereof. This information may involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied by such statements.

Speaker 1

Factors that could cause or contribute to such differences are described in detail in the company's most recent filings available on Cedar Plus at www.cedarplus.ca and edgar@ww.sick.gov. Furthermore, certain non IFRS measures will be referred to during this call. The term non IFRS adjusted EBITDA loss or non IFRS adjusted EBITDA will hereafter be referred to as adjusted EBITDA loss or adjusted EBITDA as applicable. Any estimates or forward looking information or statements provided are accurate only as of the date of this call, and the company undertakes no obligation to publicly update any forward looking information or statements or supply new information regarding the circumstances after the date of this call. Please also note that all references on this call reflect currency in Canadian dollars unless otherwise stated.

Speaker 1

With that, it's my pleasure to turn the call over to Orin Schuster, CEO of IAM Canabis. Orin, please go ahead.

Speaker 2

Thank you, Amo. Good morning, everyone, and thank you for joining us today. While presenting the 2024 full year results in March, I focused on the progress we made internally, both strategically and operationally. The efficiencies and integration to build a solid right self foundation to deliver on in 2025. In q one twenty twenty five, we can see in the group's financial results that we have hit our target.

Speaker 2

In q one, IMC reached net profit with an 87% improvement in our gross margin versus q one twenty twenty four. Our focus continues to be on execution, shifting our resources to where we see the biggest ROI and leaning into our integrated structure. In q one, with our integrated supply chain, we launched a total of 12 new strains in Germany, driving about €3,000,000 or 39% of our cannabis flower sales in Germany. To put this into perspective, in the second half of twenty twenty four, we imported a total of 11 new strains to Germany for an upside in sales of about 14% in Germany. In q one of twenty twenty five alone, we have already exceeded the last six months of 2024.

Speaker 2

Needless to say, I'm very proud of the work the entire team, both in Israel and in Germany, put in to deliver these results. Moving on to Israel, we see that the shifting focus and resources towards the German market and supply delays impacted our Israeli business. While the Israeli revenue declined by 66% versus q one twenty twenty four, our German business grew 569% versus q one twenty twenty four, offsetting the revenue decline in Israel. In addition, we are seeing that the cost cutting measures produced by shifting our production facility in Israel in 2024 are flowing through to the financial results, leading to the increase in gross margin of 87% and an increase in gross profit of 94%. To sum up the first quarter of twenty twenty five, I'm delighted to see how the efficiencies and integration of the past two years is starting to be visible in our financial results.

Speaker 2

Our goal was for the group to be positive, which we achieved this quarter. Our target now is to continue to execute our strategy. I will now hand the call over to Uri, who will review our first quarter twenty twenty five financial results. Uri? Thank you, Owen.

Speaker 2

Before reviewing our q one results, I would like to emphasize one

Speaker 3

of this quarter's milestones. The adjusted EBITDA in Q1 twenty twenty five resulted in a profit of $600,000 compared to an adjusted EBITDA loss of $2,200,000 in Q1 twenty twenty four, which is an improvement of almost $3,000,000 The company achieved a net profit of approximately $200,000 Our Q1 results were mainly impacted by the following points: The German region revenue in Q1 increased by 569% versus Q1 twenty twenty four, and we continued with our expense reduction process, which resulted in a decrease in operating expenses of approximately 56% versus Q1 twenty twenty four. I will now take you through the overview of the Q1 twenty twenty five financial results for the company's operations. Revenues for Q1 twenty twenty five were $12,500,000 compared to $12,100,000 in Q1 twenty twenty four, an increase of $400,000 or 4%. The increase is mainly attributed to the accelerated growth in Germany, with an increase in revenue of $6,600,000 and decreased revenue in Israel of $6,100,000 net.

Speaker 3

The decrease is attributed to the Orenin deal cancellation, which resulted in a decrease in revenue of approximately $3,500,000 compared to Q1 twenty twenty four. Germany's share of total revenue in Q1 twenty twenty five has significantly increased compared to the corresponding period in 2024 to 62%. This increase has had a considerable impact reflected in a higher average price due to favorable market conditions and growing demand. The cost of revenue for Q1 twenty twenty five were $9,100,000 compared to $10,300,000 in Q1 twenty twenty four, a decrease of $1,200,000 or 12%. This is mainly due to the $600,000 slow inventory clearing in Q1 twenty twenty four and other expenses decreased in Q1 twenty twenty five of about $600,000 net.

Speaker 3

Gross profit for Q1 twenty twenty five was $3,400,000 compared to $1,800,000 in Q1 twenty twenty four, an increase of $1,600,000 or 94%. G and A expenses for Q1 twenty twenty five were $2,000,000 compared to $2,300,000 in Q1 twenty twenty four, a decrease of $300,000 or 14%. Selling and marketing expenses for Q1 twenty twenty five were $1,300,000 compared to $2,300,000 in Q1 twenty twenty four, a decrease of $1,000,000 or 44%. The decrease is mainly attributed to our NIM revoked agreement of approximately 800,000.0 Total operating expenses for Q1 twenty twenty five were $3,300,000 compared to $7,400,000 in Q1 twenty twenty four, a decrease of $4,100,000 or 56%. Operating expenses ratio for Q1 twenty twenty five was 26% versus 77%, excluding the onetime expense outcome of our NMD cancellation for Q1 twenty twenty four, representing an increased efficiency of about 66%.

Speaker 3

The efficiency ratio improvement results from decreased operational cost and increased revenue. EBITDA for Q1 twenty twenty five were $600,000 profit compared to loss of $5,000,000 in Q1 twenty twenty four, an increase of 5,600,000 Net profit for Q1 twenty twenty five was $200,000 compared to loss of $6,000,000 in Q1 twenty twenty four, an increase of $6,200,000 Diluted income per share for Q1 twenty twenty five was 0.09 compared to a loss of $2.52 per share in Q1 twenty twenty four. As of the balance sheet, cash and cash equivalents as of 03/31/2025, were $1,400,000 compared to $900,000 on 12/31/2024. Total assets as of 03/31/2025, were $44,934 compared to $39,188 as of 12/31/2024, representing an increase of 5,746 or 15%. The increase is mainly due to increase of 2,850 in trade receivables, 2,218 in inventory, 1,031 in advance to suppliers.

Speaker 3

Total liabilities as of 03/31/2025, were 41,761 compared to 36,042 as of 12/31/2024, representing an increase of 5,719 or 16%. The company plans to finance its operation from its existing and future working capital resources as well as from its available credit facilities and we'll continue to evaluate additional sources of capital and financing as needed. I would now like to turn the call back to you, Oren, for closing remarks. Oren?

Speaker 2

Thank you, To sum up q one twenty twenty five, I'm delighted to see that the progress we have made internally, both strategically and operationally, is starting to impact the group's financial results directly. As of this quarter, we are profitable. I will now hand the call over to the operator to begin our question and answer session. Operator?

Speaker 4

Thank you. We have our first question from Oscar.

Speaker 5

Yes. Hello?

Speaker 2

Hi.

Speaker 5

Hi. My question is, why is it important to how do I say this? For the upcoming meeting of accepting the 25% of the new company. Why is that important given the the given time of straight capital?

Speaker 6

Why is that, yeah, why is

Speaker 5

that important? The upcoming meeting and being approved of us approving the 25% ownership of Focus? Yeah. Why is that important at the moment right now? Thank you.

Speaker 7

It's something that we are working on quite some time on the regulatory side, and it just happened now, but it's a long process. And the also, Uwe, I don't know if you want to, relate to that.

Speaker 8

Yeah. I I will I will take it. So, basically, since, we are we have a structure of companies, there are all kind of balances that we want to clear between companies and to move them from, let's call it, long term loan to investment as equity. And according to tax regulations, in order to do it in a in our country, you're supposed to hold 100 of the at least for the for the focus company. So based on advice we received, the best way of doing it without getting into troubles of concerning it as as revenue for tax purposes and those kind of act from the tax authorities, we must hold 100 of the Focus shares.

Speaker 8

So we had to make some kind of a deal in and use external valuation for the value of the of the Focus for the rest of the 26% so we'd be able to acquire it and to to be able to protect the company from a tax perspective.

Speaker 1

Okay.

Speaker 5

Thank you.

Speaker 2

Thank you.

Speaker 4

To ask question, please raise your hand using your mobile or desktop application and wait for your name to be announced. There are no further questions.

Speaker 7

Thank you, operator, and thank you all for joining our call today.

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Key Takeaways

  • In Q1 2025 the group delivered its first net profit of $200k and turned adjusted EBITDA to a $600k profit, compared to a $2.2M loss in Q1 2024, driven by an 87% increase in gross margin.
  • Revenue from Germany surged 569% year-over-year, accounting for 62% of total sales as 12 new strains launched in the quarter contributed €3M (39%) of cannabis flower sales.
  • Israeli operations saw a 66% revenue decline versus Q1 2024 due to a strategic shift to Germany and supply delays, although cost-cutting measures supported margin improvement.
  • Operating expenses were cut 56% year-over-year, with selling and marketing down 44% and G&A down 14%, driving the operating expense ratio from 77% to 26% and enhancing overall efficiency.
  • Cash and equivalents rose to $1.4M, total assets increased 15% to $44.9M, and the company plans to finance operations through working capital, existing credit facilities, and potential new capital sources.
A.I. generated. May contain errors.
Earnings Conference Call
IM Cannabis Q1 2025
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