Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IM Cannabis Corp (IMCC, Financial) experienced a significant increase in sales in Germany, with a 200% growth in Q2 2024 compared to Q1 2024, following the legalization of cannabis in Germany.
- The company reported an 11.7% increase in revenue in Q2 2024 compared to Q2 2023, driven by strong performance in the German market.
- IM Cannabis Corp (IMCC) has successfully increased its selling price per gram of dried flower by 21% year-over-year, reaching $6.09 per gram.
- The company has strategically focused on the premium and ultra-premium segments in Israel, launching new strains and brands to strengthen its market position.
- IM Cannabis Corp (IMCC) has reduced its operating expenses by 29% in Q2 2024 compared to Q2 2023, reflecting effective cost management and restructuring efforts.
Negative Points
- The company's gross profit decreased by 75.6% in Q2 2024 compared to Q2 2023, primarily due to clearing old inventory and accruing for slow-moving stock.
- IM Cannabis Corp (IMCC) reported a non-IFRS adjusted EBITDA loss of $2.3 million in Q2 2024, a significant increase from the $0.5 million loss in Q2 2023.
- The company's cash and cash equivalents decreased to $0.7 million as of June 30, 2024, from $1.8 million at the end of 2023, indicating potential liquidity concerns.
- Total assets decreased by 17.6% as of June 30, 2024, compared to December 31, 2023, largely due to the cancellation of the Oranim agreement.
- IM Cannabis Corp (IMCC) faces challenges in maintaining gross margins, with significant inventory clearance and accruals impacting financial performance.
Q & A Highlights
Q: Can you provide more details on the supply chain for the German market and how you are addressing supply bottlenecks?
A: Oren Shuster, CEO: Supply is crucial in Germany, and we have our own sources. We increased orders post-legalization and will introduce more suppliers. In Q3, we will start selling products from Israel in Germany, creating a new supply channel. We are the only Israeli company with operations in Germany, and we plan to launch premium brands like BLK MKT there.
Q: Will the supply from Israel affect your operations there, and what are the market trends in Germany?
A: Oren Shuster, CEO: In Israel, we focus on premium segments, mostly importing from Canada. In Germany, we target the mid-market but will offer a full product range. The Israeli supply to Germany will not affect our Israeli operations as it involves mid-market products from other Israeli growers.
Q: What resources are needed to support growth in the German market?
A: Oren Shuster, CEO: Supply is the main focus. We have strong market access and relationships with pharmacies. We are well-established since 2019, and our growth is supported by a profitable business model. We are confident in our ability to support operations and imports financially.
Q: What contributed to your success in Germany compared to other companies?
A: Oren Shuster, CEO: We have a strong market presence and a familiar brand. We were proactive in securing more supply post-legalization, which contributed to our growth. Our established relationships with pharmacies and the cannabis community in Germany also played a significant role.
Q: Can you provide insights into the gross margin trends, particularly in Germany?
A: Oren Shuster, CEO: Our gross margin in Germany is currently around 40%. While price compression may occur, we are preparing for it. In Israel, we expect changes to improve gross margins, though the exact timeline is uncertain.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
