IM Cannabis Corp (IMCC) 2025 Q1 法說會逐字稿

Good morning and welcome to IM Cannabis Corp's first quarter 2025 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.

Good morning and thank you operator. Joining me for today's call are IM Cannabis, Chief Executive Officer Oren Shuster and Chief Financial Officer, Uri Birenberg. The earnings and press release that accompanies this call is available on the investor relations section of our website at investors.i mcannabis.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 here.

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. Factors that could cause or contribute to such differences are described in detail in the company's most recent filings available on Cedars at www.cedarplus.ca and Edgar at www.sec.gov.

Furthermore, certain non-IFRS measures will be referred to during this call. The term non IFRS adjusted eit 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 CAD unless otherwise stated. With that, it's my pleasure to turn the call over to Oren Shuster, CEO of IM Cannabis. Oren, please go ahead.

Thank you, 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 rights of foundation to deliver on in 2025.

In Q1 2025, we can see in the group's financial results that we have hit our target. In Q1, INC reached net profit with an 87% improvement in our gross margin versus Q1 2024. Our focus continues to be on execution. Shifting our resources to where we see the biggest ROI and leaning into our integrated structure.

In Q1, with our integrated supply chain, we launched a total of 12 new strains in Germany, driving about €3 million or 39% of our cannabis flour sales in Germany.

To put this into perspective, in the second half of 2024, we imported a total of 11 new strains to Germany for an upside in sales of about 14% in Germany.

In Q1 of 2025 alone, we have already exceeded the last six months of 2024.

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 56% versus Q1 2024, our German business grew 569% versus Q1 2024, 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 increasing gross margin of 87% and an increase in gross profit of 94%.

To sum up the first quarter of 2025, I'm delighted to see how the efficiencies and integration of the past two years is starting to be visible in our financial results.

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 end the call over to OA who will review our first quarter 2025 financial results.

Thank you, Owen.

Before reviewing our Q1 results, I would like to emphasize one of these quarter milestones.

The adjusted EBITDA in Q1 2025 resulted in a profit of 0.6 million compared to an adjusted debit loss of 2.2 million in Q1 2024, which is an improvement of almost 3 million. The company achieved a net profit of approximately 0.2 million.

Our Q1 results were mainly impacted by the following points.

The German region revenue in Q1 increased by 569% versus Q1 2024, and we continued with our expense reduction process, which resulted in a decrease in operating expenses of approximately 56% versus Q1 2024.

I will now take you through the overview of the Q1 2025 financial results for the company's operations. Revenues for Q1 2025 were 12.5 million compared to 12.1 million in Q1 2024, an increase of 0.4 million or 4%.

The increase is mainly attributed to the accelerated growth in Germany with an increasing revenue of 6.6 million and decreased revenue in Israel of 6.1 million net.

The decrease is attributed to the organin bill cancellation, which resulted in a decreasing in revenue of approximately 3.5 million compared to Q1 2024.

Germany's share of total revenue in Q1 2025 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 a favorable market conditions and growing demand.

The cost of revenue for Q1 2025 was 9.1 million compared to 10.3 million in Q1 2024, a decrease of 1.2 million or 12%. This is mainly due to the 0.6 million slow inventory clearing in Q1 2024 and other expenses decrease in Q1 2025 of about 0.6 million net.

Gross profit for Q1 2025 was 3.4 million compared to 1.8 million in Q1 2024, an increase of 1.6 million or 94%.

GNA expenses for Q1 2025 were 2 million compared to 2.3 million in Q1 2024, a decrease of 0.3 million or 14%.

Selling and marketing expenses for Q1 2025 were 1.3 million compared to 2.3 million in Q1 2024, a decrease of 1 million or 44%. The decrease is mainly attributed to our name revoked agreement of approximately 0.8 million.

Total operating expenses for Q1 2025 were 3.3 million compared to 7.4 million in Q1 2024, a decrease of 4.1 million or 56%.

Operating expenses ratio for Q1 2025 was 26% versus 77%, excluding the one-time expense outcome of a RMB cancellation for Q1 2024. Representing an increased efficiency of about 66%. The efficiency ratio improvement results from decreased operational cost and increased revenue.

EBITDA for Q1 2025 was 0.6 million profit compared to loss of 5 million in Q1 2024, an increase of 5.6 million. Net profit for Q1 2025 was 0.2 million compared to loss of 6 million in Q1 2024, an increase of 6.2 million.

Diluted income per share for Q1 2025 was $0.09 compared to a loss of $2.52 per share in Q1 2024. As of the balance sheet.

Keshikeshivalences of March 31, 2025 were 1.4 million compared to 0.9 million on December 31, 2024.

Total assets as of March 31, 2025 were 44,934 compared to 39,188 as of December 31st, 2024, representing an increase of 5,746 or 15%.

The increase is mainly due to an increase of 2,850 in trade receivables, 2,218 in inventory, 1,031 in advance to suppliers.

Total abilities as of March 31, 2025 were 41,761 compared to 36,000 in 42 as of December 31, 2024, representing an increase of 5,719 or 16%.

The company plans to finance its operation from its existing and future working capital and resources, as well as from its available credit facilities, and will 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.

Thank you. To sum up, Q1 2025, I'm delighted to see that the progress we have made internally, both strategically and operationally, is starting to impact the growth's financial results directly. As of this quarter, we are profitable.

I will now end the call over to the operator to begin our question and answer session, operator.

Thank you. To ask a question, please raise your hand using your mobile or desktop application or press 9 on your telephone keypad and wait for your name to be announced.

We have our first question from Oscar.

Yes, hello? Yeah, hi.

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 given time of straight capital, why is that?

Yeah, why is that important, the upcoming meeting and being approved of us approving the 25% ownership of focus.

Yeah, why is that point at the moment right now? Thank you.

It's something that we are working on for quite some time on the regulative side and.

It just happened now, but it's a long process. And that also, I don't know if you want to relate to that.

Yeah, I will take it. So basically, since we are the start 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 the 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 acts from the tax authorities, we must hold 100% of the focus shares. So we had to make some kind of a deal in the And use external valuation for the value of the focus for the rest of the 26%. So we'll be able to acquire it and to be able to protect the company from a tax perspective.

Okay.

Thank you.

Thank you.

To ask a question, please raise your hand using your mobile or desktop application and wait for your name to be announced.

There are no further questions.

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