OrganiGram Holdings (TSX:OGI) reported second-quarter financial results on Tuesday. The transcript from the company's second-quarter earnings call has been provided below.
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Summary
Organigram Global Inc reported a challenging Q2 with a decline in net revenue to 59.8 million, primarily due to issues in vapes and infused pre-rolls, and competitive market pressures.
Despite challenges, the company gained market share in flower and edibles, with notable performance in products like Big Bag of Buds and Shred shots.
The completion of the Sanity acquisition marks a strategic move into the European market, with expectations for significant revenue contributions from Sanity and ongoing growth in international markets.
Operational issues in pre-roll production and vape potency were addressed, with improvements expected in Q3 and Q4, supported by new product launches and operational enhancements.
Organigram Global Inc maintains its position as the number one licensed producer in Canada by market share, with strong performance expected in the latter half of fiscal 2026 driven by both domestic and international growth.
Full Transcript
OPERATOR
Good morning, My name is Ed and I'll be your conference operator today. At this time I would like to welcome everyone to the Organigram Global Inc Second Quarter Fiscal 2026 Earnings Conference Call. After the Speaker's prepared remarks, there'll be a question and answer session. Please limit yourself to one question and one follow up. You may request for additional questions. Thank you. I'll now turn the call over to Max Schwartz, Director of Investor Relations.
Max Schwartz (Director of Investor Relations)
Thank you very much and good morning everyone. Thank you so much for joining us today. As a reminder, this call is being recorded and a replay will be available on our website within 24 hours. Today's call will include forward looking statements. Actual results could differ materially due to a number of risk factors outlined in our filings and cautionary statements included in our Q2 fiscal 2026 press release and MD&A. We'll also reference certain non IFRS measures such as adjusted ebitda, adjusted Gross Margin and free cash flow. Definitions and reconciliations are available in our disclosure materiallys unless otherwise noted. Market share data is sourced from High Fire Weed Crawler, Provincial Boards, retailers and our own internal sales tracking. Discussing our results today are James Yamanaka and Greg Guyet, CEO and CFO of Organigram Global respectively. Once again I welcome you to today's call and with that I will turn the call over to James.
James Yamanaka (CEO)
Thank you Max and good morning everyone. Thank you for joining us today. It's now been about four months since I joined Organigram and after an initial period of deep operational review across the business, my focus remains on execution, leveraging our strengths, addressing areas for improvement and fully realizing the financial and strategic contributions of Sanity Group in Q3 and beyond. Overall, the company has meaningfully repositioned itself for expansion. However, Q2 was a challenging quarter with the Canadian recreational market growth being called down from 5% to 2.2%, operational issues temporarily impacting our performance in vapes and infused pre rolls and improving but elevated levels of out of spec International Flower which we continue to work through. Before getting into our quarterly highlights, I'll walk through these challenges and how we are addressing them in pre rolls. Coded Indica Pre-Rolls (Indica Pre-Rolls) quality inconsistencies following the internalization of pre rolled production at Aylmer and the use of new production equivalent introduced higher variability and fill rates and lower overall product consistency as we calibrated our processes. The result was lower repurchase rates and a 1.6 point share loss in overall pre rolls versus the prior period that is not acceptable to us. In response, we tightened quality control processes and implemented production changes to enhance consistency Pre rolls coming off the line today are already more consistently filled and coded and we expect to introduce IPR (Indica Pre-Rolls) coding automation in the near term to ensure consistency remains at acceptable levels. In vapes, segments of our portfolio fell below competitive benchmarks on both pricing and potency, contributing to share erosion across five 10s and all in ones. A key driver of the 6.1 point year over year share decline was our over indexing toward lower potency 1.2 gram vapes as consumer demand shifted toward higher potency 1 gram formats. To address this, we are launching higher potency offerings offerings and refreshing both product and hardware including Box Hot, Liquid Diamond, all in ones in the coming weeks. On International Flower on spec pass rates have improved from Q1 due to adjustments we've made to our post office processes. Quarter over quarter growth in international sales from 5 million in Q1 to 6.1 million in Q2 reflects that progress. However, there is more work to be done here to bring our on spec volumes up to international levels. We expect continued improvement in Q3, supporting both revenue and margin expansion in the back half of the year. Despite these challenge challenges, we delivered strength across a number of other areas. In flower, we gained 2.2 share points year over year driven by strong performance from big bag of buds and key cultivars such as Purple Punch out and Ultra Sour as well as very strong reception for our new root beer cultivar. These gains reflect continued improvements in flower potency, quality and consistency, strengths we expect to carry into upcoming pre roll and milled flour launches and our summer shred retail activations. In edibles, we gained 1.8 share points year over year while beverages and concentrates grew 0.7 and 3.1 3.1 points respectively. We attribute this growth to innovation including new beverage launches such as shred shots featuring our fast technology as well as continued momentum in products like Shreddham's Max 10s and box hot with Diamonds. While we saw increased competition in mills flour and modest share declines year over year, we returned to growth sequentially and held a leading 38.9% share in that segment. Overall. Organigram remains the number one LP in Canada by market share. In Q2 we maintain leadership positions in the key markets of Ontario, British Columbia and Alberta while continuing to build momentum. In Quebec, we Now rank number three in the province reaching 11.3% market share as of the end of March, a 2.6 point increase year over year, and are the fastest growing LP in Quebec fiscal year to date. This performance has been driven by strong Quebec Vape and flower sales contributing approximately 25 million in retail sales in the province during the quarter. Across our portfolio of industry leading brands, Shred Box Hot and Big Bag of Buds were all ranked within the top eight brands nationally. Big Bag of Buds is the fastest growing flower band in the country, Box hot is a number one concentrates and number two vape brand and Shred alone would rank as a top 10 LP by its market share. Taken together with the operational remediation and product enhancements underway in vapes and infused pre rolls, we are confident in our ability to regain share and drive stronger growth in the back half. Moving on to our international business, the completion of our Sanity Group acquisition in April marks a significant milestone for Organigram, creating a combined entity with leadership positions in the world's two largest federally legal cannabis markets, Canada and Germany. With growth initiatives underway in Switzerland, the uk, Poland and the Czech Republic, Sanity Group is expected to generate on average approximately 25 million euros in quarterly revenue over the next year and serves as a platform to scale across Europe as the market continues to evolve toward more structured medical frameworks. From an integration standpoint, Sanity Group will operate fairly independently in the first year, allowing the team to remain focused on execution and growth within its core markets while receiving strategic support and supply from global organigram resources where appropriate. Outside of Europe, we continue to supply flour to partners in Australia, where we also recently launched vape and edible SKUs under our box Hot and Edison brands, expanding beyond wholesale flower into branded sales. Our products are expected to be available to more than 4,000 pharmacies nationwide as distribution rolls out. Regarding recent cannabis rescheduling in the US we are watching closely. It is too early to determine which pathways, if any, to accessing the US medical markets are viable for us. Our two US Strategic investments will likely benefit from these developments and we continue to evaluate opportunities as the regulatory landscape evolves. Finally, with respect to EU GMP certification, in April we provided all additional documentation requested by the regular regulator to date to support the closure of all major findings identified in our certification audit. Given the increased scrutiny of licensed licensed producers seeking EU GMP status, it is difficult to predict timing, but we expect an update on certification in the coming months. Turning to operations Notwithstanding the quality control improvement we've already implemented in IPR production, we are seeing continued improvement in several areas. In Q2 we achieved a record quarterly harvest of over 32,000 kg supported by yield improvements, while average TFC at our Moncton facility TFC reached 29.8%, the highest level to date. Looking back at Q2 last year, our yield improvements equate to a 56% increase in capacity without expanding our facility footprint and and reducing our cultivation costs while we also continue to advance our genetics programs including the identification and deployment of powdery mildew resistant cultivars discussed last quarter, two resistant cultivars were launched in March. These advancements are contributing to lower plant care requirements, reduced input costs and improved yields. We are now expanding the program to target additional traits including terpene and aroma expression, color and broader resistance to mold and yeast. This work also dovetails with our seed based cultivation strategy which remains a key focus area in Q2. Approximately 25% of our harvest was grown from seed and we continue to evaluate opportunities to expand this approach to further reduce costs and increase consistency. Finally, in Winnipeg we continue to ramp up our beverage production line to meet the growing demand of the market and and we are already seeing a strong reception for our recently launched shred sodas which are expected to drive additional beverage growth in Q3. Overall, Q2 presented challenges that impacted our results and required us to move quickly to competitive and operational adjustments that we expect will support more sustainable performance over the back half of the year. Those adjustments are being closely monitored and early indicators suggest the actions already completed and underway are beginning to improve execution and stabilize performance across the impacted business segments. With stronger execution expected in our core business, further improvements, international performance, typical seasonal tailwinds and the addition of Sanity Group's financial contributions in Q3, we expect a stronger back half of the year supported by both revenue growth and margin expansion. With that, I'll turn over the call to Greg to provide additional details on our financial results.
Greg Guyet (CFO)
Thanks James. As James outlined, Q2 reflected a combination of market softness and more significantly, some execution driven challenges in vapes and infused pre rolls. Further, while we made progress improving the proportion of international flower meeting EU specifications, international growth in the quarter was constrained by lower than typical on spec volumes. Net revenue for the quarter was 59.8 million compared to 65.6 million in the prior year period, representing a year over year decline of about 9%. Quarterly revenue was primarily impacted by share erosion in vapes and infused pre rolls, but partially offset by continued strength in other parts of the portfolio. International revenue for Q2 was 6.1 million, which was flat year over year and up from 5 million in Q1. International shipments in the first half equaled 11.1 million, up from 9.4 million in the first half of fiscal 2025, an 18% improvement year over year. We expect the second half of fiscal 2026 to represent a material step change in international growth, especially as proportions of international flower meeting specifications continue to improve and we add the consolidated financials of sanity Group in Q3 adjusted gross margin for the quarter was 18.4 million compared to 21.9 million in the prior year period representing a decline of 16%. Our adjusted gross margin rate was 31%, a decrease of 200 basis points year over year. This decline was primarily driven by more value products representing a higher proportion of our mix and higher than typical returns on vapes, infused pre rolls and international flour. While margin performance in the quarter was below our expectations, it is important to note that the underlying cost structure continues to improve. Cultivation yields and realized synergies remain positive contributors and we expect those to become more visible as we regain competitiveness in vapes and infused pre rolls and and our international volume continues its previous growth trajectory. G and A expenses for the quarter were effectively flat compared to Q2 fiscal 2025 at 14.9 million. G&A reflected lower ERP implementation expenses offset by higher professional fees and a credit provision of approximately 800,000 due to the insolvency of a customer. As a percentage of net revenue, G and A was approximately 25% representing an increase of approximately 300 basis points year over year, largely due to lower revenue base in the quarter. We continue to expect GNA to trend down as a percentage of revenue as we move through the second half of the year. Sales and marketing expenses were 8.7 million compared to 7.5 million in the prior year period, representing 14.5% of net revenue. The increase reflects higher investments in advertising, promotions and trade marketing initiatives to support new product launches. In the current period, overall SGA as a percentage of revenue was 39%, an increase of 500 basis points year over year. Adjusted EBITDA for Q2 was 0.9 million compared to 4.9 million in the prior year period. The decline was primarily driven by lower recreational revenue while operating expenses increased as a proportion of net revenue as well as lower gross margin. Net loss for the quarter was 0.9 million compared to net income of 42.5 million in the prior year period. The decrease in net income in the current period is primarily attributable to lower fair value gains on derivative liabilities and preferred shares, lower net revenue and gross margins, and an impairment of 5.8 million on our hemp derived products business in the US due to the change in the regulatory environment in the US From a cash flow standpoint, cash used by operating activities was 6.8 million compared to cash used of 16.6 million in the prior year period, representing favorable changes in working capital partially offset by lower adjusted EBITDA. It's worth noting that between Q1 and Q2 last year our inventory increased significantly due to the motif integration and new product launches. In Q2 of this year, inventory was flat compared to the prior quarter, reflecting tighter inventory management with clearer demand visibility. Free cash flow represented an outflow of 7 million in the quarter compared to an outflow of 23.1 million in the prior year period, primarily attributable to lower investment in working capital and lower capital expenditures. Regarding our liquidity position as of the end of Q2, OrganiGram had cash and equivalents of 54.8 million including 4.3 million of unrestricted cash. Subsequent to quarter end, we deployed the majority of our cash to fund the acquisition of Sanity group and secured 60 million in financing from ACB Financial to maintain financial flexibility. This includes 20 million non revolving term loan used in part to fund the acquisition, a 30 million revolving facility to support the Sanity earn out obligations and general corporate purposes, and a 10 million operating facility for general corporate purposes. Following the transaction, we had approximately 40 million of available liquidity on our credit facilities. The financial impact of the competitive and operational challenges we experienced earlier in the year was largely realized in the first half of fiscal 2026 and we are now seeing performance stabilize in the second half of fiscal 2026. While margins and profitability were impacted in the quarter, the underlying cost structure continues to improve, supported by significantly higher yields, efficiency gains and prior investments in automation, which positions us well to continue our previous trajectory of margin improvement and profitability. As we move into the second half of the year, we expect improvements in net revenue and adjusted gross margin along with sequential international revenue growth. Following the acquisition of Sanity Group, we are adjusting our fiscal 2026 guidance now projecting net revenue to exceed 350 million in fiscal 2026 with adjusted EBITDA and adjusted gross margin exceeding our fiscal 2025 performance, free cash flow approximately break even and less than 10 million in capital expenditures based on assumptions that we continue to have a strong innovation pipeline, increasing international sales, high cannabis quality and higher potency, and receipt of our EU GMP certification. With that, we'll open up the call for questions.
OPERATOR
We'll now begin the question and answer session. Please limit yourself to one question and one follow up. You may re queue for additional questions. If you'd like to ask a question, please press Star one to raise your hand and to withdraw your question, press Star one. Again, we ask that you pick up your handset when asking a question to allow for optimum sound quality if you're muted locally. Please remember to unmute your device. Please stand by while we compile the Q and A roster. Your first question comes from the line of Aaron Gray at agp. Your line is open. Please go ahead.
Aaron Gray (Equity Analyst)
Hi, good morning and thank you very much for the questions. I guess first, to start off, you gave a lot of color in the prepared remarks, but just kind of take maybe a high level view to make sure we have an understanding. You've obviously done a lot of work to improve the yields, you know, over the past, you know, two years. So just as we understand some of the issues that occurred during the quarter, just give us some of the confidence that you feel like you are on the other side of it and you're going to start to see some of the improvements that you talked about in terms of pre roll and others. I know some of it was bringing it in house, so just some of the confidence that you have that it was more of a short term hiccup and you're going to be able to rebound back to some of the market share dominance that you've had in Canada. Thank you.
James Yamanaka (CEO)
Sure, I can take that question. This is James. The issues that happened the quarter, as you mentioned on the IPR (Indica Pre-Rolls) line, what happened is we in house and we had to do it a little quicker than we wanted to because of the CCA (Cannabis Compliance Authority) status of the previous supplier. We've gotten on top of it, We've taken a look, we've already taken a lot of remediation actions and we're already seeing an improvement in the quality which we think will be able to continue to prove over Q3 and Q4. In terms of vapor, there was an issue with a new device component, again which we have identified and are fixing and again confident that will improve in Q3 and Q4 when it comes to the out of spec. Yes, there was great performance, I think in terms of improving the yields. It did put pressure on the downstream drying capacity. But we're seeing sequential improvement in the pass rate time over time. And I think you could see it in the quarterly increase in the shipments that we had internationally. It's one of those things that, you know, the microbial issues are one of those things that you have to be constantly on top of. But I think in all three of the operational areas, which unfortunately all happen to happen at the same time, we have identified the fundamental issues and I think we're already seeing some initial indicators in all three and we do expect improvement over Q3 and Q4. Okay, thanks for that color. James, question for me. Just as we think about the US and rescheduling, you know, how should we think about the opportunities, particularly given the investment vehicle that you have shared with bat, does this open up more opportunities, particularly on the medical side, to make more investments, potentially even consolidate them? And do you think more now about, you know, plant touching state legal medical markets giving the language within the reschedule? Yeah, I think that you remember we're not a plant touching player in the US at the moment. We are looking into it and I think we'll look at what might be some viable options for us in the US I think for the moment though, the focus of the business is really on operational fixing the issue that we had in Canada in the previous quarter and really supporting the sanity group group to grow into the second half of the year. I think with the growth in the European markets and in Germany in particular, we want to focus on really growing that part of the business because it's been the best short term opportunity and mid term opportunity for that matter. But we will of course be monitoring and we're looking at what options there are in the US at the moment. But as a non-player at the moment at the moment, it's not an immediate impact on us.
Aaron Gray (Equity Analyst)
Okay, great. Thanks for the caller. I'll go and jump back in the queue.
OPERATOR
Your next question comes from the line of Kenrich Tighe at Canaccord Genuity. Your line is open. Please go ahead.
Kenrich Tighe (Equity Analyst)
Thank you. Good morning. Your commentary sort of calls out largely internal issues with respect to your IPR and vapes. But what I'd like to focus on, you could perhaps bucket for us is how much of the impact was also competitive intensity based. We saw a few of your key competitors launching some very successful product end market in those categories. So it sounds if it was a combination of the manufacturing issues you've called out but also a step change in competitive intensity. How do you address the competitive intensity piece of this given that by your comments it sounds if you're largely dealing with your internal issues.
James Yamanaka (CEO)
Yeah, I mean, you know, like in any quarter there were competitive issues. I'd say if I was looking at the issues it was probably, you know, 70, 30 on the internal issues versus competitive issues. The way we're addressing it is very specifically in vapes. We now have a competitive product. We're launching a few new products to make sure that we're competitive in terms of the potency levels and in vaping. We also have new devices and liquids that we're going to be putting into the market. So we have a direct response which I think we have a fair amount of confidence in that these will be well accepted in the market. And in terms of IPRs (Indica Pre-Rolls), I would say that was primarily the internal issues that happened when we moved the we had to step up the internalization of the IPR production in the market. So yes there is always competition but I think, you know, we need to fix our quality issues and I think we're putting into the enter the market in the next few months offers that will be quite competitive and supported by the campaigns and the usual seasonal impact of the Q3 and Q4 growth.
Kenrich Tighe (Equity Analyst)
Thanks Jims. And just a quick follow up for me with respect to international is this a function of how much supply there is in market that the regulators are being just that much more particular around the requirements not because the requirements have changed but that the margin of error has perhaps decreased or is this very specifically challenged that you faced in quarter with flower into the market?
James Yamanaka (CEO)
Yeah, I think it's a combination of two things. I think the European regulators are certainly, you know, looking at in terms of regulation they are, you know, stepping up their assessment of the things coming in. I think some of this though again is it's always challenging to manage the micros and you'll see that, you know many competitors, many of the players in the industry have similar issues. At the same time we I think have identified some of the main drivers and particularly in the drying capacity and procedures and procedures to be able to address those issues. And as I mentioned earlier we are sort of seeing sequential improvement in pass rates and we are able to ship, we were able to ship more to our international business in Q1, Q2 versus Q1 and we're expecting that continue at the same time we're looking at different remediation pathways to manage the risk over time so that we can continue to supply both Sanity Group and our other international customers.
Kenrich Tighe (Equity Analyst)
Great. Thanks so much. I'll get back in. Kieran? Yeah.
OPERATOR
Your next question comes from the line of Frederico Gomez at ATB Cormac Capital Markets. Your line is open. Please go ahead.
Greg Guyet (CFO)
Hi. Morning. Thanks for taking the questions here. Just going back to international do you have any estimate of what international sales would have been if not for the auto spec product? I don't have a specific figure for it. Greg, do you have anything on that? I mean it would have been higher. I don't have a specific number. Greg, do you have that? Yeah, I think in terms of the sales opportunity, there's probably about 4 to 5 million of international sales that we missed out on as a result of the auspect product. So a meaningful amount.
James Yamanaka (CEO)
Perfect, thanks for that. And then just a broader on the Canadian market you mentioned, I guess the overall market sort of slowed down recently. I think we've seen that in the market data. Can you talk about that? Do you expect a recovery in the overall market in terms of growth or do you think we're going to be flat for this year? And how is that impacting potentially consumer behavior in terms of shifting in product mix? Maybe higher price product versus lower price product, Any color on the overall use of the market. Thank you. Yeah, I think, you know, as we did mention that the market didn't grow about 2.2% versus the 5% we expected at the beginning of the year, which is, you know, an impact if you take our fair share of about 9 million in net revenue for us alone. You know, I do, I don't expect sort of a ramp up into double digits again, but I would say something between the 2 to 4% rate would not be unreasonable. As a, as looking at the market going forward, you are seeing some impacts in specific areas. Say, you know, in Ontario, for example, in, in the, in the parts of the, of the market where, which are heavily impacted by the U S Tariffs, you are seeing lower sort of basket purchase rates in those markets and you know, some level of, of down trading. But it's not sort of. We haven't seen it at a national level, but there's certainly pockets of the country which are impacted by the current economy where you're seeing different consumer behavior again. But as at the moment it does seem confined to specific areas, but it's something to watch going forward.
Frederico Gomez (Analyst)
Perfect. Thank you very much.
OPERATOR
Your next question comes from the line of Pablo Zuanik and associates. Your line is open. Please go ahead.
Greg Guyet (CFO)
Good morning everyone and thank you for taking the questions. Look, I just want to go back to the guidance commentary on the moving from 300 to 350 million. How much of that 50 million is coming from the higher spread capture now which would have been from OGI product right now being sold towards the downstream. And how much of a 50 million would be sales that Sanity was doing or selling from other suppliers? Can you just roughly break that out? Sure. Thanks, Pablo. So out of the increased sales we're expecting 25 million euros roughly on average from Sanity group. So strong growth there in terms of adding back from the 300 million guidance that we had before, we have to take out the amount of sales that we had previously recognized on direct shipments to Sanity and recognize it upon sale to the ultimate customer by Sanity Group. So I'd say, you know, the majority of the increase is from Sanity Group, partially offset by some softness in the core organigram business. Right. And then, and then just to follow up on, I mean, when you announced the deal, if I'm not mistaken, the sales that were given for sanity were 50 million euros with 19 million in the fourth quarter quarter. Right. So that would have been like roughly what, 76 million euros in Canadian dollars. It would have been about 120. I'm just. There seems to be a bigger drop off in the sales number of Sanity. Or maybe my math is wrong. No, I think the number you're referring to was the. Was the run rate as of Q4 wasn't their actual annual number. No, I know, I know the annual number was €50, but the fourth quarter run rate was 19 million times 4. €76. Right. That would have been about 120 million Canadian. But. So I'm just trying to reconcile the 120 million Canadian with a new number. But, but again, my math would be wrong. Thanks.
James Yamanaka (CEO)
No, the. So for the, the next two calendar quarter, for the next two calendar quarters, we're expecting 25 million euros from sanity. So an average of 50 million for the back half of the year. So that brings it to at least 100 million euros versus what they had last year. Right. Okay. No, that's good. And then just if I may, in the case of Sanity, can you expand in terms of their opportunities or their current presence in markets outside Germany, particularly in the UK and in the case of Switzerland, if you can just give us a reminder of what they have and the potential for growth there. Thank you. Yeah. Do you want to tackle. Sure, I can take that one. So Sanity Group does export medical product to the UK and they'll continue to do that. And Organigram also separately was exporting flour to the uk and we'll look at how to consolidate those businesses going forward. In Switzerland, it's actually quite an exciting opportunity where there is a recreational pilot. Sanity is in two of the cantons as one of the only players in the market where they have. They're working on the pilot and we expect that the recreational market in Switzerland will open around 2028. And it's a very interesting small but very high margin market. So it's an exciting sort of pilot there that sanity is in lead position on. They are also selling into Poland and the Czech Republic and we'll continue to support those efforts to expand into those markets. But the focus of Sanita Group is Germany as the main one because this is by far the biggest growth potential and largest market in Europe. But I think there's some interesting opportunities, particularly in Switzerland and the UK to drive additional revenue and margin through the future. Right, thank you. And if I may, I'm going to ask you to add one more question here. I know there's a lot of TBD in the case of what happens in the us how the rules change, but assuming that they do not allow exports and that they do not allow interstate trade, would you still be interested in investing in the medical operators with every state being their own island? Or for you, exports and interest rate would be a necessary requirement for you to invest in the U.S. look, I think we'll continue to look at all of the opportunities. I think the key for us is to really look at where if we did invest, what is the real potential? What optionality does it give us? Does it give us a real chance to compete long term in those markets or not? And I think we'll be prudent in where we go and we'll have to weigh it against the opportunities to invest in, you know, in all the markets that Sanity is talking about. And what's that return on investment we'll get from those? I mean, the US is, you know, obviously by far the largest market in the world. But I think, you know, we'll invest if there's an opportunity, if the regulatory situation is right, if the cost is right. And we think we have a legitimate chance to build some optionality to grow for the future. But we'll always balance it against the other options we have, whether it's domestically in Canada and probably more likely over the next few years in Europe, using the resources, the capabilities of the Sanity group.
Pablo Zuanik (Analyst)
Thank you.
OPERATOR
We've now reached the end of the Q and A session. I'll turn the call back to James for closing remarks.
James Yamanaka (CEO)
Thank you much. Thank you very much everyone for your time. Just to sum it up, it was a challenging quarter. It was driven by primarily by specific operational issues that we are addressing and we have great confidence in our ability to turn that around in Q3 and Q4. And we're very excited about the growth potential of Sanity Group in our other markets in the world. So thank you very much once again for your attention and for the questions that we all received. Have a Good day, everyone.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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