Auxly Cannabis Group Inc. Achieves Positive Adjusted EBITDA in Q1 2023
TORONTO–, Auxly Cannabis Group Inc. (TSX: XLY) announced its financial results for the first quarter ended March 31, 2023, revealing positive Adjusted EBITDA and notable revenue growth. The company, a leading player in the cannabis industry, reported total net revenues of $24.0 million, representing a 6% increase compared to the same period in 2022.
Auxly’s achievements in the first quarter of 2023 were highlighted by its first-ever positive Adjusted EBITDA, signaling a significant milestone in the company’s history. Additionally, Auxly retained its position as the fifth-largest licensed producer (LP) in Canada, capturing a 5.7% share of the market. Sales of Cannabis 1.0 products showed improvement, reaching a 4.6% share of the market, up from 3.7% in the previous quarter.
The Cost of Finished Cannabis Inventory Sold Margin demonstrated substantial growth, reaching 37% during the first quarter of 2023. This represents an increase from 23% in the same period of 2022 and 30% in the fourth quarter of 2022. The improvement in margin was attributed to a sales mix shift towards dried flower and pre-roll products, leveraging the cost structure of Auxly’s cultivation facility in Leamington.
Cash from continuing operating activities was $3.2 million during the first quarter of 2023, compared to a cash usage of $7.0 million in the same period of the previous year. This positive cash flow reflects Auxly’s efforts to enhance financial performance and operational efficiency.
Hugo Alves, CEO of Auxly, expressed satisfaction with the results, stating, “We are very pleased to have achieved the Company’s first quarter of positive Adjusted EBITDA. The results for the first quarter of 2023 continued to build upon the gains made in the fourth quarter of 2022, despite historical revenue headwinds in the first calendar quarter of the year.”
The company’s net revenues for the first quarter were driven by sales of dried flower and pre-roll cannabis products, which accounted for approximately 55% of total revenues. Auxly maintained its strong position in the market by focusing on key product categories, including Cannabis 2.0 products, while increasing its market share for Cannabis 1.0 products to 4.6%.
Auxly’s gross profit for the first quarter of 2023 reached $7.9 million, marking a significant improvement compared to the same period in 2022. The Gross Profit Margin rose to 33%, up from 16% in the first quarter of 2022. The Cost of Finished Cannabis Inventory Sold Margin, excluding non-cash amounts, increased to 37% during the first quarter, reflecting the company’s focus on low-cost cannabis cultivation and streamlining certain operational processes.
The company successfully managed its selling, general, and administrative expenses (SG&A) during the first quarter of 2023, achieving a 20% decrease compared to the same period in 2022. Auxly’s strategic efforts to reduce overhead and enhance cost efficiencies contributed to the positive financial results.
Looking ahead, Auxly aims to continue improving its earnings performance, focusing on key product formats, cost reduction, and increased efficiency. The company projects a 15% increase in net revenues for 2023, supported by enhanced distribution, an expanded product portfolio, and a dedicated internal sales team. Additionally, Auxly plans to maintain a blended Cost of Finished Cannabis Inventory Sold Margin between 35% and 40% by leveraging its low-cost cultivation facility and manufacturing automation.
Auxly Cannabis Group Inc. remains committed to delivering high-quality cannabis products that address the evolving needs of consumers while striving for financial excellence.
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