Auxly Cannabis Group Inc. announced a strong start to 2024, with record revenue, margin, and adjusted EBITDA in Q1.
However, the company reported a net loss of $26 million for the quarter ending March 31, 2024, up from a $10.2 million loss in Q1 2023.
The increase in losses is attributed to a deferred tax expense related to the conversion of Imperial Debenture into shares, partially offset by improved gross profits and lower expenses.
Financial Highlights
- Revenue: $38.4 million from cannabis product sales in Q1 2024, up from $37.5 million in Q1 2023.
- Excise Tax: $13.1 million, down from $13.6 million in Q1 2023.
- Gross Profit: $9.5 million, up from $7.9 million in Q1 2023.
- Adjusted EBITDA: $2.2 million, compared to $138,000 in Q1 2023.
- Wages and Benefits: $4.3 million, down from $4.7 million in Q1 2023, due to streamlining operations.
CEO Statement
“Following a transformative year for Auxly, we have maintained our positive momentum in the first quarter of 2024 and are continuing to achieve profitable growth,” said Hugo Alves, CEO of Auxly. "Q1 2024 was the best Q1 in Auxly history across key metrics of revenue, gross margin, and adjusted EBITDA. Our commitment to product quality, innovation, and distribution excellence drove our top-line sales growth year-over-year, and our continued focus on operational efficiency and prudent capital management helped us deliver another quarter of adjusted EBITDA profitability.”
Product and Market Expansion
Auxly’s brand portfolio includes Parcel, Back Forty, Foray, Dosecann, and Kolab Project. The company has listings in all Canadian provinces, the Yukon, and the Northwest Territories. In May 2024, Auxly launched its first branded product in Quebec, the Back Forty large format 0.75g three-pack pre-rolls. Auxly also conducts wholesale bulk sales of dried cannabis to other licensed producers in Canada.
Operations and Strategic Moves
Auxly’s operations are based in Charlottetown, PEI, Ottawa, and Leamington, Ontario. The company completed the Imperial Debt Conversion on March 28, 2024, converting $121.9 million of the principal amount into shares. Additionally, Auxly announced an amendment and extension of the Auxly Leamington Credit Facility with the Bank of Montreal, extending the maturity date to December 31, 2025, with an option to extend further by making a $2.5 million principal repayment.
Future and Concerns
The company acknowledges material uncertainty regarding its ability to sustain profitability and positive cash flows, which may cast doubt on its ability to continue as a going concern. If Auxly cannot generate sufficient cash flow, the carrying value of its assets could be subject to significant adjustments.
