Auxly Reports 2025 First Quarter Results

, /PRNewswire/ - Auxly Cannabis Group Inc. (TSX: XLY) (OTCQB: CBWTF) ("Auxly" or the "Company") a leading consumer packaged goods company in the cannabis products market, today released its financial results for the three months ended March 31, 2025. These filings and additional information regarding Auxly are available for review on SEDAR at www.sedar.com. Financial highlights for the first quarter ended March 31, 2025: Net revenues of $32.7 million, an increase of 29% compared to the same period in 2024. Gross Margin on Finished Cannabis Inventory Sold1 of 48%, an increase of 1,000 bps or 26%, compared to the same period in 2024. SG&A of $9.7 million, an increase of 12% compared to the same period in 2024. Adjusted EBITDA1 of $7.4 million, or 23% of net revenue, an increase of 232% compared to the same period in 2024. Cash flow from operations of $2.0 million and cash at quarter end totalled $17.1 million. Reduced debt1 by another 5% from the end of 2024. Commercial highlights for the first quarter ended March 31, 2025: #4 largest Canadian Licensed Producer with market share of 5.8% at quarter end2. Back Forty exited the quarter as the #1 cannabis brand in Canada. Launched new cultivar Chemzilla in Ontario which rose to become the #1 SKU in the 14g flower category, reinforcing the strength of the Back Forty brand. Maintained a leadership position in the competitive vapour category, holding ten of the top fifteen all-in-one SKU positions nationally. Back Forty remained the #1 non-infused pre-roll brand in Ontario, supported by the launch of high THC cultivars Lemon Diesel and Pine Tar Kush. ____________________________________ 1 Non-IFRS or supplementary financial measure. Refer to the Non-GAAP Measures section in the MD&A for definitions. 2 Hifyre IQ, as of April 2025 Management Commentary Hugo Alves, CEO of Auxly, commented: "We are pleased to report another exceptional quarter of financial and commercial performance, highlighted by a 29% year-over-year increase in net revenue, and a 232% improvement in adjusted EBITDA. These results reflect the successful execution of our strategy and our focus on teamwork, innovation, and operational efficiency. We continued to see strong growth in distribution, driven in particular by the expanding reach of our flower portfolio. As we continue to strengthen our balance sheet and reduce debt, we are building a solid foundation for long-term leadership and sustainable growth. The future of Auxly is bright and we're just getting started." Financial Highlights and Key Performance Indicators For the three months ended: March 31, March 31, (000's) 2025 2024 Change % Change Net revenues $ 32,669 $ 25,241 $ 7,428 29 % Gross margin on finished cannabis inventory sold* 15,831 9,569 6,262 65 % Gross margin on finished cannabis inventory sold (%)* 48 % 38 % 10 % 26 % Net income/(loss) 12,111 (26,012) 38,123 147 % Adjusted EBITDA* 7,433 2,240 5,193 232 % Weighted average shares outstanding 1,310,291,543 1,016,839,478 293,452,065 29 % As at: March 31, December 31, (000's) 2025 2024 Change % Change Cash and equivalents $ 17,112 $ 18,356 $ (1,244) -7 % Total assets 264,820 261,530 3,290 1 % Debt* 52,091 55,683 (2,592) -5 % *Non-IFRS or supplementary financial measure. Refer to the Non-GAAP Measures section in the MD&A for definitions. Results of Operations (000's) Three months ended: March 31, 2025 March 31, 2024 Revenues Revenue from sales of cannabis products $ 49,212 $ 38,357 Excise taxes (16,543) (13,116) Total Net Revenues 32,669 25,241 Cost of Sales Costs of finished cannabis inventory sold 16,838 15,672 Inventory impairment 123 456 Gross profit/(loss) excluding fair value items 15,708 9,113 Unrealized fair value gain/(loss) on biological transformation 12,312 2,773 Realized fair value gain/(loss) on inventory (9,337) (2,435) Gross profit 18,683 9,451 Expenses Selling, general, and administrative expenses 9,672 8,621 Equity-based compensation 1,505 1,927 Depreciation and amortization 1,296 1,230 Interest and accretion expense 2,147 6,868 Total expenses 14,620 18,646 Other incomes/(loss) Interest and other income 47 19 Gain/(loss) on settlement of assets and liabilities and other expenses 39 (634) Foreign exchange gain/(loss) (163) (210) Total other income/(loss) (77) (825) Net income/(loss) before income tax 3,986 (10,020) Income tax recovery/(expense) 8,125 (15,992) Net income/(loss) $ 12,111 $(26,012) Adjusted EBITDA $ 7,433 $ 2,240 Net income/(loss) per common share – basic and diluted ($) $ 0.01 $ (0.03) Weighted average shares outstanding – basic 1,310,291,543 1,016,839,478 Weighted average shares outstanding – diluted 1,365,880,272 1,016,839,478 Net Revenues For the three months ended March 31, 2025, net revenues were $32.7 million as compared to $25.2 million during the same period in 2024, representing increases of 29%. Revenues for the three months ended March 31, 2025 were comprised of approximately 63% (2024 – 59%) in sales of dried flower and pre-roll Cannabis Products, with the remainder from oils and Cannabis 2.0 Product sales. During the first quarter of 2025, approximately 75% (2024 – 76%) of cannabis sales originated from sales to British Columbia, Alberta and Ontario. Since 2024, the Company had sales in all Canadian provinces and the Yukon and Northwest Territories. Gross Profit Auxly realized a gross profit of $18.7 million for the three months ended March 31, 2025, resulting in a 57% Gross Profit Margin as compared to $9.5 million or 37% during the same periods in 2024. The Gross Margin on Finished Cannabis Inventory Sold for the three months ended March 31, 2025 improved to 48% versus 38% in 2024 as a result of the streamlining and improvements made in our manufacturing process to reduce operating costs and increased demand and pricing of adult-use recreational market and bulk flower products. Higher cultivation yields lowered costs, and efficiency improvements at our Auxly Charlottetown facility further reduced costs. Realized and unrealized fair value gains and losses reflect accounting treatments associated with Auxly Leamington cultivation activities and sales and are influenced by changes in production, sales and net realizable value assumptions. Inventory impairments during the first quarter of 2025 of $0.1 million were associated with charges related to reductions in net realizable value of dried cannabis under the Company's product specifications, a decrease of $0.3 million from the comparative period. Total Expenses Selling, general and administrative expenses ("SG&A") are comprised of wages and benefits, office and administrative, professional fees, business development, and selling expenses. SG&A expenses were $9.7 million in the first quarter of 2025, $1.1 million or 12% higher than the same period in 2024. The increase in SG&A was primarily driven by investments to support higher sales. Wages and benefits were $4.7 million for the quarter, as compared to $4.3 million during the same period in 2024. Wages and benefits increased compared to 2024 due to an increase in bonus accruals which was partially offset by cost savings from the streamlining of operations and support staff as a result of a more focused product portfolio. Office and administrative expenses were $1.6 million for the quarter, $0.2 million higher than the same period in 2024. The Company continues to actively control overhead spend in the organization while growing sales. Auxly's professional fees were $0.3 million during the first quarter of 2025, $0.2 million lower than 2024. Professional fees incurred primarily related to accounting fees, regulatory matters, reporting issuer fees, and legal fees associated with certain corporate activities and as a result can fluctuate significantly from one period to the next. Business development expenses were $nil for three months ended March 31, 2025 as compared to $0.1 million for the same period in 2024. These expenses primarily relate to business development and travel related expenses. Selling expenses were $3.1 million for the three months ended March 31, 2025, an increase of $0.7 million from the same periods in 2024. The increase in expenditures was primarily as a result of investments in marketing initiatives and higher Health Canada fees related to higher revenues. Equity-based compensation for the quarter was $1.5 million, primarily driven by the Cash Settled RSUs granted in 2023 and RSUs issued in 2024. During the same period in 2024, equity-based compensation was $1.9 million. Depreciation and amortization expenses were $1.3 million for the three months ended March 31, 2025, representing an increase of $0.1 million over the same period in 2024 as a result of capital investments made during 2024. Interest expenses were $2.2 million for the three months ended March 31, 2025, a decrease of $4.7 million over the same period in 2024. The decrease in expenses were primarily a result of the conversion of Imperial Debentures into Shares and lower interest expense on adjustable-rate debt. Interest expense includes accretion on the convertible debentures and interest paid in kind on the Imperial Debenture. Interest payable in cash was approximately $1.8 million for the first quarter of 2025, $0.5 million lower than the same period in 2024 as a result of lower principal amounts outstanding on debt instruments. Total Other Incomes and Losses Total other incomes and losses was a net loss of $0.1 million for the three months ended March 31, 2025, compared to a net loss of $0.8 million in the same period in 2024. The other incomes and losses in the first quarter of 2025 were primarily driven by foreign exchange losses. The other incomes and losses in the first quarter of 2024 were primarily driven by the loss on the adjustment to the provision related to the claim filed by Kindred Partners Inc. and foreign exchange losses. Net Income and Loss Net income for the three months ended March 31, 2025 was $12.1 million, representing a net income of $0.01 per share on a basic and diluted basis. The net income of $12.1 million in 2025 includes $8.1 million of deferred tax recovery related to the change in estimated useful life of intangible assets. The net loss of $26.0 million for the three months ended March 31, 2024 included $16.0 million of deferred tax expense on the conversion of Imperial Debenture into Shares. Excluding the deferred tax recovery related to the change in estimated useful life of intangible assets in 2025 and the deferred tax expense on the conversion of Imperial Debenture into Shares in 2024, net income increased by $14.0 million primarily due to improved gross profits and reduction in interest and accretion expenses. Adjusted EBITDA Adjusted EBITDA was $7.4 million for the quarter, an improvement of $5.2 million when compared to $2.2 million during the same period in 2024. Adjusted EBITDA for the three months ended March 31, 2025 improved primarily as a result of improved gross profits. Outlook The Company remains focused on achieving long-term, profitable growth by strengthening its leadership position in the Canadian cannabis market. Auxly consistently develops and commercializes products that resonate with Canadian consumers under trusted brands known for quality and consistency and will continue to execute against its strategy of focused innovation, enhanced product distribution, operational efficiency, and debt reduction. In the quarter, the Company reported net revenues of $32.7 million, a 29% increase year-over-year, driven by strong performance across key product categories. Liquid Imagination 28G remained a top-selling dried flower SKU, while the launch of Chemzilla 14G supported flower portfolio diversification and product mix optimization. The Fire Breath cultivar, originally launched in late 2024 in Quebec and Ontario, has expanded distribution in British Columbia, Nova Scotia and PEI, aligning with our national growth strategy. The Company has continued to strengthen its position in the value segment through the expansion of milled flower offerings. The Company continues to defend its leadership position in the competitive vape category. During the quarter, the Company launched a new flavor within the Back Forty all-in-one vape line-up, which quickly became a top-selling SKU. This strong consumer uptake reflects the brand equity that the Company has built in the category, as consumers were eager to trial the new flavor offering. In the pre-roll category, the Company refreshed its product portfolio led by the successful launch of Lemon Diesel and Pine Tar Kush which drove incremental volumes. Gross margin on finished cannabis inventory sold improved to 48% in the quarter, compared to 38% in the same period of 2024, driven by higher cultivation yields, improved product pricing in the adult-use market, and a refined customer mix. SG&A expenses were $9.7 million, a 12% increase year-over-year, primarily reflecting strategic investments to support higher sales volumes, build brand equity, expand distribution networks, and deepen retail relationships — critical barriers to entry in a competitive market. Auxly remains committed to strengthening its balance sheet. During the quarter, the Company continued to reduce its debt and remained actively engaged with its creditors to manage liabilities and ensure working capital flexibility to fund future growth initiatives. The Company remains confident in its ability to deliver sustainable, profitable growth through a focus on innovation, operational excellence, and disciplined execution. By advancing its strategic priorities, Auxly aims to reinforce its leadership in the Canadian cannabis market, build a strong foundation for future global opportunities, and create long-term value for all stakeholders. Non- GAAP Measures Please see the Company's MD&A dated May 14, 2025, under "Non-GAAP Measures" for a further description of the following financial and supplementary financial measures. Financial Measures EBITDA and Adjusted EBITDA These are non-GAAP measures used in the cannabis industry and by the Company to assess operating performance removing the impacts and volatility of non-cash and other adjustments. The definition may differ by issuer. The Adjusted EBITDA reconciliation is as follows: (000's) Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 Q1/25 Net income/(loss) $ (12,863) $ 32,621 $ (54,020) $(26,012) $ 2,002 $ 3,239 $ 4,423 $12,111 Interest and accretion expense 6,457 6,613 6,837 6,868 2,749 3,133 2,291 2,147 Interest and other income 20 (16) (22) (19) (140) (54) (27) (47) Income tax expense/(recovery) - - (3,238) 15,992 - - - (8,125) Depreciation and amortization included in cost of sales 911 1,151 1,084 1,292 1,780 1,382 1,338 1,274 Depreciation and amortization included in expenses 1,673 1,817 1,708 1,230 1,067 1,197 990 1,296 EBITDA (3,802) 42,186 (47,651) (649) 7,458 8,897 9,015 8,656 Impairment of inventory 1,459 3,233 5,109 456 473 674 729 123 Unrealized fair value loss/(gain) on biological transformation (4,713) (4,766) (2,481) (2,773) (8,817) (9,964) (11,073) (12,312) Realized fair value loss/(gain) on inventory 3,146 5,538 5,428 2,435 4,464 7,703 11,625 9,337 Restructuring and acquisition costs 86 29 131 - 655 (75) 271 - Equity-based compensation 377 707 148 1,927 701 1,324 1,103 1,505 Impairment of assets 2,588 - 37,118 - - - - - Non-recurring bad debt expense/(recovery) 780 360 - - - (123) - - (Gain)/loss on settlement of assets, liabilities and disposals (1,478) (46,887) 4,006 634 62 (183) (1,461) (39) Foreign exchange loss/(gain) 479 (283) 486 210 177 33 797 163 Adjusted EBITDA $ (1,078) $ 117 $ 2,294 $ 2,240 $ 5,173 $ 8,286 $ 11,006 $ 7,433 Supplementary Financial Measures Gross Margin on Finished Cannabis Inventory Sold "Gross Margin on Finished Cannabis Inventory Sold" is a supplementary financial measure and is defined as net revenues less cost of finished cannabis inventory sold divided by net revenues. Gross Profit Margin "Gross Profit Margin" is defined as gross profit divided by net revenues. Gross Profit Margin is a supplementary financial measure. Debt "Debt" is defined as current and long-term debt and is a supplementary financial measure. It is a useful measure in managing the Company's capital structure and financing requirements. ON BEHALF OF THE BOARD "Hugo Alves" CEO About Auxly Cannabis Group Inc. (TSX: XLY) Auxly is a leading Canadian consumer packaged goods company in the cannabis products market, headquartered in Toronto, Canada. Our mission is to help consumers live happier lives through quality cannabis products that they trust and love. Our vision is to be a leader in branded cannabis products that deliver on our consumer promise of quality, safety and efficacy. Learn more at www.auxly.com and stay up to date at Twitter: @AuxlyGroup; Instagram: @auxlygroup; Facebook: @auxlygroup; LinkedIn: company/auxlygroup/. Notice Regarding Forward Looking Information: This news release contains certain "forward‐looking information" within the meaning of applicable Canadian securities law. Forward‐looking information is frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or information that certain events or conditions "may" or "will" occur. This information is only a prediction. Various assumptions were used in drawing the conclusions or making the projections contained in the forward‐looking information throughout this news release. Forward‐looking information includes, but is not limited to: the proposed operation of Auxly, its subsidiaries and partners; the intention to grow the business, operations and existing and potential activities of Auxly; proposed timelines for the build‐out, expansion, licencing or commercialization of the Company's facilities and projects; the Company's execution of its innovative product development, commercialization strategy and expansion plans; the Company's intention to introduce innovative new cannabis products to the market and the timing thereof; the anticipated benefits of the Company's partnerships, research and development initiatives and other commercial arrangements; the expectation, timing and quantum of future revenues, Gross Margin on Finished Cannabis Inventory Sold, SG&A and of positive Adjusted EBITDA; expectations regarding the Company's expansion of sales, operations and investment into foreign jurisdictions; future legislative and regulatory developments involving cannabis and cannabis products; the timing and outcomes of regulatory or intellectual property decisions; the ability of the Company to maintain and grow its market share; the relevance of Auxly's subsidiaries' current and proposed products with provincial purchasers and consumers; consumer preferences; political change; competition and other risks affecting the Company in particular and the cannabis industry generally. A number of factors could cause actual results to differ materially from a conclusion, forecast or projection contained in the forward‐looking information in this release including, but not limited to, whether: the Company will be able to execute on its business strategy or achieve its goals; Auxly's subsidiaries are able to maintain the necessary governmental and regulatory authorizations to conduct business; the Company is able to successfully manage the integration of its various business units with its own; the Company's subsidiaries obtain and maintain all necessary governmental and regulatory permits and approvals for the operation of their facilities and the development of cannabis products, and whether such permits and approvals can be obtained in a timely manner; the Company will be able to successfully launch new product formats and enter into new markets; there is acceptance and demand for current and future Company products by consumers and provincial purchasers; the Company will be able to increase and maintain revenues, maintain positive Adjusted EBITDA, and/or achieve and maintain its target Gross Margin on Finished Cannabis Inventory Sold; risks relating to the overall macroeconomic environment, which may impact customer spending, the Company's costs and margins, including tariffs (and related retaliatory measures), the levels of inflation, and interest rates; and general economic, financial market, legislative, regulatory, competitive and political conditions in which the Company and its subsidiaries and partners operate will remain the same. Additional risk factors are disclosed in the annual information form of the Company for the financial year ended December 31, 2024 dated March 20, 2025. New factors emerge from time to time, and it is not possible for management to predict all of those factors or to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward‐looking information. The forward‐looking information in this release is based on information currently available and what management believes are reasonable assumptions. Forward‐ looking information speaks only to such assumptions as of the date of this release. In addition, this release may contain forward‐looking information attributed to third party industry sources, the accuracy of which has not been verified by the Company. The forward‐looking information is being provided for the purposes of assisting the reader in understanding the Company's financial performance, financial position and cash flows as at and for periods ended on certain dates and to present information about management's current expectations and plans relating to the future, and the reader is cautioned that such forward‐ looking information may not be appropriate for any other purpose. Readers should not place undue reliance on forward‐looking information contained in this release. The forward‐looking information contained in this release is expressly qualified by the foregoing cautionary statements and is made as of the date of this release. Except as may be required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward‐ looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise. Neither Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release. SOURCE Auxly Cannabis Group Inc. WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

Auxly Reports 2025 First Quarter Results

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