The company released its financial results for the fourth quarter ending Dec. 31, 2022.
The company generated $94.5 million in net revenue for the year, an increase of 12.8% from the previous year’s revenue of $83.8 million.
The company’s revenue was generated from various sources, with approximately 42% of it from sales of dried flower and pre-roll cannabis products. The remainder of the revenue was from oils and cannabis 2.0 products such as edibles, extracts and topicals.
“The Canadian cannabis industry faced numerous challenges in 2022, and Auxly was not immune to their impacts,” CEO Hugo Alves said in a statement. “To better position the company within current industry realities, we adapted our strategy in the third quarter by streamlining our focus to the three largest Canadian product categories.”
Around 85% of the company’s revenue originated from sales in British Columbia, Alberta, and Ontario. The company does not participate in the Quebec market.
Auxly’s gross profit was $16.5 million, representing a decrease of $2.8 million versus the previous year. The gross profit margin for 2022 was 17%, which was lower than the previous year’s 23%. The lower gross profit margin was due to non-cash impairments and fair value adjustments.
Net losses totaled $130.3 million, representing a net loss of $0.15 per share, versus $45.9 million the year in 2021.
The company saw $24.7 million worth of revenue in the fourth quarter, around $4.6 million lower than the same period in 2021, though $4.9 million or 20% greater sequentially.
Amid the turbulence in Canadian cannabis, Auxly streamlined its product assortment, reduced costs, and internalized its sales team. As a result, the company saw improvements in margins, sales, and adjusted EBITDA.
The company’s selling, general, and administrative expenses (SG&A) were $46.7 million, representing a 5% increase compared to the previous year. This increase was primarily due to the full-year impact of the addition of Auxly Leamington expenditures.
Wages and benefits accounted for $18.7 million of the SG&A expenses, with the net increase being primarily due to the addition of Auxly Leamington.
The company reported a negative adjusted EBITDA of $16.9 million, which was an improvement from the previous year’s results.
In 2023, the company aims to increase net revenues by 15%, with a focus on key product categories and enhanced distribution.
Auxly is also aiming to manage SG&A expenses as a percentage of net revenues to keep it below 40%.