Auxly Cannabis Group Inc. (TSX: XLY) (OTCQB: CBWTF) reported its first quarter of positive adjusted EBITDA in company history, according to its financial results released today for the first fiscal period of 2023.
The Toronto-based company reported total net revenues of C$24 million in Q1 2023, marking a 6% increase from the same period in 2022. It retained its position as the fifth largest licensed producer in Canada, controlling a 5.7% market share. The company also boosted sales of Cannabis 1.0 products, increasing its market share from 3.7% in the previous quarter to 4.6%.
“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,” CEO Hugo Alves said in a statement.
Alves highlighted the company’s shift towards dried flower and pre-roll products, which contributed to an increase in the cost of finished cannabis inventory sold margin to 37%, up from 23% in the same period
The company achieved a gross profit of C$7.9 million in Q1 2023, an increase of C$4.2 million from the same period in 2022. Its gross profit margin stood at 33%, up from 16% in Q1 2022.
Auxly reduced its selling, general, and administrative expenses by 20% compared to Q1 2022, spending C$10.1 million. This was largely due to measures taken to reduce overhead costs after Q3 2022.
Net loss for the quarter was C$10.2 million, representing a net loss of one Canadian cent per share. The loss was largely driven by changes in other losses, improved gross profits, and lower total expenses.
Looking ahead, Auxly said it aims to continue to improve earnings performance, increase its focus on key product formats, lower costs, and increase efficiency. It expects to increase net revenues by 15%, continue leveraging its low-cost cultivation facility in Leamington, manage SG&A to keep it below 40% of net revenues, and streamline assets where possible.
“We are very pleased to have achieved the company’s first quarter of positive adjusted EBITDA,” Alves said. “We believe that we are on track to achieve our full-year plan.”