Auxly Cannabis Group Inc. (TSX:XLY) (OTCQ:CBWTF) released its financial results for the three months ended March 31, 2022, reporting net sales of CA$22.6 million ($17.49 million), up by 147% year-over-year. Net revenues improved as a result of the company's expansion into Cannabis 1.0.
Q1 2022 Financial And Operational Highlights
- Gross Profit was of CA$3.7 million resulting in a 16% gross profit margin, compared to CA$2.3 million (26%) during the same period in 2021. Gross profits were impacted by the biological assets and inventory impairments of CA$5.0 million associated with the closure of the Auxly Annapolis and Auxly Annapolis OG facilities as announced on February 7, 2022.
- Net losses attributable to shareholders of the company were CA$39.8 million for the three months ended March 31, 2022, representing a net loss of CA$0.05 per share on a basic and diluted basis. This compared to a net loss of CA$10.5 million in the same period year ago.
- Adjusted EBITDA of negative CA$5.6 million during the three months ended March 31, 2022 was CA$0.9 million better than the same period in 2021, primarily related to higher gross profits before fair value adjustments and impairment charges, partially offset by higher SG
- SG&A of CA$12.8M in Q1 2022 decreased slightly quarter-over-quarter with the full quarter consolidation of Auxly Leamington;
- Continue to hold the #1 LP position in Cannabis 2.0 sales nationally;
- With growing competition in vapes, the largest 2.0 product category, Auxly continued to hold the #1 LP position in national sales with 20% market share;
- Successfully launched 10 new SKUs into the market in the quarter, including solventless live rosin vapes, new infused pre-roll strains and the first-to-market Live Rosin Chew all under Kolab Project brand;
- Recorded non-cash impairment of approximately CA$25.7 million related to the closure of Auxly Annapolis and Auxly Annapolis OG cultivation facilities.
"Amid intense and growing competition and seasonal buying trends in the Canadian cannabis market, Auxly continued to see strength in sales, increasing revenues 147% year-over-year,” Hugo Alves, CEO of Auxly, stated. “Though this quarter presented some ongoing supply chain and operational challenges preventing us from meeting consumer demands for our branded cannabis products, we believe we have taken the necessary steps to correct these issues for the coming quarters, allowing us to increase fill rates and continue with our exciting new product launches throughout the year.”
Outlook
The company's high-level objectives for 2022 are:
- Improve revenue and gross profit margin to achieve positive Adjusted EBITDA;
- Win with consumers and increase brand traction;
Photo: Courtesy of Rob Warner on Unsplash
