Shares of Auxly Cannabis Group Inc. (TSX: XLY) (OTCQX: CBWTF) fell 12% on Monday morning after the cannabis company posted a wider loss in the first quarter.
Net Revenues Rise 147%
Net revenues were $22.6 million in the quarter ended March 31, an increase of 147% from $9.2 million in the prior-year quarter. Net revenues improved thanks to the company's expansion into Cannabis 1.0 products and its continued leadership in Cannabis 2.0 products.
Net losses attributable to shareholders of the company came in at $39.8 million (-$0.05 per share) for Q1 2022. The loss of $29.4 million compared to the same period in 2021 was mainly due to the net impact of approximately $25.7 million related to the closure of the Auxly Annapolis and Auxly Annapolis OG facilities during the period and a gain on settlement of assets and liabilities and other expenses of $4 million in 2021.
Adjusted EBITDA was -$5.6 million in the first quarter, $0.9 million better than the same period in 2021, primarily due to higher gross profit before adjustments fair value and impairment charges, partially offset by an increase in general and administrative expenses.
Auxly CEO Hugo Alves commented: "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. 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. We continue to lead the market in cannabis 2.0 products and remain focused on building to leadership in dried flower and pre-rolls and improving our business to achieve our goal of reaching adjusted EBITDA profitability."
Auxly Launched 10 New SKUs
During the first quarter, Auxly launched 10 of the planned 60 new SKUs expected to launch throughout 2022, with strong early results and consumer success. Auxly continues to prioritize investment in innovations for key growth categories while maintaining its standards of producing high-quality products that contribute to its growing consumer awareness and brand value.
In 2022, Auxly plans to drive organic growth through continued innovation, increased brand traction and ubiquitous distribution, while prioritizing operational efficiency and profitability. Its main objectives for 2022 are to improve revenue and gross profit margin to achieve positive adjusted EBITDA, as well as win with consumers and increase brand traction.
The cannabis company remains focused on controlling costs and improving margins through continuous process improvements and investments in automation. Auxly remains confident in its Q2 sales outlook and its ability to achieve Adjusted EBITDA profitability in 2022.
