Auxly Reports Second Quarter 2025 Results

Executive Summary

• Auxly Cannabis Group Inc. reported strong financial results for the second quarter and first half of 2025, with net revenues increasing 33% year-over-year to $38.8 million for the quarter and $71.5 million for the six-month period.
• The company achieved significant margin expansion, with Gross Margin on Finished Cannabis Inventory Sold rising to 52% in Q2 2025 from 41% in Q2 2024, driven by production efficiencies and favorable product mix.
• Post-quarter balance sheet enhancements include an amended senior debt facility with extended maturity, $10 million in new credit, and the conversion of remaining Imperial Brands debt into equity, resulting in a pro forma Total Debt to TTM Adjusted EBITDA ratio of 1.4x.

Key Details

• Q2 2025 Financial Highlights:
  • Net Revenues: $38.8 million (up 33% YoY).
  • Gross Margin on Finished Cannabis Inventory Sold: 52% (vs. 41% in Q2 2024).
  • SG&A Expenses: $10.3 million (up 11% YoY).
  • Adjusted EBITDA: $11.6 million (up 123% YoY), representing 30% of net revenue.
  • Net Income: $8.3 million (up 315% YoY).
  • Cash Flow from Operations: $4 million.
  • Cash at Quarter End: $17 million.
• Six Months Ended June 30, 2025:
  • Net Revenues: $71.5 million (up 31% YoY).
  • Gross Margin on Finished Cannabis Inventory Sold: 51% (vs. 40% in 2024).
  • Net Income: $20.4 million (vs. net loss of $24.0 million in 2024).
  • Adjusted EBITDA: $19.0 million (up 156% YoY).
• Balance Sheet & Debt:
  • Total Debt as of June 30, 2025: $49.0 million (down 10% from Dec 31, 2024).
  • Pro forma Net Working Capital: $35 million.
  • Post-Q2 Recapitalization: Amended senior debt with extended maturity, $10 million in new credit added, and Imperial Brands converted remaining debt to equity.
• Operational & Commercial Metrics:
  • Market Position: #3 largest Canadian Licensed Producer with 6.2% market share.
  • Brand Performance: Back Forty was the #1 cannabis brand in Canada; Liquid Imagination and Fire Breath 28g were the top two best-selling SKUs nationwide.
  • Category Leadership: Leader in the all-in-one vape category (12 of top 15 SKUs nationally) and #1 non-infused pre-roll brand in Ontario.
  • Revenue Mix: ~65% from dried flower and pre-rolls; ~75% of sales originated from BC, Alberta, and Ontario.
• Cost Structure:
  • Inventory Impairments: $0.1 million in Q2 2025 (down from $0.5 million in Q2 2024).
  • Interest Expense: $1.9 million in Q2 2025 (down from $2.7 million in Q2 2024) due to debt conversion and lower principal amounts.
  • Equity-Based Compensation: $1.1 million in Q2 2025.
• Outlook:
  • Expect continued growth in net revenue for H2 2025 driven by demand, distribution, and operational efficiencies.
  • Capital allocation: $1.5 million to $2.5 million for capital projects at Auxly Leamington and Auxly Charlottetown in 2025.
  • Active evaluation of international export opportunities.

Notable Quotes

• "Amidst a record quarter for net revenue, gross profit, and Adjusted EBITDA, we believe we are still Just Getting Started. Net revenue increased 33% year-over-year through increased demand for our products, deeper distribution across the country, increasing production volumes, and higher pricing." — Hugo Alves, CEO