Auxly Cannabis Group (XLY) investor relations material

Executive summary

• Achieved record Q1 2026 net revenue of CAD 39.8 million, up 22% year-over-year, driven by strong demand for flower, pre-rolls, and vapes, with Back Forty maintaining its lead as Canada's top cannabis brand.

• Adjusted EBITDA rose 65% to CAD 12.3 million (31% margin), reflecting improved gross profits and operational efficiency.

• Cash flow from operations before working capital was CAD 11.3 million, up 102% year-over-year, with a cash balance of over CAD 42 million at quarter-end.

• Net income was CAD 3.5 million, down from CAD 12.1 million in Q1 2025 due to a prior-year deferred tax recovery; excluding this, net income increased by CAD 5.8 million.

• Focus remains on quality, innovation, and profitability, with continued investment in capacity and efficiency at Auxly Leamington.

Financial highlights

• Net revenue reached CAD 39.8 million, up 22% year-over-year, outpacing industry growth of 2%.

• Gross margin improved to 55% from 48% in Q1 2025, aided by manufacturing efficiencies and cost reductions.

• Adjusted EBITDA margin was 31% of net revenue.

• Cash and cash equivalents increased 32% year-over-year to over CAD 42 million; total debt was CAD 45 million.

• Interest expense nearly halved compared to Q1 2025.

Outlook and guidance

• 2026 outlook unchanged; expects to grow net revenue above market rates through distribution, innovation, and increased capacity.

• Profitability to be maintained via efficiency investments and cost control; expects improved cash flow conversion as interest expense declines.

• Plans to invest CAD 10–12 million in capital projects at Auxly Leamington in 2026 to boost quality, capacity, and efficiency, including international shipment capabilities.

• Not forecasting material international revenue in 2026 but will continue test shipments; sees long-term growth potential in international markets.