Auxly Cannabis Group (OTC:CBWTF) released first-quarter financial results and hosted an earnings call on Monday. Read the complete transcript below.
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The full earnings call is available at https://app.webinar.net/0YwVgEegekG
Summary
Auxly Cannabis Group Inc reported record Q1 2026 financial results with a net revenue of $39.8 million, a 22% year-over-year increase, and adjusted EBITDA of $12.3 million, reflecting a 65% increase year-over-year.
The company’s strategic focus includes maintaining market growth through innovation and distribution investments, with plans for $10 to $12 million in capital projects to enhance product quality and capacity.
Auxly Cannabis Group Inc maintained a strong balance sheet with over $42 million in cash and a debt of $45 million, planning significant free cash flow generation in 2026, while exploring strategic acquisitions and share repurchases to enhance shareholder value.
Operational highlights include strong demand for the Back 40 brand, which remains Canada’s top cannabis brand, and improvements in manufacturing and procurement processes that supported a gross margin increase to 55%.
Management reiterated confidence in the company’s ability to grow above market rates, driven by product quality, consumer trust, and strategic initiatives focused on efficiency and cost control.
Full Transcript
OPERATOR
Good morning ladies and gentlemen and welcome to the Auxly Cannabis Group Inc Q1 2026 Financial Results Conference call. At this time, all lines in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 14, 2026. I would now like to turn the conference over to Hugo Alves, CEO. Please go ahead.
Hugo Alves (Co-Founder and Chief Executive Officer)
Thank you operator Hello, Good morning. I’m Hugo Alves, Auxly’s co Founder and Chief Executive Officer. I’d like to welcome all of you to Auxly Cannabis Group Inc’s Q1 2026 conference call and webcast. Joining me on the conference call today are Travis Wong, our Chief Financial Officer, and Marc Charbin, our Head of Investor Relations. Today I’ll share key takeaways from the quarter and then we’ll open the call up to questions from analysts and answer some questions that have come through our Investor Relations inbox over the last few days. Before we begin, I’d like to remind you that our remarks may contain forward looking information and actual results could differ materially. Forward looking information is subject to many risks and uncertainties. Certain factors or assumptions applied in the forward looking information can be found in our latest annual information form and management discussion and analysis. These documents are available on our website and sedarplus.ca. More generally, if you have questions once this call is completed, please reach out to our Investor Relations. Our contact information can be found at the end of our earnings press release. Turning to our Financial Results Our Q1 2026 financial results represented seasonal records in net revenue, adjusted EBITDA and cash flow from operations. Net revenue reached 39.8 million, an increase of 22% year over year against a backdrop of industry growth of approximately 2% over the same period. Gross margin on finished cannabis inventory sold increased to 55%, up from 48% in Q1 2025. Adjusted EBITDA was 12.3 million, an increase of 65% year over year and representing an EBITDA margin of 31%. Cash flow from operations before working capital changes reached 11.3 million, an increase of 102% year over year and representing a 92% conversion from adjusted EBITDA. Our 22% net revenue growth is driven by the continued success of Back Forty as Canada’s number one cannabis brand by dollars sold, a position Back Forty has held since December of 2024. The seasonally slow first calendar quarter of the year typically results in a sequential decline in net revenue for Auxly of 3 to 6%. In Q1 2026, our sequential decline was less than 1%, just shy of an overall quarterly record. We are seeing strong demand across the board for our flower pre rolls and vapes. Consumers continue to be drawn to the back 40 value proposition of high THC and consistent quality at a competitive price compared to Q1 2025. We are also benefiting from higher incremental volumes across the portfolio and improved pricing in the flower portfolio, which was partially offset by price compression on VAPE products. Our gross margin of 55%, an EBITDA margin of 31% reflect improved manufacturing processes to reduce operating costs, higher cultivation yields, efficiency improvements across the operating footprint, strategic procurement initiatives that further reduce costs and a relatively fixed overhead cost base. We believe these margin improvements are structural and sustainable over the long term. Our improved profitability is translating directly into cash flow. With interest expense down by almost half relative to Q1 2025 and little change to working capital as compared to year end, Auxly ended the quarter with over $42 million in cash and $45 million in debt on the balance sheet. This is the strongest our balance sheet has been in years. Our outlook for 2026 is unchanged from when we reported Q4 25 results just two months ago.
Hugo Alves (Co-Founder and Chief Executive Officer)
We believe Auxly can continue to grow net revenue above market rates through continued investment in distribution and innovation and increased quality and capacity at Auxly and Edington. We plan to maintain profitability through continued investments in efficiency and rigorous cost control across the organization and we expect the conversion of profitability to cash flow from operations to improve through the reduction of interest, expense and stabilization of working capital investments.
Hugo Alves (Co-Founder and Chief Executive Officer)
And the continued strong demand for our products gives us the confidence to keep building for the Future through a $10 million to 12 million dollar capital program at Auxly and to increase quality, capacity and efficiency and also give us greater optionality for international sales in the future. As our financial position strengthens, capital allocation is becoming an increasingly important part of how we create long term value. Our trailing twelve month cash flow from operations before working capital will was approximately $44 million and we planned …
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