The company saw a positive adjusted EBITDA for the period.
Auxly Cannabis Group Inc. (TSX: XLY) (OTCQB: CBWTF) reported a sharp rise in its third-quarter revenue alongside meaningful cost reductions.
The Toronto-based company announced that its net revenues for the quarter ending Sept. 30 soared to $28.2 million, a 42% jump from the same period last year.
Auxly’s success in the third quarter wasn’t just limited to revenue growth. The company also successfully reduced its SG&A expenses by $1.5 million, or 13%, from the same period in 2022. The reduction is part of Auxly’s broader strategy to streamline operations and enhance profitability.
The company also saw a positive adjusted EBITDA of $100,000, an upswing of $5.9 million compared to the same period last year “primarily as a result of improvements in gross profits and SG&A.”
“During the quarter we continued to take positive steps to focus our operations, reduce costs, and improve profitability,” CEO Hugo Alves said in a statement.
He added, “We saw increased demand for our products due to strong operational execution, the persistent efforts of a dedicated internal sales force and the increasing popularity of our Back Forty and Parcel brands. The successful consolidation of our manufacturing activities, enhancements in pre-roll automation and disciplined spending have directly improved margins and resulted in better overall financial performance.”
The company stated that it maintained its ranking as the fifth-largest licensed producer in Canada, holding a 4.8% market share by quarter-end, which edged up to 5% by October. The company’s products, particularly in the pre-roll segment, have seen growing popularity, with Back Forty Wedding Pie and Banana OG pre-rolls leading sales.
Auxly has also made strides in product innovation and operational improvements. The introduction of new Back Forty all-in-one vapes and enhancements in post-harvest operations at its Leamington cultivation facility will help the firm meet demand and maintain quality.
The company managed to strengthen its runway by extending a convertible debenture with Imperial Brands plc by two years, boosting its balance sheet.
Looking ahead, Auxly aims to grow net revenues by 15% in 2023, focusing on key product categories and leveraging its large-scale cultivation facility for cost efficiency. The company also plans to manage its SG&A effectively, targeting a margin below 40% of net revenues.
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