Auxly Reports Fourth Quarter and Full Year 2025 Results

Rhea-AI Summary

Auxly (OTCQB: CBWTF) reported 2025 results with net revenue $151.5M (+24%) and Adjusted EBITDA $43.8M (+64%). Gross Margin on Finished Cannabis Inventory Sold improved to 54%. Full-year net income was $41.9M. Year-end cash totaled $32.3M with Total Debt/Adjusted EBITDA of 1.1x. Management plans $10–12M capital spend in 2026 and became a DIP lender/stalking horse bidder for Ayurcann assets. Q4 revenue was $40.1M (+16%) with Adjusted EBITDA margin ~31%.

Positive

• Net revenue +24% to $151.5M in 2025
• Adjusted EBITDA +64% to $43.8M
• Gross Margin on Finished Cannabis improved to 54%
• Net income $41.9M for 2025
• Cash $32.3M and Total Debt/Adjusted EBITDA 1.1x

Negative

• SG&A increased 22% to $43.4M, raising operating leverage pressure
• Q4 gross profit margin declined to 43% from 50% in Q4 2024
• Q4 net income fell to $0.9M from $4.4M due to realized fair value losses

TORONTO, March 26, 2026 /PRNewswire/ - Auxly Cannabis Group Inc. (TSX: XLY) (OTCQB: CBWTF) ("Auxly" or the "Company") a leading consumer packaged goods company in the cannabis products market, today released its financial results for the three and twelve months ended December 31, 2025. These filings and additional information regarding Auxly are available on SEDAR+ at www.sedarplus.ca.

Highlights for the year ended December 31, 2025 compared to the prior year:

• Net revenue of $151.5 million, an increase of 24%
• Gross Margin on Finished Cannabis Inventory Sold of 54%, compared to 46% in 2024
• SG&A of $43.4 million, an increase of 22%
• Adjusted EBITDA of $43.8 million, an increase of 64%
• Adjusted EBITDA margin of 29%, compared to 22% in 2024
• Net income of $41.9 million or $0.03 per basic and diluted share
• Cash flow from operations before working capital changes of $38.6 million, representing 88% conversion from Adjusted EBITDA
• #3 Canadian Licensed Producer by market share^[1]
• Back Forty was the #1 cannabis brand in Canada throughout 2025¹

Highlights for the fourth quarter ended December 31, 2025 ("Q4 2025") compared to the prior year period ("Q4 2024"):

• Net revenue of $40.1 million, an increase of 16%
• Gross Margin on Finished Cannabis Inventory Sold of 56%, compared to 54% in Q4 2024
• SG&A of $11.7 million, an increase of 26%
• Adjusted EBITDA of $12.5 million, an increase of 14%
• Adjusted EBITDA margin of 31%, compared to 32% in Q4 2024
• Net income of $0.9 million or $0.001 per basic and diluted share
• Cash flow from operations before working capital changes of $11.9 million, representing 95% conversion from Adjusted EBITDA
• Cash at quarter end totalled $32.3 million
• Total Debt to Adjusted EBITDA was 1.1x at quarter end
• Launched new premium-tier brand, South Point, in Alberta and Ontario

See definitions and reconciliation of non-GAAP measures elsewhere in this release.

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1 HiFyre IQ January 2026

Conference Call

Auxly's management team will host a conference call tomorrow, Friday, March 27, 2026, at 10:00 a.m. EST to discuss its financial results. Participants can access the conference call by telephone by dialing: 1-888-699-1199 (conference ID: 41380) or by audio webcast at: https://app.webinar.net/871ZPZoyxXm. Investors are encouraged to send questions to IR@auxly.com in advance of the call for discussion during the question and answer period. For those unable to participate in the conference call at the scheduled time, it will be available for replay on the Company's website within 24 hours after the conclusion of the call.

Management Commentary

Hugo Alves, CEO of Auxly commented: "Q4 2025 was a strong finish to a milestone year for Auxly. In the fourth quarter we surpassed $40 million in quarterly net revenue while maintaining CPG-style margins, including 56% Gross Margin on Finished Cannabis Inventory Sold and a 31% Adjusted EBITDA margin. For the full year, Auxly delivered 24% net revenue growth and 64% Adjusted EBITDA growth as we continued to scale our business while expanding profitability. Our flagship brand, Back Forty, also strengthened its leadership position and was the #1 cannabis brand in Canada by dollars sold for the entirety of 2025 which is a testament to the strength of our products, innovation, and nation-wide distribution. 

Our balance sheet also strengthened materially during the year, ending Q4 with $32 million in cash against $46 million in total debt. With recurring cash flow and a stronger financial foundation, we are in a position to allocate capital proactively and with discipline to drive long-term value. Canada will remain the foundation of Auxly's durability. For us, winning at home means continued innovation, improved distribution, and operational excellence across the organization, from cultivation and manufacturing through to the head office. In January, we announced a $10 to $12 million capital program for 2026 focused on improving quality and throughput at Auxly Leamington and preparing the business for direct international distribution.

Subsequent to quarter end, Auxly opportunistically became the DIP lender and stalking horse bidder for the assets of Ayurcann Inc. The opportunity provides some insight into how our team is thinking about capital allocation. The absolute size of the transaction is conservative relative to our cash position and forecasted free cash flow, which means the financial risk is quite low whether we are successful in our bid or not. At the same time, Ayurcann has established brands and listings in two of our core categories of vapes and pre-rolls, which means the assets align directly with our strategy of winning at home. Finally, in the event of a successful bid for Ayurcann and the full deployment of our 2026 capital program, we still expect to retain excess cash that we believe can be deployed prudently into opportunities capable of generating returns well above our cost of capital. We are excited about the year ahead and remain focused on building a durable company that can continue to grow profitably, generate strong cash flows, and create long-term value for our stakeholders."

Fourth Quarter and Full Year 2025 Financial Overview

Net revenue for the fourth quarter of 2025 was $40.1 million, an increase of $5.5 million, or 16%, compared to the same period in 2024, driven primarily by higher volume and pricing across dried flower, pre-roll and vape products. For the year ended December 31, 2025, net revenue was $151.5 million, compared to $122.3 million in 2024, representing an increase of 24%.

Gross Profit Margin for the fourth quarter of 2025 was 43% (2024 – 50%), while Gross Margin on Finished Cannabis Inventory Sold improved to 56% (2024 – 54%). Gross profit benefited from higher net revenue, favourable production costs at Auxly Leamington, and operational improvements in cultivation and manufacturing. For the year ended December 31, 2025, Auxly generated $86.7 million of gross profit, representing a 57% Gross Profit Margin, compared to $59.9 million (49%) in 2024. Gross Margin on Finished Cannabis Inventory Sold improved to 54% for 2025, up from 46% in 2024.

Selling, general and administrative expenses were $11.7 million in the fourth quarter of 2025, an increase of $2.4 million from the same period in 2024. For the full year, SG&A totaled $43.4 million, an increase of $7.7 million compared to 2024, primarily reflecting investments to support higher sales.

Net income for the three months ended December 31, 2025 was $0.9 million, compared to $4.4 million in the fourth quarter of 2024, primarily reflecting realized fair value losses on inventory. Excluding realized and unrealized fair value gains and losses, net income improved due to stronger gross profits and lower interest and accretion expenses following the conversion of the debenture held by Imperial Brands PLC and other debt repayments.

For the year ended December 31, 2025, net income was $41.9 million, an improvement of $58.2 million compared to 2024. Results for 2025 included an $8.1 million deferred tax recovery related to a change in the estimated useful life of intangible assets and an $8.1 million after-tax gain on the settlement of the Imperial Debenture. In comparison, 2024 results included a $16.0 million deferred tax expense related to the conversion of the Imperial Debenture into shares. Excluding these items, year-over-year improvement was primarily driven by stronger gross profits and lower interest and accretion expenses following the Imperial Brands PLC debenture conversion and other debt repayments.

Adjusted EBITDA was $12.5 million for the fourth quarter of 2025, an increase of $1.5 million, or 14%, compared to $11.0 million in the fourth quarter of 2024, driven by improved gross profits partially offset by higher selling expenses and wages to support growth. For the year ended December 31, 2025, Adjusted EBITDA was $43.8 million, an increase of $17.1 million, or 64%, compared to $26.7 million in 2024, reflecting improved gross profits partially offset by higher selling expenses and wages to support higher sales.

Outlook

Auxly remains focused on delivering sustainable, profitable growth by building on its leadership in the Canadian cannabis market. Auxly continues to advance its strategy through focused innovation, operational excellence, and prudent financial management. With a strengthened balance sheet, we are well-positioned to drive long-term shareholder value.

We expect the Canadian recreational cannabis market will continue to benefit from the tailwinds of increasing social acceptability, capture of market share from the illicit market, the divergence of existing supply to international markets and limited capital availability to the cannabis sector. We believe many of these trends could persist over the long-term.

Auxly continues to see long-term potential in international markets and is actively evaluating export opportunities. We are well-positioned to succeed internationally, supported by our strong brands, scalable production, and a strategic partnership with Imperial Brands. Auxly intends to invest in its international export capabilities over the course of 2026 to prepare and position us for long-term international growth. Our deliberations towards international sales are purposefully rigorous and measured to ensure that international cannabis activities are accretive to profitability and that our focus on winning at home is not compromised.

Auxly believes it can continue to grow net revenue above market rates through product innovation, further investment in distribution and increased capacity at Auxly Leamington. Both innovation and output increases are expected to be funded from operating cash flow for the foreseeable future. Auxly plans to maintain profitability through focused innovation, investment in efficiency and quality, and rigorous cost control. Furthermore, the conversion of profitability to free cash flow is expected to improve through the reduction of interest expense and stabilization of working capital.

Auxly expects to allocate between $10 million to $12 million of cash flow from operations towards capital projects at Auxly Leamington in 2026. In combination with previous capital investments, these investments are expected to increase capacity and efficiency throughout cultivation and processing and add capabilities that will allow for direct international shipments.

Over the long-term, Auxly remains confident in its ability to deepen its leadership position in Canada and make meaningful advances towards our vision of global leadership while maintaining profitability. With its consumer-trusted brands, best-in-class operating assets, national distribution, and data-driven approach to innovation, Auxly is well-positioned to meet evolving consumer preferences and deliver strong financial performance. 

Non- GAAP Measures

EBITDA and Adjusted EBITDA are non-GAAP financial measures used in the cannabis industry and by the Company to assess operating performance removing the impacts and volatility of non-cash and other adjustments. The definition may differ by issuer. EBITDA and Adjusted EBITDA used by the Company are reconciled with net income or loss from continuing operations of the Company, an IFRS measure, in the section "Results of Operations" in the MD&A dated March 25, 2026.

"Gross Margin on Finished Cannabis Inventory Sold" is a supplementary financial measure and is defined as net revenue less cost of finished cannabis inventory sold divided by net revenue. "Gross Profit Margin" is defined as gross profit divided by net revenue. Gross Profit Margin is a supplementary financial measure. "Debt" is defined as current and long-term debt and is a supplementary financial measure. It is a useful measure in managing the Company's capital structure and financing requirements.

ON BEHALF OF THE BOARD

"Hugo Alves" CEO

About Auxly Cannabis Group Inc. (TSX: XLY)

Auxly is a leading Canadian consumer packaged goods company in the cannabis products market, headquartered in Toronto, Canada. Our mission is to help consumers live happier lives through quality cannabis products that they trust and love. Our vision is to be a leader in branded cannabis products that deliver on our consumer promise of quality, safety and efficacy.

Learn more at www.auxly.com and stay up to date at Twitter: @AuxlyGroup; Instagram: @auxlygroup; Facebook: @auxlygroup; LinkedIn: company/auxlygroup/.

Financial Highlights and Key Performance Indicators  

For the three months ended:
(000's)		2025		2024		Change	% Change
Net revenue		$40,113		$34,626		$5,487	16 %
Gross Margin on Finished Cannabis Inventory Sold*		22,637		18,684		3,953	21 %
Gross Margin on Finished Cannabis Inventory Sold (%)*		56 %		54 %		2 %	4 %
Net income/(loss)		943		4,423		(3,480)	-79 %
Adjusted EBITDA*		12,540		11,006		1,534	14 %
Weighted average shares outstanding - basic		1,349,578,902		1,284,329,265		65,249,637	5 %
For the years ended:
(000's)		2025		2024		Change	% Change
Net revenue		$151,482		$122,329		$29,153	24 %
Gross Margin on Finished Cannabis Inventory Sold*		81,102		55,861		25,241	45 %
Gross Margin on Finished Cannabis Inventory Sold (%)*		54 %		46 %		8 %	17 %
Net income/(loss)		41,855		(16,348)		58,203	356 %
Adjusted EBITDA*		43,787		26,705		17,082	64 %
Weighted average shares outstanding - basic		1,329,411,626		1,204,591,972		124,819,654	10 %
As at December 31,
(000's)		2025		2024		Change	% Change
Cash and cash equivalents		$32,279		$18,356		$13,923	76 %
Total assets		272,048		261,530		10,518	4 %
Debt*		46,279		54,683		(8,404)	-15 %
*Non-IFRS or supplementary financial measure. Refer to the Non-GAAP Measures section for definitions.

Results of Operations

For the years ended December 31:
(000's)		2025	2024
Revenues
Revenue from sales of cannabis products		$       227,771	$       185,666
Excise taxes		(76,289)	(63,337)
Total net revenue		151,482	122,329
Costs of sales
Costs of finished cannabis inventory sold		70,380	66,468
Inventory impairment		869	2,332
Gross profit/(loss) excluding fair value items		80,233	53,529
Unrealized fair value gain/(loss) on biological transformation		57,104	32,627
Realized fair value gain/(loss) on inventory		(50,593)	(26,227)
Gross profit		86,744	59,929
Expenses
Selling, general, and administrative expenses		43,352	35,676
Equity-based compensation		5,720	5,055
Depreciation and amortization		5,000	4,484
Interest and accretion expenses		6,658	15,041
Total expenses		60,730	60,256
Other income/(loss)
Interest and other income		130	240
Gain/(loss) on settlement of assets and liabilities and other expenses		6,326	1,401
Gain/(loss) on disposal of assets held for sale		-	(453)
Foreign exchange gain/(loss)		47	(1,217)
Total other income/(loss)		6,503	(29)
Net income/(loss) before income tax		32,517	(356)
Income tax recovery/(expense)		9,338	(15,992)
Net income/(loss)		$         41,855	$        (16,348)
Adjusted EBITDA		$         43,787	$         26,705
Net income/(loss) per common share – basic and diluted ($)		$             0.03	$            (0.01)
Weighted average shares outstanding – basic		1,329,411,626	1,204,591,972
Weighted average shares outstanding – diluted		1,586,730,943	1,204,591,972

EBITDA and Adjusted EBITDA Reconciliation

(000's)	Q1/24	Q2/24	Q3/24	Q4/24	Q1/25	Q2/25	Q3/25	Q4/25
Net income/(loss)	$ (26,012)	$     2,002	$     3,239	$     4,423	$   12,111	$     8,310	$   20,491	$     943
Interest and accretion expenses	6,868	2,749	3,133	2,291	2,147	1,866	1,423	1,222
Interest and other income	(19)	(140)	(54)	(27)	(47)	(32)	(26)	(25)
Income tax expense/(recovery)	15,992	-	-	-	(8,125)	-	(1,213)	-
Depreciation and amortization     included in cost of sales	1,292	1,780	1,382	1,338	1,274	1,785	1,544	1,844
Depreciation and amortization     included in expenses	1,230	1,067	1,197	990	1,296	1,276	1,224	1,204
EBITDA	(649)	7,458	8,897	9,015	8,656	13,205	23,443	5,188
Impairment of inventory	456	473	674	729	123	147	235	364
Unrealized fair value loss/(gain) on     biological transformation	(2,773)	(8,817)	(9,964)	(11,073)	(12,312)	(15,842)	(18,093)	(10,857)
Realized fair value loss/(gain) on inventory	2,435	4,464	7,703	11,625	9,337	13,274	12,071	15,911
Restructuring and acquisition costs	-	655	(75)	271	-	-	-	-
Equity-based compensation	1,927	701	1,324	1,103	1,505	1,092	1,293	1,830
Non-recurring expense/(recovery)	-	-	(123)	-	-	(193)	-	(217)
Loss/(gain) on settlement of assets,     liabilities and disposals	634	62	(183)	(1,461)	(39)	243	(6,775)	245
Foreign exchange loss/(gain)	210	177	33	797	163	(381)	95	76
Adjusted EBITDA	$     2,240	$     5,173	$     8,286	$   11,006	$     7,433	$   11,545	$   12,269	$   12,540

Notice Regarding Forward Looking Information:  

This news release contains certain "forward‐looking information" within the meaning of applicable Canadian securities law. Forward‐looking information is frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or information that certain events or conditions "may" or "will" occur. This information is only a prediction. Various assumptions were used in drawing the conclusions or making the projections contained in the forward‐looking information throughout this news release. Forward‐looking information includes, but is not limited to: the proposed operation of Auxly, its subsidiaries and partners; the intention to grow the business, operations and existing and potential activities of Auxly; proposed timelines for the build‐out, expansion, licencing or commercialization of the  Company's facilities and projects; the Company's execution of its innovative product development, commercialization strategy and expansion plans; the Company's intention to introduce innovative new cannabis products to the market and the timing thereof; the anticipated benefits of the Company's partnerships, research and development initiatives and other commercial arrangements; the expectation, timing and quantum of future revenues, Gross Margin on Finished Cannabis Inventory Sold, SG&A and of positive Adjusted EBITDA; expectations regarding the Company's expansion of sales, operations and investment into foreign jurisdictions; future legislative and regulatory developments involving cannabis and cannabis products; the timing and outcomes of regulatory or intellectual property decisions; the ability of the Company to maintain and grow its market share; the relevance of Auxly's subsidiaries' current and proposed products with provincial purchasers and consumers; consumer preferences; political change; competition and other risks affecting the Company in particular and the cannabis industry generally.

A number of factors could cause actual results to differ materially from a conclusion, forecast or projection  contained in the forward‐looking information in this release including, but not limited to, whether: the Company will be able to execute on its business strategy or achieve its goals; Auxly's subsidiaries are able to maintain the necessary governmental and regulatory authorizations to conduct business; the   Company is able to successfully manage the integration of its various business units with its own; the Company's   subsidiaries obtain and maintain all necessary governmental and regulatory permits and approvals for the operation of their facilities and the development of cannabis products, and   whether such permits and approvals can be obtained in a timely manner; the Company will be able to successfully launch new product formats and enter into new markets; there is acceptance and demand for current and future Company products  by consumers and provincial purchasers; the Company will be able to increase and maintain revenues, maintain positive Adjusted EBITDA, and/or achieve and maintain its target Gross Margin on Finished Cannabis Inventory Sold; risks relating to the overall macroeconomic environment, which may impact customer spending, the Company's costs and margins, including tariffs (and related retaliatory measures), the levels of inflation, and interest rates; and general economic, financial market, legislative, regulatory, competitive and political conditions in which the Company and its subsidiaries and partners operate will remain the same.   Additional risk factors are disclosed in the annual information form of the Company for the financial year ended December 31, 2025 dated March 25, 2026.

New factors emerge from time to time, and it is not possible for management to predict all of those factors or to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward‐looking information. The forward‐looking information in this release is based on information currently available and what management believes are reasonable assumptions. Forward‐ looking information speaks only to such assumptions as of the date of this release. In addition, this release may contain forward‐looking information attributed to third party industry sources, the accuracy of which has not been verified by the Company. The forward‐looking information is being provided for the purposes of assisting the reader in understanding the Company's financial performance, financial position and cash flows as at and for periods ended on certain dates and to present information about management's current expectations and plans relating to the future, and the reader is cautioned that such forward‐ looking information may not be appropriate for any other purpose. Readers should not place undue reliance on forward‐looking information contained in this release.

The forward‐looking information contained in this release is expressly qualified by the foregoing cautionary statements and is made as of the date of this release. Except as may be required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward‐ looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Neither Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.

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SOURCE Auxly Cannabis Group Inc.

FAQ

What were Auxly (CBWTF) full-year 2025 revenue and profitability results?

Auxly reported $151.5M in net revenue and $43.8M Adjusted EBITDA for 2025. According to the company, revenue rose 24% year-over-year and Adjusted EBITDA increased 64%, reflecting higher volumes, pricing and improved finished-product margins.

How much cash and debt did Auxly (CBWTF) have at year-end December 31, 2025?

Year-end cash was $32.3M with Total Debt to Adjusted EBITDA of 1.1x. According to the company, the balance sheet strengthened during 2025 and supports disciplined capital allocation in 2026.

What caused Auxly's (CBWTF) lower net income in Q4 2025 versus Q4 2024?

Q4 2025 net income fell to $0.9M from $4.4M primarily due to realized fair value losses on inventory. According to the company, stronger gross profits and lower interest expense offset some effects when excluding fair value volatility.

What capital investments does Auxly (CBWTF) plan for 2026 and why?

Auxly plans to allocate $10–12M to capital projects at Auxly Leamington in 2026 to boost quality and throughput. According to the company, investments aim to increase capacity, efficiency and enable direct international shipments.

How did Auxly's (CBWTF) margins perform in 2025 and Q4 2025?

Full-year Gross Margin on Finished Cannabis Inventory Sold was 54%; Q4 finished-cannabis margin was 56%. According to the company, finished-product margins improved year-over-year despite a Q4 gross profit margin decline driven by inventory fair value effects.

What strategic transaction did Auxly (CBWTF) pursue after Q4 2025?

Auxly became the DIP lender and stalking horse bidder for Ayurcann assets after quarter-end. According to the company, the opportunity aligns with its vape and pre-roll category strategy and is sized conservatively relative to cash and forecasted free cash flow.