Auxly Reports Second Quarter 2026 Results

TORONTO, Aug. 13, 2026 /CNW/ -- 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 six months ended June 30, 2026. These filings and additional information regarding Auxly are available on SEDAR+ at www.sedarplus.ca.

Highlights for the second quarter ended June 30, 2026 (Q2 2026), as compared to the period ending June 30, 2025 (Q2 2025)

• Net revenue of $45.8 million, an increase of 18% over the same period in the prior year
• Gross Margin on Finished Cannabis Inventory Sold of 55%, compared to 52% in Q2 2025
• Adjusted EBITDA of $14.3 million, an increase of 24% or 31% of net revenue
• Net income of $7.7 million, or $0.08 per basic share and $0.07 per diluted share
• Cash flow from operations before working capital changes of $13.4 million, an increase of 31% and represents a 94% conversion from Adjusted EBITDA
• Effectuated a 14:1 share consolidation, effective July 28, 2026

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

Management Commentary

Hugo Alves, CEO of Auxly commented: "Q2 2026 was a record quarter for Auxly, and a testament to the strength of our brands and the execution of our team. Net revenue increased 18% year-over-year to $45.8 million, Adjusted EBITDA grew 24% to $14.3 million, and cash flow from operations before working capital increased 31% to $13.4 million with a 94% conversion from Adjusted EBITDA. We continue to repurchase shares under our NCIB, which we believe represents a compelling return on capital, and in July we completed our 14:1 share consolidation to strengthen our capital structure and improve our capital markets quality. As we head into the seasonally stronger second half, we remain focused on innovation leadership, disciplined capital allocation, and continued investment in our Leamington facility to support multi-year growth in profitability and cash flow. I'd like to thank our incredible Auxly team and our consumers and partners whose support drives us forward every day.  We are building to last and excited about the future of Auxly."

Second Quarter 2026 Financial Overview

Net revenue was $45.8 million in Q2 2026 as compared to $38.8 million in Q2 2025, representing an increase of 18%. The year-over-year growth in net revenue was primarily driven by higher incremental volumes across the core portfolio, improved pricing across the flower portfolio, and partially offset by price compression on vape products. The revenue increase was supported by strong performance in the Company's flower and pre-roll segment, which benefited from increased demand and improved distribution.

Gross Margin on Finished Cannabis Inventory Sold for Q2 2026 improved to 55% from 52% in Q2 2025. In addition to the factors impacting net revenue, the higher Gross Margin on Finished Cannabis Inventory Sold resulted from the improvements made in our manufacturing process to reduce operating costs, efficiency improvements at our Auxly Charlottetown facility and strategic procurement initiatives that further reduced costs.

Selling, general and administrative expenses were $12.5 million, or 27.4% of net revenue in Q2 2026, compared to $10.3 million, or 26.6%, in Q2 2025. The increase in SG&A reflects investments made to support higher sales.

Net income was $7.7 million in Q2 2026, a decrease of $0.4 million compared to Q2 2025. Excluding the impact of fair value adjustments on biological transformation and inventory, net income increased by $2.0 million primarily due to improved gross profits and the reduction in interest and accretion expenses, partially offset by higher SG&A. 

Adjusted EBITDA was $14.3 million in Q2 2026, an improvement of $2.7 million compared to Q2 2025. Adjusted EBITDA improved primarily as a result of improved gross profits, partially offset by higher selling expenses and higher wages and benefits to support higher net revenue.

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 strong 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 Auxly Leamington 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 and conversion to cash flow through focused innovation, investment in efficiency and quality, and rigorous cost control.

Auxly expects to allocate between $10 million to $12 million of cash flow from operations towards capital projects in 2026 and up to $30 million through to the end of 2028, inclusive of 2026 capital projects. These capital investments will be made within Auxly Leamington's existing footprint. In combination with previous capital investments, these investments are expected to increase production capacity by 30% from 2025 levels to meet increasing demand for Auxly's portfolio of brands. The capital projects are also expected to improve efficiency throughout cultivation and processing.

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. 

Balance Sheet and Capital Allocation

As of June 30, 2026, current assets were $108.0 million, including cash and cash equivalents of $38.6 million. Total Debt outstanding was $43.6 million and total Debt to TTM Adjusted EBITDA was 0.8x. Cash flow from operations before working capital changes was $13.4 million, representing 94% conversion from Adjusted EBITDA.

Total basic and diluted weighted average shares outstanding for the three months ended June 30, 2026 were 102.3 million shares and 117.3 million shares, respectively.

During the second quarter, the Company repurchased approximately 2.6 million Shares for $5.7 million, at an average price of $2.19 per share. The Company has remaining capacity to repurchase Shares under its NCIB, which expires on the earlier of April 19, 2027 or the completion of the maximum authorized purchases.

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 August 12, 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.

Conference Call

Auxly's management team will host a conference call today, Thursday, August 13, 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: 51031) or by audio webcast at: https://app.webinar.net/epvzMnBMkRB. Investors are encouraged to send questions to the Investor Relations Team 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.

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/.

Investor Relations:

For investor enquiries please contact our Investor Relations Team:
Email: [email protected]
Phone: [phone]

Financial Highlights and Key Performance Indicators

For the three months ended:	June 30,	June 30,
(000's)	2026	2025	Change	% Change
Net revenue	$               45,804	$                   38,802	$             7,002	18 %
Gross Margin on Finished Cannabis Inventory Sold*	25,096	20,268	4,828	24 %
Gross Margin on Finished Cannabis Inventory Sold (%)*	55 %	52 %	3 %	6 %
Net income/(loss)	7,701	8,310	(609)	-7 %
Adjusted EBITDA*	14,275	11,545	2,730	24 %
Weighted average shares outstanding - basic**	102,326,590	93,970,351	8,356,239	9 %
For the six months ended:	June 30,	June 30,
(000's)	2026	2025	Change	% Change
Net revenue	$               85,557	$                   71,471	$           14,086	20 %
Gross Margin on Finished Cannabis Inventory Sold*	46,968	36,099	10,869	30 %
Gross Margin on Finished Cannabis Inventory Sold (%)*	55 %	51 %	4 %	8 %
Net income/(loss)	11,167	20,421	(9,254)	-45 %
Adjusted EBITDA*	26,531	18,978	7,553	40 %
Weighted average shares outstanding - basic**	100,336,825	93,782,346	6,554,479	7 %
As at:	June 30,	December 31,
(000's)	2026	2025	Change	% Change
Cash and cash equivalents	$               38,557	$                   32,279	$             6,278	19 %
Total assets	276,201	271,636	4,565	2 %
Debt*	43,578	46,279	(2,701)	-6 %
*Non-IFRS or supplementary financial measure. Refer to the Non-GAAP Measures section for definitions.
**Weighted average shares outstanding have been adjusted to reflect the effect of 14:1 Share Consolidation effective July 28, 2026.

Results of Operations

For the periods ended:	Three months June 30,			Six months June 30,
(000's)	2026	2025		2026	2025
Revenue
Revenue from sales of cannabis products	$          70,767	$          59,124		$       130,505	$       108,336
Excise taxes	(24,963)	(20,322)		(44,948)	(36,865)
Total net revenue	45,804	38,802		85,557	71,471
Costs of sales
Costs of finished cannabis inventory sold	20,708	18,534		38,589	35,372
Inventory impairment	1,180	147		1,414	270
Gross profit/(loss) excluding fair value items	23,916	20,121		45,554	35,829
Unrealized fair value gain/(loss) on biological transformation	12,603	15,842		22,361	28,154
Realized fair value gain/(loss) on inventory	(12,655)	(13,274)		(25,741)	(22,611)
Gross profit	23,864	22,689		42,174	41,372
Expenses
Selling, general, and administrative expenses	12,532	10,315		23,916	19,987
Equity-based compensation	1,438	1,092		2,449	2,597
Depreciation and amortization	1,204	1,276		2,422	2,572
Interest and accretion expenses	1,071	1,866		2,163	4,013
Total expenses	16,245	14,549		30,950	29,169
Other income/(loss)
Interest and other income	270	32		328	79
Gain/(loss) on settlement of assets and liabilities and other expenses	1	(243)		1	(204)
Foreign exchange gain/(loss)	(189)	381		(386)	218
Total other income/(loss)	82	170		(57)	93
Net income/(loss) before income tax	7,701	8,310		11,167	12,296
Income tax recovery/(expense)	-	-		-	8,125
Net income/(loss)	$            7,701	$            8,310		$         11,167	$         20,421
Adjusted EBITDA	$          14,275	$          11,545		$         26,531	$         18,978
Net income/(loss) per common share – basic* ($)	$              0.08	$              0.09		$             0.11	$             0.22
Net income/(loss) per common share – diluted* ($)	$              0.07	$              0.08		$             0.10	$             0.20
Weighted average shares outstanding – basic*	102,326,590	93,970,351		100,336,825	93,782,346
Weighted average shares outstanding – diluted*	117,253,072	105,263,588		115,044,201	104,234,960
*Weighted average shares outstanding have been adjusted to reflect the effect of 14:1 Share Consolidation effective July 28, 2026.

EBITDA and Adjusted EBITDA Reconciliation

(000's)	Q3/24	Q4/24	Q1/25	Q2/25	Q3/25	Q4/25	Q1/26	Q2/26
Net income/(loss)	$     3,239	$     4,423	$   12,111	$     8,310	$   20,491	$        943	$     3,466	$     7,701
Interest and accretion expenses	3,133	2,291	2,147	1,866	1,423	1,222	1,092	1,071
Interest and other income	(54)	(27)	(47)	(32)	(26)	(25)	(58)	(270)
Income tax expense/(recovery)	-	-	(8,125)	-	(1,213)	-	-	-
Depreciation and amortization     included in cost of sales	1,382	1,338	1,274	1,785	1,544	1,844	1,768	1,711
Depreciation and amortization     included in expenses	1,197	990	1,296	1,276	1,224	1,204	1,218	1,204
EBITDA	8,897	9,015	8,656	13,205	23,443	5,188	7,486	11,417
Impairment of inventory	674	729	123	147	235	364	234	1,180
Unrealized fair value loss/(gain) on     biological transformation	(9,964)	(11,073)	(12,312)	(15,842)	(18,093)	(10,857)	(9,758)	(12,603)
Realized fair value loss/(gain) on inventory	7,703	11,625	9,337	13,274	12,071	15,911	13,086	12,655
Restructuring and acquisition costs	(75)	271	-	-	-	-	-	-
Equity-based compensation	1,324	1,103	1,505	1,092	1,293	1,830	1,011	1,438
Non-recurring expense/(recovery)	(123)	-	-	(193)	-	(217)	-	-
Loss/(gain) on settlement of assets,     liabilities and disposals	(183)	(1,461)	(39)	243	(6,775)	245	-	(1)
Foreign exchange loss/(gain)	33	797	163	(381)	95	76	197	189
Adjusted EBITDA	$     8,286	$   11,006	$     7,433	$   11,545	$   12,269	$   12,540	$   12,256	$   14,275

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 impact of the Share consolidation on future trading price, liquidity, marketability or attractive of the Shares; 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; the market price of the Shares following the Share consolidation may not increase proportionally to the consolidation ratio; there can be no assurance that the Share consolidation will achieve the Company's intended objectives, including improving the trading price, liquidity, marketability or attractiveness of the Shares; 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.

SOURCE Auxly Cannabis Group Inc.