Auxly Cannabis Group (3KF0) Q2 2026 Earnings Report

The call presents multiple strong operational and financial positives: double-digit revenue growth (+18% YoY), improving gross margins (55%, +3pp), record adjusted EBITDA (+24% YoY) and very strong cash conversion (94%). Product innovation and distribution momentum (Liquid Imagination, Back Forty, Galactic Jack) and an articulated $30M 3-year capital plan to raise yields are constructive. Offsetting items are accounting-driven net income volatility from noncash fair-value adjustments, higher SG&A to support growth, modest net debt (~$6M), and execution/funding risk related to the multi-year capacity expansion and cautious stance on international expansion. Overall, the highlights materially outweigh the lowlights.

Auxly reiterated unchanged 2026 guidance, targeting net revenue growth above market rates while sustaining strong profitability and cash generation: Q2 results underpinning the outlook were net revenue $45.8M (+18% YoY), gross margin on finished cannabis sold 55% (vs 52% Q2‑25), adjusted EBITDA $14.3M (+24% YoY; 31% margin) and cash flow from operations before working capital $13.4M (+31% YoY; 94% conversion of adjusted EBITDA). Management plans a ~$30M capital program over the next three years (including $10–12M in 2026) to raise Leamington yields ~30% vs 2025 (phased through end‑2028 with yield gains beginning in 2027), expects working capital to remain similar to last year with modest increases to support growth, aims to improve cash conversion via lower interest expense, will fund investments from cash from operations, and retains a strong balance sheet ($38M cash, $44M long‑term debt) plus ongoing NCIB activity (Q2 repurchases $5.7M for 2.6M post‑consolidation shares after a 14‑for‑1 consolidation).