Auxly Cannabis Group (TSX: XLY) (OTCQB: CBWTF) hit record quarterly sales and strengthened its position in the Canadian market, even as liquidity concerns continue to shadow the producer.

Net revenue jumped 18% to C$33.3 million in the third quarter ending Sept. 30, the Toronto-based company said Friday. Auxly netted income of C$3.2 million, versus C$32.6 million a year earlier when results included C$46.9 million in debt restructuring gains.

That pushed Auxly to fourth place among Canadian recreational cannabis wholesalers, up from sixth last quarter, according to Hifyre data cited in company filings. Gross margins widened to 47% from 30% a year earlier as Auxly leveraged its 1.1 million square foot automated greenhouse facility in Leamington, Ontario. The company consolidated its dried flower and pre-roll manufacturing into the facility after closing its Ottawa operation in November 2023.

“The successful execution of the company’s previously disclosed efforts to increase cultivation yields also contributed to the improved gross margin,” Auxly said in its MD&A.

Vape products have been a bright spot, with Auxly controlling more than 36% of Canada’s all-in-one segment. Sales of its Back Forty brand dried flower rose 12% from the previous quarter, making it the third best-selling flower product nationally.

Still, the company warned it won’t have enough cash to fund operations for the next 12 months without improved sales or margins. As of Sept. 30, Auxly had C$19 million in cash and negative working capital of C$13.2 million.

The company has moved to shore up its finances, with debt dropping 54% from year-end after tobacco giant Imperial Brands PLC converted C$123.4 million in debentures to equity in March, taking a 19.8% stake. Auxly also recently extended an inventory financing loan that was coming due.

“Looking ahead, we will continue to prioritize efficient growth and sustainable profitability,” the company said in filings.

The Daily Hit is a recap of the top financial news stories for Thursday, August 15, 2024.

On the Site

New York ruling could threaten crackdown on unlicensed marijuana sales

A court ruled that a convenience store in Queens would be allowed to reopen due to improper delivery of a summons under Operation Padlock.

Read more here.

Georgia low-THC medical marijuana program growing by 1,000 patients per month

Only around a dozen dispensaries are operational in Georgia.

Read more here.

Lykos to cut 75% of staff, reorganize in wake of FDA defeat

Remaining staff will focus on efforts to get FDA approval for the MDMA therapy.

Read more here.

Blüm Holdings posts second-quarter profit, driven by dispensary sale

The company said it’s focused on making operations more efficient and expanding its retail footprint.

Read more here.

Gold Flora enjoys rising revenue from last year’s TPCO deal

Still, sales fell slightly from the first quarter and the company remains a going concern.

Read more here.

More earnings:

In Other News

Medcana

SFWJ, which does business as Medcana, a holding company focused in the cannabis and agricultural technology sectors, announce that all of the convertible debt on the company’s calance sheet will be eliminated by the end of the third quarter.

Read more here.

Germany

Four and a half months after the federal law came into effect, it remains unclear who in Berlin will decide on applications from so-called “social clubs” that want to grow cannabis.

Read more here.

Dallas

The Dallas City Council on Wednesday voted to put a marijuana decriminalization measure on the ballot for the November election, continuing a trend by Texas activists to reform cannabis policy at the local level.

Read more here.