ALUULA Reports First Quarter 2024 Financial Results

Victoria, British Columbia--(Newsfile Corp. - March 27, 2024) - ALUULA Composites Inc. (TSXV: AUUA) ("ALUULA" or the "Company") today reported its financial results for the three-month period ended January 31, 2024 ("Q1 2024"). All currency amounts are listed in Canadian dollars.

"In Q1 2024, we achieved sales of $2.3 million, reflecting a 61% increase compared to the same period last year. This impressive growth is directly linked to an increase in new customers in our vertical markets," said Sage Berryman, CEO and President of ALUULA. "The wind sport sector has demonstrated strong sales growth for ALUULA. We've experienced our brand partner list quickly expand, gaining strong adoption of ALUULA materials with these leading partners. In the performance outdoor sector, we've also seen strong activity which we expect will start translating to meaningful revenue. We are pleased to see our customers support ALUULA's value proposition, reflected in the growing order volumes for our materials. This positive trend has successfully brought our gross margins into the target range for this quarter."

During Q1 2024, ALUULA onboarded five new wind sports brands, commercialized products with nine, and also engaged with over thirty brands in the outdoor industry. The Company unveiled brand partnerships with Arc'teryx, Durston Gear, and Rockgeist.

"ALUULA materials are known for delivering what they set out to. We are thrilled to see our sales pipeline remain robust and expanding, fueled by the growing demand for sustainable and high-performing textiles," said Berryman.

This quarter, ALUULA sold 54,924 square meters to seven commercialized customers at an average price of $31 per square meter, compared to 15,007 square meters sold to one customer in Q1 2023 at a similar average price per square meter, representing a 266% increase in sales volume. ALUULA considers companies purchasing more than 1,000 square meters of material as commercialized.

"With Q2 2024 well underway, we are determined to maintain this momentum as we continue to expand our core business," said Berryman. "We aim to turn the interest we're seeing from brands wanting to partner with ALUULA into successful, long-term relationships."

Key Q1 2024 Highlights:

• Sales increased 61% or $880,553 to $2,334,255, compared to $1,453,702 during Q1 2023. The increase was primarily due to an increase in ALUULA's standalone sales which included existing wind sport customers ordering more materials during the quarter, several new wind sport brands ordering materials to support product launches, and material orders from new customers in the outdoor market.
  • ALUULA's sales increased by 36% or $613,643 to $2,334,255 in Q1 2024, compared to $1,720,612 in Q4 2023.
• ALUULA's standalone sales increased by 179% or $1,281,747 when compared to Q1 2023. The increase was primarily due to an increase in sales to the wind sport and outdoor vertical markets. Q1 2023 sales were negatively impacted by a working capital shortage which resulted in a delay in fulfilling sales orders. ALUULA did not face the same challenges in Q1 2024 and was able to capitalize on prior years business development efforts by commercializing with new customers.
• Cost of sales increased to $1,317,905 compared to $1,251,468 in Q1 2023.
• Gross margin increased to 44% in Q1 2024 from 14% in Q1 2023.
• Net loss and comprehensive loss was $228,972 for Q1 2024 compared to $1,165,151 for Q1 2023. The Q1 2024 net loss was primarily due to improved gross profits and lower operating expenses.
• Onboarded five new wind sport brands bringing the total at the end of Q1 2023 to thirteen, with nine of these brands offering premium priced products featuring ALUULA materials.
• Engaged with over thirty prominent Outdoor brands spanning various stages of the sales cycle, from initial needs analysis to field testing prototype products.
• Showcased its new materials, Durlyte and Graflyte, at the November 2023 ISPO Trade Show ("ISPO") through the unveiling of its brand partnerships with Arc'teryx and Durston Gear. The Company also announced a brand partnership with Rockgeist.

Key Q1 2024 Corporate Update

During Q1 2024, ALUULA capitalized on momentum built during the fiscal 2023 year. The Company commercialized several products with new customers in the wind sport and outdoor vertical markets and reported its highest quarterly sales and material production since its inception. The Company is now uniquely positioned to focus on growth, expand its product offering, and capitalize on sales opportunities in the outdoor market and other vertical markets.

In fiscal 2023 ALUULA began working with customers across several vertical markets including Outdoor, Sailing, and Airships. Working in partnership with these customers in order to successfully replace incumbent materials in these new markets, ALUULA has developed additional products including ALUULA Durlyte® ("Durlyte"), and ALUULA Graflyte™ ("Graflyte").

After finalizing material specifications for Durlyte and Graflyte during Q4 2023, ALUULA showcased these materials and new brand partnerships at the ISPO, with highlights as follows:

• Arc'teryx announced their collaboration with ALUULA and previewed a concept backpack which showcased new manufacturing technologies. These included "no sew" construction and other new finishing techniques made possible by the unique properties of ALUULA. A key feature of the concept backpack is that it is recycle-ready at the end of its useful life.
• Durston Gear announced the launch of their first backpack featuring ALUULA's seam tape long with its Graflyte and Durlyte materials. The combination of these ALUULA materials enabled Durston to reduce the weight of their backpack by 50%.
• Rockgeist, the first brand to launch ALUULA in the bike market, announced their collaboration with ALUULA to reshape bike pack performance by leveraging ALUULA materials' lightweight, waterproof, and abrasion-resistant properties as well as its unique construction methodologies, including welded seams.

Following ISPO, ALUULA's sales pipeline featuring outdoor vertical market opportunities grew by over thirty new leads.

In the wind sports market, ALUULA continued to gain momentum in Q1 2024, which represents the nearest term sales opportunity. Over the past two fiscal years, ALUULA commercialized with a limited number of brand partners to showcase its materials' competitive advantages. With ALUULA's Gold material's superior performance now successfully demonstrated, ALUULA is securing commitments from additional wind sport brands. At the end of Q1 2024, nine wind sport brands had launched products with the Gold material and an additional five are expected to follow during the second quarter of fiscal 2024.

ALUULA's sales process and brand partnership development involves multiple steps, from initial contact through to final product launch. This process can be time consuming, though it ensures each product commercialization is successful. Although this long sales cycle results in delayed revenue, it is essential in order for ALUULA to maintain successful long-term customer and brand relationships, where ALUULA materials become the core ingredient of high-value products.

Financial Statements and Management's Discussion and Analysis

This earnings press release should be read in conjunction with ALUULA's interim financial statements for the three months ended January 31, 2024 (the "Financial Statements ") and the related management's discussion & analysis (the "MD&A "), which can be found on ALUULA's website and its issuer profile on the System for Electronic Document Analysis and Retrieval Plus ("SEDAR+") at www.sedarplus.ca.

About ALUULA Composites

ALUULA is a materials brand that improves the performance of outdoor gear with environmentally sustainable solutions. Proudly owned and manufactured on the Canadian west coast, ALUULA's innovation is driven by a deep understanding that equipment does not need to sacrifice performance for sustainability. ALUULA's materials are known for their unique construction capabilities and their ability to make products lighter, stronger, and more sustainable.

aluula.com | TSXV: AUUA

On behalf of the Board of Directors,
Sage Berryman
Chief Executive Officer
1-888-724-2470

For ALUULA investor inquiries, please contact:

1-888-724-2470, ext. 4
IR@aluula.com

For ALUULA media relations, please contact:

info@aluula.com

ALUULA's Brand Partners

The term "brand partners" does not refer to formal partnerships with our customers. The term refers to marketing relationships with our customers who use ALUULA's technology as a brand ingredient in their products.

TSX Venture Exchange

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

Forward-Looking Statements

The information in this news release includes certain information and statements about management's view of future events, expectations, plans, and prospects that constitute forward-looking statements. These statements are based on assumptions subject to significant risks and uncertainties as described in the Company's management discussion and analysis. Because of these risks and uncertainties and as a result of a variety of factors, including the timing and receipt of all applicable regulatory, corporate third-party approvals, the actual results, expectations, achievements, or performance may differ materially from those anticipated and indicated by these forward-looking statements. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statement will prove to be correct. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise.

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