Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rubicon Organics Inc (ROMJF, Financial) achieved record net revenue for both the three and nine-month periods ending September 30, 2024, with increases of 34% and 15% respectively compared to the prior year.
- The company reported its highest adjusted positive EBITDA for a quarter and achieved a second consecutive quarter of profit from operations.
- Rubicon Organics Inc (ROMJF) maintained a strong market share in the premium flower, pre-roll, premium edible, and topical markets in Canada.
- The launch of their Vape products has been successful, becoming the fastest and widest product launch in the company's history, with over 55% national distribution achieved in just six months.
- The company has successfully diversified its product portfolio, capturing almost 29% of the premium edibles market within a year of launch.
Negative Points
- The Canadian cannabis market is facing challenges such as excise taxes and competition from the black market, which could impact growth.
- Rubicon Organics Inc (ROMJF) experienced a dip in gross margin in Q1 2024 to 25% due to market trends like price compression and a shift to lower price larger formats.
- The company's investment in ERP implementation has depressed adjusted EBITDA by $600,000 this year.
- There is a mixed performance in the Simply Bare Organic brand, with steady market presence but unchanged market share from the prior year.
- The company faces pricing pressures and competition within the premium category, impacting margins and profitability.
Q & A Highlights
Q: Can you clarify your expectations for 20% growth over 2023 net revenue with the Vape momentum?
A: Margaret Brodie, CEO: We expect our Vape products to contribute to a 20% growth over our 2023 net revenue base. This projection remains unchanged since our initial launch in May.
Q: What do you mean by branded products using external capacity, and how does it affect gross margins?
A: Janice Risin, CFO: Branded products refer to our vapes and edibles, which involve external partners in the supply chain. This results in shared margins but is necessary for growth. We are seeing gross margins stabilize as market prices begin to stabilize.
Q: How do you feel about the breadth of your Vape portfolio as you look into 2025?
A: Margaret Brodie, CEO: We aim to maintain a focused approach with core SKUs that have momentum. We may introduce limited-time offers and explore using other brands to differentiate offerings, but 1,964 remains our primary focus.
Q: Can you provide an update on your contract manufacturing partnerships?
A: Margaret Brodie, CEO: Our partners are crucial to our success, and we have strong relationships with them. We are working on securing additional quality biomass to increase our premium flower offering by 20% in 2025.
Q: What are the remaining steps for your debt refinancing, and how confident are you in closing it?
A: Janice Risin, CFO: We are in the later stages of the process and expect to finalize it soon. We anticipate similar interest rates to our current venture and are confident in closing before the end of the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
