Rubicon Organics Inc. (TSXV: ROMJ) (OTCQX: ROMJF) (“Rubicon
Organics”, “Rubicon”, or the “Company”), a licensed producer
focused on cultivating and selling organic certified, premium
cannabis, today reported its financial results for the first
quarter ended March 31, 2023 (“Q1 2023”). All amounts are expressed
in Canadian dollars.
“Despite the historical sluggishness of the
first quarter in the cannabis industry, Rubicon Organics has
demonstrated an impressive 71% revenue growth (vs Q1 2022) and has
delivered positive Adjusted EBITDA for the 4th consecutive
quarter”, said Margaret Brodie, Interim Chief Executive Officer and
Chief Financial Officer. “While acknowledging the ongoing
challenges faced by the Canadian cannabis industry, including both
licensed producers and retail stores, I maintain a positive outlook
on the premium segment which continues to experience robust
double-digit growth. With our diverse portfolio of consistent,
high-quality products, Rubicon is well-prepared to meet the rising
demand in this segment."
Q1 2023 Highlights:
- Record net revenue of $8.8 million (71% increase from Q1 2022)
for the three months ended March 31, 2023
- Achieved Adjusted EBITDA1 of $0.2 million for the three months
ended March 31, 2023
- Achieved operating cash flow of $0.2 million for the three
months ended March 31, 2023
- 2.1%2 national market share of flower and pre-rolls
- 5.3%3 national market share of premium flower and
pre-rolls
Q1 2023 Results of
Operations
|
|
The Three Months Ended |
|
|
March 31, 2023$ |
March 31, 2022$ |
Net revenue |
|
8,799,940 |
|
5,148,214 |
|
Production costs |
|
2,678,604 |
|
2,372,820 |
|
Inventory expensed to cost of
sales |
|
2,934,894 |
|
1,920,330 |
|
Inventory written off or provided for |
|
157,424 |
|
110,740 |
|
Gross profit before fair value adjustments |
|
3,029,018 |
|
744,324 |
|
Fair value adjustments to
cannabis plants, inventory sold, and other charges |
|
139,463 |
|
1,746,098 |
|
Gross profit (loss) |
|
3,168,481 |
|
2,490,422 |
|
Loss from operations |
|
(304,497 |
) |
(1,129,209 |
) |
Adjusted EBITDA1 |
|
168,665 |
|
(1,521,490 |
) |
|
|
|
|
As At: |
|
March 31, 2023$ |
March 31, 2022$ |
Cash and cash equivalents |
|
7,600,477 |
|
8,294,117 |
|
Working
capital |
|
19,298,535 |
|
19,321,971 |
|
Net revenue
The Company delivered record net revenue of
$8,799,940 for the three months ended March 31, 2023. This
represents significant net revenue growth of 71%, compared to the
prior year.
Compared to Q1 2022, the Company doubled the
number of SKUs for sale with the launch of several new strains, and
product formats. The sales growth was underpinned by an increase in
product yield, THC and quality from our Delta Facility.
Revenue growth in Q1 2023 versus the prior year
was primarily driven by the expansion of 1964 Supply Co™, having a
full year of sales in all key markets, continued range expansion,
and a new hero strain with Comatose.
Simply Bare™ Organic also increased in Revenue
compared to the prior year. The brand benefitted from the launch of
new strains, larger formats, and an infused pre-roll offering.
Revenue growth has continued across all our key
markets (Alberta, BC, Ontario, and Quebec) which together make up
99% of our sales in the three months ended March 31, 2023 (March
31, 2022: 97%).
Production costs
For the three months ended March 31, 2023,
production costs increased by $305,784 (13%) compared to the prior
year.
Under the Company’s accounting policy,
production costs are expensed as incurred. Production costs consist
of the direct and indirect costs incurred to grow cannabis plants
to the point of harvest. They include labour related costs,
cultivation materials and consumables, utilities, facility costs,
certain overheads, and production related depreciation. This
methodology means that unless product is produced and sold during
the period, the production costs associated with inventory held at
period end are expensed prior to revenue being derived.
The increase in production costs is related to
an increase in plant density, plant handling techniques applied and
increased overall yield of cannabis crops meaning additional labour
is required during the cultivation cycle and at harvest. In
addition, there has been a notable increase in the costs of
fertilizer and other input materials due to inflation as well as
the need to use additional inputs due to larger crop sizes and an
increased number of plants on hand. The additional cultivation
labour, plant density and plant handling techniques have directly
related to increased quality and yield from the Delta Facility.
Inventory expensed to cost of
sales
For the three months ended March 31, 2023,
inventory expensed to cost of sales increased by $1,014,564 (53%)
compared to the prior year.
After cannabis is harvested, the remaining costs
incurred in drying, processing, and packaging are capitalized to
inventory and expensed once the finished good is sold. The ratio of
inventory expensed to cost of sales was 33% of net revenue for the
three months ended March 31, 2023 (March 31, 2022: 37%). This ratio
is directly impacted by throughput from the facility meaning that
overheads are spread over a larger number of units and given the
increase in production this has positively impacted the ratio.
Given the high inflationary environment in which
the Company is operating in 2023, Management continues to monitor
these costs closely and identify cost savings initiatives.
Gross profit and loss from
operations
For the three months ended March 31, 2023,
growing net revenue and production efficiencies combined for an
increase to gross profit of $0.7 million compared to the prior
year. Despite a significant increase in net revenues of 71%,
operating expenses remained relatively stable with a decrease of
$0.1 million (4%) for the three months ended March 31, 2023 as the
Company began to see the results of operating leverage.
For the three months ended March 31, 2023, the
Company’s loss from operations has significantly decreased to $0.3
million from $1.1 million in the prior year.
Rubicon Organics achieved Adjusted EBITDA1
profitability of $0.2 million and positive operating cash flow of
$0.2 million for the three months ended March 31, 2023.
Company Outlook
Rubicon Organics has set out four key priorities
for 2023:
1. Optimize
Yield and Cultivation at our Delta Facility
Our priority is delivering super-premium quality
cannabis flower products in the Canadian market. Producing at scale
in a greenhouse environment is subject to seasonal impacts and
commercializing new strains to meet the demand in market and our
brand standards can present challenges. We remain focused on
ongoing refinement and optimization in our cultivation systems. In
2022 the Company achieved several crops exceeding our nameplate
11,000 kg’s capacity, and we expect 2023 to be a year of steady and
consistent quality production. Additional tables will be installed
in our facility to improve air circulation and increase capacity in
the second half of 2023, with standard maintenance scheduled during
downtime.
2. Maximize
Canadian Premium Opportunity
Rubicon is focused on maximizing the gross
margin we earn from each gram produced from our Delta Facility.
Delivering both the right genetics and product formats to the
customer at the right price to value ratio and maintaining good
relationships with the provincial distributors and retail stores
are critical to our success. In 2023 we are driving to grow our
Simply Bare™ Organic brand and to premiumize opportunistically
elements of our 1964 Supply Co™ brand the impact of both would
be positive on our gross profit.
As we have forecast demand beyond our available
supply from our Delta Facility we have begun projects that we
expect to incrementally grow our net revenue and gross profit. We
intend to launch products that do not require the Delta Facility’s
capacity that we anticipate will add incremental gross profit to
our results in a cost effective and efficient manner such as
through contract grow relationships which will be to Rubicon’s
quality standards. We are also actively looking to build our
revenue with the launch of new products under our existing brands
which can be contracted to other licensed producers thus not
utilizing our existing capacity. We intend to deliver this
incremental gross profit without significant incremental overhead
cost to our business, thus driving additional overall
profitability.
3. Drive
Efficiency in Processes and Systems
As steady state has been established at our
Delta Facility, we now are seeking to create efficiency in our
systems away from manual processes or those where there is reliance
on key individuals to increase the resilience and repeatability of
our systems and reduce cost. As part of this process, Rubicon is
evaluating new information systems and expects to begin
implementing new systems beginning in the second half of 2023. This
project will increase costs in the short-term, but we believe will
improve efficiency of the existing business and ready Rubicon for
further growth.
4. Build a
Proud, Engaged Team Delivering Outstanding Results
With turmoil in the cannabis sector in the last
number of years, coupled with the stresses relating to work in the
pandemic and tightness of the labour market, we have seen
considerable turnover in the business. We believe that in order to
deliver a premium product to market, our team members being engaged
and proud is important to put our best foot forward with our
consumers and customers. Furthermore, the cost and resources used
when there is labour turnover can be considerable. As part of
achieving an engaged and proud team, we have set clear goals and
objectives linked to reward to recognize the hard work and
accomplishments of team members. We also have begun reviewing our
Company values listening to our people as part of the process and
Rubicon’s evolution now that we are in a more steady state.
Rubicon believes that our cannabis quality,
brand positionings and product offerings will drive continued
growth in net revenue, resulting in an increase in gross profit and
Adjusted EBITDA for the full year 2023. With a stable cost base,
this anticipated growth in net revenue and gross profit would
improve our operating leverage. Additionally, we expect to achieve
positive cashflow for the full year, pending opportunistic
investment decisions.
As a business we are now looking to increase the
volume of product that we have available for sale to fill the
demand we have for our quality products. The business is evaluating
several options to increase our capacity. We believe that despite
any market volatility, inflationary pressures, regulatory change,
our product quality and brand portfolio has positioned Rubicon to
win in the premium cannabis market.
Conference Call
The Company will be hosting a conference call to
discuss Q1 2023 results on Tuesday, May 23, 2023. Conference call
details are as follows:
Time: |
7:00 AM PT / 10:00 AM ET |
Conference ID: |
24664234 |
Local
dial-in: |
+1 (416) 764 8658 |
Toll Free N. America: |
+1 (888) 886 7786 |
Webcast: |
https://viavid.webcasts.com/starthere.jsp?ei=1614812&tp_key=e84b4da18a |
ABOUT RUBICON ORGANICS INC.
Rubicon Organics Inc. is the global brand leader
in premium organic cannabis products. The Company is vertically
integrated through its wholly owned subsidiary Rubicon Holdings
Corp, a licensed producer. Rubicon Organics is focused on achieving
industry leading profitability through its premium cannabis flower,
product innovation and brand portfolio management, including its
flagship super-premium brand Simply Bare™ Organic, its premium
brand 1964 Supply Co.™, its premium concentrate brand LAB THEORY™,
its mainstream brand Homestead Cannabis Supply™ and its topical
brand Wildflower™.
The Company ensures the quality of its supply
chain by cultivating, processing, branding and selling organic
certified, sustainably produced, super-premium cannabis products
from its state-of-the-art glass roofed facility located in Delta,
BC, Canada.
CONTACT INFORMATION
Margaret BrodieInterim CEO & CFOPhone: +1
(437) 929-1964Email: ir@rubiconorganics.com
The TSX Venture Exchange or its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) does not accept responsibility for the
adequacy or accuracy of this press release.
Non-GAAP Financial Measures
This press release contains certain financial
performance measures that are not recognized or defined under IFRS
(“Non-GAAP Measures”) including, but not limited to, “Adjusted
EBITDA”. As a result, this data may not be comparable to data
presented by other companies. The Company believes that these
Non-GAAP Measures are useful indicators of operating performance
and are specifically used by management to assess the financial and
operational performance of the Company as well as its liquidity.
Accordingly, they should not be considered in isolation nor as a
substitute for analysis of our financial information reported under
IFRS. For more information, please refer to the “Selected Financial
Information” section in the MD&A for the three months ended
March 31, 2023, which is available on SEDAR at www.sedar.com.
Below is the Company’s quantitative
reconciliation of Adjusted EBITDA calculated as earnings (losses)
from operations before interest, tax, depreciation and
amortization, share-based compensation expense, and fair value
changes. The following table presents a reconciliation of Adjusted
EBITDA to the most comparable IFRS financial measure for the three
months ended March 31, 2023 and March 31, 2022.
|
|
Three months ended |
|
|
March 31, 2023 |
March 31, 2022 |
|
|
$ |
$ |
Loss from operations |
|
(304,497 |
) |
(1,129,209 |
) |
|
|
|
|
IFRS fair value accounting
related to cannabis plants and inventory |
|
139,463 |
|
1,746,098 |
|
|
|
(443,960 |
) |
(2,875,307 |
) |
|
|
|
|
Interest revenue |
|
— |
|
(5,056 |
) |
Depreciation and
amortization |
|
744,783 |
|
692,427 |
|
Share-based compensation
expense |
|
(132,158 |
) |
666,446 |
|
Adjusted EBITDA |
|
168,665 |
|
(1,521,490 |
) |
Cautionary Statement Regarding Forward Looking
Information
This press release contains forward-looking
information within the meaning of applicable securities laws. All
statements that are not historical facts, including without
limitation, statements regarding future estimates, plans, programs,
forecasts, projections, objectives, assumptions, expectations or
beliefs of future performance, statements regarding Rubicon
Organics' goal of achieving industry leading profitability are
"forward-looking statements". Forward-looking information can be
identified by the use of words such as “will” or variations of such
word or statements that certain actions, events or results "will"
be taken, occur or be achieved.
Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause
actual results, events or developments to be materially different
from any future results, events or developments expressed or
implied by such forward looking statements. The forward-looking
information in this press release is based upon certain assumptions
that management considers reasonable in the circumstances,
including the impact on revenue of new products and brands entering
the market, and the timing of achieve Adjusted EBITDA profitability
and cash flow positive. Risks and uncertainties associated with the
forward looking information in this press release include, among
others, dependence on obtaining and maintaining regulatory
approvals, including acquiring and renewing federal, provincial,
local or other licenses and any inability to obtain all necessary
governmental approvals licenses and permits for construction at its
facilities in a timely manner; regulatory or political change such
as changes in applicable laws and regulations, including
bureaucratic delays or inefficiencies or any other reasons; any
other factors or developments which may hinder market growth;
Rubicon Organics' limited operating history and lack of historical
profits; reliance on management; and the effect of capital market
conditions and other factors on capital availability; competition,
including from more established or better financed competitors; and
the need to secure and maintain corporate alliances and
partnerships, including with customers and suppliers; and those
factors identified under the heading "Risk Factors" in Rubicon
Organic’s annual information form dated March 31, 2023 filed with
Canadian provincial securities regulatory authorities. These
factors should be considered carefully, and readers are cautioned
not to place undue reliance on such forward-looking statements.
Although Rubicon Organics has attempted to identify important risk
factors that could cause actual actions, events or results to
differ materially from those described in forward-looking
statements, there may be other risk factors that cause actions,
events or results to differ from those anticipated, estimated or
intended.
These factors should be considered carefully,
and readers are cautioned not to place undue reliance on such
forward-looking statements. Although Rubicon Organics has attempted
to identify important risk factors that could cause actual actions,
events or results to differ materially from those described in
forward-looking statements, there may be other risk factors that
cause actions, events or results to differ from those anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in forward-looking statements. Rubicon Organics assumes
no obligation to update any forward-looking statement, even if new
information becomes available as a result of future events, new
information or for any other reason except as required by law.
We have made numerous assumptions about the
forward-looking statements and information contained herein,
including among other things, assumptions about: optimizing yield,
achieving revenue growth, increasing gross profit, operating
cashflow and Adjusted EBITDA profitability. Even though the
management of Rubicon Organics believes that the assumptions made,
and the expectations represented by such statements or information
are reasonable, there can be no assurance that the forward-looking
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in
forward-looking statements. Investors are cautioned against undue
reliance on forward-looking statements or information.
Forward-looking statements and information are designed to help
readers understand management's current views of our near and
longer term prospects and may not be appropriate for other
purposes. Rubicon Organics assumes no obligation to update any
forward-looking statement, even if new information becomes
available as a result of future events, changes in assumptions, new
information or for any other reason except as required by law.
_______________________________________1
Adjusted EBITDA is a non-GAAP measure that is calculated as
earnings (losses) from operations before interest, tax,
depreciation and amortization, share-based compensation expense,
and fair value changes. See ‘Non-GAAP Financial Measures’ for
details on the Adjusted EBITDA calculation.2 Hifyre data for flower
& pre-rolled products covering three months ending March 31,
20233 Hifyre data for premium flower & pre-rolled products
covering three months ending March 31, 2023
Rubicon Organics (TSXV:ROMJ)
過去 株価チャート
から 5 2024 まで 6 2024
Rubicon Organics (TSXV:ROMJ)
過去 株価チャート
から 6 2023 まで 6 2024