Rubicon Organics reports Q3 2024 financial and operating results

This post is presented by our media partner Grow Opportunity
View the full article here.

Delivered a record net revenue of $13.5 million for Q3 2024, a 34% increase year-over-year, and $34.5 million for the first nine months of 2024, a 15% increase year-over-year.
Adjusted EBITDA¹ of $2.0 million for the three months ended September 30, 2024
Operating cash flow of $0.9 million for the three months ended September 30, 2024
#1 premium licenced producer across all categories²

(Globe Newswire) Vancouver – Rubicon Organics Inc., a licensed producer focused on cultivating and selling organic certified and premium cannabis, today reported its financial results for the three and nine months ended September 30, 2024. All amounts are expressed in Canadian dollars.

“Rubicon Organics record net revenue for both Q3 and year-to-date 2024 reflects our strength and position as Canada’s leading premium House of Brands. Rubicon Organics continues to innovate and expand our product offerings, solidifying a strong market share in premium flower, pre-rolls, edibles, and more. I’m particularly proud of the success of our 2024 vape launch, which has already achieved 55% distribution in just six months. Looking ahead, we expect to drive further growth in Canada and beyond, as we intend for new market entry in 2025.”

“Rubicon Organics’ financial results for Q3 2024 reflect our strong operational execution and strategic focus. With a record-high net revenue of $13.5 million for the quarter and $34.5 million for the nine-month period, we have demonstrated our ability to achieve growth despite the challenges in the market. Our commitment to disciplined financial management has resulted in positive adjusted EBITDA for eight out of the last nine quarters. We also anticipate finalizing our debt re-financing before the end of the year paving the way for the Company’s next five years of growth,” said Janis Risbin, CFO.

________________________
_{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. Included in Adjusted EBITDA in the nine months ended September 30, 2024 is $0.6 million of one-time costs incurred for the ERP implementation project. See Non-GAAP Financial Measures for details on the Adjusted EBITDA calculation.
² Hifyre data for premium products covering flower, pre-rolled products, concentrates, edibles, topicals, and vapes for the twelve months ended September 30, 2024}

Q3 2024 and Subsequent Highlights:

For the three and nine months ended September 30, 2024

Net revenue of $13.5 million (34% increase from Q3 2023) and $34.5 million (15% increase from Q3 2023) for the three and nine months ended September 30, 2024.
Gross profit before fair value adjustments of $4.4 million (35% increase from Q3 2023) and $10.2 million (6% decrease from Q3 2023) for the three and nine months ended September 30, 2024.
Adjusted EBITDA¹ gain of $2.0 million and $2.4 million compared to $1.1 million and $3.1 million in Q3 2023, for the three and nine months ended September 30, 2024.
Cash provided by operating activities of $0.9 million for the three months ended September 30, 2024.
#1 premium licenced producer across all categories³ with 6.4% market share, up from 5.1%⁴.
2.0%⁵ national market share of flower and pre-rolls for the three and nine months ended September 30, 2024.
5.7%⁶ and 6.2%⁷ national market share of premium flower and pre-rolls for the three and nine months ended September 30, 2024.
Wildflower^™ is the #1 topical brand in Canada with market share of 27.8%⁸ for the nine months ended September 30, 2024.
28.5%⁹ and 27.2%¹⁰ national market share of premium edibles for the three and nine months ended September 30, 2024.
Launch of full spectrum extract vapes in Alberta, BC, and Ontario with four SKUs in market.

________________________
_{³ Hifyre data for premium products covering flower, pre-rolled products, concentrates, edibles, topicals, and vapes for the twelve months ended September 30, 2024}
_{⁴ Hifyre data for premium products covering flower, pre-rolled products, concentrates, edibles, topicals, and vapes for the nine months ended September 30, 2023}
_{⁵ Hifyre data for flower & pre-rolled products covering three and nine months ended September 30, 2024}
_{⁶ Hifyre data for premium flower & pre-rolled products covering three months ended September 30, 2024}
_{⁷ Hifyre data for premium flower & pre-rolled products covering nine months ended September 30, 2024}
_{⁸ Hifyre data for topical products covering nine months ended September 30, 2024}
_{⁹ Hifyre data for premium edible products covering three months ended September 30, 2024}
_{¹⁰ Hifyre data for premium edible products covering nine months ended September 30, 2024}

2024 Results of Operations:

	Three months ended				Nine months ended
	September 30, 2024 $		September 30, 2023 $		September 30, 2024 $	September 30, 2023 $
Net revenue	13,499,282		10,041,746		34,495,396	30,123,479
Production costs	2,897,890		2,797,037		8,522,534	8,067,975
Inventory expensed to cost of sales	6,013,707		3,806,971		14,960,189	10,657,979
Inventory written off or provided for	209,770		194,798		788,773	525,401
Gross profit before fair value adjustments	4,377,915		3,242,940		10,223,900	10,872,124
Fair value adjustments to cannabis plants, inventory sold, and other charges	(500,324	)	(1,309,266	)	62,718	(1,776,209	)
Gross profit	3,877,591		1,933,674		10,286,618	9,095,915

As at:	September 30, 2024 $	December 31, 2023 $
Cash and cash equivalents	9,601,162	9,784,190
Working capital †	10,643,402	10,132,089

† Working capital as at September 30, 2024 includes $10.9 million current portion of loans and borrowings. The Company is currently in discussions with the debenture holder and other lenders to extend the term of the existing agreement or to enter into a new loan agreement anticipated to be finalised before the end of the year.

2024 Outlook

Brand and Product Development

Our strategy is founded on a strong premium house of brands, highly regarded by both budtenders and consumers alike. Guided by consumer research, we continually innovate our products to anticipate market trends. Our commitment to quality and excellence is evident throughout all areas of our business, seeking to deliver products and services that consistently meet the highest quality standards.

Launch into Vape Category

Rubicon launched into the vape category with our 1964 Supply Co^™ brand. The introduction of vapes strategically aligns with our market expansion strategy and offers substantial growth prospects. The vape market has demonstrated robust growth over recent years and trends in Canada and the US support the vape category’s increasing prominence, rivaling or surpassing traditional flower products.

Using our Delta grown genetics and supplementing with biomass of the same genetics grown at partners, we launched Comatose and Blue Dream Full Spectrum Extract (“FSE”) resin vapes in Ontario, BC, and Alberta in May 2024. Following strong demand, we launched new cultivars, with GLTO #41 in late July 2024 and White Rainbow in October 2024. We anticipate launching a fifth vape SKU in market by the end of 2024.

In line with our approach to the live rosin edibles we launched under the brand in 2023, we are focused on delivering products that maintain a competitive edge through superior quality, right price to value ratio leveraging our established and reputable brands. We are confident that by capitalizing on this opportunity, over time we can achieve comparable financial success with our vape offerings as we have with our flower business.

Wildflower^™’s Leadership in Cannabis Wellness

Wildflower^™‘s prominence in the cannabis wellness sector is driven by its notable topical products. The Company has expanded the brand to adjacent categories, including edibles, oils, and capsules designed to address specific wellness needs such as sleep, pain relief, and anxiety reduction. While we expect more competition to enter the topical and wellness category, we are expanding the brand into other categories and anticipate steady growth and momentum behind the daily wellness consumer.

Launch of New Genetics

Rubicon plans to continue to launch new and novel genetics into its Simply Bare^™ Organic and 1964 Supply Co^™ brands to continue leadership in the premium cannabis market. Launches in 2024 include BC Organic Zookies, BC Organic Power Mintz, BC Organic Fruit Loopz, and BC Organic Pineapple Sour under the Simply Bare^™ Organic brand. Blue Dream, Stinky Pinky and LA Kush Cake have been launched under the 1964 Supply Co^™ brand in 2024 with Sour Tangie expected to launch before the end of the year.

Growth from Solid Business Fundamentals

Consistent quality and systematic delivery to our customers, including the provincial distributors and retailers, and consumers to meet their needs is imperative to be successful in the Canadian cannabis industry. In 2024 we are investing in an Enterprise Resource Planning (“ERP”) system which is necessary for our business to deliver more growth in future and reduce reliance on key people within our internal systems. Project costs are estimated to reach $1 million, with $0.6 million incurred in the first nine months of 2024. While a resource intensive process, this ERP implementation readies our business for growth in the future.

Financial

We believe that our commitment to cannabis quality, strategic brand positioning, diverse product portfolio, and committed team will position us as one of the premier cannabis companies in Canada. For 2024, we continue to anticipate year over year growth in net revenue, supported by modest increases in our cost base, excluding the impact of the ERP implementation occurring across 2024, thereby enhancing our operating leverage. While we expect growth in 2024, we also anticipate that much of the growth will come from our branded products that are produced using external capacity and thereby deliver lower gross margin than our current mix. Furthermore, we anticipate continued fierce competition in the distressed Canadian cannabis industry, leading to the maintenance or growth of value and standard pricing tiers, rather than premium price tiers. Notwithstanding these pressures, we expect to deliver continued operating positive cash flow in the year ahead and plan to refinance our debt to a longer-term mortgage facility before the end of 2024.

Conference Call

The Company will be hosting a conference call to discuss Q3 2024 results on Thursday, November 14, 2024. Conference call details are as follows: