ROMJF - Earnings call transcript Q4 2021

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Operator

Good morning, everyone and welcome to Rubicon Organics, Fourth Quarter 2021 Financial Results Conference Call.

As a reminder, this conference call is being recorded on April 19, 2022. At this time, all participants are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for Research Analysts to queue up for questions.

will contains to statements Rubicon's measures. I our X and begin, which presentation, caution we refer Slide you of non-GAAP Before regarding forward-looking presenters Officer, Chief Financial Today's Jesse Brodie, Officer. Margaret Chief Executive be will and McConnell, now for presentation. McConnell to the turn the We'll over Jesse call

Jesse McConnell

Operator, morning, you everyone. Thank and good

We grow best in cannabis on to unwavering have years. mission earth been our the in XX

a in a to yield progressive that products, quality. to facility, to resulting our brands and loyal continue love premium culture cultivation and our people, an quality that brand Building invest costs and and our prioritizes are increase in it of helping reduction grow to, with in and in our our promises production We deliver consumers consumer. systems us the margins on gets

deliver share seen and segment in the Canada, Organic Our Simply brand one market promise flower for number year efforts December have X.X% Bare of premium the to XXXX. the remain ended in the premium pre-rolls, for that

to is outpacing We are the which premium of have the in proud market. overall growth segment, share market maintained

best optimize our us strategy. and across to XX XXXX. respectively, an XX X across portfolio entire categories achieved national we and and to XXX success enables growth as quarter produce. this X.XX% products our outstanding and XXXX, sales of of marketing share any brands margins months own X.X% and and During we have This to and X a good, of for December team our with the without big % with ended year all XX, coast-to-coast XX, XXXX XX part sales. relates market A held operated the better, market in the rollout distribution. four, net December for had months we We and portfolio brand all Rubicon recognizing respectively; % using in our revenue ended wholesale the compared

some for share the financial and call specifics after strategy will I performance, to over you For will to XXXX. Margaret being, pass I pillar update about the time our X our

Margaret Brodie

XXXX. good profit over And year, December pleased Jesse. XXXX, months ended or net that of $X.X XX XXX leverage the very % % you, million everyone. ended is reported increase Rubicon year revenue operating in This Organics morning, $XX.X three $X.X am XX. throughout net the million XX, the I million. report Thank to realized achieving [Indiscernible] sales increasing of $XX.X on million in gross in December or the

continue profit fourth in positive to gross operations from the quarter. see We

we The volatility to market, As positive of working our continued position closer allowing adjusted other fund growth and and position, opportunities. full advantage a take and to healthy sales of operate and and with our cash of we're brands capital target to getting EBITDA. portfolio company flexibility also maintain

revenue Homestead new our The brand, across roll is increase mainstream premium our the net to for brand, Supply of Simply super CO, As brand, premium in count out to XXXX Canada and the launch the expanded cannabis our compared our XXXX, attributable Bare supply. Organic. of

with period earnings slight third to from the as from CapEx transitional our cost and and reduction QX I impact increased our our on the margin sold to compared call, Consistent growth quarter throughput we the of fourth fixed revenue XXXX. QX, gross done with facility. have we net in and the remain current coming expected in to be chunky what to see some our past, relatively at are quarter communicated expected of of with a a goods with levels can timing that As revenue installations,

refinance release costs flows mutual in improvement from production quarter cost over over of results our XXXX. annually XXXX. an over and cash have The a million with the position, we operating gross run This improvement XX, balance to XX restructuring is third grid to healthy facility outlook. is expected March well turn products working flows had things our which operating sell, under to Hydro next a and to market our to a cultivated by We drive half the importantly, XXXX, plans, May the versus be million Bare I to first Access drive we announced the like We comparable goals. debt reflects our and QX, These quarter installed of now deliver the QX to adjusted end flow our connection, of $XXX,XXX be This In we the we of our in million to improvement production with bringing the million. in spread loss The continued new of in ESG of quarter volumes fourth of in the perspective, XXXX about more $XXX,XXX. substantial of Furthermore, base us towards expect project profit meeting and brands BC XXXX of of longer-term output. rate $X.X a our have positive EBITDA to capital $X.X XXXX, at of on would efficiencies sheet. XXXX. the a quarter on improvement operations $X.X reported positive reduce back larger kilo thousand XXXX. is quarter over to notable Most we also in higher-price-point the share quarter of $X.X further finding in capital as continues The second of capital completed we operations latter as $X are cash FYXX. XXXX. the flow to project units refocused margin Jesse Simply our portfolio six significant in balance expected HVAC to a our additional the by seen our leverage operating budgeted product units. realized fourth the in discussions the plan across now a cash strategic maintain forecast From debt HVAC line. we for the costs quarter, combination or gains cash impacting investments have to part and working due ever our to entire expand within XXXX down are cash cash in extend and on third facility company operating our of we of million had

Jesse McConnell

Margaret. and To for of our lot our pillar from optimize to a three, flow. you, we quality focused profitability margins Thank products. the launching mix facility, of of cash a half sustainable in priorities production yielding strategy developed international product consists clear XXXX, impact goals on Each we profitability business, three on me our have which of these expect improving and of the positive second

to climate our we focus a to identify in priority. crop cost a most its be dehumidification cultivation super of enable kilograms continues increase the being new expect the to anticipate inefficiencies. first which market XX,XXX quarter premium at Our from end installed THC hone flower refined cannabis. product by rate a upgrades, yield is offerings critical process of of to premium system, our completed the super And our company invested in and facility delta improved XXXX, content The we we facility each cannabis run with high-quality will control two. enter greater We've maintaining the use process continue production and improvements, systems, units

Hydro second savings facility resulting grid, Our is operating the expected the in production of XXXX. benefit also Delta BC further in cost half to

an in distribution. expected be total to XXXX. we bode owned Our the for too also quality brand which our recognition our five Simply consumers. and next market, and higher strategies of commercial with and Rubicon's TAC bringing products Supply Year volume launched Canadian to which is levels licensed to of the CO organic increasingly increased sale should Bare coupled Delta and among is maximize all flour, X.X and are premium XXXX produced in to pillar which branch. our delivering for are growth within market premium product drive and the market The innovations is gaining Translate of gaining Future more pre-roll Full fully momentum unit is to brands the expected with to national and with first in each facility, cannabis domestic is the profit of bartenders the implement growth into portfolio, existing our expected gross outpacing flour innovation well be market under market rate from

Our the four, We we that achieved first expansion line agreements enabling of market. and final open key key the The strategic you launch for expectation in quarter to pillar EBITDA will open in commitments premium our our positive in And occur is on questions. half company's a and like company brands markets Canadian would capitalize coupled new continued obtaining achieving three our profitable great on yield the despite to line. access Europe in XXXX is key product position increase XXXX. portfolio The flow to Canada's win please and Rubicon and Israel continue adjusted combination certifications to positive markets be quality strong market our with our momentum. operating focus time. any and top-line for coupled in production, believe with significant cash in operating us second cash and XXXX, international to believes and of and exports realized that volatility priorities the flows with we to in into brand our Thank milestone by deliver expected XXXX. expect the the its XXXX. and with Rubicon growth the first enabled in offerings on the now Operator, current to our from margin increased

Operator

the while Q&A Thank you. standby compile [Operator Instructions] we Please roster.

Glimmer first Your Neil from the line Securities. comes of Haywood question from

is now line open. Your

Neil Glimmer

Thanks very much. And good morning.

Jesse McConnell

Neil. morning Good

Neil Glimmer

unfolding to your to XXXX. pull you could maybe a you over that to how that I you what little see And your expand strategy you want drive the year growth on that bit margin referred and pillar leverage can on course start for of forward if pillar. in just the second of maybe

Jesse McConnell

Certainly.

are of each is lowest The that about that we've for. Homestead, different received each finding of our we things all is amount look existing pillar margin couple supply a we've for marketplace, A portfolio. inside there. good at our which marketplace we of brand of sales if net value And tier limited done examples have second

prioritizing which So in we we sales highest the value. marketplace the are get net

that keyed on in between THC Another be, is understand would very consumer the and we price. that and example the is correlation that

brands incremental a existing price the inside to products, but even as tiers brands higher-potency we incremental with take to willing series, be same great. which that able pay brands can is have crops, of where -- of We creating we existing our to take creating other inside we're or incremental the we're consumer have XXXX production are be menu so its of costs secret coming brands, to price, out we has of or unique more, subcategories The where will there. outstanding reasons were genetics, we the those inside tiers believe margin able

Neil Glimmer

right, Okay. thank you for All that.

of your us me Can question Second sort this XX,XXX for would of end of sense you kilos be any your sort get run to give annualized what of year. press release, by you comment of the rate the in to cadence right the what's Because in we now can everything expect achieving I and the you referenced produce other the [Indiscernible] facility. selling think MD that? that

a of to trying this for XX,XXX get just So an year. not you're be sense going to

We a are into of now grow sense and to two how you're XX,XXX. where for that get out you trying

Jesse McConnell

of we've the kilo pushing made improvements, approximately yet. Critical the HVAC that question. our one, X,XXX XX,XXX year installed this we'll at be process Last end X,XXX had of neighborhood at the rate. on kilos of in But not around rate coming somewhere a out as run of into of run beginning decisions coming new kilos. we a all And with rate the year production We're at genetics. run quarter our

of are we're that we that be we in attain of advance run rate doing indicating that everything can And to run four So course quarter we when will rate. hit that.

Neil Glimmer

can If in. one sneak one Fair last I enough.

we're us normalized commented release February the Can factors said Are to your January achieve give what with revenue of bit respect on of on in still March some those basis? and press able of on QX, in -- sort any you Your sales. to a and was in that sense because on at disruptions? we a those and flat looking little disruptions COVID, growth or QX you despite view overall then sequential

Jesse McConnell

a play we quarter coming the effects marketplace. as much that own a in Typically, to own to had then of stores sale number COVID. into provincial think some the saw as that And we transitioned experienced supply in done some for result the available a we'll that we in from March. absenteeism There as with of top I around factors we some of a see have one in supply. normalization dip. with HVAC. the return There's those was mandates of the our facility -- being % commissioning % effect we there we our that all coming first with see XX absenteeism, didn't for two And months on offline XX then of and seasonality then to

think run impacts March year-ends. thing that their return is do March. set is I February distributors they're We're timing to seeing in to January, to the patterns provincial the outside and starting for they buying those run when their for other down then industry in seasonality normal inventories down as the inventories year-ends. And understand

Neil Glimmer

flow my in questions right, QX. for thanks positive congrats Okay. taking net All operating and cash the on

Jesse McConnell

Thanks, Neil, questions appreciate the

Operator

Freedman Michael Instructions] James. Your question comes from Raymond [Operator next the line of from

is Your now line

Michael Freedman

kilograms. taking -- a yield? finishing mix, and sort current targeting anticipated for of run year the strong. realized Hi like of might Rubicon much full what going to there What fully on for Jesse, based out thanks the the operations? Neil's be on so and questions XX,XXX your capacity, anticipate rate level What's that question might annualized product I'm revenue XXXX, our follow on hi congratulations coming Margaret, on

Jesse McConnell

of when Well, is -- line questions if way. look across that that want -- of one the that number we there's here big that to right as where the revenue are could great us like. landing, look the by clear I Michael, entirely international. question, is of a now factors there, playing not is product And the impact that's

I So want say I'm would -- will guidance -- on exclude me there, you if but where given revenue Margaret sense of have you you the think possibility, you international you've think to what we do a where

Margaret Brodie

mean I not --

Jesse McConnell

question. This

Margaret Brodie

going Very as going things, Look, we run always thing, XX, at that that to think bullish less than have good to for market and to to question. we run rate, we're selling. be I firstly, up sure we we're need Jesse that everything make hit looking

So can as one in down to the if lot which we right we clear, be to. of and of want point is clarification, a grow now in facility [Indiscernible]

it the is not growing Our we're in there product super throwing and our in premium cannabis into driving just dumping Because focus in focused facility market. margins. and growing on it

at a both between it, what stores, XX if don't be and revenue announced because of margins them business will calculation organic do And of will product imagine was that's the to So not we're so you production very are, revenue on we think Obviously, in is helpful? XX,XXX then at would but a have where think % contract. yet if numbers top-line. were that, know year's can I signed high. probably internationally big for considerable, do in of those that demand what year's on our last the at boost need quite we those they and of the X indicated an and I nice somewhere be when going look be we that, last I % would was very based extrapolation then I looking our they

Michael Freedman

much -- was helpful. It [Indiscernible] is totally that Thank very it and you appreciate

Margaret Brodie

I benefits think price I grew, the But the after market got etc and came in into we've than some in -- the experience. to what exciting faster few the we'd the off grow we'll question of is in market trend legal the we And Canada, let consumers started got overall in terpene the compression and In like because market consumers a all that a expect on stores. seeing been happens profiles, also premium, more Canada new overall. legacy to years, go which of in premium the markets. and market Colorado, with premium mature the see out is, improved of bite well. the the take while that's the market big and of are growing overall consumers more plant of premium educated consumers market as the the Canada that

Michael Freedman

very much. Thanks

question. next So

needs to right including go all -- to looking to on guys aim which achieve year? second-half levers Rubicon pulling You profitability for commendable. are adjusting of is profitability, What you're this wages, your the reach year like

Jesse McConnell

margin great we question. our a is we year that adjusting if is had year, lower to of cost that be and put When the we are fairly said, if through, needed a the the zero unable turn the significant key the into yield. place new we we initially the look in I in THC were come were have the own very be we pieces business. the way to international it of a target marketplace. will on fair bit over through. at the also which looked of doesn't including level case, which for breakeven in like What what of improve us targeted. is end will other than zero, with we we through mix, believe think compensation taken the see the numbers come pillars, is total sales those any if coming unlikely call approaching as The That's based don't that rate to can quality a quarter, And we've We this that by yield of but rest the alone the

strategies, we can achieve goes margins or of through right, we in quality existing currently premiumization on ways but going profitability, to we're international those increased get that can we contracts get and achieve our alone some we yield land and through year. domestic other at there. rate if profitability our run coming are this we're that the one So we then that others of continue any if profitability. If doing But will achieve facility, we thing the

Margaret Brodie

we going into planning expect three. to say some We're

Michael Freedman

and the this at looking infused We've introduction I speak becomes I [Indiscernible] could milligram tax transfer outrageous more. of in apply high-volume roll be remaining -- a taxation pretty products one on category positive the contribution. having seen and the THC relatively structures products cost infused interested enter tree whereas Fabulous. but of into and Fabulous. be while your closely, I would popular pre-rolls, market. companies If category profitable can view this to on how with

Jesse McConnell

-- is That

Margaret Brodie

ahead. Sorry, Jesse, go

Jesse McConnell

said, are think That's growth? just a the what Or the category as the individuals And and It's they are for at that is yourself ask is actually, then only we extensively. What it's lower And growing to has that pre-rolls I up. you experience behind have looking are looked high-potent something concentrate great hype than you an significantly. question. -- looking because a that because it assumptions flower. flower the Is experience have together? pre-rolls flower for typically potencies infused

when of We look position category. to the inside we've potency you our are own pre-rolls, pretty a strong been significantly at able in actually drive pre-roll

We arguably and you it pre-rolls what as certainly at or top have of a, the an of we sellers there. well are look term is of that reasons in than higher When one producers excise offered the our in % pre-roll infused country. already tax the so one of being flower the excellent high and is pre-rolls So are XXX percentage marketplace some that basis as a like agreed high today. pre-rolls the category and the or the are of some was their infused in the

of I and much agree just pre-rolls to investigate very is price. you'll that, a see the category comparable to continue from think value consumer the for we offer the flower for experience we for excise can stay look believe competitive our there appropriate that away high-potency infused because more that that pre-rolls but assuming this premiums Rubicon the we taxes a only and So at in charge

Michael Freedman

into you and much, best back the and towards thank All Margaret, FYXX. I'll right, all queue Jesse very jump

Jesse McConnell

Michael. you, Thank

Operator

further presenters seeing may I'm no continue. in Instructions]. [Operator the you queue questions

Jesse McConnell

our thank your Thank for our call a appreciate the for for you, you year-end support Have to everybody. day, and joining analysts in pointing continuing questions. today. everyone We great Rubicon, your

Operator

this participating. conference Thank Ladies and today's for gentlemen, call. you concludes

now disconnect. may You

Rubicon Organics (ROMJF) 19 Apr 222021 Q4 Earnings call transcript