Rubicon Organics Inc. (TSXV: ROMJ) (OTCQX: ROMJF), a licensed producer of “organic, certified” premium cannabis, reported a notable year-over-year growth of 71% revenue growth in its first quarter 2023.
The rise is attributed to robust growth in the premium cannabis segment and expansion of its product offerings.
Rubicon reported a record net revenue of C$8.8 million for the first quarter, and positive adjusted EBITDA for the fourth consecutive quarter – even as the industry appeared in a lull, based on the first batch of earnings this season.
The boost was supported by a 2.1% national market share of flower and pre-rolls, and 5.3% share of premium flower and pre-rolls.
“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,” Margaret Brodie, who is both interim CEO and CFO of Rubicon, said in a statement.
Significant revenue growth was driven by an expansion of 1964 Supply Co, which recorded a full year of sales in all key markets. The launch of several new strains, larger formats, and an infused pre-roll offering under the Simply Bare Organic brand also contributed to the revenue rise.
Rubicon also reported revenue growth across all key markets – Alberta, British Columbia, Ontario, and Quebec – accounting for 99% of sales in Q1 2023.
Operating expenses remained stable due to operational efficiencies, resulting in higher gross profit of C$700,000. Loss from operations fell significantly to C$300,000 from C$1.1 million in the previous year.
However, Rubicon also reported a 13% uptick in production costs and a 53% increase in inventory expensed to cost of sales, primarily due to an increase in plant density, enhanced handling techniques, and inflation-driven costs of inputs such as fertilizers. To mitigate such costs in a high-inflation environment, the company is actively identifying cost-saving initiatives.
In addition to its first-quarter performance, Rubicon is focusing on certain key areas for the remainder of 2023:
- Optimizing yield and cultivation at its Delta Facility.
- Maximizing Canadian premium opportunity.
- Driving efficiency in processes and systems.
The strategic pathway is meant to drive further growth in net revenue and gross profit, improve operating leverage, and ensure positive cashflow for the year. Rubicon said on Tuesday that is also evaluating options to beef capacity to meet demand this year.
“With our diverse portfolio of consistent, high-quality products, Rubicon is well-prepared to meet the rising demand in this segment,” Brodie said.