Rubicon Organics Inc. (OTCQX: ROMJF) delivered mostly positive results on Monday as the company begins to post profits — buoyed by its premium flower and pre-roll line. The Vancouver cultivator released its financial results for the second quarter ending June 30, 2022. Rubicon reported approximately $8.8 million in net revenue during the period, a 92% gain versus the same period last year.
According to SEDAR filings, the company also reported a second-quarter net loss of $1.2 million versus a $1.5 million loss in the previous quarter; and a net loss of $5.1 million in the same period last year. The earnings were for a loss of two cents per share, versus a loss of three cents per share in the previous quarter.
“Rubicon Organics has reached profitability due to the continued success of Simply Bare Organic as Canada’s #1 premium flower and pre-roll brand and the impressive market share gains of our newly launched mainstream brand 1964 Supply Co.,” said CEO Jesse McConnell. “Our production facility at the end of Q2 2022 was delivering yield run-rates capacity expectations of 10,000kg and we are beginning to realize the benefits of operating leverage as our production costs remain relatively flat, excluding some minor cost creep due to inflationary pressures…I am also pleased to increase our guidance to achieve positive Adjusted EBITDA for FY 2022 and as well as operating cash flow positive in the second half of 2022.”
Rubicon’s revenue grew $3.7 million over the quarter — representing year-on-year revenue growth of 92% and 61% over the three and six months of this fiscal year.
In total, it reported $11.6 million in total revenue. However, the company’s growth in concentrate sales triggered an increase in excise tax worth $2.76 million, according to Sedar filings — offsetting net revenue gains versus the prior year. Concentrates attract higher excise taxes as a percentage of revenue than flower products.
Rubicon posited a three-pillar strategy this year focused on yield and quality, improving product mix to optimize margin, and obtaining certifications for international access, “each of which we expect will have a positive impact on our profitability and cash flow.”
“Our strategy has proven successful as evidenced by Rubicon achieving 8.6%3 market share of the premium flower and pre-roll market in the second quarter of 2022,” the company said in the release. “We continue to expect the premium market to outpace the growth of the total market in Canada as it has done in other leader markets and believe that Rubicon Organics is well positioned to take advantage of this momentum as consumer preferences shift.”
The company sees itself as operating cash flow positive and adjusted EBITDA profitable for the rest of this year, too.
“The growth in the rate of sale of our Simply Bare Organic and our 1964 Supply Co. brands has led us to being one of the fastest growing licensed producers in Canada in Q2 2022,” McConnell said. “We expect to see our products in international markets in either late 2022 or the first part of 2023. ”