Rubicon Organics (ROMJ) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 net revenue of CAD 12.1 million, up 7% year-over-year, and $21.0M for the first half, up 5% year-over-year, with a return to positive adjusted EBITDA and operating cash flow after a subdued Q1.

• Maintained No. 1 premium market position in Canada, with 6.5% market share across all premium categories and strong shares in premium flower, pre-rolls, edibles, and topicals.

• Expanded product portfolio with launch of premium vape products, reaching over 40% national distribution within two months, and new premium genetics and wellness offerings.

• Successful launch of full spectrum extract vapes and new premium genetics under flagship brands.

Financial highlights

• Q2 2024 net revenue: CAD 12.1 million; gross profit: CAD 3.6–3.7 million; gross margin: 30%.

• Adjusted EBITDA for Q2: CAD 860,000–900,000; free cash flow: CAD 700,000–740,000.

• Operating cash flow improved to CAD 1.1 million in Q2, reversing a CAD 900,000 outflow in Q1.

• Cash and cash equivalents at June 30, 2024 were $9.5M; working capital $9.8M.

• Year-to-date cash flow positive at CAD 0.2 million.

Outlook and guidance

• Expects continued net revenue growth and increased adjusted EBITDA for 2024, excluding ERP investment.

• Anticipates positive operating cash flow for the full year and plans to refinance debt to a longer-term facility in H2 2024.

• Projecting over 20% revenue growth in 2025 from vape segment expansion.

• ERP implementation go-live expected in early 2025, with total 2024 spend of about CAD 1 million.

• Growth expected from branded products produced using external capacity, likely resulting in lower gross margins.