Rubicon Organics Reports Fourth Quarter 2020 Financial Results and Operational Milestones
- Earned $4.8 million of net revenue in Q4 2020, an increase of 51% over Q3 2020
VANCOUVER, British Columbia., April 06, 2021 (GLOBE NEWSWIRE) — Rubicon Organics Inc. (“Rubicon Organics” or the “Company”) (TSXV:ROMJ | OTCQX:ROMJF), a licensed producer focused on cultivating and selling organic certified and premium cannabis, today reported its financial results for the fourth quarter and year ended December 31, 2020 (“Q4 2020”). All amounts are expressed in Canadian dollars.
Our focused strategy of producing the highest quality premium organic cannabis is gaining more traction as we launch new products, add brands and expand distribution. We are very pleased with the $9.4 million in net revenue we delivered in 2020, our first year of operation, and we believe that our expanded distribution and deep innovation pipeline will continue to drive revenue growth and improved profitability in 2021.
Jesse McConnell, Chief Executive Officer
We are in an excellent financial position to drive organic growth and will continue to consider strategic options towards driving shareholder value and achieving our long-term goal of being global brand leaders in organic cannabis.
Q4 2020 Highlights:
- Earned $4.8 million of net revenue, an increase of $1.6 million or 51% as compared to Q3 2020;
- Launched in Quebec with the Simply Bare™ Organic and the 1964™ brands and received first purchase orders for both flower and hash;
- Launched BC Organic Apple Toffee in Simply Bare™ Organic, available in jar and pre-roll formats;
- Signed an agreement with PAX LABS® to fill organic cannabis oil pods for the PAX® ERA™ and PAX® ERA Pro™ premium vaporizers;
- Triggered the acceleration of 3.15 million warrants with an exercise price of $3.50, resulting in the exercise of 2.04 million warrants and gross proceeds of $7.1 million;
- Amalgamated three Canadian subsidiaries which will allow for use of over $20 million in tax losses in the future; and
- Announced intention to appoint Julie Lassonde to the Board of Directors once her security clearance is obtained from Health Canada.
Highlights Subsequent to Q4 2020:
- Received a sales amendment from Health Canada allowing the direct sale of concentrate products and hash to provinces and distributors;
- Closed a $23.0 million bought deal offering at a price of $3.80 per unit consisting of one common share and one-half common share purchase warrant;
- Entered into an agreement with The Valens Company (“Valens”)(TSX:VLNS) to provide organic certified extraction services;
- Announced purchase orders from distributors in Ontario, British Columbia, Alberta and Saskatchewan for Wildflower CBD Relief Sticks and Wildflower CBD Cool Sticks; and
- Repaid the $5.0 million first mortgage loan in full.
Q4 2020 Select Financial and Operational Results:
In Q4 2020, Rubicon Organics earned $4.8 million of net revenue, which is an increase of $1.6 million or 51% as compared to Q3 2020. This increase in net revenue is attributable to an increased product offering, including the launch of new brands, and expanded distribution channels across Canada.
The Company reported an Adjusted EBITDA loss of $3.0 million in Q4 2020, as compared to a loss of $2.6 million in Q3 2020. The sequential change in Adjusted EBITDA is attributable to the increase in net revenue in Q4 2020 offset most significantly by the write-off of inventory that did not meet our strict internal quality standards.
The Company reported a net loss of $5.0 million in Q4 2020, as compared to a net loss of $4.3 million in Q3 2020. The sequential change in profitability reflects fair value changes in the Company’s cannabis assets and increases to operating expenses such stock-based compensation and general and administrative expenses.
Rubicon Organics is determined to achieve positive operating cash flow and profitability. In Q4 2020, the Company gained significant market share in the premium category, in particular in Ontario and BC., including the capture of the #1 premium brand in BC¹ and the #2 premium brand in Ontario and Alberta¹. Through the winter of 2021 in Canada, the Company experienced a significant decrease in orders from the provincial distributors in Ontario and Alberta relative to forecast. This decrease from forecast was particularly noteworthy where store closures were in effect or stores were limited to “click and collect” shopping. In addition, there has been inventory de-stocking events at provincial distributors impacting total short-term market demand and lower first-time purchases of new product innovation by the distributors. These factors will impact Rubicon Organics’ ability to achieve its previously disclosed Adjusted EBITDA and operating cash flow targets in Q1 2021. The Company’s current expectation for the achievement of such milestones has been delayed to Q2 2021, subject to the impact of further provincial restrictions on retail store openings and distributor buying patterns. We remain confident in our product appeal and plan to win in the premium market given that with the recent significant SKU rationalization at various provincial distributors, Rubicon Organics retained all of its SKU listings with the provincial distributors and also added new SKUs such as 7g jars of Simply Bare™ Organic and Wildflower topicals.
Despite these external factors, the Company has maintained pricing for its premium products, remained rigorous in the control of cash costs, implemented efficiencies across its production process and tailored its innovation pipeline to product categories with high consumer demand and premium margin potential.
The Company expects to fully repay the mortgage facilities existing at December 31, 2020 as they come due between April 2021 and July 2021, and to refinance approximately half of the debt to a long-term mortgage financing facility, potentially with more favourable terms.
The Company will be hosting a conference call to discuss Q4 2020 results on April 6, 2021. Conference call details are as follows:
Date and time: 7:00 AM PT / 10:00 AM ET
Conference ID: 3998408
Local dial-in: (833) 900-2238
International dial-in: (647) 689-5136
ABOUT RUBICON ORGANICS INC.
Rubicon Organics Inc. is becoming the global brand leader in organic cannabis products. Through its wholly owned subsidiary Rubicon Holdings Corp, a licensed producer, the Company cultivates, processes and sells organic certified, sustainably produced, super-premium cannabis products from its state-of-the-art hybrid greenhouse located in Delta, BC, Canada. Rubicon Organics is focused on achieving industry leading profitability through a focus on innovation and the development of brands and cannabis 2.0 products, including its flagship super-premium brand Simply Bare™ Organic and its super-premium concentrate brand LAB THEORY™.
Chief Financial Officer
Phone: +1 (437) 929-1964
Non-GAAP Financial Measures
This press release contains certain financial performance measures that are not recognized or defined under IRFS (“Non-GAAP Measures”) including, but not limited to, “Adjusted EBITDA”. As a result, this data may not be comparable to data presented by other cannabis companies. For an explanation and reconciliation of these measures to related comparable financial information presented in the financial statements prepared in accordance with IFRS for the year ended December 31, 2020, please refer to the “Selected Annual Information” section in the MD&A for the year ended December 31, 2020. The Company believes that these Non-GAAP Measures are useful indicators of operating performance and are specifically used by management to assess the financial and operational performance of the Company.
1 Based on information from industry data sources including the Ontario Cannabis Stores and Buddi data during the period from October 1, 2020 to December 31, 2020.