Earnings call transcript: Rubicon Organics’ Q1 2025 revenue exceeds forecast

Rubicon Organics Inc. reported a robust financial performance for the first quarter of 2025, with net revenue reaching $12.38 million, surpassing the forecast of $12 million. Despite a slight earnings per share (EPS) loss of $0.01, the company demonstrated significant growth in key areas, leading to stable stock performance in after-hours trading. According to InvestingPro data, the company is currently trading at a low revenue valuation multiple with a market capitalization of $19.39 million. The company also highlighted advancements in product innovation and operational capacity.

Key Takeaways

• Revenue increased by 39% year-over-year, reaching $12.4 million.
• The company achieved positive adjusted EBITDA of $700,000, a significant improvement from a loss in the previous year.
• Expansion in product lines and operational capacity, including new wellness products and pre-roll formats.
• Acquisition of the Hope facility to enhance production capacity by 4,500 kilos.
• Canadian cannabis market showing signs of stabilization and resilience.

Company Performance

Rubicon Organics showed strong performance in Q1 2025, with a notable 39% increase in net revenue compared to the same period last year. The company has successfully transitioned to positive adjusted EBITDA, marking a turnaround from the previous year’s losses. This growth is attributed to the expansion of product offerings and operational enhancements, positioning Rubicon as a leader in the premium and organic cannabis segments.

Financial Highlights

• Revenue: $12.4 million, up 39% year-over-year
• Earnings per share: Loss of $0.01
• Gross margin: Improved to 31% from 25% last year
• Cash position: $7.8 million
• Working capital: $20.6 million

Earnings vs. Forecast

Rubicon Organics reported a revenue of $12.38 million, exceeding the forecast of $12 million. The EPS loss of $0.01 was in line with expectations, demonstrating stability despite the slight loss. The revenue surprise highlights the company’s ability to outperform in a challenging market environment.

Market Reaction

Following the earnings announcement, Rubicon Organics’ stock remained stable in after-hours trading, reflecting investor confidence in the company’s growth trajectory and market positioning. The stock’s performance aligns with its recent trading range, maintaining a steady position between its 52-week high and low.

Outlook & Guidance

Rubicon Organics remains optimistic about future growth, forecasting continued revenue and adjusted EBITDA improvements. The company plans to capitalize on international market opportunities and expects its Hope facility to contribute significantly to production by late 2025. The focus on premium segments and international expansion is expected to drive future growth.

Executive Commentary

CEO Margaret Brody expressed confidence in the company’s direction, stating, "We are bullish about the future of Canadian cannabis as global demand now surpasses quality supply." She also highlighted the stabilization of domestic pricing, which began in Q4 2024, as a positive indicator for future performance.

Risks and Challenges

• Market saturation and pricing pressures in the cannabis industry.
• Potential supply chain disruptions impacting production and distribution.
• Regulatory changes in key markets that could affect international expansion plans.
• Economic uncertainties that may influence consumer spending and market demand.

Q&A

During the earnings call, analysts inquired about the company’s international expansion strategy and the potential impact of the Hope facility on future production. Rubicon confirmed plans to explore markets in Germany, France, and the UK, emphasizing confidence in selling the new capacity from the Hope facility.

Full transcript - Rubicon Organics Inc (ROMJ) Q1 2025:

Conference Operator: Good morning, ladies and gentlemen, and welcome to the Rubicon Organics First Quarter Earnings Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. I would now like to turn the conference call over to Margaret Brody. Please go ahead.

Margaret Brody, CEO, Rubicon Organics: Good morning, everyone. Thank you for joining us today. I’ll be sharing an update on our strong start to 2025, the growth opportunities ahead and a few key industry developments. I’m also pleased to introduce our new CFO, Glenn Ibbott, who joins me on the call for the first time, and he’ll be walking you through the financial results. As you can see from our recent announcements, 2025 has been busy, and we have plans to grow our business.

In terms of key milestones, in Q1, we delivered net revenue of $12,400,000 a 39% or $3,500,000 increase year over year. We reported positive adjusted EBITDA of $700,000 marking a $1,100,000 improvement compared to the same period in 2024. We received our GACP certification for our Delta facility to allow us to execute our inaugural international shipment to Poland in mid March. And we entered into an agreement to acquire a new facility in Hope, BC, expanding our annual production capacity for premium cannabis flower by over 40% to 15,500 kilos. In Q2 twenty twenty five thus far, we’ve appointed our new CFO, Glenn Ibbott.

For those of you not aware, Glenn is best known in the industry for his tenure as CFO at Aurora Cannabis from 2017 to 2024, where he played a pivotal role in the company’s rapid growth, international expansion, and delivery of recurring EBITDA and cash flow. His expertise comes at an important time for Rubicon Organics as we scale new capacity and explore new markets for our industry leading premium cannabis brands. And we successfully closed a non brokered life offering, which we upsized by 50% to $4,500,000 due to strong demand despite recently significant volatility in the capital markets. Our revenue growth this quarter was fueled by strong performance across Canada’s Four largest provinces. We remain focused on the Canadian market and satisfying our key Canadian customers, and I’ll speak to that more in a moment.

A key driver of our Q1 growth was the strong performance of our resin vape line. Although it only launched in Q2 of twenty twenty four with just two SKUs, we expanded it to five by the end of twenty twenty four, and then by the close of Q1 twenty twenty five, we had eight SKUs in market, further strengthening our growing product portfolio. These vape carts have been extremely well received, quickly capturing nearly 15% of the segment and continuing to gain strong momentum. Beyond resin vapes, we also saw steady growth in the rest of the 1964 portfolio as well as with our Simply Bare and Wildflower brands, which continue to strengthen our overall portfolio. Our presence in premium edibles continues to expand.

At the end of Q1, we had offerings in the category under Simply Bare, nineteen sixty four and Wildflower. We see a real opportunity to continue to build on our brand strength in this category. When it comes to topicals, we remain the market leader in the topical category despite our premium pricing. While we’ve seen some share loss recently due to competitors entering with a wide range of SKUs at lower price points, we continue to grow revenue and leave this segment with fewer products thanks to our product quality and strong brand equity. In growing our offerings to consumers, we are regularly launching new products that build on the strength of our House of Premium brands and leverage our genetics bank.

In Q1, a few standouts to note. We launched BC Organic Pink Drip by Simply Bare in late March. We are honored to bring this standout genetic to the legal markets for the first time from the legendary Gastown Genetics. Launched under SimplyVARE, it has been receiving incredible reviews and is part of our drop strategy to provide the SimplyVARE consumer with new and unique flavors. As I mentioned, we expanded our SKU count on nineteen sixty four FSE resin, and we have now grown to eight resin SKUs in market, most recently adding Lemon Diesel, a vibrant summer ready strain that complements the existing SKU lineup.

Lastly, we launched Homestead Edibles. Building on the success of our other gummy launches in 1964, Wildflower and Simply Bare, we’ve now introduced resin gummies under Homestead. This launch is designed to bring the mainstream consumer into our premium product portfolio. The product launched at the end of Q1 in BC and will launch in Ontario in the coming months. I will now pass the call over to Glen to discuss our financial performance.

Glenn Ibbott, CFO, Rubicon Organics: Thanks, Margaret. Good morning, everyone. As Margaret noted, I’ve been a CFO in the Canadian cannabis industry since 2017. I’ve seen a lot of companies attempt to navigate the incredibly competitive Canadian business. And I have to tell you that I’m beyond delighted to join Margaret and the Rubicon team, leaders in premium cannabis with great brands, incredible products, and an unwavering dedication to deliver a high quality experience to our customers each and every time.

Okay. Now looking at our financial performance in Q1 of twenty twenty five. The first quarter of each calendar year is normally a seasonally lighter quarter for Rubicon, so we are pleased to have achieved net revenue of $12,400,000 for the three months ended 03/31/2025, a 39% increase over the same period last year. Our overall growth is largely driven by our premium 1964 brand where continued product innovation resonates with our customers. Our 1964 brand delivered strong growth in both the vape and flower categories, up 44% year over year.

This performance was led by the successful ramp up and strong customer demand for products we introduced last year, including our resin vape line launched in q two of twenty twenty four and new flower genetics such as new lemon diesel genetics. Pre roll, which saw a softer performance in early twenty twenty four, were also a significant contributor this quarter, thanks to the new 0.5 gram pre roll pack format introduced mid-twenty twenty four that has gained solid traction in the market. Simply Bare experienced growth across all categories with strong contributions from new product lines launched in 2024 such as capsules and edibles and unique genetic launches in our organic pre roll segment. And in the wellness category, Wildflower continues to perform well despite its relative premium pricing versus the larger competitors in the category. Revenue growth was driven by strong sell through of existing SKUs and further supported by the successful launch of two new products, the Wildflower Extra Strength Relief Stick and the one:one CBD THC Relief Stick, both of which have resonated with consumers and helped to extend our footprint in the wellness space.

Moving down the P and L, gross profit before fair value adjustments was $3,800,000 a 72% improvement from Q1 of twenty twenty four. And our gross margin improved to 31%, up from 25% in the same quarter last year. Gross profit is an important driver of financial strength and reflected strong revenue growth coupled with scale benefits and operational efficiencies at our Delta facility. Within SG and A costs, we saw normal increases in salaries year over year, while external G and A spend was down slightly, and marketing was up just over $200,000 as we invested in the growth of our leading brands. So summing all of this up in adjusted EBITDA, our Q1 twenty twenty five adjusted EBITDA came in at $700,000 up from a loss of $400,000 last year.

This marks our fourth consecutive quarter and eighth of the last nine quarters of positive adjusted EBITDA, which signaled strong underlying business health even as we continue to invest in long term growth. Now I’ll discuss cash flows and balance sheet health. During the quarter, changes in working capital impacted operating cash flows as we used a net $962,000 We had higher excise tax payments resulting from a strong Q4 twenty twenty four sales and an increased investment in inventory levels to support anticipated demand. We ended the quarter with $7,800,000 in cash and a solid working capital position of $20,600,000 Our liquidity remains strong, supported by prudent cost control and a disciplined capital structure. As you will recall, in November 2024, we secured $10,000,000 in credit facilities at an interest rate of 6.75%.

Subsequent to Q1, we raised gross proceeds of $4,500,000 to support startup and scale up of the Hope facility. We may consider additional debt financing should we choose to accelerate key projects, but we consider Rubicon’s current balance sheet to be very healthy and providing the flexibility to pursue additional growth initiatives. But to summarize my review of our Q1 financial performance, solid revenue growth across all of our key segments and products, combined with continued cost discipline led to the fourth consecutive quarter of positive adjusted EBITDA and continued robust financial health. I’ll now turn the call back to Margaret.

Margaret Brody, CEO, Rubicon Organics: Thanks, Glenn. As you may have followed our story over the last couple of years, we have built our top line by working with co manufacturers to launch both edibles in ’23 and vape in ’24. We have been looking for more incremental supply beyond our existing contract grow relationships, and our next move is the acquisition of the Hope facility, which is expected to deliver incremental flower production for our business. We expect to close the purchase of the new facility in Hope, BC in the coming weeks. This acquisition is timely given the now evident global supply cannabis supply shortage.

Our Delta facility is already producing some of Canada’s best premium cannabis, and we are the only scaled premium and organic cannabis operator in the country. And Hope provides the opportunity for us to satisfy more demand as it brings an incremental 4,500 kilos of production capacity into our business for just $4,500,000 purchase price. And we expect to add under $2,000,000 in incremental CapEx, of which three quarters we expect to spend in 2025. Given that the low end of estimates are that it would cost more than $12,000,000 to build this facility today, this is an incredibly strategic purchase. We will fully own the facility and the real estate, allowing a stronger balance sheet and optionality.

The Hope site was first licensed in BC was the first licensed in BC and is located about an hour and a half from our existing operation in Delta. This proximity allows us to leverage our experienced operational team to quickly get it up and running with the first harvest expected in late twenty twenty five. We expect it will take twelve to eighteen months from once we acquire the Hope facility and get the appropriate consistent quality and begin to optimize yield. We’ll incur significant start up OpEx in 2025, and we do not expect revenue to follow in twelvetwenty six. This expansion will help capture unmet demand for our capacity constrained brands in Canada, and we expect to open up international channels in 2026.

Now on to our growth opportunities. Flower continues to be our favorite product to sell and for good reason. Simply Bare and 1964 have consistently strong demand, often outpacing what we’ve been able to supply. It’s a great problem to have, but it has meant we’ve historically been limited on our ability to launch larger format offerings. With contracted incremental 2,000 kilos of biomass in 2025 and then capacity from Hope in 2026, we expect that we could satisfy more of the requests we receive for larger format products.

But larger format products largely come with moderately lower margins, although with the potential positive impact on our top line and ultimately our bottom line, which is significant. Our resin vapes have exceeded expectations since launching just over a year ago in BC. The vape market itself is expanding, and we’re finding more and more segments where we can win. Most recently, we’ve secured a listing in one province for an all in one resin vape, and we are seeking to launch more broadly across our key markets during the year. This format allows us to reach a new kind of customer, those looking for a convenient, ready to use option different from our existing five ten threat offerings.

We also eagerly anticipate the results of the Quebec based listing for potential initial sales in Q4 of twenty five. In terms of Homestead, this brand has started as a tactical solution originally used to move flower that, while still high quality, didn’t quite meet the premium standards of Simplyvera 1964. It has become a bit of a cult favorite with customers eagerly watching for available product. Recognizing the demand for Rubicon quality products, we recently launched Homestead resin gummies, which opens us up to a more mainstream edible customer. And finally, international.

We see tremendous demand for consistent quality supply from medical patients around the world and expect in future to be participating in those markets, although we do not expect that to have a meaningful revenue contribution in 2025. This year, we continue to see our hypothesis of Canadian cannabis moving along the Gartner hype curve coming true. Highs followed by the low or low, and now the emergence of clear winners as the market matures. The past four years until 2025 have been marked by intense competition and relentless pricing pressure. We now believe, and data demonstrates, that beginning Q4 twenty twenty four domestic pricing has stabilized with some segments already seeing price increases due to shortage of quality supply.

Dynamics in the market are shifting, with demand outpacing supply, setting the stage for steeper, more sustainable resurgence both domestically and internationally. Wholesale prices have risen notably since last summer, and we continue to receive strong demand for our products from both markets and expect the next eighteen to twenty four months to be a period of continued growth for Rubicon. To look forward to the remainder of 2025, we see the cannabis markets have turned a corner. What can you expect from Rubicon? Firstly, we are focused on securing additional premium quality supply in two ways: one, through our planned HOPE acquisition and two, through contract arrangements where we expect incremental 2,000 kilos of biomass.

Secondly, we are focused on the domestic market and building trust with customers in Canada. We see now is the time that brands are built and that many of our competitors are turning away from the Canadian market, and that coupled with rising barriers to entry onto Canadian shelves with provincial SKU rationalization and supplier scoring means it will be increasingly challenging for new brands and products to secure shelf space. At the same time, Canadian consumers are becoming more brand loyal, prioritizing trust and value in their purchasing decisions. We believe our award winning brands and diverse product portfolio will continue to resonate with them. Thirdly, we remain committed to bringing new and innovative genetics to the Canadian market to continue to elevate our consumers’ experiences.

And lastly, in 2025, we plan to test and learn in the international medical market in advance of having incremental production from Hope, some of which we expect will be available for international channels in 2026. In financial terms for our 2025 targets, we are forecasting growth in both net revenue and adjusted EBITDA from our core business on a like for like basis. In 2025, our annual adjusted EBITDA will be impacted by initial pre revenue operational costs of just over $3,000,000 associated with the start up of Hope with revenues of Hope not likely to appear until 2026. We are bullish about the future of Canadian cannabis as global demand now surpasses quality supply. Over the past few years, Rubicon has strategically laid the groundwork by expanding into edibles and vape products, refinancing our debt and preparing to broaden our footprint.

With the planned acquisition of Hope, our market positioning growth and initiatives, coupled with the industry shift towards undersupply, Rubicon is very well situated for long term success and value creation. I’d now like to open the line to analysts for questions. Operator, please open the line.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Session. Your first question is from Neil Gomer from Haywood Securities.

Neil Gomer, Analyst, Haywood Securities: Margaret, maybe I’ll start with respect to your comment on the contract grows expecting 2,000 kilos this year. Can you give us a sense as how that compares to last year? I know you started the contract grows last year. Just like wanting to better understand whether that’s a similar level to last year or that’s incremental to, to the contract product that you received last year.

Margaret Brody, CEO, Rubicon Organics: Great question, and good morning, Neil. It’s actually all incremental. We did have some contract girl come in last year, but it was much it was not included in this incremental 2,000.

Neil Gomer, Analyst, Haywood Securities: Okay. Okay. Thank you for clarifying. And then what’s your philosophy? And maybe it’s too early to answer the question, but I’ll ask it anyways.

Going into ’26, once you have hope, you know, running, are are you expecting to continue with the contract? Are you expecting hope to sort of displace what you’re getting from the contract growth?

Margaret Brody, CEO, Rubicon Organics: No. You know, look. We intend to continue to move forward. I think there we do have long term contracts, but they there’s often pricing discussions annually. So our intention is to continue with that and and, look, be the be a good base and partner for our suppliers and a reliable one.

I think in this market, being a reliable partner actually has considerable value for, contract manufacturers.

Neil Gomer, Analyst, Haywood Securities: K. Thank you. With respect to HOPE, you know, soon we close in a couple weeks time here, and then you can obviously start your CapEx initiatives right away. When when would you anticipate getting the license and I able to actually put first plants into the facility?

Margaret Brody, CEO, Rubicon Organics: The under promise and over delivering me is going to say end of the summer. We have noticeably heard in the industry that Health Canada is being a little slower, although we do have a assigned individual working on the file, and we did submit it back in March. I’m hopeful. I don’t like saying hopeful for hope that by mid July it’s in, but I think I would say to you August would be probably a more conservative worldview. In either case, we do expect, from a conservative perspective, that we are taking down at least one harvest this year.

Neil Gomer, Analyst, Haywood Securities: Okay. Thank you. Last question, on the income statement. Gross margins, I’m well aware, fluctuate quarter to quarter, you know, for various different factors, economies of scale and so forth. So it did come down a little bit from q four.

Obviously, part of that is the revenues, and it’s not really a quarter question. It’s more of a how should we be thinking about it on an annual basis, you know, so that we just don’t pay attention too much to the quarter over quarter fluctuations, but more, you know, if I look at last year, sort of the average was, you know, 31 and a half, I think, as far as gross margin. You know, should that be be sort of sustained at similar levels, this year, or or any puts or takes that, you may wanna comment on with respect to the gross margin line?

Margaret Brody, CEO, Rubicon Organics: Great. Good question. Our production costs stay relatively flat on the year. So if you took last year’s and this year’s and just ran them out, it’s really the inventory expense to cost of sales portion, which is the the which is everything past the harvest door. Look.

I I’d like that to be around 35%. That’s what we’ve seen in the past, and I think that would be a good indicator for this year.

Neil Gomer, Analyst, Haywood Securities: Okay. Great. Thanks for taking my questions.

Margaret Brody, CEO, Rubicon Organics: I should actually mention, Neil, one thing. Pre roll automation that we, we have spoken about, those machines arrived this week. So we expect to see some of the the benefits of that, and that’s what will that was what will derive, the 35%. That’s one of the significant items.

Neil Gomer, Analyst, Haywood Securities: Okay. Great. Thank you.

Conference Operator: Thank you. Once again, please press star one should you wish to ask a question. Your next question is from Pablo Zuanic from Zuanic and Associates. Your line is now open.

Pablo Zuanic, Analyst, Zuanic and Associates: Thank you. Good morning, everyone. Margaret, can you just maybe give a broader view of the premium segment? I mean, based on the data with you know, there’s a lot of macro uncertainty out there, you know, some consumer pressures. When you think of the premium segment compared to a year ago, where are we?

I mean, is the segment shrinking, growing? What would be your thought there? If you can just comment on that. And related to that, I don’t know if you can quantify, the impact of deflation on your revenue growth. I mean, very impressive year on year growth, but, you know, was deflation a a a headwind, in terms of your revenue growth?

Thank you.

Margaret Brody, CEO, Rubicon Organics: Great great questions. On the premium segment overall, always tricky to cut the numbers because as we are seeing we look at Hifyre data, which takes the anything falls into premium is over 20% of the the average cost, and we have seen average cost in Canada, well documented, stabilize and actually go up a bit from the about the fourth quarter of last year. Look. On consumer pressure and and premium, we’ve actually seen inflation in Canada. So Canadians’ experiences both grow while there’s been some pressure on grocery, rents have stabilized and other things.

So unless we are into a a major recession, I think we’re fairly confident. I’m not an economist. If you could predict what’s gonna happen in the next few months, I think that would be great. We’ve obviously seen tremendous volatility, which does make consumers nervous. We also see at the same time, we’re competing also against the legacy markets.

Legacy market prices tend to be lower than legal market, so that always puts pressure on on us. That that being said, we believe our genetics, the positioning that we’re in, and our brand strength, we expect to continue to grow share. That’s our goal, notwithstanding any economic situation. And I don’t know, Glenn, if you’ve got a a different view than me on that.

Glenn Ibbott, CFO, Rubicon Organics: No, Margaret. I mean, as you’ve described, where we participate in premium and and the products that we’re continuing to launch, new genetics, etcetera, in the premium side, there’s no pricing pressure there is pretty minimal over the last little while for our products, for our type of products. You know, we can’t speak to the low end, and the pressures that might be there in the mass market. And as we look forward, you know, we are launching across all our product categories and, know, the, you know, the premium segments that we operate in. So, Pablo, it’s not a significant concern for us as we forecast the rest of the fiscal year.

Margaret Brody, CEO, Rubicon Organics: And your next question was on deep deep deflation on the revenue growth. You know, for us, I don’t we didn’t see that at all. I think the the genetics we have in market right now are getting consumer pull, and we’re very proud of that and excited for that also for the remainder of the year. So that’s just not been our experience. Can’t speak to others in the industry.

Pablo Zuanic, Analyst, Zuanic and Associates: Okay. Thank you. And just a quick follow-up. I mean, obviously, you know, you’re increasing capacity with with hope. But I guess it’s a two part question again.

I I don’t know if you answered the prior question, but this year, you plan to buy incremental two tons of biomass. But is that on top of two tons last year? I don’t know if you wanna give a number for how much biomass you bought last year. And then in terms of these incremental tons, I mean, are are we talking about premium flower for your very premium products, or is this is this more for distillate, for lower end products? If you can quantify if you can if you can give more color there.

And separate, but again, related, and I know we don’t wanna get ahead of ourselves here, but, you know, what’s your capability down the road to expand the capacity in at Hope and even expand the capacity at Delta, or would you have to look at a third facility for that? Thank you.

Margaret Brody, CEO, Rubicon Organics: Great questions. I’ll take them one at a time. Firstly, buying the 2,000 kilos, that’s on top of last year, and we didn’t disclose how much last year we purchased. So I’m gonna wear beige on that one. In terms of what that is, look.

We want it to be premium flower. The quality needs to hold, and we hold our quality standard high. If the strains that are grown don’t meet the quality standard, we can often go to our our contract manufacturer, contract growers, and and and shift price, but we do have outlets to put that flour through our diss sorry, our our our our hydrocobin process. So we can use all of it. We we’d love it to be flour.

That’s where we’re aiming for it to be. And what you can see is on the 1964 product that’s been released and actually doing reasonably well, we’re really proud to see the lemon diesel moving, and that is a partner a partner product. It goes everything that we do goes through to make sure that it meets extensive tasting panel and trial, and every batch gets smoked to make sure the quality is there. So we’re really confident in our process to be able to maintain that. Then I believe we can use it all.

Frankly, we want the flower. We want the biomass. And lastly, on capability to expand HOPE or Delta. HOPE, we’ve said that production capacity is around 4,500 kilos. Previously, other companies had six six said 6,900.

I actually think if you were growing one genetic all the time for max yield, that’s a reasonable number. Next year, we don’t expect that, you know, 26, I think, you know, it takes a minute to optimize. I’ve said twelve to eighteen months. I’d love to be at at a closer to a 4,500 kilo run rate at the end of twenty six. Let’s get the quality there first and make sure we understand the facility, although facility does have an excellent reputation.

Expanding that will be about optimizing yield. There’s not space to expand. At Delta, could we expand? Yes. Should would we look at another facility and growth?

I think everything’s on the table as we you know, you what you’ll notice from Rubicon is clear execution. You know, oftentimes, somebody in the in the team throws up the idea. We make sure that it fits into our strategic plan, and and, typically, the plan is driving what the ideas are. And then as hopes hope the hope project will now be into execution mode, that will be on the ops team. And I’m obviously looking for what’s next, and that’s my role.

Pablo Zuanic, Analyst, Zuanic and Associates: Thank you. Let me add just just one more. I know you’re just launching now the all in one live resin vapes, but the plan is to stick to live resin only in in vapes. Right? Or are you looking at also other types of, vape products?

Thanks. That’s it.

Margaret Brody, CEO, Rubicon Organics: We that’s a great question. Look. The FSC resin is what we’re launching going to launch onto the all in one. We’re very excited about that segment. What I would comment is that, margins are comparable to existing vape, but it allows us to get into the hands of a different use time often in terms of consumers.

Consumers often buy both or and so they they they use the products well. We’re very excited about the all in one. It’s a new category for us, and it should be our growth our growth area this year. We also expect that that you know, we we’ve explored rosin. You can see that we have rosin in our gummies.

That’s not in the near term. In terms of distillate, it’s not a game we’re interested in playing at this stage. We think that it’s a it it it’s more of a race to the bottom on on price and a bit less differentiation. But to be honest, we’re growing the business. And so I think as you go forward, you’ve gotta you’ve gotta make sure you’re always considering everything.

I just don’t see that in the next eighteen months, certainly something will come.

Pablo Zuanic, Analyst, Zuanic and Associates: Got it. Thank you.

Margaret Brody, CEO, Rubicon Organics: Thanks, Pablo.

Conference Operator: Thank you. Your next question is from Josh Felker from CB One Capital. Your line is now open.

Josh Felker, Analyst, CB One Capital: Thanks. Good morning, Margaret, and welcome back from retirement, Glenn. I’m sure you must have gotten a half decent offer in order to get you off the lake, but welcome. The first question is around your confidence in your ability to sell the new capacity from Hope. I know you’re basically selling out of everything that you produced right now, or I believe that’s the commentary.

I’m just wondering what other levers you can pull to sell this new capacity, and do you think there’s demand for this additional capacity through your brands? Thank you.

Margaret Brody, CEO, Rubicon Organics: Josh, I would say if you were to look at our S and OP plan, our sales and operating plan in ’25 and ’20 excuse me. ’24 and ’25, you’d see that we have the demand there. And what I what I commented on is it’s really the larger format bags that we have very, very strong, you know, unmet demand. Those are slightly lower margin. Not not it’s not crazy.

There’s also considerable demand for consistent high quality product into international markets. Very confident that we can sell all of it. And in fact, I think we’ll alluding to Pablo’s question, be quickly looking for what’s next. But I see Rubicon as having a wonderful positioning with indoor high quality product. We’re gonna have our our fantastic organic facility, and I guess there’s a question of what’s next.

I think there’s there’s more supply for us to to be seeking because there’s there’s lots of demand out there. And as as we talked about recently in terms of international, you know, markets are just turning on, and there’s a a lot of space. France has just announced they’re looking at the end of next year, between Germany, Switzerland, The UK, Poland. There’s there’s there’s lots of there’s lots of room.

Josh Felker, Analyst, CB One Capital: Super. Appreciate that answer. And I guess that was my follow-up question. What are you seeing in terms of supply demand factors in international markets? I’m wondering if you’re still seeing undersupply because I’m starting to hear commentary from other operators that there may be more of a parity now in those international markets.

So how is that developing? And then, I guess, more relevant to you, how is that developing on the premium side?

Margaret Brody, CEO, Rubicon Organics: So I think what’s what we’re hearing happened over the last six months is the in this is specific to Germany. The operators panicked because they didn’t have enough supply, went out, bought a ton of supply. Not necessarily in the the premium segment, I would say, more in the mainstream. And we are now having global competition coming in from whether it’s Colombia. I know South Africa is turning on, etcetera.

More of the more of that is at the lower end of the market. I think this is going to be just a case of hurry up and wait, and then it’s gonna be not enough supply. We’re we’re just gonna see weird supply demand curves over the next little while as as new customer or patients emerge in those markets. What we are hearing is there’s not premium supply. And I think what happened was there was a lot of run to purchase, and then and then, oh, we maybe repurchased too much.

But I think that’s just normalization of of growing pains in any market. I I think that the the general curve is absolutely going towards there is a a wave of demand. Any short term pinches, which I think we’re probably in one right now, have emerged quite quickly. So I think over the last five weeks, it’s all of a sudden gone, oh gosh. At the value and mainstream end of the market, they’re okay for supply, but we’re not hearing that in the premium segment.

Josh Felker, Analyst, CB One Capital: Great to hear. Congratulations on the quarter. Thank you so

Neil Gomer, Analyst, Haywood Securities: much for taking my questions.

Margaret Brody, CEO, Rubicon Organics: Thanks, Josh.

Conference Operator: Thank you. There are no further questions at this time. I will now hand the call back over to Margaret Brody for the closing remarks.

Margaret Brody, CEO, Rubicon Organics: Thank you for joining us today and welcoming Glen to the team. Rubicon is in a transformational year, driving to build the most trusted house of premium brands in Canada and beyond. Hot off the press is that we won Standard Producer of the Year at this year’s Grow Up on Monday night, adding another accolade to our cabinet. I’d always also like to give a personal recommendation, and this quarter, it’s the Simply Vare Pink Drip Flower. I can hand sit down and say it was one of the best consumption experiences I’ve ever had, and I would really encourage you to give it a try.

Conference Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your

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