Rubicon Organics Reports First Quarter 2021 Financial Results and Operational Milestones
GlobeNewswire - Tue May 18, 5:19AM CDT
Rubicon Organics Inc. (TSXV:ROMJ.VN) (OTCQX:ROMJF) ("Rubicon Organics" or the "Company"), a licensed producer focused on cultivating and selling organic certified and premium cannabis, today reported its financial results for the first quarter ended March 31, 2021 ("Q1 2021"). All amounts are expressed in Canadian dollars.
"Rubicon Organics has maintained its market share leadership position in the organic cannabis segment and remains a top selling premium brand in all major Canadian provinces. We remain focused on superior product quality and we have rapidly implemented efficiencies to our production process that position us to maximize our profitability. Our unique expertise in cultivating and marketing premium cannabis remains a significant competitive advantage and we firmly believe we have the right team and the right strategy to deliver long-term value for our shareholders," said Jesse McConnell, Chief Executive Officer.
Q1 2021 Highlights:
Highlights Subsequent to Q1 2021:
Q1 2021 Select Financial and Operational Results:
Three months ended Three months ended Three months ended March 31, 2021 March 31, 2020 December 31, 2020 $ $ $ Net revenue 4,110,563 454,043 4,774,488 Other income -- 131,173 -- Loss from continuing operations (3,987,316 ) (3,696,245 ) (4,805,606 ) Loss from discontinuing operations -- (111,926 ) (237,096 ) Net loss for the period (3,987,316 ) (3,808,171 ) (5,042,702 ) Adjusted EBITDA* (3,375,368 ) (3,036,260 ) (2,958,525 ) Cash 20,213,416 1,650,313 12,136,459 Working Capital 20,534,187 2,476,598 4,166,180
* Adjusted EBITDA is a non-GAAP measure that is calculated as earnings (losses) from operations before interest, tax, depreciation and amortization, share-based compensation expense, and fair value changes. See Selected Financial Information in the Q1 2021 Management's Discussion & Analysis for details on the Adjusted EBITDA calculation.
In Q1 2021, Rubicon Organics earned $4.1 million of net revenue, an increase of $3.7 million from Q1 2020, which is attributable to an increased product offering, including the launch of new brands, and expanded distribution channels across Canada. Net revenue declined $0.7 million from Q4 2020 due to ongoing restrictions by provincial governments on retail store operations.
The Company reported an Adjusted EBITDA loss of $3.4 million in Q1 2021, as compared to a loss of $3.0 million in Q4 2020 and $3.0 million in Q1 2020. The sequential change in Adjusted EBITDA is attributable to the decline in net revenue described above and the variance over the prior year is due to higher operating costs incurred to support the ramp up of the Company's operations.
The Company reported a net loss of $4.0 million in Q1 2021, as compared to a net loss of $5.0 million in Q4 2020 and $3.8 million in Q1 2020. The sequential change in profitability reflects fair value changes in the Company's cannabis assets and the year-over-year variance reflects higher net revenue offset by increased production and overhead costs, as well as a foreign currency translations benefit in the prior year.
Outlook
In Q1 2021, the Company maintained significant market share in the premium and organic product categories with its Simply Bare Organic(TM) brand. The Company held a top six position in premium in each of Ontario, Alberta and Quebec and remained the #1 premium brand in BC. Consistent with industry trends and guidance, the shutting of stores in Q1 2021 had a significant impact on sales to provincial distributors relative in forecast, particularly in Ontario and Alberta. This trend of decreased sales in Ontario and Alberta has continued with the ongoing lock-downs and store closures where sales are limited to "click and collect" shopping in those markets. In the few weeks that stores in Ontario were open to in-store shopping, Rubicon saw significant in-store sales increases. The government restrictions on retail operations remains challenging for revenue growth, but the results of the few weeks being open indicated a strong consumer demand in the premium segment for our Simply Bare Organic(TM) brand.
As a proactive measure to an uncertain outlook for store re-openings, Rubicon Organics is undergoing a company-wide restructuring and has already achieved an annualized savings of $2.6 million. Rubicon is also accelerating the launch of additional products and brands in the coming months which we expect will drive revenue within more segments of the premium flower category and with cannabis 2.0 product launches.
COVID-19 related store closures will impact Rubicon Organics' ability to achieve its previously disclosed Adjusted EBITDA and operating cash flow targets in Q2 2021. The Company's current expectation for the achievement of such milestones has been delayed to Q3 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 the additional SKU's being added in various markets across the country.
On March 31, 2021, the Company fully repaid the $5.0 million first mortgage on the Delta Facility. On April 23, 2021, the Company fully repaid two tranches of second mortgages totaling $8.4 million in principal and $2.1 million in accrued interest. In Q2 2021, the Company expects to enter into a mortgage financing facility at more favourable terms.