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spk00: in a listen-only mode. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. It is now my pleasure to introduce Chris Spooner, Executive Vice President of Finance. You may begin.
spk03: Thank you. Hello, everyone. and welcome to Rubicon's fourth quarter and full year 2023 earnings call. A few quick reminders before we begin. This call is being webcast and can be accessed on the investor section of our website, which can be found at investors.rubicon.com. Today we will present Rubicon's financial results for the fourth quarter and full year of 2023, which will be followed by a question and answer session. During the call, management will be making forward-looking statements that are subject to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, and our actual results may differ materially due to known and unknown risks and uncertainties, as discussed in greater detail in our earnings release and our SEC filings. We assume no obligation to update forward-looking statements except as required by law. Additionally, We will refer to non-GAAP financial measures during our call today, including but not limited to adjusted gross profit and adjusted EBITDA. We provide these non-GAAP results for informational purposes, and they should not be considered in isolation from their most directly comparable GAAP measures. A discussion of why we believe these non-GAAP measures are useful to investors, certain limitations of using these measures, and reconciliations to the most directly comparable GAAP measure can be found in our earnings release and our filings with the SEC. Joining me on the call today are Phil Radone, Rubicon's Chief Executive Officer, and Kevin Schubert, Rubicon's President and Chief Financial Officer. With that, I would like to turn the call over to Phil.
spk02: Thank you, Chris, and thank you to everyone for joining us today. Last year was transformational for Rubicon. Our goals for the year were to materially improve our operational performance and strengthen our financial position. And I am proud to say that we accomplished both strategic objectives while achieving record financial performance and continuing to deliver better environmental outcomes for our customers. In the fourth quarter, we continued to grow adjusted gross profit with an increase of 37% year-over-year and expanded adjusted gross profit margin by 264 basis points. Adjusted EBITDA also improved by $17 million year-over-year to a loss of $437,000, an improvement of 98% from the fourth quarter of 2022. In addition, it is worth noting that the adjusted EBITDA figure includes approximately $3.8 million of non-cash operating expenses. Core to our success in 2023 was a successful completion of a number of key finance measures that included recapitalizing our debt, closing a new term loan, expanding our revolver capacity, and securing additional financing. The completion of these tasks gave us the financial flexibility we needed and improved our liquidity position. Full details of those actions can be found in our Q3 2023 filings. Operating efficiently was also the key focus in 2023, and we achieved a $55 million annualized expense reduction. While managing this company-wide shift and against the backdrop of economic challenges, we drove a 37% growth in adjusted gross profit year over year in the fourth quarter, and we not only met but exceeded our goal of achieving a double-digit adjusted gross profit margin. accomplishing this goal ahead of schedule. The net result of these optimizing actions was a 91% year-over-year improvement in the full year gross profit. Amidst all these strategic moves, we remained committed to sustainability. We diverted over 1.6 million tons of materials from landfills, translating to approximately 2.1 million metric tons of CO2 emissions avoided during 2023. Looking ahead, some challenges remain, but we remain focused on continuing the accelerated growth in our high-margin SaaS offerings and advancing key strategic optimization efforts, including, for example, a small but meaningful reduction of less than 20 people in February that was designed to optimize our workforce. As always, we remain dedicated to constantly evolving with our customers and delivering strong environmental and economic outcomes with a continuously improving experience. Continuing our review of 2023, I'd like to take a moment to highlight a few of Rubicon's wins in pursuit of delivering efficiency and sustainability solutions to our customers while prioritizing innovative technology. Rubicon Connect had significant wins in both adding new customers to the Rubicon family, as well as extending relationships with existing Rubicon customers. These new multi-year agreements are with prestigious commercial clients in a wide range of industries, such as Neiman Marcus and Vale Properties. The renewals include a five-year contract extension with Gap Incorporated and two-year extensions with both Goodyear Tires and AmeriCold. We look forward to deepening the relationships with these customers in the coming years, as well as welcoming more commercial clients into the Rubicon family so that they too can achieve better environmental and financial outcomes. In June 2023, we hosted our second annual NEXT Summit, the premier technology summit for leaders and innovators in solid waste, fleet operations, and sustainability. The summit provided a collaborative platform for industry leaders to gain insights into our cutting-edge technological developments and directly engage with our team. A top priority for Rubicon is to provide new and innovative technology that is tailored to customers' needs, which are often born from these collaborative sessions with our customers. Some of these features, which were rolled out last year, include a billing module for streamlined invoicing and AI-driven features to combat illegal waste disposal. ensuring operational efficiency and effectiveness for our clients. The third annual NEXT Summit will take place in New York City in June of 2024, bringing together fleet and commercial partners to facilitate collaboration between waste, recycling, and sustainability experts. Rubicon's commitment to sustainability was once again evident in 2023 through the launch of our technical advisory services, empowering customers to achieve their sustainability goals through tailored solutions and strategic partnerships. These developments highlight Rubicon's commitment to innovation, digitization, and sustainability, positioning the company as a leader in waste and recycling solutions. Last year was marked by strategic partnerships, technology deployments, and a continued focus on customer satisfaction and environmental impact reduction. I will now turn the call over to Kevin to provide a review of the fourth quarter and full year 2023 financials. Thanks, Phil.
spk01: I will now take a few minutes to review our fourth quarter and full year 2023 results, beginning with the fourth quarter. Revenue was 170.7 million, an increase of 4.7 million, or 2.8%, compared to 166 million in the fourth quarter of 2022, mainly driven by business expansion with existing customers, including new business lines. Adjusted gross profit was 18.3 million, an increase of $4.9 million, worth 36.5% compared to $13.4 million in the fourth quarter of 2022, driven by additional higher margin business with existing customers, which also drove adjusted gross profit margin expansion of over 260 basis points to 10.7% from 8.1%. Adjusted EBITDA was negative $437,000, an improvement of $17.1 million compared to negative $17.6 million in the fourth quarter of 2022. And as Phil previously mentioned, the adjusted EBITDA figure includes approximately $3.8 million of non-cash operating expenses. Now turning to our four-year results. Revenue was $697.6 million, an increase of $22.2 million, or 3.3%, compared to $675.4 million, for the full year of 2022. Adjusted gross profit was $72.2 million, an increase of $18.9 million, or 35.5%, compared to $53.3 million for the full year of 2022, driven by additional higher margin business with existing customers, which also drove adjusted gross profit margin expansion of over 245 basis points to 10.4% from 7.9%. Adjusted EBITDA was negative $33 million, an improvement of $41.3 million compared to negative $74.3 million for the full year of 2022. I'll now turn it back over to Phil before we take questions.
spk02: Thank you for continuing this journey with us. We look forward to updating you on our progress in the coming quarters. With that, I will turn the call over to the operator, who can open the line for questions.
spk00: Thank you. We will now begin the question and answer session. As a reminder, if you would like to ask a question, press star followed by the number one on your telephone keypad. We have no questions at this time. I will turn the call back over to Mr. Rodoni for final remarks.
spk02: Thank you everyone for joining us today and we look forward to updating you in the future. Thanks again.
spk00: This concludes today's call. You may now disconnect.
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