Rubicon Organics Inc.

Good morning, everyone. Welcome to Rubicon Organic's fourth quarter 2021 financial results conference call. As a reminder, this conference call is being recorded on April 19, 2022. At this time, all participants are in a listen-only mode. Following the presentation, we'll conduct a question and answer session. Instructions will be provided at that time for research analysts to queue up for questions. Before we begin, I will refer you to slide two of our presentation, which contains Rubicon's caution regarding forward-looking statements and non-GAAP measures. Today's presenters will be Jesse McConnell, Chief Executive Officer, and Margaret Brody, Chief Financial Officer. I will now turn the call over to Jesse McConnell for the presentation.

Thank you, Operator, and good morning, everyone. We have been unwavering in our mission to grow the best cannabis on Earth and for the Earth. We continue to invest in our people, facility, and cultivation systems, resulting in a progressive reduction in our production costs and an increase in yield and quality of our products, helping us to grow our margins and deliver on our brand promises to the consumer. Building premium brands that consumers love and are loyal to begins with a culture that prioritizes quality. Our efforts to deliver that promise have seen Simply Bare Organic remain the number one premium brand in Canada in flower and pre-rolls, with a 7.6% market share of the premium segment for the year ended December 2021. We are proud to have maintained market share in the premium segment, which is outpacing growth of the overall market. During quarter four, we operated with our entire portfolio of brands in market and with coast to coast distribution. We held a 1.8% and 2.1% market share across all categories for the 12 and three months ended December 31st, 2021, respectively. And we have achieved this using our own sales and marketing team without any wholesale sales. Rubicon had an outstanding year recognizing 141% and 43% growth in net revenue for the 12 and three months into December 31st, 2021, respectively, as compared to 2020. A big part of our success relates to the national rollout of our good, better, best brand portfolio strategy. This enables us to optimize margins across all the products we produce. For the time being, I'll pass the call over to Margaret to share some specifics about our financial performance, and I will update you after our three-pillar strategy for 2022.

Thank you, Jesse, and good morning, everyone. I am very pleased to report that in the year ended December 31, 2021, Rubicon Organics reported net revenue of $22.6 million. This is 141% or $13.2 million increase over 2020. Rubicon realized increasing operating leverage throughout the year, achieving gross profit of $1.5 million, or 22% on $6.8 million in net sales in the three months ended December 31st. We continue to see positive gross profit from operations in the fourth quarter as we operate with our full portfolio of brands and markets, and we are getting closer to our target of positive adjusted EBITDA. The company also continues to maintain a healthy cash position and working capital positions, allowing flexibility to fund growth, handle sales volatility, and take advantage of other opportunities. As compared to 2020, the increase in our net revenue is attributable to our expanded SKU count for our super premium brand, Simply Bare Organic, the rollout across Canada of the premium brand, 1964 Supply Co., and the launch of our mainstream brand, Homestead Cannabis Supply. As I communicated at our third quarter earnings call, we expected the fourth quarter to be a transitional period with some chunky timing on revenue and the impact of our CapEx installation. And we can see that with a slight reduction from Q3 to Q4 2021. Consistent with what I have said in the past, our cost of goods sold are expected to remain relatively fixed as compared to current levels, with the growth in gross margins coming from increased net revenue and throughput of our facility. We have also refocused on finding additional efficiencies within our operations to further drive down our cost base and expand production volumes to spread costs over a larger output. In combination with bringing higher price point products to market under SimplyBear and 1964 brands, we expect notable margin gains in the latter half of 2022. We reported an adjusted EBITDA loss of $600,000 in the fourth quarter of 2021, a substantial improvement of 2.4 million versus Q4 2020. Most importantly, as we had forecast in our third quarter release to be operating cash flow neutral in the fourth quarter, we have now seen the results of our investments in working capital with our first ever quarter of positive operating cash flows of half a million dollars. This positive cash flow from operations is a 6.8 million improvement over the comparable quarter in 2020 and a 1.7 million improvement over the third quarter of 2021. The improvement in cash flows reflects the operating leverage we realized on the gross profit line, access to sell our product cultivated across the entire portfolio of brands, and the continued impact from the restructuring we announced in May 2021. From a capital perspective, we have installed six new HVAC units. These HVAC units are part of our strategic plan to deliver 11,000 kilos of production run rate by Q4 2022. The next significant budgeted project is the BC Hydro grid connection, which is expected to be completed by the end of the second quarter of 22. This project is expected to reduce our operating costs by well over a million dollars annually and drive us towards meeting our ESG goals. The company continues to maintain a healthy cash and working capital position, and as of March 31, 2022, we had a cash balance of $8.5 million. Furthermore, we are in discussions to either extend our debt facility or refinance to a longer-term facility the debt on our balance sheet. I would now like to turn things back to Jesse to share more about our 2022 outlook. Thank you, Margaret.