Rubicon Organics Inc.

conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If anyone has any difficulties hearing the conference, please press door zero for operator assistance at any time. I would now like to turn the conference call over to Margaret Rohde. Please go ahead.

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 Ibbitt, 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 $12.4 million, a 39% or $3.5 million increase year-over-year. We reported positive adjusted EBITDA of $700,000, marking a $1.1 million 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, B.C., expanding our annual production capacity for premium cannabis flower by over 40% to 15,500 kilos. In Q225 and thus far, we've appointed our new CFO, Glenn. 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 $4.5 million 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 24 with just two SKUs, we expanded it to five by the end of 24, and then by the close of Q1 25, 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, 1964, 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 lead 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 Simply Bare, it has been receiving incredible reviews and is part of our drop strategy to provide the Simply Bare consumer with new and unique flavors. As I mentioned, we expanded our SKU count on 1964 FSE Revin 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 Glenn to discuss our financial performance.

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 2025. 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 $12.4 million for the three months ended March 31, 2025. a 39% increase over the same period last year. Our overall growth was 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 Q2 of 2024 and new flower genetics, such as new lemon diesel genetics. Pre-rolls, which saw a softer performance in early 2024, were also a significant contributor this quarter, thanks to the new 0.5 gram pre-roll pack format introduced mid-2024 that has gained solid traction in the market. Simply Bear experienced growth across all categories, 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-to-one CBD THC relief stick, both of which have resonated with consumers and helped extend our footprint in the wellness space. Moving down the P&L, gross profit before fair value adjustments was $3.8 million, a 72% improvement from Q1 of 2024. 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&A costs, we saw normal increases in salaries year over year, while external G&A spend went 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 2025 adjusted EBITDA came in at $0.7 million, up from a loss of $0.4 million last year. This marks our fourth consecutive quarter and eighth of the last nine quarters of positive adjusted EBITDA, which signals 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 2024 sales and an increased investment in inventory levels to support anticipated demand. We ended the quarter with $7.8 million in cash and a solid working capital position of $20.6 million. Our liquidity remains strong, supported by prudent cost control and a disciplined capital structure. As you will recall, in November 2024, we secured $10 million in credit facilities at an interest rate of 6.75%. Subsequent to Q1, we raised gross proceeds of $4.5 million to support startup and scale-up of the whole 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.