Rubicon Organics Inc.

to Rubicon Organics third quarter 2025 earnings call for the three and nine months ended September 30, 2025. As a reminder, this call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for analysts to queue up for questions. Please refer to slide two for our caution I'm recording forward-looking statements and non-GAAP measures. Today's presenters are Margaret Boding, CEO, and Grant Ibbott, CFO. I will now turn the call over to Margaret.

Thank you, and good morning, everyone. I'm pleased to share our Q3 2025 performance and an update on our strategic plans as Canada's number one premium licensed producer. Glenn will then take you through our financial results. In Q3, we achieved net revenue of $15.6 million, up 16% year-over-year, marking another record quarter. It's important to note that our growth has come despite our capacity constraints, which we are planning to partially address with our capacity from the Cascadia facility in 2026. We delivered adjusted EBITDA of $1.7 million, our sixth consecutive quarter of positive adjusted EBITDA, and delivered net income of $2.8 million. We expanded our VAPE portfolio with the launch into the all-in-one category. Following the close of the quarter, we also finalized licensing for our Cascadia facility, formerly known as HOPE, with first crops planted October 25 and operations now underway. And we sent a drop shipment to Australia under the 1964 brand, our first international branded shipment and our first time shipping to the country. And we secured additional debt of $4 million. Rubicon continues to outperform the market, growing faster than total market and in key premium categories. In premium flower and pre-rolls, we've grown our market share to 6.2% up from 5.7%. In premium baits, we've made a big leap, now holding 13.2% of the national market compared to zero just a year ago. This rapid market share capture reflects the power of and demand for our leading premium brands. And Wildflower remains a standout, the number two topical brand in Canada with over 27% share. Just a quick note on how we're reporting bait performance going forward. High Fire, the industry data source, that pulls the data has changed its categorization and no longer includes our live resin vapes under the live resin category. To keep things consistent and better reflect the underlying performance, we've decided to report under the broader premium vapes category going forward. Our 1964 brand, the engine of our business, led growth driven by pre-rolls and vapes. Simply Bear saw modest growth but remains an important and profitable part of our portfolio, and Wildflower maintains its leadership with Canada's top-selling topical SKU. We continue to launch new products that reflect our genetics leadership and premium positioning. BBC Organic Black Zope and Apples and Bananas launched under Simply Bare in 1964, respectively. Notably, Apples and Bananas delivered our highest ever terpenes on record in company history of over 5.8%, demonstrating our continued increase in focus on quality, which we believe sets our brands apart from the competition. After our initial all-in-one launch in July, we delivered a second cultivar later in Q3 and expect two additional SKUs in market by year-end. This launch strategy reflects a strong consumer demand for our leading premium bait portfolio. Before I hand things over, I want to take a minute to thank Glenn for his impact already made here at Rubicon. His leadership has definitely been felt across the business, and I'd like to congratulate him and welcome him on board with his permanent appointment as our CFO and Corporate Secretary. And now I'd like to pass the call on to Glenn.

Thank you, Margaret. Good morning, everyone. In Q3, we had another solid quarter. Net revenue was $15.6 million, a 16% increase year over year, despite our current biomass capacity constraints. Gross profit before fair value adjustments was $5.8 million, up 32% from the same period last year. And our gross margin was 33%, compared to 32% in Q3 2024. Adjusted EBITDA was $1.7 million, down $200,000 from Q3 of last year, which was expected as we made some targeted investments in SG&A to support future revenue growth. Now to explore in a bit more depth the drivers of our continued growth. 1964 remains the company's primary growth engine, delivering strong performance across the key segments of pre-rolls, vapes, and flour. The pre-roll category continues to show notable momentum, with revenue up more than 80% over the same quarter last year. In 1964, vapes were up more than 20% over the same period. The brand also posted modest gains in dried flour. even though current limited biomass availability has constrained Rubicon from fulfilling what we believe is significant unmet demand for 1964 flour. We expect the Cascadia facility to partially alleviate this constraint in the second half of 2026. Simply there, our leading ultra-premium brand saw a small decline of just over $100,000 compared to Q3 of last year's. Dried flour was down modestly, but was partially offset by gains in capsules. Wildflower, although smaller in revenue than Simply Bear in 1964, carries stronger than average gross margins. I'm pleased that the brand was up strongly in Q3 2025 compared to last year. 60-gram six were up over 30%, remaining Canada's top-selling SKU in the segment, according to High Fire, and Wildflower gummies were up over 80% from the same quarter in 2024. Homestead revenues remained low, which reflects the strong performance from our operations team in delivering high-quality premium product for our 1964 and Simply Bare brands. As you may know, Homestead serves as an outlet for biomass that does not meet the premium standards of our flagship brands, but it still offers strong quality at competitive prices. Overall, gross profit before fair value adjustments was $5.3 million in Q3, and $14.2 million year-to-date, up from $4.4 million and $10.2 million in the prior year comparative periods. This translates to a gross margin of 34% in Q3 and 33% year-to-date, compared to 32% and 30% in comparative periods last year. Margin improvement was mainly driven by higher volume throughput and efficiency gains. We implemented our pre-roll automation technology in Q3, which is expected to reduce labor costs and increase annual gross profits by approximately $1 million based on current volumes. With pre-roll automation complete, we are now evaluating a number of additional operational efficiency projects that we expect should benefit our overall margin profile over time. We've also seen our ongoing focus on increasing cultivation yield, while never compromising on our quality standards. but it's starting to show results. Our Q3 2025 yields were up more than 10% over earlier in the year. Clearly, the P&L and cash flow multiplier effect of attaining additional high-quality cannabis without significant incremental cost has a meaningful positive impact on margins and on our ability to get more growth from existing assets. We believe we have room to continue to improve the yield at Pacifica. SG&A expenses in Q3 2025 increased $1.3 million over the prior year as we invested in targeted marketing initiatives to drive brand growth and brought on key talent to position the business for near-term expansion. We also saw increases in Health Canada fees, licensing, and insurance costs as revenues continued to increase and we brought on the new Cascadia facility. As a reminder, in addition to incurring $4.2 million in excise taxes in Q3, we, as is the case for all licensed producers, also incur the Health Canada regulatory fee, which is calculated at 2.3% of net revenue and naturally rises as our revenue grows. Adjusted EBITDA for Q3 2025 was $1.7 million compared to $2 million in the prior year. Importantly, this marks our sixth consecutive quarter of positive adjusted EBITDA, underscoring the resilience of our core business and our ability to deliver profitability while continuing to invest in long-term growth initiatives. Turning to cash flow and financial health, despite investing in building inventory for base launches this fall, we still generated half a million dollars in cash from operating activities in the third quarter, as compared to $900,000 in Q3 2024. That's six of the last eight quarters delivered positive operating cash flow. We closed the quarter with $6.9 million in cash and a strong working capital position of $24.1 million. As noted in our press release earlier this week, we have secured additional debt financing totaling $4 million from an existing lending partner at similar terms to our current term debt. This strengthens our liquidity and provides us flexibility to support growth initiatives and strategic priorities. In short, we are delivering strong financial performance and growth within our existing footprint as we continue to increase revenue and margins and generate positive adjusted EBITDA and operating cash flow. By leveraging our high-quality, efficient cannabis production, exceptionally strong brands, and excellent talent, we have delivered this financial performance while also investing strategically for the expected revenue inflection next year as we bring on more capacity. We look forward to the hard but rewarding work of continuing to grow revenue and expand margins through scale and efficiencies, all while maintaining a robust financial position. Now back to Margaret.