Rubicon Organics Inc.

Good morning everyone. Welcome to Rubicon Organics Q1 2026 earnings call for the three months ended March 31, 2026. 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 the time for analysts to queue up for questions. Before we begin, please refer to slide 2 for our caution regarding forward-looking statements and non-GAAP measures. Today's presenters are Margaret Brody, CEO, and Glenn Pitt, CFO. I'll now turn the call over to Margaret.

Good morning, everyone. Today, I'm providing an update on Rubicon Organics and our progress on 2026, the year we've described as a year of two halves. As previously outlined, 2026 is a transition year with our new Cascadia facility ramping up and adding costs to the business in the first half as we complete the ramp-up, where in the second half, we expect to meaningfully see the financial benefits. In the first quarter of 2026, we saw revenue from our existing footprint, excluding Cascadia, grow 11% year-over-year. At the same time, our gross profit and bottom line were impacted by Cascadia's pre-revenue ramp-up. Glenn will walk through the financial results shortly and provide additional context behind the numbers. Rubicon continues to be Canada's number one premium licensed producer. Our focus this quarter has been balanced between delivering today while building for tomorrow. Nowhere is that more visible than at our Cascadia facility. Our first harvests are complete with batches showcasing promising results with THC potencies closely comparable to Pacifica. This provides early validation that this new facility will uphold the quality standards our brands are known for nationally, while positioning us to begin addressing the significant unmet demand for our products. We have also been advancing several initiatives that target our gross profit, and we expect these will meaningfully contribute to growth and operating leverage as the year progresses. Internationally, we have launched into the UK our first brand-forward medical market outside of Canada. Before handing it over to Glenn, I want to emphasize that our near-term margin profile reflects deliberate and strategic investments in capacity, and we are confident that these investments will unlock the next phase of growth for Rubicon.

Thank you, Margaret, and good morning, everyone. As expected, Q1 2026 reflected the typical industry seasonality and was compounded by the lingering effects of the late 2025 DC distribution strike. Despite these factors, we were satisfied that we were able to grow revenues by 11% and achieve key strategic milestones at the Cascadia facility. Net revenue for the quarter is $13.7 million, up $1.3 million over Q1 of 2025. This growth was driven by continued strong performance in our 1964 brand and supported by stable contributions from our Century Bear brand. Canada's number one selling premium brand, 1964 supply goal, remained the cornerstone of our portfolio, representing two-thirds of our net revenue for the quarter and was up 13% year over year. This growth was primarily driven by flower and free rolls, while performance across the rest of the portfolio remained relatively stable. Looking ahead, our Cascadia facility represents the key unlock to further growth in 1964, expanding our supply, so that we can begin to grow into the unmet demand for our products. Simply there, our nationally leading super premium brand represented around one-fifth of revenue. Our overall performance was flat compared to the prior year. Flower sales increased meaningfully up 24%, supported by new genetics and ongoing quality requirements. We expect this brand to be well positioned for growth throughout 2026. Wildflower accounts for a relatively smaller portion of revenue, but continues to deliver above average gross margins, with the 60-gram relief stick remaining Canada's number one selling topical skew. International revenue was just under $1 million for the quarter, relating to wholesale shipments. We do expect growth through the remainder of 2026 on our international sales line, following the April launch of our 1964 brand in the UK, our first brand launch outside of Canada. Gross margin before fair value adjustments was 20% in Q1 2026 compared to 31% in Q1 of 25. Excluding the temporary impact of the Cascadia operating costs, which hit our P&L prior to revenue from Cascadia volume being recognized, our Q1 gross margin would have been approximately 29%. Margins were also pressured from the lower VC revenue due to the lingering effects of the VC strike. However, Gross margin is expected to improve in the second half of 2026 as revenue from Cascadia product is recorded and the fixed costs of our cultivation and manufacturing infrastructure support a higher level of sales. Operating expenses in G1 2026 increased by $1.6 million year over year, reflecting planned investments in talent, brand development in Canada, international initiatives, and growth-related regulatory and insurance costs. Adjusted EBITDA was a loss of 580,000 in Q1 2026 compared to positive 700,000 in Q1 2025. This reflects the impact of our increased fixed cost infrastructure in a seasonally soft quarter and prior to the revenue inflection we anticipate in the second half of 2026. From a liquidity perspective, we ended the quarter with $3.2 million in cash. Cash flow from operations was $2.1 million for the quarter, representing strong accounts receivable collection, following a record Q4 25 for sales. In April 2026, we temporarily increased our line of credit by $1.5 million until the end of September, providing additional flexibility to support the integration and optimization of Cascadia. For CapEx, we spent approximately half a million dollars during the quarter, mainly on Cascadia optimization initiatives. So, Q1 has given us a solid foundation to launch into the remainder of 2026. Growing 11% through a seasonally slow quarter while absorbing the cost of a major facility ramp-up speaks to the underlying resilience of this business. Looking ahead, we have clear visibility for revenue and margin expansion through a balance of 2026 and beyond. We continue to anticipate a clear inflection point mid-year with higher revenues improved margins, and stronger operating cash flow in the second half as Cascadia ramps into branded sales, and we are able to service more of our currently unmet demand in Canada and internationally. Our path to long-term margin expansion is well-defined and underway, driven by processing automation, yield improvement, and dual facility scale efficiencies, all expected to contribute to P&L bottom-line growth this year and in the years ahead. For the full year of 2026, we expect a total of $5.2 million for CapEx across all approved accounts, and this reflects further process insourcing and automation and cost efficiency projects. This investment is supported by the $4 million in debt financing we secured late last year and by expected stronger operating cash flow in the second half of this year. With proven execution and continued strong demand for our leading brands, we remain confident in delivering our 2026 plan. With that, I'll turn the call back to Margaret.