Rubicon Organics Inc.

Good morning, everyone. Welcome to Rubicon Organics' second quarter 2026 earnings call for the three and six months ended June 30, 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 that time for analysts to queue up for questions. Before we begin, please refer to slide two for our caution regarding forward-looking statements and non-GAAP measures. Today's presenters are Margaret Brodie, CEO, and Glenn Ibbott, CFO. I will now turn the call over to Margaret.

Good morning, everyone. Thank you for joining us to review our second quarter results and provide an update on our progress in 26. Rubicon is proud to remain Canada's number one premium licensed producer, and this quarter reflected execution on many fronts. Our second quarter results demonstrate the strength of Rubicon's premium-focused strategy and the progress we are making across our expanding operating platform. We delivered record Q2 net revenue of $18.5 million, representing 23% growth year-over-year and 35% growth sequentially, while continuing to gain market share in the premium category. Importantly, growth was achieved primarily through improved execution at our Pacifica facility. Targeted operational initiatives drove approximately 20% higher per crop yields in the first half of 2026 compared to the prior year, supported by increased product availability across our portfolio. Growth was realized across all three of our key brands in Canada, while international markets also contributed to our continued momentum. Our new Cascadia facility also achieved several meaningful milestones during the quarter, namely hitting 1964 brand quality earlier than expected and we were able to realize half a million dollars of revenue from Cascadia-derived products. While initial yields remain below our long-term target, yield optimization is a normal part of ramping up a cannabis cultivation facility. and we continue to refine cultivation practices, environmental control and genetic selection to support further improvements to the balance of the year. The yield growth that we have been able to achieve at Pacifica indicates to us that our goals at Cascadia are achievable. Internationally, our Cascadia facility has now received its IMC GAP certification. Both of our facilities now have the required international certification We continue to review 2026 as a tale of two halves. Our first half reflected the significant improvement of our Pacifica facility and the remaining investment required to bring Cascadia online and support our next phase of growth. As production volumes increase and operating efficiencies reach our expectations, we expect the benefits of our expanded platform to become more visible through the second half of the year and notably into 2027. With that, I'll turn the call over to Glenn to review the financials.

Thank you, Margaret. Good morning, everyone. Revenue for Q2 2026 was $18.5 million, a record quarter for us, up 23% year-over-year and 35% sequentially. The disruption that we saw in Q1 from the lingering effects of the late 2025 BC distribution strike and the typical industry seasonality appear to be in the rear view mirror. This revenue growth was driven by our increasing ability to supply the existing demand across our across our premium brand portfolio. In Q2, this was mainly supported by higher production yields at Pacifica, which are up 20% on average in the first half of 2026 compared to H1 2025. Importantly, for future quarters, Catadia has begun to move from a pre-revenue investment phase to a revenue generating part of our platform, with its initial revenue contribution of $450,000 realized late in the second quarter. Q2 revenue growth year-over-year was driven across both 1964 and Simply Bare by a mid-teens percentage increase in dried flower and over 40% growth in pre-rolls, as well as international sales, a revenue channel that did not exist for Rubicon in Q2 of 2025. For Q2 2026, 1964 delivered 64% of our revenue, Simply Bare contributed 25%, Wildflower was 6% and international sales accounted for 4%. The launch of 1964 in the UK during the second quarter represents an important step in expanding our premium brands beyond Canada. We expect international revenue to continue to grow in the second half of 2026 and to average approximately 10% of total revenue for the whole of fiscal 26. Gross margin before fair value adjustments was 30% in Q2. Excluding pre-revenue Cascadia operating costs, gross margin would have been approximately 36% in Q2, our best gross margin since Q4 of 24, and demonstrating the strong operating leverage of the business as we add top-line growth. SG&A in Q2 26 was $6.9 million, up by $2 million compared to Q2 of last year, and $900,000 sequentially, reflecting planned investments in talent, Brand Development in Canada, International Initiatives, and Growth-Related Regulatory and Insurance Costs. Of the $900,000 increase from Q1 to Q2 of 2026, 74% is marketing and sales initiatives and Health Canada fees, both a direct function of revenue growth. Adjusted EBITDA was positive at $1.1 million in Q2 compared to $1.4 million in prior year periods. This result reflects the costs associated with operating a larger platform ahead of realizing the full revenue contribution from Cascadia. Regarding liquidity, we ended the quarter with $3 million in cash and $20.9 million in working capital. We spent approximately $2.6 million on CapEx projects in the first half of 2026, all directed at achieving manufacturing efficiencies and yield and capacity increases. Looking ahead, we believe we are well positioned to continue growing Rubicon's revenue as our ability to supply existing demand in both domestic and international markets improves. As we move into the second half of this pivotal year, with the additional capacity available from Cascadia, we expect revenue and adjusted EBITDA to progressively ramp through Q3 and Q4 of 2026. Steadily strengthening our gross margin remains a key area of focus and attention for Rubicon's leadership teams. 2026 initiatives include ongoing work to increase cultivation yields at both Pacifica and Cascadia, expanding manufacturing efficiency through projects such as pre-roll automation, recently completed, and bringing our hydrocarbon oil production in-house by December, and finally optimizing our product portfolios. Central to our margin approach is leveraging the increased scale from our growing operations to more efficiently absorb our fixed production costs over these higher production volumes. We expect these initiatives to contribute meaningfully to margin expansion and EBITDA growth as we move through the remainder of 2026 and into 2027. With that, I'll turn the call back to Margaret.