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Canadian cannabis producer Rubicon Organics Inc. (TSXV: ROMJ) (OTCQX: ROMJF) reported flat revenue and a swing to a loss in the first quarter, citing seasonal weakness and lingering consumer pessimism as dampening factors. Still, the company was up 50% trading at $0.40 cents a share after the close Wednesday afternoon.

For the period ending March 31, Rubicon posted net revenue of C$8.9 million, a 1% uptick from the first quarter of 2023. But adjusted EBITDA fell to a loss of C$400,000 versus a C$1.7 million profit in the year-ago period. The company did not immediately provide bottom-line net profit/loss figures for the quarter.

“We anticipated a challenging first quarter due to typical seasonality and the overhang of weak consumer sentiment from 2023,” CEO Margaret Brodie said in a statement. “I expect to recover from this temporary dip from our streak of positive adjusted EBITDA in the second quarter.”

A key part of Rubicon’s optimism lies in the launch of its new full-spectrum extract vape products under the 1964 Supply Co. brand. The release said the company received initial purchase orders for these vapes from Alberta, British Columbia and Ontario provincial distributors.

“The vape market has demonstrated robust growth over recent years and trends in Canada and the U.S. demonstrate indicating the vape category’s increasing prominence, rivaling or surpassing traditional flower products,” the company said, framing the launch as a way to capitalize on the segment’s upside.

Brodie added, “With a focus on quality, we are confident that our vape launch will not only drive revenue growth but also solidify our position as a leader in the Canadian cannabis market.”

Rubicon did log a 28% year-over-year decline in first quarter gross profit to C$2.2 million, which Brodie attributed to an unfavorable product mix shift during the quarter.

“In the first quarter, a changing product mix reduced our gross margin, but this spring we’ve shifted focus to higher-margin products, expecting improved results in the second quarter and beyond,” she said.

The company also highlighted its strong market positions, citing Hifyre data showing it was the top premium licensed producer across all cannabis product categories in Canada during the first quarter.

When it comes to cash flow, Rubicon recorded negative operating cash flow of C$900,000 for the first quarter. At the end of March, its working capital included C$10.7 million in current loans and borrowings.

CFO Janis Risbin said, “With the expected re-financing of our debt later this year, we remain focused on strengthening our already solid foundation and continuing to invest opportunistically for growth in 2024 and beyond.”

Looking ahead, Rubicon projected year-over-year revenue growth for full-year 2024, though also anticipating lower gross margins as it uses more external cultivation capacity for branded products. Pricing pressures were also expected to persist industry-wide, according to the release.

Despite the headwinds, management struck an upbeat tone about 2024 overall, forecasting continued positive operating cash flow and positioning Rubicon “as one of the premier cannabis companies in Canada.”

The post Rubicon banks on vape launch to offset lackluster first quarter appeared first on Green Market Report.

420GrowLife

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Adam Jackson, KahliBuds, 420GrowLife