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Rubicon Organics Inc (TSE:ROMJ)
:ROMJ
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Rubicon Organics
(OTC:ROMJ)
51Neutral
Positive Factors
Debt Management
Management is close to refinancing the debt, which is expected to provide a positive update soon.
Financial Performance
Rubicon reported Q4/24 revenue of $14.2M, an increase of 42.1% Y/Y and 5.2% sequentially and above the estimate of $13.7M.
Revenue Growth
Revenue growth will come from increased product availability due to contract grows the Company has entered into.
Negative Factors
Investment Pressure
Investments are expected to pressure EBITDA on a short-term basis.
Rubicon Organics (ROMJ) vs. S&P 500 (SPY)
Market Cap
$25.54M
Dividend YieldN/A
Average Volume (3M)28.91K
Price to Earnings (P/E)―
Beta (1Y)-0.12
Revenue Growth8.20%
EPS Growth63.76%
CountryCA
Employees208
SectorHealthcare
Sector Strength66
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)-0.04
Shares Outstanding56,754,944
10 Day Avg. Volume27,524
30 Day Avg. Volume28,906
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.68
Price to Cash Flow (P/CF)7.80
P/FCF Ratio9.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$1.53Price Target Upside240.96% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Rubicon Organics Business Overview & Revenue Model
Company DescriptionRubicon Organics Inc. produces and sells organic cannabis for the recreational and medical-use markets in Canada. The company processes and sells organic cannabis under its wholly owned and other licensed brands. Rubicon Organics Inc. was incorporated in 2015 and is headquartered in Vancouver, Canada.
How the Company Makes MoneyRubicon Organics makes money primarily through the cultivation, production, and sale of premium organic cannabis products. The company's key revenue streams include wholesale distribution to licensed cannabis retailers and direct sales to consumers in the adult-use and medical cannabis markets. Rubicon Organics generates additional income from its portfolio of brands, which includes premium organic cannabis products that command higher price points. The company leverages strategic partnerships with retail distributors and other cannabis companies to enhance market reach and improve sales performance. Factors contributing to its earnings include the growing demand for organic cannabis and the company's focus on sustainability and quality, which differentiates its products in a competitive market.
Rubicon Organics Financial Statement Overview
Summary
Rubicon Organics demonstrates robust revenue growth, but profitability and cash flow generation are ongoing challenges. The balance sheet is stable with manageable leverage, but the company struggles to convert equity into profits. While there is potential for improvement, especially if operational efficiencies are realized, the current financial position highlights the need for strategic focus on enhancing profitability and cash flow.Income Statement
Rubicon Organics has shown some improvement in revenue growth with a significant increase in total revenue over the years, recently achieving a 10.9% growth from 2023 to 2024. However, the company struggles with profitability as reflected by negative EBIT (-14.9%) and net profit margins (-4.5%) for TTM, despite a positive EBITDA margin of 5.3%. This indicates operational challenges in achieving profitability despite revenue growth.45
Neutral
Balance Sheet
The balance sheet shows a moderate financial position with a debt-to-equity ratio of 0.30, indicating a manageable level of leverage. The equity ratio stands at 66.3%, reflecting a solid equity base. However, the company has been unable to convert its equity into profitability, as seen in the negative ROE of -5.4% for TTM. The stable asset base suggests potential, but profitability remains a key concern.55
Neutral
Cash Flow
Rubicon Organics has seen a decrease in free cash flow growth, with a significant drop in free cash flow from 2023 to TTM. The operating cash flow to net income ratio is positive at 1.11, suggesting some ability to generate cash from operations. However, the free cash flow to net income ratio is weak at 0.22, indicating challenges in free cash flow generation, which could impact future financial flexibility.40
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 48.70M | 40.12M | 35.52M | 22.61M | 9.39M | Gross Profit |
| 15.42M | 13.14M | 13.81M | 1.51M | -663.96K | EBIT |
| -1.17M | -1.08M | -2.59M | -13.26M | -11.99M | EBITDA |
| 1.86M | 1.95M | 217.00K | -10.87M | -10.37M | Net Income Common Stockholders |
| -2.56M | -1.82M | -3.86M | -14.52M | -14.98M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 9.86M | 10.91M | 8.29M | 11.58M | 12.14M | Total Assets |
| 56.61M | 54.89M | 56.11M | 54.84M | 51.07M | Total Debt |
| 9.89M | 10.40M | 10.22M | 9.82M | 13.99M | Net Debt |
| 31.83K | 617.81K | 1.92M | -1.77M | 1.85M | Total Liabilities |
| 19.21M | 17.00M | 17.77M | 15.94M | 22.23M | Stockholders Equity |
| 37.40M | 37.89M | 38.33M | 38.90M | 28.84M |
| Cash Flow | Free Cash Flow | |||
| 1.85M | 2.47M | -2.50M | -15.94M | -20.30M | Operating Cash Flow |
| 3.40M | 5.05M | 1.95M | -10.44M | -14.31M | Investing Cash Flow |
| -1.55M | -2.73M | -4.45M | -5.50M | 3.08M | Financing Cash Flow |
| -1.77M | -804.01K | -838.56K | 15.30M | 21.26M |
Rubicon Organics Technical Analysis
Neutral
0.45
Price Trends
0.46
Negative
0.43
Positive
0.43
Positive
Market Momentum
>-0.01
Positive
44.86
Neutral
21.21
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ROMJ, the sentiment is Neutral. The current price of 0.45 is below the 20-day moving average (MA) of 0.50, below the 50-day MA of 0.46, and above the 200-day MA of 0.43, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 44.86 is Neutral, neither overbought nor oversold. The STOCH value of 21.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:ROMJ.
Rubicon Organics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (50)
Financial Indicators
Performance Comparison
TSE:ROMJ
Rubicon Organics
0.45
0.09
25.00%
CGC
Canopy Growth
1.19
-6.66
-84.84%
OGI
OrganiGram Holdings
1.07
-0.83
-43.68%
ACB
Aurora Cannabis
4.44
-1.84
-29.30%
TLRY
Tilray
0.45
-1.27
-73.84%
Rubicon Organics Earnings Call Summary
Earnings Call Date: Apr 2, 2025 | % Change Since: -23.73% | Next Earnings Date: May 14, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Rubicon Organics' strong revenue growth, market share leadership, and successful product launches, despite facing challenges like price compression and capacity constraints. The strategic acquisition of a new facility and international expansion signal future growth potential.Highlights
Record High Net Revenue
Rubicon Organics achieved record high net revenue for both the 3-month and 12-month periods ending December 31, 2024, up 21% and 42% respectively compared to 2023.
Positive Adjusted EBITDA
Reported positive adjusted EBITDA of $4 million, excluding $900,000 in one-off ERP implementation costs, with a record high profitability of $5 million without the costs.
Market Share Leadership
Rubicon holds over 6% market share of the Canadian premium market, with leading positions in the premium medical cannabis segment at 30% market share within a year of launch.
Vape Product Success
Successfully launched a vape product line, achieving over 13% national market share and 56% national distribution in six months.
International Expansion
Received GACP certification for the Delta facility, allowing Rubicon to execute inaugural international shipment to Poland and enter into an agreement to acquire a new facility in Hope, BC.
Awards and Recognition
Swept the 2024 KIND Magazine Awards with 11 accolades and won Vape of the Year and Best New Product.
Strong Operating Cash Flows
Operating cash flows improved to $2.3 million in Q4 2024, marking the third year of positive operating cash flows.
Strategic Acquisition
Acquired a new facility in Hope, BC, expanding annual production capacity by over 40% to 15,500 kilos.
Lowlights
Price Compression Challenges
Faced price compression in the market, affecting gross profit, driven by an adverse product mix and a shift towards larger flower formats.
Capacity Constraints
2024 sales were impacted by capacity constraints, particularly in larger formats, limiting ability to meet demand.
Increased Inventory Costs
Inventory expense to cost of sales increased from 34% to 43% in 2024 due to price pressure and larger format, lower margin SKUs.
Company Guidance
In the recent conference call discussing Rubicon Organics' Q4 financial results for fiscal year 2024, several key metrics and strategic initiatives were highlighted. The company achieved a record high net revenue increase of 21% for the three-month period and 42% for the twelve-month period ending December 31, 2024, compared to the previous year. Additionally, Rubicon reported a positive adjusted EBITDA of $4 million, excluding $900,000 in one-off ERP implementation costs. The company also achieved three consecutive quarters of profit from operations and maintained a leading market position with a 6.1% share of the total premium market over the past 12 months. The successful launch of their vape products contributed significantly to their growth, capturing 13% of the national resin vape category in Q4. Looking forward, Rubicon plans to expand its production capacity by over 40% with the acquisition of a new facility in Hope, BC, and expects further revenue growth and international expansion. The company has secured $10 million in credit facilities at a competitive interest rate of 6.75%, positioning it well for future growth opportunities.Rubicon Organics Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Rubicon Organics Enhances Employee Incentives with RSU and PSU Grants
Positive
Jan 21, 2025
Rubicon Organics Inc. announced the granting of 784,712 restricted share units (RSUs) and 784,712 performance share units (PSUs) to selected executives and employees under its Omnibus Equity Incentive Plan. The RSUs will vest over one to three years, while the PSUs will vest after three years contingent upon achieving specific performance targets. This move is likely to strengthen employee engagement and align their interests with those of the company, potentially enhancing Rubicon’s market position in the premium organic cannabis sector.
Rubicon Organics Promotes Ramsey to COO
Dec 23, 2024
Rubicon Organics has announced the promotion of Melanie Ramsey to Chief Operating Officer, a move reflecting her significant contributions to the company’s growth and operational success. Ramsey, who has been with the company since 2018, will now oversee day-to-day operations and drive strategic growth initiatives. Her leadership and deep understanding of the business are expected to further enhance Rubicon Organics’ competitive position.
Rubicon Organics Celebrated at 2024 KIND Awards
Nov 27, 2024
Rubicon Organics has been recognized with multiple prestigious awards at the 2024 KIND Awards, highlighting its excellence in the premium cannabis market. The company’s brands, Simply Bare Organic and 1964 Supply Co., received accolades for their high-quality products. This recognition emphasizes Rubicon Organics’ strategy to lead the premium cannabis segment in Canada.
Rubicon Organics Achieves Record Revenue Growth
Nov 14, 2024
Rubicon Organics has reported a record net revenue of $13.5 million for Q3 2024, marking a 34% increase year-over-year. The company’s strategic focus and operational execution have led to a strong market presence in premium cannabis products, with significant year-to-date growth. Rubicon Organics continues to innovate and expand its offerings, contributing to its leading position in the Canadian market.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.