Nov 15, 2023
Good morning, everyone. Welcome to Rubicon Organics Q3 2023 Earnings Conference Call.
[Operator Instructions] This conference call is being recorded on November 15, 2023. [Operator Instructions] Before we begin, I will refer you to Slide 2 of our presentation, which contains Rubicon’s discussion regarding forward-looking statements and non-GAAP measures.
Today’s presenters will be Margaret Brodie, Interim CEO and CFO; and Janis Risbin, Vice President of Finance. I would now like to turn the conference over to Margaret Brodie for the presentation.
Ms. Brodie, please proceed.
Thank you, operator, and good morning, everyone. Today, I will provide an update on Rubicon Organics and the performance in Q3 ‘23, highlighting our progress as a leader in the Canadian cannabis market.
Rubicon Organics stands at the forefront of the Canadian cannabis industry, specializing in the creation of premium and super premium branded cannabis products. Our devoted customer base recognizes us as a provider of the highest-quality premium cannabis in Canada.
Holding organic certification and employing living soil techniques, we bring terpene-rich flavors to discerning consumers. Operating from our 125,000-square-foot facility in Delta, British Columbia, we seamlessly merged indoor quality with greenhouse efficiency, implementing craft processes executed by a dedicated team of growers, delivering to 97% of the addressable Canadian population.
Recent developments from Rubicon Organics, our Super Premium Simply Bare flower continues to generate excitement with our recent drops of our new jokers and brides midstreams which sold out in 2 days. This strategy of new rotating streams is proving to capture consumers’ attention and helps us in finding those unique cultivars such as BC Organic White Rainbow that respond well in market and earn the right to be part of the permanent portfolio.
With the continuing growth of the infused pre-roll category, our premium 1964 brand launched two new pre-roll, the 1x1 gram Comatose Rosin Roll that features a mix of flavorful Comatose flower and potent Comatose region. Comatose is the 1964 Supply Co.
hero strain and was voted indica of the year by Kind Magazine in December ‘22 and an infused pre-roll, the Super Lemon Haze Heavy Hitter rosin roll, which is a 1x1 gram infused pre-roll featuring Super Lemon Haze flower and potent Super Lemon Haze hash rosin. Following our initial success of our two live rosin gummies, we have also expanded the 1964 portfolio by launching 3 additional flavors in live rosin gummies, Tropical Punch paired with Banana OG live rosin, Strawberry Watermelon paired with strawberry cough live rosin, Green Apple paired with GG4 live rosin.
We also introduced two new products under our Wildflower Wellness brand, Wildflower Extra Strength topical release 6, which is available on 60-gram size and features our highest concentration of CBD at 900 milligrams per stick. The Wildflower 1:1 CBD to THC topical release stick that is available in a 30-gram size has a balanced concentration of 105 milligrams THC and 105 milligram CBD per stick.
With both product formulations they are blended with coconut oil, shea butter and therapeutic essential oils such as arnica and wintergreen. Turning to our financial results.
In Q3 2023, we achieved net revenue of $10 million for the 3 months ended September 30, 2023, a 5% decrease from Q3 2022. And for the 9 months ended Q3 2023, we achieved net revenue of $30.1 million, a 23% increase compared to Q3 2022.
We delivered adjusted EBITDA of $1.1 million and $3.1 million for the 3 and 9 months ended September 30, 2023, a decrease of $750,000 and an increase of $2.4 million compared to the comparative periods in ‘22, marking our sixth consecutive quarter of adjusted EBITDA positive. We also achieved operating cash flow of $1.4 million and $4 million for the 3 month and 9 months ended September 30, ‘23 delivering $6.8 million in operating cash flow over the 12 months ended September 30.
We have grown our cash balance in the 12 months by 37% to $9.4 million. We achieved 2% market share of flower and pre-rolls and 5.6% of the premium flower and pre-rolls category.
And we achieved 5.1 per share of national premium edibles for the 3 months ended September 30, ‘23, following their initial launch only in Q2 ‘23 this year. Subsequent to Q3 ‘23, on the commercial front, we are driving forward with exciting, innovative new product offerings.
On the previous slide, you will have seen our Layer J. This is the first of its kind launched in Canada, which separates it from the rest of the infused pre-rolls in market.
Released under Simply Bare Organic, hitting shelves in BC and Ontario last month, the Layer J contains two layers, one with flower and hash of one cultivar and one with flower and hash rosin of another cultivar. The first two cultivars are BC Organic Cleopatra and BC Organic White Rainbow.
Also under Simply Bare, we launched New School Hash, which is created using a combination of new age technology and traditional methods to offer hash that is terpene forward and a potent smoke. More recently, we have launched edibles under our wellness brand, Wildflower with different combinations of cannabinoids, including CBD, CBN, CBG and all delivered with live rosin THC.
The excitement and growth potential for Wildflower continues. The Wildflower brand continues to be the number one topical in Canada, with an incredible market share of 26% in the 3 months ended September 30, increasing from 9.9% in the comparative period last year and gaining a further 3.5% market share from Q2 ‘23 to Q3 ‘23.
The Provident is targeting those consumers seeking the benefits of CBD wellness. Anticipating the continued growth in the CBD category, we will remain responsive to consumer demand as evidenced by the introduction of the extra strength stick and the 1:1 CBD THC stick during the summer.
Building on the strong wellness category reputation that Wildflower has for an everyday wellness consumer, we have recently launched our four flavors of wellness edibles. These innovative gummies contain all-natural ingredients, are made with real fruit purees, with no added sugar or colors and are vegan and gluten-free.
The four delicious flavors are in market and include Sweet Dreams Blood Orange, Sweet Dreams Goji Berry, Sweet Dreams Cherry and Daily Bliss Lemon Ginger. The Sweet Dreams Edibles contains CBN, CBD and live rosin drive to THC and will satisfy those seeking help with sleep, whereas the Daily Bliss flavor contains CBG and CBD designed for those seeking a more energized and focused experience.
Through different offerings, thoughtfully crafted with specific cannabinoids, we are reaching the evolving needs and preferences of our diverse customer base. Rubicon Organics is focusing and ready for more growth and in order to do this, we set our four key priorities in 2023.
Firstly, to optimize yield and cultivation of the Delta facility; secondly, we seek to maximize the Canadian premium opportunity by leveraging the strength of our leading brands; thirdly, we want to drive efficiency in processes and systems ready for growth; and lastly, we aim to build a proud and engaged team who deliver outstanding results. Firstly, our priority is to optimize yield and cultivation of the Delta facility.
Rubicon is dedicated to providing the Canadian market with super premium quality cannabis flower products as our primary focus. As a flower-first business, we prioritized excellence in this domain and constantly strive to enhance our flower quality.
We maintain an unwavering and endless commitment to continuous improvement, acknowledging that we can always push our quality further. We now have installed tables fully across all growing compartments in our facility.
With this recent installation, we anticipate continued improvements in plant health and an increase in capacity up to 10% for the late ‘23 harvest and beyond. More high-quality flower in turn provides further opportunities to strengthen and grow our highest margin Simply Bare brand.
Constant improvements and refinements within our operations lead to continuous improvements within our flower quality, driven from operational execution, which means consistency and quality in our brands. Secondly, we seek to maximize the Canadian premium opportunity by leveraging the strength of our leading brands.
Our goal is to optimize the gross margin programs produced by offering customers the right genetics and the right product formats at appropriate price to value ratio. We aim to grow the Simply Bare Organic brand and enhance the gross profit from our other brands.
Responding to capacity limitations, we strategically make product decisions to maximize contribution margins while meeting consumer and customer, i.e., the provinces insights and demand. Now that we have installed tables in each growing compartment of our Delta Greenhouse, we have maximized capacity for dried flower at our current facility.
Due to the success in market of our first edibles, using our partner, we have expanded our portfolio for its 1964 with more flavors and launched edibles under Wildflower for the first time. With this asset-light strategy, we expect to generate additional sales and gross profit while building our 1964 and Wildflower brands with minimal impact on Delta’s capacity.
We have received the first delivery of flower from our first contract grow partner. This is a significant moment following a lengthy and pragmatic process that began in 2022.
Although early stages in what we expect to be a long-term partnership, we are pleased that our diligence has resulted in receiving flower that meets our exceptionally high quality standards and all without using our Delta facility capacity. We continue to evaluate high-quality partnerships for both contract grow and co-manufacturing as an asset-light model in order to complement our own premium production and to satisfy the increasing demand for our brands.
Thirdly, we want to drive efficiency in processes and systems to be ready for growth. We are underway with our ERP system implementation that will drive short-term non-recurring costs in ‘23 and ‘24, new systems will bring efficiencies going forward, and this is a key step in preparing for growth.
Lastly, we aim to create a proud and engaged team who deliver outstanding results. At Rubicon, we placed a strong emphasis on team member engagement and pride to ensure the delivery of a premium product while minimizing costs related to team member turnover.
In line with our commitment to accountability, we released our third environmental social governance report in October. A few highlights to share with you include, completion of our BC Hydro power upgrade, producing the use of natural gas generators and decreasing our energy usage by 13% and greenhouse gas emissions by 19%, diverting 56% of waste from landfill through recycling and composting and we achieved 80% diversity across our employee base.
The full report is now available to view on our website. Furthermore, we have also reviewed our company value listening to our people as part of our process and Rubicon’s evolution now that we are in a steadier state.
Our refreshed values, our quality, excellence, integrity and freedom, these values will guide us on the next phase of our journey. Our AGM was held September 14, whereby all proposed directors were successful in their nominations.
They bring expertise and experience to our Board of brand builders, manufacturers, government relations specialists, strategists and governance experts. I will maintain my role as Interim CEO and CFO until the Board appoints a permanent CEO.
The current leadership team remains dedicated to executing the strategy and achieving our upcoming milestones. We have been able to continue with our trajectory of positive financial results through our three flagship brands, Simply Bare Organic, our premium flower-first product; 1964, our premium flower-first cannabis products; and Wildflower, our wellness-focused brand, where we continue to drive consistent high-quality products that are recognized and winning with consumers.
We have strategically diversified our offerings to cover a wide range of formats, sizes and product categories with this approach, allowing us to be competitive and agile regardless of the market’s direction, and this has proven to be particularly significant in 2023 amidst the prevailing economic downturn in Canada. The overall cannabis market continues to grow in ‘23, coming off record legal sales totaling $4.5 billion in ‘22, with an estimated 40% to 50% of consumers still purchasing in the illicit market.
Cannabis use is highest amongst 20 to 24-year-old demographic, with 50% have consumed in the last 12 months, pointing to expected organic category growth to continue over time. Recent data has illustrated the continued strength of the illicit market across Canada as a pull as consumers if all of their cannabis is purchased at a legal retailer.
No province or territory reported results higher than 56%. Ontario came in at 49%, Quebec 45%, and BC was the lowest with only 38% of cannabis consumers buying all their cannabis in the legal market.
Current trends and data indicate that over the next 3 years, the premium cannabis market will grow by over $300 million. Our thesis has been the premium market is where the profitability lies, and as this part of the category is growing faster than the overall market, Rubicon and our premium brands are well placed to benefit from this significant growth.
Although we continue to see the impact of price compression and THC inflation in the Canadian cannabis market, we expect this to rebalance post; 23 bankruptcies, with excess capacity continue to come offline over the upcoming year. According to data from Health Canada as of March 31, ‘23, approximately one-third of Canadian cannabis greenhouse capacity have already been taken offline as the industry readjusts following years of excess production.
As per the latest high-fire data, the premium market has returned to growing faster than the total market after a deceleration in spring and early summer of ‘23. We do note that with price compression, that classification of premium is now set at a lower threshold.
As the market goes through the house cleaning of 2023, we believe that consumers are learning of Rubicon’s product consistency, superior quality and a more unique full body flavors, which are expected to drive market success of our brands to win in the premium category. Canadians are facing headwinds from higher interest rates and a slowing economy.
We are observing signs of a long expected mild economic downturn with subdued growth. Canada’s population continues to increase, but on a per person basis, Canadian GDP has now been in decline for four straight quarters.
While we expect that both price compression, THC inflation and the economic environment will impact our growth in the short-term, we believe much of it is due to financial strain as companies move into insolvency and will rebalance later in ‘24. We believe that in staying the course with our dedication and focus on operational execution, high-quality production towards our brands, together with new and favorite genetics and product formats, we will deliver the right value equation to our consumers.
This landscape of distressed assets sets the stage for us to be opportunistic in future. I shall now pass the call over to Janice, who will share some specifics about our financials.
Thank you, Margaret, and good morning, everyone. Looking at our results for the most recent quarter, the company earned $10.1 million of net revenue, a 5% decrease versus the same quarter prior year.
We were hindered by a particular soft July before recovering to sale it’s growth to those August and September across our portfolio. In particular, Simply Bare was impacted by continued price pressure in the market and the shift from dry flower to infused pre-rolls.
In light of the recessionary environment in Canada, we were no exception to the consumer buying patterns of down trading their purchases starting in the late spring and going into the summer. This has been seen within the cannabis sector and many other sectors as consumers tighten their pockets.
Turning to the gross profit line, we achieved gross of $3.3 million, which is a decrease of 21%, driven by the lower absolute net revenue and adverse product mix in the quarter. Despite the disappointing July, we are pleased that we continue with consistent positive adjusted EBITDA, marking the sixth consecutive quarter we have achieved this milestone.
We are proud of another quarter of operating cash flow, which totaled $1.4 million for the quarter, which is the fifth consecutive quarter of positive operating cash flow. Looking at the ratio of operating cash flow to net revenue, we achieved 14% for the 3 months ended, which was a 1-point improvement against the comparable period.
Looking to our balance sheet, we have grown our cash balance by $1.1 million or 13% since our 2022 year-end balance, with the cash generated from operating activities, driven by the efficient conversion of revenue to cash. As previously communicated, we expect CapEx spend to be less than $4 million for the year, with $2.1 million spent up to Q3 2023.
We remain focused on maintaining our strong balance sheet, which is enviable compared to our competitors. Our long-term debt bears interest at a very compelling rate of 7.5% compared to Canadian Prime at 7.2%.
This will be moving to current at the end of December 2023, and we are in active discussions surrounding a long-term mortgage at similar rates. As we look at the rolling 12-month run rate, we again see consistent growth in our overall trajectory.
Our super premium brand, Simply Bare, did experience a decline in net revenue growth for the rolling 12 months due to a weaker Q3 2023. With increased quality competition and consumers feeling the pinch, we continuously review our Simply Bare portfolio to ensure we have a competitive product offering and market at the right price.
1964 continues to be the primary driver of the company’s top line growth. Building on the success of the Simply Bare Organic brand, 1964 was launched nationally in summer 2021 and has gone from strength to strength.
In April of this year, 1964 was ranked as the number one premium brand in Canada. The success of the brand and reputation has built can be attributed to the strong performance of legacy Strange launch, including Comatose, Gelato 41 and [indiscernible].
Leveraging the strength of the 1964 brand and its reputation for quality, Rubicon successfully introduced its inaugural line of edibles in Q2 2023 under the 1964 brand, swiftly securing the addition of the third highest premium edible by market share. The introduction of 1964 Live Rosin Edible epitomizes our strategy of collaborating with top-tier third-party partners to enhance the diversity of our premium brands.
The established reputation of Rubicon and our brand serves as a solid foundation for future expansion. Wildflower continues to dominate the topical category, delivering continued net revenue growth.
We are pleased to be leveraging the strength of this brand and continue to expand the portfolio as we have recently done with our first edible launch, aimed at the daily consumer. Looking at gross profit, we continue to see gross margin expansion over the rolling 12 months from 29% in the 12 months to Q3 2022, increasing to 37% in the most recent 12 months as we optimize our product mix and realize operating leverage on our fixed production costs.
We have continued to deliver positive operating cash flow and adjusted EBITDA in quarter three. Adjusted EBITDA continues to be an important measure for Rubicon as it strips out the non-cash items in addition to the standard EBITDA calculation such as share-based payments and the gains and losses from the biological asset accounting standard, which can have significant swings.
Of the $4.7 million loss from operations for the 12 months ended September 30, 2023, $4.2 million relates to a loss from the fair value adjustments for biological assets. Focusing on adjusted EBITDA, we continue to trend upwards.
However, due to a soft July in 2023, we saw a small dip in the 12 months to September 2023. Results in August and September returned to expected levels, and we remain on track for 2023 adjusted EBITDA to exceed the prior year.
We delivered an operating cash flow to adjusted EBITDA ratio of 156% for the 12 months ended Q3 2023, up versus 132% in the 12 months ended Q2 2023. Our Q3 result continue to bolster our confidence in our business plan for 2023 and set the foundation for another year of strong results for Rubicon.
I would now like to turn the meeting back to Margaret to share more about Canadian cannabis sector for Rubicon Organics.
Thank you, Janis. New data from Health Canada indicated a Canadian cannabis industry has on a record number of federal licenses to be revoked this year.
We anticipate further reduction in market capacity with licensed indoor greenhouse cannabis cultivation expected to decline from the current 1.5 million square meters, down from the previous peak of 2.2 million square meters. Rubicon did an assessment of the Canadian cannabis producers at the beginning of this year, and we expected conservatively that 6% of market share based on ‘22 figures would come out of the market in ‘23.
We estimate that over 5% of the market share has already gone into insolvency proceedings to date. I expect this to continue as companies struggle with cash burn and, due to their financial situation are unable to raise funds or access debt.
Although it is not all doom and loom, a group of Canadian cannabis companies are emerging as winners and Rubicon Organics is on that list. With many Canadian companies in financial distress, we see price compression that we expect to be short-term.
But on the other side of this is the Canadian cannabis industry with a strong surviving and growth opportunity in a more balanced supply-demand model. The current period marks a significant moment for numerous companies due to consumers opting to down trade purchases.
Companies like ours, equipped with flexible product range, are just at meeting consumer needs, fostering loyalty within our portfolio for continued and further success. This is where our size of operation, asset-light model and focus will win.
On the back of the ongoing challenges competing against the illicit market, heavy regulatory and tax burdens, unsustainable pricing strategies from distressed competitors and THC inflation, in addition to the recessionary environment in Canada, we believe that many of these issues will be tackled in the coming year. I reiterate my belief that the federal government is expecting the industry to move to a stage of more balanced supply-demand equilibrium before making any major changes that will impact the economics at both federal and provincial level.
Additionally, there is a notable lack of robust trading activity on the Canadian Stock Exchanges, including the TSXV, where we are listed, which, in the first 9 months of ‘23, has experienced a decline of 72% volume compared to 2021. In terms of Rubicon specifically, we have good upside.
The legal market is still growing in all sales and premium sales with competitors falling away. So how do we grow our business with a single capacity-constrained asset?
First of all, we have a solid footing to grow from. We have a strong balance sheet in the cannabis sector, excellent people and great relationships with our customers.
Secondly, we have our organic growth. We are continuously working to maximize our yield and quality from the Delta facility and have recently commissioned the final installations of tables in the facility.
This installation will increase our yield up to 10%, with improved air circulation and space for plants, meaning better plant health, which leads to higher tripping levels and quality. And we target our most profitable products to sell to deliver the highest return on our fixed cost base.
The growth in the overall premium flower segment means there will be more opportunity for us to sell our strongest price point of Simply Bare Organic flower over the coming years, where it is only about one-third of our sales at this time. Finally, we leveraged the power of our reputable premium brands.
In order to do this, we are adding external capacity to our business through, a, our manufacturing relationships such as with our recently launched edibles and extension opportunities for the Wildflower brand, and b, through targeted and trusted contract grow relationships to fill the demand for our brands. Our ability to leverage the power of our premium brands is proven in our incredible 1964 brand, which after launching our Live Rosin edibles in April ‘23, these edibles have moved to the number three premium edible position since then.
As previously mentioned, I am pleased to announce that after a long careful selection process, we obtained the inaugural harvest from our initial contract grow partner last month. Additionally, we anticipate finalizing an agreement for a second contract grow partner by the conclusion of ‘23.
Our goal is to procure a minimum of 1,000 kilos of high-quality biomass from the right contract grow partners in ‘24 and to expand beyond that in the following years. This means as asset-light approach working with knowledgeable cultivators who are not looking for the complexity of brand building and sales and marketing team, but just want to grow great need.
With over 1,000 LPs in Canada, we have a lot of choice and solid cultivators exist looking for outlets like ours. Lastly, we will be opportunistic, as and when the opportunities arise that are right for our business to grow.
As you can see in our guidance, with an operating cash flow positive year, we are in an opportunistic position. We see a growing marketplace and growing demand for our loved brands offset by assets in the marketplace getting cheaper by the day.
Rubicon remains focused on our business strategy and to deliver positive results to ultimately drive value for our shareholders. We are all aware that the Canadian cannabis industry is hampered by various issues, including an oversupply of inventory, claims of THC inflation and short-term focused price decisions by competitors.
We are also in a recessionary environment in Canada and have seen consumers down trading pervasively across all purchasing decisions. In this context, we remain focused on building from the strong platform laid, making decisions to support growth and maintain financial strength.
Few companies in the cannabis sector are positioned financially such as Rubicon Organics. With our premium market position, solid balance sheet and positive trajectory, we expect to deliver continued growth in net revenue, resulting in an increase in gross profit, adjusted EBITDA for the full year ‘23 as compared to ‘22 as well as positive cash flow.
We would now like to open the line for questions. Operator, please open the line.
[Operator Instructions] Your first question comes from Neal Gilmer from Haywood Securities. Please go ahead.
Yes. Thanks and good morning.
Margaret, maybe just on your prepared remarks, you commented about a 10% increase in yield you are able to achieve, is that going to be in place in the Q4 here, or is that something for 2024, basically, you are going to look for a 10% lift in yield basically driving higher volumes out of the facility?
Thanks Neal. The final tables went in, in October.
We rolled them so that we didn’t have downtime. So, we just had slightly longer leads between the various – certainly longer downtime between harvest of one crop and planting of the next.
The first crop is just coming out now, but with the grind care process, etcetera, it will most likely start to impact Q1 sales.
Okay. Thanks for that.
We might be – and we could tie a little bit into Q4, but it’s all 2024.
Right. But basically, in ‘24, you will be expecting 10% higher yield than ‘23?
Correct. And my wording is up to because it depends on strain and turn and all the rest of it.
But really, we added additional square footage within the facility, which is great.
Yes. On the gross margins, I totally understand they can fluctuate from quarter-to-quarter with product mix and various other different factors.
If you take a look at it on an annual basis, do you have like a target that you strive for that you can share with us?
Yes. When we were – when everything was 100% of our facility, we were looking at 40%-plus.
As we are looking more towards adding contract manufacturing and contract grow, I think we are going to look that, that’s going to move closer to 30% as we go forward, just depending on mix. What we certainly saw, as you heard in our remarks, in the third quarter was – and we have seen it around the sector is consumer is really down trading, right, with stepping whilst every once in a while treating themselves, not necessarily standing in the more premium products.
We expect that to shift. So, as we look longer term, we think we will be more impacted by the co-man and contract grow than we will by that ratio itself.
Okay. Thank you.
Maybe I guess last one for me. I noticed overall operating expenses down, I think close to $700,000 versus the prior quarter.
Is that sort of a permanent new level, or were there just some one-time things that sort of helped to reduce OpEx in the quarter?
More one-time things, Janis, I don’t know if you have got a view on that. It was within – we plan pretty carefully.
But I am actually trying to think about what that was.
Yes, I can absolutely add to that. So, one of the items last year, we had a particularly higher quarter of legal fees.
Those were one-off by nature. And the other thing this year is as our performance did come in a little lesser than expectations, we have just adjusted our bonus accrual in line with the corporate plan so that we are not paying out at 4%.
So, obviously, that will always vary based on our performance and how we are doing versus our targets. We are still up year-on-year just not quite meeting those stretching targets we set ourselves.
Yes. And most targets were based on a continued economy where we were in ‘22.
The momentum that we felt it has shifted. I mean we have spoken about this in the market with testers [ph] who are there in Canada.
But we won’t spend ahead of our SKU [ph] without those people.
Great. Thank you, Neal.
[Operator Instructions] Your next question comes from Jesse Reitman [ph] from [indiscernible] Research. Please go ahead.
Congratulations on the quarter. I wanted to check in on the asset-light strategy.
I am curious with that approach, when do you expect to see more volume coming through those contract grows? Where are the techniques you are using to preserve quality and so that quality doesn’t dip on the contract grows relative to the things that you are doing in-house?
Thanks Jesse. Good question.
Look, we believe that there are great growers out there in Canada right now. And a lot of people that are picking up the facilities, that are coming back into market after they have turned off, are – tend to be legacy market growers that didn’t build brand, that didn’t deal with complexity.
Next year, we are planning sort of – we are willing to say around an extra 1,000 kilos, but when looking at the year as a test and grow to settle us up – ourselves up as we go forward. Once we have onboarded a partner, we expect to work with that partner in the long-term.
We joke that we like to date before we marry and make sure that the relationship is solid, that the output is solid and that we can rely on it. Beyond that, if we look forward 3 years to 5 years, we would love to double the size of our cannabis business and the volumes that are going through.
But we will do it prudently to make sure that we maintain the brand quality and form great relationships to grow from.
And looking at bigger picture with Rubicon Organics, setting aside a bit of the macro challenges, looking beyond that, where do you see Rubicon in the Canadian landscape in, let’s say, 2 years or 3 years from now?
Another good question, we believe that the landscape will completely shift in terms of who is winning and that new companies will emerge. We do believe in the asset-light strategy.
We think it’s going to go more towards contract manufacturing. Let people do what they do well for you and make sure that they come along.
We expect Rubicon to be and continue to be the trusted customer – the trusted supplier to our customers in the largest provinces. We expect to be an influential voice on and a solid attractive voice with customer.
And my personal goal would be to be the most profitable by relative standard Canadian cannabis company. We expect that mid-sized companies will emerge.
The largest companies will – may win as they get momentum and able to fund through U.S. listings where they can bring in extra cash.
But the real groundswell comes from the operators. And the operators are the ones that day-to-day are out there building things.
It’s not adding new shiny objects to – into your portfolio to tell a story for the short-term to raise money, it’s actually about building consumer love, building bud tender love, having a great product. So, we expect Rubicon to be a bright light and a profitable premium company in the space in that landscape.
I think we are going to see more contract growing. The winning company is starting to emerge.
I won’t mention them on our call, but very impressed. I think the group is starting to be established.
And I think there is a big question mark over the larger companies on how they operate.
That’s great. Thank you very much.
Thank you. There are no further questions at this time.
I will turn the call over to Margaret Brodie for closing remarks. Please proceed Ms.
Thank you and thank you for joining us today on this earnings call. We are encouraged by the positive results and the momentum we have experienced on the year despite the economic environment which we are operating.
I just want to say thanks to our shareholders, our investors, analysts and the entire team for their hard work and dedication. And as we move forward, we are very committed to our strategic goals in maintaining transplanting operations and delivering on quality, and we are confident in our ability to pivot and navigate this ever-evolving marketplace.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.