By the numbers
2022 net loss: $281.8M
Up from $73.2M in 2021
Q4 revenue: $166M
Up 2% year over year
Projected 2023 revenue: $700M-$750M
Rubicon also estimates adjusted gross profit between $70M and $80M.
- Financial picture: After a challenging period since becoming a publicly traded company, Rubicon CEO Phil Rodoni said in a Wednesday earnings call that change is underway. The company reported that it improved profitability in 2022 “by approximately $50 million on an annualized adjusted EBITDA basis while continuing to scale quickly in attractive verticals.”
- Improving margins: Rubicon’s gross profit margin for the year remained low at 3.7%, though executives anticipate this can shift and reported a 7.9% margin on an adjusted basis. In addition to recent efforts that yielded $12 million in annualized cost reductions, executives repeatedly emphasized a focus on how the company’s subscription-based software business often has higher margins than its core waste brokerage business. While Rodoni said Rubicon previously “constrained” growth in this area amid other priorities, he anticipates exponential expansion.
- Leadership changes: Kevin Schubert, who became president of Rubicon last year, has also become CFO following the February departure of Jevan Anderson. Michael Heller, former chief administrative officer, also departed last month.
- Funding: While Rubicon’s available cash on hand remains tight at $10 million, Schubert reported “significant headway” on efforts to improve the company’s balance sheet and noted $32 million in available liquidity. This includes recently raising $39 million in new debt-funded capital, extending maturity dates on other debts (with the earliest now at the end of the year) and growing its revolving credit facility. Rubicon is now focused on recapitalizing its term loan that matures later this year.
- Software: As part of the company’s focus on its software business, which Schubert said is “growing like a weed” and which executives noted doubled its revenue between 2021 and 2022, Rubicon plans to expand its offerings beyond local governments to commercial fleets. It also plans to begin offering access to specific components of its software suite, such as ESG reporting. Software-specific revenues were not reported.
- City business: The company recently added 11 new clients to its RUBICONSmartCity business, part of the broader software offerings, including Rochester, New York, and Surprise, Arizona. In February, Rubicon also finalized a sales partnership with Bartec that will license its software “to cities and counties across the United Kingdom.”
- Commodity effects: Rubicon reported nearly $85.6 million in revenue from the sale of recyclables during the year, though Schubert noted depressed commodity pricing was a $14 million revenue headwind in Q4. Executives said they have hedges in place to avoid commodity risk and are not currently forecasting an improvement in pricing this year.
- Account updates: During Q4, Rubicon expanded and extended its contract with Walmart by two years and extended its contract with Sweetgreen by three years.
- Account optimization: At the same time, Rubicon cut certain “underperforming” accounts to improve its margins. In addition, Rodoni said the company has been looking to optimize systems and pricing levels “in line with the broader waste industry.” Schubert said this has led Rubicon to see a $16 million boost in annualized adjusted gross profit so far this year.
- Guidance: While adjusted earnings before interest, taxes, depreciation, and amortization were negative $74.3 million for the year, executives anticipate they will turn a corner on this metric by Q4 and into 2024. The company also projects surpassing a 10% adjusted gross profit margin by the end of the year.
- Looking ahead: Rodoni said organic growth remains the company’s top priority, as part of “accelerating as fast as possible our path to profitability,” but he also didn’t rule out the potential for acquisitions depending on the opportunity and available capital. Schubert said the pipeline includes “really interesting areas that can drive real incremental margin growth,” but even without acquisitions, the company feels “very, very strongly” about its current trajectory.
