By the numbers
Q1 net loss: $9.5M
Versus $24.8M net loss in Q1 2022
$28M
Annualized cost reductions to date through Rubicon’s “bridge to profitability” strategy
- Financing: Rubicon reported ongoing progress to improve its financial standing after going public last fall. The company has secured an incremental equity financing package worth $23.5 million led by its largest shareholder, Jose Miguel Enrich, and President and CFO Kevin Schubert said “we are in the final stages of securing a comprehensive refinancing package.” Rubicon’s shareholders will also consider a reverse stock split proposal at their annual meeting in June.
- Liquidity: The company ended Q1 with $10.5 million in cash on hand and $9.1 million available from a credit revolver.
- Cost-cutting: CEO Phil Rodoni said the company has made changes resulting in $28 million worth of annualized cost reductions so far, up by $16 million since its Q4 report. This included some layoffs as well as reducing expenses on certain software and third-party services. Rubicon is also pursuing the use of an artificial intelligence system that can process work order requests.
- Profitability: Rodoni reported a “record high” gross profit margin of 5.2%, up from 3.9% in Q1 2022. Rubicon’s adjusted gross profit margin was 8.9%, up from 8.2% in the same period last year. Schubert said this was largely driven by efficiencies in Rubicon’s software products, and the company expects to see benefits from those actions "accelerate as the year progresses.”
- City contracts: The company touted two new municipal software contracts with Miami and Atlanta, each for a three-year term. The cities aim to digitize record-keeping systems and streamline collection routes. Rubicon executives said growth rates are high in this segment, but the company still does not share specific revenue for this category.
- Pricing: Efforts to assess the company’s portfolio remain ongoing, with a focus on increasing profitability through pricing or new commodity services. Rodoni described this as “keeping pace with what’s in the industry” after many large haulers implemented significant pricing updates last year.
- Commodities: Like the rest of the recycling industry, Rubicon has seen its commodity revenue decline amid broader market trends. The company reported Q1 commodity revenue of $14.7 million, versus $25.1 million in Q1 of 2022. Chris Spooner, senior vice president of finance, said the company’s service structure insulates it from direct commodity risks at the adjusted gross profit level and volumes have grown because “even in a down market, this is a value proposition that resonates with our customers.”
- Looking ahead: Rubicon reiterated its 2023 guidance and Rodoni said "we remain confident in our ability to be cash-flow positive this year.” This includes goals of adjusted earnings before interest, taxes, depreciation and amortization turning positive by Q4 and potentially increasing the adjusted gross profit margin to the low double-digit percentage range. Rodoni expects the latter can be achieved by “equal contributions” from price increases, growing the high-margin software business and increasing the scope of commodity services for customers.
