By the numbers
Q2 net loss: $22.8M
Versus $27.8M net loss in Q2 2022
Q2 gross profit: $11.8M
Up from $5.5M in Q2 2022, marking a 6.8% margin
- Financial status: Waste broker and software company Rubicon reported ongoing progress in its effort to turn around its financial performance during a Tuesday earnings call. Executives said the highest-priority goals in their “bridge to profitability” plan, including recent refinancing efforts, are complete. “We are now fully focused on growth and optimizing our operations for the future,” said CEO Phil Rodoni.
- Profitability: The company reported improvement in its gross profit margin, up to 6.8% from 5.2% in Q1, to reach another consecutive quarter of record levels. Rubicon reported an adjusted gross profit margin of 10.3% driven by ongoing price increases, assessments of low-margin accounts and other efforts.
- Liquidity and expenses: President and CFO Kevin Schubert said the company had approximately $27 million available at the end of Q2 through a combination of cash and its credit facility. Since last fall, the company had reduced expenses by $45 million on an annualized basis through the end of July. Rodoni said further cost-cutting efforts are in progress, with Schubert forecasting that work could be “primarily done” by the end of the year.
- Customer updates: Rubicon touted a contract with Denver as the latest sign of growth in the higher-margin city software category. After hitting a milestone of more than 100 city contracts, Rodoni said he expects “similar momentum” moving forward. Other notable customer updates included a five-year renewal to provide waste and recycling services for locations of Gap and its affiliated brands as well as a two-year renewal with Goodyear Tires.
- Commodities: Ongoing price challenges for recyclables led commodity revenue to drop nearly 43% year over year, to $13.9 million for the quarter. Rubicon is not anticipating any near-term changes to those trends and said it is insulated from commodity effects at the adjusted gross profit level.
- Palantir partnership: Data analytics company Palantir recently increased its investment in Rubicon to now own more than 6% of shares in the company. On the call, executives described Palantir as a partner on efforts including the deployment of artificial intelligence. Rodoni said the results of this work have been more visible internally, including a system to process invoices faster, and he described Palantir as “instrumental” in the company’s optimization efforts.
- Guidance: Rubicon is maintaining its 2023 guidance, including expectations to achieve positive earnings before interest, taxes, depreciation and amortization by Q4. Schubert said that profit margins are still expected to grow further, but in the form of “smaller incremental increases as you move forward.”
- Looking ahead: Rodoni said the company sees “considerable opportunity to increase sales in our current customer base” through new or expanded services and is also working to offer “à la carte” services, rather than solely a bundled approach, in hopes of attracting additional customers.
