By the numbers
Q3 net loss: $30.2M
Versus $211.1M net loss in Q3 2022
Q3 gross profit: $13.4M
Up from $6.6M in Q3 2022, with a 7.8% margin
- Financial status: During a Wednesday earnings call, Rubicon executives reported incremental progress in their push toward profitability that was announced one year ago. “The macro and capital market environments in which we operate remains challenging,” said CEO Phil Rodoni, but “our core business is stronger than ever.”
- Profitability: This marked the third consecutive quarter of what the company described as “record” adjusted gross profit, which came in at $19.8 million for a margin of 11.6%. Rodoni noted that in addition to commodity headwinds, part of the year-over-year revenue decline was due to exiting less profitable contracts. That process will continue, but he said “the vast majority of that portfolio optimization has taken place.”
- Liquidity and expenses: Rubicon has now reduced expenses by $55 million on an annualized basis, a greater reduction than the $45 million reported in the company’s Q2 results. The company ended the quarter with $13.4 million in cash available, and President and CFO Kevin Schubert said there is “substantial liquidity that we’ll be able to tap into.”
- Growth expenses: Rubicon recently increased investments to expand the use of AI for auditing back-office invoices and enhancing capabilities to attract new commercial customers. It also grew the size of its smart city team. Rodoni said both of these investments are expected to boost earnings in 2024.
- Municipal customers: Rubicon signed a software agreement with Austin, Texas, covering Austin Resource Recovery’s fleet of 290 vehicles. Focus areas will include streamlining collection routes, tracking bulky waste and reducing missed pickups. In September, it announced a five-year software agreement with Phoenix that will cover the city’s fleet of more than 300 waste collection vehicles.
- Commercial customers: The company announced a two-year contract extension with storage company Americold, which is set to include additional locations in the future. It also signed new agreements with Neiman Marcus and Atlantis Management Group.
- Recycling: Revenue from recyclable commodities was $12.1 million, down from $22.2 million in Q3 2022, due to softness in OCC pricing. Rubicon also reported diverting more than 800,000 tons of waste from disposal so far this year.
- Q4 earnings outlook: Adjusted earnings before interest, taxes, depreciation and amortization were -$8.93 million in Q3, but executives said this is still on track to improve in Q4. While the Q4 figure may still be reported as a negative, they said it can be considered positive when accounting for one-time growth expenses, and positive free cash flow should follow soon after.
- Looking ahead: Unless a specific opportunity comes along, Rubicon has no near-term plans for M&A spending. “We’re still focused on growing our business organically and doing all that we can do there,” said Rodoni.
