Release Date: May 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rubicon Technologies Inc (RBT, Financial) reported a year-over-year adjusted gross profit growth of 5.9% and an adjusted gross profit margin expansion of 138 basis points.
- The company successfully reduced SG&A expenses by 9.3% in the first quarter compared to the prior year.
- Rubicon Technologies Inc (RBT) completed a $94.2 million transaction with Rodina Capital, which included the sale of its fleet technology business units, improving its balance sheet by reducing debt and providing additional liquidity.
- The company secured a significant contract with a new customer in the grocery sector, providing waste and recycling services to over 500 stores across the United States and Canada.
- Rubicon Technologies Inc (RBT) reported an improvement in adjusted EBITDA, which was negative $11 million, an improvement of $2.9 million or 20.9% compared to the negative $14 million in the first quarter of 2023.
Negative Points
- Revenue decreased by $15 million or 8.3% compared to the first quarter of 2023, primarily due to ending less profitable relationships.
- Despite improvements, the adjusted EBITDA remained negative at $11 million.
- The company had to allocate a significant portion of the transaction proceeds to pay down high-interest debt.
- The sale of the fleet technology business units, while beneficial for liquidity, may impact future revenue streams.
- The company’s liquidity position, although improved, still relies heavily on the successful execution of its strategic plans to achieve profitability.
Q & A Highlights
Q: On the money received from the transaction, could you illustrate the plans for that? How much will go towards paying down debt, and what are the revenue trends throughout the year, especially given the divestiture?
A: Kevin Schubert, President, CFO, Corporate Secretary: We paid down around $50 million of high-interest debt and retained over $30 million for working capital and operating purposes. We feel confident about our liquidity position and our path to profitability. Revenue trends should remain consistent, and we aim to be adjusted EBITDA positive this year.
Q: Are the targets to be adjusted EBITDA positive set for this year?
A: Kevin Schubert, President, CFO, Corporate Secretary: Correct.
Q: Could you provide an update on current liquidity?
A: Kevin Schubert, President, CFO, Corporate Secretary: As of the close of the transaction, we had a little over $30 million remaining on the balance sheet, approximately $33 million.
Q: Can you elaborate on the impact of the $94.2 million transaction with Rodina Capital on Rubicon's financials?
A: Kevin Schubert, President, CFO, Corporate Secretary: The transaction includes $61.7 million in cash for the sale, $12.5 million earn-out consideration payable by the end of 2024, and $20 million in cash for convertible preferred stock. Proceeds will be used to pay down high-interest debt and for working capital and general corporate purposes.
Q: How does the recent customer win in the grocery sector impact Rubicon's growth strategy?
A: Philip Rodoni, CEO: The contract with a new grocery sector customer, covering over 500 stores in the US and Canada, aligns with our sustainability goals and offers strong potential for incremental growth. This win showcases our platform's scalability and our ability to reduce costs and increase diversion rates for customers.
Q: What are the strategic implications of the sale of Rubicon's fleet technology business units?
A: Philip Rodoni, CEO: The sale improves our balance sheet by reducing debt and providing liquidity, enabling us to achieve our objectives faster and focus on our core RUBICONConnect business. This move underscores our commitment to a customer-focused approach and sustainability solutions.
Q: How did Rubicon's financial performance fare in the first quarter of 2024?
A: Kevin Schubert, President, CFO, Corporate Secretary: Revenue was $166.1 million, an 8.3% decrease from the previous year due to ending less profitable relationships. Adjusted gross profit increased by 5.9% to $17.1 million, and adjusted EBITDA improved by 20.9% to negative $11 million.
Q: What are the future projections for Rubicon's core business and customer relationships?
A: Philip Rodoni, CEO: We aim to add more large customers and strengthen existing relationships. Our focus remains on delivering efficiency and sustainability solutions, leveraging our platform to support customers' environmental goals.
Q: How does Rubicon plan to utilize the new capital from the transaction?
A: Philip Rodoni, CEO: The capital will be dedicated to improving services and strengthening relationships with our vendor and hauler partners, 90% of which are small independent businesses. This aligns with our commitment to sustainability and customer-focused solutions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
