ROMJF - Rubicon Organics Inc.
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Q2 2025 Earnings Call
Aug 18, 2025 12:00 AMOperator: Good morning, ladies and gentlemen, and welcome to Rubicon Organics Second Quarter Earnings Call. [Operator Instructions] I would now like to turn the conference call over to Margaret Brodie. Please go ahead.
Margaret Ruth Brodie: Today, I'll share an update on Rubicon Organics' Q2 2025 performance, our growth opportunities and outlook. Glenn Ibbott will be walking you through our financial results. In Q2, we appointed Glenn Ibbott as Interim CFO, completed a $4.5 million private placement, finalized the acquisition of our Hope facility, launched our new all-in-one vape product to market, all while positioning the company for long-term success. We also delivered record results in the quarter. Net revenue of $15 million, our highest ever single quarter, gross profit of $5.9 million, another record high and delivered adjusted EBITDA of $1.4 million, building on the $800,000 from Q1 '25 for year-to-date $2.1 million. Rubicon's growth continues to outpace total market. One of the key drivers behind our year-over-year growth was the exceptional performance of our 1964 510 thread Resin vape line launched in Q2 '24 with just 2 SKUs, we expanded to 5 by year-end. And by the close of Q2 '25, we have 7 SKUs in market, further strengthening our portfolio. These vape carts are extremely well received, quickly capturing over 15% of the segment and continuing to gain momentum. Beyond resin vapes, we saw strong growth in 1964 pre-rolls, dried flower and concentrates along with gains in Simply Bare pre-rolls. We also drove innovation in edibles and capsules. Hifyre is reporting now that pre-rolls, both infused and flower only were the fastest- growing segment in the first half of '25 and now account for 35% of total market sales. Rubicon also holds the #1 position in premium edibles, and we have strong offerings under our brands of Simply Bare, 1964 and Wildflower. In topicals, we continue to lead the category with the market's top-selling SKU despite our premium pricing. While we've experienced some share erosion with the entry of competitors offering more SKUs at lower price points, our revenue in this segment continues to hold its own. This speaks to the strength of our product quality and the brand equity we've built over time. In growing our offerings to customers, we are regularly launching new products that build on the strength of our house of premium brands and leverage our genetic bank. In Q2, a few standouts for you. We launched BC Organic Sunset Runtz by Simply Bare, again, honored to share another legacy genetic from Gastown Genetics. This was launched under Simply Bare. It's earning outstanding reviews and is a key part of our drop strategy, bringing fresh distinctive flavors to our consumers. We launched our first all-in-one resin vape under our award-winning and best-selling Comatose strain, which provide a new and discrete format to consumers to enjoy on the go. We are seeing rapid gains in distribution, and we'll have a more fulsome update view on the performance of all-in-one in the third quarter. Now Glenn on financials. Thank you, Margaret. Good morning, everyone.
William Glenn Ibbott: Today, we reported Q2 2025 net revenue of $15 million, which was our highest ever for a single quarter, up 24% versus Q2 of 2024 and up 21% sequentially. Our 1964 brands saw growth led by the pre-roll segment following format enhancements in 2024. Additional momentum came from our 510 live resin base launched late in Q2 2024, which benefited from a full 3 and 6 months in the market this year. The brand clearly resonates with consumers as it also saw continued strength in flower, edibles and concentrates. Simply Bare Organic also delivered growth in both the 3- and 6-month periods, driven primarily by strong performance in the pre- roll segment. This was supported by the momentum of our superb genetics such as BC Organic Fruit Loopz, and strengthened by recent innovations in capsules and edibles. Wildflower maintained a strong presence in the topical category with a 60-gram topical stick ranking as Canada's best-selling SKU in the segment according to Hifyre. And with the #2 market share in topicals, Wildflower remains a trusted leader in the wellness space. Gross profit before fair value adjustments was $5.1 million, up 40% from Q2 of last year, with gross margin improving to 34% compared to 30% a year ago. This reflects strong revenue growth, the benefits of scale and ongoing operational efficiencies at our Delta facility. Within SG&A, Q2 2025 costs increased by just under $1 million as we invested in targeted marketing to support brand growth and invested in people and infrastructure to position the business for future expansion. Bringing it all together, adjusted EBITDA for Q2 2025 was $1.4 million, up from $900,000 last year. This marks our fifth consecutive quarter of positive adjusted EBITDA, highlighting the strength of our underlying business even as we continue to invest in long-term growth. Turning to cash flow and financial health. We generated $800,000 in cash from operating activities in the quarter, driven by our net profit. This compares to an operating cash outflow of $300,000 in Q2 of 2024. We closed the quarter with $7.3 million in cash and a solid working capital position of $18.7 million. Our liquidity remains strong, supported by disciplined cost control and a prudent capital structure. As you recall, in November 2024, we secured $10 million in credit facilities at an interest rate of 6.75%. During Q2 2025, we raised gross proceeds of $4.5 million in an equity financing to support the start-up and scale-up of the whole facility. We may consider additional financing should we choose to accelerate key projects, but we consider Rubicon's current balance sheet to be very healthy. To summarize my review of our Q2 and first half 2025 financial performance, solid revenue growth across all of our key segments and products, combined with operational efficiencies and continued cost discipline led to positive operating cash flow, the fifth consecutive quarter of positive adjusted EBITDA and overall robust financial health. I'll now turn the call back to Margaret.
Margaret Ruth Brodie: Thanks, Glenn. We are underway with a strategic expansion, having purchased our new facility in Hope, BC that closed in June. This acquisition is timely now given the evident global cannabis supply shortage and certainly one of quality. The new site provides the opportunity for us to satisfy more demand as it brings an incremental 4,500 kilos of production capacity into our business for about $4.5 million purchase price plus an expected $2 million in incremental CapEx. For those unaware, the site was the first licensed cannabis facility in BC and is located 1.5 hours from our existing operation in Delta, which should allow us to get it up and running quickly. Once licensed, we expect it will take 12 to 18 months to get the appropriate consistent quality and begin to optimize yield. We are now awaiting Health Canada licensing, which we expect this year with incremental OpEx of $1 million to $2 million incurred in '25, pending license timing and revenues in the first half of '26. This expansion will help capture unmet demand for capacity-constrained brands in Canada, and we expect could open up international channels in '26. Rubicon is planning to grow our business. We have consistently grown our revenues faster than total market growth, and we expect that to continue. Through the Hope acquisition, we expect to increase our supply capacity by over 40%. This, combined with long- term supply agreements will help us to meet growing demand. We are growing our vape market offerings as we now have 9 SKUs in market when there were only 2 launched last summer. We started out with traditional cartridge format and have just launched our all-in-one, which is now in Canada's fastest-growing market category. Our initial all-in-one vape launch this year is 1 SKU, and we expect to have a total of 4 in market by the end of this year. As mentioned, Rubicon has received its GACP certification and sent its first shipment internationally. Our plan with international is to test and learn in '25 before we undertake a similar crawl, walk, win strategy that we previously executed in flowers, then topical, then edibles, then vapes. We see a strong future for our business. And in '25, it is a transformational year. Our company outlook for '25 remains consistent. Firstly, we are focused on securing additional premium quality supply in 2 ways. Firstly, getting this new facility up and running; and secondly, through contract arrangements where we expect an incremental 2,000 kilos of biomass. Secondly, we are focused on the domestic market and building trust with our customers in Canada. We see now is the time that brands are built and many of our competitors are or have turned away from the Canadian market. And that, coupled with rising barrier to entry on to Canadian shelves with provincial SKU rationalization and supplier scoring means it will become increasingly challenging for new brands and products to secure shelf space. At the same time, Canadian consumers are becoming more brand loyal, prioritizing trust and value in their purchasing decisions. We believe our award-winning brands and diverse product portfolio will continue to resonate with them. Third, we remain deeply committed to introducing new and innovative genetics to the Canadian market, continuing to elevate the consumer experience. Our goal is to lead the industry in genetic innovation and deliver fresh, exciting news to customers. And lastly, in '25, we plan to test and learn in the international market in advance of having incremental production from Hope, some of which we expect could be available for international channels. In financial terms, our '25 targets remain unchanged. We are forecasting growth in net revenue, adjusted EBITDA from our core business on a like-for-like basis. And as I mentioned, our '25 annual adjusted EBITDA will be impacted by initial pre-revenue operational costs of $1 million to $2 million associated with the start-up of Hope, with revenues from Hope not likely to appear until '26. We're bullish on Canadian cannabis as global demand now exceeds quality supply. With strategic moves into edibles and vapes, debt refinancing and the new site acquisition, Rubicon is well positioned for long-term growth and value creation. We would now like to open up the line for analyst questions. Operator, please open the line.
Operator: [Operator Instructions] And your first question is from Neal Gilmer from Haywood Securities.
Neal Gilmer: On the good quarter here. Maybe I want to start with the revenue line, solid growth year-over-year as well as quarter-over-quarter. You talked about procuring 2,000 kilograms of biomass, I guess, to help support that. Can you talk a little bit about what sort of more opportunities you have given the fact that your current facility is pretty much at capacity? Remind us how much you procured last year to sort of understand how much of growth that 2,000 is this year?
Margaret Ruth Brodie: Neal, good question. Look, if you look back on the last 3 years with a single asset, we've been able to grow the business, certainly well over double digits. every year, and that's through innovation and looking at new product lines. Some of the biomass that we are bringing in is going into our baseline. So we believe that we've got a significant amount of growth yet, in particular with the all- in-one. I can't quantify it as much today in terms of what that's going to look like because we are seeing a shift in market right now between the 510 over to all-in-one, but we are seeing the distribution and early stages of the all-in-one formats mimicking what we did last year with 510. So I would say we're bullish. The margins on both of those are very strong and at the higher end of our range, so stronger than the average margin you're seeing which is great. And that's where -- part of where you're seeing the growth in our margin, and we're focusing on high-margin products. There is other ways we can start to look to still to drive the revenue forward. And one thing is this year, we've got a trial of our genetics in outdoor grow, which then that product could go into our vape products as well. So we're looking at lots of different opportunities to grow our business.
Neal Gilmer: That's great. It's almost like you read my mind because my next question was on the margins. So you basically sort of answered it.
Margaret Ruth Brodie: Why don't you ask your question on margin because I think Glenn is prepared to answer that one.
Neal Gilmer: Yes. Well, just obviously, there was a nice growth in gross margins, both year-over-year and quarter-over-quarter. And I was just looking to see sort of what sort of drove that growth. And obviously, it sounds like it's those -- the vape line that's helping contribute to that. Is there much more room for that to grow?
Margaret Ruth Brodie: Glenn, do you want to take that one?
William Glenn Ibbott: Yes, for sure. I mean, Rubicon stays in its lane and plays in the premium segment of the market, as you know. So the margins are pretty healthy to begin with for the Canadian rec market. And Margaret pointed out the growth in the vapes, which have strong relative margins. I also point out that we're getting more volume through a fixed manufacturing base. So I would say it's a little bit of scale, the efficiencies that come with scale. So some fixed costs and cultivation, focusing on yields there and just pushing more through the facility in terms of bringing biomass and manufacturing. So that to me is exciting, as you know, you can get more out of an asset, just it flows to the bottom line. And I think that's what we're seeing here with margin and continuing profit improvements.
Neal Gilmer: Yes. Yes, that's great. Last one for me is with respect to Hope, how much of the CapEx can you -- how much of the work can you do in advance of getting the Health Canada license? Like I know you plan to invest $1 million to $2 million into that. I can't recall what the rules are, like can you still get all the work done in advance of the license? Or do you have to get the license before you can really do much of the investment into the asset?
Margaret Ruth Brodie: Good question. We do have a bit of a chicken and egg scenario happening in that we have submitted and are waiting with Health Canada. There are some things that are more -- we expect when we get the license, it will only take us a few weeks to be able to move in terms of planting. I think that's a better answer because some of the timing. Some work has been done, some work is still yet to do, but we're very confident that, that won't slow us down in the way that we've managed the business. So we're not thinking that it will be -- we obtain the license and we have to wait 2 months. It may be a couple of weeks that we need to finalize a few things, but it's not a significant delay. And our expectations on the license will be at some point between now and the end of the year. Many of you are aware that within Health Canada, there has been a slowdown they had it in their results, et cetera, we do not believe there's any impediment to us getting the license. It's a matter of, in my view, when and not if.
Operator: Your next question is from Pablo Zuanic from Zuanic & Associates.
Pablo Ernesto Zuanic: Look, just a follow-up to the last question. In terms of the whole facility, can you talk about whether what you have found there, it's better than expected or in line with your expectations? Also, I'm sure -- I know you've talked about 40% capacity expansion, but over time, with yields and efficiencies, it could be a bigger delta in terms of throughput. So just if you can just give more color in terms of the state of that facility and relative to your expectations. And then the only thing I would add on the same topic in terms of the timing question, if you were to get the license, as you said, within that range that you gave, Margaret, you were to get it literally on December 30, when could you be generating revenue from that facility?
Margaret Ruth Brodie: Great questions. Firstly, on the state of the facility, we're very happy with it. I don't think there's anything to report materially. I think we've done -- did a good job on due diligence. There's always 1 or 2 things, but to [indiscernible] farms and the individual who was maintaining it out there. Two, in terms of throughput. Rubicon likes to underpromise and overdeliver. So I don't want to say we want to blow past the 4,500 kilos. Obviously, we're going to -- we are focused on optimizing every single asset that we have. So I would say that is a target of ours, but we also manage for facility downtime and not to have any issues in the facility. So sometimes that has an impact. But yes, I think that's a fair question. Can you beat it? Many in our business, given that the previous owner said it was 6, 900 kilos would say that we can. we're growing -- we expect to grow beautiful premium weed there. So we want to make sure that we're setting realistic expectations. But obviously, we have ambitions to go higher. And so in terms of the license on December 31, I believe that, that would not change our first half revenue expectation, although we certainly would dampen our -- the amount in the first half that we do.
Pablo Ernesto Zuanic: Okay. Understood. That's good color. And then I don't know if this is for Glenn, but Glenn, you made, I think, a reference that after the equity raise, you feel that you're in good shape, but that you would consider future equity raises to fund future expansion. I don't know if it's for Margaret. But just trying to understand, I guess, assuming that you have other expansion opportunities, what's your debt leverage tolerance, right, so we can model equity raises when you get to a certain point?
William Glenn Ibbott: Yes. Pablo, good question. I think we're just pointing out that in the cannabis industry, there's always opportunities. And if there's a compelling return, if there's a business case that makes sense, we've got room to take on a bit more debt. I think we'd be comfortable with $3 million or $4 million more debt. We could service that quite easily. We do have warrants out there. And I think our expectation is that we will as we progress the company and grow the top and bottom line. So at some point, those will be in the money and there'll be some more coming in there. So there's opportunities to step on the gas on some current projects and accelerate them, cost efficiency projects. And certainly, with our eyes on continuing to grow our business in Canada and the test and learn strategy internationally, we believe over the next year or 2, there will be more opportunities to grow. So just flagging that we've got more capacity there, but there's nothing imminent in our plans that we want to note for you.
Pablo Ernesto Zuanic: Okay. And one last one for me, Margaret. It's a 2-part question, but you talked about overseas demand outstreaming quality supply. And I'm sure you would know that based on the inbound calls that you're getting. But maybe if you can give more color on that. And are you missing out on opportunities right now because the third-party biomass you're buying is for vape and it's not for premium flower, obviously, right? So -- but just if you can give more color about that because some people are talking about oversupply, but it seems to be on the low end of the market, not on premium. And then the second part of your question, and I'm sorry to add this, it's related but separate. When I look at the high Hifyre data for Canada in premium flower, I see a lot of movements in terms of brands, right? Some brands gaining, some brands losing. Maybe it's just the regular quarter-to-quarter changes based on promotions. But I'm surprised that there seems to be a lack of stickiness there apparently based on the movements among brands in premium with 28Gs growing, for example. If you can just give more color in terms of your big picture view about where we are in that premium flower in Canada.
Margaret Ruth Brodie: Absolutely. Thank you. For the first question on international in terms of color, look, we still have [indiscernible] I would say that at the mid level, so mainstream and below, there is capacity turning on. We saw those farms announcement opening up their next piece. We know Cronos is growing and there is increasing supply. There are stories like that out there. There are also outdoor grows around the world turning on. What we are not seeing is the turn on of legal premium flower capacity, and that is a very limited and small category with Canada really being the leader in international. What we have seen and why we took the strategy that we did was we've seen lumpiness in public company reporting on international markets. i.e., export permits slowing down, speeding up. We've heard many stories of nonpayment. We heard stories of people sending product across and then not meeting specs and then not getting paid. So when you start into that, that creates instability in your business and in your forecasting. I do expect that Rubicon will play internationally more significantly in the future, but we still have a lot to do in Canada, and we need to get the new facility up and running. Oversupply, I just don't think that that's -- I think that's a bit of a false narrative, more that people buy supply in advance because there was a nervousness of not having it, and it's really lumpy. So they have a big bulk and then it goes away and big bulk and goes away. What international buyers, in particular, for the medical patients is looking for is consistent supply. And that's really where we always want to be consistent for our customers. We're in the business of brand building. And at this stage, we don't believe we have the amount of supply to be able to deliver that consistently. And that actually leads very well on to your next question with respect to the Hifyre data and the move in premium. We see the Hifyre data says anything premium is 20% over the average selling price in that period. We actually look at several brands of our competitors. And those brands, we do find are more sticky. We -- based on where we are with how quickly genetics are selling in smaller formats, which are more profitable, we fill 28 gram fast, part of part of looking at hope and getting additional biomass and some of the work we're doing is how we can fill that because obviously, we want more of the [indiscernible] dollar. We also want to satisfy our customers' needs for a larger format. We think that brands are beginning to get stickier and since the shelf is beginning to get established in Canada with consistency. So for us, I think that it's -- there are some subtleties within price points that are significant to the consumer. If you're charging -- if the average in Canada for 3.5 gram jar these are not the right number. So let's say, hypothetically, it was $25 at anything over $30 is going to be in that. Well, that ranges then from $30 up to $50, which would include Simply Bare and 1964 as well as a series of other brands that to us don't actually -- aren't actually premium. So data can be funny. We want to look at our categories and how we're winning into probably tighter pricing brands. And we feel that that's getting stickier.
Operator: And your next question is from Andrew Semple from Ventum Financial.
Andrew Semple: Congrats on the second quarter results. I'll start off with just kind of going back to the growth drivers in the quarter. [indiscernible] highlighted kind of in the prepared remarks and throughout this call. I'm just wondering how some of your other product formats did within the quarter. Were they contributing to growth? Did you continue to see strong momentum in some of your other products such as flowers, pre-rolls and edibles. If you could comment on that, that would be helpful.
Margaret Ruth Brodie: Pre-rolls being probably the story of the first half outside of vape for us, holding in other places, but we've seen pre-rolls surpass flower for the first time into being the largest category. I think a big part of that is the trust in terms of what consumers are getting, convenience, et cetera. We -- as you may or may not be aware, targeted pre-roll automation project that's actually now completed. We'll see the benefits of which in the second half. And we really see pre-rolls as being a strong category going forward. We saw that in our growth, very pleased with it. And we also shifted the format of our pre-rolls in 1964 that were [ 0.7 x 3 to 0.5 x 5 ]. And we were trying to differentiate a bit in the market didn't quite work. That was a '24 initiative, and we've really seen momentum that. So I would say pre-rolls are a story of 2025. And I think all-in-one is going to be -- I think those are all-in-one and pre-rolls are going to be a big part of the future. The importance of flower and having quality flower from a brand perspective cannot be understated. And that's different from growth. It's actually about demonstrating to the market and the consumer the consistency and quality of what you can do.
Andrew Semple: That's great. And maybe just a quick follow-on to that. Did we see any contribution from the pre-roll automation in the second quarter? Or was that all...
Margaret Ruth Brodie: Minor. Yes. Yes. Just very minor, it really commissioned in June. So I would have to go in and do some data mining. And sometimes you see what you want to see when you're looking at a very short period of time, but we're very pleased with how the project has gone. I want to really give credit to our team on it.
Andrew Semple: Great. And then maybe just on the inventory this quarter, a little bit higher. It's been higher than Q1. Q1 is a bit higher to close out the year. My understanding is you've been typically selling most of, if not all, of what you can produce. Obviously, that's tracking revenues higher, but I just want to check and see if there's any kind of strategy or reason that the inventory has continued to move higher other than just the sales momentum.
Margaret Ruth Brodie: That one is over to Glenn.
William Glenn Ibbott: Yes. Most of what you're seeing there is a buildup in anticipation of launching all at ones and the higher run rates for the 510. So we see in our -- you're right, of course, there's not much in the finished goods that goes out the door pretty quickly. But in our vape, you see vape carts and oil and that sort of thing built up in anticipation of the launches. So that's the main driver. There's bits and pieces of other stuff, but that's really where the growth is. So I'd expect us to continue to look for ways to manage that down. Certainly, when you look at our cash flows in the first half, you see the investment in inventory and has consumed a couple of million dollars of cash in the first half. So we will try to manage that down a bit. But we do have higher volume run rates and more product categories that are requiring us to carry a bit more in inventory.
Andrew Semple: Great. That's useful color. And maybe final one for me, if I may. Just returning back to the topic of international sales. Obviously, Rubicon communicated a test-and-learn strategy on international. I note that you had your first international shipment in Q1. Did you have any follow-on shipments in the second quarter on the international market side? And what's the thoughts about the likelihood of seeing additional international in the second half of the year? Just trying to get a sense of maybe whether that first experience went well, whether you see an opportunity in this year or maybe you need to wait for the whole facility to be online first. If you could comment on that, that would be helpful.
Margaret Ruth Brodie: Yes. Great question. Not in the second quarter, in the third quarter, yes. Again, we're doing small lots. So what we want to -- what I'd like to do is have dealt with potential partners in several different countries by the end of the year, have moved -- we did expect the shipment would -- a shipment in the third quarter would go up in the second quarter, but the export Canada permit delay was real. So I think it was early July that we ended up getting it and I applied for it 5 months before, something like that. I do understand once you get into a regular routine, it gets quicker. My goal is to have gone to several countries by the end of the year because then we can see product reaction, we can understand the channels, we can work with Health Canada and get the permits, all those types of things. We are -- we do need hope to come online. But there's still more to assess, and there is a lot of opportunity. I'm very, very pleased with our choice though to take focus on the Canadian market for that shelf space given the size of the business we are. I believe that that's standing us in very good stead and has almost increased the -- because of the brand and reputation, it's actually, I believe, increased the inbound that we get.
Operator: [Operator Instructions] Your next question is from Josh Felker from CB1 Capital.
Josh Felker: On the quarter. I know that Hope and Delta are different facilities. One is a hybrid greenhouse, one is an indoor facility. I know Delta is living soil, and I believe Hope was built for hydro. I'm just wondering, have you developed any specific or bifurcated strategy for Hope given that it's different than Delta?
Margaret Ruth Brodie: Great question. We are certainly looking at how we can maximize Hope. And we're also looking at strains that weren't as successful in Delta in terms of a greenhouse environment, pushing them to Hope that we believe will be more successful in an indoor hybrid environment. To be clear, those would be 1964. It would not be -- the organic facility is at Delta. [indiscernible] So I think some of the Kush strains and Indica-leaning are likely to be more successful, but it could be the opposite. We'll see as we go. We will be -- you know us, we trial as we go. We like to get as much data and information as we go along, but feeling very bullish on Hope and excited for what's next. And we have to change the name because we talking about Hope all the time is just terrible. Glenn is going to kick me.
Josh Felker: Looking forward to the new name. My next question, just interested in how legacy strains are performing. Wondering if flower success is a derivative of popular legacy offerings or more new SKUs.
Margaret Ruth Brodie: That's a very good question. Our 2 original -- or Blue Dream is our original strain, still extremely popular, one of our top-selling SKUs. Comatose as well won flower of the Year back in 2022. It's held position and is still our #1 strain. That's over 3 years. It's fairly unheard of. And I think what we're going to see going forward in the Canadian market is these hero strains that consumers come back to time and time again. That in particular, it's important for consumers, but what we see is the excitement around new news and leading with genetics brings interesting curiosity into our brand, in particular, what Simply Bare does. We plan to be Canada's global leader in genetics. We have been focusing on that. You've heard us talk about it in the past. We believe the genetics story is not yet being fully told in the market and the opportunity around that. One thing that I think if you look at opportunities in 3 years, we built a fantastic year to date a great genetic library, but we built a fantastic genetics library. That's something that I believe will be able to be monetized in the future as well. Now we're not at that stage yet, but there's a significant amount of opportunity, and we're extremely excited about what's coming in the next 2 years of our pipeline. I mean we thought we're that far along from a commercialization perspective, very excited.
Josh Felker: I appreciate that. And then to maybe sneak in a third question, seeing some uptick in wholesale pricing and wholesale pricing commentary on a larger basis. I'm just wondering, as a purchaser, what are you seeing in wholesale pricing on a year-over-year basis versus '24? I know a lot of your growth is from incremental capacity, which is purchased, but your margin keeps improving. So I'm just wondering what are you seeing in that wholesale pricing line?
Margaret Ruth Brodie: Two things. One is we have long-term supply agreements and work with partners that understand the importance of consistent -- dealing with consistent and strong partners that pay their bills. That has not been true in Canadian cannabis, and I think now that's occurring on the worldwide stage. It doesn't mean you need to be 100% of their capacity, but being the -- a strong leg of the stool is important for companies around Canada. In terms of -- Hope will certainly -- the new facility will certainly assist us with that. We only saw wholesale pricing to this time last year. We are now seeing additional capacity come online. Will that balance it potentially. I don't believe that prices are going to go up significantly from where they are now would be my personal prediction. I don't know if others have a different view given what's happening in the market. And so I think we're in a good spot.
Operator: There are no further questions at this time. I will now hand the call back over to Margaret Brodie for the closing remarks.
Margaret Ruth Brodie: Thank you for joining us today. Cannabis is in a global supply shortage and Rubicon Organics is Canada's premium leader who is elevating experiences and building trusted cannabis brands with industry-leading quality and world-class genetics. We are investing today to accelerate future growth, leveraging our strong position, proven know-how and balance sheet to build enduring brands designed to stay on shelves for the next 30 years. I always end a conference call with a personal recommendation. And today, I'd like to turn the attention to Wildflower and our extra strength release stick, which I'm finding extremely helpful with my low cartilage knee pain. Thanks, everyone.
Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.
Margaret Ruth Brodie: Today, I'll share an update on Rubicon Organics' Q2 2025 performance, our growth opportunities and outlook. Glenn Ibbott will be walking you through our financial results. In Q2, we appointed Glenn Ibbott as Interim CFO, completed a $4.5 million private placement, finalized the acquisition of our Hope facility, launched our new all-in-one vape product to market, all while positioning the company for long-term success. We also delivered record results in the quarter. Net revenue of $15 million, our highest ever single quarter, gross profit of $5.9 million, another record high and delivered adjusted EBITDA of $1.4 million, building on the $800,000 from Q1 '25 for year-to-date $2.1 million. Rubicon's growth continues to outpace total market. One of the key drivers behind our year-over-year growth was the exceptional performance of our 1964 510 thread Resin vape line launched in Q2 '24 with just 2 SKUs, we expanded to 5 by year-end. And by the close of Q2 '25, we have 7 SKUs in market, further strengthening our portfolio. These vape carts are extremely well received, quickly capturing over 15% of the segment and continuing to gain momentum. Beyond resin vapes, we saw strong growth in 1964 pre-rolls, dried flower and concentrates along with gains in Simply Bare pre-rolls. We also drove innovation in edibles and capsules. Hifyre is reporting now that pre-rolls, both infused and flower only were the fastest- growing segment in the first half of '25 and now account for 35% of total market sales. Rubicon also holds the #1 position in premium edibles, and we have strong offerings under our brands of Simply Bare, 1964 and Wildflower. In topicals, we continue to lead the category with the market's top-selling SKU despite our premium pricing. While we've experienced some share erosion with the entry of competitors offering more SKUs at lower price points, our revenue in this segment continues to hold its own. This speaks to the strength of our product quality and the brand equity we've built over time. In growing our offerings to customers, we are regularly launching new products that build on the strength of our house of premium brands and leverage our genetic bank. In Q2, a few standouts for you. We launched BC Organic Sunset Runtz by Simply Bare, again, honored to share another legacy genetic from Gastown Genetics. This was launched under Simply Bare. It's earning outstanding reviews and is a key part of our drop strategy, bringing fresh distinctive flavors to our consumers. We launched our first all-in-one resin vape under our award-winning and best-selling Comatose strain, which provide a new and discrete format to consumers to enjoy on the go. We are seeing rapid gains in distribution, and we'll have a more fulsome update view on the performance of all-in-one in the third quarter. Now Glenn on financials. Thank you, Margaret. Good morning, everyone.
William Glenn Ibbott: Today, we reported Q2 2025 net revenue of $15 million, which was our highest ever for a single quarter, up 24% versus Q2 of 2024 and up 21% sequentially. Our 1964 brands saw growth led by the pre-roll segment following format enhancements in 2024. Additional momentum came from our 510 live resin base launched late in Q2 2024, which benefited from a full 3 and 6 months in the market this year. The brand clearly resonates with consumers as it also saw continued strength in flower, edibles and concentrates. Simply Bare Organic also delivered growth in both the 3- and 6-month periods, driven primarily by strong performance in the pre- roll segment. This was supported by the momentum of our superb genetics such as BC Organic Fruit Loopz, and strengthened by recent innovations in capsules and edibles. Wildflower maintained a strong presence in the topical category with a 60-gram topical stick ranking as Canada's best-selling SKU in the segment according to Hifyre. And with the #2 market share in topicals, Wildflower remains a trusted leader in the wellness space. Gross profit before fair value adjustments was $5.1 million, up 40% from Q2 of last year, with gross margin improving to 34% compared to 30% a year ago. This reflects strong revenue growth, the benefits of scale and ongoing operational efficiencies at our Delta facility. Within SG&A, Q2 2025 costs increased by just under $1 million as we invested in targeted marketing to support brand growth and invested in people and infrastructure to position the business for future expansion. Bringing it all together, adjusted EBITDA for Q2 2025 was $1.4 million, up from $900,000 last year. This marks our fifth consecutive quarter of positive adjusted EBITDA, highlighting the strength of our underlying business even as we continue to invest in long-term growth. Turning to cash flow and financial health. We generated $800,000 in cash from operating activities in the quarter, driven by our net profit. This compares to an operating cash outflow of $300,000 in Q2 of 2024. We closed the quarter with $7.3 million in cash and a solid working capital position of $18.7 million. Our liquidity remains strong, supported by disciplined cost control and a prudent capital structure. As you recall, in November 2024, we secured $10 million in credit facilities at an interest rate of 6.75%. During Q2 2025, we raised gross proceeds of $4.5 million in an equity financing to support the start-up and scale-up of the whole facility. We may consider additional financing should we choose to accelerate key projects, but we consider Rubicon's current balance sheet to be very healthy. To summarize my review of our Q2 and first half 2025 financial performance, solid revenue growth across all of our key segments and products, combined with operational efficiencies and continued cost discipline led to positive operating cash flow, the fifth consecutive quarter of positive adjusted EBITDA and overall robust financial health. I'll now turn the call back to Margaret.
Margaret Ruth Brodie: Thanks, Glenn. We are underway with a strategic expansion, having purchased our new facility in Hope, BC that closed in June. This acquisition is timely now given the evident global cannabis supply shortage and certainly one of quality. The new site provides the opportunity for us to satisfy more demand as it brings an incremental 4,500 kilos of production capacity into our business for about $4.5 million purchase price plus an expected $2 million in incremental CapEx. For those unaware, the site was the first licensed cannabis facility in BC and is located 1.5 hours from our existing operation in Delta, which should allow us to get it up and running quickly. Once licensed, we expect it will take 12 to 18 months to get the appropriate consistent quality and begin to optimize yield. We are now awaiting Health Canada licensing, which we expect this year with incremental OpEx of $1 million to $2 million incurred in '25, pending license timing and revenues in the first half of '26. This expansion will help capture unmet demand for capacity-constrained brands in Canada, and we expect could open up international channels in '26. Rubicon is planning to grow our business. We have consistently grown our revenues faster than total market growth, and we expect that to continue. Through the Hope acquisition, we expect to increase our supply capacity by over 40%. This, combined with long- term supply agreements will help us to meet growing demand. We are growing our vape market offerings as we now have 9 SKUs in market when there were only 2 launched last summer. We started out with traditional cartridge format and have just launched our all-in-one, which is now in Canada's fastest-growing market category. Our initial all-in-one vape launch this year is 1 SKU, and we expect to have a total of 4 in market by the end of this year. As mentioned, Rubicon has received its GACP certification and sent its first shipment internationally. Our plan with international is to test and learn in '25 before we undertake a similar crawl, walk, win strategy that we previously executed in flowers, then topical, then edibles, then vapes. We see a strong future for our business. And in '25, it is a transformational year. Our company outlook for '25 remains consistent. Firstly, we are focused on securing additional premium quality supply in 2 ways. Firstly, getting this new facility up and running; and secondly, through contract arrangements where we expect an incremental 2,000 kilos of biomass. Secondly, we are focused on the domestic market and building trust with our customers in Canada. We see now is the time that brands are built and many of our competitors are or have turned away from the Canadian market. And that, coupled with rising barrier to entry on to Canadian shelves with provincial SKU rationalization and supplier scoring means it will become increasingly challenging for new brands and products to secure shelf space. At the same time, Canadian consumers are becoming more brand loyal, prioritizing trust and value in their purchasing decisions. We believe our award-winning brands and diverse product portfolio will continue to resonate with them. Third, we remain deeply committed to introducing new and innovative genetics to the Canadian market, continuing to elevate the consumer experience. Our goal is to lead the industry in genetic innovation and deliver fresh, exciting news to customers. And lastly, in '25, we plan to test and learn in the international market in advance of having incremental production from Hope, some of which we expect could be available for international channels. In financial terms, our '25 targets remain unchanged. We are forecasting growth in net revenue, adjusted EBITDA from our core business on a like-for-like basis. And as I mentioned, our '25 annual adjusted EBITDA will be impacted by initial pre-revenue operational costs of $1 million to $2 million associated with the start-up of Hope, with revenues from Hope not likely to appear until '26. We're bullish on Canadian cannabis as global demand now exceeds quality supply. With strategic moves into edibles and vapes, debt refinancing and the new site acquisition, Rubicon is well positioned for long-term growth and value creation. We would now like to open up the line for analyst questions. Operator, please open the line.
Operator: [Operator Instructions] And your first question is from Neal Gilmer from Haywood Securities.
Neal Gilmer: On the good quarter here. Maybe I want to start with the revenue line, solid growth year-over-year as well as quarter-over-quarter. You talked about procuring 2,000 kilograms of biomass, I guess, to help support that. Can you talk a little bit about what sort of more opportunities you have given the fact that your current facility is pretty much at capacity? Remind us how much you procured last year to sort of understand how much of growth that 2,000 is this year?
Margaret Ruth Brodie: Neal, good question. Look, if you look back on the last 3 years with a single asset, we've been able to grow the business, certainly well over double digits. every year, and that's through innovation and looking at new product lines. Some of the biomass that we are bringing in is going into our baseline. So we believe that we've got a significant amount of growth yet, in particular with the all- in-one. I can't quantify it as much today in terms of what that's going to look like because we are seeing a shift in market right now between the 510 over to all-in-one, but we are seeing the distribution and early stages of the all-in-one formats mimicking what we did last year with 510. So I would say we're bullish. The margins on both of those are very strong and at the higher end of our range, so stronger than the average margin you're seeing which is great. And that's where -- part of where you're seeing the growth in our margin, and we're focusing on high-margin products. There is other ways we can start to look to still to drive the revenue forward. And one thing is this year, we've got a trial of our genetics in outdoor grow, which then that product could go into our vape products as well. So we're looking at lots of different opportunities to grow our business.
Neal Gilmer: That's great. It's almost like you read my mind because my next question was on the margins. So you basically sort of answered it.
Margaret Ruth Brodie: Why don't you ask your question on margin because I think Glenn is prepared to answer that one.
Neal Gilmer: Yes. Well, just obviously, there was a nice growth in gross margins, both year-over-year and quarter-over-quarter. And I was just looking to see sort of what sort of drove that growth. And obviously, it sounds like it's those -- the vape line that's helping contribute to that. Is there much more room for that to grow?
Margaret Ruth Brodie: Glenn, do you want to take that one?
William Glenn Ibbott: Yes, for sure. I mean, Rubicon stays in its lane and plays in the premium segment of the market, as you know. So the margins are pretty healthy to begin with for the Canadian rec market. And Margaret pointed out the growth in the vapes, which have strong relative margins. I also point out that we're getting more volume through a fixed manufacturing base. So I would say it's a little bit of scale, the efficiencies that come with scale. So some fixed costs and cultivation, focusing on yields there and just pushing more through the facility in terms of bringing biomass and manufacturing. So that to me is exciting, as you know, you can get more out of an asset, just it flows to the bottom line. And I think that's what we're seeing here with margin and continuing profit improvements.
Neal Gilmer: Yes. Yes, that's great. Last one for me is with respect to Hope, how much of the CapEx can you -- how much of the work can you do in advance of getting the Health Canada license? Like I know you plan to invest $1 million to $2 million into that. I can't recall what the rules are, like can you still get all the work done in advance of the license? Or do you have to get the license before you can really do much of the investment into the asset?
Margaret Ruth Brodie: Good question. We do have a bit of a chicken and egg scenario happening in that we have submitted and are waiting with Health Canada. There are some things that are more -- we expect when we get the license, it will only take us a few weeks to be able to move in terms of planting. I think that's a better answer because some of the timing. Some work has been done, some work is still yet to do, but we're very confident that, that won't slow us down in the way that we've managed the business. So we're not thinking that it will be -- we obtain the license and we have to wait 2 months. It may be a couple of weeks that we need to finalize a few things, but it's not a significant delay. And our expectations on the license will be at some point between now and the end of the year. Many of you are aware that within Health Canada, there has been a slowdown they had it in their results, et cetera, we do not believe there's any impediment to us getting the license. It's a matter of, in my view, when and not if.
Operator: Your next question is from Pablo Zuanic from Zuanic & Associates.
Pablo Ernesto Zuanic: Look, just a follow-up to the last question. In terms of the whole facility, can you talk about whether what you have found there, it's better than expected or in line with your expectations? Also, I'm sure -- I know you've talked about 40% capacity expansion, but over time, with yields and efficiencies, it could be a bigger delta in terms of throughput. So just if you can just give more color in terms of the state of that facility and relative to your expectations. And then the only thing I would add on the same topic in terms of the timing question, if you were to get the license, as you said, within that range that you gave, Margaret, you were to get it literally on December 30, when could you be generating revenue from that facility?
Margaret Ruth Brodie: Great questions. Firstly, on the state of the facility, we're very happy with it. I don't think there's anything to report materially. I think we've done -- did a good job on due diligence. There's always 1 or 2 things, but to [indiscernible] farms and the individual who was maintaining it out there. Two, in terms of throughput. Rubicon likes to underpromise and overdeliver. So I don't want to say we want to blow past the 4,500 kilos. Obviously, we're going to -- we are focused on optimizing every single asset that we have. So I would say that is a target of ours, but we also manage for facility downtime and not to have any issues in the facility. So sometimes that has an impact. But yes, I think that's a fair question. Can you beat it? Many in our business, given that the previous owner said it was 6, 900 kilos would say that we can. we're growing -- we expect to grow beautiful premium weed there. So we want to make sure that we're setting realistic expectations. But obviously, we have ambitions to go higher. And so in terms of the license on December 31, I believe that, that would not change our first half revenue expectation, although we certainly would dampen our -- the amount in the first half that we do.
Pablo Ernesto Zuanic: Okay. Understood. That's good color. And then I don't know if this is for Glenn, but Glenn, you made, I think, a reference that after the equity raise, you feel that you're in good shape, but that you would consider future equity raises to fund future expansion. I don't know if it's for Margaret. But just trying to understand, I guess, assuming that you have other expansion opportunities, what's your debt leverage tolerance, right, so we can model equity raises when you get to a certain point?
William Glenn Ibbott: Yes. Pablo, good question. I think we're just pointing out that in the cannabis industry, there's always opportunities. And if there's a compelling return, if there's a business case that makes sense, we've got room to take on a bit more debt. I think we'd be comfortable with $3 million or $4 million more debt. We could service that quite easily. We do have warrants out there. And I think our expectation is that we will as we progress the company and grow the top and bottom line. So at some point, those will be in the money and there'll be some more coming in there. So there's opportunities to step on the gas on some current projects and accelerate them, cost efficiency projects. And certainly, with our eyes on continuing to grow our business in Canada and the test and learn strategy internationally, we believe over the next year or 2, there will be more opportunities to grow. So just flagging that we've got more capacity there, but there's nothing imminent in our plans that we want to note for you.
Pablo Ernesto Zuanic: Okay. And one last one for me, Margaret. It's a 2-part question, but you talked about overseas demand outstreaming quality supply. And I'm sure you would know that based on the inbound calls that you're getting. But maybe if you can give more color on that. And are you missing out on opportunities right now because the third-party biomass you're buying is for vape and it's not for premium flower, obviously, right? So -- but just if you can give more color about that because some people are talking about oversupply, but it seems to be on the low end of the market, not on premium. And then the second part of your question, and I'm sorry to add this, it's related but separate. When I look at the high Hifyre data for Canada in premium flower, I see a lot of movements in terms of brands, right? Some brands gaining, some brands losing. Maybe it's just the regular quarter-to-quarter changes based on promotions. But I'm surprised that there seems to be a lack of stickiness there apparently based on the movements among brands in premium with 28Gs growing, for example. If you can just give more color in terms of your big picture view about where we are in that premium flower in Canada.
Margaret Ruth Brodie: Absolutely. Thank you. For the first question on international in terms of color, look, we still have [indiscernible] I would say that at the mid level, so mainstream and below, there is capacity turning on. We saw those farms announcement opening up their next piece. We know Cronos is growing and there is increasing supply. There are stories like that out there. There are also outdoor grows around the world turning on. What we are not seeing is the turn on of legal premium flower capacity, and that is a very limited and small category with Canada really being the leader in international. What we have seen and why we took the strategy that we did was we've seen lumpiness in public company reporting on international markets. i.e., export permits slowing down, speeding up. We've heard many stories of nonpayment. We heard stories of people sending product across and then not meeting specs and then not getting paid. So when you start into that, that creates instability in your business and in your forecasting. I do expect that Rubicon will play internationally more significantly in the future, but we still have a lot to do in Canada, and we need to get the new facility up and running. Oversupply, I just don't think that that's -- I think that's a bit of a false narrative, more that people buy supply in advance because there was a nervousness of not having it, and it's really lumpy. So they have a big bulk and then it goes away and big bulk and goes away. What international buyers, in particular, for the medical patients is looking for is consistent supply. And that's really where we always want to be consistent for our customers. We're in the business of brand building. And at this stage, we don't believe we have the amount of supply to be able to deliver that consistently. And that actually leads very well on to your next question with respect to the Hifyre data and the move in premium. We see the Hifyre data says anything premium is 20% over the average selling price in that period. We actually look at several brands of our competitors. And those brands, we do find are more sticky. We -- based on where we are with how quickly genetics are selling in smaller formats, which are more profitable, we fill 28 gram fast, part of part of looking at hope and getting additional biomass and some of the work we're doing is how we can fill that because obviously, we want more of the [indiscernible] dollar. We also want to satisfy our customers' needs for a larger format. We think that brands are beginning to get stickier and since the shelf is beginning to get established in Canada with consistency. So for us, I think that it's -- there are some subtleties within price points that are significant to the consumer. If you're charging -- if the average in Canada for 3.5 gram jar these are not the right number. So let's say, hypothetically, it was $25 at anything over $30 is going to be in that. Well, that ranges then from $30 up to $50, which would include Simply Bare and 1964 as well as a series of other brands that to us don't actually -- aren't actually premium. So data can be funny. We want to look at our categories and how we're winning into probably tighter pricing brands. And we feel that that's getting stickier.
Operator: And your next question is from Andrew Semple from Ventum Financial.
Andrew Semple: Congrats on the second quarter results. I'll start off with just kind of going back to the growth drivers in the quarter. [indiscernible] highlighted kind of in the prepared remarks and throughout this call. I'm just wondering how some of your other product formats did within the quarter. Were they contributing to growth? Did you continue to see strong momentum in some of your other products such as flowers, pre-rolls and edibles. If you could comment on that, that would be helpful.
Margaret Ruth Brodie: Pre-rolls being probably the story of the first half outside of vape for us, holding in other places, but we've seen pre-rolls surpass flower for the first time into being the largest category. I think a big part of that is the trust in terms of what consumers are getting, convenience, et cetera. We -- as you may or may not be aware, targeted pre-roll automation project that's actually now completed. We'll see the benefits of which in the second half. And we really see pre-rolls as being a strong category going forward. We saw that in our growth, very pleased with it. And we also shifted the format of our pre-rolls in 1964 that were [ 0.7 x 3 to 0.5 x 5 ]. And we were trying to differentiate a bit in the market didn't quite work. That was a '24 initiative, and we've really seen momentum that. So I would say pre-rolls are a story of 2025. And I think all-in-one is going to be -- I think those are all-in-one and pre-rolls are going to be a big part of the future. The importance of flower and having quality flower from a brand perspective cannot be understated. And that's different from growth. It's actually about demonstrating to the market and the consumer the consistency and quality of what you can do.
Andrew Semple: That's great. And maybe just a quick follow-on to that. Did we see any contribution from the pre-roll automation in the second quarter? Or was that all...
Margaret Ruth Brodie: Minor. Yes. Yes. Just very minor, it really commissioned in June. So I would have to go in and do some data mining. And sometimes you see what you want to see when you're looking at a very short period of time, but we're very pleased with how the project has gone. I want to really give credit to our team on it.
Andrew Semple: Great. And then maybe just on the inventory this quarter, a little bit higher. It's been higher than Q1. Q1 is a bit higher to close out the year. My understanding is you've been typically selling most of, if not all, of what you can produce. Obviously, that's tracking revenues higher, but I just want to check and see if there's any kind of strategy or reason that the inventory has continued to move higher other than just the sales momentum.
Margaret Ruth Brodie: That one is over to Glenn.
William Glenn Ibbott: Yes. Most of what you're seeing there is a buildup in anticipation of launching all at ones and the higher run rates for the 510. So we see in our -- you're right, of course, there's not much in the finished goods that goes out the door pretty quickly. But in our vape, you see vape carts and oil and that sort of thing built up in anticipation of the launches. So that's the main driver. There's bits and pieces of other stuff, but that's really where the growth is. So I'd expect us to continue to look for ways to manage that down. Certainly, when you look at our cash flows in the first half, you see the investment in inventory and has consumed a couple of million dollars of cash in the first half. So we will try to manage that down a bit. But we do have higher volume run rates and more product categories that are requiring us to carry a bit more in inventory.
Andrew Semple: Great. That's useful color. And maybe final one for me, if I may. Just returning back to the topic of international sales. Obviously, Rubicon communicated a test-and-learn strategy on international. I note that you had your first international shipment in Q1. Did you have any follow-on shipments in the second quarter on the international market side? And what's the thoughts about the likelihood of seeing additional international in the second half of the year? Just trying to get a sense of maybe whether that first experience went well, whether you see an opportunity in this year or maybe you need to wait for the whole facility to be online first. If you could comment on that, that would be helpful.
Margaret Ruth Brodie: Yes. Great question. Not in the second quarter, in the third quarter, yes. Again, we're doing small lots. So what we want to -- what I'd like to do is have dealt with potential partners in several different countries by the end of the year, have moved -- we did expect the shipment would -- a shipment in the third quarter would go up in the second quarter, but the export Canada permit delay was real. So I think it was early July that we ended up getting it and I applied for it 5 months before, something like that. I do understand once you get into a regular routine, it gets quicker. My goal is to have gone to several countries by the end of the year because then we can see product reaction, we can understand the channels, we can work with Health Canada and get the permits, all those types of things. We are -- we do need hope to come online. But there's still more to assess, and there is a lot of opportunity. I'm very, very pleased with our choice though to take focus on the Canadian market for that shelf space given the size of the business we are. I believe that that's standing us in very good stead and has almost increased the -- because of the brand and reputation, it's actually, I believe, increased the inbound that we get.
Operator: [Operator Instructions] Your next question is from Josh Felker from CB1 Capital.
Josh Felker: On the quarter. I know that Hope and Delta are different facilities. One is a hybrid greenhouse, one is an indoor facility. I know Delta is living soil, and I believe Hope was built for hydro. I'm just wondering, have you developed any specific or bifurcated strategy for Hope given that it's different than Delta?
Margaret Ruth Brodie: Great question. We are certainly looking at how we can maximize Hope. And we're also looking at strains that weren't as successful in Delta in terms of a greenhouse environment, pushing them to Hope that we believe will be more successful in an indoor hybrid environment. To be clear, those would be 1964. It would not be -- the organic facility is at Delta. [indiscernible] So I think some of the Kush strains and Indica-leaning are likely to be more successful, but it could be the opposite. We'll see as we go. We will be -- you know us, we trial as we go. We like to get as much data and information as we go along, but feeling very bullish on Hope and excited for what's next. And we have to change the name because we talking about Hope all the time is just terrible. Glenn is going to kick me.
Josh Felker: Looking forward to the new name. My next question, just interested in how legacy strains are performing. Wondering if flower success is a derivative of popular legacy offerings or more new SKUs.
Margaret Ruth Brodie: That's a very good question. Our 2 original -- or Blue Dream is our original strain, still extremely popular, one of our top-selling SKUs. Comatose as well won flower of the Year back in 2022. It's held position and is still our #1 strain. That's over 3 years. It's fairly unheard of. And I think what we're going to see going forward in the Canadian market is these hero strains that consumers come back to time and time again. That in particular, it's important for consumers, but what we see is the excitement around new news and leading with genetics brings interesting curiosity into our brand, in particular, what Simply Bare does. We plan to be Canada's global leader in genetics. We have been focusing on that. You've heard us talk about it in the past. We believe the genetics story is not yet being fully told in the market and the opportunity around that. One thing that I think if you look at opportunities in 3 years, we built a fantastic year to date a great genetic library, but we built a fantastic genetics library. That's something that I believe will be able to be monetized in the future as well. Now we're not at that stage yet, but there's a significant amount of opportunity, and we're extremely excited about what's coming in the next 2 years of our pipeline. I mean we thought we're that far along from a commercialization perspective, very excited.
Josh Felker: I appreciate that. And then to maybe sneak in a third question, seeing some uptick in wholesale pricing and wholesale pricing commentary on a larger basis. I'm just wondering, as a purchaser, what are you seeing in wholesale pricing on a year-over-year basis versus '24? I know a lot of your growth is from incremental capacity, which is purchased, but your margin keeps improving. So I'm just wondering what are you seeing in that wholesale pricing line?
Margaret Ruth Brodie: Two things. One is we have long-term supply agreements and work with partners that understand the importance of consistent -- dealing with consistent and strong partners that pay their bills. That has not been true in Canadian cannabis, and I think now that's occurring on the worldwide stage. It doesn't mean you need to be 100% of their capacity, but being the -- a strong leg of the stool is important for companies around Canada. In terms of -- Hope will certainly -- the new facility will certainly assist us with that. We only saw wholesale pricing to this time last year. We are now seeing additional capacity come online. Will that balance it potentially. I don't believe that prices are going to go up significantly from where they are now would be my personal prediction. I don't know if others have a different view given what's happening in the market. And so I think we're in a good spot.
Operator: There are no further questions at this time. I will now hand the call back over to Margaret Brodie for the closing remarks.
Margaret Ruth Brodie: Thank you for joining us today. Cannabis is in a global supply shortage and Rubicon Organics is Canada's premium leader who is elevating experiences and building trusted cannabis brands with industry-leading quality and world-class genetics. We are investing today to accelerate future growth, leveraging our strong position, proven know-how and balance sheet to build enduring brands designed to stay on shelves for the next 30 years. I always end a conference call with a personal recommendation. And today, I'd like to turn the attention to Wildflower and our extra strength release stick, which I'm finding extremely helpful with my low cartilage knee pain. Thanks, everyone.
Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.