Rubicon(RBT) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved record adjusted gross profit for the third consecutive quarter, with a 41% year-over-year increase and an 11% increase from the prior quarter [36] - Adjusted EBITDA improved by $12 million to a loss of $8.9 million year-over-year, marking an 8% improvement from the prior quarter [45][53] - Revenue for the third quarter was approximately $171 million, a decrease of $14 million or 7% compared to the third quarter of 2022, primarily due to softness in commodity prices [65] Business Line Data and Key Metrics Changes - The RUBICONSmartCity business has doubled year-over-year, with significant partnerships established, including a five-year agreement with the City of Phoenix [4][12] - The RUBICONConnect business saw an increase in adjusted gross profit driven by portfolio optimization and margin improvement activities [66] Market Data and Key Metrics Changes - The company reported a 35% growth in adjusted gross profit year-to-date in 2023, while diverting over 800,000 tons from landfills, equating to approximately 1.6 million metric tons of CO2 emissions avoided [39] - The company has surpassed 13 million unique service locations and 8,000 haulers and recycling partners, managing over 160 types of waste streams [49] Company Strategy and Development Direction - The company is focused on improving operational performance and strengthening its financial position, with a commitment to achieving profitability and growth [3] - Investments are being made in AI and software sales teams to enhance operational efficiency and attract new customers [23][68] - The company aims to achieve positive adjusted EBITDA in the fourth quarter of this year and for the full year of 2024 [9][59] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the challenging macro and capital market environments but emphasized the stability and growth potential of the waste and recycling industry [46] - The company is optimistic about its core business strength and is focused on organic growth while remaining opportunistic regarding M&A opportunities [81] Other Important Information - The company reduced expenses by $55 million on an annualized basis and expanded adjusted gross profit margin to over 10% ahead of its goal [50] - The company has $15 million in cash and undrawn availability under its credit facility as of the end of the third quarter [67] Q&A Session Summary Question: What are the drivers of the slowdown in service revenue this quarter? - The significant drop in cardboard commodity prices was a major contributing factor, along with adjustments related to portfolio optimization [72] Question: Any intention of reaccelerating M&A plans? - The company is focused on organic growth but will evaluate M&A opportunities as they arise, depending on available capital [75] Question: How much available debt capacity do you have to draw down? - Specific details on available debt capacity were not broken out, but the company is working towards improving its financial position [78]