Rubicon Technologies, Inc. (NYSE:RBT) 2023 Fourth Quarter Earnings Conference Call March 7, 2024, 5:00 PM ET
corporate participants
Chris Spooner – Executive Vice President of Finance
Phil Rodoni – Chief Executive Officer
Kevin Schubert – President and Financial Officer
conference call participants
operator
Good afternoon, and welcome to Rubicon Technologies’ fourth quarter and full year 2023 earnings conference call. My name is Jenny and I’m the operator on today’s call. As a reminder, this conference call is being recorded. (Operator Instructions) Thank you.
Now I’m pleased to introduce Chris Spooner, Executive Vice President of Finance. You are good to go.
Chris Spooner
Thanks. Hello, everyone, and welcome to Rubicon’s fourth quarter and full year 2023 earnings conference call. A few quick reminders before we begin. The conference call is being webcast and can be viewed on the Investors section of our website at investors.rubicon.com. Today, we’ll present Rubicon’s fourth quarter and full-year 2023 financial results, followed by a Q&A session.
During the conference call, management will make forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, and our actual results may be subject to known and unknown risks and uncertainties, which are discussed in more detail in our earnings releases and SEC filings. We assume no obligation to update forward-looking statements except as required by law. Additionally, we will mention non-GAAP financial measures during today’s call, including, but not limited to, adjusted gross profit and adjusted EBITDA. We provide these non-GAAP results for informational purposes only and should not be considered separately from the most directly comparable GAAP measures.
Discuss why we believe these non-GAAP measures are useful to investors, as well as certain limitations Reconciliations using these measures and the most directly comparable GAAP measures can be found in our earnings reports and filings with the SEC.
Joining me on the call today are Rubicon CEO Phil Rodoni; Rubicon President and Chief Financial Officer Kevin Schubert.
and I’d like to turn the call over to Phil.
Phil Rodoni
Thank you, Chris, and thank you all for joining us today.
Last year was a transformative year for Rubicon. Our goal this year was to significantly improve our operating performance and strengthen our financial position, and I am proud to say that we achieved both of these strategic goals while delivering record financial results and continuing to provide better services to our customers. Good environmental results.
In the fourth quarter, our adjusted gross profit continued to grow, with an annual increase of 37%, and our adjusted gross profit margin expanded by 264 basis points. Adjusted EBITDA also increased by $17 million from the same period last year, with a loss of $437,000, a 98% decrease from the fourth quarter of 2022.
Additionally, it’s worth noting that the adjusted EBITDA number included approximately $3.8 million in non-cash operating expenses. Central to our success in 2023 is the successful completion of a number of key financial measures, including adjusting our debt capitalization, closing a new term loan, expanding our revolver capacity and securing additional financing.
Completion of these tasks provides us with the financial flexibility we need and improves our liquidity position. Full details of these actions can be found in our Q3 2023 document. Efficient operations are also a focus in 2023, and we achieved an annualized cost reduction of US$55 million.
While navigating this company-wide shift and against a backdrop of economic challenges, our fourth quarter adjusted gross profit increased 37% year over year, and we not only met, but exceeded our goal of achieving double-digit growth in adjusted gross profit. interest rate, achieving this goal ahead of schedule.
The final result of these optimization measures was an annual gross profit increase of 91%. Amid all these strategic moves, we remain committed to sustainability. We diverted more than 1.6 million tons of materials from landfill, equivalent to avoiding approximately 2.1 million tons of CO2 emissions in 2023.
Looking ahead, some challenges remain, but we remain focused on continuing to accelerate growth of our high-margin SaaS products and advancing key strategic optimization efforts, including, for example, the planned reduction of a small but profitable business of less than 20 people in February. Meaningful layoffs optimize our workforce.
As always, we remain committed to evolving with our customers to deliver strong environmental and economic outcomes through ever-improving experiences. Continuing our review of 2023, I wanted to take a moment to highlight some of Rubicon’s wins in delivering efficiency and resiliency solutions to customers while prioritizing innovative technology. RUBICONConnect has achieved significant wins both in adding new customers to the Rubicon family and in expanding relationships with existing Rubicon customers.
These new multi-year agreements are with high-profile commercial clients across a variety of industries, including Neiman Marcus and Vail Properties. The renewals include five-year extensions to Gap, Inc. and two-year extensions to Goodyear Tire and Americold. We look forward to deepening our relationships with these customers in the coming years and welcoming more commercial customers to the Rubicon family so they, too, can achieve better environmental and financial outcomes.
In June 2023, we hosted our second annual Next Summit, a premier technology summit for leaders and innovators in solid waste, fleet operations, and sustainability. The summit provides a collaborative platform for industry leaders to gain insight into our cutting-edge technology developments and interact directly with our teams. Rubicon’s priority is to deliver innovative technologies tailored to client needs, often stemming from collaborative sessions with clients.
Some of these features were launched last year, including a billing module to streamline invoicing and AI-driven capabilities to combat illegal waste disposal and ensure customers’ operational efficiency and effectiveness. The third Next Summit will be held in New York City in June 2024, bringing together fleets and commercial partners to promote collaboration between waste recycling and sustainability experts.
Rubicon once again demonstrates its commitment to sustainability with the launch of technology consulting services in 2023, enabling clients to achieve their sustainability goals through tailored solutions and strategic partnerships. These developments underscore Rubicon’s commitment to innovation, digitalization and sustainability, making the company a leader in waste and recycling solutions. The last year has been characterized by strategic partnerships, technology deployments and a continued focus on customer satisfaction and reducing environmental impact.
I’ll now turn the call over to Kevin to provide a review of our fourth quarter and full year 2023 financials.
Kevin Schubert
Thanks, Phil.
I will now take a few minutes to review our fourth quarter and full-year 2023 results (beginning with the fourth quarter). Revenue was $170.7 million, an increase of $4.7 million, or 2.8%, from $166 million in the fourth quarter of 2022, driven primarily by business expansion with existing customers, including new business lines.
Adjusted gross profit was $18.3 million, an increase of $4.9 million, or 36.5%, compared to $13.4 million in the fourth quarter of 2022, driven by increased higher-margin business with existing customers, which also This drove adjusted gross margin expansion by more than 260 basis points to 10.7% from 8.1%. Adjusted EBITDA was negative $437,000, an increase of $17.1 million compared to negative $17.6 million in the fourth quarter of 2022.
As Phil mentioned before, the adjusted EBITDA number includes approximately $3.8 million in non-cash operating expenses. Turning now to our full-year results. Revenue was $697.6 million, an increase of $22.2 million, or 3.3%, from $675.4 million for the full year of 2022.
Adjusted gross profit was $72.2 million, an increase of $18.9 million, or 35.5%, compared to $53.3 million for the full year 2022, primarily due to an increase in higher-margin business from existing customers, which was also driven by Adjusted gross profit margin increased by more than 245 basis points to 10.4% from 7.9%. Adjusted EBITDA was negative $33 million, an increase of $41.3 million compared to negative $74.3 million for the full year 2022.
I’ll now turn it back to Phil before we ask questions.
Phil Rodoni
Thank you for continuing this journey with us. We look forward to updating you on our progress in the coming seasons.
That way, I’ll transfer the call to the operator, who can open the phone and ask questions.
question Time
operator
Phil Rodoni
Thank you all for joining us today and we look forward to providing you with updates in the future. Thanks again.
operator
This concludes today’s conference call. You can disconnect now.
