- Earnings call transcript Q3 2022

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Operator

Good afternoon, and welcome to the Arcadia Biosciences Third Quarter 2022 Earnings Conference Call. Today's presenters will be Stan Jacot, President and Chief Executive Officer; and Pam Haley, Chief Financial Officer of Arcadia. This call is being webcast, and you can refer to the company's press release at arcadiabio.com.

Before we start, we would like to remind you that Arcadia Biosciences will be making forward-looking statements on this call based on current expectations and currently available information.

However, since these statements are based on factors that involve risks and uncertainties, the company's actual performance and results may differ materially from those described or implied today.

company's language the recently their review XX-Q. filed can safe in harbor most You that, now I over With Instructions] [Operator will Jacot, to turn CEO. Stan call the Sir, may you begin.

Stan Jacot

our you us and call. for afternoon, quarter conference thank today Good for XXXX third joining

represent earnings Our previous Greenfield. our path discussed as called Project part of progress to third continued on that profitability quarter we've strategy results calls, on our long-term

two, one, right the are in noted our and gross As previous distribution from GoodWheat doubled on key to include, press improved for our highlights we quarter, XX%, track. our margins that release, validation the

Our QX focused transformation a company. leaner, revenues more reflect the to

We have is reported working. and business QX. grain and from sales it does divested or part plan, This the and is in not QX all soybean business, of we QX include Bioceres our any that revenues lines unprofitable non-recurring HBX of milestone

higher dollars revenues first two While gross QX our QX combined. profit our QX and than the QX, were were below quarters

the more GoodWheat our in to you stores, we was retailers pasta. the launch GoodWheat. I officially around the just QX our for had we a wanted very first grew brand significant to available months that today and mid-May, we At distribution interest of mid-August, with in with as that On on earnings discuss great our call pace more XXX On our that added rapid are with made May tasting, earlier. the and having in a two that communicated a channel launched with progress gains nearly added call GoodWheat XXXX. pleased QX the extremely which we better-for-you pasta pasta time, is discussed on the at time, channel GoodWheat retail quality that we and earnings we e-commerce revenues, I'm third in Amazon, our topic short in margins of success So our in have transition gross announced perfect we improvement a launched quarter period in

a the alone, count We has is now with I'm also store and internal a retail quarter hard projected X,XXX This thank are to accomplishment excited an like I that work as already nearly team Arcadia brands whole, of would that distribution extremely the success. for expectations. amazing take making to exceeding would by report a cross-functional the the minute so is and in and effort, doubled this third stores. collaboration in of team all own we launch was a proud GoodWheat pasta the year. nationwide our launch truly their available and Today, It and end GoodWheat double for the our that

rising category and Nielsen bringing covers in our tough by category essentially on quarter, which encouraged food partners, Needless sales to received the believe the regarding X.X%. proposition our Beyond price placements. and stores, feedback promotions, we a XX customers also period we ads, pasta we has is that XX, pasta for GoodWheat September performed. data continue were units grew will costs the [ph] ending I coupons, traffic the retail are where progress displays, environment. launch utilizing the spot including how pasta driving from category are have in we and the media we to to new Based weeks GoodWheat There We the our differentiated to with delighted from to the committed face made of programs up to trial the already and last of a third XX% have partners a category are I'm say, our have drive of bright year am pasta economic the compared variety to social of supporting and value influencers. be same awareness

compared touch our we future very categories good wheat add just the we before, one of feel our core X.X%, well believe one when category ended The discussed the period XX and as many Water X%, units handful primarily September of pain X% continues previous sales in to Coconut of both Coconut unit category Zola superior later, quarter the from sales pasta the increases. where declined weeks sales to perform is shift was is category brands In which grow, a declined dollar XX%. I unit XX, Water other year. X% for the So on and increased same let by ProVault sales and is will And while GoodWheat. improvement proprietary last an now that growing only me Dollar brands, increased to this more prospects grew continues relief. we've about but and can price Zola value. driven units to sales.

quarter, leading coconut see mentioned of prefer tests. last opportunity for distribution to Zola taste other we unbranded blind in brands As water increase we a the taste as Zola to consumers

new our we As a taking order result, packaging, retailers our refreshing to on new space. in and innovation shelf gain to working message are are

economic XX% distribution some CBD landscape, sales ProVault. Moving ProVault in as points, step hit result weeks products. seen the completely year. and hard a units last has to sales September XX market pain and same retailers environment category of The we X.X% ending X% topical have Despite especially relief XX. increased price The been fell to and grew declined period the in compared this CBD the X.X% of tougher-than-expected out current higher

provide to want our update from lines. gears I Now shift an business certain on and exit

focus placing opportunity profitability simplifying our product, inherited wind two, as have a a differentiated previously QX, In our reported complete. the legacy goals. we we was business that announced meets we three, and in co-packing would its part we large acquisition. capital, our without that we've and an business And of been easily XXXX the one, a this scale ability that QX, to focused As significant and discussed, Arcadia that, on intense on businesses has operations down

manufacturing on facility, changes happy divest August in communicated I'm Savvy Naturals also We well cash the a us as allowed margins. is higher-margin This X,XXX on to and higher of focus resulted in and up revenue our This we significant. focus were gross transitions nearly those in freed level report business, brand, simplified that QX improvement basis improvement as and that to X. point would quality our completed These SKUs.

the first deliberate it spend So compared talk few X the a important I think months XXXX is at about of Arcadia progress to XXXX. of over X minutes to made months to first financial the

acquisition last remove from those approximately not months increased million both XX%. our or are revenues And if sales while $X.X XX% same have to Our million include revenue, does years, revenues we of completely the $X full X period of year. XXXX up compared still a

businesses and our of time, At XX%, to has leading $XX.X unwind focus ability on of we X,XXX million same expenses, in which basis margin goods have testament our to the costs time million the to validates profitable improvement business through decreased operating our more our is first X the point or sold frame, under same made total $X.X During our the profit than to growth. $X has while keeping control. gross increased a underperforming months. the decisions including gross a million, cost This grow

during operations for million or last to months or $X.X operations year. our the the by improved reported finally, XX% to first last compared million of compared loss cash improved XX% from by first $X.X year. use And XXXX months approximately same the million Our X from of X $XX of period

allow this sufficient XXXX. direct to Currently, the category pasta. better made from fund there's of quarter in while third GoodWheat most the lot of ended managing while of We value brands So proposition August. evaluating simplifying have and are to profitable the to still us existing in focusing by equivalents, potential bring we believe job exploratory acquisition the work proceeds phase the offering do, $XX.X the to is we new through a our doing our and of in that a an of gross we cash. tremendous targets of business speaking our million wheat-based million outside brand cash in And cash the with progress $X registered operations bolstered would on cash,

in believe mentioned is tremendous one pasta purchasing the laid out opportunity many we established in where our can briefly scale to our that is wheat of already comments, initiative I there As in has branded grocery and quarters. This an provide Greenfield, a aisle, We existing differentiation. my earlier just categories prior category Project broad distribution. shelf by placement which a of in faster different is business a component significant

sales over could include anticipation funds As Greenfield strategy the consumer and earlier a of initiative, expansion. To a well we may for access in purposes in GoodWheat we and investments acquisition billion potential to launches, increasing the planned acquisitions. as representing further $XX the mix than categories for annual in spending. establish of indicated this strategy reminder, those using in GoodWheat as product best Project Furthermore, footholds marketing capital markets was first execute

early very this on to the with to front. concludes more in news is are share stages, keep wanted if any I current This you prepared will and you share thinking, We updated I my our to remarks. come, so there but

that, turn financial to over detail. now will to Pam with I Pam? QX more in So call results discuss the XXXX our

Pam Haley

afternoon, Good everyone. Stan. Thanks,

are recognized million lower sales Goodland compared recognized this unfavorability water GoodWheat the pasta date. XXXX total year-to-date months as of expenses by the $X.X operating million resulting The impacted was higher previously in Natural were the of year-to-date launched quarter. we of of third which with offsetting million in coconut XXXX care progress in since year-to-date was the we operating a reduced The revenue the Savvy [ph] our the quarter to for driven decrease year-to-date in positive co-packing a revenues for million our we sales X%, Partially recognized was XX%. quarter XXXX, increase in were half for on gross As underperforming of $X.X of anticipated focus in revenues and to $X.X XXXX XXXX $X.X quarter. third and third million compared to year. year-to-date pleased by period communicated, than as of we XXXX quarter divested. third an gross of pasta was quarter sales brands. Lower and the third this same And this to million revenue businesses, majority than expenses revenues of million $X.X of of full grain sales million noted, pasta accounted mentioned this margin and turned the first quarter end from higher-margin XX%, in And Total XXXX a third the XX%. quarter year of X our second quarter in body XXXX. quarter had the very $XX.X for earlier, as quarter an revenues Total product but third favorability was for $X.X and have decrease Stan margin $X.X product addition have as less GoodWheat and third

consulting As reflected we equipment the recognized the this XXXX revenues favorability Stan XXXX, focused the result as lease quarter or were XXXX, third for of $X in reduced revenues the months million $X.X Also than million quarter product for lower the SG&A of to million SG&A XXXX been product XXXX. and is with $X.X of the with mentioned, Cost expense recognized. first lower line in have an our first was third $X.X X the the expense of for XXXX, recognized recognized expenses. of revenues in quarter, quarter the primarily months that was expenses in favorable total $X.X quarter here. the to in was recognized driven cost was million compared which containment, impairment million same on impacting operating lower revenues period. amount property due by in and higher of results the higher during X employees, immaterial Cost

along amount driven components the were was XXXX. during employee on with of SG&A turned fees in with operations lower XXXX gain from stockholders was the lease quarter million consulting to absence months HBX XXXX, quarter as lower extinguishment PPP income total third the discussed lower offsetting $X.X the $X in by of quarter million third sale XXXX. triggered of of $X.X quarter lower of quarter in $X.X And Verdeca from recognized the XXXX. all in million $X.X X loss other expenses, the million fair XXXX expenses was in the warrant the this operating quarter favorability quarter this was to acquisition XXXX. option year. liabilities focus common million recognized commercialization and Chinese attributable third Net along in non-cash XXXX the greater call, first as Bioceres gain approval and [ph] Soy. R&D lower value was reviewed, of from million just as has $X.X of on was third with million common the and The a of of we change third to versus loan compared by of second second the on in $X.X million milestone the Loss seed of soft a million in company's $X.X $X.X

change common and sale but stockholders not the of warrant XXXX. concludes the investment This with year-to-date, time a call in XXXX registered months are back X common third stock our XXXX. the to operator the from preferred million you Thank financial and from fair a in your I'll same and lower million in of questions. XXXX and present XXXX, shares months included We for first quarter August first in for operations year-to-date difference the gain $X.X to Thank highlights was $XX.X was for for value re-measuring $X.X options the very attributable $X.X Bioceres quarter you. $XX.X over that to of loss million option turn Net liabilities the the attention, of offering. XXXX million. X direct much versus of in third the Operator? was XXXX period million versus Loss issued

We Klieve Markets. Instructions] from from comes [Operator will Our question session. question-and-answer now first Lake Ben Capital Street begin the

Your now line is open.

Ben Klieve

Thanks afternoon. taking my Good for questions.

quarter categories have three that great kind material this on the With product gross first kind number in talk kind really three question products if of each you quarter. categories? they're margin that now? business Because streamlined this line product I'm profit. really the First now of the in right Can characteristics margins, those about and with each of relatively curious or primary gross there progress across of of you drive individual with other

Stan Jacot

we our point a range our all that sight QX. little for Ben. for us experienced to the this line of keep We're Thank different we margin same the would gross product question, three different. Yeah. the you - lines, of at But are in SKUs individual would growth say in as

Ben Klieve

couple Okay. questions Thank a you. GoodWheat then specifically. on of And

I as what realistic count time quarters, kind great you the over Can count that So through range? now quickly next expanding frame progress I'm regarding first, distribution. us of XXXX progressing retail of next. there, expectations frame as did. few the you say, store comes of retail kind mean in some help wondering for end or

Stan Jacot

Yeah.

way time So in depending nation. to again, of X,XXX by X,XXX continue to expect we which distribution GoodWheat present get will the to retailers would many all XXXX, to XXXX. across the And this time on the the frames, points end we shelf last through to reset

Ben Klieve

with loud Perfect, Stan, also expectation you can Perfect. into via on Is potentially Bioceres there of any either of on trial opportunity hear underway of via your thank CPG you. and you revenues ongoing GoodWheat the provide you Okay. South on kind categories control expanding wondering fronts? those in on clear updates can then acquisition. BXB other market and kind I addressable to via that beyond if I'm the you integrate America. the elaborate

Stan Jacot

our continue new partnerships this Yeah. pipeline projections. to continue Nothing will to leverage have this like that but and We year there's we significantly for nothing impact to companies the still currently in for point. partnerships really Bioceres, with report at the new look

Ben Klieve

QX and the operations? broad Okay. been processing kind your one businesses Are all have this expected there of initiative of one outflows as the really any you're inflows, those recently All beyond right. With of Or last of here QX? exiting realized your Very kind cash from here around - streamlining and good. facilities. with for And me. then pieces exiting all moving

Stan Jacot

Pam that I'll Yes, answer. Ben, over turn to to

Pam Haley

as think we don't we I and of will we the I them – quarter a Ben. balances at perspective. we expect end inventory value. the from to Hi, we that evaluating at rightsize of do looking balances especially still the to fair and year, don't lot market the asset each the year, end mean cash at a have the we will those be and be

but be don't much really some write-downs, we could additional way out. expect cash in So the going of there

Ben Klieve

Okay. again in on on get All I'm I'll Well, That good right. fronts, back really I makes sense. and Congratulations All some good progress on right. think queue. several shape.

Pam Haley

you. Thank

Operator

Thank you.

H.C. question Dipesh comes Our next from Patel Wainwright. from

open. Your now line is

Dipesh Patel

for guys. the update. Hi, Thanks

Just standing in for Ram Selvaraju Bain breakeven? When operating at reach right. to cash plan H.C. flow do you

Stan Jacot

Yes.

So as a part expect we of Project XXXX. that happen in to early Greenfield,

Dipesh Patel

to look are that products, you what regards hemp-related - inventory And holding? your with then like? if And expect to Okay. any of receive do might you so, to consideration some whatever still or see remaining

Stan Jacot

that turn one to that, I'll over With Pam.

Pam Haley

Sure.

CBD - we we'll have we truly And year, and are lately, to monetize look hemp books. our pretty market right we assets challenged just challenging it's been the depending see. that still the now. So But it's continuous outlook looking I for how a market on pretty evaluation. to on has mean, have that does next

Dipesh Patel

question, or of the line? for Okay. would in what - product sorry, level uptake? are last among then employing of would characterize characterize how strategies you the they And level order distributors that drive to your GoodWheat And you commitment

Stan Jacot

Yes.

I satisfied partners driving we've say of period. would on our very trial them, early for that our [ph] performance. we in we are the good are very So most listed, with

get display. know, in As adds secure [indiscernible] once you feature we we which distribution, include promotions to have and include

and that, just activities of trial. the are lift with corresponding marketplace. we starting see the now promotion that we some to hit see those So corresponding And

and marketing And brand - So we're been improve Commitment promotion our tools the at strong. to the tools remarks, to we strong. continue yes, - our has mentioned we're the looking but losses. been in to acceptance as typical has all

Dipesh Patel

Stan, you, Thank Pam. Great.

Pam Haley

you. Thank

Operator

back I Jacot questions for this queue. At in time, to call closing turn the And Mr. presenters, comments. further will I show no

Stan Jacot

you. Thank

have in progress more a to closing, and made focused lean we So this meaningful transitioning in organization. year Arcadia

call. continue to as a our our full execute QX, as well financial GoodWheat everyone. doubling continues gross you look by ability ongoing results again with have results quarter in alone. the third improve believe for We validate today. evidenced our management in and on sharing members our as us Our to to you significant plans that long-term the Have our distribution next expectations afternoon, profit forward year on with to great we previously expenses. in And outperform joining increase shared our of Thank

Operator

Thank today's you Thank you, ladies conference. gentlemen. for and participating. concludes This

now disconnect. may You

Arcadia Biosciences (RKDA) 10 Nov 222022 Q3 Earnings call transcript