RKDA - Earnings call transcript Q2 2024 | Arcadia Biosciences, Inc.

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Operator

Good afternoon, and welcome to Arcadia Biosciences Second Quarter 2024 Financial Result and Business Highlight Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Mark Kawakami, Chief Financial Officer at Arcadia. Please go ahead.

Mark Kawakami

Thank you, and good afternoon.

call T.J. the on me today is Joining Schaefer, and Chief Executive Officer. Arcadia's President call you at press and being arcadiabio.com. refer This webcast, company's can is to the release

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

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

most safe company's XX-Q. harbor the recently review our filed in can You language

With that, the turn call over to I'll now T.J.

Thomas Schaefer

Good afternoon, you for results today us second joining XXXX. our quarter everyone. And for thank to discuss financial

of quarter second Arcadia. significant XXXX The turning point for was a

transform flow to we As chart business becoming positive. our cash path the and

more I We X the have made like strides would the great you even progress months, significant last over today. that last share and to with over years X

start of of completed that But reminding part monetize in first, IP. second X we allowed quarter the by let of XXXX our transactions to that me everyone wheat us the

this toward North to introgressing to exclusive Wheat trait germplasm In rights steadily America. it an Durum agreement Starch million May, related Corteva our exchange Corteva $X with into purchase in with for agreement Corteva gives resistant commercialization, collaboration rights The and a Arcadia's associated to entered patent resistant asset sell been Agriscience, certain lines, this have transaction started to Wheat access owned advancing subsidiary in and Starch to for North wholly of into with XXXX markets cash. American Durum trait. Arcadia has elite an them Corteva beyond

accelerating of of onetime monetization $X this technology, million. means For our the resistant earlier payment Starch with Arcadia, royalties Durum

relating its Arcadia May our an also to Corporation. when entered The assets GoodWheat to agreement Arcadia in into second sell to business Food wholly-owned certain occurred Above subsidiary, and asset purchase Wellness, transaction

prime million transfer cash agreed promissory the exchange for of part Arcadia $X $X million finished a interest agreement, a and that X-year in trademarks term inventory, and at and GoodWheat annual to rate. note the grain with As goods accrues

than distinct categories: Pasta, distribution, launched our points X GoodWheat achievement over In & brand X,XXX years, the of less size. we company a Pancakes for Mac securing Cheese an and into amazing X

also the required and now P&L reflected was monetize nationally the right recognize the are The our However, of business to scale the discontinued felt we the investment as time business brand. operations. historical results that GoodWheat in to

IP, for savings. these in While allowed part they us wheels cost transactions of wheat set additional to motion the monetize our also

reductions equipment will For and example, with the count that GoodWheat on full salaries months able farm negotiate to the beginning successfully cut the dollars benefits greater hundred sale head by also our XX% exit an exit and of XXXX. in compared in no have facility longer needed. several from is year early XXXX, were to Idaho has through our We resulted even the thousand impact of X generated that

and we to expense We our approximately basis million of per exit run will estimate year these full to million rate approximately a quarter, on impact Compared XXXX. of the we normalized $X savings as $X transactions. operating important that in million to nearly to fees opportunities of expense note further. to our M&A continue expenses look related for includes be $X.X $X.X approximately It's our the reduce million SG&A QX XXXX in X to

through achieve are our not profitability, reductions we to strategy there part cost-cutting alone. of cost While will certainly get

brand. part Water brand, around May Leaf off Coconut XXXX, Arcadia XXXX. natural growing sweet, in provides in our we It our XXXX The clean as of start taste in of advantages Water a GoodWheat celebrated Coconut and and several brands, electrolytes. that to is became included also Zola acquisition, Zola Founded Zola offers second also that the part in rich for Arcadia Echo several hydration strategy to part crisp the slightly revolves of in care is are contrast body strong to its

an section and several it year retailers, the means marketplace conventional customer established which in in base produce of the Zola's distribution benefits. history grocery placement channels. One, provides XX-plus has is Two, typically Zola's

competitive. less it's First,

to fresh, Second, section with require it the natural normally aligns products, the investment brand enhancing the And its store. consumers. health-conscious in typical is slotting that appeal not does third, produce center

Arcadia? than this from So what predictable does GoodWheat. marketing investments significantly financial customer reorder more perspective, a less for mean It and patterns means

In investment because brand sales a for dollar point. trial invest me for matched net example drive to to relative in our help nearly of Let the in be contrast, home X% an give marketing dollar expect sales on GoodWheat drive around our need we advantages heavily you to as XXXX, help gross the I our felt basis. go-forward new In to the marketing brand. to of a awareness Zola, just outlined we investment

made. shift have we talk Let's now into gears momentum continued to Zola the and The about progress previously about QX. spoke related we

sales the XXXX, category increased Zola XX%, in data water June XX, ending period According sales XX-week coconut increased while XX%. to Nielsen

in period XX%. Zola XXXX, increased XX%, latest XX, ending Additionally, June sales data sales that shows the increased while category X-week Nielsen

numbers is reminder, end be into while the different. retailer, a is reported point-of-sale customer through can represents data As our Nielsen the sales that represent sold sold or inventory that which means inventory to the

to outpace previously have distribution QX And increased in same called Zola the sales in in data XXXX XX% So the the period as ship numbers increase category that compared during will are shows is that won not QX just new the a XX% XX% last by Nielsen continue the and and reflected I of quarter. we we year, optimistic while actual we will out about to the highlighted.

lime momentum QX XX.X-ounce shipping pineapple Tetra are gains, the are offerings and Pak in Aside that about distribution new seeing also from just original, we with XXXX. excited began flavors we our the in

the growth profit. optimistic the half, expectation experienced So in we gross XXXX, in half continue second strong terms in strong Zola about this performance we will have revenue is be of the and of a to in lot first generating growth our that and

provide my of up rest to prepared want some Before I the on perspective I XXXX. remarks, wrap

and While On we call Zola. our the to immediate costs focus provided in is a investor we to to May, from outlook the reducing explore distribution today, top perspective, for Zola and a our preliminary expect alternatives, we growth special More gains line continue at want in strategic our metrics. sales new on from specifically, accelerating reaffirm lost we offset XXXX, those back GoodWheat.

for full with filed our year on line believe will a in in we revenues XX-K March. XXXX essentially in So basis, $X.X our XXXX we the reported million be

expense to approximately quarter. $X million and an profit, in expect rate million margins We than continue $X be in we to run more of in per low gross comfortable our with operating resulting gross XXs, the remain

XX-K XXXX. is result XX% compared $XX use our XXXX The reported decrease for to expected the we an in in of that in our million cash

I that, to call the to will financial results. With Mark our discuss turn over now QX

Mark Kawakami

call. remind Thank Any refer on results everyone impact of discussion the that like operations will exclude the you, of reference year T.J. body to will to operations. results and to discontinued joining everyone my the impact and the I'd us only. prior the welcome to financial care continuing of GoodWheat

flat that, This approximately XX% total begin versus partially in and In was increased driven and that Zola of compared were last last a period QX, financial basically sales revenues Zola, growth the to an million. strong was revenues. year. results. With sequentially was of the sequentially same our increase by Total year. $X.X XX% revenues it XX% were by I'll GLA decline offset of oil in discussion

Zola about quarter, This the of revenues. total represented XX%

increase to going the operations As compared to category. outlook revenues. hold This margin last was resulting of outpacing take growth The T.J. We're growth gross mentioned, off and the margin with The about XX% remained compared continuing QX of begins the revenue profit was $XXX,XXX. the year. in XX% is Zola improvement XXXX, driven of last was QX. increase and as to optimistic quarter new low strong offerings our consistently gross gross total gross represents start forward an percentage around has in very a product the XXs. from distribution in by sales to new profit dollars X% an as

as percentage expect the sell the half of we total year. reminder, sales over a decline to inventory as second GLA the of through oil a we As remaining

to and to of QX this and XXs costs low We a QX. low Research gross development This profit to it to rates the a XXXX that. towards expect was trend year, after in XXs $XX,XXX the trend was compared impact were last toward year. in compared the $X,XXX the $XX,XXX an where be of QX of increase of decrease

of Zola QX on The on gain of nearly sale administrative new was to Above and increase Corteva. related this the transactions $X.X was the and in $XXX,XXX transaction approximately last intangible the general million, $X.X and of was the QX of was million above year to costs a development proceeds sale. and flavors. were and the related million equal The to $X driven assets The cash with it that also Note Food. sale Corteva Selling, the from year. by the legal gain the decrease to related consulting by reduction driven expenses with is fees of

had this compared As compared of This year to a of year. discontinued GoodWheat loss QX internally of a of of was to decrease was and cost through this sale last place The the basis took QX asset developed of, from The QX operations XX% midway and XX% $XXX,XXX. X. a was of decrease year.

of XX% to year. QX in ceasing costs the by about We end expect these before decrease the by altogether

reduction Moving the in The of the Above balance million The our We quarter. Arcadia in million of paid million of $X in net sheet. of investments XXXX with half of first and million received last cash of cash a the impact business compared that $XXX,XXX to in change cash. $X Arcadia with Corteva, million all $X.X with to $X.X QX the that resulted cash ended be transaction $X.X will as of the transaction Food. in activities short-term includes

half Zola of revenues positive impact expect the similar in and cost of consumption be in cash to the we our second Given growth initiatives, the net reduction XXXX. our

We peak growth inventory start XX% our an through expectations an of ended and XXXX, QX of year-end. to selling for the season the end was strong of reflecting This $XXX,XXX. Zola, the balance compared revenue for increase with of

a the we $X a at million. $X.X The X-year As the its over the note that prime accruing of recorded promissory term of rate. interest and received X be at note GoodWheat. installments, million, result with of discounted a value value We of to is note the stated sale repaid in is

in scheduled $X.X million are XXXX. approximately to of of We receive cash May

repayment of interest. principal first the As and

our has tremendous conclusion, towards QX of made progress profitable. In becoming Arcadia in goal

our First, wheat of sold brands monetized we IP level that high investment. the required a and

company. significantly maintaining our lower and in And cash we and while continue quarter-over-quarter increased levels both Zola gross we to operating Second, consumption our year-over-year a basis, finally, margin lowest expenses our rates. to history as revenues a public on reduce the

to over call the turn the operator now for will I questions.

Operator

our And first Selvaraju from Instructions] [Operator & H.C. Raghuram Company. Wainwright from question comes

Raghuram Selvaraju

Congratulations on important progress. all this

Firstly, if that I wanted transacted feel still you crop to could trait could the on Or you've future? monetized ask any monetized? the remaining be owns assets if there effectively be that at in juncture, this everything that company that are

Thomas Schaefer

for few in a durum. our actively our question. we sales potentially traits working or to monetizing be did RS have we be the as that licensing an similar with we even whether well. still do of are what to -- still asset in remains on will Thanks the there form agreements Yes, seen library that Still

Raghuram Selvaraju

to expect Okay. And us introduction you the that wondering visibility, Zola additional on future? pineapple of make the can any and foreseeable any was any whether for flavor color Or of the provide flavors? timing you lime you sole if new introductions then I be secondly, with

Thomas Schaefer

Yes.

So, just remarks, the in prepared pineapple shipping started the lime as QX. stated in I my and

we into could very We in the are continue explore new ideas XXXX. longer we potentially those to that do have marketplace. innovation And So launch term. then some

is So yes. the I short think answer

We and innovation product are new coming looking in potential the years. at an pipeline introductions

Raghuram Selvaraju

of see respect of need you in Zola to in you effectively model sustainable with competes. Water assumptions that to the research, the of market which achieve in penetrate would What terms for currently then market was internal approximately. question profitability the as percentage market your segment Coconut broader order goal And last size according to to franchise what a

sense have market of so what a of sustainability we for the would company? Just share translate kind into

Thomas Schaefer

Yes. It's question. a good

of category the X% We're grocery And a So look I the which at, a of still bit we of is looking -- is think based today, subset. we're those single-digit to, typically of to need -- on kind the order at in I market. to low kind to probably rate of think, very the get just where little kind -- that a that's we reach are -- breakeven. scale

Operator

Klieve from comes our Markets. And Capital from Lake Ben question Street next

Benjamin Klieve

lot a itself. on and progress a year-to-date. on quarter Congratulations quarter of the nice here A question

And make in of all there Can Zola. kind but about that the was talked lumpy kind want would revenue no were outperformance the have of real onetime this of really sizable You the in I that understand versus that you second supporting product of new makeup kind a revenues quarter. function that category? I sure to outperformance -- of and given the anything clarify that different placements tailwinds that you came kind drove or

Thomas Schaefer

correct. sort onetime of revenues There sort sell-in have of the no were no that's large that Yes, -- lumpy no performance. would and initial drove

Benjamin Klieve

Okay. Great. you guys. Great. for That's good

X first just Another trends of you question burn GLA and the quarter over how expect about this here few you you into percentage itself on your inventory -- on this comment talked down that longer-term as maybe to year? kind quarters kind in of base kind once the and the of the regarding revenue your of the a the quarter through year. tail quarter off balance to and ratcheting be last Can exiting GLA, second of you

Thomas Schaefer

Yes.

So, it XX% second of quarter, our revenue. was

in Let it me get was like the it -- quarter, closer XX%. first to looks

right. forward, you're In the terms of go

all -- but that -- of we have. the through GLA be will the We the that be we sell We're selling we through are end. inventory XXXX, remaining will end selling

saw And X would the essentially what quarter be you projecting we quarters in for what and so is X. second

Benjamin Klieve

good. Very

the Wondering year a you halfing 'XX on and $XX your rate or cash about that -- in Let's expect this kind that talk full million. the see, quarterly you exit and your going I would burn is year, one of at if into guys 'XX, from year last kind be to either you're as go lowest will basis. you this of be the me, run looking year for cash the to it $X.X exiting can noted year. million burn of

'XX how you into of that kind is 'XX? cash to exiting I'm going curious low going burn So think be

Thomas Schaefer

Yes.

guidance would for So I burn the the that half. in think cut we 'XX is

the right. you're on $X to in based So comments $X.X Kind of we million made. that million range

use of the we would Our half, second in cash be first X.X% half. said and similar the was in it

of we're landing 'XX. And so that's kind for where

$X of prepared we other we my million on where savings an are. million run that The I remarks of that of in we thing to identified was of expect rate said additional cost be annual that top $X kind

as 'XX, that we in So coming we more see into play exit. so kind of

have another So respect what it's year. don't low I to that that this trying But to information at out. reduce want $X into any in of that, million at comments And digits point beyond we're make mid-single takes this is with more to next kind 'XX, looking November. to we'll

run million work $X but So to little at bit a we've today. rate beyond do, already we where more got identified our current we've are

Benjamin Klieve

Good for Very guys. good. it. Got you

Operator

And turn closing questions. Schaefer back I'm to further showing would for now to T.J. no I remarks. like the call

Thomas Schaefer

transform Arcadia the turning In we as second summary, as for a business. of we significant view XXXX the quarter point

exited our the cost order have organization structure the in runway. and underperforming our rightsize to streamlined brands Over last we extend X several years,

profitability. We significant on the to on faster for and Zola have secured Coconut progress path new for continue continued thank category forward share. as We in introduced gain to we Water and market products are and distribution wins you we grow and positioned to our our your you updating than interest Arcadia look new

Operator

conference call. participating. today's concludes This Thank for you

disconnect. may You now

Arcadia Biosciences (RKDA) 13 Aug 242024 Q2 Earnings call transcript