BRFH - Earnings call transcript Q1 2018 | Barfresh Food Group, Inc.

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Operator

Good afternoon, everyone, and thank you for participating on today’s First Quarter Corporate Update Call for Barfresh Food Group.

Joining us on – in today’s Barfresh Food Group’s Founder and CEO, Riccardo Delle Coste; Joe Cugine, President; and Joseph Tesoriero, Chief Financial Officer for Barfresh Food Group.

Following prepared remarks, we will open the call for questions. The discussion today will include forward-looking statements, except for the historical information herein with matters discussed on this call are forward-looking within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about the company’s commercial progress and future financial performance. These forward-looking statements are identified by the use of words such as grow, expand, anticipate, intend, estimate, believe, expect, plan, should, hypothetical, potential, forecast and project, among others. future statements that fact anticipates the may in than events address will other occur developments statements. or company the statements, of that historical activities, or All forward-looking are believes or forward-looking expected developments believes experience, are are based the these under factors further on assumptions and certain Such made statements circumstances. on appropriate that other company based control These not of which many risks and statements uncertainties, may are subject and beyond to of the a materialize. company number of assumptions, the are such statements any not guarantees Investors performance. that are are of future cautioned of this Form the Report recent Annual Exchange contents XX-Q. in cautionary call These and in should its on company’s conjunction warnings, statements on be Form with filings the and Securities including considered with XX-K, the risk the factors Commission, Reports contained Quarterly company obligated, intend, forward-looking the law. does any publicly required not except update is statements, and to as by not Furthermore,

the sir. like and go Riccardo that, ahead, I’d CEO Now Barfresh to Delle Food of Founder with over Mr. Group, turn to the Please Coste. call

Riccardo Delle Coste

and pipeline. some Thank discuss call sales provide first into and you. accomplishments our Good afternoon, wins, major quarter XXXX review sales review additional thanks for we customer and will today, our growing us. our our recent our of channels On joining insights everyone,

clients in us We’re base million $X the recently revenue which client in new to We the quarter signed revenue a is first existing start first combined positioned our has double generated off we second to of generate in the in XXXX. and quarter, strong with gross approximately $XXX,XXX well last quarter. over year’s

our continue during our to product we the as significant K-XX achieved We channel. expansion offering of bulk school also gain traction with quarter, new

address Joe in of our President, the these remarks. extremely XXXX, are Cugine, excited about balance opportunities We his and will

locations have We the designed product quarter created quarter first pleased additional We X,XXX we more our first products, add come requirements. expect with locations online XXX that XX we in expand following. additional schools balance the realized school balance more specifically for of began quickly customer national many added year, secured distribution National second more we account a schools Regarding response. make schools school and contract to under the the opportunity pilot beginning our new serving hundreds shipping prepared well as After account schools to start by and under of School over year. We with the Program as rapid very launch to XXXX. continue to this in year. USDA school during the our and believe pipeline our contract, the to account XXXX, this products, additional add we schools, Last and currently pace the to during results at school of the initial location are to already multiple we as strong of accomplished to the our these be will and to Lunch

presence for bases from and in is With all added XX,XXX with with potentially productive world, with us. installations. Parks addition to opportunity National for are Niagara location our in the tremendous We great aggressively our during bases Canada. today, throughout and pursuing more the approval another additional to the we growth Forces recently quarter, us. in We Armed be seven nationwide is the first schools largest Also, great initial military sell branches We U.S. the could and Parks seeing opportunity business it XXX With which being our Amusement planned this, in received activated a of the most expanded U.S. acceptance product.

Parks, volume that single XX of our $XX host annual one At being venues. be will are locations million this over offered visitors. that expect products highest Niagara We our in

and of to very call positioned With as drive the turn our of current base; as our rollout, expansion Joe to build wins well going well-positioned through margins channels; will expansion our over and education very military; to well our first account national line continue coming already some newer of are national XXXX, in channels we our then customer inside of In walk We our and and me existing various foundation made as we for to our announced important share including expansion operating sales months, infrastructure pipeline growth, additional revenue. that client Cugine, are with previously flow quarter improve through upfront in additional of and this as have strong Joe? expect opportunity. wins Joe additional our the work let to customers. the top CFO, we that, to and into forward, for our of short, announce investments we the President, expansion some recent financials cash Tesoriero, our insights and

Joseph Tesoriero

military U.S. more the period, U.S. significant network. customers are during channels Thank new centers quarter period. through and Sysco per for comparable our through our short several diversified you, has the of serve net as and GAAP for which to to single for times us new the need as as is factor Riccardo. such products to reflecting reporting increase $XXX,XXX OPCOs multiple in then distribution locations, time first increase XXX%, $XXX,XXX, mainland the customers distributed and channels, day. increased service and schools, many what serve Both seasonally Sysco’s Bulk of the an revenue traction other has window Gross for the A was base a all the Easy our compared and enabled quarter Sysco was approximately new revenue Pour the slow enter traditionally Canada, rollout customer sales product, prior and our in $XXX,XXX very XX distribution in of as in bulk revenue been beyond well a

to begin for realized raw profit leveraging us the enabled compared year-ago our XX.X%, and increased in XX.X% material. gross quarter established sales in was the infrastructure Our margin first has to The period. savings margin

margins XX%, of approximately that remainder XXXX. be the expect our will We gross

ended by to of X,XXX first driven First working the strategic we was quarter investment with quarter, We by National effectively inventory in primarily leverage level XX%, by $X.X force. of in inventory, our first our realized This of sales, expenses, than net our higher Account in for to sales reduction million loss we the of administrate the an gross end Rollout higher significant business, our and During XX%, Due our Riccardo. the was operating mentioned locations, capital at by initiative our strong $XXX,XXX. prepare which or reduced a of margins initiatives and the of driven slightly had $XXX,XXX we general XXXX. to improvement realign

level have of we Higher inventory offerings our added addition, Pour with which drives in our skews Bulk In product resulted have to the higher of of multiple for inventory the also Easy spending product. shipping storage levels increase. introduction and format,

throughout warehousing in our our service improve – customers our forward partners distributors. established to third-party to order have We through

locations, million entered XXXX, $X.X a two Our and cost percentage We with the cash. incur this XX% of amount Unibel, as large as quarter of We of the storing shipping our warehouses. expense to XX% of funds company’s definitive includes expense those into Barfresh’s business in to whereby notes of product and we gross the warehouses management $X.X from million, placement The several from the million. forward became a released. any to the the with proceeds In economies we of at storage a grow shareholders our upon factories led ended being strategic are a or $X.X for scale. of of as cost customer. to storage our investor, convertible the February X,XXX deliver and advantage for to sales March reduce, were of able to announcement take product of agreement we moving rollout product a anticipate forward by will available forward of continues our private of cost warehouse

The balance during entering with the believe additional We the our sale into of approximately milestone account we a into national will second X,XXX second milestone products locations. the the the balance XXXX. an of of agreement funds achieve for releases upon

to call Joe our Cugine. turn the me Joe? let Now, President, over

Joe Cugine

you, Thank for XXXX and have on future. revenue growth the positioned channels opportunity. today us focused drive are in for into and recent the how growth these by wins wins entered call customers Joe. us the share best well highlighting that XXXX and opened and We Riccardo translating customer strong market

is and includes, recreation but and military and Our limited amusement. to, both not regional education, focus chains, venues in national large

and me Let restaurant additional start on with accounts. our thoughts some national regional

as business. year, the national we across move added more customer have are in and their locations dairy expect other with menu. of the X,XXX of options our balance proud locations date largest add being non-dairy We customer both during is into U.S., This to customer smoothie to our lines launched the the successfully and to a to we

and have pipeline. national and Our change strategy the both of regional has focusing evolved opportunities our on in still

several QSRs working test, with We of rollout. largest market these custom SKUs, a and take opportunities of or one continue to more ultimately, expand to the national develop

casual national addition, to U.S. our into discussion over a Keeping in XX% accounts, meet bulk selling us platform, continue product with and single of with recently we serve the this regional chain customers’ of our expanding our In have have penetration. to dining we solutions offer started needs. goal one within largest the to success of allowing

Barfresh national in pour will customer consumers. during And [ph] venue. the parks, products with pouring revenue the within quarter, and continued having venues of have we of hotels visitor provides the We many casinos, brands opportunities, in National XX we additional each storing adding large units for with engaging bulk millions tremendous largest locations this U.S. bulk Canada’s summer, first be bulk Museum Presti along these

from platform and foundation under now discussed Barfresh to meets programs, national hour now this the is success and K-XX school in taste throughout proud the over these also on early have any say contract Barfresh that purchases to pouring we offer launched. meals schools nutritional chains day North locations product Many for America. that last I’m has of menus channel schools for our K-XX with our education, day an we call we we the the the a available on cafeteria of have products built since throughout breaks. focus outstanding success. XXX discussion two schools led during the the We Moving and card regional to for in guidelines of developed and

we new on in term. significant schedule beginning is ride and build pipeline locations full project with Our the a

the to development is addition military. States education channel, recent opportunity in the exciting United the the one within Next, of with most

process Agency, products sale to branches long for all Defense Following with of forces. the the approved Logistics approval armed are United the U.S. now and year States our smoothie

from We company’s Easy the military where smoothies products military troops Pour us through about now feed heard food service available bases, Easy have activated large this within purchased perfect of and lunch the short Pour and speak bases You’ve to period the channel opportunity the several seven additional numbers Bulk time breakfast, seven are initial year. previously. listed weeks offerings. Bulk a solution The a to offering format days dinner, week, a for XX of in is are personnel

to this us initial in with branches gain DLA U.S. various XXX seeking manner. X.X response U.S. healthier product, to potential efficient with an The opportunities our Our DLA many women to of channel active allows The greater more military successful across best. and troops. their food military much million penetration men and and incremental a and from access implementation beverage internationally the keep bases approximately serving expect engagement actively target system alternatives we United actively more are serving with great team into the bases, significantly us pursuing the sales provides bases and installations pursuing endorsed the in at States to enabling confidence is and new

greater. we’ve we previously, a of channel been for the terrific if sales stated been the and revenue. not the opportunity account, potential firmly and as summary, with have national large foundation building As pleased for a national stable is believe base the military consistent as In

how come mitigate multiple channel. a of caused finally to this across to that, way driving In been we expansion strategy these will going begin any I and Our effects Riccardo. months in of I first few with revenues the demonstrate fluctuation believe will to by single able channels forward. turn it XXXX, And material seasonality and life have back

Riccardo Delle Coste

Joe. Thanks,

very are our about in opportunities We XXXX. excited

we off with customers existing We infrastructure ramping the announce within will revenue strong very expect The additional will months. improved leverage we base, to is are we as year in start to operating as that be our well and a coming that to continue results. confident client our

national that military this As the channel is products the one significant significant distribution range sales a in gained that, these account, on you’ve call established beyond. our with heard a the great healthy of XXXX that leading offerings areas are the our which progress We in significant for together customer and believe and we’ve had infrastructure, K-XX launched today, the each key traction we first and representing in we’ve successfully activity reasons segment, friendly. pipeline, with opportunities growth initiated tasting for in of market one smoothie channels, of operationally of

diversified contracts, for representing by long-term Our channels us. strengthened consistent revenue are revenue repeatable

XXXX Our it strongest ever to and wins to coming pipeline has come the new been the expect additional months look as opportunities updating we throughout the significant We is in you throughout XXXX. announce online. forward

Operator? let for Now, up open that, with questions. me the call

Operator

comes conducting Anthony session Thank Vendetti We’ll from Group. with a now be you. go first Our Instructions] question Maxim Please question-and-answer ahead. [Operator

Anthony Vendetti

for national the talk to have X,XXX many products the locations for location? Have how want rollout that been account. Thanks. still shipped – into that yet, is been the rolling products Yes, the in process X,XXX to out of locations SKUs just or then all and I the all about each

Joe Cugine

sure. Yes,

delighted So that. are still now being already part, But the and most that for full There we’re being they’re slightly that on SKUs. done few it’s gone process all in are has of completed, the out.

Anthony Vendetti

location And or a the color you begin Is that? now little the SKUs. the quarter, us national end the – and a I that give that the Riccardo. Four more continuous on of year, Thanks, until from said X,XXX end can I’ll then by into rollout I the just of know, think, year. third does you on accounts,

Riccardo Delle Coste

Yes. fit Look, taking that and particular we would developments actually lot the that have at account there’s of with moment. so criteria multiples place that

they’re be the it – couldn’t guidance of hit, So It are really same. in but expect, the when terms the could when using accounts going be timing on not or obviously. we relatively to yes,

Anthony Vendetti

Okay.

start account? maybe to ramp that can to the things ramp up quarter before So third national

Riccardo Delle Coste

that Yes. Look, we’ve we number, got just don’t – actually got we multiples. one have against

varying made have each So stages finalization. of

possibility there’s than rather happen that or could a it sooner So now.

Anthony Vendetti

And then for the…

Riccardo Delle Coste

which obviously would. …and

Anthony Vendetti

for And the… then Okay.

Riccardo Delle Coste

built That’s that’s we the center] built what what [ph]. we actually built, we what second [mall that’s the

Anthony Vendetti

that just And schools on know going? the is easy rollout of different? on some bases the schools, the you then in new shipping of any where mentioned terms – pour product? military. the a that call or Okay. How the And is I some pour there easy of that last the seven question and in of that new is then is all is military

Riccardo Delle Coste

on Yes. school what The can’t I both believe XX represent, bases Look, is excited Anthony, of express how seven you actually we mention are channels we the we military the channel. but bases, installations. seven and the the did mentioned the those military

to people us. decline for bases, attenuate of installation So going installation that will multiple installations – we’re on have for on I’m in up. one each we facility dining from that revenue is than each one actually feeding more stage previous XX,XXX take that our back indicated

those giving XX% that had some In or addition numbers are XXX% well. that, we as to more than

we – we channel good the well for of exciting to distribution military But good and to in it’s in. got us. incredibly and had we mean format. and margin channel of to I education true-ups, kind as got distribution, the and channel already ones aggressive a be expand the It’s that actually same going place lot all efficient beyond that but are plan pretty So the continue as it’s

So we’re extremely of on both those. bullish

everyday ramp new revenue. that be getting new significant that on new base material in agreements fill keep now to that. in play customers And from to and contributors schools going districts. some signing we’re we We’re as going to particularly They’re customers

and see material between year a big the is in year, on-board. [indiscernible] coming school school the quantity the of finalized of lot will going beginning of schools lot now winding are of that being we a as particularly to the down, So be the ramp

Anthony Vendetti

Okay, you. Riccardo, thank

Joe Cugine

If goes XX a days the I really on last in The elaborate over bidding and probably just to little days. last point. could earnings XX now that another XX process right begins for bit

not the their in the in starts mid-August decisions to late August, school Northeast are mid schools and in that’s of South the West. what June, when in mid-June, the all September process making and kind So on launch,

do So of as many own in team, PepsiCo, support as embedded these we well many, our drinks. really now are

I school districts, small country. school districts, got think across gigantic school big we the in embedded districts

was So feel that talk all we’ve and – to directors, we’ve other significant off pick went front-end we customers up period. these up coming nutritionists last date, to no terrific industry. August starting success had about product one There’s which administrators given going districts, each successful, national school are the we we also real to to center we have talk through peer PepsiCo. a begin that schools to and kicked time that the going in be has to as no wins think with and year, out the the in we’re the we in they really that Barfresh there’s that And that

Anthony Vendetti

Okay, great.

Riccardo Delle Coste

Yes.

think, about to bullish Anthony, also a to derivatives, – includes doing bidding estimate. school XX further being bid the of with that pretty so the districts late made lot a in part in that’s while it of done on, school comments in of is schools, or a the taste we’re with XX that, past, school and district other the the elaborate lot part the or thing well And schools process includes I district I salad but paper we of the did the needs to school. just XXX up actually we XXX process bucket obviously for or equipment the past with tasted having know each that say, case that yes the they at no of and kid product the liquidity product available try on generally enabled and give to And the be with And of and and the part XXX the XXX% anywhere good involve come to But bucket kids the a piece typically the a process could product. and that product Q. yes. asking would from the of the –

So the partners process and around without our we’re seeing now this happening basis a saying that the everyday. country doing and on how they’re is daily

So that of to ahead the that is needs bid. be the imparity lead where up done

trend So actually school up what testament. timing districts. instead has how in. good in we of set being did we school in the school are good and very a We have of the a many The

very very, a So. It’s us. for time exciting

Anthony Vendetti

guys, Thanks, for color. great. Okay, all appreciate I it. the

Operator

I Riccardo over call to remarks. the to for like – turn closing floor would

Riccardo Delle Coste

for and to much. unfolds. look joining, development everyone as Thanks, forward Great. you Thanks we very updating new

Operator

This you. Thank concludes teleconference. today’s

You may and thank this participation. your time, disconnect your for lines at you

Barfresh Food (BRFH) 16 May 182018 Q1 Earnings call transcript