BRFH - Earnings call transcript Q3 2018 | Barfresh Food Group, Inc.

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Operator

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

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

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

Riccardo Delle Coste

Good quarter wins, coal into results, our and review today, our On third sales pipeline. provide expanding afternoon, our us. sales our we'll thank you for recent channels growing review everyone insights our discuss and XXXX joining additional

while just amount the X year. to the Our our third million this is our X X reduced of third to prior months with first X%. of make announced are last revenue by today education and restaurant the our These XXX% of months first year over military Gross the to net $X.X revenue than that, and large over Revenue the generated started. primarily the growth XXXX first education improved due quarter same expenses new and national Throughout on to the we military in the And put into we two chain. the progress approximately was administrative sales of another we're results in increasing a approval X.X our of million. XX.X%, To perspective, our months continued roughly quarter getting year. record just improved quarter with for top the channels. general sales breakthrough company double by of channels, margins we more and X.X% is generated quarter,

multiple education As announced September, the that last over release, had to on channel expanded throughout of we our states. press we XXX school in locations

This districts that districts adding We already were have customers. XXXX. in XX-fold continued increase from beginning educations the that grow school to represents more schools adding announcement, since a in new and of

now previously US addition, installations have in In armed and military XX our we we successfully forces dining are serving XX completed facilities. announced over

make be provide great added update more to progress this locations shortly. in we able to continue being channel We will and with further

channel the breakfast with existing in driven are being customers as increasing the rates. school we on is having growth great our products direct Continued impact by success a education are participation having their

country. we west signed, the southwest Our the continued also be distribution by growth recently regions driven covering new the and agreements of will

beyond thousands school currently distributors School education the us gives of Southwest new the exclusively we to recognized locations and service serve. agreement Department Agriculture Association XXX than the serving and access more of Food food nationwide XXX with United is American the United channel working with and This districts opportunities States. largest schools our of the by West One supplier, food as school throughout specialty more Service States

to come. With represent schools these are bases, to bases about our The serve years with Our over schools optimistic we for military customer large, and and distributors’ the in XXXXX quality, commitment a perfect the fit highest us. growth with military nation's meals. channels most very nutritiously is product sound channels education XXX for attractive

sales annual biggest street We volume which now with and full channels military the multi-year contracted counter-seasonal commitments. are to for These approval turn are based successfully down product customers the are up to education primarily channels, navigated our These have able business. our attention hurdle to and the we process. is process and these customers the

We expect these that and largest channels time streams. revenue could become over our most two predictable

national milestone We finally, signing adequately have I'm to QSR quick approval. second of much are of have convertible qualifies perseverance few And this locations. products a the we XXXX cash approved national with to our personnel a announce afforded to will funding XXXX an as growth. rolled weeks. to and more on the over written next out new we've rapidly receive we received finally savings finally we year by in channels. that accelerated with organization both funded and complete After dedication, issued plan that within for our This that pursue enormous chain us as testing to also our funding and our coupled notification strategic work, update is note serve enter be market expect amended. the happy leaner customers amount with new hard as will received allow continue to been progress and of these restaurant And efficient the

we and months summary, We first XXXX. results the healthy of a very forward and In X with are to look extremely accomplishments XXXX. excited are proud the pleased of for these very

have satisfy the established manufacturing the to We business now expected we base ample ramp have as in developed. XXXX as that capacity well

to XXXX and with we to the none fixed to client beginning and that to enter approximately in robust beginning at over of We rightsizing Keep XXXX. have in of costs the progress XX great overhead XX at G&A is XXXX compared we continually over bases, expanding. compared XXX schools our reduce base have military a made mind, expect

will channels XXXX Joe? And provide who turn Cugine the our So into opportunities. our results off our is financial our it President, before insight Tesoriero Joe going call more that, our to CFO, base into business like I'd to over with solid. to handing Joe to very discuss and

Joseph Tesoriero

was and third Today, I'll period. quarter of And key for the Net $X.X of million financial an third Riccardo. XXX% first increase an quarter, said in and $XXX,XXX on months Thank by results the areas, Riccardo product the our X Pour as prior opening X were our of his education the months million. first military. the for double to comparable in a XXXX the This the newest revenue discuss channels, sales two provide compared aspects then update business. remarks, operational prior first of X and bulk million number driven coming our months $X.X versus $X.X of improvement of at including was Easy increased you, in sales year,

for compared the in the XX.X% period. year X for months to XX.X% profit the the to margin was Our in first X Similarly, gross XXXX quarter XX.X% was profit XX.X% margin compared of ago margin gross months third of primarily us our to is order begin in XXXX. to infrastructure enabled materials. in leveraging product profit improvement driven by Also, mix. cost gross has raw sales savings The established the in realize in margin increase first

year margin expect with gross quarter. profit We current to the the to similar finish

the beneficial us to third capital. or costs, million net most million XX% We allowed reduce impact brokerage sales, inventory, by X.X we to inventory quarter gross Higher increased expense, of This than and control capital P&L with of the hand the ended efforts payroll, year. compensation margins strong our $XXX,XXX and working result $XXX,XXX. at had personnel is our third reduction quarter, lower a XX% our the sales a X% and travel, with achieve a to in-house mix we efficient loss primarily coupled in working support. of expense reduced reflecting and effective the in on ongoing our G&A reduction beginning sales operating about administrative During of realized which ongoing of XX% in include improvement of $X.X driven our the quarter the by stock during of an the general improvement focus of and

it take our expense of XXXX. reduce a a While anticipate over increased expense sales, storage on XX% in shipping in grows shipping shipping note March XX% of XX% milestone basis, as next of receive and of to advantage million noteworthy will XXXX as mentioned And Milestone within expressed call, that is as now and funding in percentage we in and related have scale. XX% of we convertible sales the to as by to expect business We continue this year few storage and storage requirements the Riccardo percentage satisfied in of the the second X amended decreased that we of a and $X.X from quarter-over-quarter the issued weeks. economies earlier the amount

pursue to the personnel asset organization loan coupled with funding account backed our leaner the accelerated and The company to business, fund our for ramp XXXX cash ABL plan us savings new adequately pursuing planned facility afforded the to national Additionally, resulting allow up funded enter is will and Milestone X efficient the strategic from growth. today. rollout of expected announced by an the more currently

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

Joe Cugine

Thank Riccardo growth translate and expected and you, would strong of I revenue customer highlighting strong to call before you the today explain channels. opened Joe. how these on specific in education particular these are military areas, XXXX. the in expand our in recent I like into growth on wins to by And types update wins

for One rollout. occurred restaurant now large the from of approval testing channel of in our and of the with has chain receipt completion date to most a national important developments QSR national a

project that opportunity forward. now QSRs. focused this we moves on We our remain are and incredibly continuing Moreover, other about work execution, as excited diligent on large national with are

term. process in our launching different near the the continuing goal other chains We our testing in are of customers with with pipeline

demands continue in their platform. frozen We product flexibility and meeting to proud customer our to be help of innovation beverage maximize

our You'll the hearing in future. chains other with about be progress more near

customers, a ski dining national relationship interest Last we Landry's customer that party our including as such operators, casual product have and expanded large traffic Incorporated. see resorts. high month, of and we [indiscernible] regional our and with zoos, from theaters dining announced many to continue in other segments, third QSRs, level restaurants, We

of chain, Landry's on year Crab that we locations. to also our Gump the success April of Shack later, restaurants. As Joe's in their a reminder, products US in first restaurant product in Based our serving companies all began products decided in begin Landry's restaurant Bubba XXXX, Shrimp our of a serving

for product complement in beverage of that seeing of while Shack our opportunity Crab the adult We the is Once their efficiencies, are offerings. speed at they serve great service XX to beverage locations. single recognize our now current for product plus Joe's the part a brought customer of the time, same a the build beverages in-house, range

expanding as within flavors We are locations continue to family. well as the within Landry’s excited existing additional banners

continuing pipeline coming spoke one about many in of during is we quarters. to XX% expect where we national very To gained have announce chains towards our dine dining single opportunities expand call, large well casual all the working serve the penetration our product. upon further to I and that do project to segment, more a the term. we rollout locations customers, in our investor have within We the with near last casual This are

education we contract selling X just the into over are our our months over of Moving now update. when had to which channel, from or with in last represents ago growth we investor products XXX XX% school locations, and

receive unique to XX,XXX that offering, representing continue strategic allow US national specialized administrators programs, over achieve responses to distributor our believe positive districts We XXXXX from school growth channel, and with us schools. school in and this over relationships footprint rapid really public distribution

our school receiving no add districts launched are smoothies flavors, of to from To in artificial, products offer targeted schools We help process their number colorful consist those great demand and incoming districts can menus. the innovation the have provide that added we approval and in healthy of students. many increasing navigated School now to and gluten and that like would sugar are also nothing calls to growth, drive administrators and free. fruit, bold tasting new real three and have

tastings the from our signed channel advancing and distributor the has at far, customers with feedback Further Southwest. tremendous. latest so our reinforced has progress our agreement in we new been education product by the And West been the

high our product. the leading and education recognized in us their and volumes decision with Our the channel to as new food specialty supplier quality is speaks partner affordable to distributor

frozen the to plus bring the throughout will Our West product districts school they be with of offerings beverages now Southwest the and part United they XXX work States.

that channel. further remain relationships We the of proud education growing these of beverage suppliers the to one fastest us within enable are

just to time, added now military bases military Moving locations now we week. gone a the In from completed have short more X XX with being installations channel. every to

continue overseas and expectations XXXX, military to internal our exceeded US Starting have all smoothies. We that actively expect announce in will proudly pursue we serving military to be Barfresh facilities. bases

dining a halls for dinner, number large is personnel weeks breakfast, days to week, visit XX that feed a Our very a time Bulk Easy period in Pour year. perfect format of of solution X the lunch, the enlisted short

We This some placement on multiple have of non-appropriated have but the in bases to to locations. on concentrating we're X another. serve months machines also military the the goals, the of to excited we wherever have In only example, the in largest we our traffic our Barfresh side X they started of few provides the not Mondays military smoothie for the exceeded expand locations five in and product business, maximum installed operator personnel serving lastly, have dine. separate And locations. to choose on high number past ability

Our base, traffic round Pour targeting year channel sales a Easy wide strategy is Bulk for across balanced high destinations.

all like driven channels by restaurants military, are workplace and penetration highly example, remain And have addition back dining, new the during strategy, revenue multiple channels streams very ski theaters, strong to secured across plan education, and Riccardo. in we on which seasonal, it that, the recreation For I resorts of business. fall and non-seasonal continuing We of our winning to that of turn winter. in channels with

Riccardo Delle Coste

Joe. Thanks,

excited progress the and ahead We for are as the outlook about opportunities our as very well XXXX. recent

well made from growth military from approval with as education As of breakthrough tremendous our revenue as today, expected. with half first channels restaurant national our you us years heard in major and strong we've headway progress chain

to continue fixed our increase at margin the overhead execute continue plan. as costs, we whilst to time reducing We our on our same

as our to begin forward to schools military approval base XXXX a you and customers the other come as We look from XXXX. over accomplishments regional with as well well as will strong restaurant pipeline as XX strong national fruition. for to growth market updating over We chain an adding X opportunity of XXX when enter for as many locations, to customers updating on funded our to Milestone a we execute business these

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

Operator

Investors. [Operator of Borus Justin line Instructions] Ibex from Our from the first question comes

Justin Borus

is give more locations, we locations, give on sort account. as account you're say, of that you a XXXX than sure let you I'm that you sense a the you Can specific any but congratulations locations, of any what when us Riccardo, obviously, little color, the could us say XXXX give of and us will XX,XXX the is there? new range press release national as vague you seeing can more can expect much

Riccardo Delle Coste

substantial more It's XXX. than that.

Justin Borus

you, Riccardo. you I again? don’t say think I that heard Can

Riccardo Delle Coste

that more we can’t comment Oh, the a locations, to not I I obviously, than XXXX, number can can lot of tell what exact you that. but it's tell substantial you it's is

Justin Borus

Is assume it visited a that from is even household to safe heard time time? of or to have people this most

Riccardo Delle Coste

To recognized brand a Yes. name. very be household

Justin Borus

know chains. cycle. more win you of one is know, And national the is kind question, we're and is a last excruciating of with the for, our the -- it of in finish more chains? sense weeks pipeline some close mentioned or just to you us process, one getting Or that years, you line and any, what we you middle think one. there now I takes months, hope to there talking is Obviously, how Could towards expect we more, give does sales kind this it look? are an are that Do you

Riccardo Delle Coste

the in I the why right. is probably put this reason important was really we started these I channels. It whole first company all Look, mean these to the for perspective, think in it's place.

in other other come very the and us that have think we'll of is pretty it's we've that had more major us we've feel shows we time there same some robust to communicating and period the pipeline that other those genuine a a accounts see these these -- and today taken national absolutely more has been And that And accounts here, made. that taken of so but think So, out it even a we that we've get we've position a end shortly. of and learned remains I over we've whilst I lot that progress of to applied really longer, the today lot longer consistent accounts. lot

and from end absolutely expect funnel side time accounts the the an bring to more we shortly. our major other it's incredibly of through So exciting

Operator

line Maxim Group. comes the question next of Our from Vendetti from Anthony

Anthony Vendetti

the So XXXX Obviously, does you're this going national a approximate to not of overnight. X plus rollout be like? account, in terms month what's the that rollout look what Is locations into or schedule?

Riccardo Delle Coste

all Yeah. are piecemeal, once. a Look, still I a to there you approach it's that system can -- there a wide steps tell not are few take, but at it's

So it to We're in very very competitive this a as competitive actually expected that. guidance around Obviously, landscape in any and timing, is the really we're of from system wide, seasonality to market. terms away -- what giving staying timing. particularly a be but

of that system all is versus at So part answer a doing a once is it can't piecemeal. that approach the I wide question that

Anthony Vendetti

Okay. skews And how many then offered? will be

Riccardo Delle Coste

exactly say how that confirm can it's can't I Again, multiple. many, I but

Anthony Vendetti

Multiple skews.

Okay.

Riccardo Delle Coste

Yes. Multiple skews.

has a for very the of And we're I look, That -- So it's in this happy company. this long -- making, on time right. lot the a mean, exciting a side. pretty we're just time been

Anthony Vendetti

on wide hires once as And this some to that runs cut costs. account you there have as know rollout based press of Are still release I that well make to the occurs? in it others, smoothly was were help start sure this to occur the then any mentioned system the able

Riccardo Delle Coste

have opportunities, to the That's built a so when do whole we these overhead. good we've increases of revenue big because add I is the way very question, really don't need that outset, the business in right, bunch think a from we

product movement these accounts, the coordinating the of national right. We’re in

this individual go each to out require personnel our to the doesn't stores. So, of

accounts. the that of managed by All is

warehouses upfront initial the the where lifting and product The product stops the heavy us. us their sending is that's all and development the and and it testing distributors in of making starts for product. done for really we're So, to it

So of is sending is once and their doing to complete, that distributors all products all we’re making warehouse.

no, are headcount add to we So, the as expecting a not answer result. direct is actually

Anthony Vendetti

And And then total is basis? it on just school added the by schools, for but skews. X? that is X the to the not it skews a the schools, it added you looks school Does in or on like bring some you all schools schools

Riccardo Delle Coste

mean, I very interesting. it's Look, Yeah.

is, it three to and XXX with to really XX National that come now We We’ve we're dealing tell all equally massive for are from now channel. really we’re starting. channel it's this exciting expecting are I but the We just can great that just Account a has education part us, table starting. and grown the to you be channels are

So time skews created or were we've that run the at Generally, X X a the and the will different two about the schools rotate through in year. throughout skews options total. flavors

with and this deeper already be some seeing. channel, think go of dairy I as themselves other we Some there we're But the and are opportunities yogurt without. them that into organic them will that presenting of

and position So we're our in buy bullish that to customers contracts our to with incredibly are very this products. solidifying these multi-year channel be excited on

So yeah.

Anthony Vendetti

the is schools, starting or these up additional January? then starting And this in revenue that XXX up from semester that is Okay.

Riccardo Delle Coste

be distributor their that will and needs up whether the distributor of started. involved set and existing completed go It and ahead submitted signed up this forms started It time, you starting to we need them get get from needs a when through them No. semester. There's set distributors. to to to of our a we be get up, get certain bit it's does a little documentation them will takes to time bit and -- it take when

it set work a take there's school, can get to time training and of bit sometimes, and getting accounts then the up. for little the these there's a so to So done that process

Operator

[indiscernible] question the from next Our of comes line

Unidentified Analyst

given the that. be that the national on all account and going on seems give you've it color able you've you're to exhausted, to Congratulations

clear word So, mouth seems them are as I and couple ask school of about questions schools the more and want the and get to more that momentum accelerating to the you a is cycles segment. the that. sales more It there, all shortening,

next generate for I schools the think plus average a kind by like, and you're like, as sense of year, So revenue you little the do example, what XXXX for what it also been a basis? XXX for like do that per this might number the by end look look that to year, looks I revenue now, of wanted that was on the you to think of will more per in in you've wondering, of end beginning schools example, the do while school what school get now, a they what

Riccardo Delle Coste

Sure. Thanks, Ray.

believe should we number, that the school So to before end able the the be number there of target get year. XXX that a we

is But most interesting comfortable we’re that's number by we because number XXX that we actually so that have our That's confirmed. have not actually a are actually So that XXX that now say schools is, let's with is XXX part that pouring larger December. just a that the But the actually we much of schools those pretty district. part existing evident have of product. what schools

then a district, in to easier lot school getting and reason you challenging add typically this we're example schools particular in this them for the actually schools. say, channel most Once is approval. or schools, a is So we're other really approved is in going the because X now three to the part you're two business district, important other school okay, why for it's of

challenging most the really that's So part.

XXXX probably much closer schools already coming that number greater so are evident schools. we’re the of that those to schools of So is district to the in, their represent XXX XXXX part that’s schools back to are that part not probably a that

be there's that growth feel getting schools. natural organic we So to in going new to a addition

going we the them? an No. exists that it's customers to. already organic product sold opportunity we've are Now, that of growth all within to But get

keep to perfect is in We and down So there's enormous district that in Pasco example we schools, as XX. a now within started XX think County. going we we’re path, an that growing opportunity keep the

that we type and X schools we that. a existing district of particular new district and or represents that's the schools schools the and can that that that in that's than worth mentioning some expect schools XXX XXX organic a of without schools even we greater within have the or have So growth sales lot process. X channels probably It's

that when the you done look and selling a there's of schools take as certain right, times have the that times. well, cycle at vacation So we've have and and lot bidding away ground work

a been but these the timing be for a tell very acquiring of of it's channel revenues. accounts, -- this side exciting enormous is in us there bit see little for there's as for channel us be So it I’ll from will terms eventually that learning you we little our incredibly and really growth an in to consistent and repeatable

very So excited.

Unidentified Analyst

think a generate. And do school then what revenue much you individual we per an how expect basis, could on can school

Riccardo Delle Coste

Probably per about annually school. XX,XXX XX,XXX to

Operator

next Our line the question [indiscernible] comes from of

Unidentified Analyst

You’ve of the been end year installation? many by what kind specifically, you of you talking military bases a bit expect revenue the and how expect more opportunity, the about per

Riccardo Delle Coste

Sure.

the earlier too actually. the year in long or announced XX not installations we So ago

all are delayed now. did did they -- pouring They So get we a bit. little

taken of the did terms done those of in by delivered XX delay lot equipment got delays in some terms supply number -- side revenue got on finish of of to year. is XX into the we the probably this really a our close result October we'll those that. so was year, to September. end think as we the where expected we that expect we and to supplier, have been We there's a be of they done, majority to finish a quarter where of of recognition But Unfortunately, in the have equipment all a getting because installed from in

are. significant where still currently from again we leg So, up a

that locations we accurate So to a finish year the expect shortly. provide on that's more we will the and very update military and detailed with where

Unidentified Analyst

And what kind of do you per revenue expect installation?

Riccardo Delle Coste

per from to XX,XXX expecting we're Look, Yeah. anywhere XX,XXX installations.

revenue are these locations. So high

on per expecting what location that's So we're basis. a

Unidentified Analyst

per or that quarter Is per year?

Riccardo Delle Coste

That’s per annum.

Operator

we of closing the to end the session like turn to reached and question-and-answer and Ladies the management would have remarks. I gentlemen, back call for

Riccardo Delle Coste

we Yeah. actually Obviously, very much for and time bringing at developments more Cheers. joining. shortly very to exciting a Thanks, some and thanks look forward everybody. Barfresh

Operator

conference. today's concludes This

You at this may disconnect you your your time. lines participation. for Thank

Barfresh Food (BRFH) 14 Nov 182018 Q3 Earnings call transcript