BRFH - Earnings call transcript Q4 2019 | Barfresh Food Group, Inc.

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Operator

Good afternoon, everyone, and thank you for participating in today's Fourth Quarter and Full Year 2019 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 Raffi Loussararian, Vice President of Finance 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.

others. identified anticipate, use plan, intend, forecast project are as words should, statements and expand, grow, estimate, among forward-looking by of the such potential, These believe, expect, historical All fact developments statements the or in may believes will company the forward-looking the other statements future that that activities, are events than address or or occur anticipates of statements.

are circumstances. other certain company experience, materialize. expected Such statements on factors the to forward-looking of based that statements a these which of not assumptions assumptions, uncertainties, are made beyond appropriate company are subject risks the believes based the control may These many developments and under are on number and further of and

this its such the are not in future that Form on considered guarantees forward-looking recent Exchange risk cautioned report conjunction with any are Form the required Commission, and the statements with Investors and except is company's and intend and in statements The including the XX-Q. update should contained not obligated call as XX-K cautionary warnings, publicly Securities law. to on filings statements be contents any annual company not report of factors by of quarterly performance. does The

stock and loss noncash sale costs, derivatives. business of that performance, information these Management in release of measures. the the are order non-GAAP in In company. aid stock to factors is to is the reflective GAAP compensation, the The the reconciling company's useful the directly of the EBITDA provides the comparable the believes also including EBITDA, update on issued understanding cash the gain which flow investor to in in table business adjusted of it services, company because most measures, certain presenting adjusted items or for including are reconciled primary

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

Riccardo Delle Coste

our full call On expanding into our accomplishments, and our year channels and discuss review sales we for XXXX sales joining insight our in today, everyone and will you thank added us. growing results pipeline afternoon our Good provide and efficiencies. operating improvements

to first To our Before current the any light results, I an of quarter and state I'd our update we the logistics. in the material of give have not business manufacturing COVID-XX. discuss supply on in date, disruptions or experienced chain XXXX like

schools towards the being their see began for canceled of we as the to temporarily safety customers. close such of quarter, businesses and first orders However, forced end the due restaurants, national to to and employees parks

March in aware, our the month quarter. are you historically is of strongest many first As

year $XXX,XXX these $XXX,XXX we distributor gross despite cancellations, year. and compared However, the prior load in to revenue approximately gross of QX approximately the prior for comparison, still revenue in in recorded

of served over the saw well in we the strengths military our business in of of the we meaningful versus is year to our continue prior improvement of expect our the side that as we and quarter, One had us bottom base diversified our and Despite course customer company line grow. continued the XXXX. improvement lower sales a

new our on during the to order Many times. challenging bottle the helping receive these ready-to-drink to be school we made across assistance continue our States in students in school. meals their expedite of Additionally, them conscious United feed students decision at rely they to to production channel the

able are school the options healthy community bottled in closures. our hands the food to students continue with despite serving of So administrators they

Security Relief, effects and are be the Economic of COVID-XX our the CARES Coronavirus Aid, for and we eligible offset To Act. assistance from under will business applying

color the We the results. will provide as more quarter and first quarter our release on results we

$X.X sales X% increased over million. net For full year XXXX our to

language waiting meaningfully package. been approving for shifted our while quarters the our finalized products sales and XXXX we of sales would however, were focus and bottle USDA ready-to-drink also third year our announced during recently have bulk full we Our higher; the widely fourth now

Four forward and format customer startup bulk on XXXX manufacturing in cash capabilities. on equipment, new testing our hence help investment reduced significantly flow this package bottle to new finalize thinking freeing up

get into them comparisons we last still faced the products last quarter also late schools recently running. in distributors up because we signed And revenue previous were year large our and fourth our challenging a of formal prior the and into fully were that experienced sold year school to periods, to versus We products focused USDA's on of authorization reimbursable. selling the year waiting

platform. received bulk The which product, we will our announced that we & package, and Twist the Last is new our approved launch ready-to-drink Go. exciting authorization week, news enhance of that USDA our the new

with previously during I assist mentioned, expected in to closed schools while student order than are this As was COVID-XX. feeding earlier done

working have will this discuss months us in many We been more opportunity a for long-term on detail and offering tremendous believe which create for will Joe growth shortly.

profit Full gross will margins in our XXXX year XXXX expectation product gross expanded in It those to be to existing lines. XXXX our margins comparable that for is X% XX%.

and We of and by our such contract an administrative to $X.X annual our measures as our headquarters a relocating loss XX% we which XXXX million yield entering and by cost collectively operating also approximately with million. reduced into XX% cost reduction and reduction reduced to of In benefits, new general expenses outsourcing $XXX,XXX. $X.X we will payroll implemented

begin chain our of second adjusted XXXX. help of supply to believe improvements making and in we understand EBITDA. these In an have logistics in in quarter to are XXXX cash the first began report all impact results our financial improvements to the will half everyone better Additionally, significant effort in we we flow a improvements the made on expenses, and

was is XXXX full XXXX of an evident and a QX XXXX, with dramatically as of EBITDA million loss $X.X This starting better be be year in of compared a loss our in in will of the XXXX. to $X improvement $XXX,XXX. adjusted For million expected

national one each great with accounts our of channels. the a of Throughout our our the accomplishments restaurant of commence a for one a to in with the and later Puerto We had review chains; we XXXX discuss products sales in two the regional course rollout restaurant plus strides call. provide rollout I'll been year with expanded Now our America, XXXX. North in new in reach approved multinational with chain, of made location we and recently regional announced will we and Rico Joe which that multiple

Moving the to and having on to school being many still despite closed breakfast served temporarily, schools channel, are launch students.

time, this Twist yogurt & schools. School I offering As administrators recently certain District assist in Go difficult order with County said begin to their have working earlier, begun school announced smoothies, fruit to we Pasco Most and to during bottled our we students.

time and then and during on reopened. offering immediate this when this full assistance expect school schools to We offer school to districts rollout additional with implementation menus to their

of successful aggregate share common recent company per capital XX% warrant at per the million price approximately Before debt handing came an million from the $X.XX call of of $X like sale the of existing with be Joe, announced of the stock share, to funding. exercise for conversion coverage X-K. through $X.XX talk we about growth raised filed March, In per I'd of $X.X had and with will which recently combination approximately an $X.X to our round the million as

new as we out This our announced strong for us multinational our products recently customer financial enter XXXX and and a gives begin new and prepare sheet capital position balance rolling wins.

sales call to discuss the I'll to And Joe? with Joe our channels. Cugine over President, our that, turn now

Joe Cugine

start the and restaurant Thank you, Riccardo. national discussing I regional will accounts. by

out our said, development over product Riccardo leading regional this excited have rolling line to customized and summer years we with announcement approved of begin As recently a a multiple rollout U.S. locations. testing multinational commence of This been with with we QSR really flavors. after and are XXXX comes to

will and our their This for able will the dramatically increase for more We opportunity profitable is is growth. product company share menu. major information a milestone our be to once on

established multinational others. network, successfully an have with you We manufacturing We look logistics closer we updating the ample to many and on capacity, get restaurant the forward as this client organization launch. service progress to to distributor and

QSR quarter. also chains, new we will our XXXX to launched In serving products began test in other U.S. in We the national chains third the two continue restaurant which with

in Rico a and second North was national locations. sandwich chain chain a first The the in Puerto America XX with was

reach we locations addition restaurant menus expand the additional of and course Additionally, our with customers over into existing the new expansion and to the year chains. beverages with of continue to

Moving continued to more awaiting school pace we as USDA education in slower much to a we add channel, were at the locations approval. XXXX, the albeit

we approval into However, now products of channel, that wins have in and the accelerated new with introduction expect we XXXX. this

through flavors; new product work and of feedback juice strawberry a Customer fruit offering smoothie up that contains with important means X and ready-to-drink in of we administrators This Go. to and two this comes different fruit a yogurt a call half with peach. this yogurt parts fruit these channel Twist and of cup is are and & two testing banana and ounces come sales and school

These flavors for meals smoothies colors, they funded protein and an USDA new makes sugars, and it and standards. contain two alternative contain meet therefore programs, yogurt they no components; served fruit the or snacks which reimbursable and the all federally artificial preservatives, added under no importantly

rolling product XXX,XXX order and was School that our Florida District with We announced recently initial in them the out we bottles will month. the for first this in be to County Pasco

great had a rate. and relationship order district ongoing school with a We long-standing have high monthly this expect

Go product lunch COVID alone, doubling XXX to available be will and the to the within school this continue serving to This their closure of schools our & district offering increases during locations the significantly all penetration new students assistance this breakfast Twist receive large our to school virus. who temporary approximately due week schools. the

during these We need help students are these to be pleased to able trying in times.

Pasco our and it snack available rest la as with a and day this reopen, schools or is seen existing to healthy Bulk new as customer you it throughout the will schools and & Once Go shortens is our our perfect on importantly offered served menu the any the It meal occasions. process in does the selling Twist And basis. equipment. compliment on County, penetration carte have option the à and will now Easy-Pour breakfast as require products all of for be not further

with first on placement is in believe many for of be of opportunity Go United our school the States, & the Based products with our XX,XXX schools over the County Twist we Pasco vast. this will smoothie. districts district the adopt success to initial And

channel. I'll Now on the touch military

over all facilities. currently dining facilities are the in bulk United our products easy-pour dining international and States We selling

In fact, facilities additional dining international selling dining plans South in this just pursue our we facility Korea our and in to have military started first year. product

engagement total serving pursuing troops. facilities actively are We active all which $X.X U.S. million with military XXX bases

it back to I'll that, Riccardo. with And turn

Riccardo Delle Coste

Thank for cost of introduction significant management year to company restructuring We used expansion. Joe. you, and and continued operating as initiatives our success reductions margin expenses, and with of reposition XXXX the G&A continued

that USDA the solidify status product reimbursement to our our channel school continue with from the We meets in all accreditation standards.

We achievable. country product also our a that launched will throughout a to smoothie far ready-to-drink recently far make ability of more greater created number new the and serve children

Look at sheet of sales product one alone school smoothies district in XXX,XXX potential ready-to-drink first in our the the new of schools. this understand for first to smoothie only month

with start announcement new a to and you increased in off great national to in are We updating a the XXXX and look forward account on the accomplishments more year funding ahead. recent I of our of

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

Operator

of Thank Goldberg [Operator comes question first with Your Capital your from proceed Management. question. Len you. Please Goldberg line the with Instructions]

Len Goldberg

announced Joe. schools. with the QSRs Riccardo with and Congratulations and progress the Hey

took or So us me long? so tell tell what

Riccardo Delle Coste

glad see Well [indiscernible]. should We're we it to nonetheless.

Len Goldberg

the Pasco the this? rest maybe timing Well regarding Okay. extrapolate County of to the possible Florida on country, can success any you

Riccardo Delle Coste

originally Yes, really brought things and year, plan, down targeting the forward beginning meals. and were school still students get being their going we we year new COVID-XX thought look, beginning so obviously schools to we the then due closed done of to the serving at we our were together it with original of schools the

routes, of bus some picks-ups. doing know, and You it via

turning are myriad but in solutions being are different a for that is of in a There very essence, this place, point put big as.

create includes is through been work the marketplace As nothing this the directly USDA. makes product. be components the of specifically We it requirements afternoon for we requirements, like the which beneficial but schools. feeding USDA the is summer and the call, mentioned the to and feeding also through funded for summer going only that all reimbursement, the also lunch, actually in with the all There new approved the to so product programs meet even programs, very to with all has on federally else school breakfast, us it and not period meal the

of requires large and traditionally, in we've throughput. therefore up of with So equipment a set put is school the to the when schools equipment it in capital return a terms high piece cost

typically few when with and school student typically there. the given needed, is go those into it it and equipment. a - middle district that a that in the commitment you was within So complete limits to we schools high no and larger would a This schools schools would from and opposite population start take we almost district is a

an supplying County them we been years do were half to sampling other example weren’t all that we've the but that because, is students, of in locations you initial perfect may Pasco where or with a You student locations half of testing you explained. for and now, in only I've XXX% for of their reasons number go we are just of the the and the to immediately the know population the really able

we very the the the whilst were different also closely So administrators school formats. with new serve at grades allows it It bottle County and to know to old the the developing work you we products. actually Pasco leaders with product, and

So call that there schools do in the of breakfast a are lot what's classroom.

the you in Whereas them is So and classroom. cafeteria and can served come has made smoothie them areas is on the it machines carts. that the it on out them bottles, and the kids go. They the been very put when in the drink a to to They very. the classrooms classroom breakfast the the have in roll with in do difficult

but this, extremely only So challenges product it the the different is water we vastly solved the thought not kids as the are well. the customers, and i.e. obviously love about administrators, for and and

little color? of a you bit give I did So

Len Goldberg

the so one roughly? month for services many how students XXX,XXX Yes,

Riccardo Delle Coste

and I schools believe believe it I that XX,XXX kids. has about is XXX school about

Len Goldberg

you the shutdown? hands to could and students light into Okay a bottles may the be little delivering shed districts on during school and

Riccardo Delle Coste

got Yes, products them and to routes, from of such they community the by certain [indiscernible] bus what a told, established they prepare they programs some at They an of the once have those it a register being and and bus up they've so feeding of on different job they product, in all then they the from package deliver but packs kids for schools being the and all and unbelievable and refrigerated they a week sorts and centers or are doing feeding we're have kind as we Pasco it place, the meals what schools do the are dry go put product, is the meals centers them the a route whether product that people been then an those meals. together frozen deliver kids.

this…. in So

Len Goldberg

kind routes, have at parents what so so or school of to okay. arrive bus don’t up, the to pick Oh, kids

Riccardo Delle Coste

Correct, I via believe route. they are being bus delivered

products our are thawed. they and are frozen So

them logistical from to well very and to So also able packs keep perspective as other they a products food cold. because it works use are chilled freezer

Len Goldberg

Okay.

Riccardo Delle Coste

thing know you is and other is, So really we're product the important two actually, substituting products. the one

and the bottle smoothie alternate one fruit the the mean component protein yogurt the components. in have So yogurt you actually both or

that to provide the schools two what the consolidating otherwise would also separate to one to product. kids products be we're So would need

Len Goldberg

it. you. I Okay, appreciate thank

Riccardo Delle Coste

Len. All right thank

Operator

question Morgan MSR line proceed with the Please David with from comes next of question. Investments. your Your

Unidentified Analyst

on all and congratulations raise. progress and the Hi, getting the national the

have on Is I in that do going point be or your a will at raise. to you execute future? question sufficient Now raise this cash need plan near the to another to the

Riccardo Delle Coste

gone to structure of sufficient see some what true, out G&A we great come we've We've – you yet. been that clean overhead made up that's Now and No, to of question. coming have haven’t to is our we cost David. good but which the believe a all able have expenses, lengths reduce

rest throughout of come You will in year. the that out definitely QX start the to and see

have we you give an of kind to the made. on idea changes Just that

last the use just put to a with the were with changes of we revenue basically we place, in XX% that year's by we would as same over loss sales. already operating marker, have level have our just If reduced

obviously new So with we rollout just we've that that and ready-to-drink as think both we've what as announced, very national regional we is what have the together the exciting already year well a got account, bottle, ahead sufficient. commencement,

Unidentified Analyst

will it they machines it national The or the have have…? will will have or account, bottles the

Riccardo Delle Coste

been national the be Actually neither. number that single of accounts will on packets. - serve quite for Not our years we've working a

Unidentified Analyst

when soonest first your region the Okay actually that and be will stores out, one region will within of then the have that's product? those rolling

Riccardo Delle Coste

actually summer. be it Well, will this

say that's So we so haven’t very been able before, exciting. that to

So hits we're the communicate going to – as that we're to be it able fruition very to be come and that excited on we'll to to have more menus. able

Unidentified Analyst

the glad of I'm hear progress. to all great. well Okay,

Riccardo Delle Coste

Thanks David.

Operator

question Anthony next from with comes line Your Vendetti proceed Group. question. Maxim of with your Please

Anthony Vendetti

Go or because Go that district seems you be on just competition it yogurt can that products? Twist have companies for space, in Twist talk great Well, the seems in products? other products Twist but or school the Thanks. school you any about that's product, competition like to a & fruit the & district there the see outside Go Is the there that &

Riccardo Delle Coste

great There quite before is why actually and - Yes, look, product around reason also products that's is lot is what and to include. it been hasn’t the it incredibly regulations The is channel a is distribution it quite difficult a because important. a can actually of there create the question. can't done

to distribution to succeed. a this channels need You for frozen have product

have purely use life cannot of a shelf product. the dry You from and refrigerated or

the in profile. technical it into product of baseline in the And regulations. created is lot other without lot now There into that or shelf but life are refrigerated you around see although really of A go too actually built how a we've well it is of to elements, is [indiscernible] yogurt lot the a different product meet there a some the going factors many right play manufactures. very might yogurt of

Anthony Vendetti

outside your have no that? that's moving of this else now, So school something believe one about terms for beyond that school unique the district product believe district you has. you in What right the knowledge you based on

Riccardo Delle Coste

The point there, that out doing going the of forward I out hundred at And County without is looking a the just in it still mean got again, we actual answer XXX,XXX you numbers you're in XX,XXX. in just school bottles the absolutely, only schools, runway time, ahead Pasco but discount right channel. at know of lot putting us first month, of schools without have is – a hundred

that is runway product. the at we So we of that for enormous believe from additional amount But will an time with product. revenue this the right there look

Anthony Vendetti

said parks to of Okay and product. installations far ordering is going your restaurants, in any disruptions or aren’t you military national – be so any supply then But obviously there? terms chain any didn’t you slowdown usual have business military as are

Riccardo Delle Coste

for we No, we've fact, and it with but delay the not will locations. our of most international military being got part just business we up bases well. as running the to is usual even the though some actual In coronavirus, as slightly due

for most So as the military is part, the business usual.

Anthony Vendetti

sandwich then said for and on that U.S., lastly so chain you XXXX location restaurant chain Rico, the Okay, XX are a company…? is chain, restaurant, for the locations of is Puerto in the restaurant the you part in

Riccardo Delle Coste

It separate. is two

Anthony Vendetti

Two separate ones.

Riccardo Delle Coste

yes. Yes, separate, completely

Anthony Vendetti

on restaurant chain of terms rollout? that in you are And XXXX the where

Riccardo Delle Coste

our to single the Well, we're have orders largest going come through summer. for

it a in to this locations very time exciting So and be we expect is summer.

Anthony Vendetti

delay Okay COVID-XX as know, you as far this at based and point? on no

Riccardo Delle Coste

mean, what point this no at knows No delays. who happens. I

have ball, but You a we going know, obviously expected. stands it as right now, that's crystal as don't

Anthony Vendetti

it. Thanks, back the appreciate hop queue. in I'll I Okay,

Riccardo Delle Coste

Thanks.

Operator

Please with question Mike the Donnelly with line comes proceed Ibex of next question. your Your Investors. from

Michael Donnelly

across it will give you give line. over finish national a account bit actual Patience on number color in national finally be was great? can the more Thank little locations, says could paying and you, on of release that XXXX hoping color finally little specific the if you on us a bit is guys locations, more getting and press the off. us the I congratulations accounts

Riccardo Delle Coste

– data XXXX. Mike. that like is easily. think will because it just definitely than relatively specific yet, can't give it it We I away more We the give

we're we communicate chain the We it be is is in Once who into moment on able to will going really menus the are who be going at menus summer. just is. yet. on it the not But to

we are - national are we is really account remind still with want still as mentioning is, to we approved worth what everybody However, the that well.

also. people are update we the to other unfolds hoping it So to with with national the as to regards going account market

Michael Donnelly

Great, thanks guys.

Riccardo Delle Coste

right thanks. All

Operator

have we gentlemen, does of and conclude session conference. end the reached and Ladies this today's question-and-answer the

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

Barfresh Food (BRFH) 13 Apr 202019 Q4 Earnings call transcript