BRFH - Earnings call transcript Q3 2021 | Barfresh Food Group, Inc.

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Operator

Good afternoon, everyone, and thank you for participating in today's Third Quarter 2021 Corporate Update Call for Barfresh Food Group.

Joining us today is Barfresh Food Group's Founder and CEO, Riccardo Delle Coste. [Operator Instructions] The discussion today will include forward-looking statements. Except for historical information herein, matters set forth 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, success of the strategic relationships and projections of 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, continue, could, may, predict and will, and variations of such words and similar expressions are intended to identify such forward-looking statements. the the developments historical or that or occur than activities, that anticipates other statements. may or forward-looking events the in statements statements fact of address will All are future company believes These statements made experience, appropriate the future expected under that certain the or factors believes based other on developments company based are on assumptions are circumstances. beyond number uncertainties, many Such and the of statements risks control are of subject assumptions, the company. to which are a of or these those of assumptions risks by more should or materialize may from underlying incorrect, uncertainties materially such one indicated results actual Should prove or anticipated forward-looking vary statements. or Accordingly, statements, to which not date place forward-looking as only on of the these investors are speak made. they undue cautioned are reliance in with annual report recent X-K, conjunction with uncertainties, The warnings, current of the Form and contents the contained the risk the therein. factors including on its and reports considered filings Exchange report Commission, on Form XX-Q, quarterly XX-K, Form this call on be statements any Securities company's including and should company disclaims changes whether any call, intention statements current of forward-looking expressly otherwise. any to this publicly a or information, assumptions update future after in result new events, as the Furthermore, in most company comparable In is GAAP measures. non-GAAP the the the to performance, the of table the in reconciled aid order including adjusted business update business is to release company's certain presenting which also understanding measures, EBITDA, of the investor the directly because Management believes company. is the that flow the it to provides adjusted of information the EBITDA reflective useful cash of on of The including or for noncash and stock sale costs, primary compensation, derivatives. items loss issued of services are factors stock gain these reconciling the

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

Riccardo Delle Coste

and afternoon, good Thank you, everyone.

last our our $XXX,XXX XXXX million for third today, compared XX% revenue X the as period call of result quarter Go year, quarter the the to September The increased discuss fourth XX, quarter sales compared increased On I first for for in review $X.X compared XXX% bulk XXXX, in the outlook to gradual quarter. orders and the well is for the of and the and channel year-over-year up results Revenue and affected increase will same the months single-serve to ended quarter & third COVID-XX the our last year. as million XXXX. in of return school Twist $X.X of second products product in sequential and our to

against the due to that times. to able manufacturer's to significant wait quarter material $X.X in I'm the months For first XXXX, is million to the supply really $X.X history. inability of us supply the revenue as X had period XXXX. capture were planned challenges $XXX,XXX we third already same third the material constraints of XXX% additional not and to company's million proud product our an working that record year labor fact revenue raw We and increased revenue shortages. manufacturing in best of revenue to This due result ability to of compared were we in our a chain raw despite quarter our with achieve of

year, orders orders in Additionally, this our made risk We due this third not of robust of are to Therefore, not pipeline. not school those entered strategic reflection true results relationships to the from while having locations of to districts, and challenges. not preserve the able in our the larger number year quarter decision to all the supply some quarter. school locations last a we we to order school in these the pursue double their service were cancel from

period to decline that of the concentrates compared once first additional our in mix XXXX sales in XXXX. support is XX% the districts last margins of which the and of XX%, as quarter schools. XXX% & costs, X higher higher The year. months XX% some the of XX% same factor for material we comfortable prices. to and Go for in WHIRLZ the our expect gross margins due to of of of Twist we well volume the juice the the for are were Gross raw and compared able activate resin Gross resulting third product more same year However, chain school supply as to margins the are packaging was higher period larger new XXXX to were

possibly which We good materials high will and fourth see resin And expect to of XXXX for economics. on fall, the are be quarter we gross year, prices fourth front, persist for our while into Twist & XXs. stay in is expect the news favorable shortages to the profit the raw starting next we quarter margins labor the Go to

compared Our X and in the the net XXXX The to third in million $X.X the quarter, $X.X the expenses personnel $XXX,XXX months the year. by decreased third as period. shipping net primarily of of XX% third quarter year loss to from a same in for in XXXX was labor shortages X% increase last the XXXX. period increase period to to first significant to G&A by which and of R&D months the increases, improved as storage expenses $X.X costs, more of loss Net for costs. of G&A compared in of a million the with same the XXXX. loss the for X for driven $XXX,XXX compared for of net increased lower market loss quarter million prior XXXX $XXX,XXX the G&A than compared a unprecedented of offset to first and quarter XXXX improved

continue the and XXXX. elevated the to shipping first into storage costs half expect We of

as efficient increase help well volume costs. load per expected these taking of volume will as offset and However, sales higher in partially to our arrangements more us advantage distribution

$X.X year. a for approximately the the respectively, period and For the quarter XXXX, improved of record months and million, and be We products, $X.X significantly single-serve of the compared We due despite new fourth sales XXXX, and at improvements the expect quarter and costs. last to or to of to return achieved COVID-XX, adjusted from million of adjusted company close EBITDA very loss and revenue. a to higher same third to X higher the in of bulk $XXX,XXX a our backdrop first these of as a minimal $XXX,XXX, breakeven EBITDA for loss our fully

million and cash, sheet, June September our approximately inventory coverage. XX, completion of of XX, placement a warrant As of X, $X.X of of no announced December inventory XXXX, $X common $XXX,XXX million with stock of compared XXXX. we $X.X of the of private million on had $X.X On and cash we as balance XXXX, million of to approximately

convertible negotiated $XXX,XXX In and $XXX,XXX also of conversion approximately debt This eliminated retirement the and the addition, of and all interest. we prior of transaction existing related debt approximately interest.

PPP are XXXX. fourth expect our second second currently Once to this for quarter we to to is debt-free. working PPP forgiven, $XXX,XXX, in loan the expect we of Additionally, be forgiven have and occur loan that

sequential third than quarter is XXX% fourth million, the from quarter is achieved approximately Since school The Now bulk This already offset to fourth sequential give third the full our which revenue school we fourth quarter COVID-XX have largest this the have our from industry-wide is the increase the given shortages customers. affected the we is year. larger last and historically the in you this recovery continued slower the of for the continued first in year, to have quarter improvement quarter customers, mind, is our Despite holiday start an the growth on into and the growth expectations lighter has the a fourth and of helped month for XXXX, to a year. we seen quarter closures. quarter historically year, seasonally had third the of which fourth sales especially our revenue meaningful quarter. update of us Keep $X.X customers, revenue our in time of each expect of compared continued of quarter. improvement from

We that with are of we we start able And last period. we with number our engage double to now supply been service begin working as see during to had challenges this those locations chain larger will haven't to year. time ease, school customers school we the

we relationships. entering strategic accounts, Additionally, win and into both independently to distribution school continue new pursue and by

few some these We expect of to the months. new next over relationships announce

to adjusted revenue. expect quarter the due to in close be stronger fourth EBITDA to We breakeven

We costs, and price improve advance passing increases strategic reviewing on raw materials also where to relationships. are in possible, buying supplier more

a We number partnerships to future for of outside announce and also with opportunity our distribution extend product these in our of all see the ready-to-drink & near to Twist new channel of expect school will together the that plans benefit channels. on to we that work Go the continue

areas determine an additional strategic important to see to but small and believe we chain, efficiencies, greater manufacturing improvements starting greater review for as in volume partnerships, are our capacity, our expect to and XXXX. overall time is We significant provide and value add supply now

contact chains, year. up, will our restaurant single-serve, We regional pick with customers, and products but businesses are see national back in QSRs, ease expect, greater only restrictions our also to a and in as we start and not return bulk still next military

need due next chain will will approach. And significant in strategic we sometime We bring position be to times. supply be meaningful year. way, we a lead not re-engage are the a to Once also more long in in the case and this immediately on our challenges, to to shortages, hope raw supply subside, extremely material early service challenges be and namely able the not new customers,

drive We as on improve of believe expenses, clean will operations as have a are structure to strong early being us which the to making breakeven and optimizing progress our fourth year. position closer quarter operating our and this debt further we cash

margin XXXX. a significantly revenue cash this increases, have to burn, As our of trend reductions continue expect and and our into we cost reduced result improvements,

Our stockholders' underway those capital order July, met in equity requirements and We process. increase in to year national submitted the meet our a raise for in had and uplisting listing the are the application this secondary to requirements a earlier exchange. purpose,

there which longer expected. inundated take aware, As has caused and I'm been SPAC all of the have to exchanges, our are that national year sure IPO this uplifting record a have transactions you number much than process

have available revenue chain regular record another to are agent, occurring we we fourth leaving an curtailed provided that growth year-over-year close process have throughout with that despite are end our this ship documentation, the records, of the company of with continued have closing, supply In in uplisting challenges we expect uplisting soon. hopeful to amount to and sequential and all However, us year, quarter. product and necessary deliver communication setting the revenue

and districts improvements The We we to in wins country, channel. locations this presence school have some with doubled and our of the largest the expanding in many are our continually number quarter of continued school positioned include all major results. strong fourth so again forward next achieved full year. with we XXXX speaking us have I year you growth far year look for announce when this has to our

take Now questions. that, let with your us Operator?

Operator

from first Instructions] [Operator Group. The question comes with Maxim Matt Bullock

Matt Bullock

single-serve an forward hoping through could I pre-COVID little them in the segment, bit going a provide to was at you just update of and of high level maybe where products trend where bulk they you terms And a XXXX? expect levels? are on

Riccardo Delle Coste

sure. Yes,

service that So of return. help Mainly starting the actually for the the the high some come generally bulk accounts The bulk a back. that reason throughput more Primarily single-serve bulk the has people up a actually single-servings bit little started back to was back product. slower probably product congregated. little businesses come than a in, were the is are the means actually open It's taken high strongest of recovery in item, capacity, path where volume bit on summer and a to products we're to bulk being a again, it's so itself that process, which that back. the have

customers though the not I'll you their a come So may have -- couple examples. the yet, that And serving right? business, are the product have of back even areas of particularly some of general our reopened that's business give for

military by but not Let's single-serve yet, say, got the they've base, are self-service self-service. on may up is. example, The be a and communal area grab-and-go the touch opened area point going doing for where troops a

open locations product see in little are as was bit previous and those season. of well starting the -- to we a a selling little more There is pipeline So from up. the more of there

up back So are pick seeing of to we those areas business the again.

Matt Bullock

kind context Excellent. bit a of retail then guess And That's distribution? to of the And you've a provide those if more maybe, regarding at Twist progress or any once excellent. chain reached? disruptions deal the can supply just what out Go, pivoting I all is might Okay. those partnerships that little had look you like around are & pushed have

Riccardo Delle Coste

Yes.

a it work So we are still in is progress. -- still

channel, and every back their back a are that education getting a We in messages have and out We're the and us product other in the really in the bring where they and traction product, too. and tried can love from store. asking are tried day we're from the and getting amazing they the parents, it from product consumers they they say getting go parent children reaching and to the the they that's probably to product, their school, amazing feedback parents buy grocery the the us parents,

working So definitely it's on. that something we're

We that haven't are proposition. announce got other in are sense? actively grocery it any from pursuing we Does we definitive and it on retail planning the just than working store, plans it, to a yet, a pipeline, is make and

Matt Bullock

a should Absolutely. My time for would XX-Q filed? to the be, line there we be expect last question is

Riccardo Delle Coste

now. by filed been have should XX-Q

Operator

Mike Donnelly Ibex comes Investors. question next Our with from

Mike Donnelly

it of by completed? year? be Just be going little bit uplifting think to the on would will I the helpful. a Is more end be the it color

Riccardo Delle Coste

cut you Mike, that I all question. out. catch Sorry, didn't

Mike Donnelly

an in it end Can of give You mentioned national July be us by year? completed? you to you QX? it to to when that it Is the you as submitted application to hope a Is more uplift the color exchange. some

Riccardo Delle Coste

mean, can in the something We in hence ago. is very everyone believe tell cetera. documents, that’s believe the we on. been did everybody. we’ve I time all by completed everything that raise. terms close – It There’s that’s the some requirements, going We experienced you application I financial of this been – I requested that that’s considerable is now. have capital delays of we it’s met submitted Look, Yes. think was submitting we why us everything et

We may possible but will very into to before year, happen are next could the the with it the them. that able year. is in over of happen the be end it I tick It’s But contact that wouldn’t it’s of – very before year. end possible it the it possible.

Operator

Gregozeski [Operator Global. Greenridge Instructions] with Our next question comes from William

William Gregozeski

education the much third revenue as how quarter was Riccardo, a your the percent of from channel in total?

Riccardo Delle Coste

I product. probably number over scratching of But to half Twist But the still keep education It's bulk dealing a think little channel about that multiple with the across & something now. is is mean just surface, serious accounts, we're fronts, product. lot the mind I to where to we're is one, bulk the Go the and and And the bit right mean of both we're the right? I X/X hope in and really real effects multiples & dealing for our product haven't from supply chain COVID, now. -- we not of Twist both challenge our Go aim issues. the in be been purely are doing we a with also largest

we're So just the even we within channels. at, surface are from where really scratching these

William Gregozeski

of students? schools you're supply date. the mentioned not that then by of schools that you've because schools signed percent distributing in Are you signed you've to What distributing versus And all to number to terms just of Okay. what the unable now size you've into of or chain?

Riccardo Delle Coste

of when to that's essential happening volume place product larger not too we any materials per very and up, environment to ends menus, chain on them becomes And trucking and for it quite up that business because the manage getting they to what end include negotiating raw menu, issues. as the period is we the Everything available deal supply really at sign think simply them required giving no challenging given those and structure the they're and time se. all. We're it's up shipping accounts right? plan. Well, short it the having for for But There's to pricing for a menu contract from just part of of in them for extensive. agree their avoiding large their current of the the I accounts we necessarily a put

along Let with alone the actual price increases coming that are that.

those one as because as be with total it's as could now. accounts significant business. that business account you give some right percentage we're there really to very doing out And not, now total business we've it of big mean much there's some in as of the could been an those be right it as our to that -- the So rest that I relates our could difficult large. accounts of we're what are working exact

need that there. we on think but of do the still can. it's we with to lot obviously a particularly to stuff -- we're the realities us, to the much corner there's when I supply ease, around forward what's chain So and as out deal as we're exciting looking for going that. And challenges plan -- of really trying

William Gregozeski

Okay.

school existing just like really that, not that like schools, what or be would LA the applies new district something correct? So to

Riccardo Delle Coste

Yes.

So we that's period. volume supplied for haven't real an And less that's a of a them where period. volume, this -- real And prices hasn't a account an that there's been example during probably well. probably good during And as expensive example significant there that's like it's account that this supplied great that. a requirement

profitable business a So the less chain. accounts we of on are that the have supply definitely are more less guiding towards -- the requirement

William Gregozeski

And Okay. if a question what's do percent year in the from as even quarter? third & And percent total the you it's possible of a Go was, see sales that? that project to Twist now, of last where

Riccardo Delle Coste

the expectations et come of our also be Yes. cetera, business, accounts we difficult for would strong, obviously project have some year. the expect to from and around with on we other got year coming very particularly And other the because business the now parts back. also A we’ve next to that of parts national

about now, stands. sitting a with at as & Twist more bit XX%, right the XX%, probably maybe little we’re So it Go

Operator

for The Thank session. presentation. question-and-answer conference attending the you now [Operator today's has Instructions] This concludes concluded.

disconnect. now may You

Barfresh Food (BRFH) 16 Nov 212021 Q3 Earnings call transcript