BRFH - Earnings call 1 2022 | Barfresh Food Group, Inc.

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Operator

Good afternoon, everyone, and thank you for participating on today's first quarter 2022 corporate update call for Barfresh Food Group.

Joining us today is Barfresh Food Group's Founder and CEO, Riccardo Delle Coste, and Barfresh Food Group's CFO, Lisa Roger.

Following prepared remarks, we will open the call for your questions. 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 provision of the Private Securities Litigation Reform Act of 1995, including statements about the company's commercial progress, success of its 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. All statements other than the statements of historical fact that address activities, events or developments that the company believes or anticipates, will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made based on experience, expected future developments and other factors that the company believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. by of prove or vary place incorrect, those that or made. more should materialize materially are undue or investors they as indicated assumptions statements. Accordingly, of forward-looking underlying actual anticipated speak reliance one on these not statements, uncertainties risks or from are these Should cautioned forward-looking which to only such results date may the items non-cash stock stock loss associated with costs, for Nasdaq non-operational X-K, measures. The recent compensation, including of is and or filings Exchange call, considered be a in uplist. other including result current therein. Furthermore, company's The EBITDA, otherwise. In order to the table or any Form contents current with intention conjunction contained any including reconciled the Form the are company's of presenting on non-GAAP to future call services, assumptions such reports including Securities of quarterly Form update gain new on which the derivatives also whether of statements sale as as report information, forward-looking those warnings, in GAAP events, this factors cautionary recent issued the the reports on publicly and performance, are changes reconciling adjusted company update Commission, after with costs, annual comparable should disclaims on and in business or measures, to XX-Q the this non-recurring business release aid and the the certain in the expressly the XX-K the understanding most company on and any risk statements company's core investor the provides is useful Management the reflective it believes because company's period-to-period directly performance that information to of EBITDA the of business. adjusted

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

Riccardo Delle Coste

our first quarter this our quarter call. Good year. Revenue for with us immediate XXXX the of start and continued in fiscal year-over-year million, supply to to first afternoon, thank $X.X you issues fulfill the for joining despite ability pleased impacting all increased XXX% earnings everyone, I'm chain orders.

by following customers. products was more of Twist driven with also to bulk segments those a start our uptick these growth as from single-serve more quarter the pandemic. It's & continue see we and our spring of and importantly, we and and see customers upcoming see more reengage season into the in enter revenue and by education Our encouraging hiatus us, to with as success greater an continued Go our selling the channel products a enter return to and bulk improve the that single-serve we customer in

to the Firstly, coming product and from because end. help year offset because quarter they chain; education with channel second a the higher-margin and school slows supply down pressure will secondly, the in are the our an

offset helps Our diverse seasonality. that customer also mix to

we have increased expanding and customer size driven of been team. strong base, adoption sales Additionally, our product by our our

expect United a schools can us to the new we year. our school we XX,XXX school continued as from number the with locations announcements XXXX/'XX school of with massive new have We as over And districts. XX,XXX opportunity the in and footprint expand new States tackle school you enter

we of We the bottlers. we Cola this are to building number Pepsi that announced in J&J with also pipeline our with similar distributors have a year one relationships earlier

ability quarter continued to in service quarter. the case raw our the elevated to costs constraints unparalleled impacted also first fully costs. These our all transportation included margins and packaging was material shortages, quarter, industry the and that impacted fourth our and clients increased costs this in As supply our labor face entire

equipment that of freight we believe sales fiscal the broad across about to initiatives are products offset and issues. of the price end we half range we our packaging talk of and offset Roger, the in and the margins will Lisa? to achieve the the implement year, pressures allow now to increases to quarter the the strong look initiatives us effect in detail. projecting went at place are and initiatives CFO, over more of results cost back the a of half customers. We more include first These into quarters majority first continuing quarter confident our As we that matched and enter sales with in back turn the quarter growth have improvements and these ingredient to we optimization, record Lisa improved to year. I'll second to the this remain call

Lisa Roger

quarter the same first the $X.X $X for last year. to million XXX% Revenue compared Riccardo. to you, period of XXXX increased for Thank million

comparable orders. mentioned, as the the gradual Riccardo return all we our inability for as fulfill of is our in & increase in channel The Go to despite revenue achieved product sales the As well year-over-year result Twist increased year-over-year school growth of orders revenue on be with we our first and gradually and bulk seasonally-light quarter bulk top as our single-serve quarter still believe a second our entering be seeing to single-serve for education and channel customers. products. We up will ramping while line selling are the will progress the

sales our gross period quarter the packaging margins products. of compared as expect higher raw XX% material be was same strong XXXX will costs Go product The Twist believe and year and lower-margin year. half to back higher achieve full as were well for XXXX. Gross in mix record & the due volume last XX% for the for growth and margins decline to for we the year of the to first revenue However,

savings various as and single-serve and We margins to the effect implementation of of other in back improve into go customers with as us. our XXXX, reengage products in higher-margin more expect gross half bulk the stages cost and of pricing initiatives

year. the was last pullback significant in loss area The costs in period this price XXXX $X.X with to to affected $X.X million increase by the shipping the the $X.X of the the first labor G&A of loss quarter revenue, XXXX. net costs coupled as from expenses first unprecedented increase had XXXX million quarter increase in we driven of as to in an shortages quarter COVID-XX of for to well year a as net quarter. in quarter first and the was a market compared million and Our in increased in G&A in $X.X million for same last in the compared personnel the storage increase compared

in half For year. by cost increase loss a the storage the savings last of impact. Personnel compared these for EBITDA decline implementing. shipping first the increase costs for a loss in will quarter approximately XXXX, same impacted the we our was approximately adjusted adjusted to had $XXX,XXX quarter, of by and and margins more approximately offset implemented by remaining a by of $XXX,XXX. other $XXX,XXX period initiatives as $XX,XXX first be increased $XX,XXX the the costs increase EBITDA gross revenue, costs than Adjusting the the price offset with are end We at believe of the of

balance sheet. to our moving Now

As of $X.X $XXX,XXX XX, and March of XX, $XXX,XXX $X.X our of inventory million cash and December had sheet of approximately XXXX, compared as of we to cash on million of balance inventory XXXX.

turn for will the back remarks. closing I Now to Riccardo call

Riccardo Delle Coste

you, Thank Lisa.

the especially immune we traditionally new approximately all and we'll set the QX for lowest quarter are year this the are XXXX been exit that of baseline believe of and bottom company, an have challenges the We number that supply that to improved we alone is grow. top given full industry-wide given were sales I them not fiscal revenue positioned and year to. through a sales QX XX% has revenue year line. QX well and to will with of continue pleased manage

summer quarters spring pre-COVID the entering a return where and are greater our of We we expect customers.

improvements. efficiency We cost continue to on and work

to to are bottom on company. the line. top now a work to are strong on start off I a full our hit just stride we board, new the to with both improvements the have to believe finish we and and we to and of successful partnerships. We continuing year, team We strategic our expect are year beginning

that, let's with take questions. Operator? Now your

Operator

[Operator Instructions] Vendetti question Anthony is Our first Maxim of Group. from

Anthony Vendetti

of So couple a Riccardo. questions,

the sign can little Pepsi discussions you You quarter? a going you bottlers. independent about bottler? Pepsi since any with other last And one? distribution Any with distribution -- the is bit first that signed talk up other the Are with how having with agreement

Riccardo Delle Coste

has or last of conversations progressing, with X kind just Yes, others. mean in that are it X we one only is It's and getting weeks we weeks, since been together. got X I started.

Anthony Vendetti

And potential move Okay. the still early know a then the plan... into in I you're convenience stores. channel? looking you are Where supermarket that is Or Is that at stage?

Riccardo Delle Coste

white was can kind It is else. the we've in same challenges, some we supply still of have so provided to been And ways we Even dealing get impact of a that early a quarter, didn't We've you the the to improvements. with lot we changes front as And increase see, that. improvements, of at everybody for as -- lot made got us. we've of and the the stage. of chain space first continue of make further for the end price and look maximum we really

as works the product, we relates would have hoped. than little is just it still it the what in and So grocery to bit earlier a

Anthony Vendetti

obviously, of goods chain inflation cost Okay. sold. And supply your then material raw issues, impacts

You price and input that offset completely increases offset pushback? have sense clients? from to partially said been makes been to costs, price able Have your is able mentioned implement everyone Any then -- you've been increases? what's seeing Or increases. response the price they the

Riccardo Delle Coste

bag all Mixed Good question. Yes. around.

never cost increases with do fully price So so. and to we haven't were to been intending the the able we offset increase,

We probably we increases. increase between offset will initiatives cost that of are that the than the -- we and It quarter. did the more the do implement offset of first But price increase will and some more -- expect end that the also we underway. actually at than have other price

do what's some And that in end costing the forced up positive it's it's So for time think have is we the lining company that a going from I by really our marketplace happened to underway. deep yielding from of the structure. us dive results what the kind we're to silver finished, very on

Anthony Vendetti

said you Just to bag. further, little dig mixed a

to elsewhere price much they of So but the going what's to been go able the the that too don't just pushback? Obviously, think back, what's they're been Are is the going saying to can there's trying clients be they're to it or not concern? are their because the what increase if understand a what's it they increase, themselves. -- been along they absorb I'm pass pushback? price concern, pushing

Riccardo Delle Coste

Yes.

been giving fatigue of or are where issue. resistance There everybody it's hasn't increase not anything -- price [ right, a maybe little been occasional an it's part, It you most increases. us, that's price it's the like hit because it's hasn't. just really accounts, ] the just a For bit just

been I actually. So the been And it the majority, we've hasn't able pretty issue. to vast an easily, think price and really for balance take

Operator

Gregozeski from is William question Greenridge next of The Global.

William Gregozeski

mean, what seeing you coming you're of back product that mentioned the Can You are in the roughly and I ones percent to single-serve customers product past bulk the quantify, sent online. now? you have taking again old

Riccardo Delle Coste

coming would That's We're mark, definitely starting has engagement the pretty a up. the but really we're the say, question. good in probably maybe the just at through XX% early still see orders like it's ticked and spring. I to

or out from even where the distributors and will where the and deeper really have summer just a through but it's not closed amount they're had territories up, later improve. us the to been of because As and into to been direct. distributors actually some again, fair still seeking dropped out distributions there's outreach get started what only into even have of us in It off it's or new think you, customers continue been product, I and see our or other we seeking the just down orders picking people that spring, great actually some seeking -- maybe

mark now, would I probably right XX% growing. say definitely it's So about we're but a at

William Gregozeski

And about same the Okay. is that military in channel? the

Riccardo Delle Coste

bit the all the or on actually. at be did bit [ similar year. we very Yes, And of at little to little back a is spur further a more a down they probably they because once. close The had ] coming have it's a seem end military little when along of bit COVID turning that

William Gregozeski

you had that more had mentioned you've you out How that And sales, are have in the to guys to the enough product. send doing could more with getting past want Okay. you customers if product?

Riccardo Delle Coste

a great That's question. great. Yes,

we both chain, So production we've well been as well. amount an capacity. And capacity additional really have up doing our supply opened with ingredient alternative co-packers suppliers the of -- enormous as work sourcing, capacity as on

the least the capacity issue. at and sourced we for located that we've sold the of gap that in now. we've also vendors see now So balance closed foreseeable additional products what future And the for have year as

contracts. contingency put ingredients have critical well look we all place So as a as and taken those plans and at in high-risk

very contribute take And further we initiatives also So right pipeline to got These good some the now issues the for it's business capacity. us. enhance the that our are that's now that feel going ingredient where a going and result we've right forced goods. with about in and additional lowering both an sourcing look we're at only and yield hard cost to have of to at incredibly us to positive the

Operator

[Operator end our teleconference. Q&A concludes gentlemen, of Instructions] This have and today's reached Ladies the we session.

your You at time. participation, you wonderful may this lines Thank your have for a disconnect day. and

Barfresh Food (BRFH) 28 Apr 222022 Q1 Earnings call transcript