Earnings call transcript Q2 2023

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Operator

Good afternoon, everyone, and thank you for participating on today's Second Quarter 2023 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. [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 its strategic relationships and projections of future financial performance.

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

based company These made circumstances. on appropriate control are uncertainties, to assumptions statements on other of and based risks subject the many experience, the certain of and a which developments the factors under assumptions, beyond number Such are company. expected believes future statements that of the are are

more statements. these should date undue to are vary -- the materially take they uncertainties materialize or which speak of prove actual anticipated one are which or Accordingly, these reliance forward-looking indicated of speak on and/or of by results only or incorrect, risks such made. investors from may forward-looking assumptions statements, underlying not Should cautioned those

Securities The as forward-looking update result Exchange on any statements otherwise. future Furthermore, a company the information, call contents considered the changes be publicly conjunction any after whether therein. Commission, the intention and contained assumptions including events, any and risk current the to XX-Q of Form cautionary X-K, company's Form or with new factors warnings, especially disclaims this filings including of Form should current with such XX-K in as statements call, on annual recent reports report in and this and quarterly on reports

also those the non-GAAP including the GAAP business or of business to useful reconciling performance, the and reflective period-to-period associated business. measures. withdrawal comparable services presenting EBITDA, NASDAQ costs, reconciled it such believes are provides including The update directly in to other because the adjusted the performance in with investor order company aid in company's to Management noncash release for nonrecurring most as table are which understanding uplist. the the items certain information a product In and the measures, costs the company's nonoperational is of EBITDA issued company's core stock compensation, of stock is the adjusted that

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

Riccardo Delle Coste

you and second afternoon, Good for quarter us thank call. our everyone, XXXX for joining earnings

regain on to the end our expected, result As second as to school back quarter school a with the we year. to get menus lost added issues before school was and manufacturer bottle of as the challenging the work customers largest of

The upcoming back added that over customers for year-over-year for quarter. smoothie some for 'XX-'XX and on year, format, current good is thus and to format more customers growth carton third our to converted these sequential carton gained a We the this than our commencing year school quarter, us to new quarter. achieve we doubled path the school production in revenue capacity setting their and news a the some of we have of the in menus been

XXXX. in revenue the We million $X the million to through compared million quarter are XXXX $X.X million over the $X.X as end and third secured quarter to in the $X.X quarter to range in and halfway million third of the $X.X already and of in have quarter of expect second

the EBITDA quarter EBITDA third We adjusted achieve expect XXXX. to positive quarter the fourth be breakeven approximately for and also adjusted for of

expect XXs to and period the were at be quarter, the to margin carton XXs. XX% prior to the to maintain of half This in year year expand able close we as back high improvement continues modest expect in to the and margins low capacity

required in to has production annually co-packer the the XX will meet our to increase million current is of to our we million engineering capacity for fully demand. staffed, additional and have capacity personnel Once cartons required carton changes alone. XX growing approximately units and hiring completed the smoothie process Our of smoothie

And the comes for expect record we fiscal and expectation as grow XXXX. year capacity is revenue achieve to significantly will online, our it revenue that

production we have Finding In stage share addition of a all our expect smoothie to to co-manufacturer be X. carton are excited up a running bottle available and new experience, year. increased co-manufacturer and found with that of infrastructure task. in easy are I'm fortunate was the we format, an next partner capacity beginning we not fiscal right to the the that contracting checks by to a with that And

we We as fiscal we'll and it that now capabilities future. the more and necessary the in manufacturing have an will robust service even have today grows base XXXX, year believe exiting customer base, to

and Our with the up be back them this carton continuing by of annual beginning working advance to with manufacturer million fiscal ramp end our half work run to the margin operational XXXX XXXX, continuing our efforts. co-manufacturer focus to by for improvement will bottle of carton year fiscal an of rate units to new XX running production of and year our million the up to to XX year have

the is year exit bottle manufacturer. on issues fiscal with trajectory to were XXXX goal last year we back growth before Our ran our the to we into largest

over to the I'll Lisa our Lisa? call CFO, Roger. now turn

Lisa Roger

Riccardo. you, Thank

to bottle result XXXX. $X.X second & of our million Go. largest quarter manufacturer compared was Twist the supply decline loss of year-over-year limited million the for of by the The caused second is for quarter Revenue of $X.X of XXXX a

into selling Riccardo have As already are heavy in over $X.X we revenue third the secured stated, season. for heading and million quarter our

and end million to million. the between $X.X revenue expect $X quarter We with

revenue full For our for to expect carton capacity format. record year, and ramp smoothie as to achieve demand we the continue

second XXXX, of at fiscal XXXX quarter XX% of similar to margins quarter for the for year-end XXXX prior Gross and the the and respectively. years second were XX%

throughout of margin year the product of We mix a sales half the expect carton smoothie modest back increase. as as improvement result

second of XXXX. quarter $XXX,XXX the $XXX,XXX loss was as XXXX quarter compared in of net for a loss second net to Our the of

this expense The due primarily XXXX distribution compared outbound second quarter to $XXX,XXX quarter decrease of that a by to the as $XXX,XXX XX% year the and offset decline outside hired to providers, specializing retain in were and was marketing of market for XXXX. in quarter service decline in school the freight XX% cost to of result revenue, in the a in second brokers storage expense the decreased of including third Selling, partially the XXXX.

in quarter driven tax stock-based period technology-driven administrative costs efficiencies of compensation the decreased for in G&A to same and reversal headcount program. from and credit, under resulting by $XXX,XXX to of primarily of recognition in resulting reduction the G&A confirmation year. XXXX compared performance The XXXX personnel from a last recognized $XXX,XXX decrease XXXX compensation expenses was in and unit the previously stock decrease second our a COVID-related XX% our

For compared $XXX,XXX quarter XXXX, of to the for adjusted was the second loss XXXX. of as of $XXX,XXX approximately second loss of our EBITDA a approximately a quarter

be and outbound fourth to achieve result of headcount costs expect increased of gross approximately the in exception and with for quarter breakeven quarter fixed improvements, XXXX relatively second positive margin of EBITDA late as operating volume, We for EBITDA reductions adjusted of a the the adjusted quarter freight. XXXX taken third XXXX of the sales

Now moving on our balance to sheet.

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

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

Riccardo Delle Coste

Thank you, Lisa.

manufacturer worked We and turning XXXX. half being back as the we a capacity believe new back, bottle to our enter with we year producing on corner coming replacement of are increasing January our the customers carton this expected be and smoothie by

and sequential annually our of growth. to We ramp right fiscal million path bottom carton grow towards in year-over-year will and expecting engaging improvement capacity for with heading million help to XX believe us top and end our significantly be this units line as us are able We format our the smoothie XX year. towards starts sustainable long-term by are with partners who to we the on up

the that, with would like open Operator? for And questions. up line I to

Operator

Group. is of first Our Nick Instructions] [Operator go Sherwood ahead. from question Maxim Please

Nick Sherwood

visibility districts things any that for the have upcoming year, working detail Hi, about of and taking the you're the thank you Can of for go school my nature? type the on question. school into with you you contracts

Riccardo Delle Coste

that's a to year has that that we -- the that lost had been because product were last for, schools the on of get menus challenges of we the since because issues to Actually, off we've very taken question sure. Yes, difficult menus part that was we the great mid-season. had, the it back

are school bids new happening been that up the very during -- what the been the with have added the is we of of time and customers, smoothie bids, did significant we carton a obviously, showing However, format. that number the until product have, And including the product we end has those that what have to been year. happen completed

now their we have we 'XX-'XX the us product that and enter added are they've quite been on well customers off as school there the as previous their menus. now us bids that awarded a menus So the that number had took of because bad year, product, of as large back to

complement that will customers well gained we as had as we that new now So previous new school we've of lost the of have year. now a beginning starting that customers the be full both that customers

exciting co-ops, from of awarded, districts do your have very a hundreds for from time actually range new into a So school time products a smaller that large school to lot opportune very been urban getting been have that bids the everything at larger It's us we awarded. been districts of purchasing us. districts a of year school range we've to which back with for

Nick Sherwood

have bulk single-serve question my the you is, segments Awesome. of any And the business? final then updates do on and

Riccardo Delle Coste

Yes.

starting of So parts the the back. single-serve and to come are business bulk

the our seen actually particularly -- have a business. on part push bulk our of on We

since labor been time market though has as the for For the first customers. actually our we improving COVID, feel

challenging. new season, it this found Before still bit little summer a we

pretty business that we that operate the equipment market labor equipment challenging last as with a the side that our of still And felt still to our bulk year, needed result, sales. was the customers. For affected for customers

season, on. turned an in definitely going has However, we this equipment seen have The increase into been requests. back

are sales bulk up. Our

encouraged very also program our we're with And bulk relaunch we well. did new So as X:X that.

was that's result which that COVID case. And put on to contributing and our relaunched be we've forward, to also of going So as now. sales been hasn't that a going hold, just back the

high-margin it's a So product. and very --

Nick Sherwood

detail I'll that all for and you Thank queue. return the to you. Thank

Operator

question investor. next Our Instructions] private is Please [indiscernible], he's from go [Operator ahead. a

Unidentified Analyst

Riccardo, Hi. Good how're you? afternoon

Riccardo Delle Coste

How're Good. you?

Unidentified Analyst

pretty seems QX announcements. but like a you ongoing signed that It QX So or you're pending any to significant districts, haven't you're able release that to it school announce Is have heard because of lot of it's deals? case that legal press not projecting. from a jump such we

Riccardo Delle Coste

situation. that don't into accounts Yes, some and really we aren't fruition on we're are starting really of -- A as these ordinary part we No. result separate, we speak or not lot that It's of commenting are customers. come That's the as of to these now. doing existing of course business. really are things a anything of

A some have restarting and back lot of the school when when for of varying complete process. school. They degrees go are have varying of they their timetables -- they they districts, them

not In some disclose districts to actually fact, to wish actual all. it publicly. publicly us school be Some want at disclosed don't

sales on as year. So into completed, getting new to our we're getting market out our we really the bids getting contracts products school just our getting in, working on rolled focusing go the up,

you can half along. expecting year. been strong We are the a had all indicating back that very As we see, of

the to get those finishes menu, off. very be we replaced us around mark, school experienced going customers issues they back always that the that take menu that the once year you product obviously to we and last it's difficult year, Finishing of that the which challenging had lost on their because June beginning on was

available ability school and our on the carton their the get advantageous. So the year now has and very having to of having good product menus been new with by to back beginning product

couldn't to has getting So to the us beginning smoothie those new in opportunity format some previously. the in customers get carton carton we having new have larger even get school the we addition afforded also that school format year, of districts of new the been the because

new format, of back excited half carton Now year. the the with we're the about very

bottle can As We're online you new we've our bids a from across that to sales announced been expected the on manufacturer We've are the is January. carton capacity see, The be board. production winning in as increasing. both has perspective, increased. got

here much look strong. the issues we other had the now record manufacturer, than of that's to historical the the pretty very expecting with feel quarters cleanup bottle from rearview that finish So mirror Again, previous a we year we're on out. the we've and year that, in record very, as

Unidentified Analyst

what investors share you've be QX like you the mean, double. could for. that's pretty going in kind yourself to and Got hoping of that's mean, terms and CEO company, being almost it. versus jump significant the I QX? in of I Anything a the QX, Founder, been

Riccardo Delle Coste

been right? it's last again, not, more really Sorry, We year. here should have and

Unidentified Analyst

Yes.

Riccardo Delle Coste

at with have the not been We right? have by this So that for previous multiple had that had already been of we point, year we the were this a would probably it issues easily. end of the very manufacturer, already

Unidentified Analyst

it. see you on the over QX? have you the how it. but share that you of expect you on into the Anything could Got in guidance, not going district Got school to QX -- Do signed? sequentially the shaping grow do based terms

Riccardo Delle Coste

significant still are, be bottle very you can't mean, have, yet I If the clearly significantly now, of we the very accounts because bottle be that we higher a don't we that still. we getting service have had we which capacity. can capacity to as we that see, despite have Absolutely. just clear, would number numbers strong,

to to up are open QX but us of increase sales the that we whole and have been a waiting bottle new that come we bottle additional to we know only for have that's not customers QX, going capacity. our range additional going to expect QX when the online, manufacturer already between

So that just between to don't and QX growth QX. we come expect

QX year into QX on We QX, into expect to next then and as it come and well.

Unidentified Analyst

That's one. it. great. last Got One

going cash. that you where that be of are that's to the able revenue we do service and understand this happen terms with through think be could there enough? to the are and you In I to go cash, -- But provide will cash? show that the are, Or we can things can company raise? looking

Lisa Roger

our QX currently in breakeven that or cash positive operating flow believe QX. in be in and positive model -- close we would Well, QX to

as cycle a We cash. operating fairly short as have far

to capital -- invest it into have lot grow. not it's a And so doesn't we like we as working

So there's not much concern there.

to it's have we but announced secured a fully NASDAQ the balance NASDAQ not convertible shore have meet So there for haven't need and get issue We it, previously draw in that's hope we And up debt through drawn. to addition it. we -- if draw But intended equity available us. funds have to to offering that, we we to compliance. -- to the the don't some have don't it's primarily to we

Riccardo Delle Coste

only as really And backup. it's a

Unidentified Analyst

Got it. Yes.

as of takes well? that that So care NASDAQ concern

Riccardo Delle Coste

Correct.

Unidentified Analyst

Thanks.

Operator

queue. concludes have We Instructions] today's And conference. then [Operator no questions the that in

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

Barfresh Food (BRFH) 14 Aug 232023 Q2 Earnings call transcript