SNAX - Earnings call transcript Q4 2021

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Operator

Good afternoon. Thank you for standing by and welcome to the Fourth Quarter and Full Year 2021 Conference Call and Webcast for Stryve Foods, Inc.

As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Austin Ke, General Counsel, to begin.

Austin Ke

thank for and us. operator you, you joining all Thank Officer Stryve Joe Alex With are Executive Hawkins. and Officer, me today Financial Chief Co-Founder, Chief Oblas; and

Before which are everyone on our to discussion we of will based would future expectations of performance. today statements part our remind forward-looking include current begin, I that like

do of update be differ later therefore undue and forward-looking could results expectations. placed actual performance, them. from these to These should future not not statements statements at Our substantially are these upon We not undertake guarantees and reliance date. results operating more that by Inc. We shareholder a risks refer you future a the Stryve and today's to financial for detailed report the impact filed discussion condition. of SEC filings could Foods,

will measures loss. include non-GAAP measures GAAP measures also the of such non-GAAP to now a like financial Non-GAAP for We today's over further Co-Founder, would net call such I you net EBITDA. be Joe not income measure discussion financial considered Officer measure detail. Executive should shareholder as financial as and supplement turn report Oblas. a addition, of the In substitute as a today's in Chief GAAP nearest to to to call included refer and the for to reconciliation Stryve, the and

Joe Oblas

good Thank and everyone. you, Austin afternoon,

market to at I the today new to brief full shareholder QX want you introduction results, give received I explain a year Stryve Before XXXX and XXXX the letter quarterly close.

and letter which you full Stryve a forward, results, quarterly the we'll our give strategic to Moving is view designed this milestones. sharing in forecast format, be results of shareholder financial

The conference morning, close release review. you the of call we time after is will plan each letter shareholder our a to at forward, plenty to giving hold market following quarter. Moving

And so, on focus primarily Q&A. the we can

to had release not QX questions. to earnings letter know time giving you the afternoon, As we right before already time hear, much prefer we most and spend the to as Since this we our much call for you you'd for apologize asking of the call to we had like know as announced review. shareholder such

do can the have you at investor's our stryve.com. not If shareholder it letter, the download bottom tab, website at the of located you

QX, you definitely above give we will time. for more mentioned As

highlights over snack QX are and XXXX. product that category Now we a the Stryve been behind essentially a and of XXX story the with the to new perfected irony years. letter have meat U.S. The that consumed created leading for and has is

grams preserve meat to snacks. establish year new comprise USDA. is the world throughout which first are and Stryve achieved to best Four, who the way and licensed meat be of nutritional announcement world top that XXX% of profile Key we're leading new Two, Number the late those innovation Statista, long to it never, and While our we facility our too. it's this the launching relevant competitive approximately this than turns chains. and to of manufacturing The the out, to with mover loving mover contain a It's better company healthy Seca first creating XXXX According never frozen participate. Stryve carbs. Vacadillos of highlights and be category. expansion snack $XXX letter of slabs meat on bringing to. snacking a or Stryve zero are investments store with spices vinegar the of is protein focus the no with to up the ingredients, generally are learn beef, and snack U.S. According to organic people to it, will a brands natural follows: the to Biltong in seven in our XXX Biltong meat per nutrition in either billion air-dried billion and wide products XX% grams natural by ounce, across and is sugar $X hanging in has than all meat which market scalable the thinks addition Three, one, participants highly expected chain in pack snack continued snack open and based better introduction U.S. that drying resulting women in XX large and distribution is through including brand. the the of SPINs, U.S. natural development subcategory ago Carne top our of reach now retailer, Americans category, the foods jerky of stores product U.S. as convenience approximately Five, XX market will to sticks meat and first air-dried share grocers air to the the begun have line meat a initial our more in us the defended earned in it well begin the wasn't and category XX and product

be All stops, are in-store trailing velocity fueling stores, According across our dollar and acceptance within truck stores. just harm stores, What's sold NC airports, club, everywhere. as cetera. February the experienced colleges, incredibly SPINs amazing for of Sports et tractors convenience products and increase supermarkets, broad period, the Stryve of diverse of distribution Vacadillos are XX-week is ecosystem, arenas, velocities. particularly in these XXth, products brand factors an our impressive to about a XXX% can

shareholder to and the organic with world's letter. guidance foods plays leading In our and partnership natural is expanding our retailer, in and Costco adding burgeoning forecast into addition recently outlined the

private from benefited to e-commerce full we sales increased sales by the year club, retailers of as grocery and contributions revenue and in $XX.X our accounts increased and million convenience new from channel. at Our platform mass, a existing key label to top net wins wholesale of a additional DTC from in XXXX, number distribution XX% generated nearly line sales

traffic, of products pandemic part in through higher following the of new channel Importantly, attribute the sell foot besides easing and restrictions. to wholesale velocities distribution, we an increased related by expanded in growth supported

today, net year-over-year, year-over-year net and XXX.X% channels club. including QX, Strong labor supply XX.XX% of factors to the Throughout businesses strong related both significant and transportation. $X.X challenges across particularly XXXX sales new most affecting to For sales industry XXXX. half our million, Stryve increasing labor chain, contributed Like most half, impacted These coming experienced convenience in we XX.X% year-over-year. with during cost to lift second and from sales, significant faced gains net growth increases. negatively cost increased representing wholesale a of distribution pressure pervasive performance the commodity second

XX.X% decreased showed three first resilience XX.X%. the our of annual slightly XXXX, from margins to While quarters our through gross gross margin

line However, gross $XX.X increased growth, profiting million $X.X $X.X million to sales top to due from million.

price beef While turn Alex in welcome our seen from for that, XX% over the I'd beef like highs our to we walk commodity some of we XXXX the of XXXX the expect to QX call in continued outlook. year XXXX, cuts. With markets, a current in QX through volatility the prices with between drop seeing down well to full as as and and XX% highlights, are

Alex Hawkins

Good afternoon, XXXX. fourth I'll Joe. for results discuss and guidance quarter Thanks our review everyone. now

doors Net wholesale customers in itself order, growth e-commerce to to year additional derived we during our ago across our in experienced majority performance million. to That on $X the of increased the from of fourth this growth significant up rose XX.X% the The direct-to-consumer million million, to was in E-commerce million of at our chain net of on as websites. sales XX.X% of that the to compared our our distribution quarter. Amazon $X.X channels. $X.X the period, secured maintain e-commerce distribution year. we for sales sales own most $X.X to in the up quarter from million million, wholesale XXX.X% from X top issues efforts said, the hindered For sales our XXXX was $X business of particularly fourth $ as rose brands in impacted new by our earlier fulfillment quarter we that added and products, ability percentages of stock supply

As iOS simultaneously both results that and behind XX ads in delayed. Like were business advertisers, activity. tracking or less our including The expensive conversion became Facebook update advertising web significantly direct-to-consumer significantly our direct-to-consumer digital effective. aren't DTC limited impacted app fulfilled most were direct-to-consumer a and result, the by for investment more many and from functionality, orders advertising

fourth As a scale digital midway the back through advertising significantly elected quarter. to result we

and prudent approach fourth proceed While future, this that for to decision advertising a that of business direct-to-consumer we XXXX, the result be foreseeable resulting plan we to XXXX. believe line in the believe acknowledged a profitable quarter more we direct-to-consumer with in would will as to that advertising the these significantly We in spending on basis. such in more overall direct-to-consumer bottom anticipate be trends digital continue sales lower will what

Private deepen million. relationships to sales quarter. label $X.X volume quarter hindered increased costs. in quarter of volumes, it down Not in $X.X our provide be XX.X% label important to of fourth of does label to our our $X fell piece impacted an performance story. it was but private continues from XXXX helps our the The to business negatively private for labor ability by commodity orders million million primarily retailers. sales only year by increased goods to and well million, of chain incremental with our was compared the by supply in challenges customers the driven deliver period. that $X.X Cost packaging our as $X.X the during as million sold ago This to Finally, increased

increased have the due this commodity on they've related Our what the significantly Many be had to And and pandemic. we is limited been have beef well, inputs to to supply prices our to beef. direct of and overall lower although input other impact believe as affected indirect our chain factors business. primary beef isn't

what the efficient experiencing Gross be ago driven Further, $X.X network. a by quarter, XX.X% we expensive to factors. also in year more period. wage to and decreased seeing million significant in are are fourth the less down believe $X.X pressure million We from profit similar transportation we

percent gross profit and cost to are XX.X% these offset in in raising ago fell margin As our for we identifying areas net help compared aggressively prices. year the To pressures, optimization are a XX% structure, to we period. of sales,

While price quarter, yet to on throughout rolled of We but of are December, take were out. in increases we to the these see websites price the XXXX. hold took accounts not of in in price being fourth implemented the increases our year owned the process wholesale effects hope

completed heavily capital common agent a XXXX, successfully Class and has proceeds debt, placement Leveraging million. cash this fees in as senior was before operating and private in of placement January paid December $XX approximately its invested expenses. A million Our balance stock also bank its Stryve warrants first Oklahoma, Madill, deducting of investing in other of in raise, procure generating $X.X XXst Stryve In Further, and distribution advances the is has other improvements to our support and/or and capital during marketing working supply company planning half manufacturing innovation, upcoming initiatives is in of the expanding build facility chain efficiently. product primary XXXX. XXXX. bolstered expected the retail facilities its Stryve to off

for a $XX forward. sales XXXX. taking range $XX net Strive's follows: Now XX.X% million look increase an to of to anticipate outlook to XXXX We as of XX.X% is financial to approximately in moment compared the million,

ongoing anticipate QX year. follow amount Costco modest the comes growth for we online greater the quarter orders orders, revenues to second than lay-in QX quarter. orders that throughout in distribution will new second paired size expect all an of that XXXX, we the of from the grow in occur anticipate retailer's as expected While over new that given significantly lay-in quarter-over-quarter base lay-in our to with a Further, major support MVM XXXX we XXXX distribution outsized of XXXX, Typically are subsequent consider course retailers set distribution. orders the the

in the based the impact While the in partially offset of associated sales respect revenue large first gross in due in the pressure and of MVM of new efficiencies macroeconomic supply among recovery the refocused price while factors. our expenses. advertising comparable that, orders. back substantial G&A coupon to In management gross to instead and expected profit revenue on enjoying on fast being in and in we QX are continued receipt on And be distribution to growth Costco company enhancing, profitably and we to expenses, diversification. more to Accordingly, retail more our environment, revenues With impact velocities XXXX, to of QX focused to energy the throughout with during conservative year, in pass second continues the hyper board, to laser-focused depending being Joe. distribution, we from half XXXX widespread in will have on grow of fluctuate the accepting being sustained today's fundamentally to impressive and that anticipate manufacturing, to of is across change driving associated other digital quarter-to-quarter the more relative marketing XXXX With growth continuing increases its rapidly, is while of while response invest in-store sales. the lay-in XXXX margin margins, we I'll operating and chain on production our half beginning anticipate it --- gross increasingly particular recognition QX timing to selling, innovation

Joe Oblas

with begin market expand to share, will excellence. significantly Thanks a DTC foundation we category, Alex. enable In we us creating believe XXXX retail and distribution, product innovation manufacturing summary, our and that

coming now unprecedented are We and weathered start and businesses and We and meaningful are all growth the across add virtually right indicators in well our direction. are an feel debt-free great period we have distribution channels. of virtually pointing off a capitalized, continuing that up all to for time

build benefit we're growth to forward. think that, -- it open going to ready high tirelessly shareholders With work question. a that to continue our company will up to believe should profitable I We

Operator

you. Thank

We question session. our will go now [Operator begin Instructions] from Grondahl comes Northland the Securities. Mike ahead. of Now question-and-answer first Please

Mike Grondahl

guys. Hey,

looking we recovery, head sort XX%, you but some XQ continue cost really fourth the first is first is the is going and gross consistent XXXX, Just margins as XX%, with quarter to said the pressures then XQ half of margins as they thoughts I and be through to the of spot for around for some gross XXXX? on with right be just half that think the

Alex Hawkins

Mike. Hey,

business continue the experienced is quarter. first certainly affect and a slight these the might We I'd So, it see in way we've will our to lift. characterize they that pressures

-- been speaking in I seeing ballpark versus that I of we the overall, impact a it's muted some will the Costco quarter, in same, As in benefits same second we MVM say the Joe benefit has the year of will happen. the some think price we be And that generally the quarter. of where part start increases, be it's improvement but the beef there partially quarter. mentioned, commodity prices ago, although from were of for the latter first would we'll will that'll couponing, But directionally the by

substantial and in hopefully this So, substantial benefit keep with a no of gross QX, area. of that, same but amount price associated we obviously also there's of increases down, coupon, see coupon the of meat -- with And and ballpark trial should help to adoption full to margins coming prices in revenue very our Starting impact from a consumer helping then the that'll those revenue brand. drive continuation the the significant and a recent trend associated Costco MVM. around

Mike Grondahl

kind term for What's it. goal Got gross margins? of your medium

Alex Hawkins

I here. depends it that that we're talking on think the mean, I timeline

of continued that on generally and again, be of at year to we the I were including think factors end of to business recovering, the fourth prices we we the where on look evolution have. the path the play a meat as we'd lot like back to quarter, But the XXXX. here, the of of full there's mix

Mike Grondahl

to through Walmart business you're for you maybe ones retailers, doing challenged as you revenue it. your which Costco the business, and are picking at? more up but then XXXX naming it. trying more you better, are can, guidance could Got ones Got just if think which And without

Joe Oblas

-- I it's accepted been channel been strong, surprising in product our It's natural how opening I'm really more rural the quite been so has across of some received great. have say, that numbers been board the really velocities retailers, quickly. Mike. to channels of and the mean, some would have I been and really -- strong been very that the well -- Walmart guess have been eye have Joe. been Hey, products strong. Overall see have received distribution it's I and

a where jumping So, really already I velocity some with and has the been prices taking even think we're pleased with of lot retailers well.

coming of pleased in So, from got as we a previously retailer I the And have announced, we're big the very standpoint. months. lot we've velocity we expansions mean, over next where -- few are here we've up and

Obviously very, with stores, and small, a doing a team's Costco, online. frequency the but you amount there's to distribution. national Walmart, is XXX stores the well tremendous Target. the very impressive. really to lot distribution got mean, is to got it add of going continuing comes distribution And and very You speedways I XX

and We're a excited taught to thing is years right super ever these last doing things lot about the I've very XX we're be us cautious of that. So, I seen expect trying this one the for unexpected just because happen. after is that years stuff this now, haven't been

Mike Grondahl

Got it. getting stuff stuff, natural of the any some were And is the update health you that there into? or on

Joe Oblas

launched. our are just But that success -- website Nutrition onto -- Ted feedback skews. got soon. Stryve commodity type and recently just nice of up and The own a but we Collagen Nutrition, pre-workouts the in recently Broth be we're products, chairman, from as Stryve launched great category are getting Casey. have I they're should mean, more were lot I've Stryve website. our the Bone does and history this

I nice going accretive for it as think that's be go the Stryve margin should this to be we and as forward So, well. narrative to really future in

Mike Grondahl

Got it.

Okay.

Operator

Our ahead. next Fuhrman from go Craig-Hallum. question Please comes of Alex

Alex Fuhrman

met of that Can then you accounts to more about like your in initially new It question. what been your and thanks you'd to this my from talk retailer, are it guidance your there been demand been Is are not for we'd certainly lot for retail, Great. looking significantly like of here? your for retail be or on growth product happening year? conservative XXXX. to expectations or coming kind in particular there's is shortfall It terms the side and certainly manufacturing where of there's that sounds of rate sounds something good it just Guys there's you a sounds as a your strong about product taking been things for the modeling, for at have business. ask taking the down of looking lot add what -- Wanted like the just has maybe pretty your velocities doors. in numbers any

then at trying ends your up Just square how to that guidance.

Joe Oblas

Well, hey, to we're uncertainty to predict want it's uncertainty. trying in where to be hard It's Alex. going, trying we're -- more Joe. be to -- we're conservative because nature A, or we

to and number and the conservative being our to tremendously, on that is starting really to businesses, So, our focusing a and energy putting of lot be two, business as look, pulled we've Number spending a level performance. we're cut we conservatism of one. burned move want to back good translate stewards overall the reduction consciously that'll down e-comm capital of digital in some say,

the intelligent change bit So on for not that spend, with and of iOS to it's fall of the just a return us, a ad us.

don't when that we're see pushing reason to the into to keep not a we going logical heavy arena get return. Now,

So, the side from I some as would say well. e-comm

to mention net point Now, a is will the revenue. a as that MVM Costco coupon, coupon the fall other to carries and

So, cautious. as the will we just want coupons redemptions don't to know like done be look we've on what before. MVM an We very, not very those

make just that sure we're we're forward out beating what that that we're we're go to know we sure going going make trying So, to and to, guiding consistently.

Alex Fuhrman

the potential Can intermediate capacity? term of that to really when of there manufacturing enough be that talked you think new Joe. walk utilizing us a million is of much when near then, And That's and demand to you facility. the Do to completed the or $XXX need you helpful, will through your having you future run expansion an capacity? expect your just about past, revenue rate, Okay. kind in manufacture entirety be primary manufacturer the you've in there time you'll

Joe Oblas

well process we've corporate our are expanding and also order, are of more factory need -- and our instance, then here additional rate our will upcoming have factory. we run the to location Well, as announced, space e-comm in when which area office, and in securing for the Costco Worth production pack-out size expansion. capacity the and goods consistently be at of up of fulfillment But our and the our advance as produce to of of, functions look in the Madill our Dallas-Fort for previously you out us the starts current capacity. run we we we to see that allowing And finished house for center,

up we're think are So, of at continue know when. doing capacity it's we're foresight of showing we what a the good because we being I question -- we're not if, going but it's factory, in to question a scaling

Alex Hawkins

got we rate to expect Just this elaborate is right? different run The of kind substantial time. kind We're a part way the level of set our such nationwide rollout you run to And to very of when window little to accommodate a now, through Costco in right the about that bit. question that that see manufacturing working capacity, on you think We business. I capacity. that a rate top do short rate on think demand, need was run have of base of different when to production of

our -- forward. are of the that's the our need right? completed and being manufacturing about who That moving expansions we've so, full the have here the production additional to scale. to if when the manufacturing the that benefit this it's added about dealing we of at And and we can think a pretty outsource we people expand could that unique, the capacity we're looking manufacturer, necessarily pretty make And capacity rates for look footprint product, capabilities. said, and for It run not but of the we have would to year is recently part continuing space great the

sure had ahead front So, the have to we of we obviously, time. end make build to

Alex Fuhrman

helpful. Thanks Joe. Okay. That's really Thanks Alex.

Joe Oblas

Alex. Thanks

Operator

turn question-and-answer closing session. Mr. for would I like This to concludes conference to the any Oblas back remarks. over the

Joe Oblas

conference year full has Thanks much. for very for a everyone webcast call fourth Stryve. XXXX attending everybody and week. our great Hope and Thanks quarter

Operator

conference today's concludes This call.

and a Thank for You have pleasant you lines. day. may disconnect participating your

Stryve Foods (SNAX) 28 Mar 222021 Q4 Earnings call transcript