Earnings call transcript Q1 2023

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Stryve Foods First Quarter Fiscal 2023 Financial Results Conference Call. At this time, all lines are in a listen-only mode.

Following the presentation, we will conduct the question-and-answer session. [Operator Instructions] This call is being recorded on Monday, May 15, 2023.

Now, I would like to turn the call over to Sandy Martin, Three Part Advisors to make introductions and read the Safe Harbor Statement. ahead. go Please

Sandy Martin

Hawkins. and earnings operator, Chief the Foods Officer, Stryve Officer, Thank call. welcome With quarter Alex Financial Chief conference Boever; Stryve's me first Chris you, and to today Executive are

part Before we begin, to that discussion Act would Securities like the statements XXXX. safe will forward-looking made of of of the Litigation everyone include Private to today are our remind I that pursuant harbor provisions Reform

Actual results Forward-looking guarantees of these control. We and statements, update therefore, forward-looking to by refer the expectations. not these them. uncertain to nature, of should not placed be date, and, not they only differ outside and could statements These their are performance undue are at from reliance undertake later today. do upon materially company's statements future a

will GAAP measures. call in financial EPS. adjusted a to supplement to today's a include EBITDA of measure reconciliation non-GAAP release further and considered a earnings the discussion detail. you Non-GAAP adjusted including non-GAAP nearest financial for included as financial today's GAAP not addition, We for In refer measures, to and the measures press be should of substitute

is being audio on of can our on News be webcast accessed link the page at through the release and the Events ir.stryve.com. section posted is and the Investors Also, call press This earnings website.

Boever. With that, I Chris? call Chris would turn to to now like over the

Chris Boever

our first quarter in detailed culture, transformation. weeks We view. our Sandy, and few structure, the and joining call. welcome, for thank mostly earnings capabilities and changes are improvements of you, our our for The progress Thank I in and results process, XXXX rear you reported where ago a strategy, year-end us

to next plan, opportunities against into my executing Stryve of of members. thanks to the growth, our now phase front profitability. advancing in Special leads are team We sizable us, which the

and are and recognized. commitment Your appreciated efforts

have important accomplishments. announced earnings and Since X we meaningful that call,

flavor, a Carne Chipotle lineup the the brand, First, Honey. fast-growing with innovation expanding Vacadillos Seca, our new of launch for

in segment, We are stick into jerky the with entering and also growing the growing the excited large Vacadillos. to be meat brand segment, fastest

and air only sticks. the pronounce grams Vacadillos terrific two that no sticks taste preservatives, and no consumers of offerings, important Chili Lime they benefits. Introducing can deliver Habanero Higher sugar, protein ingredients than category consumer beef leader, dried great.

early it's approximately that Seca consumer now are launch of of their response. XX,XXX, the we across attributes, surprise these the available we in Carne the mid-April, sticks a about That's three at the Speedway of total and With two Since no have X-Eleven indicators of beef and country. flavors locations by footprint. encouraged XX%

capital in our on second April million. optimized. driven brand, has was new near-term full The development distribution our was portfolio XX to been QX, with growth, the complement packaging and strategy positioning brand announcement This to the and and platforms investment shipping along extension, our our innovative raise The action partnership an on by quality. of rationalized Stryve $X.X support in

strategic created we and executing and implementing are imperatives. for Simultaneously, now

We cash costs, have aggressively and been more. managing investments,

alignment Enterprise-wide is plan team. operating management and a true a and is as metrics Our those performance strategies component, now supports become the goals, organization executing we key as objectives, one company.

distribution release, very pleased designed slice Numerous across is very is momentum grow a to partners which expand awarded and more classes am those gains category market. new in awarded I been are specific shared have of earnings I trade. strategy, of customer category. the already that on encouraging. the the the our to all response from our about Numerous and are retail wins being

We retailers in-store. will expand add and/or new physically update additional they to existing items the once are as category,

are real meaningful. are opportunities abundant. and The proof points outlined for growth The

throughout communicate are is beyond. just getting new and we working, many more quarter started. The have and to will We the strategy

pack, pricing, and complementary quality on cause pack. focused trial display to are marketing initiatives retail-ready vehicles strategic patriotic full case with marketing with in-store messages divine labor-saving, We driving merchandising, include execution,

We the expanding a have Stryve margins, great will a return on and that proven investing we how is for managing company do X.X are consumption, it. building that that productivity, focused everything growing we foundation, costs, and driving in cash we and have deliver improving we manner do built is profitability. addressing maniacally

You starting numbers. in the to are the impact, having see changes the are

combined planned Our thoughtful improvement and for growth our is operational success. approach to with the recipe

and The executed is in to to few stakeholders. quarters, all was our and agenda, prioritize demonstrates just foundation a built required was drive have we value that simplified what sequenced

earning with We expect in category to grow consumption, market the ultimately gains snack meat accelerating a at share. above rate well

grow at will not all costs. We

partnering collaboratively are and with share. their grow retailers compete We to them help

margins will operational improvements. expand We with

profitable, We are very a innovative we the category growing better-for-you has offering seen. committed will best and keep company with cost tasting, ever deliver to this down,

the several outcomes waste, economic our have As shared, we impact. providing enhance zero a waste have that initiatives, value-generating discovered we monetize the and and solutions and We eliminate previously have where adopted implemented mantra. ways to has environmental now team

to the are Pet shelf-stable points Two Meals MRE proof to the Stryve commitments. new that kits, to of of against protein Eat now are addition In kits. selling our supporting Treats, delivers Ready or Tails Both manufacturers we ingredients these initiatives

to of cost required what my we executing been progressed The company. Later this truly which month I a successful and Stryve. are has year portfolio, is impressive. have innovation the optimizing operating turnaround combined with and on have marks rationalization, learned has been with management, and renovation, become part and included that, true first speed cash a have productivity

strategy. on I everything, are started our We each delivering we would, I said since and and outlined new

and for the deliver to our that will continue we have We records company commitment. on demonstrated we performance, new set

of consecutive with narrow quarter financial and was adjusted improved first EBITDA. Our year-over-year results losses our improved operational third quarter and

of net million. reaffirming our for XXXX are We $XX to sales in a range guidance $XX million

accelerate in proof We more are future. will keep that informed performance and the we share as points you our many

turn Alex. Now, will over I call the to

Alex Hawkins

Chris. Thanks,

begun across actions the and results that margins, to year-over-year turnaround shared, line As consecutive quarter evidencing have Chris hold QX expanded bottom our our third take improvements organization. process was improved of and

stable we value company. improved With building are significantly products, materials, procurement repeatable a we improving operational on a better new processes, sustainable price operating and believe yields, of more direct and proposition

part of materially and that, operating quarter. losses expenses As cash have reduced this again we narrowed

an made not establish we requisite with offerings, strides investors have volumes that a the quarter, as variable be point more well operations on increased in volumes. positioned see also to believe proof can growth for our are the organization impact and to have better company to cost We optimized although with further streamlined leaner, and second productive begin there, accelerate an important We profitability will will what to fixed the structure.

a saw weeks ago, year-end many believe call winter in with As over we And and the normalize from begin down periods inventory retailers diverging managed to as to we our few things we late orders the messaged expected, quarter. consumption. levels first in holiday

this As distribution of the scratch driver our beginning be business Chris mentioned, traction in the retail with future, which market foreseeable for growth with of we wins primary just the the given year, surface are have will we new to seen superior positive our that offerings.

yield that in basis We believe due continue sequential wins to will online. to distribution part second a function growth on large step coming new the quarter

year $X.X starting the in first with were in expected anticipate consistent you are walk in results with Net and second financial acceleration ago the line generally our Let results compared quarter, we quarter. sales through for me the million, $X.X to These the what quarter QX. for guidance. now million we

we've of profit quarter. million pricing gross gross net shown that the volumes, and or our This a year for $X.X sales improvement $XXX,XXX evidence our Our quarter to of basis sales XX.X% of is profit XX.X% our ago net was compared XXX agenda gross of hold point margin the year-over-year. in productivity taking or in despite

the company quality QX refocus revenue represent transformative We core Recall our program reduced ramp its believe will intentionally multifaceted significantly that rationalization QX. our turning on through volumes the we changes where show gross profit our that as meaningfully versus volume up numbers point streams. the to in the

Operating expenses favorably year of prior to million QX first and million, sequentially $X.X the compares year were million. QX quarter the from of $X.X last for $X.X which

progress elimination continue to cost mitigation strategies. our show We and in

we remove of back we of structure you since operating that in to and cost those committed expenses which were improved that previously XXXX, will exceeded have changes We half we made. actually XX% the on

project addition, footprint headquarters. to including on future optimize in More that calls. off a our the throughout to we the organization, come kicked In

This The prior the first quarter compares to million million share. net or favorably a in net or loss of $X.X loss per $X.XX was share $X.X per year $X.XX quarter.

million for QX Our the were shares first loss impacted outstanding average XX.X in in share XX.X shares from year's last quarter weighted million year per this by to shares change amounts

ago the loss favorably was adjusted adjusted The share compares which year quarter. the $X.XX for loss first in quarter, $X.XX to per share of per the

with line for Finally, first company. our history EBITDA in our quarter QX XXXX, adjusted the loss $X.X in EBITDA lowest the the was of quarter of million, adjusted

year $X.X the compares loss adjusted ago. to a EBITDA million QX's favorably $X.X of million

GAAP at the find can to reconciliations release. of today's You press the non-GAAP end

our net of positive of inventories excluding million we to receivable end working and and and financial capital, $X.X of equivalents first of with approximately position. sheet accounts $X.X million. Turning quarter, of had the the and At cash balance $X cash cash debt $XXX,XXX with million

drawing have actively receivable the Since to drawn needs. in any a place to interest needed time what this need managed line we we to fall, amounts expense putting we and further credit we our based accounts we on only it. have could, of liquidity support Recall last our that extent line at inventory when mitigate

build distribution support our were to through products see continue levels. Accordingly, our steady existing As XXXX trade to of we we our call, we inventory some to discussed packaged packaging, substantial these down legacy initiatives explain inventory QX up while our inventory for QX inventory despite to in secured to bring QX and wins newly XXXX, levels resets, packaging. because helps of our prior new the we from retail overall which

transition inventory is that our the that complete, will year. anticipate the this over balance once We down of come levels

legally the mentioned, in rate at from promissory of and lenders subordinated warrants XX%. received a Each price As share ramp for to one $X.X senior per of million near-term million of $X.XXXX $X.X million outstanding for form strike quality expire the secured a the purchase in the lender accrue financing of per are months X.XX to is The in approximately issuance. of of distribution. share we that three A of at will notes exercisable the Chris strive principal secured $X.XXXX years financing notes warrants three date and and of recently debt common total Class interest

line revenues, of this our a by consumption we toward steps cash to self-sustaining as the take and acceleration of model. Supported credit, financing with expect decline, we

our to continue strictly focus to We cash manage judiciously carefully continue capital oversee and business, and we executing on as planning liquidity. discipline our managing working to with

of range respect million With $XX sales million, the a to quarter year, sales low full expect the year fall we to guidance the first year. our representing point for to net for $XX fiscal within with

modest our results top be to XXXX. will XXXX comparing when at in recall, of approximately that rate estimated run While line end rationalized sales of flat range base growth to the million mostly to was $XX XXXX, overall, QX that show

means that with this quality XX% growing business year-over-year core that range, in So guidance over by anticipate we our XXXX.

continue to subject increased that by margins. consistent gross volumes plant to our improvement meaningful into expect we and volumes our externalities, in And chain commodity improvements with wins drive We continuing mid-XXs that supply gross will margins to we the point throughout we our see year-end. a scale distribution our pricing, to expect believe several to support QX, any as in and

to like With back would that, it Chris. I turn to

Chris Boever

Thank you, Alex.

with results, improvements X.X progression which plan are in further and our operational Stryve quarter XXXX. of confidence our our financial pleased us for and gives We first

at on a approach and simplified brand with and We trial presence our benefit, with generation the the consumer more go. will findable our a and priorities in-store or segmented optimizes improved that penetration an experience strategy, clear our and channel delivers awareness, gain shopper amplifies demand and home

in initiatives expect the and to will of progress forward. quality, reflected growth. rates Thanks category branding, on in focus outperform Stryve execution. growth our be We that to productivity these on moving We've our terms significant made

delivers that and a executes a Our retailers that consumers, our innovative one elaborates and to with responsible deliver is in delights shareholders. our growth protein snacks our promise delivers better-for-you for profitable, company, manner

all and my the shareholder, confidence the stakeholders. high is is largest and As I fully My Board individual am aligned with commitment unwavering. Stryve

line Operator? to With would open like questions. the for I that,

Operator

Instructions] Thank Please [Operator gentlemen, now question from the ahead. we Fuhrman first Your you. with comes and Alex session. Ladies will Craig-Hallum. question-and-answer conduct go

Alex Fuhrman

is million, now. I'm year. to much last look and hearing big you're what when said $XX revenue very and of and for $XX And these two about Whole It of than in congratulations to Thanks distribution sounds that done the last with this around everything done But question. on top I row what like all sounds wanted years. Hey, be years Foods a revenue the X-Eleven something going that the correctly guys. taking of wins way announced wins you've is which your to line, get for going my recently. it to a done the you've some to guidance like is ask composition the probably different million lot the with going you've couple new if is Speedway, on

So positioned that be revenue about the year, to for with How in you've next year, going to the ahead last not doors times can themselves future you're is might done of like might do going the what years? million that growth how business, to of base $XX look far you you to this of and get talk but this of year into couple compared look revenue? too

Chris Boever

thanks and you stab add color. Alex, take some question. at Alex, for the then Hey, first a I'll can it,

to I've generation. some that pretty both turnaround the With just in able moved to doing around or single same this absolutely been amazing. is fast we've disciplined demand a and cost organization, investment be significant impacts every those done the have parallel and for the organization a reposition in we right-size that time path of for be the the really to at while do organization

more and in were better we our now stores to with informing basically and distribution we're more doing and partners as selling consulting brands more locations. with it, get So retail out

as you that sequentially the rise each So quarter. you'll it up unfold, year anticipate we see see

With inflection one to said, being we QX. a second point the be as quarter, that's going QX big from to

behavior the will chasing any historical versus be repeated. cost, of which at see also volume You'll not

both shoppers. be solutions are partners so to category business that us, in our to shared aim deliver of We and for for retail are a for-profit and of both our we and company able deliver consumers

haven't more continue come they're customers know, gain to just we bag already and yet then closed. online, and shipped more we and stores. as already So and in in the many They they

that happening. the in partners. on see and what's showing in product in a retail a you let it starting grow their to to consumption to want as We'll would you'll So inform would starts We let QX retail when continue up stores when going numbers. their courtesy them in -- never know our competition be

of many as you many just very assure can happen. we So, see lot more in banners out acceleration coming retail continue wins we'll on that, there. many, And works. board there's we for well-recognized a to close new But are more, we There's getting the that started.

Momentum we repeat that's is destroying it starting to to we And our and value you'll and negative take not I momentum is will grow. shareholders build. basically programs, But And to thing. outcomes big, level. when that think, see next beautiful will, company. and big create for And chase to a continue the

it next we're we'll going create. build right skyscraper do We're to to building to to next then level, then going way the and going stronger, level foundation keep stronger to and the this we're disciplined. and that going the really we're So the be and

for So add question. that that great. thank Alex, other you be any if you color, would can

Alex Hawkins

Sure.

to Just the as as, XX% business rough was direct-to-consumer historically material the channel sales in very far net anywhere range. of commentary, of XX% portion a e-commerce

that changed value us before, has for to became market as the and right and business. not way shared has time gone this drive on, As we've just grow fundamentally to

our long and market more is revenue, basis. a run building this line retail getting profitable more on the it's revenue to in there potential there distribution, shifted we bottom the significantly so And wholesale higher out efforts and valuable

forward. from focused that continue the growth see a than standpoint, significant of just to core much distribution. our there or be to shift something retail a as moving it's retail going pursue, potential we'll that channel been but online. is and Online And so business growth distribution there driver is really of has so we'll not our a more on We're still

Alex Fuhrman

the kind how you you're to in of couple bit that of announced that to from getting to it revenue doors next what you the here you could the Just follow-up, $XX that of conceivable in product the helpful. the mean, a matter already beyond million just revenue get really get mean, of a then years it is both over of growth Is of doors? level? and up And look some little level have Thanks kind just I of a more million That's I a and like? you. $XX revenue of in velocity? kind more meaningful unpack of path is Okay. more tying could together, with algorithm if just

Chris Boever

Yes. Thanks, Alex. again,

in anticipating going a be thresholds measured that sales. not measured. have including guidance and simple channels, longer-term $XX to are it a for About There's do offerings. our and estimated billion math. in category, through, $X Today, we'll share, current deliver category breaking that's but we're some providing can is how about billion ranges We with a half about on you the we the total

With with in but anticipate late from and we in and the certainly been expect estimates shown new earning a gain, velocity be innovation, to packaging, start in into increase marketplace the the share. to QX, our conservative significant which very the we renovation, distribution the improvements in known back with half. gaining We've

on based and to going increase. our velocity with retailers as a confident well, very are We see we're research working that

under would share, flat, and do pretty three high So gaining a two being remained was would SKUs have a Today, above up that represent significant very, which share. aim can gain we get the average, out customers, that We and share. you rise level we're if a and the ACV even have category certainly said, very you we got to value we distribution equal and about lot we a ACV. get With everything that half a channel. didn't nothing that confident if you math the with a we you of points, we're even XX% distribution XX gain get on at five measured share, play a share, to TDPs from

that So to current innovation behind the you we the the that. We've got fall an $XX lot in those to million and million renovation million innovation thresholds lot $XXX outlined, the way a to potential marketplace. of will it whether see our supplement a some numeric currently that here, $XX of and and break deploying be that through of beyond agenda potential line in we're

Some start you'll of concert see shelf still just the for chasing more and coming the growth. proliferating revenue others creating are them creating ready to in of to in with versus retailers' the concepts developed launched months then sake and SKUs and be engagement that complexity and in

and We're leak connect that ensure it our operators. growth We're to going we're mindful going to going not to to on back be and demand our response supply collect to the because be end. going We're and we're the growing, structure that profitable margins at gross so very team outcome. cost expand we're to deliver efficiently margins, maintain while only but expanding we not hold our as and same a to operating time

Alex, have share like if that? you'd you else to anything on

Alex Hawkins

through. of I even And I in potential to that not our our once low is right, a top-line just the a lot. guided a we've quickly of scratching market and retailers, really going I overall because very say, think that couple this see for of the quarter And key you're think still us, can performance, get on was months going grow how you'll clear a is to just few surface sense base. Sure. we be have that Chris the looking a impact as just just can report. of would QX walking that

Alex Fuhrman

I the really helpful. Chris. Thanks, Okay. Thanks, appreciate responses. That's Alex.

Alex Hawkins

Thank you.

Operator

no at Chris please [Operator Instructions] are proceed. Boever, questions this There further time.

Chris Boever

Thank our Thank of your Have company. in evening. short look our quarter providing progress forward great you few We on to a second in for you. interest a our an update results months.

Operator

this your for disconnect you concludes We conference please call your Thank that today. thank you you. Ladies for participating gentlemen, lines. ask and and

Stryve Foods (SNAX) 15 May 232023 Q1 Earnings call transcript