RGF - Earnings call 4 2021 | Real Good Food Company, Inc.

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Operator

Greetings, and welcome to the Real Good Foods Fourth Quarter and Full Year 2021 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Chris Bevenour, Investor Relations for Real Good Foods. Thank you.

You may begin.

Chritopher Bevenour

to Conference Good Call. welcome Quarter Company's and Earnings XXXX morning, the Food Real Fourth Good

Jagdale, On Executive Chief Akshay Chairman; call Jerry Financial the today Law, Executive is Officer; Bryan Freeman, Chief Officer. and

approximately fourth our release, published Time access may X:XX quarter Eastern You a.m. which earnings we at today.

it's website not at had release, to Investors the review chance you've on portion www.realgoodfoods.com. If the a available of our

of statements I'd statements made to and that securities meaning on within call begin, remind risks like we are certain Before and forward-looking this are the considerable subject federal laws everyone to uncertainties.

to gross These sales, historical gross acquire forward-looking growth compete Act statements EBITDA our for our our fact and well strategy as margin, profit, include are this net production and from call industry, our harbor manufacturing are capacity. the expand on Litigation made successfully margin and customers and gross intended from by increase sales liability forward-looking financial adjusted Reform statements adjusted Private today, statements new our adjusted implement Securities products, results, regarding including qualify established as customers, net statements other introduce existing of safe statements projected All XXXX. of to profit, the ability in gross effectively our new and than

such many control results, significantly from achievements the implied on expressed uncertainties, unknown statements made. statements. and or results, Such are made current expectations a of can differ available forward-looking which such to outside time of and represent known statements achievements this performance are the Forward-looking company's by or management's future and information performance statements call the are based at on cause or number involve

or by or new are the as the forward-looking cause a of company and no required information, such to result to events filings the Exchange obligation other undertakes as Commission. detailed risks whether otherwise. statements that with or any contribute Important future and Securities update factors law, in Except company's could differences herein,

addition, measures, certain refer results to certain results our are In financial on into of we account or operating throughout the basis. onetime charges to non-GAAP we reflect to that refer ongoing ongoing business taking an our which core and which nonrecurring discussion, believe better this performance before not

adjusted in Freeman. Our financial is Real comparable adjusted over each pleasure our which our my call on reconciliation under and tab. with including financial the measures, Company's its directly to available Investors financial referenced. And gross Good measure EBITDA earnings margin release, to website that, it measure non-GAAP of are to included is GAAP non-GAAP most turn Chairman, Bryan Food the Executive is A

Bryan Freeman

review our Good cover morning, Chris. will financial well financial and discuss After more everyone. fourth positioned Gerard will us Thanks, open results fourth Akshay I briefly questions. will for that, your the we joining long-term then you our Today, believe and quarter long-term discuss in detail. quarter growth. our our up targets. and financial review We call operations, earnings reasons for call. the our we'll guidance we're highlights on key appreciate

Let's get into it.

strong XXX% products gains and wins. financial our strong results. channel increased despite lapping quarter quarter million and intra We channel this to to fourth this growth our with compared driven velocity and by Sales customer strong by a the in we club best-in-class year with year. our new velocities the continued driven core accelerate, to financial XXXX had gains quarter, highlights, in XXX% ago, distribution Starting ended $XX.X growing growth our exceptionally retail last by

despite on EBITDA we growth expenses year-over-year making. investments margins trends also a positive profit in the metrics. sequentially. basis also higher increased margin profit Adjusted We year-over-year our was up key gross XXX owing points are improved operating saw basis to Adjusted

satisfied. our early at peer We're guidance results total be addressed quarter's in stages to penetrating this addressable goal market average we're of with aggressively have not line in our and growth the more strong, margin. Although were and our was

pulled of EBITDA in EBITDA by beyond. have As goal this have investment increasing result to this to for our enabled guidance are on greater our growth guidance a and forward positive Moreover, focus with by XX revenue margins months and be we XXXX doing raised we without Bolingbrook, sacrificing also parts our and XXXX. our

$XX in For $XXX XXXX, and of $XXX revenue $XX we now first minutes. million range will the be into expect a quarter few greater go million detail to and expect million million. between Akshay to in revenue

has can you growth As from and our guidance, accelerated. our see results fourth quarter

one early stages brand We long-term the demand we long-term million still $XXX up and growth and robust to get a guidance believe Keeping is sales our has our believe the we in with brand potential are are our reflect of of challenges, same. biggest our to the updating for in to journey.

community this the trends X What indicators social velocity. are with gives us positive and brand growth repurchase rates household outlook engagement, These and about conviction penetration, are we health indicators. see our

all continued Foods are The Real a combined, is Good brands and to besides important. But growing. RGF scale, sheer community more I've said frozen Nestle's all followers the or in of than of we grow. engagement number brands past, is social Conagra

XXX,XXX our number recent During the of first any on of posting. the category of exceeds of hours the posts by top our period, health in brands thousands Instagram average of comments of each The posts comments our we and followers wellness saw Xx. across attracting X few than Instagram more in

to to which with footprint Our greater social us penetration. to shelf, the connect leads media demand drive consumers household and allows

U.S. X.X%, is from a one household a For household of in ago. approximately every the product. Real households Numerator, penetration according This brand XX has to double a year Foods Good almost has penetration

and frozen the speaks ranks a than our and brands levels to of penetration a proud X of retail. the And of amongst founding. all health positioning at to to marketing. household which, at differentiated fact, behind we little our over wellness brand something mind, now nature and be In #X is only million household since are $XXX Keep is more penetration our years we're brand these by in only Amy's way,

line acceleration velocity velocity took compared also first items. to that being And which exceeding should despite XX% are our SPINS in rapidly our household is According and February ending an quarter is core Good our And period repurchase the XX-week over period and expectations. over the occurred in the last which is are baseline while XX, sales with XX-week in retail peers. growth noted XX% the pricing grew XX%, Foods It our metrics year-over-year, finally, primarily growing be over our growth Real to penetration, rates velocity action. brand period. Growth by X-week we at XX% driven growth

we It As health seen The indicators growth facility with negative not manufacturing our in health metrics because any these brand to impact to have Bolingbrook, related Illinois. to the retail new takeaway. increase price capacity thus have contributing far, elasticity. that we in of is sales such, are investment strong demand strong brand made

positive I'm our we of is the month. I'm now on short-term product will This with in expect be for a enable ahead announce the time enhancement will to start a to EBITDA to match happy long expected us this commencing full capacity and later accelerate but Bolingbrook owing detail, margin more Akshay facility schedule to that significantly to year this of to pleased investment. with in implications report our production demand also discuss to our efforts.

our briefly touch on Next, XXXX innovation I pipeline. will

bigger, as new a be expecting truly P&L We goal to product faster. design. our few meaningful As on to and our be a can each reminder, characterized shots and strategy but fewer, better shot material have take

$X poultry, billion on in Asian are focused For XXXX, very Breakfast dense to Entrees breaded but no retail are craveable. in healthy nutrient we sales These platform. expanding representing our are categories aggregate that approximately with and options little massive

carbohydrate, no chicken This they as highly the good can provide added with sugar breading gluten-free, product grain-free, nugget serving or and unique families. a strips and is differentiated protein. has poised chicken consumers to designed feel category a to reduces We about system design their that disrupt increases

this April. starting We're shipping products in about excited we'll and launch, be

favorite [ chicken, we famed dishes, cracked protein Asian have in and on and carbohydrates orange our as such sugar Entrees, general and sweet sows. and the ] some increasing code sour For of reducing

$XXX entrees we'll this excited personal my We are starting substitute in that April. to type poultry breaded of and $XXX for opportunity dishes such, It's and than could fewer provides products also Asian most potato platforms about represent to craveable Real traditional million million protein carbs shipping types. Good and we're a our date, view be and launch, believe these Foods. launching We're as potato-based

brand demand in breakthrough we're our that high innovation this entry existing we used categories Breakfast. a be us create taking capacity form and can block to that not believe add this of easy. much innovation is craveable it breakfast Again, We is factors. line is using will multiple lowering gives unlocked cars bowl build for enables in and To is into which protein to bowls, meet what and a this a to Bolingbrook out these the growing and needed products. our and is

now talk to we about more Bolingbrook the CEO, operations Law, like And is I'd turn call Jerry to our over broadly. and

Gerard Law

XX% everyone, morning, generated model, has to in our financial from you now from a self-manufactured a improve sales of us model thank for Good in self-manufacture co-pack which performance. today's over Operationally, call. and Bryan. Thanks, where XXXX, allowed being transitioned to joining we our assets, are

process with We've for strong improved efficiency continues since to demand keep our team manufacturing doubling beginning Our the products. while more XXXX. than to up of of push production our the hard and our accelerating

to significant increase strong production in continues capacity, outpace our demand Despite the production.

ideal demand. rely in internal In on to our we the had outpaced quarter fact, is meet heavily capacity, to first co-packers more demand than and

reasons get in for million the long-term brand all Bryan greater the we have sales. to $XXX in potential our For mentioned earlier, to confidence

Our is online March. to is in start coming new going facility Bolingbrook

first X a win we production in lease, of is a our and part sign from For months the perspective, is unprecedented the market. which why run time we

allowing faster action-oriented, to it move and most us lean are real. keep We We organizations. than

such a of this the plant existing the size new Bryan our of to in existing capacity and sales is we Industry vast on will come products products have approximately Bolingbrook have in mentioned. built is a Capacity majority phases, Xx and million of of City plant quite Facility as $XXX produce capable will out of bit flexibility the into our plant. design, the as the of producing well that has

the add availability Within X and after the relatively approximately we months, next that. $XXX to order easily capacity incremental in capacity efficiently short in with will million another $XXX X in an million have to

time where RGF, to also we XXX% cannot our meet be position will For teams in even innovation we since but our marketing accelerate incremental demand, drive only best-in-class demand and of the the further. growth and a joined first I leverage

believe we facility the lower plant's revenue in costs new material enhancement and and puts costs, throughput lower a major Products to in this distribution have long-term hub. accelerates will driven structurally Overall, supplies goal position proximity our made meet higher new raw million in of this labor margin lower strategy. to by cost facility in us our $XXX

pressure some bringing our is Industry has resulting at of inefficiencies. it benefit been from that Bolingbrook added The will Facility, over online City which XXX% rates, utilization leave operating of in

Facility much We as operate Industry more online. expect to comes the efficiently City of Bolingbrook

strategies capture infrastructure we and innings capacity existing Moving compete. demand. growing and are new which forward, share foods positioned serve frozen we activity, very in the we in awareness, are innovation, anchored early to and our to including distribution well market so this market growth With exciting and expanding that products of continue in improving believe in in ones, can all good channels the our of real categories launching the we the investing

Chief to Officer, will fourth like the I'd the walk financials. through Jagdale, our over Financial call Now to Akshay you who turn quarter

Akshay Jagdale

fourth Jerry, our for with morning, Thank We're financial and everyone. opportunities growth quarter and pleased you, significant ahead. the results good

our driven fourth the due customers. existing growth quarter club last fourth growth in XXX% by in greater retail in to Sales strong in were the quarter products million, compared to was the expansion sales Net year. channel the and fourth $XX.X from up quarter demand primarily core

channel quarter. to had majority retail inflection the channel prior that a that. Sales quarter majority This given compared XXX% major in growth drove and been year our growth the driving the in of of a grew point marks last the club to fourth

drive in be to amount happen growth on to stages continue in growth footing, disproportionate to of the our and on But build retail inflected we performance near channel a channel and as and We such, continue growth and business the term. the early in XXXX explosive of expect club club beyond. our momentum shows quarter this is fourth solid can that has to

continued wins, play new see new data existing customer core strong threads out is the scanner velocity strong expanded products in the This by recent innovation. You can retail in and being as growth driven this and with consumption distribution customers, well. channel product growth in

in the quarter. growing at remained 'XX strong 'XX we driven quarter retail channel fourth slower We in in and year, Club in with strong continue of than albeit the last the of reported quarter compared gains growth what growth velocities. rate a to the to strong by expect fourth channel sales XXX% distribution fourth

Recall much lapping the that of more. quarter our this that is launch the XXX% which first makes club full channel, out growth stand the in

We periods as remain in sales strong future we existing new customers. expect to club channel customers to and our growth expand acquire continue with

fourth quarter was sales margin profit margin year. compared sales net gross gross Our a of fourth of reflecting XX% last $X.X net million of quarter $X.X gross million or in X.X% profit a to of of gross the

basis in of gross self-manufactured net of primarily XXX by compared material quarter of quarter during sold margins increase profit XX.X% in last year. increases million, was $X.X including labor net were net to $X.X the fourth million gross the that million XX.X% increase point gross sales in profit The reflecting Adjusted gross of products costs. in $X.X and to the or adjusted sales, raw increase in partially in was sales due and amount margin offset

XQ which For increases the packaging are increases. in not year. implemented raw effect greater price broad-based second inflation perspective, believe material results include and full year structural these with as XX% is impact expected and We such, for average impact the starting the to did XXXX the in have up 'XX. of of fourth quarter nature half take were price materials, costs, but materially direct of increases most in on The full

and of cost basis. is combination with inflation pricing robust improve in 'XX actions efforts. restore further a and a goal reduction We The on margins pricing of our to a offset we higher dollar believe can

expect improved and to we packaging will efficiencies gross leverage labor driving cost material costs, volume forward, delivered and reductions. be input improvement Going profit manufacturing lower

expenses in adjusted adjusted operating higher loss the EBITDA fourth the loss million operating company's of XXXX, expenses in EBITDA driven to Total fourth marketing operating costs to leadership $X.X teams, distribution profit. approximately costs expense selling million operating was and investments the quarter. were expenses Total net of $XX.X connection compared in primarily was development. Adjusted by million sales and quarter of higher driven growth. company our and the by to of fourth higher which The in million growth million to in support build-out the with of an primarily $XX.X compensation loss gross $X.X increased support XXXX. and increase operating personnel investments million and expenses equity quarter in marketing compared increased EBITDA expenses readiness growth selling to The expenses support of public sales was of business incurred brand the and The to $X.X in was IPO. expenses a research increased increased finance the related include excluding by higher $XX operations, partially and offset increased

Turning outlook. our now to

integration included and XXXX Bolingbrook process, into long-term We plan. completed which a total of the have budgeting our

specifics in the additional will us greater into gives the our and achieving significantly target and flow overall, long-term get our Bolingbrook sales shortly, in supply chain I accelerates our but margin matrix cash agenda. confidence

Starting guidance our XXXX, impacted by which is first of with quarter Bolingbrook. not for

reflecting million of to adjusted XX% first of of to margins, the of gross $X.X quarter XXXX. sales $X For line the expect of we the compared $XX to an in we $XX with be quarter million EBITDA approximately approximately XXX% to expect approximately of million loss Adjusted net first fourth XXXX, million. to XXXX, increase quarter

and outlook term. the our long for XXXX to Moving

matrix. supply our updating our guidance of inclusion We the chain reflect to Bolingbrook are into

XXXX, to now net of $XXX For previously. sales $XXX to reflecting XX% approximately compared of XX% approximately million, to million XX% increase XX% expect from to an up we XXXX,

previously. to range the to $XX from and million We $X expect adjusted $X million million adjusted EBITDA to gross million, loss in XX% a XX% of of margin loss $XX of up

for now margins now up EBITDA approximately adjusted XX%, expect margins net up XX% from previously. year-over-year growth previously, XX%, million As previously. and sales of term, expect the XX% low long teens from of from up We adjusted gross $XXX we of

flow. Now and balance cash shifting our to sheet

million As of we capital. XXXX, $XX net cash was public, business cash debt had total cash will $XX.X million. $X.X of of the we that we had a and have and we went raise XX, assumption words, dime In we December equivalents million. other more of position been this operating Since under a not

to today in a in have a presented to this We put been plan goal, we to goal. this to and place you us hard believe working we achieve puts place what achieve have

with $XX.X fund combined liquidity is $XX.X of Our our of than cash million, us enough provide of more $XX.X million, foreseeable with unused capacity the for business our balance future. revolver million, which to

the that through for least with it facility on at CapEx that no note is leased cash the with plan be we being an expect to ahead Also, and previous with breakeven CapEx equipment and plan. adjusted XXXX our full to important EBITDA requirements is in As needs, in our flowing associated of now a spending Bolingbrook limited basis, costs XXXX. P&L year

are All plan considered, current out today. we take have that, now execute and to we Operator? With laid questions. the to your our have fund ample available needs we liquidity

Operator

Jon comes [Operator the question of line Our William from Blair. Andersen first Instructions] with

Jon Andersen

with on Congrats the the to start progress outlook. date. I'll

expansion. For obviously will some like through Bolingbrook activity. innovation on soon XXXX, the you progress new made of coming market to be sounds business It the

a more numbers to at driving level? confidence can the of get of me like a kind that, a just bit the current the guidance gave move on And of the wins, the midpoint for you to account of more us just little specifically the of wondering components that or so little what's to new raised that? sales. some But I'm give $XX the we'd on kind color billion handle innovation, if bit

Bryan Freeman

the Yes run guidance QX the for Jon, full year it when bottom take end our the rate, of hits of guidance you providing. sort we're that

to question in more so innovation a we forward answer your put in guidance. material discipline follow continue not the And directly, to to way

really don't we're see the that of And you in XXXX impact so guidance Bolingbrook providing. full forward our

Jon Andersen

Okay.

So support year, like innovation. Bolingbrook like this and clear X on it of items some and come later your core up be month of sounds plans existing will this that, for the the production just Line some to

Bolingbrook that later the may at any placed the saying X currently you beyond be is innovation addition in not year Line developments further are and But any of that guidance? the in

Bryan Freeman

In not do way, corrected. guidance. That's XXXX a we material forward innovation have the in

Jon Andersen

Terrific. looks club Okay. the you you talk that but one like that exceeding curious the kind plans have I'm you Can a there's about on club, That's helpful. shelf then there bit -- feature new customer or portion of for business kind longer-lived to And meeting with items a -- an have that to -- about be respect on kind with of on of of your little performance it's that the date. And newer. would if there's the or if update update relatively if XXXX, relationship X the your just new X kind of and in promotional relationships, expectations the any customer helpful. of

Bryan Freeman

board, frankly, the in customers We're across measured pleased with the the unmeasured across and both channel. and velocities all

to the promote with cadence base In it And promote other a current was and the with normalized in just growth we'll as the that to in the I promotions, mean, products of existing we're would QX, more the across fact, selling customer year. majority regard with brand any seeing QX items.

go there's in and the -- XXXX that channel. early ways we're still revenue the we in in and growth believe 'XX, revenue quite stages And in the unmeasured still a frankly. forward to of think We that

fill want you some there? in did Akshay, gaps to

Akshay Jagdale

Yes. Bryan. Thanks, Yes.

you the guidance to our Jon, little the changed. So and more a what's numbers on color and give in breakdown

this the You talked Bryan appropriate channel. the related want stage. new the think so guidance or conservatism unmeasured at new of to it is we is XX% have. of distribution so our And Only and XX% as products. to It's in about to related in or that change

the XX where pleased the are with XX% XX% upside. right new to and we we've performance now, Another We're we're there's that. is think there. club adjusted seeing -- and customer we But

X% And the in remaining, related let's better velocities is business. to say, to the X% base

rates really in continue So in We at meet grow strong. for our as velocities we scanner to really, year, right? XX% don't data, us to you've seen if probably this we'll the guidance, our the to them retail need are hit be So channel, those numbers.

you some gives raise. guidance specifics hopefully, So the on that

Jon Andersen

to into of Yes, automate you kind finding, Bolingbrook, have question had this, to proof-of-concept and that's this labor Industry. you that, out you really of it of a initial helpful. that you of some systems that to are have going City process? also your ingredient answer these obviously, too expected labor relative opportunity about So some in the Are had And original early may and intact content of ability finding expectations? stuff but enough be in general. to production around take words, the kind this relates automate I content that degree to assumptions to that is but you other least at ability the novel reduced

Bryan Freeman

does that novel that that are do that words, novel, products products what And for you base it's assembly I it. mean? systems of of not, piece serial are equipment rolling before although remind our or is not other forming an I'll a In XXX Yes. not the -- to number Jerry, the -- that will our the pass enchilada

of really tests on run degree turn that. actually behind part confidence. to We've Jerry thesis So we of the high a it I'll have that's and over Bolingbrook. some And

Gerard Law

said is what confident correct. What put Yes. in Thanks, there. we out We're Bryan. Bryan

We have trials. ran some

enchiladas prove proof concept. wrapped fact, As trials our of a to our matter ran we of on some bacon week, this

facility. on arriving line be first the for that's will have of in that We the April, automation order equipment Bolingbrook that

those the that out bowl we've because as we're gate. the stuff now that to we we products, as those and to more as breaded we're getting ever far execute than trialed on of our have automation chicken far meet -- want So confident actually line, ready as

is to there quality, So the short times outright ability delivery of Hope labor reduce to term. in just execute be we're to impacted your do in it We're or confidence the going degree answers it. to able able on the that that be performance with without our confident strong. And is question. to that right

Jon Andersen

does. It one It me. for does. Last

guess, should or about we situation. commodity XXXX certain we that input you How I still your need a key cost, think and Is the visibility input ingredients? the your consider? locked to have of into On portion there exposure your costs,

Bryan Freeman

Yes. as we I would you know, labor commodity, that, say we about and by took and that. good pricing this are we feel covered we and regarding feel quarter, where

we pricing However, fuel Eastern with sit commodity covered see pressure actions good that and we And we we in today, on hesitate at if continued and If all again will as take feel will we're Europe, the hesitate see events with we've But again, we the closely recent increases. costs. move -- we if the material we've that not are we taken. stays not as looking it fuel. same price input it will to we

the we've piece with that as the automation. again, well And as optimization the We've got coming as got pipeline. -- the well is, in product other

know to this add as like I few comments would And well. a to Akshay

Akshay Jagdale

Yes. Thanks, Bryan.

little XXXX. inflation that. a to quantitative you saw give in double-digit bit to We more view just high a of So single on low

mid-single for midpoint, gross right? the a inflation. includes Our range provided margins, guidance at But have we digits

have our we end inflation what plus Bolingbrook. of startup is for into further planned, it contingencies than bottom any the want So think issues way the margin bottom guidance with gross the account about -- takes you to

So we that factors those included the margin. are X in gross provided for range

no bottom if Bryan guidance helps. margins, And scenario worst-case of gross go take to about, talked pricing will our both that of on which if actions, we end if at So that end those includes on that ready the happens. up we're further

Operator

of Our comes from Jefferies. next Dickerson question Rob the with line

Robert Dickerson

A couple about the the the retail just questions. long-term I you're what is club pointing guess, I to slide, opportunity. opportunity, to is of quick Great. think

out extremely have on same well coming especially forward, so go time, you growing done club. innovation the driven And so club, far And at this year. Bolingbrook. by nice You've the in

the are velocities and my potential you're say of production capacity and I'm think I the innovation go-forward previously them those ex-club,selling brand as the these talking showing and curious, of new to them the performance the I'm just addition again, conversations So SKUs then just curious, your going? side. in how retail to just pipeline? you the on some kind wins I heard question, business maybe Like first retailers

like any have It line ex-club let's the factoring your year half of really kind retail you in doesn't items sound gains. new say, within are revenue this of back sizable guide, in that

Bryan Freeman

with XXX% right partners we're We're the and it helping in right. great we're now. a with in retailers The position channel, good that position. You're fact really in We're up year-over-year retail retail items. doing us existing puts grow our

in So reset QX. you that's a which occurs great setup as go into the -- category season, reset

ways. of have I extremely in well variety would say gone our a conversations

expanding going our breaded and working. Those and are well well footprint products going core obviously are then and bringing conversations conversations core because Those poultry as multi-serve Asian. to our our products, So they're well. innovation

with tell can breakfast our hand you bowls. that both And orders for commitments Rob, customer and innovation, today we in I have

Asian multi-serve and breaded poultry. Entrees

and our like I our I outlook. So like chances

Robert Dickerson

then this you, And a Okay. is Jerry. Perfect. for maybe question

phasing of of the Bolingbrook Just the build. in terms

the have in like bit plays kind to of the or base had seems get out you year. as once Phase through actually I to is terms then You hit the Phase of on of how it operational slide SKUs? you? have X, through the plan, of of you more kind you pages just get XXXX. what and view the like year, of how -- Or that one you more Phase like this and you V kind And that able more differences shows kind for Is you're works more. that like have that strategic how produce I in Just end little arrive employee Phase trying build one explain maybe just color a fully for

Gerard Law

a we going you Rob. get I'm to a understanding that can can really rainbow way color true give Thanks, get you here.

the lines a gate what in. every one, used up we limits We line our we to approach I thesis So XX-plus is time that was and/or approach bang. hundreds in time. limit our a And off. stepped blues. brownfield. didn't lines set exposure at have blues out spiral, startup really want rig And the do did of did lines, I And approach to phased hard start-ups the exposure phased to but -- to been or at on to bringing XX is We our phased lines a want think pull -- to essentially the been I big I then And a through our bang didn't big start-ups. And a do And product I've of backyard. one line of a to is call greenfield. start-up one

The we the these it larger do time, startup that if lines pre-break. And like one novel kind start-up with running ahead It's coming of exercise for several over and breaks. the start-up each to blues running. rather it We're date it next installed. of up. breaking of to We're it what approach our we're months a on break intend date to already turn see is a ahead going and have. waiting to it understand That's first the of and than thing

the at every last -- the have plant operators, blue-collar several almost ahead it But over of obviously, feels a guys. We been start-up. weeks I've the guy. I'm we're like we're plant. week

operators. experienced in brought we And

a we October signed -- people. We a We We've harsh safety people, have that's food side in we of distribution our office already ops out ops already people. managers, had good portion that X, of really of hired in in an got hired that November by mid lease people, strong. ops SVP

long of for time. companies watch So quite lot And in another training doing on in staff. or of there and bring folks them instead we've a that, is folks I times, curve A they changer. I had before that a our letting think week production these stay X

So start-up expense, that first while we've really smoothen line. the will curve been on to exposed that out it

to will point that confident line confident up. be and number getting that already mechanically and plant. done. done has and walk be we're motions a that those people been through our we're the we've already process, things with So USDA our high will and of degree through sort up we through rigor the We're establishment The the of They do have have them. first going from

as Employee training folk. up far as starts line

week, up. product bringing have with start exercise that training. actually and aligns It training about We next and you employee

when where So we out that think possibly up bring month. XX-minute we start, it's it's curve they're what product that and drill, we're new in this and the to about until whole have could more then dynamic going the I have call XX -- minutes where door I companies the some something

was? going And golly, go that. reasonably through startup your we'll were what And expect I occur months, to does, then and an Does to over constraints we do but to question the the manner to something have mean, lines it. rabbit to people, with not we don't the break, respect the orderly orderly that us doing catastrophe summer, by staging that And that allows in hole down we going cover happening resource expect a we're fashion. We're plant. everybody said I at in next these of be

Robert Dickerson

might this of careful, the maybe on operational about my revenue the the you're of facility, the that That's last build kind real just for into with profit for potential question, just being if is side like Yes, how it great. I also you. no. but just Because flow think year. very you what the obviously, all mean new I of is not and sounds

innovation necessarily So in there's the not guide, real right? new

have new you a that we're win, what plant, than how that you is factoring let's business given like have guide. okay, and we're in. And then of a win getting new phasing not the coming the is not some you're III not Bolingbrook, we or some half. new that if new a careful not get happens, the could function saying, it's say new of and win, it the in putting a being in but in we're if innovation It new guide back could we're we to we're might in of fair? business happen, Phase business And lot big out build going the careful build, better QX in maybe projecting of that how we're very you're in of and the sounds do Is plant. being But It yes, there. the this

if quarter was we'll report I remember quarters last ago, I -- have because asked visibility much you go once QX, just to I And it back or on better X Bolingbrook.

is see long guide there's sense if of I know But like but winded, lot sounds it also from that guide what there, time. careful very know in as at the Bolingbrook. question. a what a kind don't we'll with in point in So that makes you're being you put I the

clarify. Just to try

Bryan Freeman

it does. No,

it. the thinking it, you're on please about comment with in free Rob's Akshay, how Jerry, to think agree I about thinking right I feel but it way.

Gerard Law

Yes. Fair enough. Rob.

Just sorry. -- Yes,

we're it nuggets think we're But to with operating few company, one. I'll always I guide. We're you very said summarized the more and you a data. just listen, going prudent some that a be we -- environment that tough we've is every how well. give

on big bringing a We are plant.

in all do what facility facility you look for revenue, million we've $XXX as at is if our guidance along -- Bryan current So said can existing sales. and mentioned our

fully account So start-up we of are taking blues. into contingencies

those, expect don't happen, that. if incorporates already our We do they but guidance

As as are mentioned, we and the repeat to we a in our that's to relates it rates guidance, Bryan what know prudent material products, be. think because don't new going inclusion not

We have orders.

never signed new customer that's we'll we're about a only it. them So how And have we we thinking when -- include up.

we're the where put it's and So it. given in. environment I are think how today that's also accurate we we But prudent operating

Operator

ROTH next Our line with from of comes George Partners. the Kelly Capital question

George Kelly

Congrats on all the momentum.

platform just of is is kind anything me this year I this products. there new so uniquely year? this for in kind products special new more regular was Or and here products question about development. regular new about products XXXX, a kind should first just Is cadence So and And is in big of just anticipate big XXXX this year of we beyond? a of curious,

Bryan Freeman

is always better. strategy bigger, fewer, Our

throw and very thoughtful -- And we're sticks. But see that's so XX company items going and innovation so a XX it's standpoint, our that to or wall the through what just not process. against from how go we

the has we culinary hit the team, their science think that food I that really the have stride. team, team

coming I to years. a the going one. fast we expect very our And so call breakthroughs -- in we're additional And innovation is breakthrough what model would

Labs, is from we RGF need about together that roll Our that representing it have of we works model states. then community a such which various XXX team through and our group our innovation a invitation-only is day cross-functional one, people from

it And we from rate. one use potato the and But question, answer frozen your our way our success we how to the unique I yes. run innovation will an in view, value the load example, the that and factors answer through be frozen a we get do to tots. that's But with them prototypes little feedback in french and in think is carbohydrates, And very there. fries that increase nutritional of door, tater meaningful reinvent as we those is iterate

bowls. now, we we're how to about unlock we we just Once that now use beyond the example building crack and find and innovation ways category. take breakfast great that's a And think then innovation tots, with it. code on And the that it, that we that it's

to carbohydrates in our where We it, tot lot brand block which items bunch use then and increase conventional So of serving. Breakfast. have of per a a potatoes brings that

about think we how that's innovation. So

as You'll a the we continual see as this move years. in forward thing

George Kelly

And X questions. quick helpful. Great. then That's modeling Okay.

First, on the EBITDA commentary year. next breakeven about hitting

with that probably you happen seems year. close Just gave, you'll it -- quarters actually the just if I as I to be any that by guidance could that curious pretty this in fourth getting the walk out quarter. like

be first on had. of I question. all between converge? number GAAP And still and adjusted that model the difference adjusted question to XXXX? is gross So margin, second what's in in -- And going And the when should kind the left then that's that that's

Akshay Jagdale

Bryan. that, take I'll

So me let start question. with your last

significantly. will $X X. gross between the difference pretty million maybe adjusted and a reported XXXX, margins have converge We'll in First,

will be is that, right? immaterial. it why And So

I unabsorbed we're can a overhead we're as mean, as you add-back only and year. online, big overhead. bringing the plant this absorb so that this to see, is main And portion going of

the the year. what's of main this that's difference So driver

have And that that overhead, back we be, then And we here strong, which if demand the we be goes we from once add overhead. that we capacity, away. hope can expect even we will accelerate continues because absorb and absorb it to to

will so that's And but 'XX see that definitely be almost fully X we that will 'XX. in And in -- converge in trending. that's how it

freight, we're stretch positive. As quarter comfortable are not EBITDA we're factors risk feel the that that year in doing a goals Certainly, just far early and to have cetera, of this and we we out committing those positive, now. levels discussed very as given being at et year today right to be have But XXXX We're inflation, to there don't goals that. that in like been the commit listen, internal especially EBITDA to some sooner. ready some

mean quarter. give give help, been don't policy not we we we've our And annual it's since public And to guidance. doing to went give quarterly I every to it but guidance. absolutely quarterly we guidance continue will

went driving public profitable commit. not generally, sure, we're since So on is And really, towards. solely, the mean, we thing as ASAP. one But factors, result and I is that's for of we're making focused been willing profitable what this we a have those business to sure

Operator

Freeman back turn floor that comments. gentlemen, and our concludes question-and-answer I'll for the Ladies to Mr. session. final any

Bryan Freeman

back at you in look in seeing for today, the and you, us conferences again. future. Thank near getting together to and joining everyone, Thanks also forward we May investor

Operator

Thank concludes This conference. today's you.

your You may disconnect this your participation. lines time. at for Thank you

Real Good Food (RGFC) 11 Mar 222021 Q4 Earnings call transcript