Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to The Real Food – Real Good Food Company’s Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Shamari Benton, Vice President of Financial Planning and Analysis. you. Thank

begin. may You

Shamari Benton

welcome Earnings Real Conference and Second Food Quarter XXXX Call. to morning, Good The Company’s Good

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

Eastern earnings release wire X:XX Our second Time crossed quarter today. at the approximately a.m.

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

laws call meaning to intended begin, everyone safe that forward-looking securities this I’d of Reform by on established the within like These remind from Private are harbor considerable are we to to statements Act Securities Before statements forward-looking uncertainties. the subject risks Litigation and federal XXXX. certain of the liability qualify and for are statements

customers as historical All projected statements adjusted our well new margin, growth margin production facts ability net regarding new include EBITDA, results, to and customers, implement statements financial adjusted gross made increase as gross our from statements and capacity. our gross on and forward-looking this and expand successfully profit, than effectively and net other industry, in are and sales, including adjusted strategy gross introduce our our acquiring profit, manufacturing products call today, compete existing sales

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

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

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

Our financial website of its gross comparable is tab. adjusted to under adjusted most A Investor non-GAAP GAAP is non-GAAP second our each include which margin included EBITDA are our measure reconciliation financial quarter direct reference. our financial measures available earnings release, in on measure and

Food With that, my it to Company’s Chairman, to turn is Freeman. Bryan call Good The the pleasure over Real Executive

Bryan Freeman

quarter for then positioned review briefly everyone, operations, growth. detail. well results and call After and that, for cover you reasons joining Thanks, second in the review and questions. call. I Shamari. will our Jerry Akshay we’re and second Good outlook will more open thank will financial quarter our our for profitable morning, we we’ll earnings today highlights believe on us the discuss long-term

which with a Starting an financial year-over-year both were acceleration basis the XX% of our stack on Net XX% X-year significant for and million, $XX.X increase increase highlights of second an represent sales sequentially. quarter. a of

the quarter within fourth the sequential continue over has in and and momentum sales to with June month quarter is third and this beyond. the Additionally, and into into growth we shipment a saw XX% in quarter each expected acceleration growth carried

X-year driven this significant represent and basis by up channel, which XXX% of a year-over-year basis sales acceleration The up sequentially. of growth was stack XX% was a acceleration quarter a on the which both unmeasured on

which was participate in. improvements Growth velocity, categories driven incremental in by highly the to primarily we is

for partners, that grow helps for performance remainder we the additional Given channel naturally sales the velocity our the in secured XXXX. distribution strong retail unmeasured of

quarter to double and of quarter the in the in late significantly improved XXXX. expected third Distribution is

states and encouraged the channel, categories, unmeasured in breadth which X eating particularly spans We X by our offerings temperature are occasions. the of X

the to began this quarter, year double and over compared exited items third which than ago. base XX% channel, store had we in more distribution the X a of is we quarter in the of As

As includes national a our refrigerated of further expect result, to and distribution as which platforms poultry, breaded handhelds, in and accelerate the appetizers as entrees This our we half. unmeasured well growth further second burrito flautas expansion in channel of section. include the sales

the So XXXX, to that annualized combined ACV. combined we In and have of we XX%. We ACV unmeasured items summarize, participate X currently channel states. grew X XX% temperature X X perspective. annualized items categories and the provide to items achieved in distribution In had and a XXXX, basis X additional on with in that and

than never perspective, in authorized X our simultaneously items For had more we’ve history.

say All of creates temperature into growth strategy a and going for forward. states expand a foundation strong is categories our this X working predictable that to to new durable, is across business

turning the saw happened in due Now XX% days with decline The the to XX year-over-year. channel lapping last year-over-year channel but only XX% which onetime shelf retail the of was quarter growth function Sales stack left growth the a the quarter of X-year a where to a of timing record performance. down was resets, on events. basis, and a year is promotional

resets shelf good distribution shipment this combined driven growth on inflected we has channel is now, with from late higher news by the in and June growth already velocity. The are shelf

distribution points increase points of total second of distribution XXX,XXX, which quarter an end, XXXX. As roughly is versus XX,XXX of total were our

late addition, distribution come will another due the half which build the XXXX. And schedules second roughly item versus new have in and of ago in year XX% confirmed in reset new XXXX, points of for further the second increase new back the started the this to an average. XX,XXX the measured channel, In of quarter to we represents online half distribution

have will such a velocity breaded higher entrees which remainder as global multi-serve XXXX. and for we The products significantly gaining than growth that base, poultry drive velocities brand our overall are distribution significant of the expect

expect the strong continue year. channel the for remainder We in the growth to double-digit of

growth that at we us grow of in will aforementioned The gives to XXXX confidence representing with XX%. new $XXX strong gains, velocity base approximately million, distribution combined sales business least

growth quarterly is provide given a not believe I on it our business. do hockey-stick and significant trajectory basis of typically to but guidance, so important inflection do today We the onetime

seeing already this and strong development. aware I positive ensure of our want are this shareholders to conviction are We of our happening, growth

rates, third range in $XX quarter as earnings. as we positive This half $XX of XXX% revenue SG&A sales to million, XXXX, the to growth the million $XX $XX doubles such, cash inflection XXXX, to and XX% of in of costs of second to growth. utilization a XXXX our drive plant representing percent million, our and revenue XX% of us to quarter approximately enables reduces the sales For be expect to growth fourth XX% million representing

that how up. performance margins Akshay detail, noteworthy fact shaping is margins see particularly touch of the is I while again were to this about quarter, more achieved were in utilized. Jerry our high-level speak XX.X% wanted which will Gross this a once year XXX this and this XX% the to less rest plants What this view of quarter year-over-year. is but improvement we provide the bp on we and our than

the this quarterly The power in Adjusted earnings capacity improvement underlying gross the year-over-year strong margins, and margin company’s quarter best representing XXX this of which adjusted margin XX.X% account history. utilization adjusted a performance were gross business. for to bp second points the the impact

as our sequential improve gross environment. as rates basis, a On overall labor an year-over-year in improvement increase should and commodity plant driven utilization by significantly margin a in The by favorable being our reported our is margins cost productivity significant well lower driven initiatives costs.

higher agenda. Adjusted million, significantly half half includes see our normal than in growth utilization our a which quarters. with in the and and third positive costs for impact doubling. our we cash Again, earnings of EBITDA year, loss expectations back support of the rates and this second of SG&A was of $X.X line to fourth see was in R&D our it’s overhead we and the expect how plant This almost leverages strong

look for ending in a billion market current and SPINS resonating at to XX the brand XX, the weeks with consumer how Next, July wellness with broad health line the and let’s X-year base. and industry X% wellness state According grew year-over-year, is X% health the of the positioning our the CAGR. $XXX take

line Over the total $XX period, generally category frozen CAGR. the the X-year grew in with X%, same billion food X%

the months increases our like during have versus competitors relatively cycles dealing price related tough consumers. We observers such, actions fact out recent declines significant volume elasticity. trends backdrop and category and a not consumption industry industry weakened are to have for economic did pricing that take in called as Several not with

more source at the from for consumers food historically to trends it Our performed we to frozen note seen health like growth and to down which has tends from has eating out be the highly and continues frozen the food we not category. incremental It’s broader during wellness to tend as in, recessions well eating benefit industry, compete that softening consumers trading to important the to home. category categories

private of about the frozen food to XX% overall than categories. to is lower health XX% in And Also, all on wellness private even penetration food across label compared X% frozen at is penetration, low label category as and to relatively frozen category. average XX%

the trade private lower-priced is to such, As within down category options limited. risk label

have distribution our in call value Additionally, during and downturns. foot lose what low deliver luxury, retailers that I is footprint to high-end traffic concentration typically focused their economic that consumers, on we retailers

total are relevant above our with X All market. addressable sugar, remain and highly the categories in large primary no as their things strong profile. well by the Products in with our high growth ingredients. to protein evidenced growth low carb little we overall Now claims: clean brand promises attributes and considered, these size going compete

against X velocity. and growth engagement household As we community for household and rates, track health, penetration, Starting social repeat brand ourselves with indicators: penetration.

numerated approximately our flat one household United of March brand The is in This the X.X% every Real XXXX, products households XX According in approximately has XXXX. data in means Foods from to – as the XX States months. in purchased past X.X% Good July penetration

sales. to health rank amongst behind all Our wellness brand over second continues a with household million $XXX only retail brands penetration food Amy’s, frozen in and

category household to of perspective, Jefferies, foods For years according from penetration couple a published had peak X%, entire down research a by the only of ago. a of plant-based report a X% recently

household how household resonates see penetration as significant grows with growth. quickly view of our well our We consumer a brand leading indicator to significantly. of connected future distribution we in grow footprint how back base. And demonstrates broad year, our and this half position the we this have a penetration expect Our as

They at Now turning to the industry in XXXX. of averages line XX-week July XX% data be continue as most recent in trailing rates. repeat with to

bringing new Given are of into new strong. distribution rate our we the this repeat franchise, users exceptionally is

the social our impressions and impressions organic of brand growth, This company. XX we’re able and community and efficient follow can community. size strongest for that one and We generate impressions. of Organic of growth initiatives. millions XX.X total and to history most million in impressions, our long-term the to impressions are with million due quarter Regarding the the we marked our not connect quarters over of second paid provides massive people to for generated support the value

For example, on creates advertising. This available velocity new scale we’re when launched way to store a local achieve performance cannot of we tell instantly people geo-targeting. millions item our without in who in group new our spending are through millions now at dollars and able peer distribution, of

with of and consumer way. content to a meaningful worked people defined nano verticals We thousands with engage or mobilize creators micro entertaining in and within

frozen quarter. XXX,XXX uptick XX,XXX the We community any U.S. have approximately brand the with food over of largest of the first in end of versus an followers, Instagram

is to dollars creators conversations can We advertising. and of micro content to of Based working it’s nano that continue our followers spark number authentic traditional better on marketing and say peer-to-peer believe I subscribers, using it’s than a efficient. and use

in, how than allowing consumers drive Foods others. from appreciate share new category consumers partners we to to frozen Real we with participate to food the rather retailer new grow Our Good frozen the taking categories

who long poultry term. In weeks. from This, breaded the in our $XXX These achieving sales breaded velocities confidence prior SPINS with that were purchase that in underpin items nation’s households permission brand XX showed over along X.X% strong a strong distribution. in over households health fact, have indicators to of million grow is the we the why brand largest study poultry only from recent our purchased

broadly. I’d now call over on to like to to Bolingbrook update our turn operations more CEO, and Law, provide an the Jerry our

Gerard Law

Good thank you Bryan. us joining today’s everyone, and you, for on call. Thank morning,

of second Our track the the the achieve production, far to the be facility continuing up how proud utilization are improvements new continue facility. significant Bolingbrook, on in we year. to ramp Illinois to since rate come of I and and opening we’ve half is team very

with pleased new second was exciting I for our our our quarter, expectations. line gives enables categories us and Bolingbrook gross meet was growing demand capacity the into entry in much new the our and with products. in existing which performance needed to margin

underutilized. margin continue gross is to given plants that our Our be particularly encouraging XX.X%

sales XXXX. XX% XX% for drive utilization approximately a rates capacity significant fixed second to Our the increase Higher XXXX. in half in to from guidance rates increase margins in the should utilization in cost XX% leverage for calls currently second to significant of plants, the half of our gross resulting

Adjusted point the business full to of gross underlying profile were utilized. margins, are assume plants the XX.X% when which and utilization fully margin

We building about demand. have deliberate ahead been capacity of

team year All of the the significant we are position orders to rest us made work in put for can and past get sales when and the service have a up over locked has where capacity our of XX hits. investments hard months confident the in the we running growth that the

we our demand words, our but highly margin for do the incremental half at so be the utilization increases. our growth to of we confident targeted should only remainder in efficiencies. especially meet year, also a needs, Not we plant XXXX are In to position the other as of can in good structure are second

this sub-XX% efficiencies. tough quarter activity, of as a also While contributed the our material amount solid lower judge as raw plant reflect a margin both formulations. quarter, to was of well of to optimization This efficiencies have gains on margin the which product new a performance negative impact costs utilization levels given

improve our continues and be well. as I performance efficiencies overhead expect the lower to encouraged better efficiencies, and costs, perform potential labor driven However, of City the at year utilization by the continue Bolingbrook significantly progresses to cost operating we leverage. improved resulting in in improvement plant by Moreover, Industry to better

the to for of turn the Before catalyst I like discuss would remainder Akshay, it over to I biggest XXXX.

to expect of as mix continue incremental costs our facility portion down come Every Bolingbrook structurally We Industry of becomes pound to our out coming larger our Bolingbrook, labor our to which compared is accretive City our costs has efficiencies. and sequentially achieves costs. a lower of targeted production labor to

efficiency City costs In gains continued at of labor overall addition, are by aided further Industry facility. our

in bigger of portion are plants to We of we to over flow time. production reiterate, in opportunity harvested our Bolingbrook in in a bring of second the standards this to becomes industry line as are sales mix. half XX% portion labor through confident about with and our ability To this costs X% both efficiencies of expect year major a of

plant sales will to utilization a drive leverage allow higher change costs. rates and lower us in Additionally, step overhead

in the XXXX We leverage in expect improvement this overhead to profile drive approximately margin the in half of as to points further half. second XX compared our first

combined used in our significant have that approximately These and of basis likely savings. our margin improvement. blends, chicken productivity fillings on to breading of our tortillas, our Lastly, proprietary investments the XXX include chicken enabled which to is are in Bolingbrook a basis self-manufacturing XXX product points drive

X,XXX XXXX. basis the news to XXX to point commodity roughly inflation, favorable tailwind materials point that direct for As good and costs a remained is for

incremental of that operations by XXXX. fourth meet an and third for enable for laid driven from capacity points utilization goals inflection distribution we the more guiding now in capacity higher second than sequentially XXXX. we for secured, our has perspective business the expect summary, to important meet already quarter, sales enough to out half point are demand the level and infrastructure The a In the us to will we mark

by line pleased our with significant which this expectations performance in year-over-year. margin quarter, are showed We and improvement was

half to We mid- be cash earnings dollars and expect in high the millions generate the to positive XXXX range XXXX. adjusted continue to to in second of single-digit EBITDA of expect positive

of environment It’s as in exciting has for the visibility an Real increase and in for sales to confident I continue support at in confident Foods navigate and margin half focused our talent, supply by into effectively enter second achieving our and ability group Good and we continued outlook. growing shareholders. results year, demand turnaround the our provide the We chain. value the the the investing time our are to in deliver our feel in feel of to locked drivers capabilities we have strong fiscal we

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

Akshay Jagdale

morning, you, Thank good and everyone. Jerry,

in Sales Turning of year. to expected. second the year-over-year approximately by in to million, the by driven $XX.X were XX% noting quarter second XX% unmeasured velocity the our had an financial increased compared results. incrementality than increase is in we the Net quarter channel second sales quarter, of worth again highly velocity last the category primarily higher that growth. and our It is to incremental growth is the

breaded our X.X%. the where in incumbent almost measured only As growth was incremental has brand unmeasured channel, been Bryan in XXX% the mentioned, our Same true brand poultry channel the brand. interaction in leading with is the to

strong and quarter the have Given XXXX. the in double for velocity distribution Distribution of is improved XXXX. channel third sequentially remainder to unmeasured of significantly in incremental the performance, late we the in secured quarter the expected

unmeasured in and are is a half was previous In growth stack on basis growth the our higher was expectations year-over-year. Growth channel, second forecast. of than expectations the materially X-year retail our for but ahead tracking channel XX% our down the

XXXX The decline timing events of function XX% of a was this which year’s in record driven not shelf growth the very that did by growth of Last last year-over-year quarter resets, a happened certain repeat is promotional year. in late and year. lapping part second of the

XXXX. that we higher in from than by brand products, significant which growth remainder drive introduced The this products velocity overall of with we velocities the significantly resets brand has velocities. have base our shelf channel growth the will growth recently driven already for expect June inflected distribution Shipment new combined higher

of growth the this double-digit year. channel the remainder in strong expect We for

our based least conviction in on channel in new million strong two, sales. better-than-expected growth; one, $XXX item at greater distribution expansion unmeasured incremental in continued of momentum meeting the our have target channel. the XXXX distribution measured is and strong now and following: in conviction three, The velocities We increase on growth; revenue

To and trajectory we’re providing some demonstrate stick for from pattern our conviction basis in quarterly hockey one-off on the typical a growth the year, deviating guidance. the remainder implied of a

percent XX% We as expect $XX plant to of quarter growth, such, doubles as $XX third generate our and to positive $XX administrative and earnings. million, XXX% to XX% rate, revenue sales and to growth of cash representing reduces million approximately a fourth million, quarter the XXXX representing revenue, our growth. sales $XX of to in distribution range This XX% utilization we to XXXX be expect costs million

$X.X Our quarter was XX.X% million gross compared of as of to or profit gross X.X% of gross profit second net million, margin of reflecting net of $X.X margin a sales gross sales in due improvements second material certain and gross the and decreases primarily increase costs last year. of in efficiency at quarter plant. in productivity to Bolingbrook the The was margin raw

XX.X% profit quarter prices during sales the net margins. of adjusted to as XX% reflecting million, and net gross of or in contributed was to Adjusted of the gross lower in of initiatives $XX commodity Productivity sales increase year. quarter the last margin compared year-over-year $X.X an million second

XXXX seasonally slotting product growth. in fees adjusted at of margins support adjusted like sequential contributing inputs averaged key in and gross margin first to for higher higher for gross certain we’re XX%. adjusted the of are to have levels gross this Although support the higher guidance full XXXX above-the-line margins, brand including of costs mix, implied half moderation negative maintaining for factors than Several our our least guidance range year,

are labor gross increase reported substantially in second lower the primarily margins by overhead driven to costs. a expected half, and basis, On

savings of have XXXX long beyond, ahead incremental expansion. will and productivity margin we to runway that Looking future drive a

in million quarter quarter quarter $XX.X in year. of were second million to $XX.X million expenses quarter $X.X year. the compared to $X.X second increased million the the compared approximately last in expenses the by to Adjusted $XX.X as operating operating second Total million last in of as second

the pipeline increase on depending XXXX. in support operating strong new the to costs Adjusted EBITDA tend a second product and in million well in a our year. of expenses The loss $X.X in to activity be costs as quarter in increase compared loss generally new of primarily quarter timing development the last basis of totaled R&D of was driven as of expectations. quarterly line scale as the and commercialization. with a million the the This on lumpy product to by level second research in was $X.X

second flow improved for to of high, the owing in the of significantly burn during towards quarter cash was Utilization breakeven improved underutilized plants that relatively Cash quarter rates the but we being and quarter. sequentially the most the still end period. were

invest acceleration continue also to expected XXXX beyond. support XQ significant in We and the in to inventory in growth

strong third propelling plant the significant our in cost sales in earnings. in leverage growth fixed which have We inflection starting to quarter, our and positive G&A the across and should visibility network result in significant cash us

announced Following the an second to credit end amendment our of facility. the we quarter,

our this We to which enhanced to transition with are and liquidity capital our pleased will and provide position nondilutive with us access growth agreement, generation. fund further to cash positive

we we such, execute out. ample to fund plan have needs our the and As have current liquidity laid

expect for net Now our least XXXX. our And we’re adjusted of half gross EBITDA approximately for margins of in continue of turning Long to XXXX. expect mid- XXXX, adjusted sales at range. outlook we margins net at $XXX flow, gross and $XXX least positive XX%. adjusted cash million, second adjusted earnings single-digit to to EBITDA million, of for high term, to expectations of the to as margins sales cash we in transition the reiterating XX%, In XX% of

over the operator would begin This like to prepared question-and-answer now Operator? I call session. to concludes our our the hand to remarks.

Operator

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

Jon Andersen

question. I about ask wanted for sales morning. first Thanks the guidance. to Good the

a way think by shelf nonmeasured expectations year channel, that, bit or of is you’re the right You’ve outlook of kind half measured sales that’s bit a this performance what late little distribution level, quarter outlook? So that seeing is full leading of resets full between sounds you but this later a kind a to to and there about better the is like reiterate in the reiterated kind the of or second the in the offset year year. At maybe high there for the nonmeasured measured trade-off in channels?

Bryan Freeman

shape Yes, I of can when think we’re QX and for kind look what that you at that’s directionally see guiding accurate. towards And you QX.

is lateness we’re of in, in XX,XXX the making we’re of TPDs we our up seeing [TDPs] those back today. in really the really unmeasured for Look, impressed still by additional half. coming the So terms [sic] some items see velocities with

Jon Andersen

was Yes, that question. of kind next my

you So about Can have get XX come represent, new already measured seen? shelf that, in talk seen where still you And the to seen products you the where to incremental you’ve you’ve the half like to breaded the customers incremental I some channels? customer? the also TDPs are it which think, on XX,XXX back – you products, what’s of in which are about a you seeing perhaps of poultry, I think, large the the early? year? are of at newer the And is kind anything like Or the too like say items then able velocities mass

Bryan Freeman

global entrees [TDPs] [sic] anywhere base is base, far better of in obviously, X terms it’s being way by to a see poultry. our multiserve TPDs That’s from X our than long-winded of of velocity. products our we saying and quality the and really driven The Sure. YAG our breaded

a are guidance in that’s see of And points growth points why new And our of our of basis, platforms the on those outpace of the measured X the distribution. growth in our so majority distribution channel. percentage the you

of really X really And we some other. I customers, on is in cannibalizing not where And are category what each is breaded we’ve seeing we’re gone X, provide is guidance You that. reads. they’re the specific coming say in impressing would really us poultry in velocity early platforms too that the what from to expected. item X some asked about and not those velocity to is It’s

items the additional of And to of X reflection are velocity category we’re in incremental do or category it we’re just and that is a able that door that that out the the getting door size the volume of that. is complementing of door, of The which actually that impressive.

Jon Andersen

this quarter, should of I and last events of think last cadence you the say, you had on timing One year. That’s Can to to any kind half. that sales I about comparison, headwind a promo this bit first sales mentioned, this getting this at consumers is, second the timing didn’t has what that forced that – in that activate promotion respect great. you on getting – is an guess of more I Does year distribution to place? into repeat impact the of promotions planning been you’re a reverse year I do – I’m talk in the with now you’ve half? guess, absorb

Bryan Freeman

Sure.

to lapping the look you when just XX% when right, channel. up we’re X%. think velocity measured in But I brand So – baseline I recap, mean was our growth, about at our health,

we but shelf. do plan that trade from not And of is sure really shelf, point them distribution through to on our really our that’s some of once then level. increase so We’ll healthy. We’ll on invest course, – us the historic trade, we’ll against get see and spend make that folks

Jon Andersen

about there promotion? how the year-over-year comparison kind And Anything on side, of with nonmeasured. club respect the to

Bryan Freeman

section with be in breaded And in our will say we entree the poultry will I appetizer is distribution What we’ll frozen promoting. volume have the half. platform platform the and back our platform, national our

percent is gross – volume basis, the However, really revenue on historic levels. so to from see significant we don’t our net from a changing

Jon Andersen

Great. much. Thanks so

Bryan Freeman

Thanks, Jon.

Operator

comes MKM. Please question. question next Wollam with your from of line Our JP with the proceed ROTH

John-Paul Wollam

that’s refrigerated shelves on and time? another day? how that taking the just the on And out we thanks Maybe of for make so, looking if to the could could of could Great. for you state? move want on memory my rolled start us And not been into a some just has if I sure, rundown some of Good already kind you questions. then refresh – and if for give just morning kind just

Bryan Freeman

in And JP. refrigerated ago. in We the velocity launched has the the channel item we the our and quarters handheld of a Sure, – my exceeded couple section success of the platform expectations. unmeasured

that’s so And distribution what’s growth. really driving additional

or Today, XX% to and probably is one is channel our customer a were guess this in handheld range the the unmeasured if platform XX% – probably I guess, and already. in

now And for And in so of great think you’ll growth out, measured we’ve and proven the section. the And the see channel go year that’s to a refrigerated driver up this in it company. tailwind in start half back could XXXX the been beyond. that a be we us that in that,

John-Paul Wollam

And it. forget quote was. the what then I Got exactly

with the touched your along either prepared been kind in may could curious, in by of that that means us forward? to alluded versus of one going the a on perhaps competitors where of And competitors? price that think you up your of had kind think And I category. kind categories, or tailwind taken high velocity for and weakness as something you some you price remarks you. what just And price some especially of you I’m all remind be about your frozen just stacks

Bryan Freeman

Sure.

category from X%, headlines. the this The perspective, a declined has growth to you from in down frozen has approximately X%, declined. So dynamic and see

see – sales price decline they significant unit due that’s to increases we and the You lot took. to a due think significant that

continues category. health up to – our seeing JP, grow – XX% price we’re the here’s the that the and wellness because talking we’re And increases industry products, stacked and and That close X%. point, not to with about in at that’s key

we it’s where that’s source weeks, from. In the X%, up consumers X fact, in our latest and

see unit not So wellness sort because you a down we’re the seeing of in we’re commoditized while our platform to and frozen and declines deceleration growth that brand. business, X%, health food others only in sales

investments food we that without our to aim And we’ve in wellness products. business high and do to the because conversion to XX% premium to provide plants be and the somewhere a done frozen to to rates. made and item in our with conventional what overly pricing the strategy, able – we’re the And health XX% regard scale we’ve of

John-Paul Wollam

could. sense. Great. one one, I makes quick That And if last

Just on penetration. household

higher you few of change that see I where drive the think in function sort item that big of might you comment to kind think to now really step like that will really what at in household and that need is you big be, you’d penetration? or items half you drive just a move if where misheard that. the year. But curious, there me was higher as of correct you’re I to expect back look it And the

Bryan Freeman

Sure. It’s distribution.

at We’re in for growth measured XX% XX%, calling channel. least the

that’s the that third in – will So quarter. necessarily just

will so And household grow penetration. our necessarily we means that

looking quarter. forward next data And time that pulling so this we’re to

performing the that just are So know really, a level. from to shelf, We will drive that get store-by-store distribution household are well basis we the finally on JP, excited that have a is and velocity see on We product penetration. distribution.

John-Paul Wollam

sense. appreciate really guys. I Makes the time,

Operator

Our next Please Truist. proceed line with Bill question from question. comes with the your Chappell of

William Chappell

Thanks. Good morning.

Bryan Freeman

morning. Good

William Chappell

because it top wanted to like kind start, a amount I gains I and that’s for and I line didn’t Just fair there’s distribution but Could appreciate much, cadence it just September there on driven know by October, the confident how if distribution you’re expecting seems XQ understand you a variability. kind guess, of or happen fair XQ, and to and between fall that be are can – happen be this would Just change? quarter so start of how gains great. they that if to want any cadence could

Bryan Freeman

for guidance kind thing, a of what I’ll a conviction Bill, onetime Yes, your remainder we look, we reflects And over really and in quarterly strong the the as the throw our with But we’re did his the visibility well. that on point fact of think, the year. year cadence. comments good I that, at I’d say a of at to get is we level high it Akshay think where like to have

Akshay Jagdale

are good late last happened that the so this noise year. context last asking of question. in Bill, year I the know – you

guys So you we’ve me? – been very can hear

Bryan Freeman

Yes.

Akshay Jagdale

a about late and on what There’s limb risk limited right? and is of providing have already the based not the So this light in guidance, we’ve numbers about didn’t especially to a guidance right? confidence, – been We confident if that. be out providing lot because very would deliberate distribution going it is that secured. and very the last distribution of So a downside we happened feel we year,

And on the of most now these been to it’s that note items for a in have distribution velocity, while. important

truly like on not we’re guessing velocity any either. So

that always quarterly can order run call out basically there we changes, but So we revenue really thought rate magnitude, want be to and as of some doubling validate. we’re on our

have So these to we’re that’s going so that done you we’ve guys hit guidance confidence this why one-off change numbers. that

William Chappell

helps. just that question. a a picture No, Okay. of And bigger then more of kind

got a a to X.X% million vehicle, understand at revenue of $XXX I supposed penetration of run rate? categories, or billions. you’ve but that and talking is greater how would kind penetration like but and kind household in seem fresh share, we’re it kind household Because frozen that cite the You Numerator in only the numbers, of penetration, look am if household the market perfect I not

figure to So it? if Is mean but you I and at I on that? XX% go just how household Is focused that be that penetration, – should what the not – at rate how just opportunity? imply you’re you look we that that only the million $XXX is good? as number. I at as I’m to trying out sense that a makes does run look opportunity

Bryan Freeman

items penetration, think And look it’s just that leading what Yes, much resonating to position kind it one the the with for of This just see XX getting sure. us our it’s now going the in household really business really I more the half. we’re into to U.S. with telling is in to this indicator. we we’re should is stores. – a going back we us And we’re a at point, the be I do drive brand you your to And literally that, households. we – same mean, is revenue is young. as larger for And business. saying beginning. But is still do double reason Bill, what need that what is

you, is had X because we young have company past we we’ve been which don’t we per where has on items XX So to the remind store. XX. Amy’s, about the have such versus average, I’ll a in enough we’re items store in

able low that drive that in of imply. would number with we’re – of penetration that, store, not were revenue the we to so household items And amount

it’s what brand summary, is is telling resonating. our in So position is,

get occasions that more want job in of users is those Our to more same items, we’re right to And doing dayparts, usage more what that’s now. the middle brand. our

Akshay Jagdale

add to to Yes. that. Just

I ourselves compare So an on know or average to, the you average do, the wellness we better numbers XX so does. annually household brands but around right, that and brand, that this than Bill, and just health that, $XX that household spend

math, you just if numbers apply those So $XX million. get can larger to the on you that

very as leading at right? What’s interesting a indicator. adding So really Bryan rate, consumers mentioned, a high is new we’re it’s

an numbers, distribution penetration household $XX half, now our doubled So you got the the $XX, last just and over XX months. first to we household household right? take gain. this the who’s if us pointing In spending So on second annually our revenue the we’ve half is

going so how And the out. that’s numbers to are play

them buy first give then those opportunities and our more. to try to to step is and to them like get more products, the households But

it’s think brand integrator. I is So we metric our point most for think health data the important brand the And personally, this positive most period.

William Chappell

No, the color. so that’s great. for Thanks much

Operator

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

Robert Dickerson

morning. Thanks much. Good Great. so

I time about distribution line, I just – gradually I in half. like of Clearly, the it year-end. get number. revenue guess ramping be top So get looking in you acceleration increasingly for kind back the it. guess, should talked we’re sounds terms as through guide of, this At or ‘XX same not

seasonal the in year half sure Xx implied right, from ‘XX. revenues the of prevent could trajectory doesn’t promotional kind and at am sound relative change. like you of in least plans as of as that back I of talk curious It the of what’s ‘XX, dynamics, that there’s that taking back But of there’s through kind maybe I’m some you half half would there’s this first anything this kind clearly to some about

being like should kind well makes broadly year-over-year, Xx first of in speaking, it in that very the should equal probably ‘XX. you else just seem Is as of you Xx it of half you back kind logic But sense? the can everything half if

Bryan Freeman

that what with those for point that’s next provide basis, a I this guidance and is rates, why is was rate Rob, utilization, the is flow of positive volume But on. profitable. mean, and a more of onetime inflection Yes, I the would to the what’s what that agree. that that that’s quarterly is is important really year. company team be it really you. run the sort the plant And run focused cash I business something And kind think for we on for baseline some felt the important is

Robert Dickerson

Okay.

sincere half apologies Okay. Cool. back SG&A wanted there language, one with not to by just overhead And were heard just coming I of point, following make gross through plant margin your and then made the comments kind Clearly, clarify velocities, leverage. Akshay as comment, everything and for I kind volume right, well. then some clearly. to utilization, of Jerry

greater concisely kind the range some it’s you back we guidance. should maybe be where hearing, because But XX%. or in mean hold if could margin I half clearly like the kind be like just gross thinking of could you kind we better of of remind still than through margin I’m get me XX% gross as everything

case. just I’m trying kind like of get So best to worse

Bryan Freeman

You I’m Akshay. know that going what, to to throw over

Akshay Jagdale

for causing I take confusion. full credit the

try So that. unwind let me to

there’s ended for I half. adjusted about So And right? is consensus that, think the where a That – sequential from reason decline calling good numbers deceleration for we margins. are gross first from XX% or decline

a one, great Slotting example, made drive we’ve the is to some number right? half growth, So above and investments line that’s weighted. back

in are they cheese first in than bacon higher are Number the commodities certain half and seasonally much second the like two, half.

off are gross margin start items lower of the half to in in some shelf have are a that three, items. items back and the with, coming the Number established they more on big than way newer

So reasons okay? would are basis, why lower sequentially those margins the for on be an adjusted

are numbers conservative And important are keep is – margins going spot. I where we a buy also me. to appropriately reported thing being the because inflect on can we feels But right of things consensus significantly. are Many stuff there’s we out And the think to that happen. pointing lot more

one right? plants investors what to see going margins utilized, to our make business just be and we margins are you reported going the converge are underlying with is. You’re show adjustment this like to adjusted So of because earnings

more that utilized, or nothing close it. XX% we’re is adjustment when So to

sort the cash. And margins. generate going in we’re XX So to see reported to us to of going solid that’s allow

Or you this I more? confuse did help? So did

Robert Dickerson

positive, have kind just But there’s category. with guess, it slide follow-up, Bryan, seems brand, for acceptance take again. And maybe of with the There’s has of overlap No, circles huge, like this you I one. overlap, lastly, the clarify have same incremental limited guess, we I so time, while X it the massive a the customer you right, another been chicken, helps. in at the far breaded later can you there, so I around study did want to a

retailer get Do but it half a the for you consumers that be actually brand. be get category convert you positive through term, you in those mass, back some a your That’s kind plus maybe you perspective, the incrementality that clearly could especially you’re mean the get incremental year, also new more it. like could if there could if of positive longer from this such of really I right? would believe of to actually it’s overlap you as for conversion, as you distribution more

Bryan Freeman

the only line makes prior you’re reasoning your the That of follow breaded say that this who to those what is there, poultry, of of is I saying number Rob, XX to bought nation’s X.X% But what brand weeks. and our bought shocking those kind in me. I households sense. largest would

wellness to in maybe. than that category from participating that and users the It category overlap it is demonstrates faster a X% we’re So huge is win also go does still that the health But growing weren’t frozen. X.X% our before, it sourcing and X%, from retailer shows partners. for or and

retailers. the And safe really it’s food. with number it gives me it’s makes positive. incredibly and permission a And of distribution to sort also of to within harbor So scenario shocking frozen in it us our kind us grow

when things growing of I in that could come. and years of distribution one the think most the growth and I So positive long-term think about to maintaining

Robert Dickerson

you. Thank perfect. Yes, Appreciate it.

Operator

you. Thank

floor at for like time. to to Freeman, comments. the over Mr. turn We I further have closing would no questions you this now back

Bryan Freeman

to on Thank this joining to for in days. XX and more our us you thank look doing XX quarter forward call, you. again second we Well,

Operator

Ladies and today’s conclude teleconference. gentlemen, this does

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

Real Good Food (RGFC) 11 Aug 232023 Q2 Earnings call transcript