RGF - Earnings call 3 2023 | Real Good Food Company, Inc.

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Operator

Greetings, and welcome to The Real Good Foods' Third Quarter 2023 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Shamari Benton, Vice President of FP&A. Mr. you, Thank Benton.

begin. You may

Shamari Benton

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

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

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

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

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

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

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

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

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

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

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

Bryan Freeman

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

acceleration sequentially. third X-year Starting XXX% have growth. was Net of represent on if both consumption up orders we a able and stack higher had Growth with increase for fill even an of exceeding as would were XX%, basis, far of million, significant $XX.X financial increase an highlights our year-over-year shipment on sales the to XX% time which a been been quarter.

and breadth offerings doubled which X encouraged of unmeasured X XXX% a quarter temperature quarter. The year-over-year in X consumption unmeasured sales both up Branded stacked the growth spans primarily growth by has sequentially. particularly in distribution momentum on our represented by For acceleration. categories, XX% and driven into channel, an which on this the X-year the and our Growth points states carried of perspective, which sales accelerated unmeasured a was basis, was growth, eating channel this acceleration of sequentially, were by in basis driven in third fourth quarter XX% up XX the We're the occasions. the channel.

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

sales we handheld As of beyond. fourth poultry, platforms momentum to of in distribution result, includes section. quarter expect Burritos our growth further a unmeasured refrigerated continue the include Flautas expansion as bread as the channel entrees This and of into and and appetizers and national XXXX our well which

X X perspective, XX% in items To achieved that unmeasured annualized and we ACV channel combined and grew In a combined of summarize the to with had a XX%. annualized on items XXXX, additional basis, provide we ACV. and XXXX,

We in have states. X X temperature X and categories items in currently distribution participate that

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

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

year-over-year. the year-over-year The performance. to if was better even have channel and time. turning able fill basis retail stacked to on we would Now growth customer Sales on a growth XX% were XX% orders been up X-year

consumption June significantly perspective, with sequentially, consumption reset, shipment by Both shelf far accelerated For driven shipments. combined distribution velocity. higher grew double-digit and growth growth outpacing XX%, from the

drive that The than growth for of which significant remainder XXXX. overall will we introduced higher have expect new base continue products we velocity recently the brand our significantly products, to velocity

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

third total total year. this an quarter is were points from end, beginning distribution points which the distribution As of XXX,XXX roughly of of the increase our XX,XXX

of new we achieved, quarter represent beginning if confirmed distribution the points addition, fourth another have roughly the XX% this growth from In for would XXXX which, XX,XXX of year.

has bread base, we drive significant multi-serve continue our for to will and global XXXX. expect our which overall growth and include velocity brand remainder the than of distribution game which poultry, velocities products significantly higher The entrees

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

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

of the touch our margin being remainder initiatives and in environment The on cost wanted margins how driven commodity overall quarter, quarter improvement our Jerry and the I in year well again once rates. shaping X,XXX to view this see Akshay the were XX.X% a margins and a more will but in we favorable high-level of productivity up. speak Gross highest is improvement to this history. this detail, which as and is our by as margins utilization better second year-over-year bps our plant year-over-year provide

to fixed strong On expect the which our XXXX improved continue and better fourth plants, reported basis, leverage sequential will a sales the of gross owing XXX bps we margins into momentum. given -- corresponding increase in in the quarter of cost XXXX, and the

when a few see which the middle preannounced quarter weeks the million, we $X.X in we Again, of for of ago. was EBITDA Adjusted was provided and fourth XXXX, the XXXX range see and we increase. our the This leverages cash how is plant expect of to utilization our quarter overhead fourth XXXX rates in XXXX. earnings we positive and and continuing to SG&A

later, areas capacity most expect talk fast-growing this possible on as will online about plan creates come where being to how but are incremental growth this expand the our equity from this making are Capital items. add demand change I we Jerry for and to we The recent in part month. required and improved do capacity we demand. in on redundancy want incremental in uptime to seeing production products couple accelerating surges raise, our a certain the that primary we of is meet to Now on that

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

$XX declines the that consumption industry grew out weakened tough not total not period, a related take same billion relatively during industry consumers. pricing observers have economic increases recent such, significant months for like with in did food category as our to have price elasticity. category dealing cycled X%. are Several competitors the Over the backdrop frozen the actions and called as fact trends We volume

high Another food #X facing are headwind their to the are for from value. sugar. NPD, get frozen is According consumers to attribute believe looking glycemic away we is brands

accelerating. as there SPINS sugar switch $X is a from durable in low higher was trend showed and weeks billion to A is June This interest recent interest sugar of according and consumer these fact, drugs. in Morgan the XX% study this population XX away of drugs. of it adoption In that A foods Stanley GLP-X AlphaWise the significant last of to is further the has food catalyst XX. U.S. adult

others poultry study We The GLP-X begin are why is away aisle, showed Yet, not high growth difficult in believe are when foods. carbohydrates while are that solutions drugs our sugar. frozen is find taking accelerate protein-based from also and food continues food that shift you and declining. meal the sugary more to watch eating it to this those and who

a For basis, by the October channel wellness health the RGF dollar per U.S. per highest the item are our and week store items measured XXXX, ending On in XX latest grew breaded velocity weeks X, poultry XX%.

Our velocity single-serve post And point X-year and multi-serve our entrees total in lap points as both of continues to and of entrees continue trends. gains distribution velocity to platform X- and we distribution. grow

XXXX. at to right plan the the have We even right further in item lean in we time, and

fish is of the believe the minutes been To retailer billion are is a I first X,XXX fish is frozen with that with brand report fast this item and This fillets the consumer of spend leading accepted partners. acceptance to resonating to innovation fish approximately is December. our sticks category retailers we further our new that in relatively initial few how I'm like this our movement our into $X entrance and have on pleased new I'd the with consumers. and near-term that position breaded pleased our end, stores glycemic with low this evidence agenda. ship

can that of quarters. burritos unmeasured the this in believe a retail. measured/retail our channel in coming accelerator low-carbohydrate can and be success growth now flautas to an This significant taking in high-protein bring found section is mass We example channel. Second, refrigerated the be in and the the

entrees are we in our X,XXX full ship carbohyderate a December. and [ the Third, approximately retailer barbecue new and pork] national sugar, chicken in with in first stores launching low bold January low

while conventional serving are sugar barbecue it's loaded with and sugar reminder, brands is ours only a delicious. per of sauce As X proteins

quarter. launching large that chicken stuffed approximately will Further, our in we first frozen entrees the in recently and bacon wrap, gained unmeasured stores X,XXX a new customer be channel

we on sales call more and long-term. to momentum permission the our an now In XXXX, of continue $XXX Bolingbrook I'd to million of our turn into to our operations summary, going CEO, we the Law, and a update achieve like have we least to provide achieving believe to at stated broadly. over have over goal lot in Jerry

Gerard Law

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

on coming we taken ramp better demand expand and fryer Illinois we measures attainment on quarter acceleration Bolingbrook, third drove line. in To driven and and address in under-shipped what this XXXX, up this Our the relative We by Bryan expect facility quarter, the to guidance. continuing to issue. fourth production, said, a have levels is to shortfall of new our

First, amount support in production the I am spending a needs plan. it of ensure the facility the execute time to and team resources has to the considerable my

has Our improved, as operational a result. growth performance has and production accelerated

installing certain surges so we for demand. Additionally, can additional products we handle in are capacity that

margin early gross our the in as particularly XX.X% is Our encouraging we targets. achieving stages be to long-term efficiency of continue

Our rates calls to XXXX. in to to cash XXXX. the fourth plants cost positive rates our enable capacity fixed for to sales earnings of in guidance XX% in of quarter XX% leverage increase drive the transition Higher second significant and to the utilization half utilization

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

the been work ahead months. to this get demand, made of have and investments and XX reflecting capacity hard over the past building up running to capacity deliberate We about all

improvements fourth levels some filling fried us should transitory. had machinery shortfall we with confident quarter we and due existing help continuing led up on to the combined that issues the addition attainment in Although capacity, of to uptime trouble in of orders the catch redundancy are on The XXXX. orders that lines September, were product new in the

improvement City encouraged efficiencies perform leverage. resulting be continue continues in to Moreover, expect better performance XQ quarter. and material improved of lower overhead well. costs, improve contributed to the 'XX this utilization optimization sequential efficiencies our solid and Industry addition labor performance and in at cost we costs, Bolingbrook beyond, by better operating in in I Further plant continue formula to to by driven to to raw margin

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

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

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

ability to time. standards of confident costs are line to of in XX% in sales over labor about We industry our with bring X%

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

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

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

expected commodity XXXX. direct is remainder news for materials to favorable As of costs that are remain the inflation, for the good

quarter an by us to business the fourth XXXX. sales the sequentially marked from of a we goal our that fourth meet important to cash utilization earnings higher the in perspective for already the and summary, inflection will capacity transitioning are In guiding in points distribution enable of secured, now point quarter levels positive driven to

We and are year-over-year. pleased margin by improvement quarter, this our which sequentially showed performance significant

adjusted in and range dollars expect to cash XXXX mid-teens billions expect EBITDA of positive to the earnings. We positive generate be

outlook. of have continued in confident into turnaround our margin feel and our the strong We drivers achieving visibility

It's an exciting time at Real Foods. Good

for continue sustainable focused and by locked investing has our environment to results confident shareholders. deliver effectively value growing for demand we long-term to navigate group to of support capabilities ability build and the our our We talent, in supply in aiming feel the I are chain. in sales provide

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

Akshay Jagdale

and good Thank you, Jerry, morning, everyone.

Turning in the channel of financial third Net an sales third $XX.X unmeasured XX% compared increase to sales to the of Branded results. our in quarter the were last as quarter million, third increased was growth. more the distribution XX% driven terms and Consumption in outpace in shipment doubling at year-over-year growth. year-over-year all-time far an approximately primarily both and by by dollar high, than quarter, year. sequentially

worth consumption reminder, IRI and category cash at a is is [ the had incremental incrementality still the by data again higher our to than the that expected. noting is we is as It stand As measured growth register consumption highly ].

growth leading the channel, incremental brand poultry been has measured brands in incumbent breaded The almost Expanding X.X%. in unmeasured upon our Bryan's is remarks, in where the same XXX% brands. was to our true overlap with the only channel

have ahead our Growth in of the unmeasured channel heading momentum is into tracking XXXX. we expectations, and strong

even fill was on XX% and X-year able XX% In if up year-over-year basis orders we a growth the to growth retail The channel, stack on year-over-year. better would customer time. have were been

shipments. perspective, For with saw significant reset from higher sequentially growth far shelf the grew June distribution consumption consumption driven combined by growth acceleration XX%, and outpacing Both shipment velocity.

introduced the expect have significantly The drive base to we new we which recently higher than brand products velocities significant that growth continue will for of XXXX. overall our velocity products remainder

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

adjacent existing new on entering already Although are is few distribution growing a our of on like strong products XXXX innovation well performing a that for agenda we categories shelf. fish, are focus and have breaded

as margin increase margins costs in $XX.X gross profit margin Our third better productivity to rate. compared commodity gross a to X.X% net of expansion margin The of a profit well contributed costs plant in driven gross contribution million also as million, of due a part third by of improved or was net year. product by XX.X% sales gross quarter of lower in was $X.X reflecting of gross last utilization Lower margin sales the to initiatives. quarter driven as

Adjusted year. an as margin gross adjusted the sequentially $XX.X third fixed compared net absorption revenue cost of margin to XX.X% million plan. quarter quarter the $X.X as the XX.X% continue during net sales reflecting to was gross last profit or better Gross million, in the of in higher should to improve sales leads of of

Productivity to the million expenses million expenses $XX.X in compared to in million the Total initiatives operating as the in and last commodity of in of to quarter lower year. in operating million $XX.X $XX.X the year-over-year increased approximately $XX.X margin. as compared year. contributed last the to prices third quarter by were Adjusted quarter increase quarter third $X.X third third million

pipeline lumpy R&D product tend new be timing increase to on well extent, primarily efforts. costs commercialization. to on and and expense commercialization to research strong new quarterly basis of R&D the The a was the increase product depending is by increase and expenses a higher lesser in driven activity operating in and, level costs. scale the of as the distribution in support as costs The development

As for quarter, trend in as relationship arrangement. back transitioned the be distribution This transition more to these quarter proved should to customers new a to customers the we the few costs, increase fourth inefficient. distribution large in our in which distribution reverse we efficient

in loss the burn third million was service in in improving $X.X quarter Adjusted last Cash EBITDA of the year. $X to a compared million totaled in debt the the quarter million of million quarter. the sequentially history, third $X.X company's third as $X.X pre lowest of

and negatively cash spike commodities including, limited third flow key as inability our factors time. but one-off Several not results in fill well the our to impacted as the temporary certain orders of on to, quarter,

and significant positive the growth. third the Following of significant acceleration stock we driving the in intend cash our limited offering in propelling G&A, quarter, $XX including, corporate to earnings. a to but of our purposes, third sales Class the across completed general proceeds net is support use A proceeds. to, cost leverage growth the for end million network generating fixed investing to capital working quarter us in in We Acceleration in public not of starting plant

turning remainder and the of our for outlook XXXX to Now XXXX.

sales net million $X expected EBITDA compared XX% to to quarter to XX, months to XXX% approximately For corresponding to XXXX, million XXXX. between be million. $XX the $XX ending and be is $X as in or Adjusted expect the million growth we X December

For $XXX be December margins adjusted year and XX% as EBITDA the is in be expect we XX, growth to to the compared sales gross full expected or range XX% approximately be million in XX% to the net are range. least expected XXXX, to at ending mid-single-digit Adjusted million $XXX XXXX. to to to low million

net the And approximately full $XXX percentage of X margin million, XXXX, $XX of at expect points Long of least to adjusted an margin net sales gross compared we percentage and increasing margin EBITDA at of least we XXXX. year XX%. million. continue gross to EBITDA X adjusted sales expect For of adjusted XX% $XXX million, adjusted as term, to

In we fourth quarter in addition, cash reach into that carry trend XXXX. XXXX to earnings currently the forward to expect positive and beginning of

This concludes operator hand the our the session. would back prepared now to to Q&A to call remarks. begin the I over like Operator?

Operator

Instructions]. [Operator

first from Riley Jeff comes Our Van Securities. question of the with B. Sinderen line

Jeffrey Wallin Van Sinderen

Congratulations on into QX and QX. in your progress

give I prepared us Bolingbrook. at production comments, a bit more drill you if of on realized a in this you your but we touched in little about ramp the can detail maybe some little can down more,

So QX, with guess, far new needed? may be that other I are equipment fryer in and the where any you

just of And general of and there you're and utilization so where of end QX? you experiencing terms far rate are QX in then sort in for efficiencies target run

Bryan Freeman

what Yes, late those to very the saw fill -- late you is significant QX flow a we and Hey pretty orders. order have bet, Jeff, we in capacity

to push However, fell get it we done, down. the plant we when really

And frankly, excess that what is -- the solve create and way to so capacity. redundancy to for

that I'll been end, I doing future. that. piece. on it think that in -- one happen doesn't flip he's And that to the it And Jerry really on over because who's And to about hands so we've gone the

Gerard Law

an hit had we tires. it, on the track. been of but doing I miles let's had car, to plants pace We've the hard to that I'm car. running I the accelerator We've a been it so garage. car, with We've in had and the XXX-plus Yes, so the race hour. race it Bryan. a start to doing Thanks, laps. we melt running out we Xx. The car, Then way going Yes. associate call capable like it Ferrari think about think the

as tires, point, that ready. stopped really hardening Not put race the we time to So melting spares well. we're the on car, have the we shelf we're only

get there. XX% poultry, manufacturing my remember last September a ops and I machines my X, history, seen come specialty. I've that's a October from X in We've hardcore The I just and background those breaded and teams to dance. over weeks, can been increase my make and background,

the As and uptime Bryan redundancies schedule mentioned, we've attainment. added to approve

more Additionally, in. we have coming fryers

will fryer the order. week next short We have online fryer and that a sometime of a And second be before in in we coming end arrive have the year.

that I adding out are we in I would to want to built. the I built think more that printers terms office of a and in sort core lines the it that CapEx, of everyone remind think plant have of And relatively adding office we're we're couple low also term. that we've the the the

the We're the executing and And you. changes. us. comfortable is in after with plan. that our we're for order the capacities, future hope before So question I these both covers for

Jeffrey Wallin Van Sinderen

want really of doors. That's little you we terms existing kind helpful then customers door telling of or to And maybe could retailers and maybe those? great distribution into if hear. bit and just ramping new retail then plan they And SKUs a you shift on in just larger what additional in for expansion then can new touch are most to your

Bryan Freeman

very velocities new bringing in high as simple. you are SKUs category. with of have consumers also kind and When Yes. straightforward the to

grow helping lean retailer to a in with they category. want usually you're their just you. So Then

SKU And in obviously the the add in is the entree currently expanded in entree so is opportunity I true as we Jeff, door. specifically, count as The well the an categories see door door. breaded to multi-serve distribution where there's participate poultry in, single-serve same

because selection increased So the you helping that of as year, see category. kind up I us see the of build points grow distribution them we're you'll think next SKU really

category to focus quarters. business expand as on handheld XXXX section and to the that opportunity in to refrigerated of attention a our meats well. pretty into we to The that's wanted thing is the soft upcoming a And store in I the the refrigerated see be call business ours other of nice going going

Jeffrey Wallin Van Sinderen

you launch. then the mentioned fish And Okay.

December you're start then or Is ship I starting hit said actually will correct? to in and December that to that shelves in think January. you

Bryan Freeman

same Yes. our on That's correct. is platform. true The [indiscernible] meats

are So platforms in our velocity allows as significant. see -- media well. lean the to we'll stores social in shelf. shape how national up And they're nationally. footprint They're having the . that X,XXX next counts -- X,XXX really of folks And range the a store for to once on year, on and

Jeffrey Wallin Van Sinderen

And just if follow-up that, are June the Or pretty -- on in sort how if date? the for should that, the the example, about next would of a reset sell-throughs think? when a reset you fish good we for Would that? think do that be

Bryan Freeman

I would year, be half of resets thinking next those back would when . is occur.

Jeffrey Wallin Van Sinderen

Okay. I'll enough. the rest offline. Fair take

Operator

end for thank reached session. that, of question-and-answer our have We And with participating. the you

You disconnect. may now

Bryan Freeman

we that put I call deal it I make in debt a have disconnect, wanted to we few to just and a Before on comments comments. place. make attention to recent want few

the in sheet. interest really First reduce strengthen our raise. done of equity couple one, our over increase And balance instruments months putting cash things: some And last One of been in was that all, debt liquidity. that our X do and we've several has the overall cost; to recent a two, ways. strategy two,

new by million million. forward much debt the annually, $XX also we're and who reducing cost it Services, our has increase that partner, long-term our piece as with And us PMC as cash has million the since essentially see as $X of our to potential. beginning, to is it liquidity announce been much move as has the with a will that made so decision We as interest Financial what $XX really pleased

that business we think more into and a So weeks, when results great the view and we that's quarter forward get not Thanksgiving. I we as that upcoming together. hope that next that, positive development days, it positive very fourth and development, to I our look forward has everyone deal really pull and for a in look reporting to completing a we'll the year,

have with taking that, and Thanks. great a thanks today. So for time day,

Operator

Thank teleconference. you. This today's concludes

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

Real Good Food (RGFC) 10 Nov 232023 Q3 Earnings call transcript