Barfresh Food (BRFH) 1 Apr 192018 Q4 Earnings call transcript

Good afternoon, everyone, and thank you for participating on today's Fourth Quarter and Full-Year 2018 Corporate Update Call for Barfresh Food Group.

Joining us today is Barfresh Food Group's Founder and CEO, Riccardo Delle Coste; Joe Cugine, President; and Joseph Tesoriero, Chief Financial Officer for Barfresh Food Group.

Following prepared remarks, we will open the call for your questions. The discussion today will include forward-looking statements, except for the historical information herein; matters discussed on this call are forward-looking within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about the Company's commercial progress and future financial performance. These forward-looking statements are identified by the use of words, such as grow, expand, anticipate, intend, estimate, believe, expect, plan, should, potential, forecast and project, among others. the the developments historical or that or occur than activities, that anticipates other statements. may or forward-looking events the in statements, statements facts of address will All are future, Company believes Such forward-looking assumptions on are that expected experience, appropriate factors on under developments other Company made and based further the are statements based certain believes these circumstances. not which the are assumptions, risks many may of of Company to of and control number are a subject the These statements beyond materialize. and uncertainties, Investors cautioned statements not are any that are guarantees such performance. of future XX-K, call The contents statements Form on be of recent and Report with conjunction and the the XX-Q. Form including in risk this filings cautionary the should and Quarterly Commission, considered the Securities Annual Exchange in Reports factors with Company's warnings, its contained on the intend, does any statements, is except to obligated, required not forward-looking not update by law. publicly as Company Furthermore, and

to Food Please and sir. I call Founder CEO will Coste. Delle the Riccardo Barfresh over of go Mr. the turn Now ahead, Group,

significant very and year Good XXXX into call in full-year two today, provide sales insights schools a afternoon, review and us. made sales as On expanding XXXX and will operationally. account our us quarter major you national in a our both thank channels We our fourth Discuss new review channels everyone, military. our milestone from headway growth was we XXXX strong our and approvals announced additional perspective accomplishments, for sales revenue growing joining pipeline. our as well results. achievements with for and

results. overview first in of let level provide high through walk accomplishments these me I detail, Before our XXXX financial a more

over X% XX%. to while margin XXXX gross sales million, Our $X.X increased to net XXX% expanded

XX% million. administrative we reduced expenses million $X.X loss operating or also and We by XX% or and $X.X general our reduced by

cash XXXX net and of activities from to million from flow Our XXXX. and in million XXXX. $XXX,XXX of to $X.X in sales in improvement a growth, use the cost have to cash Due net by of structure to improvements over through economies the $X.X improved of topline XXX% XXXX we our were operating cash accelerate and expect of scale million in quarter up a continue made $X.X in we use fourth cash in

results We pleased see sales year the past are very in XXXX with the a our expect grow. business over to as ramp to continues and momentum during in material

strengthen a Not only also the significant already had in in into position to in by largest over customers. more channel specialty the supply distributor districts continue and national XXX increase in were we to able these schools school expanded a to announced scratching are in last throughout Now, U.S. the large year, Throughout of expanded over with I'd surface both made Business Update a XXXX. like still nationally channels. moments to of the to and had we in the This channel to take XXX is we quite states. our just U.S., distribution multiple the our with XXXX some accomplishments further the schools with we review food On only we agreement few grow course XX,XXX schools and to Channels continue entering Education well multiple of schools we our adding the were as already Military we that call, Call, more we locations last Since school our as have that contracts. to add in

an to expect of update of season year. the In for school material the very the soon. exciting begin and locations plan another school provide bid new We middle specific school in fact, we are school ramp to

this has locations Armed expanded announcing Forces in continue and XXX gain Turning and to two XX% U.S. feedback to that a add we from Channel. issued in our Facilities, months more to the we bases a January, The release Military Dining of increase military channel. the we some make end serving is been At bases is had high strong the troops and facilities. a press product multiple we fit perfect X.X serving another have bases. locations This that are for United volume positive States active the XXX and there very dining in are million the confirmed tremendous our results channel as within

on locations are November after to rollout been for moving forward to Lastly, this this we national to and looking rollout for over a products accounts, notification lengthy our set had a tests chain written national with of approved and a our process, we a received X,XXX past system-wide account. approval QSR that

see an exercise. $X.X of more our Cugine, the our during turn insights Finally, into capital CFO, and handing strengthened million who Tesoriero, raised channels will XXXX being on equity path opportunities. XXXX build comments. We profitability Joe from Tesoriero and cash as warrant the details a me CFO we clear financial putting before successfully rollouts results we over additional to capital strong an customer to And excellent us XXXX the into off our it entering accomplishments. opportunities and the his launch on our flow position. excited into the major and sheet balance provide Overall, XXXX, to and wins very has to the raise that, through financial and with Joe in injection call to our our provide on first we ready are to are position combination President, to let discuss and Joe? This months. announce raise Joe a during more positive these of to quarter will expand coming be operational

$X million on provide financial sales results business. by you, school full-year for Pour discuss to is product. The in then full-year Revenue our an primarily was Today XXXX, channel result driven XXXX. Easy an expansion I'll compared year-over-year XXX% Thank for the of Riccardo. of and operational fourth of the $X.X bulk and million increase our quarter update aspects increase markets the key the XXXX military and in

compared by number was factors of XX% XX%, XXXX leverage the the the of production gross including in scale mix. larger was XXXX. gain product gross margin in full-year improvement to Our a profit driven from and The for profit margin

reduction that similar G&A XXXX. XX% million, driver administrative costs for full-year by million in from million to to for to this our by of million, a from XXXX improved $X.X expect $X.X $X.X primary for to improvement loss in We reducing $X.X $X.X and was gross in XXXX. improved of or margins allowed personnel operating of margin or The sales, XXXX. million $X.X to the XX% reduced XXXX $X reduce us XX% million Higher profit be million. and reduction General a gross expense XXXX expense

$XXX,XXX, fourth improved compared fourth XXX% Turning factors same and XXXX. to revenue an quarter profit to in the quarter. the the of that $XXX,XXX improvement drove of in quarter fourth margin year-over-year XXXX increase results the revenue was gross drove in results, The the

in During primarily we of quarter, reduction by improvement the reduction XX% an costs. the realized of the $XXX,XXX fourth expense, driven our administrative in and personnel general

the existing our and structure, we equity Turning begin penetration in million margin, exercise Military announced million the plus per beginning million. we of of balance revenue inventory we to the for the We had a total sheet, $X.X the of of that with ongoing of exercise X inventory, of per approximately about components $X improvement to in with G&A million and comments. approximately accelerating million strong sheet, financial our on The warrants stock sales increased improving capital an existing February price private and This profit had National share, proceeds fourth his mentioned hand year through $X.X our $X.X at accelerate strong capital XX, the the that issuance ended result as are $X.X considering of the to of the exercise balance with capital we raised control combination warrants. the of working XXXX, Channels at in and to Overall, placement of XX% million QSR the quarter, X,XXX of Riccardo gross an two we shares cash a our focus cash. coverage, opening the in gross to enter On strong during of working lower X.X capital. rollout $X.XX of a share, location and trend, ended consisted than with position at year. our XXXX coupled million common is we of School year no warrant raise of $X.XX of

I Now with call will Joe? that, turn the Cugine. President, our over Joe to

We for our the today highlighting rollout another November announced year largest discussing written customer QSR opened last call QSR by Company that dramatically wins a these locations, recent received major wins in by approval long-term our growth the the Riccardo start Joe. how Barfresh. over positioned opportunities milestone This was to-date. from channel. of you, had us expands our for earnings in on for customer our X,XXX XXXX. National revenue I'll and we the with of and Thank for have call a products strong

work national and the begin Barfresh and pipeline ample network established with strong Additionally, launch of we capacity, organization from that has we in continue others. a test to distribution proven with large to with an restaurant opportunity a to in executing near-term. expect testing move place resources manufacturing chains logistics and against to this

theaters product and as this outlets include are customer pouring customers casual operators, such driving platforms, assets restaurants, and resorts. aggressively of introducing and as to We our and traffic third-party new increased flavors number expansion ski continue expand well zoos, of sales. number segments as QSRs, [Amples] to dining of which dining large existing

For revenue increasing our customers will example, partnerships. driving our seven their of sales XX only consumers. bulk XXXX incremental with are adding and profits Clearly in locations top our new strengthen customers’

portfolio. includes flavors existing smoothie customers Shack such Concepts only also within platform, single-serve of to introduce opportunity the the Barfresh venues, which range Gump not expands our expand of within outlets we'll adding look and Joe’s addition, dine In as concepts consumer Barfresh and the customers as new but these as such outstanding for liquor will to Barfresh. such Landry's Landry's, Bubba casual Crab Shrimp

very the XX several our one more our progress starting school with time. grown we with for short in over product QX, We further With counties contract us and than the we Moving school school and/or The segment testament and ago about school locations continue the education drivers of period seven of now advanced with true to up districts growth about in XXXX the I've school are to a agreements untapped number states, selling expand for on districts, number school we year lastly, channel in in signed new to such And the need months started times of than distributors. less menus that last our be is year. variety. we weekly to of Education over U.S. basis. that XX ramp announced XXXX, public for representing products on schools, another locations the Channel, XX,XXX well into with over XXX significant with the a XX,XXX to school

adding We distribution are are in three selling flavors in and schools. now new that

Our the QX, school constantly our Armed and now start Dining another Channel. Yet and highlight Facilities. are from options is XXXX have hitting consumers moving Forces as expanded over of providing bases I'll we military mark. The seeking Military just crucial channel quickly channel, XXX are new flavors to products six our the the U.S. last

actively strategy stable locations. machines XXXX, building it streams, revenue this large facility accounts, demonstrates dining and rapid five the We and and I will during note runway we business. in as multiple large diverse national which on continue summary, six year, Military the will And separate education with ahead. of rollout are to smoothie foundation we consistent military the succeeded base with military we channels to a starting and one revenue begin and in installed our In pursue on success The locations example and approval multiple base provide we as some well Facilities bases, that U.S. Riccardo. Important locations at for for to strong expansion the another. all turn in our five pursuing for growth for XXXX, in of back a international that,

Thank you, Joe.

our our from prior our we more XX% increasing We've National year a margin. see as while by the QSR out. have quarter major structure milestones cost reduced and our as can sale. last you with fourth doubled and well losses We transformational when increasing rolled our our commentary, will customer approval improve than be sales As year to continue and full-year results that alone achieved

being being base We We over that have to added schools our be come growing now also have also and a military major and well rollout. more We XXX with now will We more rapid rate. XXXX a positive. clear XXX customers many pouring see moving at expect testing will and cash to of path flow locations over out entered profitability that products. and we

for opportunities on would the for ahead updating throughout and and year you wins by their optimistic their shareholders forward call additional growth like business support. next XXXX. hard foreseeable have continued look continued and the We long-term the for finish tremendous update on about future thanking employees we to are to and our work our I

Now the me open call up with for that, let questions.

At comes from session. be question-and-answer conducting Please Instructions] Ibex from the Justin Borus line your first [Operator of question. this a will time, we question with Our proceed Investors.

again there? potential more, or about the you more, focusing we the we of testing announced to give is on XX you that just Thanks guys. Hey, close one Is rollout? sense color, phases accounts. how be additional more, a of and many it really for might My five the many you Can in November final little question call. us you talking national to think us getting a two just bit give the customers how are getting do doing have of

Hi, Justin. of we received the we've announced for. one obviously we've that them Look approval

had As of mentioned, tell two are and and some that five advanced we to kind and quite than large. accounts it more we've it's through process. major always I between you quite that one range, significant quite definitely the going these have multiple way is can

on I sales on started of this can it thing? we've it you this type the know don't national accounts of yard these XXXX get or know timing, we seeing surprise would while. been if more even seems I summer but here specific a how line for you is from a like one

me, surprise time, for around we same our thing jeopardize want timing The to customers. not the wouldn't do No, we're last at specifics but talking is it rollout.

So the we’re you from really in that. will But numbers. steering away it tell I you'll that see

certainly that and cutting down up profitability Great. speak Well, the and a progress right probably thanks hope shareholders we for and would be now every then really the been lot get of don't the a big to the dilution know in I cost keep love. something is you I know I to and But direction. step profitability. you've getting

that’s you it's focus I – XXX%. a tell can absolutely of ours,

Great. Thanks.

comes next your of Maxim from Anthony with proceed Group. question Vendetti Our question. Please line from

Thanks. Good afternoon.

you? Hey, how are

run or is on going you? to that in mentioned how quarter. mentioned to trimmed use the Hey, So you now a it like XXXX? G&A, you I personnel, million up the looks that are expenses you bit the a call, $X.XX Is in so Joe pick and fourth guess going good rate little the forward that

I Anthony. a go would say rate that's run good probably you as forward,

other in Okay. And then process I of know you can't specifically two talk about I with that where you these the five. said think are But to another accounts. large you some there's

you a How an Or would in for a on that If expectation some happens of years they're be timeframe they could at best XXXX? your at best in of before one there, hey, those that guess the couple sort there board? you adding – characterize the look had least come is of, it of terms this but additional, it? is at

I are tell definitely not be that. expecting it years, you a couple of to can we Yes,

in is been this four years that three, look something works the So for now. has

obviously So progress. we tremendous made

some We another to year are expecting record this by be distance. year,

are that accounts picture and needed we've to us national here. that of obviously do done So everything we get to part

to is Justin, So mentioned thing, space. thing conversation the really jeopardize away is to of of last a any as launches. in announcing the we we're earlier our the customers steering timing. competitive want And that very I terms This last product with do from any

No, understand. totally

them, others lining the lost. because the the announced right, little which one And do approval to go of process close we've of multiple that end whilst have to are that for And as bit to big maybe finishes able is we really process up, that I the with. household names, other getting We're almost thing them to think dealing a talking we're well. we're brand that be only rollout names

Right.

military, the facilities? Correct? that XXX you're middle revenues? XX% Right And you now together, increasing when then still should excellent. in some percentage right of add can now and Okay you your up school dining to time you're and roughly small schools resets sign in is you up that I were How your revenue. And keep know and we up look at schools XXX you military that's at then had signing of that If more. the it? the a of

Good question.

what bid making. been and completed So though on we've the we and with have tests of season, significantly that number just even schools, been right expect are given it's of middle been now, increase that progress the touch in that number, XXX we we've the already in accounts that to with

there there a in So come those be schools. will new year, – school ramping the be material material another will

and In addition, products new flavors we've new some mentioned et cetera.

closely continue this working So channel. be to we in very

developed of really As When a a of going education that stabilized in to account channels that, set initially the being shot to we we've other we now to business very grow we long that there and But shot a great gone right, crystallizing, other we we were. company military the in really will long a a) had – started two product is national that be and that And and regional achieve. speculative way securing is and created really addition the shortly continue and over major the it's now were business, had we've everything we so. was to to for accounts. out what do first time is we top on crystallized

up look locations bulk product and So some volume military education. accounts say for between national splitting then business regional and high or at when the for you say single-serve

product. bulk the expect We to the national accounts the with far outstrip single-serve

– what then it's change. that it's but the definitely to So on and – going healthy now, expect. between to bulk a military healthy going year education, And is be this percentage a and it's true is we for

We change it very expect to shortly.

where I accounts should really the what just some degree. over by that give that expect. you mix national are So takes and sense some you mean, once product the are big of really we for single we they're serve, rollout now so

in you market. all But packaging, just a the very of Riccardo, you've have, perfected And packet. it's one single you terms said it's competitive a the that serve, market

what exact to doing who's is that? else measured You competition lot of exactly it's the in market, I – Who have mean, really exactly but smoothie doing? the I don't amount. know there's a you're doing actually

really have pieces there service, up, with distribution Sysco pretty obviously B) distribution our in we the our food agreement we an Sysco. are locked In we and largest right. isn't the patents, anybody, a) of have is have food distributors country service. for one exclusive

haven't of the really seen it's the in efficiency, just to It's we packets, because ability service create restaurants, making right. it's more those retail space, is the out the but anything – the cost the just distribution. more is in than than food for effective So the that that’s the There's other product products expensive. cost very probably actually the people there space,

the So own that that's kind of right space we now.

are the lastly sourcing the the national meet And necessary the account, national need do demand, the you X,XXX not to you have that to as account locations. that pipeline? of you the on that to to you the this only sourcing, produce meet fruit the And but the needs rollout, in others capacity need,

items I tell not until can with good approval worked Another you you've through get those that customer. already the you question, the do right,

needed chain, supply our part out necessary lead process of that all work our of our all to a of times, that. to understand was we it So that

the yes. So answer is,

to very being these worked that service approvals that and times we accounts. lead have supplier and have and requirements able go We into out stringent

Thanks. great. Okay,

of proceed the Please [Operator [indiscernible] question from question. from comes Instructions] with next your Capital. Our line Greenwich William

did fall you're customers With see you're guys. locations adding, the new guess why the I we revenue Hey, in quarter? adding or fourth all the

question. good Yes,

So is have combination schools of a a QX. it started few was in we One things. had a of lot

schools was So the for and little schools in there with a. year a a and took of between a vacations the we the bit was of product the seasonality more military the b) for that expect bit the loading a didn't QX, bases started, end probably that times. There factor of holiday have

what we really to the be case. was that found So

Okay.

two X,XXX? X,XXX? in be when With the on locations and will going fully that fixed out accounts, talked ramped everything on you’ve national location X,XXX the all the and about the Is are X,XXX

Yes, so two part just question. again a

operational national throughput. one first is, through we made that So to And progress see the we more better of turn with the we first that had issues with are accounts lot added of have a with some being account. starting the working and

that we're the we've see So that just plus an be start we'll to up said to what With it again comes impact. not keeping it numbers the that's and speaking will fixed timing, mind, confirmed reiterating just regards to I X,XXX but national exact the approval to is the in when for. before, the one account, have being and able everyone

So there others. are

Okay.

you announced to was timeline at when discretion starting It's really they rollout customer wants time. we this the there just wanted have So when to set no customer as the this, their time. to – start – this turning at

through, process but been set. to need go has Well, there's that been a approved the and calendar we've they

So to update. when we're everybody, we'll able update

Okay. that the you you right new when they to announced the you new school get until new And or on or are coming schools, when question we year do last semester on school, away? like have wait announce,

we they've the them, actually the in announced set been part up. process when already For of been and most signed they're

Okay.

But school we we'll we now be developments. so not year, up that with schools, some So and when the the providing right have have separate announced been shortly we more another set the new new they've because numbers update now.

you. Thank right. All

reached question-and-answer call now the end of have for session. the management turn to back closing remarks. I the And We will

updating shortly new Thanks to Yes. thank today we developments. everyone. look attending everybody on like We for just to the call and everybody forward

may participation. conference, your your you this lines This you today's at Thank and time. disconnect concludes for