Barfresh Food (BRFH) 24 Oct 242024 Q3 Earnings call transcript

Good afternoon, everyone, and thank you for participating on today's third quarter 2024 Corporate Update Call for Barfresh Food Group.

Joining us today is Barfresh Food Group's Founder and CEO, Riccardo Delle Coste; and Barfresh Food Group's CFO, Lisa Roger. [Operator Instructions]

The discussion today will include forward-looking statements. Except for historical information herein, matters set forth on this call are forward-looking within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and including statements about the company's commercial progress, success of its strategic relationships and the projections of future financial performance.

may, identified anticipate, use plan, and intend, forecast, continue, are as words should, similar statements and project, expand, will to grow, estimate, could, forward-looking expressions forward-looking are by such identify of the such potential, variations intended These of and such words statements. predict believe, expect, occur are statements than the or address statements. developments or events company other statements believes that future All that will anticipates in may or activities, forward-looking of historical the the fact These that assumptions expected statements the made based future developments based on are certain believes under on and the appropriate experience, other are factors circumstances. company

or Such such may or vary of prove or are more assumptions, risks results statements or of should number anticipated indicated incorrect, by of which actual to beyond many are statements. a risks the underlying and one the assumptions of materially uncertainties subject these materialize those uncertainties, control forward-looking from Should company.

EBITDA, quarterly to should undue recent on The the in comparable and margin measures they Accordingly, results, with including gross investors on tables adjusted gross of of are including the only business place its most disclaims current on including otherwise. certain the date Exchange certain update with and measures, therein. Furthermore, company factors profit, in is contained adjusted margin. performance, the to adjusted in presenting reliance and the publicly warnings, and company conjunction current statements, non-GAAP a assumptions future whether release intention XX-K expressingly and and changes considered result are order as Securities call forward-looking GAAP these calculations including any this which are also of contents Commission, on aid Form the made. filings as speak be the not this or risk information, after company's of events, to based the company's call, cautioned XX-K forward-looking understanding Form reconciled update EBITDA, reports new the any in in the on annual to the business X-K, which report any reports gross Form cautionary statements statements In

The reconciling the of nonrecurring that directly and the and useful manufacturing dispute believes items adjusted and compensation the such profit including other of with the costs, costs, they associated relocation or company. product are costs. stock provide as those gross nonoperational because investor the related the are noncash withdrawal, EBITDA performance information to certain adjusted reflective Management

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

even this a period offering future last our our is exciting for wasn't more of baseline quarter as Good offering afternoon, that new to earnings a over $X.X everyone, that the I'm over XX% you and thrilled XXXX million achievement joining third announce makes growth, or considering our for & for year. quarter, record Go quarterly it robust Pop call. revenue quarter achieved third increase revenue. serves the same What our part thank we representing of a us especially for third

for and recent initiatives strategic growth exceptionally profitability. Our us investments and well positioned have continued

Let developments. me key highlight some

allowing customers Our efficiently. of demand recent process increase being the commissioned, some of manufacturing commenced growing and production still our onboard new others which and X new have partnerships, capacity, dramatically to in us meet

a XXX We units compared million product will across increase ability to last now the over XXX% year. offerings, annually have our to produce

fourth online in with We capacity the to partners ramping quarter. have additional our expect operations up and already come new manufacturing bottle begun

channel. expertise with firms regional penetration sales are force comprehensive coordination achieved local extensive our of network, by strategic power in United is Sales. has sales point sales hundreds has Our the of channel proven out the actively Complementing that in to a through team Vice ground sales putting this professionals with with promoting products. The the leveraging expansion President in-house works experienced across of approximately the important impactful our strategy. relationships, exceptionally partnerships of to It's brokerage local opportunity this transformative only in be schools dedicated established beginning States, our education with led our U.S. in This effectively in the we our and reach impressive and approach expansion This coverage broker our broker experienced just which on network education now the internal external sales a cohesive in XX% network an covering X.X% is national country. currently the ensuring lies

we During Freeze new to our the Juice other This channel our is with target up the the administrators be compliant can from product, mill with The breakfast in been Snack and as education lunch extremely offerings of & Pop guidelines. selling commenced Go school which channel. existing reimbursable our students to programs offerings. in the response XXX% USDA volume Pops our quarter, strategically schools, and products fourth & Smart current has initial Go menu Pop menus and education complements Xx positive.

place in team. experienced with our on-trend offerings, of launch amplified our position momentum network growth. clear having Go this market results. to it's accelerate of to foodservice been aligned trajectory. It's not capacity is Looking broadening expand capitalize company about ever company other prime further production for retail We're and ahead, growth just our a Pop Pop The the & long-term we sales about and put sustained we've Go into excited management our product infrastructure stewardship & reach. for see strategically is channels year's on the in building our path a further The strongest comprehensive the under and

the Roger. now Lisa? turn over our Lisa call CFO, to I'll

of and increased smoothie ahead our in sales. build compared the bottled improvements and third in you, from Go Thank for benefited Riccardo. the in quarter XXXX high million carton million bulk $X.X XXXX. seasonally from quarter in of quarter Twist XXXX sales Revenue third to $X.X third of XX% Revenue smoothie & inventory to improvements

for margin quarter third comparable the in XXXX is pricing supply of was of excluding XX%. cost the gross costs, year product XXXX prior to third of was period the increase margin XX% in quarter at improvement mix, chain and for actions adjusted to the The adjusted due a components. margin year-over-year production relocation slight Gross favorable gross

Selling, in and marketing broker to to in result and costs, distribution investments XXXX. expense for $XXX,XXX expansion in a $XXX,XXX quarter $XXX,XXX third compared quarter $XXX,XXX the of commissions the in of is the expenses third year. as the tax G&A XXXX the in recognizing freight increase of personnel compared third period the XXXX. of increase last in well was same non-recurrence network of due primarily revenue. to to for higher travel credit broker increased driven due G&A as the quarter The company's to The increase retention of XXXX costs were employee benefits by

and third margin increased loss by a XXXX, quarter increase non-recurrence $XXX,XXX was $XXX,XXX compared headcount and third of XXXX. XXXX the The in of to increased net from tax loss result year-over-year for net Our offset the contribution partially the benefits of in of the is sales. a quarter of recognized

in quarter $XXX,XXX compared the EBITDA third XXXX, of was a $XX,XXX a loss For of to prior loss adjusted the year period. approximately our of

our sheet. moving Now on balance to

receivable sheet. in $X.X had we our $XXX,XXX XXXX, approximately accounts XX, September of and cash balance million approximately and of As on inventory

preparation of build of to cash the a our half first QX. build we of for XXXX. revenue in seasonally amount a The increase us the to XX% deployed significant the for third inventory generate year, year-over-year allowed up In high inventory in quarter

fourth to smoothie bottled online capacity expanded quarter. the come expect in We

equity Additionally, reduce taken financing. employees to and compensating we have other obtaining cash including and to requirements compensation our reduce finance nonrecourse secured litigation with liquidity measures requirements, and our directors receivables

Riccardo remarks. Now will I for the back turn call closing to

In our long-term near-term I both share want Thank to and outlook. closing, you, Lisa.

our factors: in portfolio, continue For X record will revenue First, year-over-year generating fiscal improvement. annual adjusted of the growth driven & margin revenue we highlighted to our fourth and Go quarter. This the offering, expansion Pop by is year gross by which begin XXXX, expect innovative product key

sales enhanced our new our capacity; and customer production third, which is Second, significantly acquisitions. accelerating broadened network,

stage the strong to strategic XXXX. a for momentum enter XXXX, finish we These but only as provide also not initiatives robust set

Beyond the effort key of for our new locations. co-manufacturing laid we part sustained future XXXX been our this groundwork of have the outlook, has establishment growth. A

internal represents resulted has crucial our is this incremental costs trial a growth. for that and investment acquisition resources and results, have contract it in While significant third quarter of long-term our impacted

Beyond we've diligently been all of our business. manufacturing, working aspects on enhancing

to operations have been infrastructure transport Our efficiently also and business ERP the our management integrated scale This newly and effectively. system. us positions bolstered integrated by

sales With we're improvements focus and our set these from operational capacity blocks place, to growth. now manufacturing aggressively and resources shift to increasing building in

us gives sales to Our our room track we significantly capacity record increase grow. and shows even more can expanded

initiatives deliver shareholders to and bright. The and sales new ever business both and we're coupled our term market on rebuilding substantial our term. for growth been strength prepared gives great our ability positive in we're position And in all to than ahead. more investments. near with to and momentum in We've the of opportunities seeing is capitalize and the our confidence drive these position aspects the These diligently in us and are seize the a future heights in to value our XXXX the long

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

Instructions]. [Operator

with question Group. first Vendetti Anthony comes Maxim Our from

looks about that the just Go could traction, the little that, around & wondering I the would bit pipeline helpful? any provide you initial Pops, you commentary like be and other then want just was what if talk a new Freeze Pop to

sure. Yes,

first Go. -- just So we've we actually shipped & Pop for orders our

got QX & country. So between pop that commencing We've understand up Pop very all of exceptionally they getting in a in channel offering, that is new We've lunch it from the the little but had new same has -- been servings of will opportunity code the and revenue in bit, people already exciting detail education significant. some of do out. been the set we The of registering difference new sent orders. about breakfast the be the distributors the samples We've the and have over mentioned. Go interest expressed talk the the like Probably in part are volume got most menu, a we high. just interest opening lot

the we're the get So menu lunch services if menu. versus you what breakfast of potentially Go Xx doing and of say, for and just & up to volume have a much at of audience Twist breakfast on the bigger the the, we the volume is amount for lunch

that menu, very their and for as having into we have as We addition well an on that products customers to us menu. products their Go with the same go in lunch having look the the on is also alternative So to customers very, now for them lunch option a brand-new and opportunity we're & already serving significant as breakfast menu. Twist for

it. about excited So very we're about very excited it. Very,

Okay.

that's So great.

that co-manufacturer are co-manufacturer. signed on the they is the Twist the Pop the Go, & Pop then & idea Go Pop Go & us both about just Maybe And recently, similar better? that? are Go So the the and mostly you & to Go up Twist give margins the & an or doing new it for

Sure.

does & make manufacturer do but some for our that not us. products Twist So product, other Go they

So it's different.

a the profile than probably from Go. perspective, it's However, at bit same a probably or the margin margin Twist little & profile better

[indiscernible] like products of our well. single our and product serve some as bulk

is expansion product of line. there So every

Yes.

some nationally done on the system footprint of front work the give coverage done XX really and to redundancy products. need really multiple -- building lot us on that lot we've So work cover months last we to a a a in within of manufacturing our we've from manufacturing extra the over

believe volume and also locations, manufacturing more new savings we're and get as going roll the kind product additional just some and network. pricing cost just out we to that, get and of better across with efficiencies we better commission So we

Okay. you And time, then accounts right separately, school how now? many at active in this are

We That's new months addition did new added about We've of got X,XXX being about X a locations. ones ago, the daily. great almost question. announce

be though year. Some at still penetration, as and we're which a were onboarded, the the We onboarded X.X% back we are of -- a about have as through others lot been feel half to take. Once handle on better beginning will more share new is have get a of schools-ish be we'll into the is to number, we'll year, and any about able we X,XXX it that right, detail. the get

penetration how of the across half the look look -- that X.X% good So are not just States, candidates school spectrum entire XX% account... you you United about X,XXX for candidates or this? at of good when schools are there -- good Or them candidates schools schools at are the the -- do

right? only further I about So Pop mean, & is it's worth hadn't penetration a question, for & that's X.X% good talking been and this that and Go. probably that week, we've explanation Twist some shipped up the Go, we that because any even until

open like the just still & market Go canvas penetration of from and perspective. XXX% us Pop is a complete white is So to

Go great to So -- that capacity really as constrained up & look All Twist until It been you eye. us. all they're at schools product, remember the candidates you the we've just for got now. also

So unlocked we're brought penetration. penetrate we volume now go capacity & in up, which that looking customers time, the the same to thus to we're expect the the significantly at right now. Pop same and market the and at the we're getting Go, manufacturing increase X% the and is -- with same And

Instructions]. [Operator

Our next question [ Ankur comes Sagar from ].

line Congratulations on top the higher number.

for think to want the mean, it's commend you persevered fair all to have odds. I you I think you say I I job done. have against

it's been just the we're a we've But while. had first supply. And been. behind that's our surface our really in Yes, probably both tied jump right, really significant still. have back, and definitely only been we've We really arms on because short Yes. of kind scratching

a inventory more the the of to beginning that's really online, extra with that capacity now expect of we lot coming we So types and did these this build occur. with year jumps at of the

your you Great and by team. Absolutely. job

think what and years, a not see shareholder, as of amazing too that of that much just it's without been last the have in accomplished I to dilution. couple you

for you as basically I go feedback did that now based ask side So school the products the me the the an new questions. couple that's to product. first putting was this the How Pops about area of regarding the It lunch multipart product. wanted well? is company new mean Freeze one after a customer innovation came on or -- great. question want It's as with schools. I -- the well company into seems like the it it lunch the on to a of to just you're is

or menu able do the doing launch the school you have and the this right on about lunch in without customers, signing menu, for And a and you to the getting you that schools potentially terms the you just the that? or Do Go, of have wait so to X,XXX how of product customers this process? on go bids the reach personnel get Twist for on out can & be bidding to

Okay.

right. asking of menu much are. opportunities create understanding the So to the products I'll what higher volume a take and of The top. the our bigger that. lunch the is a we've by opportunity, questions part We from where the combination customers But definitely Yes, for. listen were you're recognized we also

supply our with it So we in with chain, conjunction same what chain, understanding already our to to, what have it can our products was well, same deliver customers. access kind But a then in the great conjunction we already supply the what using supply Because chain. we're also as right? that talking was to customers we're of these using lot the of utilizing we're ingredients using ingredients

of and customers our to talking lunch by the recognizing the and then menu. on -- talking opportunity And the significance

we it's surpass a new to Go the that Pop understanding So new sheer market and volume out our Go & that product to by multifaceted and product, believe this product going for I opportunity just personally, the believe marketplace it's there approach the Twist I in product, a category. believe & introducing

to. that on been and acceptance the customers the initial initial that based talking we've And we've had reception from

a they're Pop proposed and XX,XXX We a for Go & just the customers. spring, feedback that product month & in us have from to Go but about per started are tell, spring an our units and and XXX,XXX they Twist will give time volumes to customer do month. was So the that you did being the & initial forecasting a going to I'll Pop from month of about in the intend the the Go add example.

it. volume already bullish excited & So we Twist about product, in seen significance and the are we're & and between the is contrast Pop so Go of the product opportunity which Go the why

-- play time that get to out the customers. we So out believe going I to over as that's

be of already a going -- answer customers to In yes, our already and we're on servicing the that terms total our We're to now customers, customers approaching it's going menus is to. that absolutely. existing mix we're direct

they carte added They instances, at to menus. and opens to it's cafeteria to bids. them and when will buy it rebid their moment their to some may In a add whether add choose then season maybe to it get it menus have the bid will just the flexibility la up, they'll then and the it

it until season able Some to add bid rolls won't around. a be

schools. is of Sometimes that special the different bids, around happens country mixed really they bag sometimes twice types a year, do it for a

And is supply great. from side Twist -- Got constrained. the you're it. & to somewhat fair it. that And that's say terms the in Got of it Go still

the up should and And even Twist that mentioned about I basically after think in to go manufacturer coming contract product you school the prepared you in to districts. allow QX. remarks another Go supply larger &

Yes. not Yes, means constrained. somewhat We're that's not words.

have that's on significant a the been cap to our what very factor revenue. had to completely ability really restrained. We been And generate

have the that of year beginning speak, we we well. we start turn to now improve QX, commissioned So to expect literally. as as facilities the And and next on further volume at in being

& opening up, and broadly Go So and approaching going as and those out be product nationwide. aggressively we definitely that more larger we volume be accounts will selling see capacity the there Twist

students on going on and great. again when mean product I show I it some your school customers, up for social are That's administrators, media, it's see menu. waiting the actually love even just to

can attest I So to that.

loved they it want every We so teacher, can or grandparent, home. from they product where parent, had grandchild probably the know child an a it at letting it from else and can a that know they their get get us and to a day e-mail get the other has they

and the get forward out to look definitely feedback product, we to on we great more students. getting it So

item you're contract Got of had years with it right dispute you the legal Got it. move? ago? something is had the the it. that relocation. -- of the And doing Or you think couple manufacturing a I Is regarding one still just a remainder the this manufacturing now

so No. result sold contract That was was owners do to actually -- relocate as more new of our repositioning. equipment didn't had of the a co-packers manufacturing, that. off any and a of We the one we

our really that's product. single-serve So

speak actually going which we being be, up again, targeting So we that that and business will be more once single-serve lines on again. as well. into next year new is done We'll focusing running, as

was That QSRs, significant we business the had Yes. COVID. where with opportunities before

So to opportunity really significant that's very new a that. relaunch

Yes. And a following products while, multiple we're had actually. national approved ready we've got for for those that and have by been multiple them, out QSRs to roll we where

So going we'll those planning be picking and conversations started already year, up next seeds. we've into those

Right. just one That's That's great. more. other one And great. --

I some -- think business is cash the now a see of I constraint. also

even think the cash able probably any there? be you share the I to flow can goal to gets provide revenue sales get is your of cash, line company flow sort breakeven, you and and when cash is time breakeven? get there can the to on growth generate comments you get a that And to where number on

close Yes. breakeven EBITDA EBITDA adjusted -- Well, after of quarter a were series loss. we very to this

we of was know, need margin think million So close. be on about contribution so I kind very another, we're probably to breakeven, $X.X don't EBITDA -- adjusted our sales

And constrained. be talked expect cash being you there for QX. We about to

sheet we had receivables I AR. the we in I only say it. have at $X.X our QX, borrowed but mean won't true, on Somewhat million look if in And balance facility. We $XXX,XXX also you

We really $X.X have if like So to unnecessarily. don't borrowed it. borrow another we we just could needed want million

Yes.

we available to access plan. our have meet have we cash So and to

like really feel now. in we good spot we're a So right

for that's sure. no, No, Great.

managing amazing I guys an that. think have you on work here done

can one. on don't -- you it this. a litigation last comment one the Just know regarding I I mean has taken This if while.

this you to the recourse right after and share have sure litigation taken place that you you're the initial I that in make dispute? think of at done right you the just can amount right get in to the here. amount least you're And going get the I sort -- trying think decisions financing

talking We're claim really filing really -- The position that $XX and taking filed was and a Ankur public, for [ that's not it about a of contract, bridge it, we're where at minimum Yes. the we're a ]. this leaving stage. that's for we really million

it. Got it. Got

I great. it. That's appreciate Okay.

[Operator have question-and-answer today's Instructions] our This We of the end session. reached concludes teleconference.

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