Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Barfresh Food Group Inc (BRFH, Financial) achieved a 40% year-over-year increase in Q3 revenue and orders, reaching over $2.2 million.
- The company expanded its manufacturing capacity by 400%, allowing for the production of over 120 million units annually.
- Barfresh Food Group Inc (BRFH) launched a new product, Pop & Go 100% Juice Freeze Pops, which has received positive feedback and is compliant with USDA reimbursable meal programs.
- The company has significantly increased its sales broker network, now covering 95% of the country.
- Barfresh Food Group Inc (BRFH) secured a $1.5 million receivables financing facility to support inventory and production needs.
Negative Points
- Revenue for the second quarter of 2024 decreased by 3% to $1.46 million compared to the same period in 2023.
- The company reported a net loss of $1 million for the second quarter of 2024, an increase from a net loss of $742,000 in the second quarter of 2023.
- Adjusted EBITDA for the second quarter of 2024 was a loss of approximately $682,000, compared to a loss of $617,000 in the prior year period.
- General and administrative expenses increased to $871,000 in the second quarter of 2024, up from $493,000 in the same period last year.
- The company's focus on the education channel has resulted in flat sales in other segments such as convenience, military, and entertainment.
Q & A Highlights
Q: What have you been seeing in the non-education channels in the second quarter, and did you see any boost in the summer in the entertainment channel?
A: Not particularly. Overall, the summer sales for us were flat versus last year. A lot of our focus has been around the education channel, so we do expect that to increase next year. However, the various segments were relatively flat, and that's really a factor of since COVID most of the focus has been around the education channel. (Riccardo Coste, CEO)
Q: What is the hiring outlook for the sales team? Do you think that you'll need to make a substantial number of more hires?
A: We feel that we are fully staffed now with the recent hire of our VP of Sales, Tony Grossi. With the completion of our sales broker network around the country, we have over 95% coverage. We are now formulating our strategies to go after various channels that we haven't focused on in the past due to our primary focus on the education channel. (Riccardo Coste, CEO)
Q: Can you provide more details on the new Pop & Go product and its market potential?
A: Pop & Go is an innovative product aimed at providing students with healthier options throughout the school day. It contains a half cup of fruit juice, no added sugars, no preservatives, artificial flavors or colors, and is available in five flavors. It is compliant with USDA reimbursable meal programs and smart snack guidelines. This product line will target lunch menus in schools, potentially resulting in up to five times more volume of meals served than the breakfast menu. (Riccardo Coste, CEO)
Q: How has the recent infrastructure investment impacted your production capacity?
A: We have dramatically scaled our production capacity, now able to produce over 120 million units annually of our full range of product offerings in all channels, a 400% increase from our previous capacity. This expansion is supported by three new manufacturing partnerships. (Riccardo Coste, CEO)
Q: What are the financial highlights for the second quarter of 2024?
A: Revenue for the second quarter of 2024 decreased 3% to $1.46 million compared to $1.51 million in the second quarter of 2023. Gross margin increased to 34.8% from 31.4% year-over-year. Selling, marketing, and distribution expenses decreased 7% to $583,000. G&A expenses increased to $871,000 from $493,000. Net loss for the second quarter was $1 million compared to $742,000 in the second quarter of 2023. Adjusted EBITDA was a loss of approximately $682,000 compared to a loss of $617,000 for the prior year period. (Lisa Roger, CFO)
Q: What are your expectations for the third quarter and the rest of the year?
A: We expect to achieve positive adjusted EBITDA in the third quarter and the back half of this year. We anticipate record quarterly revenue in Q3 and record annual revenue in financial year 2024. Our Q3 revenue and orders have already reached more than $2.2 million, representing a 40% increase year-over-year. (Riccardo Coste, CEO)
Q: How are you managing your cash flow and financial position?
A: As of June 30, 2024, we had approximately $383,000 in cash and approximately $1.5 million of inventory. We secured a $1.5 million receivables financing facility with a one-year term that renews annually, providing extra coverage to fund inventory. We also received non-recourse litigation financing to allow vigorous pursuit of our legal complaint without further expense to the company. (Lisa Roger, CFO)
Q: What strategic initiatives have you undertaken to support long-term growth?
A: We have expanded our product line, scaled our production capacity, expanded our sales reach, and brought on top talent to our leadership team. These investments are about building a company primed for sustained long-term growth. (Riccardo Coste, CEO)
Q: Can you elaborate on the new manufacturing partnerships?
A: We recently announced three new manufacturing partnerships. One of these facilities will primarily be dedicated to manufacturing our recently launched Pop & Go 100% Juice Freeze Pops. This approach strengthens and diversifies our manufacturing footprint, mitigates risks, and enhances our operational resilience and scalability. (Riccardo Coste, CEO)
Q: What are the key factors driving the increase in G&A expenses?
A: The increase in G&A expenses was driven by fees to broaden the capabilities of our management team, a non-cash shift to stock-based compensation, and the non-recurrence of recognizing employee retention tax credit benefits in 2023. (Lisa Roger, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
