Q4 2023 Arcadia Biosciences Inc Earnings Call
Okay.
Operator: Good afternoon, and welcome to the Arcadia Biosciences fourth quarter and full year 2023 financial results and business highlights conference call. At this time, all participants are in a listen only mode.
None: Good afternoon, and welcome to the Arcadia Biosciences fourth quarter and full year 2023 financial results and business highlights conference call.
None: At this time all participants are in a listen only mode.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand has been raised. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to T.J. Schaefer, Chief Financial Officer at Arcadia. Please go ahead.
None: After the speaker's presentation, there will be a question and answer session.
None: Ask a question during this session you will need to press star one one on your telephone.
None: I didn't hear an automated message.
None: Your hand has been raised.
None: Please be advised that today's conference call is being recorded.
Speaker Change: I would now like to hand, the conference over to T. J Schaefer Chief Financial Officer at Arcadia. Please go ahead.
Thomas J. Schaefer: Thank you and good afternoon. Joining me on the call today is Stan Jacot, Arcadia's President and Chief Executive Officer. This call is being webcast, and you can refer to the company's press release at ArcadiaBio.com. Before we start, we would like to remind you that Arcadia Biosciences will be making forward-looking statements on this call based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainty,
Speaker Change: Yeah.
Speaker Change: Thank you and good afternoon.
Speaker Change: Joining me on the call today is Dan Jacob <unk>, President and Chief Executive Officer.
Speaker Change: This call is being webcast and you can refer to the company's press release at Arcadia Bio Dot com.
Speaker Change: Before we start we would like to remind you that Arcadia biosciences will be making forward looking statements on this call based on current expectations and currently available information.
Speaker Change: However, since these statements are based on factors that involve risks and uncertainties. The company's actual performance and results may differ materially from those described or implied today you.
Stanley E. Jacot: The company's actual performance and results may differ materially from those described or implied today. You can review the company's Safe Harbor language in our most recently filed prospectus. With that, I'll now turn the call over to you. Good afternoon, everyone, and thank you for joining us today to review our fourth quarter and full year results for 2023. I am pleased to report that Arcadia continues to make steady progress in executing Project Greenfield, our three-year strategic plan to unlock the company's potential and provide a path to profitability. We are halfway through this strategic plan, and the results of this focus are unmistakable. Arcadia has significantly improved the quality of revenues and has now delivered two straight years of gross profit growth for the first time in its history. SG&A expenses have declined for two straight years and are at their lowest level since 2019. These factors have had a significant impact on cash, as our cash used in operations has gone from $25.9 million in 2021 to $15.3 million in 2023, a decline of 41%. Let's now turn our attention to GoodWeek.
Speaker Change: You can review the company's Safe Harbor language in our most recently filed 10-K.
Speaker Change: With that I'll now turn the call over to Stan.
Stan: Good afternoon, everyone and thank you for joining us today to review, our fourth quarter and full year results for 2023.
Stan: I am pleased to report that Arcadia continues to make steady progress in executing project Greenfield, our three year strategic plan to unlock the company's potential and provide a path to profitability.
Stan: We are halfway through this strategic plan and the result of this focus are unmistakable.
Acadia has significantly improved the quality of revenues and has now delivered two straight years of gross profit growth for the first time in its history.
Stan: SG&A expenses have declined for two straight years and are at their lowest level since 2019.
Stan: These factors have had a significant impact on cash as our cash used in operations has gone from $25 $9 million at 2021 to $15 $3 million in 2023, a decline of 41%.
Stan: Let's now turn our attention to good week.
Stanley E. Jacot: The GoodWeek brand continues to expand, and in Q4, it added over 1,000 shelves compared to Q3. Since our launch 18 months ago, the brand can now be found on over 3,500 grocery shelves in the pasta, pancake, and mac and cheese category. In addition, we are excited to announce that all three GoodWeek product categories are now available nationwide on Amazon. As we look forward into 2024, our focus will be on nurturing these points of distribution to grow velocity and dollar sales per store. These success stories by category will be the catalyst for expanded distribution in 2025 and beyond, and Goodweet has recently received many accolades from some significant publications. And I just want to highlight two of them here today. Better Homes and Gardens, with 13 million followers across social platforms, recognized Goodwheat in the New Basics category as the best stealthy healthy pasta with the same flavor as regular pasta but four times the fiber, and the Eat This, Not That site, which has 7 million unique views per month, awarded GoodWeek QuickCakes recognition in two different categories in January.
Stan: The good week brand continues to expand and in Q4 added over 1000 shelves compared to Q3.
Stan: Since our launch 18 months ago. The brand can now be found in over 3500 grocery shelves in the pasta pancake and Mac and cheese categories.
Stan: In addition, we are excited to announce that all three good wheat product categories are now available nationwide on Amazon.
As you look forward into 2024, our focus will be on nurturing these points of distribution to grow velocity and dollar sales per store.
Stan: These success stories by category will be the catalyst for expanded distribution in 2025 and beyond.
Stan: And good wheat has recently received many accolades from some significant publications.
Stan: And I just want to highlight two of them here today.
Stan: Better homes and gardens, with 13 million followers across social platforms recognize good wheat, and the new basics category as the best stealthy healthy posture with the same flavor as regular pasta, but four times the fiber.
Stan: And the EPS not that site, which has 7 million unique views per month.
Stan: Awarded good wheat quick cakes recognition in two different categories in January.
Stanley E. Jacot: In the 13 Best Store-Bought High-Protein Desserts, they highlighted Goodwheat Chocolate Chip Quick Cakes as a dessert when wanting something chocolatey and warm. With seven grams of protein, they're easy to make by cooking them in the microwave for 75 to 90 seconds, and in the 38 best store-bought high-fiber snacks, they recognize GoodWeed's Buttermilk Quick Cakes as a breakfast mix that provides a fluffy pancake that also carries 11 grams of fiber per serving.
Stan: In the 13th Best store bought high protein desserts. They highlighted goodwill chocolate chocolate chip quick case as a dessert when wanting something chocolate anymore.
Stan: With seven grams of protein they are easy to make by cooking them and the mic rate for 75% to 90 seconds.
Stan: And in the 38 best store bought high fiber snacks. They recognize good REIT Buttermilk quick case as our breakfast mix that provides a fluffy pancake that also carries 11 grams of fiber per serving.
Stanley E. Jacot: These accolades from trusted, independent testing outlets are proving what we already know, that our proprietary wheat is commercially viable to create great-tasting products while sneaking in more fiber and protein. And we don't plan on stopping with just GoodWeed products. There are thousands of products across the grocery store that can offer these same valuable benefits, so we see a long-term path to generate recurring royalty revenue. There are two key steps to monetizing this technology. One, partners with the wheat supply chain in order to produce a scalable, cost-effective, identity-preserved wheat supply. We need our wheat technology integrated into all customer-preferred wheat types and then efficiently moved from seed, to farm, to mill, to deliver flour.
These accolades from trusted independent testing outlets are proving what we already know that our proprietary wheat is commercially viable to create great tasting products, while sneaking in more fiber and protein.
Stan: And we don't plan on stopping with just good REIT products. There are thousands of products across the grocery store that can offer these same valuable benefits.
Stan: So when you see a long term path to generate recurring royalty revenues.
Stan: There are two key steps to monetizing this technology.
Stan: One partner with the wheat supply chain in order to produce a scalable cost effective identity preserved wheat supply.
Stan: We need our <unk> technology integrated into all customer preferred wheat types, and then efficiently move from seed to farm to mill to delivered flower.
Stanley E. Jacot: We are currently in discussions with several potential partners, and we realize it will take some time to build and perfect this step. In parallel, the second step is to work with large food manufacturers to create demand for a week. This could create a long-term pull-through partnership and ensure we have enough volume through our supply chain system. Contact has begun across several categories. And again, it will take some time to develop products with their R&D group. Now, over to Zola Coconut Water.
Stan: We are currently in discussion with several potential partners and we realize it will take some time to build and perfect the steps.
Stan: In parallel the second step is to work with large food manufacturers to create a demand for wheat.
Stan: This can create a long term pull through partnership and ensure we have enough volume through our supply chain system.
Contact has begun across several categories and again it will take some time to develop products with their R&D groups.
Stan: Okay.
Stan: Now over to sell the coconut water.
Stanley E. Jacot: The coconut water category continued to perform well in 2023, with unit sales increasing 6% while dollar sales grew 15%, according to Nielsen data for the 52 weeks ending December 30, 2023. As we previously disclosed, Zillow lost distribution at the end of 2022 due to supply chain issues, and we felt the impact in 2023 as we experienced double-digit declines in both units and dollars. However, when we look at 2024 and beyond, we are optimistic that Zola has turned the corner for the following reasons. One, Nielsen data for the last 13 weeks shows Zola unit sales up 2% with dollar sales flat. And the latest four-week data shows unit sales are up 8% and dollar sales are up 4%. Two, we have new flavor innovation that will be coming to market in Q2 for the beverage season. That includes our original, lime, and pineapple flavors, all in a new 16.9-ounce resealable Tetra Pak container that retailers are excited about. Pineapple is the number one coconut water flavor, and lime is the number one flavor in sparkling water.
Stan: The coconut water category continued to perform well in 2023 with unit sales increased 6% while dollar sales grew 15%. According to Nielsen data for the 52 weeks ending December 30, <unk> 2023.
Stan: As we previously disclosed although loss distribution at the end of 2022 due to supply chain issues and we felt the impact in 2023, as we experienced double digit declines in both units and dollar sales.
Stan: However, when we look at 2024 beyond we are optimistic that Zelda has turned the corner for the following reasons.
Stan: One Nielsen data for the last 13 weeks shows Zelle and unit sales up 2% with dollar sales flat in.
Stan: In the latest four week data shows unit sales were up 8% in dollar sales were up 4%.
Stan: Two we have new flavor renovation that will be coming to market in Q2 for beverage season that includes our original line and pineapple flavors all in a new $16 nine ounce resealable Tetra Pak container that retailers are excited about.
Stan: Pineapple is the number one coconut water flavor and lime is the number one flavors in sparkling water. So.
Stanley E. Jacot: So we believe these new offerings will energize list sales. Both flavors are 100% natural, no sugar added, and non-GMO, and are a great addition to our original extra pulp and espresso flavors. And three, we have line of sight into new retailer wins in the spring and summer beverage season that could increase Zola distribution by as much as 50% this year. So, there is a lot to be excited about for Zola when we look at the next several quarters. The last initiative to discuss today is the strategic review announced on July 20th, which stated that Arcadia would explore a range of strategic options, which could include an asset sale, acquisition, merger, sale, or other strategic transaction. Over the last eight months, we, along with our bankers, have engaged with a significant number of potential transaction partners to try to find the best outcome for Arcadia and our shareholders.
Stan: So we believe these new offerings will energize our sales.
Stan: Both flavors are 100% natural.
Stan: No sugar added.
Stan: And non GMO and are a great addition to our original extra pulp and espresso flavors.
Stan: And three we have line of sight into new retailer wins in the spring and summer beverage season that could increase the distribution by as much as 50% this year.
Stan: So a lot to be excited about Brazil up when we look at the next several quarters.
Okay.
Stan: The last initiative to discuss today is the strategic review announced on July 20th.
Stan: Which stated that Arcadia would explore a range of strategic options, which could include asset sale acquisition merger sale or other strategic transactions.
Stan: Over the last eight months, we along with our bankers have engaged with a significant number of potential transaction partners to try to find the best outcome for our <unk> and our shareholders.
Stanley E. Jacot: And while we aren't ready to provide a detailed update today, we continue to have discussions and perform the due diligence work necessary to scale Arcadia and accelerate our ability to deliver cash flow positive results. We will keep you updated as material events occur. And we must point out that there can be no assurance that this exploration of strategic alternatives will result in the company entering or completing any transaction, and no timetable has been set for the conclusion of the strategic review.
Stan: And while we aren't ready to provide a detailed update today, we continue to have discussions and perform the due diligence work necessary to scale, Arcadia and accelerate our ability to deliver cash flow positive results.
Stan: We will keep you updated as material events occur.
Stan: We must point out that there can be no assurance that this exploration of strategic alternatives will result in the company entering or completing any transaction and no timetable has been set for the conclusion of the strategic review.
Stanley E. Jacot: As we look to 2024, the foundation we have laid over the past two years provides optimism for even stronger results. Goodweed is now in three categories and garnering national attention, which will also assist our efforts in monetizing our REIT IP through other food manufacturers. Zola is leveraging new flavor innovations to expand distribution and is anticipating double-digit growth in 2024.
Stan: Okay.
Stan: As you look to 2024 the foundation, we have laid over the past few years provides optimism for even stronger results.
Stan: Could we just now in three categories and garnering national attention, which will also assist our efforts in monetizing our REIT IP through other food manufacturers.
Stan: <unk> is leveraging new flavor renovations to expand distribution and is anticipating double digit growth in 2024.
Thomas J. Schaefer: And, as mentioned in our last call, we continue to evaluate our expense profile in an effort to conserve cash. Due to all these factors, we anticipate ending 2024 with a net operating loss under $10 million for the first time in the company's history. With that, I will turn the call over to TJ to discuss our Q4 and year-end results.
Stan: And as mentioned in our last call. We continue to evaluate our expense profile in an effort to conserve cash.
Stan: Due to all these factors, we anticipate ending 2024 with a net operating loss under $10 million for the first time in the company's history.
Stan: With that I will turn the call over to T. J to discuss our Q4 and year end results T J.
Thomas J. Schaefer: Thank you, Stan, and good afternoon to everyone joining us on the call. In my prepared remarks, I will walk through our Q4 and full year 2023 financial results, as well as provide insights into 2020. As a reminder, my comments today will focus on our results from continuing operations, excluding the impact of body care, which we just continued in Q3 2020. With that, let me start by discussing our 2023 Q4 financial results. Our Q4 2023 revenues from continuing operations were approximately $1.2 million, compared to revenue of $745,000 in Q4 2022. The 57% increase in sales was primarily driven by GoodWeed and the timing of GLA oil sales as Zola remained relatively flat during the pandemic. On a year-over-year basis, GoodWeat distribution increased nearly 300 percent from approximately 1,200 stores at the end of 2022 to more than 3,500 stores at the end of 2023. Over the past 12 months, we also introduced two additional GoodWeek categories, with our Pancake Waffle Mix launching in August 2023 and Mac and Cheese in November 2023.
Thomas J. Schaefer: Thank you Stan and good afternoon to everyone joining us on the call today in my prepared remarks, I will walk through our Q4 and full year 2023 financial results as well as provide insights into 2024.
Thomas J. Schaefer: As a reminder, my comments today will focus on our results from continuing operations, excluding the impact of body care, which we discontinued in Q3 2023.
Thomas J. Schaefer: With that let me start by discussing our 2023 Q4 financial results.
Thomas J. Schaefer: Our Q4 2023 revenues from continuing operations were approximately $1 2 million.
Thomas J. Schaefer: Compared to revenue of $745000 in Q4 2022.
Thomas J. Schaefer: The 57% increase in sales was primarily driven by good week and the timing of GLA oil sales as <unk> remained relatively flat during the quarter.
Thomas J. Schaefer: On a year over year basis, good wheat distribution increased nearly 300% from approximately 200 stores at the end of 2022 to more than 3500 stores at the end of 2023.
Thomas J. Schaefer: Over the past 12 months, we also introduced two additional good wheat categories with our pancake waffle mix launching in August 2023.
And Mac and cheese in November 2023.
Thomas J. Schaefer: Despite higher revenues, our cost of goods sold was actually lower in Q4 2023 compared to the same period last year, as our 2022 results included the impact of write-downs related to hemp seeds and our archipelago joint venture, which are all no longer part of our continuing results as we focus on generating profitable revenue. Our research and development expenses of $332,000 were $169,000 or 34% favorable to Q4 2022, driven by the timing of innovation work in 22 in order to launch new Goodwheat and Zolaprop. Our selling general and administrative expenses of $3.4 million declined $207,000 or 6% compared to the same period last year, primarily driven by headcount reductions that took place in Q3 2022.
Despite higher revenues our cost of goods sold were actually lower in Q4 2023 compared to the same period last year as our 2022 results included the impact of write downs related to hemp seeds and our archipelago joint venture.
Thomas J. Schaefer: Which are all no longer part of our continuing results as we focus on generating profitable revenue.
Thomas J. Schaefer: Our research and development expenses of $332000 were $169000 or 34% favorable to Q4 2022.
Thomas J. Schaefer: Driven by the timing of innovation works in 'twenty two in order to launch new good wheat and Zola products.
Thomas J. Schaefer: Our selling general and administrative expenses of $3 $4 million declined $207000 or 6% compared to the same period last year.
Thomas J. Schaefer: Primarily driven by head count reductions that took place in Q3 2023.
Thomas J. Schaefer: In summary, our Q4 revenues from continuing operations increased $425,000, and our gross profit increased $655,000 compared to the same period last year. While sales and margins improved, we also reduced our R&D and SG&A expenses by $640,000, leading to a $1.3 million improvement in our loss from continuing operations. So we are very pleased with the progress we made in Q4 2020. Moving now to full year 2023 results. Our total revenues of $5.3 million declined $2.1 million compared to the prior year, as our 2022 results included more than $2.7 million in revenues from grain sales as well as a non-recurring milestone payment from BioSeries. Excluding these items, revenues would have increased 13%.
Thomas J. Schaefer: In summary, our Q4 revenues from continuing operations increased $425000 and our gross profit increased $655000 compared to the same period last year.
Thomas J. Schaefer: While sales and margins improved we also reduced our R&D and SG&A expenses by $640000, leading to a $1 $3 million improvement in our loss from continuing operations. So we are very pleased with the progress we made in Q4 2023.
Moving now to full year 2023 results, our total revenues of $5 $3 million declined $2 1 million compared to the prior year as our 2022 results included more than $2 7 million in revenues from grain sale.
Thomas J. Schaefer: <unk> as well as a nonrecurring milestone payment from bio series.
Thomas J. Schaefer: Excluding these items revenues would have increased 13%.
Thomas J. Schaefer: Despite the lower reported sales, our gross profit increased 54% to just over $2 million as we continue to emphasize profitable growth and higher quality revenue streams. We remain focused on managing our operating expenses and driving costs down, which I believe is apparent in our results. Our research and development expenses of $1.4 million declined 8% year over year, and our selling general and administrative expenses of $14.5 million decreased 4% compared to last year and are now at the lowest level since 2019. And if you look at our R&D and SG&A expenses together, 2023 represents the lowest level of spend since before Arcadia went public in 2015. Our loss from continuing operations of $13.9 million is relatively unchanged versus the prior year as reported. However, our 2022 results include a $2 million benefit related to the sale of our Vertica joint venture. Excluding the impact of this gain, our loss from continuing operations would have improved by $2.1 million, or 13%.
Thomas J. Schaefer: Despite the lower reported sales our gross profit increased 54% to just over $2 million as we continue to emphasize profitable growth and higher quality revenue streams.
Thomas J. Schaefer: We remain focused on managing our operating expenses and driving costs, lower which I believe is apparent in our results.
Thomas J. Schaefer: Our research and development expenses of $1 $4 million declined 8% year over year.
Thomas J. Schaefer: In our selling general and administrative expenses of $14 $5 million decreased 4% compared to last year and are now at the lowest level since 2019.
Thomas J. Schaefer: And if you look at our R&D and SG&A expenses together.
Thomas J. Schaefer: <unk> thousand 23 represents the lowest level of spend since before our <unk> went public in 2015.
Thomas J. Schaefer: Our loss from continuing operations of $13 $9 million is relatively unchanged versus prior year as reported.
Thomas J. Schaefer: However, our 2022 results include a $2 million benefit related to the sale of our vertical joint venture.
Thomas J. Schaefer: Excluding the impact of this gain or loss from continuing operations would have improved by $2 1 million or 13%.
Thomas J. Schaefer: In 2023, we will use approximately $15 million of cash to fund our operations. And we also raised $6 million in March 2023, resulting in a year-end cash balance of nearly $12 million. We believe this cash will fund our operations beyond 2024. So let me provide some context.
Thomas J. Schaefer: In 2023, we used approximately $15 million of cash to fund our operations and we also raised $6 million in March 2023, resulting in a year end cash balance of nearly $12 million.
Thomas J. Schaefer: We believe this cash will fund our operations beyond 2024, So let me provide some context.
Operator: As Stan mentioned, we are excited about entering 2024 with three Good Week categories and a tremendous opportunity to meaningfully scale our Zola coconut water business with the new pineapple and lime flavor. As a result, we expect to increase sales at a double-digit rate in 2024. The increase in sales should lead to higher gross profit dollars, albeit at a lower gross margin rate. We will continue to focus on managing our operations and expect to realize the full year benefit of the cost reductions we have implemented. The impact of these actions will result in an estimated use of cash in the single digits in 2024, which would also be the lowest use of cash since Arcadia went public. With that, I will now turn the call over to the operator for questions. As a reminder, to ask a question, you will need to press Star 1-1 on your telephone so that your name will be announced.
Thomas J. Schaefer: As Stan mentioned, we are excited about entering 2024 with three good week categories, and a tremendous opportunity to meaningfully scale, our zola coconut water business with the new pineapple and line flavors.
Thomas J. Schaefer: As a result, we expect to increase sales at a double digit rate in 2024.
The increase in sales should lead to higher gross profit dollars, albeit at a lower gross margin rate.
Thomas J. Schaefer: We will continue to focus on managing our operating expenses and expect to realize the full year benefit of the cost reductions we have implemented.
The impact of these actions will result in an estimated use of cash in the single digits in 2024, which would also be the lowest use of cash since <unk> went public.
None: With that I will now turn the call over to the operator for questions.
None: Thank you.
None: As a reminder to ask a question you will need to press star one one on your telephone please.
None: Please be advised.
None: That's your name will be announced.
Operator: Please stand by while we compile the Q&A roster. And our first question comes from the line of Ben Klieve with Lake Street Capital Markets. Alright, thanks for taking my questions. First, on the fourth quarter and full year gross profit and gross margin side, without the income statement in the press release, I'm having a hard time putting this together. Can you just lay out what the gross profit and gross margin were for both Q4 and on a full year basis? Yeah, Ben. This is Stan.
Operator: Please standby, while we compile the Q&A roster.
Operator: And our first question comes from the line of Ben <unk> with Lake Street capital markets.
Operator: Yes.
Ben: Alright, Thanks for taking my questions first on the fourth quarter and full year gross profit and gross margin side.
Ben: Without the income statement.
Ben: Press release, I'm, having a hard time, putting this together can you just lay out what the gross profit and gross margin was in both Q4 and on a full year basis. Please.
Stanley E. Jacot: Thank you for calling in, and I'll turn that over to TJ to answer. Yeah, so gross profit dollars in Q4 were $499,000, and the gross profit dollars for the full year were 2.03. Okay, great. Um, and then OK, I can back that out. Okay, so, um, you know, from when you talk about the outlook for 24, double-digit revenue growth, but TJ, you commented that, you know, given some of the portfolio shows, I expect margins to come down a bit. Can you talk about your expectations for gross profit improvement from 2023 to 2024? Sure. But again, you know, a double-digit increase in sales just wouldn't be forecasting. I think our, if you look at our full year, we had a 38% gross margin.
Ben: Yes, Ben this is Stan and thank you for calling in and I'll turn that over to T J to answer.
T J: Yes, so gross profit dollars in.
T J: In Q4 were $499000.
T J: And the gross profit dollars.
T J: For the full year were 2.03 million.
T J: Million.
None: Okay great.
And then okay I can back that out okay. So.
None: From when you're talking about the outlook for 'twenty four.
None: Double digit revenue growth, but T. J you commented that.
None: Given some of the portfolio shifts I expect margins to come down a bit can you talk about your expectations for gross profit.
None: Improvement from 2023 to 2024.
None: Sure.
None: So again.
None: Double digit increase in sales.
None: Just wouldn't be forecasting I think our if you look at our full year, we had a 38% gross margin.
Thomas J. Schaefer: So that's, you know. I think there's some product mix elements to that, and so we're looking more kind of down in the 30 to 35 percent range are the numbers that we're looking at. Got it. Okay, that's helpful.
None: So thats.
None: I think there is some product mix.
None: Elements to that and so we're looking more kind of down in the 30% to 35% range.
None: It's kind of the numbers that we're looking at.
None: Got it okay. That's helpful. Thank you.
Stanley E. Jacot: Thank you. Okay, so turning to the comments you made on trying to recognize some royalty revenue and partnering with the wheat supply chain and working with the larger food manufacturers, you know, the, especially working with the supply chain, was something that had been tried a couple of years ago. And, you know, not just at Arcadia but industry-wide, this has been a real challenge for these kind of novel, you know, enhanced nutrition varieties to really find their way into the supply chain with these big players. Can you talk about, you know, the conversations that you're having today, and give us a sense that these, you know, large wheat companies are really serious about engaging with, you know, technology like you've developed? Yeah, and so, you're right, Ben, that is, I think it's been a challenge for any identity preserved crop, but we are actually seeing some manufacturers and some supply chains that are investing in that part of the business because So we're kind of seeing the industry start to invest more heavily in that direction. Okay, okay, great.
None: Okay, So turning to.
None: <unk>.
None: The comments you made on.
None: Trying to recognize some royalty revenue.
None: And partnering with the weak supply chain and working with the larger.
None: Manufacturers.
None: Especially working with the supply chain was something that had been tried a couple of years ago and not just at Arcadia, but industry wide. This has been a real challenge for this kind of novel.
None: Enhanced nutrition, a variety to really find their way into the supply chain with these big players can you talk about the conversations that you're having today.
None: And give us a sense that that these few large.
None: Wheat companies are really serious about NK.
None: Engaging with west.
None: Technology like you've developed.
None: Yes, and so youre right that is.
None: I think that's been a challenge for any identity preserved crop.
None: But we are actually seeing.
None: Some.
Some manufacturers and some supply chains that are investing.
None: In that part of the business because they are realizing.
None: Better margins on those types of products. So we're kind of seeing the industry start to invest more heavily in in that route.
None: Okay, Okay great.
Stanley E. Jacot: Very good. On GoodWeed, a question on GoodWeed, a question on Zola, and then I'll get back in queue here. In GoodWeed, you know, you're six months now into the launch of PancakeMix. I'm wondering if you can talk about the kind of performance of these new products today versus the kind of performance of pasta six months in, you know, after you launch them. Are you, you know, realizing revenue synergies now that you've got, you know, more products in line, or is the kind of the ramp over the first six months kind of similar today as it was when you started GoodWeed a couple of years ago? Yeah, I would say for pancakes, we're seeing a similar ramp. But I would say that our velocity, compared to the Average Better For You products, is higher on pancakes than it was on pasta. It just is a more recognizable segment in that particular category.
None: Very good.
None: Yes.
None: Good way.
None: A question on good we have a question on the oil and then I'll get back in queue here and good wait.
None: For six months now under the launch of Pancake mix I'm wondering if you can talk about kind of the performance of these new products today versus kind of the performance of past six months and.
None: After you launch them or are you realizing revenue synergies now that you've got more products in line or is kind of the ramp over the first six months.
None: Similar today as it was when you started could wait a couple of years ago now.
None: Yes, I would say for pancakes.
None: A similar ramp, but I would say that our velocities compared to the average better for you products.
None: Our <unk> are higher on pancakes and they were on pasta.
None: Just as a more recognizable segments in that particular category.
Stanley E. Jacot: And so we're kind of part of it; we are benefiting from that. Too early to tell on anything about mac and cheese since that was just a November lunch.
None: And so we're kind of are we are benefiting from that.
None: Time will tell on anything on Mac and cheese that was since that was just November launch.
Stanley E. Jacot: Okay, very good. Thank you. And then there is one last one for me.
None: Okay very good.
None: Thank you and then one one last one for me and Volvo you talk about expanded distribution new Skus coming online here you also in your latest investor presentation lay out target of expanding those from a 4% ACB in 2022% to 40% in 2025 can you comment on kind of what.
Stanley E. Jacot: In Zoli, you talk about expanding distribution, new SKUs coming online here. You also, in your latest investor presentation, lay out a target of expanding this from a 4% ACV in 2022 to 40% in 2025. Can you comment on kind of what that number was, exiting 23, and then collectively how all these dynamics will improve that number, how much that number will be improved in 24? Yeah, so for 2024 or 2023, we dipped a little bit from that 4%, as we have stated earlier. But again, if we get a 50% increase in distribution, you know, that's going to get close to that 5% to 6% ACV.
That number was exiting 'twenty three and then collectively how all of these dynamics will improve that number.
None: How much that number will be improved in 'twenty four.
None: Yes, so for toy story four.
None: 2023, we we dipped a little bit from that 4% as we have stated earlier.
None: But again, if we get a 50% increase in distribution, that's going to get us closer to that 5% to 6% ACB.
Stanley E. Jacot: And so we still have a ways to go to reach that 2025 level, but the other thing to note is that the distribution that we are getting is basically filling in some of the retailers that are in our stronghold coastal regions. And, you know, we still have a lot of efforts underway to kind of fill in the rest. Got it, got it.
None: And so we still have ways to go to reach that 2025 level.
None: But the other thing to note is the distribution that we are getting is basically filling in.
None: Some of the retailers that are in our stronghold coast regions.
None: And we still have a lot of efforts underway to kind of fill in the rest of the country.
Operator: Very good. Okay, I appreciate you taking my questions. I'll get back in queue.
None: Got it got it very good.
Okay. I appreciate you taking my questions I'll get back in queue.
Operator: Thank you. One moment, please, for our next question. And our next question comes from the line of Dipesh Patel with H.C. Wainwright. Hi Stan, hi TJ, this is Dipesh on behalf of Ram Selvaraju at HC Wainwright.
None: Thank you.
None: Please for our next question.
And our next question comes from the line of <unk> Patel with HC Wainwright.
None: Okay.
Dipesh A. Patel: Hi, Sam Hi, TJ. This is deepak on behalf of Bryan Silva, Roger HC Wainwright.
Dipesh A. Patel: I've got a couple of questions with regard to revenue and then just one or two on the strategic review process. So the first one, what do you consider the most valuable and fastest growing product line from the Goodwheat franchise? Would you say it's mac and cheese, quick cakes, or pasta? Yeah, hi Dipesh, this is Stan.
Dipesh A. Patel: Got a couple of questions with regards to revenue and then just one other on the strategic review process.
Dipesh A. Patel: The first one what have you considered the most valuable and fastest growing product line from the good wheat <unk>. So would you say, it's Mac and cheese quick keto pasta.
Dipesh A. Patel: Yes, Hi, this is Stan thanks for thanks for calling in right now, we would probably say pasta.
Stanley E. Jacot: Thanks for calling in. Right now, we would probably say pasta, and it's because we're lapping more distribution growth from pasta. But again, for both pancakes and mac and cheese, we have gained some distribution that we expect to nurture over the next year. So I think all three of them will be growing this year. Got it. And then I guess a follow-up question on the GoodWeek distribution channel. Which one would you say appears to be most profitable at this point? Well, right now, most of our distribution is in traditional grocery, and, you know, those, you know, I think have, you know, equal profitability. Those retailers. Okay, and then just a couple more.
Stan: Because we are lapping more distribution growth.
Stan: From pasta, but again for both pancakes and Mac and cheese.
Stan: We have gained some distribution that we expect to nurture over the next year.
Stan: I think all three of them will be growing this year.
None: Got it and then I guess a follow up question on the good week distribution channel, which one would you say pace to be most profitable at this point.
None: Well right now most of our distribution is in traditional grocery.
And.
None: Those.
None: I think.
None: Equal profitability.
None: So those retailers okay.
None: Okay.
Stanley E. Jacot: What innovative strategies can the company use to boost revenue growth in the coming quarters? Yeah, so I think we've kind of laid out some of our key principles. You know, one was distribution growth, which we highlighted on Zola.
None: And then just a couple more.
None: Innovative strategies can the company used to boost revenue growth in the coming quarters.
None: Yes, so I think we've kind of laid out some of our key principles.
None: One was distribution growth, which we've highlighted on solar and the other one is focusing on specific retailers for good wheat that we currently have distribution.
Stanley E. Jacot: The other one is focusing on specific retailers for GoodWeed that we currently have distribution and looking at the entire mix of tools, whether that's in-store and out-of-store, to improve velocity and continue to add SKUs to those stores with our other categories. Great, that's helpful. And then last question from me: when does the company plan to complete the strategic review process? Well, what we said is that there is no specific timetable to complete the review. So, you know, we are continuing to do our due diligence, and we'll have more information as material events occur. Got it.
None: Looking at the entire.
None: Mix of tools, whether that's in store and Alistair.
None: To improve velocity and continue to add skus to those stores.
None: With our other.
None: With all of our other categories.
None: Yes.
None: Great. That's helpful. And then last question from me.
None: When does the company plan to complete the strategic review process.
None: Well, what we said is where there is no.
None: Pacific timetable to complete the review so.
None: We are continuing to do our due diligence and we will have more information as material events occur.
Stanley E. Jacot: Thank you for taking my question. Thank you. I'll now hand the call back over to President and CEO Stan Jacot for any closing remarks. In summary, as we enter 2024, Arcadia is in a great position to continue its positive trajectory. We have transitioned the top line to high-quality revenue that generates gross profit across multiple sources. We have right-sized our organization and streamlined our cost structure in order to extend our runway. Our Goodwheat is in more than 3,500 stores in three categories, and Zola Coconut Water is positioned for double-digit growth with new flavors and distribution.
None: Got it thank you for taking my questions.
None: Yes.
None: Thank you I will now hand, the call back over to President and CEO, Stan <unk> for any closing remarks.
Stan: So in summary, as we enter 2020 for Arcadia is in a great position to continue its positive trajectory, we are transitioning the topline to high quality revenue.
Stan: That generates gross profit across multiple sources.
Stan: We have right sized the organization and streamlined our cost structure in order to extend our runway.
Stan: Our good wheat is in more than 3500 stores in three categories and build the coconut water is positioned for double digit growth with new flavors and distributions.
Stanley E. Jacot: And finally, we remain focused on adjacent acquisitions as well as monetizing our IP. We look forward to updating you in the future. Thanks again for joining us, and have a great rest of your day. This concludes today's conference call. Thank you for participating, and you may now disconnect. Thank you for watching!
Stan: And finally, we remain focused on adjacent acquisitions as well as monetizing our IP.
None: We look forward to updating you in the future. Thanks again for joining us and have a great rest of your day.
None: This concludes today's conference call.
None: You for participating and you may now disconnect.
None: Okay.
None: [music].
None: Okay.
None: Yes.
None: Sure.
None: [music].
None: Yes.
Sure.