Q1 2024 Stryve Foods Inc Earnings Call
Operator: [music].
Operator: Good afternoon, ladies and gentlemen, and welcome to the Strive Foods Inc. first quarter 2024 earnings call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, May 14th, 2024. I would now like to turn the conference over to Mr. Will Pugh, please go ahead.
Good afternoon, ladies and gentlemen, and welcome to just drive Inc. First quarter 'twenty 'twenty four earnings call.
Speaker Change: At this time all lines are in a listen only mode. Following the presentation, we'll conduct a question and answer session.
Operator: Is it any time during the call you require immediate assistance. Please press star zero for the operator.
This call is being recorded on Tuesday May 14 2024.
Operator: I would now like to turn the call over to Nick.
Please go ahead.
Unknown Executive: Thank you, Operator, and welcome to the Strive Foods Fiscal Year 2024 First Quarter Earnings Conference Call. With me today are Strive's Chief Executive Officer, Chris Beaver, and Chief Financial Officer, Alex Hoffman.
Nick: Thank you operator, and welcome to the strike foods fiscal year 'twenty 'twenty four first quarter earnings Conference call with me today are stripes, Chief Executive Officer, Chris Beaver and Chief Financial Officer, Alex Hawkins.
Unknown Executive: Before we begin, I would like to remind everyone that part of our discussion today will include Fort Lincoln statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1985. Forward-looking statements, by their nature, are uncertain and outside of the company's control. Actual results could differ materially from these expectations.
Nick: Before we begin I would like to remind everyone that part of our discussion today will include forward looking statements that are made pursuant to the safe Harbor provisions of the.
Speaker Change: Private Securities Litigation Reform Act of 1985.
Speaker Change: Forward looking statements by their nature are uncertain and outside of the company's control actual results could differ materially from these expectations. These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them.
Unknown Executive: These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. Furthermore, we do not undertake to update these forward-looking statements at a later date, and they only refer to today. In addition, today's call will include a discussion of non-GAAP financial measures, including adjusted EBITDA and adjusted EPS. Non-GAAP financial measures should be considered as a supplement to, and not a substitute for, GAAP financial measures. We refer you to the reconciliation of non-GAAP-to-the-nearest-GAAP measure included in today's earnings press release for further detail.
Speaker Change: We do not undertake to update these forward looking statements at a later date and they only referred to today.
Speaker Change: In addition, today's call will include a discussion of non-GAAP financial measures, including adjusted EBITDA and adjusted EPS.
Speaker Change: <unk> financial measures should be considered as a supplement to and not a substitute for GAAP financial measures.
Speaker Change: We refer you to the reconciliation of non-GAAP to the nearest GAAP measure included in today's earnings press release referred to detail.
Unknown Executive: This call has been webcast and can be accessed through the audio link on the news and events page of the investor section at ir.strive.com. Also, the earnings press release is posted on our website, and a copy of the release has been included in the Form 8K submitted to the SEC. With that, I would now like to turn the call over to Chris Beaver.
Speaker Change: This call is being webcast and can be accessed through audio linked on the news and events page of the investors section at IR dot stripe dot com.
Speaker Change: Also the earnings press release is posted on our website and a copy of the release has been included in a form 8-K submitted to the SEC.
Speaker Change: I would now like to turn the call over to Chris Beaver Chris.
Christopher J. Boever: Thanks will good afternoon, and thank you for joining us today, the first quarter of 'twenty 'twenty four marks the next phase of transformation for striped suit.
Christopher J. Boever: Will, good afternoon, and thank you for joining us today. The first quarter of 2024 marks the next phase of transformation for Strive Foods. With the significant improvements we have made on cost, capabilities, process, and quality mostly behind us, we are excited and energized about the future. We are executing the strategy, supporting our vision to redefine the snacking category with healthier, high-protein solutions that meet the evolving needs of today's consumers. This quarter, we've seen significant progress in several strategic areas that are vital to our growth and operational efficiency.
Christopher J. Boever: With the significant improvements we have made on costs capabilities process and quality.
Speaker Change: Mostly behind US we are excited and energized about the future.
Speaker Change: We are executing this strategy supporting our vision to redefine the snacking category with healthier high protein solutions that meet the evolving needs of today's consumers.
Speaker Change: This quarter, we've seen significant progress in several strategic areas that are vital to our growth and operational efficiency.
Christopher J. Boever: A standout achievement has been the success of our new packaging initiative, which has been instrumental in driving the exceptional year-over-year improvements in our retail velocity. The consumer response to our new packaging is exceeding our expectations. We are experiencing velocity improvements on each of our three brands, with the Strive brand leading the way. Retail Sales Velocity for the Strive brand, as measured by Spins data ending March 24th, has increased at an accelerated rate, up 24.7% over 24 weeks, up 35.7% over 12 weeks, and up an amazing 51% over four weeks. Retail velocity is an important metric, capturing the Rate of Sales per Point of Distribution.
Speaker Change: A standout achievement has been the success of our new packaging initiatives.
Speaker Change: Which has been instrumental in driving the exceptional year over year improvements in our retail velocity.
Speaker Change: The consumer response to our new packaging is exceeding our expectations.
Speaker Change: We are experiencing in velocity improvements.
Speaker Change: On each of our three brands with the strive brand leading the way.
Speaker Change: Retail sales velocity for the stride brand as measured by spins data ending March 24th.
Speaker Change: The increase.
Speaker Change: At an accelerated rate.
Speaker Change: Up 24, 7% over 24 weeks up 35, 7% over 12 weeks.
Speaker Change: And up an amazing 51% over four weeks.
Speaker Change: Retail velocity is an important metric.
Speaker Change: Sure in the rate of sales per point of distribution.
Christopher J. Boever: We are greatly exceeding the performance of the category, showcasing the shelf presence, consumer appeal, and market fit of our new and improved packaging design. As of now, we believe that the transition to the new packaging is a little over halfway complete.
Speaker Change: We are greatly exceeding the performance of the category.
Speaker Change: Showcasing the shelf presence consumer appeal and market fit of our new and improved packaging design.
Speaker Change: As of now we believe that the transition to the new packaging is a little over halfway complete.
Speaker Change: On retail shelves.
Unknown Speaker: Unknown Speaker 0, This ongoing rollout and supporting data will play a critical role in our ability to secure additional distribution. Positive reception and improved shelf presence have bolstered our position in the market, allowing us to expand our reach and enhance consumer engagement while earning more market share. Moreover... We've achieved considerable improvements in the quality of our products through enhancements to our manufacturing process. These changes have elevated the consumer experience, ensuring that our products not only look appealing on the outside but also consistently deliver on taste.
This ongoing rollout and supporting data will play a critical role in our ability to secure additional distribution.
Speaker Change: The positive reception and improved shelf presence has bolstered our position in the market, allowing us to expand our reach and enhance consumer engagement, while earning more market share.
Moreover.
Speaker Change: We've achieved considerable improvements in the quality of our products.
Speaker Change: Through enhancements to our manufacturing processes.
Speaker Change: These changes have.
Speaker Change: Elevated the consumer experience.
Speaker Change: Ensuring that our products not only look appealing on the outside but also consistently deliver on taste.
Christopher J. Boever: We are gaining new users with our strategic position, and with our improved product quality, our confidence is high that repeat levels will also be high, ultimately fueling stronger velocities and brand loyalty. Alongside these product and packaging advancements, we have continued to drive efficiencies and productivity throughout the organization. Our focus on operational excellence has allowed us to optimize resources, reduce waste, and improve our overall cost structure. These efforts collectively contribute to our performance this quarter and set a strong foundation for growth and, ultimately, profitability.
Speaker Change: We are gaining new users with our strategic position and with our improved product quality. Our confidence is high that repeat levels will also be high ultimately fueling stronger velocities and brand loyalty.
Speaker Change: Alongside these product and packaging advancements, we have continued to drive efficiencies and productivity throughout the organization.
Speaker Change: Our focus on operational excellence has allowed us to optimize resources reduce waste and improve our overall cost structure.
Speaker Change: These efforts collectively contribute to our performance this quarter and set a strong foundation for growth.
Speaker Change: And ultimately profitability.
Christopher J. Boever: Our strategy will focus on leveraging the momentum we have built. We aim to fully capitalize on additional distribution channels as a result of our improved retail performance. By increasing our distribution footprint, we not only expand our reach, but we also enhance our ability to positively impact the highly expandable meat snack category. I am pleased to share we have regained a rotation for the Vacadillos brand at Costco's Southeast Division, which is now available in the Warehouse Club.
Speaker Change: Our strategy will focus on leveraging the momentum we have built.
Speaker Change: We aim to fully capitalize on additional distribution channels as a result of our improved retail performance.
Speaker Change: Increasing our distribution footprint, we not only expanded our reach but we also enhance our ability to positively impact the highly expandable meat snack category.
Speaker Change: I am pleased to share we have regained our rotation for the Vaca <unk> brand at Costco.
Costco: Southeast Division.
Speaker Change: Which is now available in the warehouse clubs.
Christopher J. Boever: Early indicators are positive, demonstrated by, once again, strong velocity. As we look to the future, we have built a robust innovation pipeline that will further leverage our capabilities and capacity to enable even greater brand and category expansion. Certainly, there will be more to share on this front in the future.
Speaker Change: Early indicators are positive demonstrated by once again strong.
Speaker Change: Velocities.
Speaker Change: As we look to the future we have built a robust innovation pipeline that will further leverage our capabilities and capacity.
Speaker Change: To enable even greater brand and category expansion.
Speaker Change: Certainly there'll be more to share on this front in the future.
Christopher J. Boever: Operational excellence will remain a cornerstone of our strategy. The efficiencies we've driven in our manufacturing processes will be built upon to ensure that we can scale effectively while managing costs. Our commitment to continuous improvement will involve further investments in technology and processes that enhance our agility while expanding margins. In summary, our strategy is centered on execution, growing our core, supported by operational expertise. These pillars will drive our performance in the near term and position us for future success in the evolving category and industry.
Speaker Change: Operational excellence will remain a cornerstone of our strategy the efficiencies we've driven in our manufacturing processes will be built upon to ensure that we can scale effectively while managing costs, our commitment to continuous improvement will evolve further investments in technology and processes that enhance our agility, while expanding margins.
Speaker Change: <unk>.
Speaker Change: In summary, our strategy is centered on execution growing our core supported by operational excellence.
Speaker Change: Pillars will drive our performance in the near term and position us for future success, and the evolving category and industry.
Christopher J. Boever: Our goal is clear, to deliver exceptional value to our consumers, partners, and shareholders while leading the way with the most highly differentiated, best tasting products the Better For You protein snacking category has ever experienced. With that, I'll turn it over to our CFO, Alex Hawkins.
Speaker Change: Our goal is clear.
Speaker Change: Continue to do that to continue.
Speaker Change: To deliver exceptional value to our consumers partners and shareholders, while leading the way with the most highly differentiated best tasting products.
Speaker Change: For you protein snacking category has ever experienced.
Speaker Change: With that I'll turn it over to our CFO, Alex Hawkins Alex.
Alex Hoffman: Thanks, Chris. Good afternoon, everyone.
Unknown Executive: Thanks, Chris Good afternoon, everyone.
Alex Hoffman: I'm pleased to provide a detailed overview of our financial results for the first quarter of 2024, which reflect both our strong operational execution and strategic focus. This quarter, we reported net sales of 4.6 million. While this represents a slight decrease of approximately 1% compared to the same period last year, it is important to recognize the significant strides we have made in terms of profitability and market penetration. The marginal change in net sales is largely attributed to our strategic decision to enhance product quality and packaging, which initially slowed some of our traditional sales channels but has set the stage for enhanced performance as these initiatives continue to gain traction.
Unknown Executive: I am pleased to provide a detailed overview of our financial results for the first quarter of 2024, which reflect both our strong operational execution and strategic focus.
Unknown Executive: This quarter, we reported net sales of $4 6 million.
Unknown Executive: While this represents a slight decrease of approximately 1% compared to the same period last year. It is important to recognize the significant strides we have made in terms of profitability and market penetration the <unk>.
Speaker Change: Change in net sales is largely attributed to our strategic decision to enhance product quality and packaging, which initially slowed some of our traditional sales channels, but has set the stage for enhanced performance as these initiatives continue to gain traction. Additionally.
Alex Hoffman: Additionally, the prior year period was benefited by a temporary display program that we elected not to pursue in 2024, as we have targeted our efforts towards securing more permanent distribution points and making better decisions with respect to how and when we look to promote our product.
Speaker Change: Additionally, the prior year. The prior year period was benefited by a temporary display program that we elected not to pursue in 2024 as we have targeted our efforts towards securing more permanent distribution points and making better decisions with respect to how and when we look to promote our products.
Alex Hoffman: Ultimately, the increased sell-through of our products driven by our packaging enhancements and improved product quality, as well as some of the new distribution we have secured, largely made up for the display program and with more attractive unit economics. Our gross profit was $1.02 million for the quarter, with a gross margin of 22.1%, compared to $0.96 million in the prior year period, with a gross margin of 20.7%. This improvement is a direct result of our focused efforts on influencing product price, manufacturing efficiencies, and cost management, which have allowed us to better leverage our resources and reduce cost per unit. This result is even more meaningful, given that prevailing beef prices for the quarter were considerably higher this year than they were in the year-ago period. But despite that dynamic,
Speaker Change: Ultimately the increased sell through of our products driven by our packaging enhancements and improve product quality as well as some of the new distribution that we have secured largely made up for the display program and with more attractive unit economics.
Speaker Change: Our gross profit was $1 2 million for the quarter with a gross margin of 22, 1% compared to <unk> nine 6 million in the prior year period with a gross margin of 27%.
Speaker Change: This improvement is a direct result of our focused efforts on inflows being product price mix.
Speaker Change: Manufacturing efficiencies and cost management, which have allowed us to better leverage our resources and reduced reduce cost per unit.
Speaker Change: This result is even more meaningful given that prevailing beef prices for the quarter were considerably higher this year than they were in the year ago period.
Speaker Change: But despite that dynamic.
Alex Hoffman: Our transformation efforts still showed an improved gross margin. However, we do expect to see some continued volatility in beef prices for the foreseeable future. However, so far in the second quarter, we're experiencing a welcome reprieve, and we hope to see that trend continue. Either way, we stand ready to respond strategically as we have shown we can do in the past. Operating expenses for the quarter were $4.0 million, down 22.7% from the year-ago period and down approximately 52% from the same period two years ago.
Speaker Change: Our transfer our transformation efforts still showed an improved gross margin.
Speaker Change: We do expect to see some continued volatility in beef prices for the foreseeable future.
Speaker Change: However, so far in the second quarter, we're experiencing a welcome reprieve and hope to see that trend continue.
Speaker Change: Either way, we stand ready to respond strategically as we have shown we can do in the past.
Speaker Change: Operating expenses for the quarter were four.
Speaker Change: Zero million down 22, 7%.
Speaker Change: From the year ago period, and down approximately 52% from the same period two years ago.
Alex Hoffman: This is consistent with our transformation strategy in that we are continuing to find ways to pull costs out of the system and position ourselves for operating leverage as we scale with improved unit economics. Consequently, our operating income showed a significant reduction in losses, improving to a $3 million operating loss as compared to a $4.2 million operating loss. Compared with the same quarter last year, this 29% reduction in operating loss underscores our progress in optimizing our operational effectiveness and driving towards profitability.
Speaker Change: This is consistent with our transformation strategy and that we are continuing to find ways to pull cost out of the system and position ourselves for operating leverage as we scale with improved unit economics.
Speaker Change: Consequently, our operating income showed a significant reduction in losses, improving to a three $3 million operating loss as compared to a $4 2 million operating loss in.
Speaker Change: In the same quarter last year.
Speaker Change: This 29% reduction in operating loss underscores our progress in optimizing our operational effectiveness and driving towards profitability.
Alex Hoffman: Our net loss for the first quarter was $3.9 million, which is a marked improvement from $4.6 million in the prior year period. In the first quarter of this year, we extended maturities of certain bridge notes put in place last April. As part of that extension, certain warrants associated with those bridge notes were modified, and the accounting treatment for such modification was a one-time, non-cash charge to other expense of $0.3 million in the current year period.
Speaker Change: Our net loss for the first quarter was $3 $9 million.
Speaker Change: Which is a marked improvement from $4 6 million in the prior year period.
Speaker Change: In the first quarter of this year, we extended maturities of certain bridge notes put in place last April.
Speaker Change: As part of that extension certain warrants associated with those bridge notes were modified in the accounting treatment for such modification was a one time non cash charge.
Speaker Change: Other expense of zero point $3 million in the current year period.
Speaker Change: Accordingly.
Alex Hoffman: Accordingly, our EBITDA loss on an adjusted basis for the first quarter of 2024 represents our best quarter ever at $2.3 million as compared to the adjusted EBITDA loss of $3.5 million in the year-ago quarter. That's a 35.2% reduction in our adjusted EBITDA loss on a year-over-year basis on roughly the same net sales figure. Our transformation efforts are working, and we expect to see and continue to see the benefits of those efforts in the quarters to come.
Speaker Change: Our EBITDA loss on an adjusted basis for the first quarter of 2024 represents our best quarter ever at $2 $3 million as compared to the adjusted EBITDA loss of $3 $5 million and a year ago quarter.
Speaker Change: That's a 35, 2% reduction in our adjusted EBITDA loss on a year over year basis are roughly the same net sales figure.
Speaker Change: Our transformation efforts are working and we expect to see we expect to continue to see the benefits of those in the quarters to come.
Alex Hoffman: This performance is indicative of the underlying strength of our business model and the success of our strategic initiatives. These results provide a solid foundation for sustained progress on our path to profitability and support our optimistic outlook for the remainder of the year. In assessing our balance sheet at the end of the first quarter of 2024, it's important to recognize the financial prudence we're exercising during this critical phase of our turnaround strategy. Our cash position is currently at approximately $0.4 million.
Speaker Change: This performance is indicative of the underlying strength of our business model and our and the success of our strategic initiatives. These results.
Speaker Change: <unk> provide a solid foundation for sustained progress in our path to profitability and support our optimistic outlook for the remainder of the year.
Speaker Change: In assessing our balance sheet at the end of the first quarter of 2024, it's important to recognize the financial Prudence. We're exercising during this critical phase of our turnaround strategy.
Speaker Change: Our cash position is currently at approximately zero point $4 million.
Alex Hoffman: This reflects a carefully managed liquidity strategy emphasizing stringent cash conservation as we navigate through significant operational enhancements and strategic realignments, which are now bearing fruit. Our liquidity constraints are being actively managed with rigorous controls on expenditure and enhancements in operational efficiency to extend our financial runway. Additionally, we previously announced the closing of $1.6 million in convertible bridge notes last month, which we believe, along with our recently extended line of credit, have provided us with the ability to manage day-to-day operations in the near term and the near-term working capital ramp required by the success we're seeing in the market from our packaging.
Speaker Change: This reflects a carefully manage liquidity strategy emphasizing stringent cash conservation as we navigate through significant operational enhancements and the strategic realignment, which are now bearing fruit.
Speaker Change: Our liquidity constraints are being actively managed with rigorous controls our expenditure and enhancements and operational efficiency to extend our financial runway.
Speaker Change: Additionally, we previously announced the closing of $1 6 million in convertible bridge notes last month, which we believe along with our recently extended line of credit have provided us with the ability to manage day to day operations in the near term and the near term working capital ramp required by the success, we're seeing in the market from a packaging.
Alex Hoffman: As we continue to navigate through these challenging financial conditions juxtaposed by our brand's success at retail, our focus is on strengthening our balance sheet through careful cash management, prudent expense control, and strategic financial planning. This disciplined approach is crucial as we work towards strengthening our financial position and ensuring long-term sustainability and growth. As we look forward to the remainder of 2024, acknowledging the current liquidity constraints we face, we are still committed to achieving our strategic goals and financial targets.
Speaker Change: As we continue to navigate through these challenging financial conditions juxtapose by our brand success at retail.
Speaker Change: Our focus is on strengthening our balance sheet through careful cash management prudent expense control and strategic financial planning.
Speaker Change: Disciplined approach is crucial as we work towards strengthening our financial position and ensuring long long term sustainability and growth.
Speaker Change: As we look forward to the remainder of 2020 for acknowledging the currently liquidity constraints. We face we are still committed to achieving our strategic goals and financial targets for.
Alex Hoffman: For the fiscal year 2024, we are reiterating our guidance for net sales. We project net sales to be in the range of $24 million to $30 million. This guidance is based on several factors, including the anticipated full rollout of our new packaging, unexpected improvements in retail velocities, and the execution of our capital plan. These factors are expected to drive increased sales volumes as the year progresses.
Speaker Change: For the fiscal year 2024, we are reiterating our guidance for net sales.
Speaker Change: We project net sales to be in the range of 24 million to $30 million.
Speaker Change: This guidance is based on several factors, including the anticipated full rollout of our new packaging.
Speaker Change: Improvements in retail velocities.
Speaker Change: And the execution of our capital plans.
Speaker Change: These factors are expected to drive increased sales volumes as the year progresses.
Alex Hoffman: We are rigorously controlling expenditures and optimizing operational efficiencies to ensure that our financial resources are aligned with our strategic priorities. This includes continuous efforts to improve our cost structure, enhance our manufacturing processes, and manage our inventory more effectively. While we are navigating through a period of significant financial prudence, our strategies are designed to lay the foundation for sustainable growth and improved profitability. As we execute on our strategic initiatives, and as our new packaging continues to gain traction in the market, we expect to see gradual improvement in our financial performance to an ultimate break-even point with the requisite volume.
Speaker Change: We are rigorously controlling expenditures and optimizing operational efficiencies to ensure that our financial resources are aligned with our strategic priorities.
Speaker Change: This includes continuous efforts to improve our cost structure enhance our manufacturing processes and manage our inventory more effectively.
Speaker Change: While we are navigating through a period of significant financial Prudence. Our strategies are designed to lay the foundation for sustainable growth and improved profitability as.
Speaker Change: As we execute on our strategic initiatives and as our new packaging continues to gain traction in the market.
Speaker Change: We expect to see gradual improvement in our financial performance to an ultimate breakeven point with the requisite volumes.
Alex Hoffman: We are optimistic about our ability to meet these targets and are committed to driving value for our shareholders through this disciplined financial management and our strategic growth initiatives. With that, I'll turn it back to Chris, our CEO, to share more about our strategic vision and the exciting opportunities ahead for Shrive.
Speaker Change: We are optimistic about our ability to meet these targets and are committed to driving value for our shareholders through this disciplined financial management and our strategic growth initiatives.
Chris: With that I'll turn it back to Chris our CEO to share more about our strategic vision and the exciting opportunities ahead for <unk> Chris.
Chris: Thank you Alex this quarter has been marked by significant enhancements across our operations.
Christopher J. Boever: Thank you, Alex. This quarter has been marked by significant enhancements across our operations. Demonstrating our commitment to cost management. As we layer in growth, we will leverage our lower cost network, leading us to a profitable outcome. These operational improvements are pivotal to our strategy for sustained growth and enhanced shareholder value. This quarter, we delivered solid results, driven primarily by significant improvements in our packaging and product quality. The sales team has been upgraded with experienced leaders and stronger broker partners. I fully anticipate an acceleration of growth in the coming quarters.
Chris: Remonstrate and our commitment to cost management as.
Chris: As we layer in growth, we will leverage our lower cost network, leading us to a profitable outcome.
Chris: These operational improvements are pivotal to our strategy for sustained growth and enhance shareholder value.
Chris: This quarter, we delivered solid results.
Chris: Given primarily by significant improvements in our packaging and product quality.
Sales Team: The sales team has been upgraded with experienced leaders and stronger broker partners.
Speaker Change: I fully anticipate an acceleration of growth in the coming quarters.
Christopher J. Boever: The protein snack category continues to evolve and increase consumer demand for healthier and more sustainable options. We anticipate category growth driven by evolving lifestyle trends and a greater emphasis on protein, health, and wellness. Our products are well-positioned to meet these changing consumer demands, thanks to their high nutritional value and alignment with current dietary trends. Most notable, reduction of sugar and free of preservatives.
Chris: The protein snack category continues to evolve with.
Speaker Change: With the increasing consumer demand for healthier and more sustainable options.
Speaker Change: We anticipate category growth.
Speaker Change: Driven by evolving lifestyle trend and a greater emphasis on protein health and wellness.
Speaker Change: Our products are well positioned to meet these changing consumer demand.
Speaker Change: They're high nutritional value and alignment with current dietary trends.
Speaker Change: Most notable reduction of sugar and free of preservatives.
Christopher J. Boever: In conclusion, the outlook for Strive Foods is optimistic. We are on a solid path, equipped with the right strategies, ready to capitalize on the opportunities ahead. We are excited about what the future holds and believe that our focused approach will lead to accelerated growth and profitability. With that, I'd like to turn it over to the operator for Q&A.
Speaker Change: In conclusion, the outlook for strive foods is optimistic.
Speaker Change: We were on a solid path.
Speaker Change: With the right strategies and ready to capitalize on the opportunities ahead.
Speaker Change: We are excited about what the future holds and believe that our focused approach will lead to accelerated growth and profitability.
Operator: Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please lift your hands up before pressing any button. One moment, please for your first question. Our first question comes from the line of Mike Grondahl from Northland Securities. Go ahead.
Operator: With that I'd like to turn it over to the operator for Q&A.
Operator: Operator.
Operator: Thank you, Sir ladies and gentlemen, we will now begin the question and answer session. So do you have a question. Please press star followed by the number one on your Touchtone phone.
Operator: We're here a plant. That's your hand has been raised should you wish to decline from the polling process. Please press star followed by the number too.
Operator: If youre using a speaker phone please lift your handset before pressing any key.
Speaker Change: One moment. Please for your first question.
Operator: Our first question comes from the line of Mike Grondahl from Northland Securities Go ahead. Please.
Michael John Grondahl: Hey guys, thanks. Um, could you talk a little bit more about getting Vacadios back in Costco? I think you said a Southeast division? Um, and the reason I'm asking is, you know, a couple years ago, you guys got into Costco, and it was highly promotional, um, you know, and you can argue that maybe it wasn't priced appropriately. Can you just talk about VacaDeals getting into that region and kind of what you think pricing is going to look like and how you think this time around is maybe improved?
Michael John Grondahl: Hey, guys. Thanks.
Michael John Grondahl: Could you talk a little bit more about getting that good deals back in Costco I think you said South East Division.
Michael John Grondahl: And the reason I'm asking is you know.
Speaker Change: A couple of years ago, you guys got into Costco and it was highly promotional.
Speaker Change: You know and you can argue maybe it wasn't priced appropriately can you just talk about market deals getting into that region and kind of.
Speaker Change: What do you think pricing is going to look like and how you think.
Speaker Change: This time around is is it may be improved.
Christopher J. Boever: Yeah, Mike, thanks for the question. Look, it's been a long, you know, patient and consistent journey. But getting our unit economics actually accurate, right, and positioned properly then puts us in a position to now engage with a customer, such as Costco, to be able to deliver a complete solution that is priced properly for all parties to win. Their club member, certainly Costco, and all as well will strive this time. So we've designed a program to give us an opportunity to show the great attributes that the Vacadio's brand has to the Costco shopper in that region.
Michael John Grondahl: Yeah, Mike Thanks for the question.
Speaker Change: Look it's been a long.
Speaker Change: Patient and consistent journey, but getting our unit economics actually accurate right and positioned properly then puts it puts us in a position to now engage with a customer.
Mike: Such as Costco to be able to deliver a complete solution that is priced properly for all parties to win their club member certainly Costco and as well strive at this time.
Speaker Change: So we've designed a program to.
Speaker Change: To give us an opportunity to.
Speaker Change: So the great attributes that the Vaca <unk> brand has today.
Cosco representative: So the Cosco shopper in that region, we have ongoing discussions with other regions.
Christopher J. Boever: We have ongoing discussions with other regions, and we have some early indicators. We just went in during the first week of May. So, you know, we're just basically seeing some of the early results, and the velocities are very strong. So, the pricing, the proposition, the value is tremendous for all, and we feel this is a win, win, win, and it's something that we can repeat, not only in that division, but other divisions as we, you know, gain momentum.
Cosco representative: We have some early indicators, we just went in in the first week of May So we're.
Speaker Change: We're just basically seeing some of the early results and philosophies are very strong.
Speaker Change: No.
Cosco representative: <unk> the proposition to value is tremendous for all and we feel this is a win win win and it's something that we can repeat not only in that division, but other divisions as we.
Speaker Change: Gain momentum.
Speaker Change: Got it and then maybe just a follow up question.
Michael John Grondahl: Got it. And then maybe just a follow up question. Chris, what two things give you the most visibility on the revenue ramp the rest of the year? Is it like...
Speaker Change: Yes.
Speaker Change: Chris what two things give you the most visibility on the revenue ramp the rest of the year is it like the.
Christopher J. Boever: The Improved Packaging, The expansion of the distribution footprint. Um, you know, expectations for repeat business or repurchases. I mean, what are the top two things that you are looking at that gives you comfort that revenues are going to ramp?
Speaker Change: The improved packaging.
Chris: The expansion of the distribution footprint.
Chris:
Chris: Expectations for repeat.
Speaker Change: Business of repurchases.
Speaker Change: What are the top two things that you were looking at that gives you comfort revenues are going to are going to ramp.
Christopher J. Boever: First and foremost, it's velocity. In all my 35-plus years in the industry, I have never seen a velocity spike like I have from the package change that we're experiencing. Now, all three brands are all accelerating in velocity; stride went through the largest renovation, and we're seeing the largest increase in dollars per point of distribution that's going up from a velocity standpoint, significantly higher. In fact, as a result, it's, um, you know, creating, um, many opportunities, but with opportunities come challenges.
Speaker Change: First of all thanks, again first and foremost it's velocity.
Speaker Change: In all my 35 plus years in the industry.
Brian: I have never seen a velocity spike like I have from a package change that we're experiencing now all three brands are all accelerating in velocity, but the stride Brian went through the largest renovation.
Brian: And.
Brian: We're seeing the largest increase in.
Brian: Dollars per point of distribution, that's going up from a velocity standpoint.
Brian Stride: Significantly higher in fact as a result, it's.
Brian Stride: Creating many opportunities, but with opportunities come challenges. So we were taking a bit by surprise as to the speed and the immediacy of the.
Christopher J. Boever: So we were taken a bit by surprise as to the speed and the immediacy of the, um, velocity improvements. And therefore, we've had to pivot and, you know, catch back up. So ultimately, our shipments probably are a little bit below where consumption is, and we're catching up this quarter on that.
Speaker Change: Velocity improvements and therefore, we've had to pivot.
Speaker Change: Catch back up so ultimately our shipments probably are a little bit below where consumption is and we're catching up this quarter.
Speaker Change: On that.
Christopher J. Boever: So, very, very optimistic. Um, so much so that customers that we see direct reads from, um, you know, it's over a hundred percent improvement in velocity on a leg to leg basis, which obviously will drive new discussions around expanding that distribution, either more stores within that retailer or more stores in the marketplace. So with that data comes a lot more fact-based category solutions that we can provide to the broader, uh, marketplace.
Speaker Change: So very very optimistic so so much so that customers that we see direct reads from.
Speaker Change: Over 100% improvement in velocity on a like to like basis.
Speaker Change: Obviously, we will drive new discussions around expanding that distribution, either more stores within that retailer and or more.
Speaker Change: Stores in the marketplace.
Speaker Change: So with that data comes a lot more fact based category solutions that we can provide to the broader.
Speaker Change: Marketplace, Secondly, we've gotten our pricing.
Christopher J. Boever: Secondly, we've gotten our pricing, um, you know, pretty much positioned properly now after several rounds of pricing that we have taken over the last, um, 20 months since I've been here. Um, so I feel good about where we are from a price and value perspective. We're being smarter and sharper about our promotional, uh, tactics that we, uh, participate in, and ensuring that they're a good investment with a good return on it.
Speaker Change: Pretty much positioned properly now after several rounds of pricing that we took over the last 20 months since I've been here.
Speaker Change: So I feel good about where we're at from a price and value perspective, we're being smarter and sharper about our promotional tactics that we participate in.
Speaker Change: And ensuring that they're in.
Speaker Change: A good investment with a good return on it.
Christopher J. Boever: And then, lastly, the next thing that's going to drive a lot more growth for us and compound that velocity will be expanded distribution. As you know, we're a pretty lowly penetrated brand. We've got lots of white space to capture distribution.
Speaker Change: And then lastly, the the next thing that's going to drive a lot more growth for us.
Unknown Executive: And compound that velocity will be expanded distribution as you know, we're a pretty lowly penetrated brand.
Speaker Change: Got lots of white space to capture distribution and with that lower penetration should drive.
Christopher J. Boever: And with that, lower penetration should drive significant improvements in our growth outlook, not even diluting the velocity where we're currently at because we're still such a new business, if you will. So I think all those things combined, and when we get new people to try the product for the first time, the experience that they're going to get with the new and improved quality that we've unlocked is just exceptional. So we believe repeat levels are going to be an all-time high for our brand, which we're already pretty decent at from the experiences that we've had, you know, in our early days online where we can see subscriptions and, you know, consumer engagement and repeat, et cetera, et cetera, from our online business, to see the actual velocities pop like they have as quickly.
Unknown Executive: Significant improvements in our in our growth outlook.
Speaker Change: Not even diluting the velocity and where we're currently at because were so were still such a new new business. If you will so I think all of those things compounded.
Speaker Change: And when do we get new people to try the product for the first time.
Speaker Change: We experienced that theyre going to get with the new and improved quality that we've unlocked.
Speaker Change: Just exceptional.
Speaker Change: Exceptional so we believe.
Pete: Pete levels are going to be at an all time high for our brand which were already pretty decent.
Pete: From our experience is that we've had.
Pete: Our early days online, where you can see subscriptions and.
Speaker Change: Consumer engagement and repeat et cetera, et cetera from our online business, but.
Speaker Change: See the actual velocities pop like they have as quickly we know new consumers are coming into the franchise trying us for the first time.
Christopher J. Boever: We know new consumers are coming into the franchise, trying this for the first time, and we are very confident that the quality and consistency that they're going to experience now are the best that we've ever delivered. And we think the category has ever seen, with 50% more protein than the leading jerky, which is the number one reason consumers come to the category, delivering total convenience and portability with no preservatives and very little to no sugar, depending on which variety you're selecting. This gives us an incredible amount of confidence that the taste, the consistency, and the positive experience will yield repeat purchases and stronger brand loyalty.
Speaker Change: And we are very confident that the quality and consistency that theyre going to experience now.
Dilip: Best that we've ever delivered and we think the category has ever seen with 50% more protein and the laden jerky, which is the number one reason consumers come to the category Dilip.
Dilip: Delivering with total convenience and portability with no preservatives and very little to no sugar, depending on which variety or selecting.
Speaker Change: It gives us incredible amount of confidence that.
Speaker Change: The taste, the consistency and the positive experience will yield repeat purchases and stronger brand loyalty.
Christopher J. Boever: So we're very optimistic now and excited about what the next phase is going to be to be able to go out now and confidently, fact-based, drive a complete category solution for our retail partners. It may be late.
Speaker Change: We're very optimistic now and I'm excited about what the next phase is going to be to be able to go out now and.
Speaker Change: Confidently that baseline drive a complete category solution for our retail partners.
Michael John Grondahl: And maybe last question for Alex. Alex, you did these bridge notes in the quarter. Um, you know, can you finance kind of keep this going as the revenue ramp supplies the working capital that's needed? Just some insight, your comfort with being able to do that.
Speaker Change: And maybe last question for Alex.
Alex: Alex can.
Speaker Change: You did these bridge notes in the quarter.
Alex: Can you finance.
Alex: Keep this going as the revenue ramps supply the working capital that's needed just some insight.
Alex: Comfort with being able to do that.
Alex: It's.
Alex:
Alex Hoffman: We don't have the installed borrowing capacity today to fund the full working capital rent that's going to be required for us to hit, you know, what we know is coming. Like Chris said, this has happened before, you know; velocities happen quickly.
Speaker Change: We don't have the installed capacity installed.
Speaker Change: Borrowing capacity today to fund the full working capital ramp that's going to be required for us to hit.
Speaker Change: What we know is coming.
Alex Hoffman: We're catching up. A lot of the way that we're going to see growth is through new distribution. And that can tend to be lumpier growth, right, where you have a distribution reset, and all of a sudden you're shipping to a significantly larger number of stores, which requires a significant bump in your inventory. So the way our existing line of credit works today, it doesn't tie to that exactly. And so we will need to bring in some amount of capital.
Chris: Chris said this has happened.
Chris: The velocities happen quickly, we're catching back up.
Chris: A lot of the way that we're going to see growth is through new distribution and that can tend to be lumpier growth right, where you have a distribution resetting all of a sudden you're shipping to <unk>.
Chris: Significantly more amount of stores, which required us to getting the bump in your inventory.
Chris: <unk>.
Chris: So the way our our existing line of credit works today.
Speaker Change #101: It doesn't tie to that exactly and so we will need to bring in some amount of capital on these convertible bridge notes are an example of that and we're going to continue to look for ways to.
Alex Hoffman: These convertible bridge debts are an example of that, and we're going to continue to look for ways to make the most of it. You know, I think that's evident in the guidance that we're giving and the balance sheet as we have it today.
Speaker Change #101: In the most.
Speaker Change: Prudent way possible with the least amount of dilution possible.
Speaker Change: Fund our business.
Speaker Change #100: To get to a sale.
Speaker Change #100: Self sustaining model.
Speaker Change #109: Once we have the requisite volumes for that but.
Speaker Change #102: But can we finance it today after off of our existing facilities no. We can't they'll need to be some sort of third party infusion, whether it's additional convertible bridge notes or something else I.
Speaker Change #103: I think that's evident in the guidance that we're giving and the balance sheet as we have it today.
Speaker Change #102: Hey.
Michael John Grondahl: [inaudible] To execute on this through the end of 24, do you have a rough range of what's needed?
Speaker Change #105: To execute on this through the end of 'twenty four do you have a rough range of what's needed.
Speaker Change #105: Yeah.
Alex Hoffman: We haven't disclosed that publicly right now, and we hope to provide some updates on that in the near future.
Speaker Change #110: We do we haven't disclosed that publicly right now and we hope to provide some updates on that in the near future.
Speaker Change #110: Yeah.
Christopher J. Boever: One thing we've done, except one thing we've done exceptionally well, is always find a solution, and we are actively working on solutions that are going to continue to fuel this really positive momentum that we've created to, you know, really delight the consumers, fulfill, meet, and exceed our customer expectations, and deliver for our shareholders. One thing we've always done since I've been here is find a way to certainly close those gaps on an as needed basis in the most prudent and efficient, scrappy, and effective manner.
Speaker Change #107: Got it one thing we've done except for one thing we've done exceptionally well.
Speaker Change #104: There is always kind of solution and we are actively working on solutions, that's going to continue to fuel. This really positive momentum that we've created to really.
Speaker Change #111: No really delight the consumers.
Speaker Change #114: Fulfill and meet and exceed our customer expectations and deliver for our shareholders.
Christopher J. Boever: So rest assured that's on our hit list of things to accomplish in the coming periods, and we fully expect to, you know, be able to continue to drive this momentum now that the marketplace is very excited about.
Speaker Change #108: One thing we've always done since I've been here is find a way to certainly close those gaps on an as needed basis, and the most prudent and efficient and scrappy and effective manner. So rest.
Speaker Change #106: Rest assured that's on our hit list of things to accomplish in that.
Speaker Change #113: <unk> periods, and we fully expect to be able to continue to drive this momentum now that the marketplaces very excited about.
Michael John Grondahl: Hey, thanks guys.
Speaker Change #106: Hey, Thanks, guys.
Speaker Change #106: Thanks.
Operator: Thank you. Just a reminder, should you have a question, please press star followed by the number one on your touchstone phone. There seem to be no further questions at this time. I'd now like to turn the call back over to Mr. Boever for his final closing comments. Well, I certainly want to express our gratitude.
Speaker Change #112: Thank you and just a reminder, so do you have a question. Please press star followed by the number one on you touched on something.
Speaker Change #112: They seem to be no further questions at this time I'd now like to turn the call back over to Mr. Beaver final closing comments.
Operator: Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line. Have a lovely day.
Christopher J. Boever: I certainly want to express our gratitude to all of our stakeholders for the continued support and belief in Strive Foods. As we've discussed today, we are making substantial progress across all fronts, from operational improvements to strategic market expansion and, certainly, financial discipline. We remain dedicated to delivering on our promises, driving value for our shareholders, and exceeding the expectations of our customers. We are very enthusiastic about the future of our company, and I look forward to sharing our continued progress in the upcoming quarters. Thank you once again for joining us on today's call.
Mr. Beaver: Well I certainly want to express our gratitude to all of our stakeholders for their continued support and belief in strive foods.
Speaker Change #116: As we've discussed today, we are making substantial progress across all fronts.
Mr. Beaver: Operational improvements to strategic market expansion and certainly financial discipline.
Mr. Beaver: We remain dedicated to delivering on our promises driving value for our shareholders and exceeding the expectations of our customers.
Mr. Beaver: We are very enthusiastic about the future of our company and I look forward to sharing our continued progress in the upcoming quarters.
Speaker Change #118: Thank you once again for joining today's call.
Speaker Change #112: Each stake.
Speaker Change #119: B a jerky.
Speaker Change #112: Yes.
Speaker Change #117: Thank you, Sir ladies and gentlemen. This concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines have a lovely day.
Speaker Change #117: Yes.
Speaker Change #112: Okay.
Speaker Change #112: [music].
Speaker Change #112: Okay.
Speaker Change #112: Thank you.
Alex Hoffman: Okay.
Alex Hoffman: Okay.
Alex Hoffman: Okay.