Q1 2024 Barfresh Food Group Inc Earnings Call

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Good afternoon, everyone and thank you for participating on today's first quarter 2020 for corporate update call for bar fresh food group, joining us today as part of fresh food group's founder and CEO Ricardo Delek coffee and bar fresh food group's CFO Lisa Roger.

Following prepared remarks, we will open the call for your questions.

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

These forward looking statements are identified by the use of the words such us grow expand anticipate intend estimate believe expect plan should hypothetical potential forecast and project continue could may predict and will and variations of such words and similar expressions.

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All statements other than the statements of historical facts that address activities events or developments that the company believes or anticipates will or may occur in the future are forward looking statements.

These statements are based on certain assumptions made it be fun experience expected future developments and other factors that the company believes are appropriate under the circumstances.

Such statements are subject to a number of assumptions risks and uncertainties many of which are beyond the control of the company.

Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect actual results may vary materially from those indicated oriented supported by such forward looking statements.

Accordingly investors are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date they are made.

Contents of this call should be considered in conjunction with the company's recent filings with the Securities and Exchange Commission, including its annual report on Form 10-K, and the quarterly reports on Form 10-Q, and current reports on form 8-K, including any warnings risk factors and cautionary statements contained therein.

Furthermore, the company expressly disclaims any current intention to update publicly any forward looking statements. After this call whether as a result of new information future events changes in assumptions or otherwise.

In order to aid in the understanding of the company's business performance. The company is also presenting certain non-GAAP measures, including adjusted EBITDA, which are reconciled in the table in the business update release to the most comparable GAAP measures.

The reconciling items are non operational or noncash costs, including stock compensation and other nonrecurring costs, such as those associated with product withdrawal and the related dispute and certain manufacturing relocation costs.

Management believes that adjusted EBITDA provides useful information in the investor because it is directly reflective to the period to period performance of the company's core business.

Now I will turn the call over to D. C E O of bar fresh food group Mr. Ricardo Delicacy. Please go ahead Sir.

Good afternoon, everyone and thank you for joining us for our record first quarter 'twenty 'twenty four earnings call.

I'm extremely pleased to report that this quarter was a historic one for our company.

We delivered the highest quarterly revenue in our company's fifth Street high gross margins and positive adjusted EBITDA for the first time.

Our results were driven by robust demand for our cotton product.

Supported by increased capacity and the relaunch of about five to one 100% juice concentrate after a temporary pools due to pandemic related challenges.

This strong top line performance translated into positive adjusted EBITDA for the first time in the company's history.

A monumental achievement and a testament to the hard work and dedication of our team.

Our gross margin also reached the highest level since early 2021, reflecting our continued focus on operational excellence and cost discipline.

Our record first quarter results had many drivers, including our ability to solidify our manufacturing footprint by adding capacity to existing co packers, but both bottles and cotton.

With our record first quarter performance and the addition of 2006 hundred recently announced school location wins within the education channel, we are well on track to generate record revenue for fiscal year 'twenty 'twenty four.

Accompanied by year over year margin improvement throughout the year as we continue to focus on additional supply chain improvements.

And we will achieve this despite not having yet replaced our largest auto manufacturer.

However, we are working hard to onboard our new high capacity ballroom manufacturing partner before the beginning of the New school year in August, which will pave the way to even greater revenue growth opportunities ahead.

To enhance our strategic growth initiatives and bolster our operational capabilities, we recently announced the pivotal executive higher.

We hired Mark on that law, as vice president of supply chain and contract manufacturing.

Speed heading out if it's the seamlessly onboard our new bottle car manufacturer and the recently acquired school account.

With over 25 years of comprehensive end to end supply chain expertise market brings a wealth of invaluable experience in establishing robust product manufacturing and supply chain operations.

He has strong command over the domain, coupled with deep rooted relationships with car manufacturers foodservice customers and distributors positions him exceptionally well to ensure a steady product flow and Uncompromised service delivery to all our valued customers.

These strategic high underscores our commitment to building a formidable supply chain infrastructure that can scale efficiently to support the long term growth plans.

Additionally, we have significantly expanded our sales network and in doing so it landed numerous large customer win.

Within just the last month, we've added over 2006 hundred New school locations and the collective student body by the 2 million students that will be served our smoothies on the breakfast menus or a la carte commencing this fall.

With a robust sales pipeline in place we anticipate further school bids to be won and are now in the coming months.

Earlier. This week, we also announced an agreement with the largest regional sounds break or in the southeast.

This agreement rapidly accelerates, our sales reach and customer acquisition capabilities across the South East as we now have access to an additional 82 new salespeople.

Under the agreement the South Bronco will represent Bob Freshest comprehensive portfolio of products to all its customer segments.

<unk>, the education channel and foodservice channel across the South East region.

This partnership is a great example of how the momentum is building in our company and we are putting the important building blocks in place after overcoming the previous supply challenges that are increasingly behind us.

By joining forces we gained an extensive sales team boasting specialized teams with deep rooted relationships in the K 12 education market Health care Recreation amusement park quick serve and regional chain restaurants.

They're expert chase and customer knowledge and shows our suite of products penetrate all crucial customer segments at scale.

Emerging from tip back space during the pandemic. This agreement. He is part of a concerted effort to reengage and actively target all customer segments without complete offerings.

To recap our incredible start to the yeah and why we are very confident in a record year in 2024.

Gross margins and cash flow.

We recently announced a 2600 new schools.

<unk> launched a five to one juice concentrate aimed at high volume locations.

[laughter] signed with the largest south east and South brokerage organization targeting all about customer groups.

And lastly, we are confident we will sign an additional bottle manufacturer before the beginning of 'twenty four 'twenty five school year.

In summary, we are incredibly proud of our achievements thus far this year and we are well positioned to build on this momentum as we continue throughout fiscal year 2024.

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

Lisa Roger: Thank you Ricardo.

Revenue for the first quarter of 2024 increased 35% to $2 8 million compared to $2 1 million in the first quarter of 2023.

The increase in the first quarter revenue as a result of improved supply due to increase capacity at our carton production this quarter over last quarter.

Prove them in bulk sales.

Actually offset by a continuation into the first six weeks of the quarter of an industry wide shortage of borealis and eight ounce cartons that began in December 2023.

Gross margin for the first quarter of 'twenty 'twenty, four was 41, 4% compared to 49% for the first quarter of 2023.

The year over year increase was due to product mix and a slight improvement in the cost of supply chain components.

Our net loss for the first quarter of 2024 was 449000.

Impaired to a net loss of 889000 in the first quarter of 2023.

The year over year improvement as a result of improved revenue and margins as well as a reduction in operating expenses due to cost saving measures.

Selling marketing and distribution expense for the first quarter of 2024 was 694000 or 25% of revenue compared to 667000 or 32% of revenue in the first quarter of 2023.

The increase in costs resulted from an increase in freight associated with the increase in revenue.

Reduction in cost as a percentage of revenue is due to greater efficiencies and operating leverage from relatively fixed personnel costs.

G&A expenses for the first quarter of 2024 decreased 14% to 858000 compared to 994000 in the same period last year.

The decrease in G&A was driven by a decrease in personnel costs, resulting primarily from a reduction in head count and the reduction in operating expense associated with our 2022 product fits well.

For the first quarter of 2024, our adjusted EBITDA was approximately 63000 compared to a loss of 544000 for the prior year period.

As Ricardo said this is the first time in our company history that we achieved positive adjusted EBITDA and a significant milestone in our journey towards profitability.

Now moving onto our balance sheet as of March 31, 2024, we had approximately $1 2 million in cash and approximately $1 3 million of inventory on our balance sheet compared to $1 9 million in cash and one 2 million of inventory as of December 31, 2023.

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

Ricardo: Thank you Lisa.

This quarter marked a series of tremendous milestones for our company.

Record quarterly revenue, our first positive adjusted EBITDA and highest gross margins you know over two years.

We are well positioned to build on this momentum and deliver a record fiscal year in terms of both the top and bottom line.

Looking ahead the replacement about lost bottle manufacturer will further fuel our growth while the initiatives like enhancing our operational and sales capabilities, expanding distribution and re engaging with existing customers as well as attracting new ones opened up additional opportunities.

We expect more record results throughout the year.

After a typically seasonally slow Q2, we believe that Q3 will be the highest revenue in the company's history.

We have never been more confident in our ability to drive long term sustainable shareholder value.

I would like to thank our entire team for their hard work and dedication that made these achievements possible and with that I would like to open up the lines questions operator.

Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad. The confirmation tone will indicate that your line is in the question queue you.

You May press star two if he would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment. Please poll for questions.

Ricardo: Thank you. Our first question is coming from the line of Nicholas Sherwood with Maxim Group. Please proceed with your question.

Nicholas Sherwood: Hi, congrats on the quarter.

For all these new school districts that you added or any of these lost customers you can re engaged with.

Or a lot of these new school districts that are there and is there any more potential to bring back and hand, the school districts, who lost when you had those manufacturing issues.

Yeah sure a lot of the accounts the new accounts that are coming on in New York now.

We do have some of the older ones that we hope still to come back more.

Nicholas Sherwood: More so when we finalize the bottle you bought who manufacturer.

With a target those larger wanted more specifically.

There's a lot of sudden what's right in front of us, especially as we go into the fall and beginning of the New school, we are and which time, we should have the new bottle manufacturer one up as well.

Mhm.

Talking about the new bottle manufacturer how much of your current capacity.

<unk> would be able would you be able to use to service the contracts for next year and.

How much excess capacity would the new manufacturer.

We're tapped out without existing bottle manufacturer.

I'm sorry.

That are quite probably heard out.

Makes up 30%.

30% of revenue.

Nicholas Sherwood: Are you asking yeah.

Yeah, Yeah, that's about right mhm.

Yep.

You know the new bottle when you bought them and in fact, when there's an enormous amount of white space there.

More business with the bottles as well as gotten out and recouping some of those lost customers.

Mhm.

And then my final question before I turn to you do you have any update on the military or entertainment channels.

Uh huh.

Yeah, So some of those channels and the Bulks are products.

Ooh.

Nicholas Sherwood: Affected by Covid.

Nicholas Sherwood: That really highlights.

One of the reasons why we are focusing on.

Nicholas Sherwood: Updating our broken network to now cover the full range of products.

We will also be targeting these additional segments are in Alberta and other channels.

Example of that is actually the statue of Liberty for example.

We just resigned a statue of Liberty in the Ellis Island for me five years.

Nicholas Sherwood: Another five year contract.

With that customer we are actually the best one products.

You know at the locations out of all the all the food and beverage items. There. So we're seeing a lot of these foodservice locations, whether it's entertainment or OXXO.

Hum.

Nicholas Sherwood: Okay.

Aquariums museums et cetera, all starting to come back now.

Okay.

Ladies and gentlemen, please standby the event will resume momentarily we thank you for your patience.

Nicholas Sherwood: Ladies and gentlemen, we thank you for your patience.

Carter you may resume.

Oh, let's say.

Speaker Change: Did you, which part of the response did you.

The notes that you re signed the contract with the statue of Liberty and that foodservice is coming back online. So that the pandemic has sort of moved into the rear view.

Yeah, a lot of that is just seasonal as well. So what you find is that the menu I mean, you go when I do the planning et cetera will be very seasonal. So it does take time to get back into the menu planning windows based on everything else that the organizations have gone on.

Speaker Change: To do that now.

Understood well, thank you for all that detail on that.

I will turn it to the queue.

Speaker Change: Thank you as a reminder, ladies and gentlemen, if you would like to ask a question at this time. Please press star one on your telephone keypad, you will hear a confirmation tone will indicate that your line is in the queue.

Hold on we poll for additional questions.

Speaker Change: Once again, ladies and gentlemen to ask a question at this time, Please press star one.

On your telephone keypad.

Ladies and gentlemen, we have reached the end of our question and answer session and this does conclude today's teleconference. We thank you for your participation and you may disconnect.

Correct your lines at this time.

Okay.

Hello.

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Speaker Change:

Uh-huh.

Okay.

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Uh huh.

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Yeah.

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