Q2 2024 Stryve Foods Inc Earnings Call

Speaker Change: Andina Acqsn 3

Operator: Andina Acqsn 3 Good afternoon, everyone. Welcome to the Strive Food second quarter fiscal 2024 financial results conference call. At this time, all lines are in listen-only mode.

Operator: Welcome to the Strived Food, 2nd quarter of fiscal 2020-24 financial results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session.

Speaker Change: Andina Acqsn 3

Speaker Change: Good afternoon, everyone. Welcome to the Strive Food second quarter fiscal 2024 financial results conference call.

Operator: Following the presentation, we will conduct a question-in-answer session. If at any time during this call you require immediate assistance, please press store 0 for the operator. This call is being recorded on Wednesday, August 14, 2024. Now, I would like to turn the call over to Will Pugh, Senior Vice President of Accounting at Stratford, to make introductions and read the Safe Harbor Statement. Please go ahead.

Speaker Change: At this time, all lines are in listen-only mode.

Speaker Change: 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.

Operator: If at any time during this call you require immediate assistance, please press star zero for the operator.

Operator: This call is being recorded on Wednesday, August 14, 2024.

Speaker Change: This call is being recorded on Wednesday, August 14, 2024. Now, I would like to turn the call over to Will Pugh, Senior Vice President of Accounting at Strifoods, to make introductions and read the Safe Harbor Statement. Please go ahead.

Will Pugh: Now, I would like to turn the call over to Will Pugh, Senior Vice President of Accounting at TriFoods, to make introductions and read the safe harbor statement. Please go ahead.

Will Pugh: Thank you, operator. And welcome to the Strived Food Spisky Year, 2020-24, 2nd quarter earnings conference call. With me today, our Strives Chief Executive Officer, Chris Beaver, and Chief Financial Officer, Alex Hawkins.

Will Pugh: Thank you, Operator, and welcome to the Strive Foods Fiscal Year 2024 Second Quarter Earnings Conference Call. With me today are Strive's Chief Executive Officer, Chris Beaver, and Chief Financial Officer, Alec Hawkins. 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 Private Security Litigation Report Act of 1985. Four Likens statements, by their nature, are uncertain and outside of the company's control. However, actual results could differ materially from these expectations.

Will Pew: Thank you, Operator, and welcome to the Strive Foods fiscal year 2024 second quarter earnings conference call. With me today are Strive's Chief Executive Officer Chris Beaver and Chief Financial Officer Alec Hawkins.

Will Pugh: Before we begin, I would like to remind everyone that part of our discussion today will include four looking statements that are made pursuant to the safe Harvard provisions that a private security solidification reform act of 1985. Four looking statements by their nature are uncertain and outside of the company's control. Actor results could differ materially from these electric patients. These statements are not guarantees of future performance, and therefore unbue reliance should not be placed upon them. We do not undertake to update these four looking statements at a later date, and they only refer to today.

Speaker Change: 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 Private Securities and 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.

Will Pugh: 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-gap to the nearest gap measure included in today's earnings press release for detail.

Speaker Change: These statements are not guarantees of future performance, and therefore, our undo reliance should not be placed upon them. We do not undertake to update these fort-looking statements at a later date, and they only refer to today.

Will Pugh: 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: In addition, today's call will include a discussion of non-gap financial measures, including adjusted EBDA and adjusted EKS. Non-gap financial measures should be considered as a supplement to and not a substitute for Gap financial measures.

Speaker Change: We refer you to the reconciliation of non-gap to the nearest gap measure, include it in today's earnings press release or further detail.

Will Pugh: This call is being 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 AK submitted to the SEC.

Will Pugh: This call is being 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 Ernest Press release is posted on our website, and a copy of the release has been included in the form AK submitted to the SEC. With that, I would now like to turn the call over to Chris Beaver. Chris...

Speaker Change: This call is being webcast and can be accessed through the audio link on the News and Events page of the Investors section at ir.strive.com.

Speaker Change: Also, the earnest press release is posted on our website, and a copy of the release has been included in the form AK submitted to the SEC. With that, I would now like to turn the call over to Chris Beaver.

Chris Beaver: With that, I would now like to turn the call over to Chris Beaver. Chris, thanks, Will, and good afternoon everyone. Thank you for joining us today. The second quarter of 2024 marks another significant step forward in Strive Foods' ongoing transformation. This quarter, we have once again demonstrated the impact of our strategic initiatives, which have been driving substantial year-over-year improvements in our financial and operational performance. But perhaps more importantly, when we look back to the second quarter of 2022 before the transformation began, the progress we made is truly remarkable, and it underscores the effectiveness of the strategy.

Chris Beaver: Thanks, Will, and good afternoon, everyone. Thank you for joining us today. The second quarter of 2024 marks another significant step forward in Strive Food's ongoing transformation. This quarter, we have once again demonstrated the impact of our strategic initiatives, which have been driving substantial year-over-year improvements in our financial and operational performance. But perhaps more importantly, we look back to the second quarter of 2022, before the transformation began. The progress we've made is truly remarkable, and it underscores the effectiveness of this strategy. Let's begin with the number.

Chris Beaver: Thanks Will, and good afternoon everyone. Thank you for joining us today. The second quarter of 2024 marks another significant step forward in Strive Food's ongoing transformation.

Chris Beaver: This quarter, we have once again demonstrated the impact of our strategic initiatives, which have been driving substantial year-over-year improvements in our financial and operational performance.

Chris Beaver: But perhaps more importantly, when we look back to the second quarter of 2022, before the transformation began

Speaker Change: The progress we've made is truly remarkable, and it underscores the effectiveness of this strategy.

Chris Beaver: Let's begin with the numbers. This quarter, our gross margin expanded to 27.4%, up from 17.5% in Q2 of 2023, an astonishing turnaround from the negative 40.4 percent gross margin we reported in Q2 of 2022. This represents not just an important improvement in our profitability, but a complete transformation in how we manage our business. From procurement to production to pricing, this kind of margin expansion over just two years to the clear indication that our efforts. The streamlined operations optimize our product mix and enhance our pricing strategy are working effectively. Operating expenses in Q2 of 2024 were down by 11 percent compared to the same period last year, reflecting our ongoing commitment to cost discipline.

Chris Beaver: This quarter, our gross margin expanded to 27.4%, up from 17.5% in Q2 of 2023, an astonishing turnaround from the negative 40.4% gross margin we reported in Q2 of 2022. This represents not just an important improvement in our profitability but a complete transformation in how we manage our business from procurement to production to pricing. This kind of margin expansion over just 2 years is a clear indication that our efforts.

Speaker Change: Let's begin with the numbers.

Speaker Change: This quarter, our gross margin expanded to 27.4%, up from 17.5% in Q2 of 2023. An astonishing turnaround from the negative 40.4% gross margin we reported in Q2 of 2022.

Speaker Change: This represents not this represents not just an important improvement in our profitability, but a complete transformation and how we manage our business.

Speaker Change: from procurement to production to pricing. This kind of margin expansion over just two years is a clear indication that our efforts.

Chris Beaver: 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31, Operating expenses in Q2 of 2024 were down by 11% compared to the same period last year, reflecting our ongoing commitment to cost discipline. However, when you compare this to Q2 of 2022, the reduction is even more profound.

Chris Beaver: Our operating expenses have been reduced by 66 percent. This reduction has been achieved through a combination of strategic headcount management, renegotiation of supplier contracts, and the rigorous implementation of our MVP program, maximizing value through productivity, which has driven efficiency improvements across all areas of our business. Adjusted EBITDA improved by 35% year-over-year, but what is perhaps even more impressive is the nearly 90% reduction in our adjusted EBITDA loss since Q2 of 2022. Back then, we were operating in a very different landscape, facing significant operational inefficiencies, a less focused product portfolio, and higher fixed costs.

Chris Beaver: Today, thanks to our comprehensive transformation strategy, we are operating with far greater agility and financial prudence. We have streamlined our product offerings, refined our go-to-market strategy, and significantly lowered our cost base, all of which have contributed to a substantial improvement in EBITDA. These financial improvements are not just numbers. They tell a story of resilience, strategic foresight, and a relentless focus on execution. They reflect the real, tangible progress we've made in transforming Strive into a leaner, more efficient company with a clear path to profitability. We say what we're going to do, and we do what we say.

Chris Beaver: One of the most encouraging aspects of our progress this quarter has been the continued outperformance in retail consumption, and the last team that said these gains have been driven largely by the success of our new packaging and brandy initiatives, which we launched late last year. As of now, we estimate that about three-fourths of our products have transitioned to the new packaging on retail shelves. The consumer response has been overwhelmingly positive, with significant improvements in shelf presence and customer engagement.

Speaker Change: streamline operations, optimize our product mix, and enhance our pricing strategies are working effectively.

Chris Beaver: This transition is not just about aesthetics; it's about communicating the premium quality of our products in a simplified manner, standing out in a crowded category. Our velocity improvements reflect the growing consumer preference for our brand, particularly as they begin to recognize and trust the Strive, Vacadios, and Kalahari brands as synonymous with quality and health. The improvements in our product quality driven by enhanced manufacturing processes have also played a critical role in this success.

Chris Beaver: Over the past two years, we have been laser focused on our production facilities, upgrading equipment, refining processes, and implementing stringent quality control methods. These efforts have paid off as evidenced by the positive feedback we received from both consumers and retail partners. The improved and consistent quality of our products better enables us to track and retain new and existing consumers.

Chris Beaver: Our MVP program has been instrumental in driving operational efficiency across our workforce. This program is more than just a cost-cutting exercise; it's about fostering a culture of continuous improvement and accountability at every level of the organization. Through MVP, we have been able to optimize resource allocation, reduce waste, and improve productivity, all of which have contributed to our enhanced financial performance. This program is a cornerstone of our strategy to build a more resilient and scalable business.

Chris Beaver: Looking forward, we are equally excited about the growth opportunities that lie ahead. We are making great strides with our air-dried pet treat strategy, which not only offers significant growth potential but also allows us to maximize the use of our raw materials. This initiative aligns perfectly with our commitment to sustainability and innovation by utilizing all raw materials.

Chris Beaver: We are not only reducing waste but also tapping into a lucrative and growing market for premium, human grade plastic. We have seen strong demand for both branded and contract-packing cuss- And we believe this segment has the potential to become an increasingly important part of our business. Additionally, we recently earned both Kosher and Halal certification, which opens up new market opportunities for us. These certifications are significant because they allow us to tap into underserved markets where demand for high quality certified products is strong.

Chris Beaver: Apply His Limit, We plan to enter these markets primarily through contract manufacturing, which will enable us to leverage our existing production capabilities. We're also excited to announce the strategic consolidation and redesign of our owned websites. This initiative, which is set to launch externally in Q4 of 2024, will allow us to benefit from cross-brand selling opportunities, a streamlined checkout experience, better conversion, and an overall improvement to our shoppers' experience. Our goal is to make it as easy as possible for consumers to find, purchase, and enjoy our products online.

Chris Beaver: And we believe this redesign will significantly step forward to drive foods in achieving that. Furthermore, our grass-fed beef product lineup under Strive and Kalahari Brands is gaining momentum. With new branding and packaging, we are offering retailers and consumers an opportunity to enjoy our high-quality brand in the growing grass-fed segment of meat sales. We are confident that this segment will continue to grow and believe it could contribute meaningfully to our overall sales.

Speaker Change: Operating expenses in Q2 of 2024 were down by 11% compared to the same period last year, reflecting our ongoing commitment to cost discipline.

Chris Beaver: When you compare this to Q2 of 2022, the reduction is even more profound. Our operating expenses have been reduced by 66 percent. This reduction has been achieved through a combination of strategic headcount management, renegotiations of supplier contract, and the rigorous implementation of our MVP program, maximizing values through productivity, which has driven efficiency improvements across all areas of our business. Adjusted EBITDA improved by 35 percent year over year, but what is perhaps even more impressive is the nearly 90 percent reduction in our adjusted EBITDA loss since Q2 of 2022. Back then, we were operating a very different landscape, facing significant operational inefficiencies, the less focused product portfolio, and higher fixed cost.

Speaker Change: When you compare this to Q2 of 2022, the reduction is even more profound. Our operating expenses have been reduced by 66%.

Speaker Change: This reduction has been achieved through a combination of strategic headcount management, re-negotiations of supplier contract, and the rigorous implementation of our MVP program, maximizing values through productivity, which has driven efficiency improvements across all areas of our business.

Speaker Change: Adjusted EBITDA improved by 35% year over year, but what is perhaps even more impressive is the nearly 90% reduction in our adjusted EBITDA loss since Q2 of 2022.

Speaker Change: Back then, we were operating in a very different landscape, facing significant operational inefficiencies, a less focused product portfolio, and higher fixed costs. Today, thanks to our comprehensive transformation strategy, we are operating with far greater agility,

Chris Beaver: Today, thanks to our comprehensive transformation strategy, we are operating with far greater agility and financial prudence. We streamlined our product offerings, refined our go-to-market strategy, and significantly lowered our cost base, all of which have contributed to the substantial improvement in EBITDA.

Speaker Change: and Financial Prudence.

Speaker Change: We've streamlined our product offerings, refined our go-to-market strategy, and significantly lowered our cost base, all of which have contributed to the substantial improvement in EBITDA.

Chris Beaver: These financial improvements are not just numbers. They tell a story of resilience, strategic foresight, and a relentless focus on execution. They reflect the real, tangible progress we've made in transforming Strive into a lean or more efficient company with a clear path to profitability. We say what we're going to do, and we do what we're going to say.

Speaker Change: These financial improvements are not just numbers. They tell a story of resilience, strategic foresight, and a relentless focus on execution.

Speaker Change: They reflect the real, tangible progress we've made in transforming Strive into a leaner, more efficient company with a clear path to profitability.

Chris Beaver: One of the most encouraging aspects of our progress this quarter has been the continued outperformance and retail consumption and velocity metrics. These gains have been driven largely by the success of our new packaging and brandy initiatives, which we launched late last year. As of now, we estimate that about three-fourths of our products have transitioned to the new packaging on retail shelves. The consumer response has been overwhelmingly positive, with significant improvements in shelf presence and customer engagement. This transition is not just about aesthetic. It's about communicating the premium quality of our products in a simplified manner, standing out in a crowded category.

Chris Beaver: One final point I'd like to touch on in relation to our growing consumer demand. As I've shared, a rapid increase in velocity at retail has been a positive surprise. While we outperformed our planned expectation, it led to some challenges in keeping up with the demand and resulted in some inventory stocks at various retailers and online platforms. Well, it's never ideal to face supply chains.

Speaker Change: We say what we're going to do and we do what we're going to say. One of the most encouraging aspects of our progress this quarter has been the continued out performance and retail consumption and velocity metric.

Chris Beaver: It's a positive sign that our demand for our product exceeded both our own and our retailers' expectations. This demand-driven shortfall was not due to capacity or structural limitations, but rather financial constraints, which we are actively addressing, including through the convertible promissory notes we secured this past quarter. Importantly, this situation has highlighted the strong consumer demand for our products and reinforced our confidence in our growth strategy. In summary, Q2 2024 has been a quarter of strong progress marked by significant financial and operational improvement.

Chris Beaver: Continued success in our core business and the exciting new growth opportunities that we've just outlined. I believe we are well positioned to continue this momentum as we move forward. With that, I'll turn it over to our CFO, Alex Hawkins, to provide a detailed overview of the financial results. Thanks, Chris. Good afternoon, everyone.

Alec Hawkins: I'm pleased to walk you through our financial results for the second quarter of 2024, which reflect both the ongoing strength of our business transformation and the disciplined execution of our strategic priorities. Starting with the top line, our net sales for the second quarter were $6.2 million, representing a 3% increase compared to $6 million in the second quarter of 2023. While the year-over-year growth might seem modest, it's important to view these results in the context of our strategic decision to rationalize certain low-margin products and discontinue some underperforming retail programs that were still supporting last year's numbers. This disciplined approach has allowed us to focus on higher quality revenue streams and improve the overall profitability of our sales force. We believe that we saw the trough of these rationalization efforts in Q4 of last year.

Speaker Change: These gains have been driven largely by the success of our new packaging and branding initiatives.

Speaker Change: which we launched late last year.

Speaker Change: As of now, we estimate that about three-fourths of our products have transitioned to the new packaging on retail shelves. The consumer response has been overwhelmingly positive, with significant improvements in shelf presence and customer engagement.

Speaker Change: This transition is not just about aesthetics, it's about communicating the premium quality of our products in a simplified manner, standing out in a crowded category.

Chris Beaver: Our velocity improvements reflect the growing consumer preference for our brand, particularly as they begin to recognize and trust the Strive, Vacatios, and Kalahari brand as synonymous with quality and health. The improvements in our product quality, driven by enhanced manufacturing processes, have also played a critical role in the success. Over the past two years, we have been laser-focused on our production facilities, upgrading equipment, refining processes, and implementing stringent quality control measures. These efforts have paid off, as evidenced by the positive feedback we received from both consumers and retail partners. The improved and consistent quality of our products is better enabling us to attract and retain new and existing consumers.

Alec Hawkins: And since then, we have shown considerable sequential growth each quarter, with Q1 of this year up 59.2% versus Q4 of 23. And in this most recent quarter, Q2, up 34.4% versus the first quarter of this year. These periods of consecutive outsized sequential growth are evidence that we've entered into the next phase of our transformation, driving sustainable quality growth. Our gross profit for the second quarter came in at $1.7 million, up significantly from $1.1 million in the same period last year.

Speaker Change: Our velocity improvements reflect the growing consumer preference for our brand.

Speaker Change: particularly as they begin to recognize and trust the Strive, Vacadios, and Kalahari brands as synonymous with quality and health.

Alec Hawkins: This improvement is primarily attributable to our enhanced sales mix, better absorption of fixed costs due to higher production volume, and more efficient production processes, as well as our ongoing efforts to optimize our price mix. The resulting gross margin of 27.4% is a substantial improvement from 17.5% in Q2 of last year, marking a full 10 percentage point expansion. And that improvement, by the way, was achieved despite the fact that we faced considerably higher input costs this quarter than we did in the prior year period.

Speaker Change: The improvements in our product quality, driven by enhanced manufacturing processes, have also played a critical role in the success.

Alec Hawkins: This is a clear indicator that our efforts to drive operational efficiencies, improve our costing, and focus on an improved mix are yielding positive results. Turning to operating expenses, we continued our disciplined approach to cost management, reducing our total operating expenses by 11.3% year-over-year to $3.9 million in the second quarter of 2024, down from $4.4 million in the prior year period. This reduction reflects the ongoing benefits of our MDP program, which has been instrumental in streamlining our operations and enhancing productivity across the board.

Speaker Change: Over the past two years, we have been laser focused on our production facilities, upgrading equipment, refining processes, and implementing stringent quality control measures.

Alec Hawkins: When we compare this same quarter in 2022, when our operating expenses were over $11.5 million for the quarter, the scale of our transformation becomes even more apparent. This substantial reduction in operating expenses has been achieved without compromising our long-term growth initiatives or the quality of our products, demonstrating the effectiveness of our cost control measures. As a result of these efforts, our operating loss for the quarter narrowed to $2.2 million compared to an operating loss of $3.4 million in the same period last year.

Alec Hawkins: This represents a significant 33.8% improvement year over year. Even more striking is the comparison to Q2 of 2022, when our operating loss stood at $15.6 million. The progress we've made over the past two years is a testament to the strength of our strategy and to the dedication of our team. Moving on to adjusted EBITDA, which we view as a key indicator of our underlying business performance. We reported an adjusted EBITDA loss of $1.5 million for the second quarter of 2024.

Speaker Change: These efforts have paid off as evidenced by the positive feedback we received from both consumers and retail partners. The improved and consistent quality of our product is better enabling us to attract and retain new and existing consumers.

Chris Beaver: Our MVP program has been instrumental in driving operational efficiency across our workforce. This program is more than just a cost-cutting exercise; it's about fostering a culture of continuous improvement and accountability at every level of the organization. Through MVP, we have been able to optimize resource allocation, reduce waste, and improve productivity, all of which have contributed to our enhanced financial performance. This program is a cornerstone of our strategy to build a more resilient and scalable business.

Alec Hawkins: This is a 34.8% improvement from the adjusted EBITDA loss of $2.4 million in Q2 2023 and a dramatic improvement from the $11.4 million loss in Q2 2022. The nearly $40 million run rate improvement in adjusted EBITDA loss over the past 2 years highlights the significant strides we've made in driving operational efficiencies, optimizing our cost structure, and positioning this business for future profitability. Our net loss for the quarter was $3 million or 91 cents per share, compared to a net loss of $4.3 million or $2.5 cents per share in Q2 2023.

Speaker Change: Our MVP program has been instrumental in driving operational efficiency across our workforce. This program is more than just a cost-cutting exercise. It's about fostering a culture of continuous improvement and accountability at every level of the organization.

Alec Hawkins: This improvement reflects not only our higher gross profit and lower operating expenses but also a reduction in interest expenses and other financial costs. It's also worth noting that our adjusted loss per share for the quarter was $0.83, which compares favorably to the adjusted loss per share of $1.84 in the prior year period. This reflects our ongoing commitment to improving shareholder value as we work towards sustainable profitability. On the balance sheet, we ended the quarter with half a million dollars in cash, reflecting our careful management of cash during this liquidity-constrained phase of our transformation.

Speaker Change: Through MVP, we have been able to optimize resource allocation, reduce waste, and improve productivity, all of which have contributed to our enhanced financial performance.

Speaker Change: This program is a cornerstone of our strategy to build a more resilient and scalable business.

Chris Beaver: Looking forward, we are equally excited about the growth opportunities that lie ahead. We are making great strides with our air-dried pet treat strategy, which not only offers significant growth potential but also allows us to maximize the use of our raw materials. This initiative aligns perfectly with our commitment to sustainability and innovation. By utilizing all raw materials, we are not only reducing waste, but also capital into a lucrative and growing market for premium, human-grade pet treat. We have seen strong demand for both branded and contract-packing customers, and we believe this segment has the potential to become an increasingly important part of our business.

Speaker Change: Looking forward, we are equally excited about the growth opportunities that lie ahead.

Speaker Change: We are making great strides with our air-dried pet treat strategy.

Speaker Change: which not only offers significant growth potential, but also allows us to maximize the use of our raw materials. This initiative aligns perfectly with our commitment to sustainability and innovation.

Speaker Change: By utilizing all raw materials, we are not only reducing waste, but also tapping into a lucrative and growing market for premium, human-grade pet treats.

Speaker Change: We have seen strong demand for both branded and contract packing customers, and we believe this segment has the potential to become an increasingly important part of our business.

Chris Beaver: Additionally, we recently earned both kosher and halal certification, which opened up new market opportunities for us. These certifications are significant because they allow us to tap into underserved markets where demand for high-quality certified products is strong, but supply is limited. We plan to enter into these markets primarily through contract manufacturing, which will enable us to leverage our existing production capabilities.

Speaker Change: Additionally, we recently earned both Kosher and Halal certifications, which open up new market opportunities for us.

Speaker Change: These certifications are significant because they allow us to tap into underserved markets where demand for high quality certified products is strong, but supply is limited.

Alec Hawkins: Our line of credit and the recent closing of three million dollars in convertible promissory notes, including approximately one point seven million dollars from insider and related party participants, have supported our operations and allowed us to fund some of the working capital required by our performance. However, as Chris mentioned, we believe that we left dollars on the table in the second quarter as the demand for our products considerably exceeded our ability to fund that pace of growth.

Speaker Change: We plan to enter into these markets primarily through contract manufacturing, which will enable us to leverage our existing production capabilities.

Chris Beaver: We are also excited to announce the strategic consolidation and redesign of our own websites. This initiative, which is set to launch externally in Q4 of 2024, will allow us to benefit from cross-brand selling opportunities, a streamlined checkout experience, better conversion, and an overall improvement to our shopper's experience. Our goal is to make it as easy as possible for consumers that sign, purchase, and enjoy our product online, and we believe this redesign will significantly step forward, strive foods, and achieving that.

Speaker Change: We are also excited to announce the strategic consolidation and redesign of our owned websites.

Speaker Change: This initiative, which is set to launch externally in Q4 of 2024, will allow us to benefit from cross-brand selling opportunities, a streamlined checkout experience, better conversion, and an overall improvement to our shoppers' experience.

Speaker Change: Our goal is to make it as easy as possible for consumers to find, purchase, and enjoy our product online. And we believe this redesign will significantly step forward to thrive foods in achieving that.

Chris Beaver: Furthermore, our grass-fed beef product lineup under Strive and Kalahari brand is gaining momentum. With new branding and packaging, we are offering retailers and consumers an opportunity to enjoy our high-quality brand in the growing grass-fed segment of meat snacks. We are confident that this segment will continue to grow and believe it could contribute meaningfully to our overall sales.

Speaker Change: Furthermore, our grass-fed beef product lineup under Strive and Kalahari brand is gaining momentum. With new branding and packaging, we are offering retailers and consumers an opportunity to enjoy our high-quality brand in the growing grass-fed segment of meat snacks.

Speaker Change: We are confident that this segment will continue to grow and believe it could contribute meaningfully to our overall sales.

Chris Beaver: One final point I'd like to touch on in relation to our growing consumer demand. As I have shared, our rapid increase in velocity at retail has been a positive surprise. While we outperformed our planned expectation, it led to some challenges in keeping up with demand and resulted in some auto stocks at various retailers and online platforms. While it's never ideal to face supply challenges, it's a positive sign that our demand for our products exceeded both our own and our retailers' expectations. This demand-driven shortfall was not due to capacity or structural limitations. or rather financial constraint, which we are actively addressing, including through the convertible promissory notes we secured this past quarter.

Alec Hawkins: This working capital shortfall, driven in part by the significant outperformance of our products at retail, is a solvable problem that we are working on in real time and hope to share updates soon. For the time being, however, our liquidity position remains tight.

Speaker Change: One final point I'd like to touch on in relation to our growing consumer demand. As I have shared, a rapid increase in velocity at retail has been a positive surprise.

Speaker Change: While we outperformed our planned expectation, it led to some challenges in keeping up with demand and resulted in some out-of-stocks at various retailers and online platforms.

Speaker Change: Well, it's never ideal to face supply challenge. It's a positive sign that our demand for our product exceeded both our own and our retailer's expectations. This demand-driven shortfall was not due to capacity or structural limitations.

Speaker Change: rather financial constraint.

Speaker Change: which we are actively addressing, including through the convertible promissory notes we secured this past quarter. Importantly, this situation has highlighted the strong consumer demand for our products and reinforces our confidence in our growth strategy.

Chris Beaver: Importantly, this situation has highlighted the strong consumer demand for our products and reinforces our confidence in our growth strategy.

Chris Beaver: In summary, Q2 2024 has been a quarter of strong progress marked by significant financial and operational improvements, continued success in our core business, and exciting new growth opportunities that we've just outlined. I believe we are well positioned to continue this momentum as we move forward.

Speaker Change: In summary, Q2 2024 has been a quarter of strong progress marked by significant financial and operational improvement.

Speaker Change: Continued success in our core business.

Speaker Change: and exciting new growth opportunities that we've just outlined.

Speaker Change: I believe we are well positioned.

Alex Hawkins: With that, I'll turn it over to our CFO, Alex Hawkins, to provide a detailed overview of the financial results. Alex.

Alec Hawkins: We are actively managing our resources to ensure that we can continue to execute on our strategy effectively and expand upon the progress we have already made. Looking ahead, we are issuing updated guidance for fiscal year 2024 as follows. We expect net sales to be in the range of $23 million to $26 million for the full year.

Speaker Change: to continue this momentum as we move forward. With that, I'll turn it over to our CFO , Alex Hawkins, to provide a detailed overview of the financial results. Alex.

Alex Hawkins: Thanks, Chris.

Alec Hawkins: Representing growth of 30% to 47% year-over-year and Andina Acqsn 3, This guidance reflects our confidence in the continued momentum of our business, supported by the full rollout of our new packaging, anticipated continued strength in retail velocities, and the strategic execution of our capital plan. We believe these factors, coupled with our ongoing focus on cost control and operational efficiency. We'll drive significant improvements in our financial performance this year of progress. In conclusion, our second quarter results demonstrate the strength of our transformation strategy and our ability to execute against our goals.

Alex Hawkins: Good afternoon, everyone. I'm pleased to walk you through our financial results for the second quarter of 2024, which reflect both the ongoing strength of our business transformation and the disciplined execution of our strategic priorities. Starting with the top line, our net sales for the second quarter were $6.2 million, representing a 3% increase compared to $6 million in the second quarter of 2023. While the year-over-year growth might seem modest, it's important to view these results in the context of our strategic decision to rationalize certain low-margin products and discontinue some underperforming retail programs that were still supporting last year's numbers.

Alec Hawkins: We are encouraged by the progress we've made and remain confident in our ability to deliver value to our shareholders through disciplined financial management and strategic growth initiatives. With that, I'll turn it back to Chris to share more about our strategic vision and the exciting opportunities ahead for Strive Foods.

Alex Hawkins: Thanks, Chris. Good afternoon, everyone.

Alex Hawkins: I'm pleased to walk you through our financial results for the second quarter of 2024, which reflected both the ongoing strength of our business transformation and the disciplined execution of our strategic priorities.

Chris Beaver: Thank you, Alex. As we reflect on our second quarter performance, it's clear that Strive Foods has delivered on the necessary foundational improvements of our transformation. The progress we have made over the past two years is a testament to the effectiveness of our strategy and the commitment of the team. We've significantly reduced our losses, enhanced the quality and appeal of our products, and laid a strong foundation for future growth. Our transformation journey has been marked by a series of strategic decisions that have fundamentally reshaped our business.

Alex Hawkins: Starting with the top line, our net sales for the second quarter were $6.2 million, representing a 3% increase compared to $6 million in the second quarter of 2023.

Chris Beaver: We rationalized our product portfolio to focus on higher margin, higher quality revenue streams, optimized our operations to drive efficiency, and invested in our brands to ensure they resonate with today's health-conscious consumers. These efforts have positioned us as a leader in the air-dried meat snack category, and we are now entering the growth phase of our strategic plan. We are focused on growing the core of our streamlined and repositioned portfolio. We are participating in a very attractive category at the intersection of protein and convenience with highly differentiated product benefits, such as 50% more protein than beef jerky, no to low sugar, and zero preservatives.

Alex Hawkins: While the year-over-year growth might seem modest, it's important to view these results in the context of our strategic decision to rationalize certain low margin products and discontinue some underperforming retail programs that were still supporting last year's numbers.

Chris Beaver: Simply put, we give the consumer more of what they want and less of what they do not want. In addition, we are now adding more with new product initiatives such as the air-dried pet treat strategy and the expansion into kosher and halal markets, which offer significant growth potential. These initiatives not only diversify our revenue stream but also leverage our existing strengths in production and innovation. The upcoming consolidation and redesign of our own websites is another important step of our growth strategy.

Alex Hawkins: This disciplined approach has allowed us to focus on higher quality revenue streams and improve the overall profitability of our sales mix. We believe that we saw the trough of these rationalization efforts in Q4 of last year. And since then, we have shown considerable sequential growth each quarter, with Q1 of this year up 59.2% versus Q4 of 23. And then this most recent quarter, Q2, up 34.4% versus the first quarter of this year, sequentially. These periods of consecutive, outsized, sequential growth are evidence that we've entered into the next phase of our transformation, driving sustainable, quality growth.

Alex Hawkins: This disciplined approach has allowed us to focus on higher quality revenue streams and improve the overall profitability of our sales mix.

Alex Hawkins: We believe that we saw the trough of these rationalization efforts in Q4 of last year. And since then, we have shown considerable sequential growth each quarter, with Q1 of this year up 59.2% versus Q4 of 23.

Alex Hawkins: and then this most recent quarter, Q2, up 34.4% versus the first quarter of this year, sequentially.

Alex Hawkins: These periods of consecutive, outsized, sequential growth are evidence that we've entered into the next phase of our transformation, driving sustainable, quality growth.

Alex Hawkins: Our gross profit through the second quarter came in at $1.7 million, up significantly from $1.1 million in the same period last year. This improvement is primarily attributable to our enhanced sales mix, better absorption of fixed costs due to higher production volume, and more efficient production processes, as well as our ongoing efforts to optimize our price mix. The resulting gross margin of 27.4% is a substantial improvement from 17.5% in Q2 of last year, marking a full 10-percentage-point expansion. And that improvement, by the way, was achieved despite the fact that we face considerably higher input costs this quarter than we did in the prior year period.

Chris Beaver: This initiative will allow us to better serve our customers online, enhance their shopping experience, and ultimately drive higher conversions and sales. Furthermore, our continued focus on premium products, such as our grass-fed beef lineup under the Strive and Kalahari brands, aligns perfectly with the growing consumer demand for healthier, more sustainable snacking options.

Alex Hawkins: Our gross profit for the second quarter came in at $1.7 million, up significantly from $1.1 million in the same period last year.

Alex Hawkins: This improvement is primarily attributable to our enhanced sales mix, better absorption of fixed costs due to higher production volume, and more efficient production processes, as well as our ongoing efforts to optimize our price mix.

Alex Hawkins: The resulting gross margin of 27.4% is a substantial improvement from 17.5% in Q2 of last year, marking a full 10 percentage point expansion.

Alex Hawkins: And that improvement, by the way, was achieved despite the fact that we face considerably higher input cost this quarter than we did in the prior year period.

Alex Hawkins: This is a clear indicator that our efforts to drive operational efficiencies, improve our costing, and focus on improved mix are yielding positive results. Turning to operating expenses, we continued our disciplined approach to cost management, reducing our total operating expenses by 11.3% year-over-year to 3.9 million in the second quarter of 2024, down from 4.4 million in the prior year period. This reduction reflects the ongoing benefits of our MDP program that Chris mentioned, which has been instrumental in streamlining our operations and enhancing productivity across the board. When we compare this same quarter in 2022, when our operating expenses were over 11.5 million for the quarter, the scale of our transformation becomes even more apparent.

Alex Hawkins: This is a clear indicator that our efforts to drive operational efficiencies, improve R-costing, and focus on improved mix are yielding positive results.

Alex Hawkins: Turning to operating expenses, we continued our disciplined approach to cost management, reducing our total operating expenses by 11.3% year-over-year to $3.9 million in the second quarter of 2024, down from $4.4 million in the prior year period.

Alex Hawkins: This reduction reflects the ongoing benefits of our MDP program that Chris mentioned, which has been instrumental in streamlining our operations and enhancing productivity across the board.

Speaker Change: When we compare this same quarter in 2022, when our operating expenses were over $11.5 million for the quarter, the scale of our transformation becomes even more apparent.

Alex Hawkins: This substantial reduction in operating expenses has been achieved without compromising our long-term growth initiatives or the quality of our products, demonstrating the effectiveness of our cost control measures. As a result of these efforts, our operating loss for the quarter narrowed to $2.2 million compared to an operating loss of $3.4 million in the same period last year. This represents a significant 33.8% improvement year over year. Even more striking is the comparison to Q2 of 2022 when our operating loss stood at $15.6 million. The progress we've made over the past two years is a testament to the strength of our strategy and to the dedication of our team.

Speaker Change: This substantial reduction in operating expenses has been achieved without compromising our long-term growth initiatives or the quality of our products, demonstrating the effectiveness of our cost control measures.

Speaker Change: As a result of these efforts, our operating loss for the quarter narrowed to $2.2 million compared to an operating loss of $3.4 million in the same period last year.

Speaker Change: This represents a significant 33.8% improvement year over year. Even more striking is the comparison to 22 of 2022 when our operating law stood at 15.6 million dollars.

Speaker Change: The progress we've made over the past two years is a testament to the strength of our strategy and to the dedication of our team.

Alex Hawkins: Moving on to adjusted EBITDA, which we view as a key indicator of our underlying business performance. We reported an adjusted EBITDA loss of $1.5 million for the second quarter of 2024. This is a 34.8% improvement from the adjusted EBITDA loss of 2.4 million in Q2 2023, and a dramatic improvement from the $11.4 million loss in Q2 of 2022. The nearly $40 million run rate improvement in adjusted EBITDA loss over the past two years highlights the significant strides we've made in driving operational efficiencies, optimizing our cost structure, and positioning this business for future profitability. Our net loss for the quarter was $3 million or 91 cents per share compared to a net loss of $4.3 million or $2.5 cents per share in Q2 2023.

Speaker Change: Moving on to adjusted EBITDA, which we view as a key indicator of our underlying business performance.

Speaker Change: We reported an adjusted EBITDA loss of $1.5 million for the second quarter of 2024.

Speaker Change: This is a 34.8% improvement from the adjusted EBITDA loss of $2.4 million in Q2 2023, and a dramatic improvement from the $11.4 million loss in Q2 of 2022.

Speaker Change: The nearly $40 million run rate improvement in adjusted EBITDA loss over the past two years highlights the significant strides we've made in driving operational efficiencies, optimizing our cost structure, and positioning this business for future profitability.

Speaker Change: Our net loss for the quarter was $3 million, or $0.91 per share, compared to a net loss of $4.3 million, or $2.05 per share, in Q2 2023.

Alex Hawkins: This improvement reflects not only our higher gross profit and lower operating expenses, but also our reduction in interest expenses and other financial costs. It's also worth noting that our adjusted loss per share for the quarter was 83 cents, which compares favorably to the adjusted loss per share of $1.84 in the prior year period. This reflects our ongoing commitment to improving shareholder value as we work towards sustainable profitability. On the balance sheet, we ended the quarter with half a million dollars in cash, reflecting our careful management of cash during this liquidity constrained phase of our transformation.

Speaker Change: This improvement reflects not only our higher gross profit and lower operating expenses, but also a reduction in interest expenses and other financial costs.

Speaker Change: It's also worth noting that our adjusted loss per share for the quarter was 83 cents, which compares favorably to the adjusted loss per share of $1.84 in the prior year period.

Speaker Change: This reflects our ongoing commitment to improving shareholder value as we work towards sustainable profitability.

Speaker Change: On the balance sheet, we ended the quarter with half a million dollars in cash, reflecting our careful management of cash during this liquidity constrained phase of our transformation.

Alex Hawkins: Our line of credit and the recent closing of $3 million in convertible promise, including approximately $1.7 million from insider and related party participants. has supported our operations and allowed us to fund some of the working capital required by our performance. However, as Chris mentioned, we believe that we left dollars on the table in the second quarter, as the demand for our products considerably exceeded our ability to fund that pace of growth. This working capital shortfall, driven in part by the significant outperformance of our products at retail, is a solvable problem that we are working on in real time and hope to share updates soon.

Speaker Change: Our line of credit and the recent closing of $3 million in convertible promissory notes, including approximately $1.7 million from insider and related party participants.

Speaker Change: have supported our operations and allowed us to fund some of the working capital required by our performance.

Speaker Change: However, as Chris mentioned, we believe that we left dollars on the table in the second quarter as the demand for our products considerably exceeded our ability to fund that pace of growth.

Speaker Change: This working capital shortfall, driven in part by the significant outperformance of our products at retail.

Chris Beaver: is a solvable problem that we are working on in real time and hope and hope to share updates soon.

Alex Hawkins: For the time being, however, our liquidity position remains tight. We are actively managing our resources to ensure that we can continue to execute on our strategy effectively and expand upon the progress we have already made.

Chris Beaver: For the time being, however, our liquidity position remains tight. We are actively managing our resources to ensure that we can continue to execute on our strategy effectively and expand upon the progress we have already made.

Alex Hawkins: Looking ahead, we are issuing updated guidance for fiscal year 2024 as follows. We expected net sales to be in the range of $23 million to $26 million for the full year, representing growth of 30% to 47% year-over-year. This guidance reflects our confidence in the continued momentum of our business, supported by the full rollout of our new packaging, anticipated continued strength in retail velocities, and the strategic execution of our capital plans. We believe that these factors coupled with our ongoing focus on cost control and operational efficiency will drive significant improvements in our financial performance as the year progresses.

Chris Beaver: Looking ahead, we are issuing updated guidance for fiscal year 2020 for as follows.

Chris Beaver: We expect net sales to be in the range of $23 million to $26 million for the full year.

Unknown Executive: Good afternoon, everyone.

Unknown Executive: Welcome to the Strived Food, 2nd quarter of fiscal 2020-24 financial results conference call. At this time, all lines are in listen only mode.

Chris Beaver: representing growth of 30% to 47% year-over-year.

Chris Beaver: This guidance reflects our confidence in the continued momentum of our business supported by the full rollout of our new packaging, anticipated continued strength in retail velocities, and the strategic execution of our capital plans.

Unknown Executive: Following the presentation, we will conduct a question-in-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

Unknown Executive: This call is being recorded on Wednesday, August 14, 2024.

Chris Beaver: We believe that these factors coupled with our ongoing focus on cost control and operational efficiency will drive significant improvements in our financial performance as the year progresses.

Will Pugh: Now, I would like to turn the call over to Will Pugh, Senior Vice President of Accounting as TriFoods, to make introductions and read the safe Harvard statement. Please go ahead. Thank you, operator. And welcome to the Strived Food Spisky Year, 2020-24, 2nd quarter earnings conference call.

Alex Hawkins: In conclusion, our second quarter results demonstrate the strength of our transformation strategy and our ability to execute against our goals. We are encouraged by the progress we have made and remain confident in our ability to deliver value to our shareholders through discipline, financial management, and strategic growth initiatives.

Chris Beaver: In conclusion, our second quarter results demonstrate the strength of our transformation strategy and our ability to execute against our goals.

Will Pugh: With me today, our strives chief executive officer, Chris Beaver, and chief financial officer, Alex Hawkins. Before we begin, I would like to remind everyone that part of our discussion today will include four looking statements that are made pursuant to the safe Harvard provisions that a private security solidification reform act of 1985. Four looking statements by their nature are uncertain and outside of the company's control. Actor results could differ materially from these electric patients.

Chris Beaver: We are encouraged by the progress we've made and remain confident in our ability to deliver value to our shareholders through disciplined financial management and strategic growth initiatives.

Will Pugh: These statements are not guarantees of future performance, and therefore unbue reliance should not be placed upon them. We do not undertake to update these four 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. This call is being webcast and can be accessed through the audio link on the news and events page of the investor section at ir.strive.com.

Chris Beaver: With that, I will turn it back to Chris to share more about our strategic vision and the exciting opportunities ahead for Strive Foods. Chris, thank you, Alex. As we reflect on our second quarter performance, it is clear that Strive Foods has delivered on the necessary foundational improvements of our transformation. The progress we have made over the past two years is a testament to the effectiveness of our strategy and the commitment of the team. We significantly reduced our losses, enhanced the quality and appeal of our products, and laid a strong foundation for future growth. Our transformation journey has been marked by a series of strategic decisions that have fundamentally reshaped our business.

Chris Beaver: With that, I'll turn it back to Chris to share more about our strategic vision and the exciting opportunities ahead for Shry Foods. Chris.

Chris Beaver: Thank you, Alex. As we reflect on our second quarter performance, it's clear that Strive Foods has delivered on the necessary foundational improvements of our transformation.

Chris Beaver: The progress we have made over the past two years is a testament to the effectiveness of our strategy and the commitment of the team. We've significantly reduced our losses, enhanced the quality and appeal of our products, and laid a strong foundation for future growth.

Chris Beaver: Our transformation journey has been marked by a series of strategic decisions that have fundamentally reshaped our business.

Chris Beaver: We rationalize our product portfolio to focus on higher margin, higher quality revenue streams, optimize our operations to drive efficiency, and invest it in our brands to ensure they resonate with today's health-conscious consumers. These efforts have positioned us as a leader in the air-dried meat snack category, and we are now entering the growth phase of our strategic plan. We are focused on growing the core of our streamlined and repositioned portfolio. We are participating in a very attractive category at the intersection of protein and convenience with highly differentiated product benefits, such as 50% more protein than beef jerky, no-to-low sugar, and zero preservatives.

Chris Beaver: We rationalized our product portfolio to focus on a higher margin, higher quality revenue streams, optimize our operations to drive efficiency, and invested in our brands to ensure they resonate with today's health-conscious consumers.

Chris Beaver: These efforts have positioned us as a leader in the air-dried meat snack category and we are now entering the growth phase of our strategic plan.

Chris Beaver: We are focused on growing the core of our streamlined and reposition portfolio. We are participating in a very attractive category at the intersection of protein and convenience with highly differentiated product benefits.

Will Pugh: Also, the earnings press release is posted on our website, and a copy of the release has been included in the form AK submitted to the SEC.

Chris Beaver: With that, I would now like to turn the call over to Chris Beaver. Chris, thanks Will, and good afternoon everyone. Thank you for joining us today.

Chris Beaver: Such as 50% more protein and beef jerky, not a low sugar and zero preservatives. Simply put, we give the consumer more of what they want and less of what they do not want.

Chris Beaver: Simply put, we give the consumer more of what they want and less of what they do not want. In addition, we are now adding more with new product initiatives, such as the air-dried pet treat strategy and the expansion into kosher and halal markets, which offers significant growth potential. These initiatives not only diversify our revenue stream, but also leverage our existing strengths and production and innovation. The upcoming consolidation and redesign of our own website is another important step of our growth strategy. This initiative will allow us to better serve our customers online and enhance their shopping experience, and ultimately drive higher conversions and sales.

Chris Beaver: The second quarter of 2024 marks another significant step forward in strive foods ongoing transformation. This quarter, we have once again demonstrated the impact of our strategic initiatives, which have been driving substantial year-over-year improvements in our financial and operational performance. But perhaps more importantly, when we look back to the second quarter of 2022 before the transformation began, the progress we made is truly remarkable, and it underscores the effectiveness of the strategy.

Chris Beaver: In addition, we are now adding more with new product initiatives, such as the air drive pet treat strategy and the expansion into kosher and halal markets.

Chris Beaver: which offers significant growth potential. These initiatives not only diversify our revenue stream, but also leverage our existing strength and production and innovation.

Chris Beaver: The upcoming consolidation and redesign of our own websites is another important step of our growth strategy.

Chris Beaver: Let's begin with the numbers. This quarter, our gross margin expanded to 27.4% up from 17.5% and Q2 of 2023, an astonishing turnaround from the negative 40.4 percent gross margin we reported in Q2 of 2022. This represents not just an important improvement in our profitability, but a complete transformation in how we manage our business. From procurement to production to pricing, this kind of margin expansion over just two years to the clear indication that our efforts.

Chris Beaver: This initiative will allow us to better serve our customers online, enhance their shopping experience, and ultimately drive higher conversions and sales. We are committed to ensuring that Strive's online presence is as strong and engaging as our retail presence.

Chris Beaver: We are committed to ensuring that Stride the online presence is as strong and engaging as our retail presence. Furthermore, our continued focus on premium products, such as our grass-fed beef lineup under the Strive-and-Collaried brands, align perfectly with the growing consumer demand for healthier, more sustainable snacking options. We believe that our differentiated product offerings, combined with our strengthening brand equity, will enable us to capture a larger share of this expanding market. In conclusion, our brands are well-positioned for continued success. We have the right strategy, the right product, and the right team to drive our business forward.

Chris Beaver: Furthermore, our continued focus on premium products, such as our grass-fed beef line-up under the Strive and Calahari brand aligns perfectly with the growing consumer demand for healthier, more sustainable snacking options.

Chris Beaver: We believe that our differentiated product offerings, combined with our strengthening brand equity, will enable us to capture a larger share of this expanding market. In conclusion, our brands are well positioned for continued success. We have the right strategy, the right product, and the right team to drive our business forward. We are focused on executing our plans, solidifying our foundation, and expanding our market presence. Delivering for our valuable shareholders. Thank you for your continued support and confidence in Strive Foods. Thank you to the Strive Squad.

Chris Beaver: We believe that our differentiated product offerings combined with our strengthening brand equity will enable us to capture a larger share of this expanding market.

Chris Beaver: The streamlined operations optimize our product mix and enhance our pricing strategy are working effectively. Operating expenses in Q2 of 2024 were down by 11 percent compared to the same period last year, reflecting our ongoing commitment to cost discipline. When you compare this to Q2 of 2022, the reduction is even more profound. Our operating expenses have been reduced by 66 percent. This reduction has been achieved through a combination of strategic headcount management, renegotiations of supplier contract, and the rigorous implementation of our MVP program, maximizing values through productivity, which has driven efficiency improvements across all areas of our business.

Chris Beaver: In conclusion, our brands are well positioned for continued success. We have the right strategy, the right product, and the right team to drive our business forward. We are focused on executing our plan.

Chris Beaver: We are focused on executing our plans, solidifying our foundation and expanding our market presence, delivering for our valuable shareholders.

Chris Beaver: solidifying our foundation and expanding our market presence, delivering for our valuable shareholders.

Chris Beaver: Thank you for your continued support and confidence in Strive Foods. Thank you to the Strive Squad. Thank you to all of our third-party vendor suppliers. We are very excited about the future, and we look forward to sharing our progress as you in the quarters to come.

Speaker Change: Thank you for your continued support and conference in Strive Foods. Thank you to the Strive Squad. Thank you to all of our third party vendor suppliers. We are very excited about the future and we look forward to showing our progress as you in the quarters to come.

Chris Beaver: Thank you to all of our third-party vendor suppliers. We are very excited about the future, and we look forward to sharing our progress with you in the quarters to come. With that, I'd like to turn it over to the operator for Q and A.

Operator: With that, I'd like to turn it over to the operator for Q&N.

Operator: Operator? Thank you.

Speaker Change: With that, I'd like to turn it over to the operator for Q&A. Operator?

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the 1 on your telephone keypad. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star followed by the 2. If you are using a speaker phone, please lift the handset before pressing any... Once again, that is star and one to ask a question.

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star or fault by the one on your telephone keypad. You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star or fault by the two. If you are using a speaker phone, please lift the handset before pressing any keys. Once again, that is star and one to ask a question.

Speaker Change: Thank you, ladies and gentlemen, we will now begin the question in answer session. Should you have a question please best start off all by the one on your telephone keypad? You will hear a prompt that your hand has been raised, and should you wish to cancel your request please best start off all by the two.

Chris Beaver: Adjusted EBITDA improved by 35 percent year over year, but what is perhaps even more impressive is the nearly 90 percent reduction in our adjusted EBITDA loss since Q2 of 2022. Back then, we were operating a very different landscape, facing significant operational inefficiencies, the less focused product portfolio, and higher fixed cost. Today, thanks to our comprehensive transformation strategy, we are operating with far greater agility and financial prudence. We streamlined our product offerings, refined our go-to-market strategy, and significantly lowered our cost base, all of which have contributed to the substantial improvement in EBITDA.

Speaker Change: If you are using a speakerphone, please lift the handset before pressing any keys. Once again, that is star and 1 to ask a question.

Speaker Change: Episode 2

Mike Gondel: Your first question comes from the light of Mike Gondel from Northland Security. Please go ahead. Hey guys, my first question is just, hey, the guidance range, the lower the upper band came down a ways. What changed, or what would you attribute that to?

Mike Grondahl: Your first question comes from the light of Mike Grondahl from Northland Security. Please go ahead. Hey guys, um, my first question is just, hey, the guidance range, the lower, the upper band. Came Down Away. What changed or what would you attribute that to?

Speaker Change: Your first question comes from the light of Mike Glandell from Northland Security, please go ahead.

Mike Glandell: Hey guys, um, my first question is just hey.

Speaker Change: The guidance range, the lower, the upper band came down a ways. What changed or what would you attribute that to?

Chris Beaver: These financial improvements are not just numbers. They tell a story of resilience, strategic foresight, and a relentless focus on execution. They reflect the real, tangible progress we've made in transforming strive into a lean or more efficient company with a clear path to profitability. We say what we're going to do and we do what we're going to say.

Alec Hawkins: Hey, Mike, this is Alex. A big part of that comes to the comments we made around the financial constraints, you know, our ability to deliver on some of the sales and some of the out of stock that resulted due to some of those constraints and that the outperformance at retail consumption, those end up being lost sales for the year. You can't get them back, unfortunately.

Alex Hawkins: Hey Mike, this is Alex. You know, a big part of that comes to the comments we made around the financial constraints. You know, our ability to deliver on some of the sales and some of the out of stocks that resulted due to some of those constraints and that the outperformance at retail consumption, those end up being lost sales on the year. You can't get them back, unfortunately. All we can do is make sure we are servicing to the best of our ability, moving forward. Again, it's not these challenges. We're not due to a failure on the supply chain or our ability structurally to produce the product.

Speaker Change: Hey Mike, this is Alex. You know, a big part of that comes to the comments we made around the financial constraints, you know, our ability to deliver on some of the sales and some of the out of stocks.

Speaker Change: that resulted due to some of those constraints and that the outperformance at retail consumption.

Chris Beaver: One of the most encouraging aspects of our progress, this quarter, has been the continued outperformance and retail consumption and velocity metrics. These gains have been driven largely by the success of our new packaging and brandy initiatives, which we launched late last year. As of now, we estimate that about three four of our products have transitioned to the new packaging on retail shelves. The consumer response has been overwhelmingly positive, with significant improvements in shelf presence and customer engagement.

Speaker Change: Those end up being lost sales on the year, you can't, you can't get him back unfortunately, all we can do

Alec Hawkins: All we can do is make sure we are servicing to the best of our ability moving forward. Again, these challenges were not due to a failure in the supply chain or our ability structurally to produce the product. It really came down to the packaging itself outperforming our expectations and our ability to fund the working capital growth to support it. And so we're having to solve that. And it is a solvable problem.

Speaker Change: is make sure we are servicing to the best of our ability moving forward. Again, it's not these challenges were not due to a failure on the supply chain or our ability structurally to produce the product.

Alex Hawkins: It really came down to the packaging itself, without performing our expectations and our ability to fund the working capital growth to support it. And so we're having to solve that, and it is a little problem.

Speaker Change: It really came down to the packaging itself was outperforming our expectations and our ability to fund the working capital growth to support it. And so we're having to solve that and it is all a little problem.

Chris Beaver: This transition is not just about aesthetic. It's about communicating the premium quality of our products in a simplified manner, standing out in a crowded category. Our velocity improvements reflect the growing consumer preference for our brand, particularly as they begin to recognize and trust the strive, vacatios, and Kalahari brand as synonymous with quality and health. The improvements in our product quality, driven by enhanced manufacturing processes, have also played a critical role in the success.

Alex Hawkins: And we're working through that; we hope to have some updates to share soon, but that's the primary driver of it: the working capital constraints that we've had.

Alec Hawkins: And we're working through that. We hope to have some updates to share soon. But that's the primary driver of it is the working capital constraints that we've had. Alex Woodson, How do you solve that?

Speaker Change: and we're working through that we hope to have some updates to share soon, but that's the primary driver of it is the work that we've had.

Alex Hawkins: Alex, how do you solve that? Can you kind of walk us through a couple of options or how you envision maybe? I mean, is that some financing, some more notes, or? We've proven that we can get creative in how we finance the business over the last few years, and we're continuing to do that. We funded some through these convertible promissory notes over the last few months. We'll continue to look at options like that. And other ways to bring in capital to support the business. It's no secret that, you know, in the position that we're in, we're still somewhat relied on external capital to support the business, particularly if we're looking to grow the business substantially, which is, you know, what we aim to do.

Mike Grondahl: Can you kind of walk us through a couple options or how you imagine maybe, I mean, Is that some financing? Some more? No, sir.

Alex Hawkins: Alex what

Alex Hawkins: How do you solve that? Can you kind of walk us through a couple options or how you envision maybe? I mean, is that some financing, some more notes?

Alec Hawkins: We've proven that we can get creative in how we finance the business over the last few years, and we're continuing to do that. We funded some of it through these convertible promissory notes over the last few months. We'll continue to look at options like that and other ways to bring in capital to support the business. It's no secret that, in the position that we're in, we're still somewhat relying on external capital to support the business, particularly if we're looking to grow the business substantially, which is, you know, what we aim to do. And that's how we'll likely solve the problem.

Alex Hawkins: i

Alex Hawkins: We've proven that we can get creative in how we finance the business over the last few years and we're continuing to do that. We've funded through these convertible promissory notes over the last few months.

Chris Beaver: Over the past two years, we have been laser-focused on our production facilities, upgrading equipment, refining processes, and implementing stringent quality control measures. These efforts have paid off as evidenced by the positive feedback we received from both consumers and retail partners. The improved and consistent quality of our products is better enabling us to attract and retain new and existing consumers.

Speaker Change: We'll continue to look at options like that and and other ways.

Speaker Change: Um, to bring in capital to support the business.

Speaker Change: It's no secret that, you know, in the position that we're in, we're still somewhat relied on external capital to support the business, particularly if we're looking to grow the business substantially, which is, you know, what we aim to do, and that's how we'll likely solve the problems here.

Alex Hawkins: And that's how we'll likely solve the problems here.

Chris Beaver: Yeah, and I would just add, I would just add, Mike, this is Chris.

Chris Beaver: Yeah, and I would just add, Mike, this is Chris. You look at the stark improvement in our profitability of a 90% improvement over two years, our burn rate is evaporating right before our eyes, we're closing and narrowing that gap to delivering a profitable business, and, you know, with just a little bit of support and getting a little bit more growth, we are very, very close to delivering against that next key inflection We will figure that other part out, and we're very optimistic about our plans and our ability to deliver across all different, you know, scales. Sure, yeah, you guys have fixed a ton, there's no doubt, and it's almost like the last piece we're waiting for.

Chris Beaver: Our MVP program has been instrumental in driving operational efficiency across our workforce. This program is more than just a cost-cutting exercise, it's about fostering a culture of continuous improvement and accountability at every level of the organization. Through MVP, we have been able to optimize resource allocation, reduce waste, and improve productivity, all of which have contributed to our enhanced financial performance. This program is a cornerstone of our strategy to build a more resilient and scalable business.

Chris Beaver: You look at the stark improvement in our profitability of a 90% improvement over two years. Our burn rate is evaporating right before our eyes. We're closing and narrowing that gap to delivering a profitable business.

Speaker Change: Yeah, and I would just add, I would just add, Mike, this is Chris.

Mike Glandell: You look at the stark improvement in our profitability of a 90% improvement over two years

Mike Glandell: Our burn rate is evaporating right before our eyes. We're closing and narrowing that gap to delivering a profitable business.

Chris Beaver: And, you know, just a little bit of support and getting a little bit more growth. We are very, very close to delivering against that next key, you know, inflection point that we are all focused and driving very aggressively towards.

Mike Glandell: and, you know, just a little bit of support and getting a little bit more growth. We are very, very close to delivering against that next.

Mike Glandell: Key, you know, inflection point that we are all focused and driving very aggressively towards, we will figure that other part out and we're very optimistic about our plans and our ability to deliver across all different, you know, spectrums.

Chris Beaver: We will figure that out of the part out. And we're very optimistic about our plans and our ability to deliver across all different, you know, spectrums. Sure. Yeah, you guys have fixed a ton. There's no doubt.

Chris Beaver: Looking forward, we are equally excited about the growth opportunities that lie ahead. We are making great strides with our air-dried pet treat strategy, which not only offers significant growth potential, but also allows us to maximize the use of our raw materials. This initiative aligns perfectly with our commitment to sustainability and innovation. By utilizing all raw materials, we are not only reducing waste, but also capital into a lucrative and growing market for premium, human-grade pet treat. We have seen strong demand for both branded and contract-packing customers, and we believe this segment has the potential to become an increasingly important part of our business.

Speaker Change: Yeah, you guys have fixed a ton. There's there's no doubt. And it's it's almost like the last piece we're waiting for is just this inflection and sales and it's, it's come up nicely off the bottom. And now it just looks like, you know, we're in the 6 million range for a couple quarters, but you know,

Mike Gondel: And it's almost like the last piece we're waiting for is just this inflection and sales. And it's come up nicely off the bottom. And now it just looks like, you know, we're in the six million range for a couple of quarters.

Mike Grondahl: Flexion and Sales Andina Acqsn 3 Flexion and Sales, It's come up nicely off the bottom, and now it just looks like we're in the six million range for it. But you know, you know, you know, you know, to help sales and flex. What is the kind of range of funds that you need?

Mike Gondel: But, you know, to help sales and reflect, what is kind of the range of funds that you need? Is there like, hey, if you could raise a little bit, you can get a little inflection? How should we think about that relationship?

Speaker Change: to help sails and flecked.

Alec Hawkins: Like, is there like, hey, if you could raise your hand a little bit, you can get a little inflection. How should we think about that? I don't know that we're providing specific guidance on that right now, but what I can share with you is, by virtue of how we designed the P&L and how close we are to reaching our goals of profitability, the amount of capital we need, whether we're going to grow substantially soon or whether it's going to be a protracted growth phase, which is not what we expect, it doesn't change very much, right?

Speaker Change: what is kind of the range of funds that you need? Like, is there like, hey, if you could raise a little bit, you can get a little inflection, how should we think about that relationship?

Speaker Change: Hello, I'm Sandy Martin, Unknown Executive,

Alex Hawkins: I don't know that we're providing specific guidance on that right now. But what I can share with you is, by virtue of how we design the panel and how close we are to reaching our goals of profitability, the amount of capital we need to whether we're going to grow substantially soon or whether it's going to be a protracted growth phase, which is not what we expect. It doesn't change very much, right? The longer we don't see growth, the more protracted the burn period, and that's where the cash would be going. But in our case, we expect the growth to be coming in over the next several quarters, which is more of a working capital investment and less of a burn, right, until you get to an inflection point.

Chris Beaver: Additionally, we recently earned both kosher and halal certification, which opened up new market opportunities for us. These certifications are significant because they allow us to tap into underserved markets where demand for high-quality certified products is strong, but supply is limited. We plan to enter into these markets primarily through contract manufacturing, which will enable us to leverage our existing production capabilities.

Speaker Change: I don't know that we're providing specific guidance on that right now. But what I can share with you is

Speaker Change: By virtue of how we designed the P&L and how close we are to reaching our goals of profitability.

Speaker Change: The amount of capital we need to, whether we're going to grow substantially soon or whether it's going to be a protracted growth phase, which is not what we expect.

Alec Hawkins: The longer we don't see growth, the more protracted the burn period, and that's where the cash would be going. But in our case, we expect the growth to be coming over the next several quarters, which is more of a working capital investment and less of a burn, right, until you get to an inflection point. It's not a lot of money, though.

Chris Beaver: We are also excited to announce the strategic consolidation and redesign of our own websites. This initiative, which is set to launch externally in Q4 of 2024, will allow us to benefit from cross-brand selling opportunities, a streamlined checkout experience, better conversion, and an overall improvement to our shopper's experience. Our goal is to make it as easy as possible for consumers that sign purchase and enjoy our product online, and we believe this redesign will significantly step forward, strive foods, and achieving that.

Speaker Change: It doesn't change very much, right? The longer we don't see growth.

Speaker Change: The more protracted the burn period and that's where the cash would be going. But in our case, we expect the growth to be coming in over the next several quarters, which is more of a working capital investment and less of a burn, right? Until you get to an inflection point.

Alec Hawkins: In the big picture, it's not a lot of money. We're working actively to solve it. We're very confident we'll have news to be able to share in the very near future. From the execution of our expectations, we are very optimistic. I've never been more, you know, excited and bullish about the outlook and future of Strive Foods than I am today. We're also finding new streams, as I discussed on the call. Some of it requires little to no cash up front.

Alex Hawkins: It's not a lot of dollars. It's not a lot of dollars, though. And in the big picture, it's not a lot of dollars we're working actively to solve it.

Speaker Change: It's not a lot of dollars though, and the big picture is not a lot of dollars, we're working actively to solve it. We're very confident we'll have news to be able to share in the very near future. From the execution of our expectations, we are very optimistic.

Chris Beaver: We're very confident we'll have news to be able to share in the very near future. From the execution of our expectations, we are very optimistic.

Chris Beaver: Furthermore, our grass-fed beef product lineup under strive and Kalahari brand is gaining momentum. With new branding and packaging, we are offering retailers and consumers an opportunity to enjoy our high-quality brand in the growing grass-fed segment of meat snacks. We are confident that this segment will continue to grow and believe it could contribute meaningfully to our overall sales.

Chris Beaver: I've never been more excited and bullish about the outlook and future of Strive Foods than I am today. We're also finding new streams, as I discussed on the call. Some of it requires little to no cash upfront. It's leveraging some of our capabilities that we already have within our facility that does not impact our capacity, utilizing other different components that we've had from early on days to maximize and economize and take advantage of some of those assets that we have within our facility.

Speaker Change: I've never been more excited and bullish about the outlook and future of Strive Foods than I am today. We're also finding new streams, as I discussed on the call. Some of it requires little to no cash up front.

Chris Beaver: It's leveraging some of our capabilities that we already have within our facility that does not impact our capacity, utilizing other different components that we've had from the early days to maximize, you know, and economize and take advantage of some of those assets that we have within our facility. So we're real close to inking some deals and some arrangements there in some of those spaces. Very optimistic as to how that's going to impact the cash conversion cycle and cash utilization on top of everything else. And the pet food stuff, is that something you'd expect to break out over the next couple quarters?

Speaker Change: It's leveraging some of our capabilities that we already have with our facility that does not impact our capacity, utilizing other different components that we've had from early on days to maximize, you know, and economize and take advantage of some of those assets that we have with our facility.

Chris Beaver: One final point I'd like to touch on in relation to our growing consumer demand. As I have shared, our rapid increase in velocity at retail has been a positive surprise. While we outperformed our planned expectation, it led to some challenges in keeping up with demand and resulted in some auto stocks at various retailers and online platforms. While it's never ideal to face supply challenges, it's a positive sign that our demand for our products exceeded both our own and our retailer's expectations.

Chris Beaver: So we're real close to inking some deals and some arrangements there in some of those spaces. And very optimistic as to how that's going to impact cash conversion cycle and cash utilization on top of everything else. Got it.

Speaker Change: So we're real close to Incon some deals and some arrangements there and some of those faces and very optimistic as to how that's going to impact cash conversion cycle and cash utilization on top of everything else.

Chris Beaver: and the pet food stuff. Is that something you'd expect to break out over the next couple of quarters? Is that at 10% of revenue? How is that doing? It sounds pretty interesting. Yeah, we've got very little actually put into our outlook for our sales. We've been extremely conservative in that. Last year we launched a one-item lineup under a brand called Two Tales.

Speaker Change: And the pet food stuff, is that something you'd expect to break out over the next couple quarters? Is that at 10% of revenue? How is that doing? It sounds pretty interesting.

Mike Grondahl: Is that at 10% of revenue? How is that doing? It sounds pretty good. Yeah, we've got very little actually put into our outlook for our sales. We've been extremely conservative in that.

Chris Beaver: This demand-driven shortfall was not due to capacity or structural limitations, or rather financial constraint, which we are actively addressing, including through the convertible promissory notes we secured this past quarter. Importantly, this situation has highlighted the strong consumer demand for our products and reinforces our confidence in our growth strategy.

Speaker Change: Yeah, we've got very little actually put into our outlook for ourselves with an extremely conservative in that.

Chris Beaver: Last year, we launched a one-item lineup under a brand called Two Tails. We'll be announcing the launch and the actual brand name in the next month or so as we bring it to retail with a multi-SKU lineup and a new brand under our umbrella. And we hope to be announcing a co-managing arrangement in that space as well, which has been growing by leaps and bounds online, direct-to-consumer, many different types of avenues, but AirDri Pet is certainly on the rise.

Speaker Change: Last year we launched a one-item lineup under a brand called Two Tails.

Chris Beaver: We'll be announcing the launch in the actual brand name in the next month or so as we bring it to retail with a multi-skew lineup and a new brand under our umbrella. And we hope to be announcing a command arrangement in that space as well that, quite frankly, has been growing like leaps and bounds online, direct to consumer, many different types of avenues. But air drive pet is certainly on the rise, and we can help out with that consumer demand with some of our capabilities to fulfill for others that are in need of service and supply.

Speaker Change: will be announcing the launch and the actual brand name in the next.

Speaker Change: Month or so as we bring it to retail with a multi skew lineup

Chris Beaver: In summary, Q22024 has been a quarter of strong progress marked by significant financial and operational improvements, continued success in our core business and exciting new growth opportunities that we've just outlined. I believe we are well positioned to continue this momentum as we move forward.

Speaker Change: and a new brand under our umbrella.

Speaker Change: and we hope to be announcing a co-man arrangement in that space as well that, you know, quite frankly has been growing like leaps and bounds online, direct to consumer, many different types of avenues, but air drive pet is certainly on the rise.

Chris Beaver: And we can help out with that consumer demand with some of our capabilities to fulfill orders for others that are in need of, you know, service and supply. So, we are actively looking to create new revenue streams that are not really contemplated too much in our outlook and create a lot of upside. So, we're being pretty prudent and, you know, conservative in some of our calls. And a business that's just, you know, kind of lowly penetrated, newish, if you will, with a lot of upside, this could, you know, turn a lot faster.

Alex Hawkins: With that, I'll turn it over to our CFO, Alex Hawkins, to provide a detailed overview of the financial results. Alex. Thanks, Chris.

Speaker Change: and we can help out with that consumer demand.

Speaker Change: with some of our capabilities to fulfill for others that are in need of, you know, service and supply.

Chris Beaver: So we are actively looking to create new revenue streams that are not really contemplated too much in our outlook and create a lot of upside. We've been pretty prudent and conservative in some of our calls, and a business that's just kind of lowly penetrated and newest, if you will, with a lot of upside. This could turn a lot faster, and we are very optimistic.

Alex Hawkins: Good afternoon, everyone. I'm pleased to walk you through our financial results for the second quarter of 2024, which reflect both the ongoing strength of our business transformation and the discipline execution of our strategic priorities. Starting with the top line, our net sales for the second quarter were $6.2 million, representing a 3% increase compared to $6 million in the second quarter of 2023. While the year-over-year growth might seem modest, it's important to view these results in the context of our strategic decision to rationalize certain low-margin products and discontinue some underperforming retail programs that were still supporting last year's numbers.

Speaker Change: So, we are actively looking to create new revenue streams that are not really contemplated too much in our outlook and create a lot of upside. So, we're being pretty prudent and, you know, conservative in some of our calls.

Speaker Change: and a business that's just, you know, kind of lowly penetrated newish, if you will, with a lot of upside, this could, you know, turn a lot faster. And we are, we're very optimistic.

Chris Beaver: And we're very optimistic. We do need some of the cash to help us get there, and as we, you know, balance all the priorities as well as opportunities, we're trying to be as, you know, prudent as we possibly can and transparent with you. Fair enough.

Mike Gondel: We do need some of the cash to help us get there. And as we balance all the priorities as well as opportunities, we're trying to be as prudent as we possibly can and transparent with you. Fair enough. Thanks, guys. Thank you. Once again, should you have a question, these best are fought by the one on your telephone keyboard.

Speaker Change: We do need some of the cash to help us get there and as we, you know, balance all the priorities as well as opportunities we're trying to be as, you know, prudent as we possibly can and try to experiment with you.

Speaker Change: Hey fair enough. Thanks guys

Alex Hawkins: This disciplined approach has allowed us to focus on higher quality revenue streams and improve the overall profitability of our sales mix. We believe that we saw the trough of these rationalization efforts in Q4 of last year. And since then, we have shown considerable sequential growth each quarter, with Q1 of this year up 59.2% versus Q4 of 23. And then this most recent quarter, Q2, up 34.4% versus the first quarter of this year, sequentially.

Operator: Thank you. Thank you. Once again, should you have a question, please press star 421 on your telephone keypad. (inaudible) There are no further questions at this time. I will now hand the call back to Mr. Chris Beaver for any closing remarks.

Speaker Change: Thank you. Once again, should you have a question, please bestow for by the one on your telephone keypad.

Speaker Change: Unknown Executive, Christopher Boever, Luke Weil

Operator: There are no further questions at this time.

Chris Beaver: I will now hand a call back to Mr. Chris Beaver for any closing remarks. Thank you, operator, and thank you for your questions, and you're inside today. As we close out this call, I want to reiterate our commitment to the transformation and growth of Stride Foods. The progress we've discussed today is just the beginning of what we believe will be a long-term trajectory of success. Our team has energized committed our strategy of sound and our focus on delivering high quality differentiated products loaded with protein to our consumers remains unwavering. We are excited about the opportunity to have a confident in our ability to continue to drive value for our shareholders, partners, and customers.

Speaker Change: There are no further questions that this time I will now hand the call back to Mr. Chris Beaver for any closing remarks

Chris Beaver: Thank you, operator, and thank you for your questions and your insights today. As we close out this call, I want to reiterate our commitment to the transformation and growth of Strive Foods. The progress we've discussed today is just the beginning of what we believe will be a long-term trajectory of success. Our team is energized, committed, our strategy is sound, and our focus on delivering high-quality, differentiated products loaded with protein to our consumers remains unwavering.

Chris Beaver: Thank you operator, and thank you for your questions, and you're inside today. As we close out this call, I want to reiterate our commitment to the transformation and growth of strifehood. The progress we've discussed today is just the beginning of what we believe will be a long-term trajectory of success.

Alex Hawkins: These periods of consecutive, outsized, sequential growth are evidence that we've entered into the next phase of our transformation, driving sustainable, quality growth. Our gross profit through the second quarter came in at $1.7 million, up significantly from 1.1 million in the same period last year. This improvement is primarily attributable to our enhanced sales mix, better absorption of fixed costs due to higher production volume, and more efficient production processes, as well as our ongoing efforts to optimize our price mix.

Chris Beaver: Our team is energized, committed, our strategy is sound, and our focus on delivering high quality, differentiated products.

Alex Hawkins: The resulting gross margin of 27.4% is a substantial improvement from 17.5% in Q2 of last year, marking a full 10 percentage point expansion. And that improvement, by the way, was achieved despite the fact that we face considerably higher input costs this quarter than we did in the prior year period. This is a clear indicator that our efforts to drive operational efficiencies improve our costing and focus on improved mix are yielding positive results.

Chris Beaver: Loaded with protein to our consumers remains unwavering.

Chris Beaver: We are excited about the opportunities ahead and confident in our ability to continue to drive value for our shareholders, partners, and customers. We appreciate your continued support and your belief in Strive Food. We look forward to updating you on our progress in the coming quarters. Thank you for joining us today.

Chris Beaver: We are excited about the opportunities ahead of you, confident in our ability to continue to drive value for our shareholders, partners and customers. We appreciate your continued support and your belief in strife foods. We look forward to updating you on our progress in the coming quarters.

Chris Beaver: We appreciate your continued support and your belief in Stride Food. We look forward to updating you on our progress in the coming quarters.

Chris Beaver: Thank you for joining us today. Each take. Don't be a jerky. Have a great evening.

Speaker Change: Thank you for joining us today. Eat Steak. Don't be a Jerky.

Operator: Have a great evening. Thank you, and this concludes today's call. Thank you for participating. You may now disconnect. Andina Acqsn 3 Andina Acqsn 3.

Operator: Thank you, and this concludes today's call. Thank you for participating.

Speaker Change: Have a great evening.

Operator: You may all disconnect.

Speaker Change: Thank you and this concludes today's call. Thank you for participating. You may all disconnect.

Alex Hawkins: Turning to operating expenses, we continued our disciplined approach to cost management, reducing our total operating expenses by 11.3% year-over-year to 3.9 million in the second quarter of 2024, down from 4.4 million in the prior year period. This reduction reflects the ongoing benefits of our MDP program that Chris mentioned, which has been instrumental in streamlining our operations and enhancing productivity across the board. When we compare this same quarter in 2022 when our operating expenses were over 11.5 million for the quarter, the scale of our transformation becomes even more apparent.

Alex Hawkins: This substantial reduction in operating expenses has been achieved without compromising our long-term growth initiatives or the quality of our products, demonstrating the effectiveness of our cost control measures. As a result of these efforts, our operating loss for the quarter narrowed to $2.2 million compared to an operating loss of 3.4 million in the same period last year. This represents a significant 33.8% improvement year-over-year. Even more striking as the comparison to Q2 of 2022 when our operating loss stood at $15.6 million.

Alex Hawkins: The progress we've made over the past two years is a testament to the strength of our strategy and to the dedication of our team. Moving on to adjusted EBITDA, which we view as a key indicator of our underlying business performance. We reported an adjusted EBITDA loss of $1.5 million for the second quarter of 2024. This is a 34.8% improvement from the adjusted EBITDA loss of 2.4 million in Q2 2023, and a dramatic improvement from the $11.4 million loss in Q2 of 2022.

Alex Hawkins: The nearly $40 million run rate improvement in adjusted EBITDA loss over the past two years highlights the significant strides we've made in driving operational efficiencies, optimizing our cost structure, and positioning this business for future profitability. Our net loss for the quarter was $3 million or 91 cents per share compared to a net loss of $4.3 million or $2.5 cents per share in Q2 2023. This improvement reflects not only our higher gross profit and lower operating expenses but also our reduction in interest expenses and other financial costs.

Alex Hawkins: It's also worth noting that our adjusted loss per share for the quarter was 83 cents, which compares favorably to the adjusted loss per share of $1.84 in the prior year period. This reflects our ongoing commitment to improving shareholder value as we work towards sustainable profitability. On the balance sheet, we ended the quarter with half a million dollars in cash reflecting our careful management of cash during this liquidity constrained phase of our transformation.

Alex Hawkins: Our line of credit and the recent closing of $3 million in convertible promise including approximately $1.7 million from insider and related party participants, has supported our operations and allowed us to fund some of the working capital required by our performance. However, as Chris mentioned, we believe that we left dollars on the table in the second quarter as the demand for our products considerably exceeded our ability to fund that pace of growth.

Alex Hawkins: This working capital shortfall, driven in part by the significant outperformance of our products at retail, is a solvable problem that we are working on in real time and hope to share updates soon. For the time being, however, our liquidity position remains tight. We are actively managing our resources to ensure that we can continue to execute on our strategy effectively and expand upon the progress we have already made.

Alex Hawkins: Looking ahead, we are issuing updated guidance for fiscal year 2024 as follows. We expected net sales to be in the range of $23 million to $26 million for the full year, representing growth of 30% to 47% year-over-year. This guidance reflects our confidence in the continued momentum of our business, supported by the full rollout of our new packaging, anticipated continued strength in retail velocities and the strategic execution of our capital plans. We believe that these factors coupled with our ongoing focus on cost control and operational efficiency will drive significant improvements in our financial performance as the year progresses.

Alex Hawkins: In conclusion, our second quarter results demonstrate the strength of our transformation strategy and our ability to execute against our goals. We are encouraged by the progress we have made and remain confident in our ability to deliver value to our shareholders through discipline, financial management, and strategic growth initiatives.

Chris Beaver: With that, I will turn it back to Chris to share more about our strategic vision and the exciting opportunities ahead for strive foods. Chris, thank you, Alex.

Chris Beaver: As we reflect on our second quarter performance, it is clear that strive foods has delivered on the necessary foundational improvements of our transformation. The progress we have made over the past two years is a testament to the effectiveness of our strategy and the commitment of the team. We significantly reduced our losses, enhanced the quality and appeal of our products, and laid a strong foundation for future growth. Our transformation journey has been marked by a series of strategic decisions that have fundamentally reshaped our business.

Chris Beaver: We rationalize our product portfolio to focus on higher margin, higher quality revenue streams, optimize our operations to drive efficiency, and invest it in our brands to ensure they resonate with today's health-conscious consumers. These efforts have positioned us as a leader in the air-dried meat snack category and we are now entering the growth phase of our strategic plan. We are focused on growing the core of our streamlined and repositioned portfolio. We are participating in a very attractive category at the intersection of protein and convenience with highly differentiated product benefits, such as 50% more protein than beef jerky, no-to-low sugar, and zero preservatives.

Chris Beaver: Simply put, we give the consumer more of what they want and less of what they do not want. In addition, we are now adding more with new product initiatives, such as the air-dried pet treat strategy and the expansion into kosher and halal markets, which offers significant growth potential. These initiatives not only diversify our revenue stream, but also leverage our existing strengths and production and innovation. The upcoming consolidation and redesign of our own website is another important step of our growth strategy.

Chris Beaver: This initiative will allow us to better serve our customers online and enhance their shopping experience and ultimately drive higher conversions and sales. We are committed to ensuring that stride the online presence is as strong and engaging as our retail presence. Furthermore, our continued focus on premium products, such as our grass-fed beef lineup under the strive-and-collaried brands align perfectly with the growing consumer demand for healthier, more sustainable snacking options. We believe that our differentiated product offerings, combined with our strengthening brand equity, will enable us to capture a larger share of this expanding market.

Chris Beaver: In conclusion, our brands are well-positioned for continued success. We have the right strategy, the right product, and the right team to drive our business forward. We are focused on executing our plans, solidifying our foundation and expanding our market presence, delivering for our valuable shareholders. Thank you for your continued support and confidence in strive foods. Thank you to the strive squad. Thank you to all of our third-party vendor suppliers.

Chris Beaver: We are very excited about the future and we look forward to sharing our progress as you in the quarters to come.

Unknown Executive: With that, I'd like to turn it over to the operator for Q&N. Operator? Thank you.

Unknown Executive: Ladies and gentlemen, we will now begin the question in answer session. Should you have a question, please press star or fault by the one on your telephone keypad. You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star or fault by the two. If you are using a speaker phone, please lift the handset before pressing any keys. Once again, that is star and one to ask a question.

Mike Gondel: Your first question comes from the light of Mike Gondel from Northland Security, please go ahead. Hey guys, my first question is just, hey, the guidance range, the lower the the upper band came down a ways. What changed or what would you attribute that to?

Alex Hawkins: Hey Mike, this is Alex. You know, a big part of that comes to the comments we made around the financial constraints. You know, our ability to deliver on some of the sales and some of the out of stocks that resulted due to some of those constraints and that the outperformance at retail consumption, those end up being lost sales on the year. You can't get them back unfortunately. All we can do is make sure we are servicing to the best of our ability, moving forward.

Alex Hawkins: Again, it's not these challenges. We're not due to a failure on the supply chain or our ability structurally to produce the product. It really came down to the packaging itself without performing our expectations and our ability to fund the working capital growth to support it. And so we're having to solve that and it is a little problem. And we're working through that we hope to have some updates to share soon, but that's the primary driver of it is the working capital constraints that we've had.

Alex Hawkins: Alex, how do you solve that? Can you kind of walk us through a couple of options or how you envision maybe, I mean, is that some financing, some more notes or? We've proven that we can get creative in how we finance the business over the last few years, and we're continuing to do that. We funded some through these convertible promissory notes over the last few months. We'll continue to look at options like that.

Alex Hawkins: And other ways to bring in capital to support the business. It's no secret that, you know, in the position that we're in, we're still somewhat relied on external capital to support the business, particularly if we're looking to grow the business substantially, which is, you know, what we aim to do. And that's how we'll likely solve the problems here.

Chris Beaver: Yeah, and I would just add, I would just add, Mike, this is Chris. You look at the stark improvement in our profitability of a 90% improvement over two years. Our burn rate is evaporating right before our eyes. We're closing and narrowing that gap to delivering a profitable business. And, you know, just a little bit of support and getting a little bit more growth. We are very, very close to delivering against that next key, you know, inflection point that we are all focused and driving very aggressively towards.

Chris Beaver: We will figure that out of the part out. And we're very optimistic about our plans and our ability to deliver across all different, you know, spectrums. Sure. Yeah, you guys have fixed a ton. There's no doubt. And it's almost like the last piece we're waiting for is just this inflection and sales. And it's come up nicely off the bottom. And now it just looks like, you know, we're in the six million range for a couple quarters.

Mike Gondel: But, you know, to help sales and reflect, what is kind of the range of funds that you need? Is there like, hey, if you could raise a little bit, you can get a little inflection? How should we think about that relationship? I don't know that we're providing specific guidance on that right now. But what I can share with you is, by virtue of how we design the panel and how close we are to reaching our goals of profitability, the amount of capital we need to whether we're going to grow substantially soon or whether it's going to be a protracted growth phase, which is not what we expect.

Mike Gondel: It doesn't change very much, right? The longer we don't see growth, the more protracted the burn period and that's where the cash would be going. But in our case, we expect the growth to be coming in over the next several quarters, which is more of a working capital investment and less of a burn, right, until you get to an inflection point. It's not a lot of dollars. It's not a lot of dollars though.

Mike Gondel: And in the big picture, it's not a lot of dollars we're working actively to solve it. We're very confident we'll have news to be able to share in the very near future. From the execution of our expectations, we are very optimistic. I've never been more excited and bullish about the outlook and future of strive foods than I am today.

Chris Beaver: We're also finding new streams as I discussed on the call. Some of it requires little to no cash upfront. It's leveraging some of our capabilities that we already have within our facility that does not impact our capacity, utilizing other different components that we've had from early on days to maximize and economize and take advantage of some of those assets that we have within our facility. So we're real close to inking some deals and some arrangements there in some of those spaces. And very optimistic as to how that's going to impact cash conversion cycle and cash utilization on top of everything else.

Chris Beaver: Got it, and the pet food stuff. Is that something you'd expect to break out over the next couple quarters? Is that at 10% of revenue? How is that doing? It sounds pretty interesting. Yeah we've got very little actually put into our outlook for our sales. We've been extremely conservative in that. Last year we launched a one item lineup under a brand called Two Tales. We'll be announcing the launch in the actual brand name in the next month or so as we bring it to retail with a multi skew lineup and a new brand under our umbrella.

Chris Beaver: And we hope to be announcing a command arrangement in that space as well that quite frankly has been growing like leaps and bounds online, direct to consumer, many different types of avenues. But air drive pet is certainly on the rise and we can help out with that consumer demand with some of our capabilities to fulfill for others that are in need of service and supply. So we are actively looking to create new revenue streams that are not really contemplated too much in our outlook and create a lot of upside.

Chris Beaver: We've been pretty prudent and conservative in some of our calls and a business that's just kind of lowly penetrated and newest if you will with a lot of upside. This could turn a lot faster and we are very optimistic. We do need some of the cash to help us get there. And as we balance all the priorities as well as opportunities, we're trying to be as prudent as we possibly can and transparent with you.

Mike Gondel: Fair enough. Thanks, guys. Thank you.

Unknown Executive: Once again, should you have a question these best are fought by the one on your telephone keyboard. There are no further questions at this time.

Chris Beaver: I will now hand a call back to Mr. Chris Beaver for any closing remarks. Thank you operator and thank you for your questions and you're inside today.

Chris Beaver: As we close out this call, I want to reiterate our commitment to the transformation and growth of stride foods. The progress we've discussed today is just the beginning of what we believe will be a long term trajectory of success. Our team has energized committed our strategy of sound and our focus on delivering high quality differentiated products loaded with protein to our consumers remains unwavering. We are excited about the opportunity to have a confident in our ability to continue to drive value for our shareholders partners and customers. We appreciate your continued support and your belief in stride food. We look forward to updating you on our progress in the coming quarters.

Unknown Executive: Thank you for joining us today. Each take. Don't be a jerky. Have a great evening.

Unknown Executive: Thank you and this concludes today's call. Thank you for participating. You may all disconnect.