NASDAQ:BRFH Barfresh Food Group Q4 2023 Earnings Report $2.80 -0.18 (-6.04%) Closing price 05/2/2025 03:58 PM EasternExtended Trading$2.78 -0.01 (-0.54%) As of 05/2/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Barfresh Food Group EPS ResultsActual EPS-$0.05Consensus EPS -$0.01Beat/MissMissed by -$0.04One Year Ago EPSN/ABarfresh Food Group Revenue ResultsActual Revenue$1.92 millionExpected Revenue$3.00 millionBeat/MissMissed by -$1.08 millionYoY Revenue GrowthN/ABarfresh Food Group Announcement DetailsQuarterQ4 2023Date3/22/2024TimeN/AConference Call DateN/AConference Call TimeN/AConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfilePowered by Barfresh Food Group Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 29, 2024 ShareLink copied to clipboard.There are 4 speakers on the call. Operator00:00:00Good afternoon, everyone, and thank you for participating on today's 4th quarter and full year 2023 corporate update call for Barfresh Food Group. Joining us today is Barfresh Food Group's Founder and CEO, Riccardo Della Costa and Barfresh Food Group's CFO, Lisa Rodger. Following prepared remarks, we will open the call for your The discussion today will include forward looking statements. Except for historical information herein, matters set forth on this call are forward looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about the company's commercial project, success of its strategic relationships and projections of future financial performance. These forward looking statements are identified by the use of words such as grow, expand, anticipate, intend, estimate, believe, expect, plan, should, hypothetical, potential, forecast and project, continue, could, may, predict and will and variations of such words and similar expressions are intended to identify such forward looking statements. Operator00:01:11All statements other than the statements of historical fact that address activities, events or developments that the company believes or anticipates will or may occur in the future are forward looking statements. These statements are based on certain assumptions made based on experience, expected future developments and other factors that the company believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward looking statements. Accordingly, investors are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date they are made. Operator00:02:00The conference of this call should be considered in conjunction with the company's recent filings with the Securities and Exchange Commission, including its annual report on Form 10 ks and the quarterly reports on Form 10 Q and current reports on Form 8 ks, including any warnings, risk factors and cautionary statements contained therein. Furthermore, the company expressly disclaims any current intention to update publicly any forward looking statements after this call, whether as a result of new information, future events, changes in assumptions or otherwise. In order to aid in the understanding of the company's business performance, the company is also presenting certain non GAAP measures, including adjusted EBITDA, which are reconciled in the table in the business update release to the most comparable GAAP measure. The reconciling items are non operational or non cash costs, including stock compensation, stock issues for services and other non recurring costs such as those associated with the product withdrawal, asset impairment and the company's NASDAQ uplift. Management believes that adjusted EBITDA provides useful information to the investor because it is directly reflective of the period to period performance of the company's core business. Operator00:03:13Now, I will turn the call over to CEO of Barfresh Food Group, Mr. Riccardo Della Costa. Please go ahead, sir. Speaker 100:03:23Good afternoon, everyone, and thank you for joining us for our Q4 and full year 2023 earnings call. The company generated its 2nd highest fiscal year revenue in 2023 with $8,100,000 despite a full year without our largest twist and go bottle manufacturer who had previously accounted for over 50% of all our purchases. These sales results are a testament to the success of our smoothie carton product, which we rolled out in the Q4 of 2022 and our growing sales team's ability to sell it into new and existing customers. We use the new carton product to sign on new school accounts over the course of the year, including one of the top 5 largest school districts in the United States. As we've stated previously, the carton format is aligned with the growing trend in schools to move toward more ecologically friendly products and has provided us an entry point into more of the higher volume school accounts. Speaker 100:04:27Over the past year, we will lay the focus on expanding both our carton and bottle capacity. Since the launch of our new smoothie carton product offering at the end of 2022, we have been working with our carton co manufacturer to have engineering changes made to the manufacturing line to increase capacity to approximately 25,000,000 to 30,000,000 units per year. All the engineering changes were completed and over the course of this year, we incrementally used additional carton capacity that was made available. We did experience a slight setback with production beginning in December as an unforeseen national shortage of cartons plagued the beverage industry and continued into the early part of February. This shortage sent schools scrambling and got the attention of Congress, especially since schools are a large customer of the 4 ounce and 8 ounce cartons for milk, both of which were in short supply. Speaker 100:05:32We were, however, able to weather the storm better than others in the industry due to our contract manufacturing relationship with a major player in the dairy industry. The issue has been resolved and we are back to full carton production. As for the bottle capacity, we worked with our existing bottle co manufacturer to see if there was a way to increase capacity and we were successful toward the end of fiscal year 2023 and this increased capacity will now continue. We also look to bring on a new co manufacturer to replace the loss of our largest one and were in the final stages of signing with a new co manufacturer this past quarter. However, they were ultimately unable to execute the contract. Speaker 100:06:23They are working to resolve the internal issues that prevented them from signing with us and we are hopeful they will be resolved soon and we can move forward again with them. However, we are also exploring other options in order to expedite the process of securing additional bottle capacity and expect this to be resolved before the beginning of the new school year in August of 2024. In addition to working to expand capacity this past year, we also expanded our product offerings with the re launch of our world's 100 percent juice concentrates. This product is USDA reimbursable, smart snack compliant for schools in the United States, a good source of vitamin C, contains no added sugars and comes in 5 great tasting flavors. And most importantly, it is stored and delivered ambient, which opens up many more opportunities for us. Speaker 100:07:19We had originally launched this world's 100 percent juice concentrates as a complement to our existing one to 1 bulk EZ Pour product into the education channel in August of 2020. However, it ended up being more of a soft launch and was subsequently put on hold due to the extended closure of schools from the pandemic. As a result of the pandemic, schools experienced prolonged labor challenges, which impacted our world's 100 percent juice concentrates due to the need of personnel to operate the frozen dispensing equipment. We had been waiting for the prolonged labor challenges to resolve at schools as well as waiting for the selling cycle to recommence the new school menus before we relaunch the product, which we did this past quarter. We believe it was the right time to reintroduce the product and allows our sales force to go out with a wider range of options at various price points. Speaker 100:08:19We are growing our sales team by expanding our sales broker coverage to an additional 13 states where we previously had no representation in the education market. ARFRESH expects to have sales coverage across 49 out of the 50 states before the end of the Q1 of 2024. And for the first time, we plan to market the newly relaunched World 100 percent Juice Concentrates as well as the 1 to 1 Bolt EZCOR concentrates through our sales brokers to the general food service market and into the education channel. And finally, as part of our expanded sales efforts, we also expect to sign a military broker contract for national coverage of all U. S. Speaker 100:09:02Military bases with Barfresh products in the United States. This is a national agreement that provides both deep senior relationships as well as local people nationwide to visit and sell our products to all the local bases. This is a first for the company and is expected to provide a robust lift in sales and further solidify our relationships with the military. In summary, we believe there is a lot of white space left for us across our sales channels, especially in the education channel. We have increased capacity for both our carton and bottle smoothie products, increased our sales network and increased offerings with the reintroduction of World's 100 percent Juice Concentrates. Speaker 100:09:45All of which we believe is setting us up for record 1st quarter revenue versus any other first quarter as we have already achieved over $2,000,000 in sales and have another month remaining in the quarter. We believe we will be on a path to sustain top line growth once we have the necessary manufacturing capabilities for our bottle smoothie product fully online. I'll now turn the call over to our CFO, Lisa Rodger. Lisa? Speaker 200:10:14Thank you, Ricardo. Revenue for the Q4 of 2023 was $1,900,000 compared to $1,400,000 for the Q4 of 2022. The increase in Q4 revenue is a result of improved supply due to increased capacity in our carton production this year over last year and the return of customers lost last year due to the loss of the company's largest bottle manufacturer, Atquist and Go, partially offset by the industry wide carton shortage Ricardo mentioned that impacted sales in the quarter. Revenue for the full year of 2023 was 8,100,000 dollars compared to $9,200,000 in the same period of 2022. Revenue in 2022 was negatively impacted by a 400 and $93,000 claim estimate resulting from the voluntary product withdrawal of Twist and Go. Speaker 200:11:03Excluding the refund claim estimate, revenue for the full year of 2022 was $9,700,000 The year over year decline is a result of limited supply and lost customers caused by the loss of our largest bottle manufacturer Twist and Go, as well as the shortage of cartons during the Q4 of 2023. As Ricardo said, the issue has since resolved itself. However, it will have a bearing on our Q1 of 2024 results as it impacted the 1st 6 weeks of sales. We do, however, expect revenue to grow sequentially in the Q1 as we have been able to recently increase capacity with our existing bottle manufacturer for Twist and Go. Gross margin for the Q4 of 2023 was 33% compared to 36% for the Q4 of 2022. Speaker 200:11:51Gross margin for the full year of 2023 was 36% compared to 16% for the same period of 2022. Gross margin for the full year of 2022 adjusted for the product withdrawal was 30%. The year over year increase is due to a full year of sales of our higher margin cartons in 2023, pricing actions and a slight improvement in the cost of supply chain components. Our net loss for the Q4 of 2023 was $701,000 as compared to a net loss of $1,900,000 in the Q4 of 2022. Net loss for the full year of 2023 was $2,800,000 as compared to $6,100,000 in the same period of 2022. Speaker 200:12:35Net loss for the full year of 2022 was impacted by $1,800,000 in charges related to product withdrawal and a $746,000 non cash asset impairment charge related to idle equipment resulting from overcapacity for our single serve products and equipment held at the manufacturer. Selling, marketing and distribution expense for the Q4 of 2023 was 6 $4,000 compared to $625,000 in the Q4 of 2022. Selling, marketing and distribution expense for the full year of 2023 decreased approximately 9% to $2,600,000 compared to $2,900,000 in the same period of 2022. The decrease is a result of decreased sales and marketing personnel costs and outbound freight as a result of decreased shipments. G and A expenses for the Q4 of 2023 decreased 31 percent to $629,000 compared to 900 $12,000 in the same period last year. Speaker 200:13:36G and A expenses for the full year of 2023 decreased 24% to $2,700,000 compared to $3,500,000 in the same period of 2022. The decrease in G and A was driven by a decrease in personnel costs resulting primarily from a reduction in headcount and the conversion of potential cash bonuses to equity awards under the company's 2023 performance stock unit program, a reduction in legal, professional and consulting fees and a reduction in research and development expense that was elevated in 2022 as we incurred preproduction expense related to the launch of our carton packaging format. For the Q4 of 2023, our adjusted EBITDA was a loss of approximately $427,000 almost half of what it was in the same period of 2022. For the full year of 2023, our adjusted EBITDA loss was $1,700,000 compared to a loss of $2,400,000 in the prior year. Our plans to achieve adjusted EBITDA breakeven in the 4th quarter were temporarily delayed by the carton shortage. Speaker 200:14:41However, we are that came online and recovery of carton supply. That came online and recovery of carton supply. Now moving on to our balance sheet. As of December 31, 2023, we had approximately $1,900,000 in cash and approximately $1,200,000 of inventory on our balance sheet, compared to $3,000,000 in cash $1,000,000 of inventory as of December 31, 2022. Now I will turn the call back to Ricardo for closing remarks. Speaker 100:15:15Thank you, Lisa. We are encouraged to have recorded our 2nd highest fiscal year revenue in 2023 and are on track to have a record Q1 in 2024 versus any other Q1 and expect the positive momentum we seen in this Q1 from our increased carton and bottle capacity as well as our expanded sales network will continue throughout the year setting us up to achieve a record fiscal year of revenue. We expect to replace our lost bottle manufacturer shortly and believe once we have the right manufacturing partners on board that provide us ample bottle capacity, we will be back on track to driving significant long term profitable growth. And with that, I would like to open up the line for questions. Operator? Operator00:16:07Thank you. We will now be conducting a question and answer Our first question is from Anthony Vendetti with Maxim Group. Please proceed with your question. Speaker 300:16:45Yes, thanks. So on the carton shortage, is that going to impact gross margins in any way? And then as we move to the 2024 school year beginning in August September, I know you said you expect to have a new packager on board. Can you maybe just talk through what conversations you're having? How many replacements replacement companies are you looking at this point? Speaker 300:17:25And then in the meantime, is there anything that you think can fill the gap, whether it's the military channel or some other channel, while you're waiting for this replacement company? Speaker 100:17:39Yes, sure. Great questions, Anthony. I'll tackle them 1 at a time. So with regards to the national carton shortage, I'm sure a lot of people would have seen that in the media. Schools were without milk cartons period due to the national shortage. Speaker 100:18:00We did weather that storm a lot better due to our significant manufacturing partner relationships who are some of the largest in the dairy industry. So we were impacted for December Q4 and then also in the first 6 weeks thereabouts in January, Operator00:18:22in the Speaker 100:18:22Q1, January a little bit of February. As a result of that, we were also fortunate that we were able to get some increased capacity from our bottle manufacturer, which closed that gap because it probably would have been a little bit worse off. But because of the increased bottle capacity from our existing manufacturer, we're able to close that gap a little bit. As a result of the higher SKU between the bottles and cartons, there was a little bit more of a compression on the margin. And we'll see a little bit more of that in the Q1. Speaker 100:18:57However, the carton supply issue has been fully rectified now and we're back to full production and serviceability on those lines. So as it relates to the bottle manufacturing capacity and getting the extra bottle manufacturer onboard, We've done a lot of work on that last year. And as you'll probably remember, I did give some updates on that. And we were literally we were supposed to have it signed in Q4 in actual fact that the contract was fully negotiated and out for signatures. And unfortunately, the partner was going through some management changes and they were just unable to sign the contract due to some internal things that they were working on. Speaker 100:19:44And we were to revisit in a few months. It just so happens that that revisit is occurring right now and we've reconnected and Operator00:19:56it's back Speaker 100:19:56on the table. So we are expecting to still have something closed here very shortly. However, in the meantime, we haven't just been sitting on our hands. We have been out there looking at other opportunities and we do have a number of other opportunities that are on the table for us right now as well. So as we think about what our bottle capacity looks like, we're extremely confident that we'll still get it resolved and get it resolved very quickly. Speaker 100:20:27In actual fact, we now have more options on the table than what we did previously. So that should also help our negotiating power. And I think that there are some other opportunities that may come out of it as well as we kind of get deeper into confirming what our manufacturing relationships look like. So I think there's going to be more to come on that that are going to be very beneficial to the company going forward. Speaker 300:20:54Okay. So even if the one that you're revisiting doesn't come through, it sounds like you have other options. That's why you're confident that within the next couple of months, you'll have something so that you're all set up for the beginning of the 2024 school year? Speaker 100:21:10Correct. Operator00:21:10Yes. Speaker 200:21:11Okay. Speaker 300:21:15And then maybe just an update a little more of if you can elaborate more on the military channel and then any other updates on other opportunities outside of the school channel? Speaker 100:21:33Yes, sure. So we did mention it briefly in the script that we spoke about before, in the update. Post COVID, it's been quite challenging getting back into the market with different products in certain channels, particularly with bulk the bulk products and the 1 to 1 and the EZ Pour as well as the new 5 to 1 that we had launched in 2020, they both require the beverage dispensing equipment. Now that's what we have in the military and that's what we have in the schools as well as recreation and amusement locations. And as a result of COVID, there was a lot of changes that happened and then post COVID, there was a lot of prolonged labor challenges within these establishments, particularly in the education channel. Speaker 100:22:28So fast forward now a good year out of that there's been a lot of reshuffling and a lot of rehiring in a lot of these places. And we just haven't been able to up until now get those products front and center and get the attention of the operators to be able to put it back on the menu to have the people in place to be able to service them. And we've now started to see that and we've relaunched the 5% to 100% juice concentrates. They've actually done really well with the initial customers that we've seeded them in. As a result of that, we have taken a different approach with our sales growth strategy. Speaker 100:23:15And previously, it was only our limited sales team that were really selling the bulk products being the 5 to 1 and the 1 to 1 product. And now what we're in the process of doing have already started doing and will be increasing significantly that is including a broker network to go out there and sell both those products not only to the education channel, but we're also getting a dedicated military channel team that's both senior relationships as well as boots on the ground nationally that can go out to each of the locations which is going to be very significant for us as well as boots on the ground 49 out of the 50 states and having multiple salespeople within each state and sometimes up to 10 people going out there and selling the product both in the education channel as well as general food service. Now when you take into account locations like the Statue of Liberty which we've been in for so many years now and Long Beach Aquarium and there's such high volume accounts someone like the Statue of Liberty where the number one product sold on-site. So there's a lot of other types of amusement locations across the country that we'll now be able to access with a local team on the ground that we just haven't been able to get access to because we don't have the depth in the sales team to get the coverage. Speaker 100:24:46So by signing these agreements and getting the teams on board which we have now focused on getting set up for the company, it should generate some serious lift in sales for the company across all the channels now. Operator00:25:01Okay. Okay. Speaker 300:25:02And then just maybe comment just looking at the mix that you have right now, what is what do you think is a reasonable normalized or go forward gross margin Speaker 100:25:20for the business? Speaker 200:25:23We're projecting high-30s, low-40s for 2024. It will build over time. Q1 is going to be a little bit lower just because of the carton issue. And then beyond that, we expect to see low 40s. Speaker 300:25:39Okay, great. Operator00:25:40All right, thanks. Speaker 300:25:41I'll hop back Speaker 100:25:41in the queue. Thanks. Operator00:26:31Thank you. There are no further questions at this time. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBarfresh Food Group Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Annual report(10-K) Barfresh Food Group Earnings HeadlinesBarfresh Food Group, Inc. (BRFH) Q1 2025 Earnings Call TranscriptMay 2 at 3:03 PM | seekingalpha.comBarfresh Announces First Quarter 2025 ResultsMay 1 at 4:17 PM | globenewswire.comBuffett’s favorite chart just hit 209% – here’s what that means for goldA Historic Gold Announcement Is About to Rock Wall Street For months, sharp-eyed analysts have watched the quiet buildup behind the scenes. Now, in just days, the floodgates are set to open. 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Email Address About Barfresh Food GroupBarfresh Food Group (NASDAQ:BRFH), together with its subsidiaries, manufactures and distributes ready-to-drink and ready-to-blend frozen beverages in the United States. It offers smoothies, shakes and frappes in various formats comprising ready-to-drink smoothie, easy pour, juice concentrates, and single serve. 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There are 4 speakers on the call. Operator00:00:00Good afternoon, everyone, and thank you for participating on today's 4th quarter and full year 2023 corporate update call for Barfresh Food Group. Joining us today is Barfresh Food Group's Founder and CEO, Riccardo Della Costa and Barfresh Food Group's CFO, Lisa Rodger. Following prepared remarks, we will open the call for your The discussion today will include forward looking statements. Except for historical information herein, matters set forth on this call are forward looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about the company's commercial project, success of its strategic relationships and projections of future financial performance. These forward looking statements are identified by the use of words such as grow, expand, anticipate, intend, estimate, believe, expect, plan, should, hypothetical, potential, forecast and project, continue, could, may, predict and will and variations of such words and similar expressions are intended to identify such forward looking statements. Operator00:01:11All statements other than the statements of historical fact that address activities, events or developments that the company believes or anticipates will or may occur in the future are forward looking statements. These statements are based on certain assumptions made based on experience, expected future developments and other factors that the company believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward looking statements. Accordingly, investors are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date they are made. Operator00:02:00The conference of this call should be considered in conjunction with the company's recent filings with the Securities and Exchange Commission, including its annual report on Form 10 ks and the quarterly reports on Form 10 Q and current reports on Form 8 ks, including any warnings, risk factors and cautionary statements contained therein. Furthermore, the company expressly disclaims any current intention to update publicly any forward looking statements after this call, whether as a result of new information, future events, changes in assumptions or otherwise. In order to aid in the understanding of the company's business performance, the company is also presenting certain non GAAP measures, including adjusted EBITDA, which are reconciled in the table in the business update release to the most comparable GAAP measure. The reconciling items are non operational or non cash costs, including stock compensation, stock issues for services and other non recurring costs such as those associated with the product withdrawal, asset impairment and the company's NASDAQ uplift. Management believes that adjusted EBITDA provides useful information to the investor because it is directly reflective of the period to period performance of the company's core business. Operator00:03:13Now, I will turn the call over to CEO of Barfresh Food Group, Mr. Riccardo Della Costa. Please go ahead, sir. Speaker 100:03:23Good afternoon, everyone, and thank you for joining us for our Q4 and full year 2023 earnings call. The company generated its 2nd highest fiscal year revenue in 2023 with $8,100,000 despite a full year without our largest twist and go bottle manufacturer who had previously accounted for over 50% of all our purchases. These sales results are a testament to the success of our smoothie carton product, which we rolled out in the Q4 of 2022 and our growing sales team's ability to sell it into new and existing customers. We use the new carton product to sign on new school accounts over the course of the year, including one of the top 5 largest school districts in the United States. As we've stated previously, the carton format is aligned with the growing trend in schools to move toward more ecologically friendly products and has provided us an entry point into more of the higher volume school accounts. Speaker 100:04:27Over the past year, we will lay the focus on expanding both our carton and bottle capacity. Since the launch of our new smoothie carton product offering at the end of 2022, we have been working with our carton co manufacturer to have engineering changes made to the manufacturing line to increase capacity to approximately 25,000,000 to 30,000,000 units per year. All the engineering changes were completed and over the course of this year, we incrementally used additional carton capacity that was made available. We did experience a slight setback with production beginning in December as an unforeseen national shortage of cartons plagued the beverage industry and continued into the early part of February. This shortage sent schools scrambling and got the attention of Congress, especially since schools are a large customer of the 4 ounce and 8 ounce cartons for milk, both of which were in short supply. Speaker 100:05:32We were, however, able to weather the storm better than others in the industry due to our contract manufacturing relationship with a major player in the dairy industry. The issue has been resolved and we are back to full carton production. As for the bottle capacity, we worked with our existing bottle co manufacturer to see if there was a way to increase capacity and we were successful toward the end of fiscal year 2023 and this increased capacity will now continue. We also look to bring on a new co manufacturer to replace the loss of our largest one and were in the final stages of signing with a new co manufacturer this past quarter. However, they were ultimately unable to execute the contract. Speaker 100:06:23They are working to resolve the internal issues that prevented them from signing with us and we are hopeful they will be resolved soon and we can move forward again with them. However, we are also exploring other options in order to expedite the process of securing additional bottle capacity and expect this to be resolved before the beginning of the new school year in August of 2024. In addition to working to expand capacity this past year, we also expanded our product offerings with the re launch of our world's 100 percent juice concentrates. This product is USDA reimbursable, smart snack compliant for schools in the United States, a good source of vitamin C, contains no added sugars and comes in 5 great tasting flavors. And most importantly, it is stored and delivered ambient, which opens up many more opportunities for us. Speaker 100:07:19We had originally launched this world's 100 percent juice concentrates as a complement to our existing one to 1 bulk EZ Pour product into the education channel in August of 2020. However, it ended up being more of a soft launch and was subsequently put on hold due to the extended closure of schools from the pandemic. As a result of the pandemic, schools experienced prolonged labor challenges, which impacted our world's 100 percent juice concentrates due to the need of personnel to operate the frozen dispensing equipment. We had been waiting for the prolonged labor challenges to resolve at schools as well as waiting for the selling cycle to recommence the new school menus before we relaunch the product, which we did this past quarter. We believe it was the right time to reintroduce the product and allows our sales force to go out with a wider range of options at various price points. Speaker 100:08:19We are growing our sales team by expanding our sales broker coverage to an additional 13 states where we previously had no representation in the education market. ARFRESH expects to have sales coverage across 49 out of the 50 states before the end of the Q1 of 2024. And for the first time, we plan to market the newly relaunched World 100 percent Juice Concentrates as well as the 1 to 1 Bolt EZCOR concentrates through our sales brokers to the general food service market and into the education channel. And finally, as part of our expanded sales efforts, we also expect to sign a military broker contract for national coverage of all U. S. Speaker 100:09:02Military bases with Barfresh products in the United States. This is a national agreement that provides both deep senior relationships as well as local people nationwide to visit and sell our products to all the local bases. This is a first for the company and is expected to provide a robust lift in sales and further solidify our relationships with the military. In summary, we believe there is a lot of white space left for us across our sales channels, especially in the education channel. We have increased capacity for both our carton and bottle smoothie products, increased our sales network and increased offerings with the reintroduction of World's 100 percent Juice Concentrates. Speaker 100:09:45All of which we believe is setting us up for record 1st quarter revenue versus any other first quarter as we have already achieved over $2,000,000 in sales and have another month remaining in the quarter. We believe we will be on a path to sustain top line growth once we have the necessary manufacturing capabilities for our bottle smoothie product fully online. I'll now turn the call over to our CFO, Lisa Rodger. Lisa? Speaker 200:10:14Thank you, Ricardo. Revenue for the Q4 of 2023 was $1,900,000 compared to $1,400,000 for the Q4 of 2022. The increase in Q4 revenue is a result of improved supply due to increased capacity in our carton production this year over last year and the return of customers lost last year due to the loss of the company's largest bottle manufacturer, Atquist and Go, partially offset by the industry wide carton shortage Ricardo mentioned that impacted sales in the quarter. Revenue for the full year of 2023 was 8,100,000 dollars compared to $9,200,000 in the same period of 2022. Revenue in 2022 was negatively impacted by a 400 and $93,000 claim estimate resulting from the voluntary product withdrawal of Twist and Go. Speaker 200:11:03Excluding the refund claim estimate, revenue for the full year of 2022 was $9,700,000 The year over year decline is a result of limited supply and lost customers caused by the loss of our largest bottle manufacturer Twist and Go, as well as the shortage of cartons during the Q4 of 2023. As Ricardo said, the issue has since resolved itself. However, it will have a bearing on our Q1 of 2024 results as it impacted the 1st 6 weeks of sales. We do, however, expect revenue to grow sequentially in the Q1 as we have been able to recently increase capacity with our existing bottle manufacturer for Twist and Go. Gross margin for the Q4 of 2023 was 33% compared to 36% for the Q4 of 2022. Speaker 200:11:51Gross margin for the full year of 2023 was 36% compared to 16% for the same period of 2022. Gross margin for the full year of 2022 adjusted for the product withdrawal was 30%. The year over year increase is due to a full year of sales of our higher margin cartons in 2023, pricing actions and a slight improvement in the cost of supply chain components. Our net loss for the Q4 of 2023 was $701,000 as compared to a net loss of $1,900,000 in the Q4 of 2022. Net loss for the full year of 2023 was $2,800,000 as compared to $6,100,000 in the same period of 2022. Speaker 200:12:35Net loss for the full year of 2022 was impacted by $1,800,000 in charges related to product withdrawal and a $746,000 non cash asset impairment charge related to idle equipment resulting from overcapacity for our single serve products and equipment held at the manufacturer. Selling, marketing and distribution expense for the Q4 of 2023 was 6 $4,000 compared to $625,000 in the Q4 of 2022. Selling, marketing and distribution expense for the full year of 2023 decreased approximately 9% to $2,600,000 compared to $2,900,000 in the same period of 2022. The decrease is a result of decreased sales and marketing personnel costs and outbound freight as a result of decreased shipments. G and A expenses for the Q4 of 2023 decreased 31 percent to $629,000 compared to 900 $12,000 in the same period last year. Speaker 200:13:36G and A expenses for the full year of 2023 decreased 24% to $2,700,000 compared to $3,500,000 in the same period of 2022. The decrease in G and A was driven by a decrease in personnel costs resulting primarily from a reduction in headcount and the conversion of potential cash bonuses to equity awards under the company's 2023 performance stock unit program, a reduction in legal, professional and consulting fees and a reduction in research and development expense that was elevated in 2022 as we incurred preproduction expense related to the launch of our carton packaging format. For the Q4 of 2023, our adjusted EBITDA was a loss of approximately $427,000 almost half of what it was in the same period of 2022. For the full year of 2023, our adjusted EBITDA loss was $1,700,000 compared to a loss of $2,400,000 in the prior year. Our plans to achieve adjusted EBITDA breakeven in the 4th quarter were temporarily delayed by the carton shortage. Speaker 200:14:41However, we are that came online and recovery of carton supply. That came online and recovery of carton supply. Now moving on to our balance sheet. As of December 31, 2023, we had approximately $1,900,000 in cash and approximately $1,200,000 of inventory on our balance sheet, compared to $3,000,000 in cash $1,000,000 of inventory as of December 31, 2022. Now I will turn the call back to Ricardo for closing remarks. Speaker 100:15:15Thank you, Lisa. We are encouraged to have recorded our 2nd highest fiscal year revenue in 2023 and are on track to have a record Q1 in 2024 versus any other Q1 and expect the positive momentum we seen in this Q1 from our increased carton and bottle capacity as well as our expanded sales network will continue throughout the year setting us up to achieve a record fiscal year of revenue. We expect to replace our lost bottle manufacturer shortly and believe once we have the right manufacturing partners on board that provide us ample bottle capacity, we will be back on track to driving significant long term profitable growth. And with that, I would like to open up the line for questions. Operator? Operator00:16:07Thank you. We will now be conducting a question and answer Our first question is from Anthony Vendetti with Maxim Group. Please proceed with your question. Speaker 300:16:45Yes, thanks. So on the carton shortage, is that going to impact gross margins in any way? And then as we move to the 2024 school year beginning in August September, I know you said you expect to have a new packager on board. Can you maybe just talk through what conversations you're having? How many replacements replacement companies are you looking at this point? Speaker 300:17:25And then in the meantime, is there anything that you think can fill the gap, whether it's the military channel or some other channel, while you're waiting for this replacement company? Speaker 100:17:39Yes, sure. Great questions, Anthony. I'll tackle them 1 at a time. So with regards to the national carton shortage, I'm sure a lot of people would have seen that in the media. Schools were without milk cartons period due to the national shortage. Speaker 100:18:00We did weather that storm a lot better due to our significant manufacturing partner relationships who are some of the largest in the dairy industry. So we were impacted for December Q4 and then also in the first 6 weeks thereabouts in January, Operator00:18:22in the Speaker 100:18:22Q1, January a little bit of February. As a result of that, we were also fortunate that we were able to get some increased capacity from our bottle manufacturer, which closed that gap because it probably would have been a little bit worse off. But because of the increased bottle capacity from our existing manufacturer, we're able to close that gap a little bit. As a result of the higher SKU between the bottles and cartons, there was a little bit more of a compression on the margin. And we'll see a little bit more of that in the Q1. Speaker 100:18:57However, the carton supply issue has been fully rectified now and we're back to full production and serviceability on those lines. So as it relates to the bottle manufacturing capacity and getting the extra bottle manufacturer onboard, We've done a lot of work on that last year. And as you'll probably remember, I did give some updates on that. And we were literally we were supposed to have it signed in Q4 in actual fact that the contract was fully negotiated and out for signatures. And unfortunately, the partner was going through some management changes and they were just unable to sign the contract due to some internal things that they were working on. Speaker 100:19:44And we were to revisit in a few months. It just so happens that that revisit is occurring right now and we've reconnected and Operator00:19:56it's back Speaker 100:19:56on the table. So we are expecting to still have something closed here very shortly. However, in the meantime, we haven't just been sitting on our hands. We have been out there looking at other opportunities and we do have a number of other opportunities that are on the table for us right now as well. So as we think about what our bottle capacity looks like, we're extremely confident that we'll still get it resolved and get it resolved very quickly. Speaker 100:20:27In actual fact, we now have more options on the table than what we did previously. So that should also help our negotiating power. And I think that there are some other opportunities that may come out of it as well as we kind of get deeper into confirming what our manufacturing relationships look like. So I think there's going to be more to come on that that are going to be very beneficial to the company going forward. Speaker 300:20:54Okay. So even if the one that you're revisiting doesn't come through, it sounds like you have other options. That's why you're confident that within the next couple of months, you'll have something so that you're all set up for the beginning of the 2024 school year? Speaker 100:21:10Correct. Operator00:21:10Yes. Speaker 200:21:11Okay. Speaker 300:21:15And then maybe just an update a little more of if you can elaborate more on the military channel and then any other updates on other opportunities outside of the school channel? Speaker 100:21:33Yes, sure. So we did mention it briefly in the script that we spoke about before, in the update. Post COVID, it's been quite challenging getting back into the market with different products in certain channels, particularly with bulk the bulk products and the 1 to 1 and the EZ Pour as well as the new 5 to 1 that we had launched in 2020, they both require the beverage dispensing equipment. Now that's what we have in the military and that's what we have in the schools as well as recreation and amusement locations. And as a result of COVID, there was a lot of changes that happened and then post COVID, there was a lot of prolonged labor challenges within these establishments, particularly in the education channel. Speaker 100:22:28So fast forward now a good year out of that there's been a lot of reshuffling and a lot of rehiring in a lot of these places. And we just haven't been able to up until now get those products front and center and get the attention of the operators to be able to put it back on the menu to have the people in place to be able to service them. And we've now started to see that and we've relaunched the 5% to 100% juice concentrates. They've actually done really well with the initial customers that we've seeded them in. As a result of that, we have taken a different approach with our sales growth strategy. Speaker 100:23:15And previously, it was only our limited sales team that were really selling the bulk products being the 5 to 1 and the 1 to 1 product. And now what we're in the process of doing have already started doing and will be increasing significantly that is including a broker network to go out there and sell both those products not only to the education channel, but we're also getting a dedicated military channel team that's both senior relationships as well as boots on the ground nationally that can go out to each of the locations which is going to be very significant for us as well as boots on the ground 49 out of the 50 states and having multiple salespeople within each state and sometimes up to 10 people going out there and selling the product both in the education channel as well as general food service. Now when you take into account locations like the Statue of Liberty which we've been in for so many years now and Long Beach Aquarium and there's such high volume accounts someone like the Statue of Liberty where the number one product sold on-site. So there's a lot of other types of amusement locations across the country that we'll now be able to access with a local team on the ground that we just haven't been able to get access to because we don't have the depth in the sales team to get the coverage. Speaker 100:24:46So by signing these agreements and getting the teams on board which we have now focused on getting set up for the company, it should generate some serious lift in sales for the company across all the channels now. Operator00:25:01Okay. Okay. Speaker 300:25:02And then just maybe comment just looking at the mix that you have right now, what is what do you think is a reasonable normalized or go forward gross margin Speaker 100:25:20for the business? Speaker 200:25:23We're projecting high-30s, low-40s for 2024. It will build over time. Q1 is going to be a little bit lower just because of the carton issue. And then beyond that, we expect to see low 40s. Speaker 300:25:39Okay, great. Operator00:25:40All right, thanks. Speaker 300:25:41I'll hop back Speaker 100:25:41in the queue. Thanks. Operator00:26:31Thank you. There are no further questions at this time. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by