Barfresh Food Group Inc (BRFH) 2023 Q3 法說會逐字稿

Good afternoon, everyone and thank you, for participating on today's third quarter 2023 corporate update call for Barfresh Food Group. Joining us today is Barfresh Food Group, founder and CEO, Riccardo Delle Coste and by Barfresh Food Group, CFO Lisa Roger, Following presentation remarks we will open the call for your question.

大家下午好，感謝您參加今天 Barfresh Food Group 的 2023 年第三季企業更新電話會議。今天加入我們的是 Barfresh Food Group 創辦人兼執行長 Riccardo Delle Coste 和 Barfresh Food Group 財務長 Lisa Roger。在演講結束後，我們將開始徵求您的問題。

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

今天的討論將包括除歷史資訊外的前瞻性聲明，本次電話會議中提出的事項屬於 1995 年《私人證券訴訟改革法案》安全港條款含義內的前瞻性聲明，包括有關公司商業進展的聲明，其策略關係的成功以及我們未來財務表現的預測。

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. All statements other than statements of historical fact that address activates, events or developement that company believes or anticipates will or may occur in the future are forward-looking statements.

這些前瞻性陳述透過使用諸如增長、擴展、預期、打算、估計、相信、期望、計劃、應該、假設、潛力、預測和項目、繼續、可能、預測、意願和變化等詞語來識別此類詞語和類似表達方式旨在識別此類前瞻性陳述。除歷史事實陳述外，所有涉及公司相信或預期未來將發生或可能發生的活動、事件或發展的陳述均為前瞻性陳述。

These statements are based on certain assumptions made based on the 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.

這些陳述基於基於經驗、預期未來發展以及公司認為在當時情況下適當的其他因素而做出的某些假設。此類陳述受到許多假設、風險和不確定因素的影響，其中許多因素超出了公司的控制範圍。

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

如果這些風險或不確定性中的一項或多項成為現實，或者基本假設被證明不正確，則實際結果可能與此類前瞻性陳述所表明或預期的結果有重大差異。

Accordingly, investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. The contents of this call should be considered in conjunction with the Company's recent filings with the Securities and Exchange Commission, including its annual report on Form 10-K and quarterly reports on Form 10-Q and current reports on Form 8-K including any warming risk factors or cautionary statements contained here.

因此，投資人應注意不要過度依賴這些前瞻性聲明，這些聲明僅代表發布當日的情況。本次電話會議的內容應與公司最近向美國證券交易委員會提交的文件結合起來考慮，包括其 10-K 表年度報告、10-Q 表季度報告以及 8-K 表當前報告（包括任何升溫）這裡包含的風險因素或警告聲明。

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.

此外，該公司明確否認目前有意在本次電話會議後公開更新任何前瞻性陳述，無論是由於新資訊、未來事件、假設變化或其他原因。

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 reconciles in the table in the business update released to the most comparable GAAP measures.

為了幫助了解公司的業務績效，公司還提供了某些非公認會計準則衡量標準，包括調整後的EBITDA，這些衡量標準在發布的業務更新中的表格中與最具可比性的公認會計準則衡量標準進行了調節。

The reconciling items and non-operational or non-cash costs, including stock compensation, stock issued for services and other nonrecurring costs, such as those associated with the product withdrawal and the company's Nasdaq uplisting. Management believes that adjusted EBITDA provides useful information conforming to the investor because it's directly reflective of the period-to-period performance of the company's core business.

調節專案和非營運或非現金成本，包括股票補償、為服務發行的股票和其他非經常性成本，例如與產品撤回和公司在納斯達克上市相關的成本。管理層認為，調整後的 EBITDA 提供了符合投資者需求的有用信息，因為它直接反映了公司核心業務的各個時期的業績。

Now I'll turn the call over to the CEO of Barfresh Food Group, Mr. Riccardo Delle Coste. Please sir, go ahead.

現在我將把電話轉給 Barfresh Food Group 執行長 Riccardo Delle Coste 先生。先生，請繼續。

Good afternoon, everyone, and thank you for joining us for our third quarter 2023 earnings call. It's been a year now since our sales were materially impacted by the loss of our largest Twist & go bottle manufacturer. So withdrawal of defective product, and as a result, the loss of some of our customers. Over the past year, we have worked tirelessly to rollout our Smoothie Cartons and use it to win back some of those lost customers.

大家下午好，感謝您參加我們的 2023 年第三季財報電話會議。自從我們最大的 Twist & go 瓶製造商的損失對我們的銷售造成重大影響以來，已經過去一年了。因此撤回了有缺陷的產品，結果，我們失去了一些客戶。在過去的一年裡，我們不懈地努力推出我們的冰沙紙盒，並用它來贏回一些失去的客戶。

Continued to expand our reach within education channel with the signing of new school accounts and to advance our operational merging improvement efforts. We have also worked to expand our Carton production capacity and locate new bottle manufacturer.

透過簽署新的學校帳戶，繼續擴大我們在教育管道的影響力，並推動我們的營運合併改進工作。我們也致力於擴大紙箱生產能力並尋找新的瓶子製造商。

Both of which are crucial to supporting our long-term growth. I'm very proud to say that based on these actions, our third quarter revenue was within our guidance. Up both sequentially and year-over-year to $2.6 million. And we achieved the best adjusted EBITDA in company history, close to breakeven at a loss of $87,000.

兩者對於支持我們的長期成長至關重要。我非常自豪地說，基於這些行動，我們第三季的收入在我們的指導範圍內。環比和年比均增長至 260 萬美元。我們實現了公司歷史上最好的調整後 EBITDA，接近盈虧平衡，虧損 87,000 美元。

We have set to realize positive adjusted EBITDA for the fourth quarter and year-over-year margin improvements for fiscal year 2023. As it pertains to expanding our reach within the education channel. We recently issued a press release highlighting some of our new wins in this channel. We announced at just seven of the new school districts we are working with represent over 1,000 new school locations and a collective population of over 750,000 students.

我們計劃在第四季度實現正調整 EBITDA，並在 2023 財年實現年比利潤率改善。這與擴大我們在教育管道的影響力有關。我們最近發布了一份新聞稿，重點介紹了我們在該頻道中取得的一些新成果。我們宣布，僅與我們合作的 7 個新學區代表了 1,000 多個新學校地點和超過 750,000 名學生。

Also of note, one of the seven districts in the top five largest school districts in the United States. We have found over the past year, that our Smoothie Cartons fits nicely with the growing trend in schools to move toward more ecologically friendly products and has provided us an entry point into more of the high-volume school accounts.

另外值得注意的是，美國前五名大學區的七個學區之一。在過去的一年裡，我們發現，我們的冰沙紙盒非常適合學校轉向更環保的產品的不斷增長的趨勢，並為我們提供了進入更多大容量學校帳戶的切入點。

We believe there is still a lot of whitespace for us in this channel and believe that increased Carton capacity and soon to come increased bottle capacity will position us to capitalize on that opportunity. We worked throughout the year to increase our capacity and are on track we are Carton co-manufacturers to end the year, we've been having the capacity to produce between 25 to 30 million units annually.

我們相信這個管道仍然有很多空白，並且相信紙箱容量的增加和即將到來的瓶子容量的增加將使我們能夠利用這個機會。我們全年都在努力提高產能，並預計在年底成為紙箱聯合製造商，每年我們的產能為 2500 至 3000 萬件。

And as for our bottle capacity. We are working to finalize an agreement with a new bottle co-manufacturer that could have us supplying more bottled product in the early part of next fiscal year. We believe that both capacity initiatives will result in a dramatic increase in our top line growth across many different accounts and channels.

至於我們的瓶子容量。我們正在努力與一家新的瓶子聯合製造商敲定一項協議，這可能會讓我們在下一財年初期供應更多的瓶裝產品。我們相信，這兩項產能措施將導致我們在許多不同帳戶和管道的收入成長大幅成長。

In summary, while it has been a challenging year due to the events that occurred last year that were outside of our control. We believe we have taken actions so that exiting this year, we have an expanded customer base and manufacturing capabilities needed to put us back on a path towards sustainable long-term growth.

總而言之，由於去年發生的事件超出了我們的控制範圍，因此這是充滿挑戰的一年。我們相信，我們已採取行動，今年退出後，我們將擁有擴大的客戶群和製造能力，使我們重新走上可持續長期成長的道路。

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

我現在將把電話轉給我們的財務長麗莎·羅傑。麗莎。

Thank you, Riccardo. Revenue for the third quarter of 2023 was $2.6 million compared to $2.4 million for the third quarter of 2022. Revenue in 2022 was negatively impacted by a $630,000 claim estimate resulting from the voluntary product withdrawal of Twist & Go.

謝謝你，里卡多。 2023 年第三季的收入為 260 萬美元，而 2022 年第三季的收入為 240 萬美元。2022 年的收入受到 Twist & Go 自願撤回產品導致的 63 萬美元索賠估計的負面影響。

Excluding the refund claims estimate. Revenue for the third quarter of 2022 with $3 million. The year-over-year decline in adjusted revenue is a result of limited supply and lost customers caused by the loss of our largest bottle manufacturer of Twist & Go.

不包括退款索賠估計。 2022 年第三季營收為 300 萬美元。調整後收入年減的原因是供應有限以及我們最大的瓶子製造商 Twist & Go 的損失導致客戶流失。

As Riccardo said, we are on track with our Carton capacity expansion plans and added a number of new school accounts and our heavy selling third quarter season. Gross margin for the third quarter of 2023 was 35% compared to a negative 30% for the third quarter of 2022. Gross margin for the third quarter of 2022, adjusted for the product withdrawal was 28%. We expect modest margin improvement in the fourth quarter as a result of product mix as Smoothie Carton sales increase.

正如里卡多所說，我們的紙箱產能擴張計畫正在按計畫進行，並增加了許多新的學校客戶，第三季的銷售量也很大。 2023 年第三季的毛利率為 35%，而 2022 年第三季的毛利率為負 30%。根據產品撤回調整後的 2022 年第三季毛利率為 28%。我們預計第四季度的利潤率將因冰沙紙盒銷量增加而進行產品組合而略有改善。

Our net loss for the third quarter of 2023 was $476,000 as compared to a net loss of $2.7 million in the third quarter of 2022. Selling, marketing and distribution expense for the third quarter of 2023 decreased 19% to $697,000 compared to $860,000 in the third quarter of 2022. The decline was due to a decrease in storage and outbound freight expense and a decrease in broker commissions as a result of lower adjusted revenue.

我們2023 年第三季的淨虧損為476,000 美元，而2022 年第三季的淨虧損為270 萬美元。2023 年第三季的銷售、行銷和分銷費用下降19%，至697,000 美元，而第三季度為860,000 美元2022 年第四季。下降的原因是倉儲和出境運費減少，以及調整後收入下降導致經紀佣金減少。

D&A expenses for the third quarter of 2023 decreased 43% to $578,000 compared to $1 million in the same period last year. The decrease in D&A was driven by a decrease in personnel costs resulting primarily from a reduction in headcount as well as 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.

2023 年第三季的 D&A 費用下降 43%，至 578,000 美元，而去年同期為 100 萬美元。 D&A 減少的原因是人員成本下降，這主要是由於人員數量減少以及研發費用減少所致，而研發費用在 2022 年有所增加，因為我們產生了與推出紙箱包裝格式相關的預生產費用。

For the third quarter of 2023, our adjusted EBITDA was a loss of approximately $87,000, the best in company history and down sequentially from a loss of $617,000 in the second quarter of 2023 and down year over year from a loss of $638,000 in the third quarter of 2022. We continue to expect to achieve positive adjusted EBITDA in the fourth quarter of 2023, as a result of increased sales volume, gross margin improvements, headcount reductions taken late in the second quarter of 2023 and relatively fixed operating costs with the exception of outbound freight.

2023 年第三季度，我們調整後的EBITDA 虧損約87,000 美元，這是公司歷史上最好的虧損，比2023 年第二季度的虧損617,000 美元有所下降，比第三季度的虧損638,000 美元同比有所下降2022 年。由於銷售量增加、毛利率改善、2023 年第二季末進行的人員削減以及相對固定的營運成本（除出境貨運。

Now moving on to our balance sheet. As of September 30, 2023, we had approximately $1 million in cash and approximately $748,000 of inventory on our balance sheet. Compared to $3 million in cash and $1 million of inventory as of December 31, 2022.

現在轉向我們的資產負債表。截至 2023 年 9 月 30 日，我們的資產負債表上擁有約 100 萬美元的現金和約 748,000 美元的庫存。相比之下，截至 2022 年 12 月 31 日，現金為 300 萬美元，庫存為 100 萬美元。

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

現在我將把電話轉回給里卡多，讓他發表結束語。

Thank you, Lisa. I'll wrap up by saying that we are encouraged by the conversations we had this past quarter with new school accounts and the reception Smoothie Carton product has had in this channel over the past year.

謝謝你，麗莎。最後我要說的是，我們對上個季度與新學校帳戶的對話以及過去一年中 Smoothie Carton 產品在該頻道中的反響感到鼓舞。

We expect this positive selling momentum to continue through 2024, especially given we will be able to offer schools both our bottle and Carton products with the increased bottle capacity that we expect to come online in early 2024. We are also hopeful that more of those lost customers will reengage with us, as we'll be able to return to our historically strong service levels. I believe we are back on track driving long-term profitable growth.

我們預計這種積極的銷售勢頭將持續到2024 年，特別是考慮到我們將能夠向學校提供我們的瓶裝和紙盒產品，並且我們預計將在2024 年初上線增加瓶裝容量。我們還希望有更多的人流失客戶將重新與我們合作，因為我們將能夠恢復到歷史上強大的服務水準。我相信我們已回到推動長期獲利成長的正軌。

And with that, I would like to open up the line for questions. Operator.

至此，我想開通提問專線。操作員。

In queue. We will now be conducting a question and answer session. (Operator Instructions)

在隊列中。我們現在將進行問答環節。 （操作員說明）

Our first question comes from Anthony Vendetti with Maxim Group. Please go ahead.

我們的第一個問題來自 Maxim Group 的 Anthony Vendetti。請繼續。

So hey, Riccardo. Hey, Lisa. How you are doing.

所以嘿，里卡多。嘿，麗莎。你怎麼樣。

Great.

偉大的。

Good. How are you.

好的。你好嗎。

Good, thanks. Just in terms of the customers that you lost. When you had that issue with the bottle manufacture. Do you have a percentage of the ones you re-signed? Is it about half of them, 75%. Just trying to understand where that's at and then what the opportunity is going forward with those customers as well as the new customers with the Cartons?

好的，謝謝。就您失去的客戶而言。當您遇到瓶子製造問題時。你重新簽約的人中，有多少比例是這樣的？是不是一半左右，75%。只是想了解情況如何，然後這些客戶以及紙箱的新客戶將面臨哪些機會？

Yeah, look, I mean, we've lost -- we did lose a fair amount of customers that we haven't been able to get back yet mainly because they still want the bottles and then some that even though they've taken the cartons and not doing the same amount of volume because they're not offering it to all the same students.

是的，聽著，我的意思是，我們已經失去了——我們確實失去了相當多的客戶，我們還無法挽回這些客戶，主要是因為他們仍然想要瓶子，還有一些即使他們已經拿走了瓶子紙箱的數量不同，因為他們沒有向所有相同的學生提供相同的數量。

So we believe you have from a percentage perspective. I would say it's probably at least probably 30% -- 30% to 40%. We do have a lot of new customers that have been added, some previously existing customers have been added that were previously lost, but we believe there's a very, very significant opportunity going into next year once the new bottle capacity comes back up, particularly with some of the larger accounts that were previously using the bottles and a waiting for them still to come back.

所以我們相信你從百分比的角度來看是這樣的。我想說可能至少是30%——30%到40%。我們確實增加了許多新客戶，也增加了一些以前失去的現有客戶，但我們相信，一旦新瓶產能恢復，明年就會有一個非常非常重要的機會，特別是一些之前使用過這些瓶子的較大帳戶仍在等待它們回來。

And in terms of that new bottle manufacturer, when will that be up 100% running so that it can completely replace what you lost on.

就新的瓶子製造商而言，什麼時候才能達到 100% 的運行狀態，才能完全取代您失去的東西。

So we're expecting to have the agreement finalized here soon. And as mentioned, be up and running early in the new fiscal year for early 2024. Yes, I would say by Q1 2024, maybe sooner, but we'll see.

因此，我們預計很快就能在這裡敲定協議。如前所述，在 2024 年初的新財年儘早啟動並運行。是的，我會說到 2024 年第一季度，也許會更早，但我們會拭目以待。

Okay. And just to be clear, on the 30% to 40%, is that the amount of customers you've lost and haven't been able to get back or is that the amount -- those is 30% to 40%, the percentage of customers you been able to get back.

好的。需要明確的是，30% 到 40% 是指您失去的客戶數量以及無法挽回的客戶數量，或者是金額 - 也就是 30% 到 40%，即百分比您能夠挽回的客戶數量。

Now that probably the percentage that we still have available to go and get back.

現在我們仍然可以返回的百分比可能是這樣。

Okay. So that means you believe record of 60% to 70% of the customers that you lost found other companies to do business with.

好的。因此，這意味著您相信您失去的 60% 到 70% 的客戶找到了其他公司與之開展業務。

No not other company they�re waiting for us. They've just --

不是其他公司，他們正在等我們。他們剛剛——

They're waiting?

他們在等嗎？

Yeah, they're just waiting.

是的，他們只是在等待。

Okay, got it. Okay. Thanks

好，知道了。好的。謝謝

We've got quite a few customers that have said to us as soon as the bottles come back, let us know.

我們有不少客戶對我們說，一旦瓶子回來，請告訴我們。

Okay that's --

好吧，那就是——

Yeah, we're literally just waiting until we get the capacity they need plan sorted out and then we can start point and then we'll go -- obviously it will be a process to go back around and get product out to everyone and they'll still be -- probably a truncated selling process, but there will still be a process involved in getting product out to them and then getting back on them. And we do need to time it with getting onto the main news and it needs to freely move their schedules as well.

是的，我們實際上只是在等待，直到我們得到他們需要的容量，並整理出計劃，然後我們就可以開始，然後我們就開始——顯然，這將是一個返回並將產品提供給每個人的過程，他們仍然會是——可能是一個被縮短的銷售流程，但仍然會有一個向他們提供產品然後返回給他們的流程。我們確實需要在了解主要新聞的同時安排時間，也需要自由地調整他們的日程安排。

Okay. And then lastly, for some of the agreements that you signed this quarter, when will you be able to start shipping products to those customers that were signed this quarter?

好的。最後，對於您本季簽署的一些協議，您什麼時候能夠開始向本季簽署的客戶運送產品？

Some of those have already started.

其中一些已經開始。

They started already? And the other (technical difficulty) before the end of the year -- by the end of the year.

他們已經開始了嗎？另一個（技術難度）在年底前－年底前。

Yes, by the end of the year, some or most have already started. Some have partially started and will ramp up to full scale within schools by the end, beginning of the new year, there's a bit of a mix, but by January, everyone should be at 100%.

是的，到今年年底，一些或大部分已經開始了。有些已經部分開始，並將在年底、新年伊始在學校內全面擴大規模，有一些混合，但到一月份，每個人都應該達到 100%。

Okay, great. Alright, I'll hop back in the queue, thanks.

好的，太好了。好的，我會重新加入隊列，謝謝。

Thanks.

謝謝。

(Operator Instructions) See we have no further questions at this time. `So this concludes today's teleconference. Thank you for your participation, you may now disconnect your lines. Have a good evening.

（操作員說明）目前我們沒有其他問題了。 「今天的電話會議到此結束。感謝您的參與，您現在可以斷開線路了。祝你晚上愉快。