Stryve Foods(US:SNAX)2024-04-01 21:16Financial Performance - Stryve reported a 43.3% year-over-year reduction in total operating expenses for the year ended December 31, 2023, leading to a 53.1% year-over-year improvement in Adjusted EBITDA Loss despite lower sales compared to the prior year [242]. - Net sales decreased by $12.2 million from $29.9 million in 2022 to $17.7 million in 2023, representing a reduction of 40.7% [255]. - Cost of goods sold decreased by $15.4 million from $30.7 million in 2022 to $15.3 million in 2023, driven by decreased sales volume and improved sourcing [256]. - Gross profit increased by $3.1 million from $(0.7) million in 2022 to $2.4 million in 2023, with a gross margin of 13.7% compared to (2.4)% in 2022 [257]. - Operating loss decreased by $16.8 million from $32.2 million in 2022 to $15.4 million in 2023, attributed to transformation efforts and improved gross margins [259]. - Net loss before income taxes decreased by $14.2 million from $33.2 million in 2022 to $19.0 million in 2023, primarily due to transformation efforts [261]. - Adjusted EBITDA improved by 52.9% from $(25.0) million in 2022 to $(11.8) million in 2023, driven by improved gross margins and rationalized spending [264]. - Basic and diluted net loss per share improved from $(16.18) in 2022 to $(8.59) in 2023 [266]. Strategic Initiatives - Stryve's transformation strategy includes a three-phase plan, with the final phase focusing on accelerating quality growth through brand reinvigoration and enhanced sales strategies [236]. - The company executed a 1-for-15 reverse stock split effective July 14, 2023, retroactively adjusting all share and per share amounts for all periods presented [227]. - Stryve's strategic rationalization of low-quality revenue sources has led to improved trends in retail consumption, despite some negative impacts on net sales [239]. - The company has identified one-time write-downs related to non-core assets and inventory as part of its transformation efforts, which began in Q2 2022 [235]. - The company plans to invest in working capital to support increased distribution with new and existing retailers in 2024 [274]. - The company aims to expand distribution in both online and traditional retail channels to acquire new consumers [283]. Financial Position and Liquidity - As of December 31, 2023, Stryve had $4.0 million remaining available under its at-the-market equity offering sales agreement, having sold 206,816 shares at a weighted average sale price of $2.99 per share during Q4 2023 [246]. - As of December 31, 2023, the company had approximately $11.7 million of indebtedness and working capital, compared to $7.2 million as of December 31, 2022 [268]. - The company secured a term loan of up to $6.0 million and an asset-based line of credit with an $8.0 million limit to augment liquidity [269]. - Total long-term debt decreased from $3.7 million in 2022 to $3.5 million in 2023 [281]. - The company has $8.3 million in short-term borrowings and current portion of long-term debt as of December 31, 2023 [281]. - Future minimum principal payments on debt total $11.96 million, with $8.5 million due in 2024 [282]. - Net cash used in operating activities decreased from $28.6 million in 2022 to $7.4 million in 2023, a reduction of $21.2 million [277]. - Net cash provided by financing activities was $7.3 million in 2023, primarily from $4.1 million in secured promissory notes and $1.7 million from an at-the-market equity facility [279]. Operational Challenges - The company experienced supply chain challenges in 2022 that negatively impacted gross margins, which continued to affect financial results in 2023 [250]. - Inventory levels were reduced by $3.1 million year-over-year due to scaled back production and liquidation sales [271]. - Stryve's profitability is significantly impacted by raw material costs, particularly beef, which are influenced by various uncontrollable factors, potentially affecting financial results [298]. - The company acknowledges that inflation has materially impacted its revenue and costs, and management is implementing strategies to mitigate these effects, though future impacts remain uncertain [299]. - Stryve's exposure to foreign currency risk is minimal, with less than 5% of net loss for 2023 and 2022 attributed to currency fluctuations [297]. Management and Governance - Management's estimates and assumptions in financial reporting are critical, as actual results may differ from these estimates due to uncertainties [301]. - The company operates as a single reporting unit, reflecting its intertwined production and distribution model [310]. - Stryve's management regularly reviews macroeconomic and industry conditions that may impact the fair value of its reporting unit [311]. - The company is continuously evaluating its ability to continue as a going concern, considering various business factors and management's plans [305]. - The company has assessed its goodwill and determined that the fair value of the reporting unit exceeds its carrying amount, resulting in no impairments for the year ended December 31, 2023 [312].