Barfresh(BRFH) - 2025 Q2 - Quarterly Results

Executive Summary & Business Update Barfresh Food Group reported an 11% year-over-year revenue increase to $1.6 million for Q2 2025, achieving a 31% gross margin, with operational challenges resolved by a new co-manufacturer. - Q2 2025 Key Highlights: * Revenue: Increased 11% Year-over-Year to $1.6 million[1] * Gross Margin: Achieved 31%[1] * New Co-Manufacturer: Completed equipment installation at the end of Q2 2025 and commenced increased supply for Q3 2025[1] * Outlook: Company expects an increase in revenue and gross margin for the second half of 2025 compared to the first half of 2025[1] - Management Commentary: * CEO Riccardo Delle Coste noted 11% year-over-year revenue growth and solid margin performance despite ongoing operational challenges[2] * The co-manufacturing partner completed equipment installation, resolving temporary inefficiencies and elevated logistics costs that impacted first-half results[2] * Barfresh now has two manufacturers producing product and is focused on building consistent production capabilities[2] * The company maintains its guidance for double-digit year-over-year revenue growth for the full year, though expectations are adjusted to reflect the greater impact of operational challenges[2] * Investments in manufacturing capacity and operational improvements are building a more scalable platform for growth and improved margins over time[2] Second Quarter of 2025 Financial Results Barfresh's Q2 2025 revenue grew 11% to $1.6 million, primarily driven by expanded bottle capacity, while gross margin decreased to 31.1% due to product mix and new manufacturer trial costs. Revenue Performance Revenue increased 11% to $1.6 million in Q2 2025, primarily due to expanded bottle capacity. Q2 and H1 2025 Revenue Performance | Metric | Q2 2025 | Q2 2024 | YoY Change (Q2) | H1 2025 | H1 2024 | | :----- | :------ | :------ | :-------------- | :------ | :------ | | Revenue | $1,625,000 | $1,464,000 | +11% | $4,555,000 | $4,293,000 | - The increase in revenue is primarily driven by expanded bottle capacity at an additional manufacturing location developed since the fourth quarter of 2024[3] Gross Profit and Margin Analysis Gross profit slightly decreased in Q2 2025, with gross margin declining to 31.1% due to product mix and new manufacturer trial costs. Q2 and H1 2025 Gross Profit and Margin | Metric | Q2 2025 | Q2 2024 | Change (Q2) | H1 2025 | H1 2024 | | :---------------- | :------ | :------ | :---------- | :------ | :------ | | Gross Profit | $506,000 | $509,000 | -$3,000 | $1,406,000 | $1,679,000 | | Gross Margin | 31.1% | 34.8% | -3.7 pp | 30.9% | 39.1% | | Adjusted Gross Margin | 31.1% | 35.1% | -4.0 pp | 30.9% | 40.3% | - The decrease in gross margin is a result of product mix and new manufacturer trial and development costs, including inefficiencies during the early production period incurred to gain additional production volume[4] Operating Expenses Q2 2025 operating expenses included $634,000 for selling, marketing & distribution and $673,000 for G&A. Q2 2025 Operating Expenses | Metric | Q2 2025 | Q2 2024 | | :-------------------------- | :------ | :------ | | Selling, marketing & distribution | $634,000 (39% of revenue) | $583,000 (40% of revenue) | | G&A expenses | $673,000 | $865,000 | Net Loss and Adjusted EBITDA Net loss improved to $(880,000) and Adjusted EBITDA loss narrowed to $(600,000) in Q2 2025. Q2 and H1 2025 Net Loss and Adjusted EBITDA | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------- | :-------- | :-------- | :-------- | :-------- | | Net Loss | $(880,000) | $(1,011,000) | $(1,641,000) | $(1,460,000) | | Adjusted EBITDA | $(600,000) | $(682,000) | $(1,106,000) | $(629,000) | Balance Sheet Snapshot As of June 30, 2025, the balance sheet shows approximately $1.3 million in cash and accounts receivable, and $1.8 million in inventory. Balance Sheet as of June 30, 2025 | Asset Category | Amount | | :----------------------- | :----------- | | Cash and Accounts Receivable | ~$1.3 million | | Inventory | ~$1.8 million | Non-GAAP Financial Measures Barfresh presents non-GAAP measures, including Adjusted Gross Profit, EBITDA, and Adjusted EBITDA, to provide investors with a clearer understanding of the company's core business performance. - Management believes that Adjusted Gross Profit and Adjusted EBITDA provide useful information to investors as they are directly reflective of the Company's performance[7] - The exclusion of certain items (e.g., manufacturing relocation costs, stock compensation, product withdrawal costs, business development expenses) in calculating Adjusted Gross Profit and Adjusted EBITDA aims to provide a useful measure for period-to-period comparisons of the Company's core business performance[7] - Adjusted Gross Profit and Adjusted EBITDA are not recognized measurements under GAAP and should not be considered as alternatives to GAAP measures[7] Updated Outlook for 2025 Barfresh has successfully resolved bottling production and logistics constraints, positioning the company for stronger second-half performance, though fiscal year 2025 revenue guidance has been revised downwards. - The bottling production and logistics constraints, which persisted throughout the second quarter with greater-than-anticipated impact, are believed to have been resolved[13] - With the second co-manufacturing partner's equipment installation complete and production capability expanded, Barfresh is positioned for stronger performance in the second half of the year[13] Revised Fiscal Year 2025 Revenue Guidance | Metric | Previous Guidance | Revised Guidance | | :---------------- | :---------------- | :--------------- | | FY2025 Revenue | $14.5 million to $16.6 million | $12.5 million to $14.0 million | Company Information and Disclosures This section provides details on the upcoming conference call for investors, an overview of Barfresh Food Group's business operations, and important disclaimers regarding forward-looking statements. Conference Call Details This section provides details for the upcoming Q2 2025 earnings conference call, including access information. - Conference Call Schedule: * Date & Time: Wednesday, August 13, 2025, at 1:30 pm Pacific Time (4:30 pm Eastern Time)[15] * Dial-in (North America): (877) 407-4018[15] * Dial-in (International): (201) 689-8471[15] * Telephonic Playback: Available approximately two hours after the call until Tuesday, August 26, 2025. Passcode: 13754380[15] * Webcast: Accessible on the Company's website at www.barfresh.com in the Investors-Presentations section[15] About Barfresh Food Group Barfresh Food Group develops and distributes ready-to-blend and ready-to-drink beverages for the education and foodservice markets. - Company Overview: * Business: Developer, manufacturer, and distributor of ready-to-blend and ready-to-drink beverages, including smoothies, shakes, and frappes[16] * Primary Markets: Education market, foodservice industry, and restaurant chains[16] * Product Formats: Fully prepared individual portions or single serving and bulk formats for on-site preparation[16] * Proprietary System: Utilizes portion-controlled pre-packaged beverage ingredients for quick, cost-efficient, healthier, and waste-free freshly made frozen beverages[16] Forward-Looking Statements This section clarifies that statements regarding future performance are forward-looking and subject to inherent risks and uncertainties. - Statements in the press release regarding commercial progress, strategic relationships, and future financial performance are forward-looking[17] - These statements are based on certain assumptions and are subject to risks and uncertainties, which may cause actual results to vary materially[17] - The Company expressly disclaims any current intention to publicly update any forward-looking statements after the distribution of this release[17] Investor Relations Investor relations contact information is provided for inquiries regarding Barfresh Food Group. - Investor Relations Contacts: * John Mills, ICR, 646-277-1254, John.Mills@icrinc.com[18] * Deirdre Thomson, ICR, 646-277-1283, Deirdre.Thomson@icrinc.com[18]