Stryve Foods(US:SNAX)2022-05-16 20:19Financial Performance - Stryve reported a net loss reduction of $4.6 million in Q1 2022 compared to Q4 2021, attributed to more efficient spending and improved gross margins [121]. - Net loss increased by $1.5 million from $5.8 million in Q1 2021 to $7.3 million in Q1 2022, largely due to the absence of a one-time PPP loan forgiveness benefit [133]. - Adjusted EBITDA was negative $6.3 million in Q1 2022 compared to negative $5.9 million in Q1 2021, indicating ongoing operational challenges [137]. - Operating loss increased by $0.6 million from $6.6 million in Q1 2021 to $7.2 million in Q1 2022, primarily due to higher selling and marketing expenses [131]. - For the three months ended March 31, 2022, the company incurred an operating loss of $7.2 million and used cash in operations of $14.1 million, compared to $8.3 million in the same period of 2021 [141]. Revenue and Sales Growth - Net sales increased by $0.6 million from $6.8 million in Q1 2021 to $7.4 million in Q1 2022, representing an 8.6% growth [123]. - DTC e-commerce revenue declined by $1.5 million, generating $1.4 million in Q1 2022 compared to $2.9 million in Q1 2021, due to increased digital advertising costs and supply chain challenges [125]. - Wholesale net sales reached $4.9 million in Q1 2022, an 85% increase from $2.7 million in Q1 2021, driven by new distribution channels [126]. - Stryve's sales growth has been strong since its inception, driven by increased consumer focus on health and wellness [108]. Cost and Expenses - Gross profit decreased by $1.6 million from $2.7 million in Q1 2021 to $1.1 million in Q1 2022, with gross profit margin dropping to 15.1% from 39.2% [129]. - Cost of goods sold rose by $2.1 million from $4.2 million in Q1 2021 to $6.3 million in Q1 2022, driven by increased sales volume and commodity input costs [128]. - Selling and marketing expenses decreased by $2.5 million from $6.5 million in Q1 2021 to $4.0 million in Q1 2022, reflecting a strategic shift in advertising spending [134]. - Salaries and wages increased by $1.2 million from $1.4 million in Q1 2021 to $2.6 million in Q1 2022, influenced by retention bonuses and increased headcount [134]. Debt and Liquidity - The company retired approximately $6.84 million of debt in Q1 2022 and completed a major expansion of its manufacturing facility in Madill, Oklahoma [120]. - The company raised $35.0 million in gross proceeds from a private placement on January 11, 2022, to strengthen its liquidity position [141]. - As of March 31, 2022, the company had working capital of $28.0 million, a significant increase from $3.2 million as of December 31, 2021 [141]. - Net cash provided by financing activities was $25.2 million for the three months ended March 31, 2022, compared to $9.7 million in the same period of 2021, reflecting a $15.5 million increase [148]. Market and Operational Challenges - The company anticipates continued inflationary pressures in 2022, affecting raw materials, transportation, and labor costs [119]. - The COVID-19 pandemic has created both challenges and opportunities, impacting supply chain dynamics and retail distribution strategies [117]. - Future performance will depend on the company's ability to manage supply chain and production capacity in line with demand [155]. - Management acknowledges the potential for continued inflation to materially impact business operations [169]. Strategic Initiatives - Stryve's management plans to implement price increases in Q2 2022 to offset rising costs and improve profitability [121]. - The company aims to expand its distribution channels both online and in traditional retail, focusing on increasing consumer acquisition through various marketing strategies [150]. - The company is focused on optimizing spending and improving unit economics to drive further reductions in net losses moving forward [121]. Risk Factors - Raw material costs, particularly beef, significantly impact profitability, with price fluctuations already negatively affecting results [168]. - Interest rate risk exists due to variable rate debt, which may affect future earnings and cash flows [166]. - Geopolitical uncertainties, including the conflict in Ukraine, may unpredictably affect interest rate, foreign currency, and raw material risks [166][167][168][169]. - Stryve's exposure to foreign currency risk is minimal, affecting less than 5% of net income for the three months ended March 31, 2022 [167].