Arcadia Biosciences(RKDA) - 2022 Q1 - Earnings Call Transcript

Financial Highlights - Company reported total revenues of $3.2 million for Q1 2022, a significant increase from $828,000 in Q1 2021, driven by opportunistic grain sales and body care product sales [14] - Revenues were up nearly 300% year-over-year and 48% compared to Q4 2021, primarily due to rising wheat prices and expanded distribution [5][14] - Operating expenses for Q1 2022 were $7.8 million, an increase from $6.2 million in Q1 2021, with R&D expenses down to $395,000 from $1.2 million [14][15] - Net loss attributable to common stockholders was $4.5 million in Q1 2022, compared to net income of $2.1 million in Q1 2021 [15] Business Line Performance - The body care segment added over 3,600 points of distribution across three brands, with Zola coconut water experiencing a 9% increase in unit sales and 17% growth in dollar sales [6][14] - The decision to wind down a non-core co-packing business is expected to improve gross margins in the second half of the year [7][8] Market Data - Company sold approximately $1 million worth of grain in Q1 2022, capitalizing on rising wheat prices [5] - The launch of GoodWheat pasta is anticipated to disrupt the pasta category, with initial orders already shipped to retail customers [8][9] Company Strategy and Industry Competition - Company is focusing on a long-term strategy to enhance its brand portfolio, particularly for GoodWheat, which is seen as a key growth driver [10][11] - The strategy includes evaluating market trends, competitive dynamics, and product formulations to establish a strong market presence [11] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the successful launch of GoodWheat and the momentum in body care and Zola [26] - The company is positioned for continued improvement in the second half of the year, with a focus on gross margin enhancement [26] Other Important Information - The approval of HB4 soy by China's ministry of agriculture will trigger milestone payments totaling $2 million and future royalty payments of 6% of net revenue [12][13] Q&A Session Summary Question: Can you quantify the amount of grain inventory and the level of wheat acreage intended for planting? - Company has about 12 million pounds of inventory, sufficient for a few years, and does not need to grow new grain immediately [17] Question: Will you add a high protein label to GoodWheat packaging? - Company plans to change packaging to highlight the high protein content without adding any ingredients [19][20] Question: Will marketing costs increase as GoodWheat ramps up? - Marketing expenses are expected to increase, but other SG&A expenses will be managed to maintain a similar overall expense pattern [21] Question: What marketing efforts are planned for the e-commerce launch? - E-commerce launch is seen as a way to ramp up national marketing efforts, allowing for broader outreach [23]