Stryve Foods(US:SNAX)2022-08-15 19:54Financial Data and Key Metrics Changes - The second quarter of 2022 marked the largest revenue quarter in the company's history, with gross revenues of $14.8 million, nearly half of the total gross revenues achieved in the entire fiscal year 2021 [7] - Net sales for Q2 were $10.9 million, reflecting a 48.9% increase compared to the same quarter last year [25] - The gross profit loss for the quarter was $4.4 million, compared to a positive gross profit of $3.6 million in the prior year quarter [25] - The net loss for the quarter was $16.4 million, or $0.53 per share, compared to a net loss of $5.6 million, or $0.55 per share, in the prior year [28] - Adjusted EBITDA loss for Q2 was $11.4 million, compared to an adjusted EBITDA loss of $4.4 million a year ago [29] Business Line Data and Key Metrics Changes - The company experienced significant production and fulfillment volumes, nearly three times that of any prior quarter, primarily due to a time-specific event that placed products in a retailer for a limited period [20][21] - Challenges arose from higher input costs and execution issues, leading to negative gross margins for the quarter [22] Market Data and Key Metrics Changes - Consumer demand for better-for-you snacks continues to accelerate, particularly for products that deliver higher nutritional value without compromising taste [10] - The company has made progress in growing retail distribution across various formats, including convenience stores and supermarkets [12] Company Strategy and Development Direction - The company announced a major restructuring plan aimed at achieving profitability, simplifying the organization, and optimizing costs through disciplined project management [16] - The focus will be on increasing distribution, managing promotional investments, and prioritizing core portfolio optimization [38] - The company aims to transition from a founder-led organization to a true operating company, emphasizing accountability and execution excellence [18][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in Q2 but expressed confidence in the company's ability to recover and improve margins moving forward [23][32] - The company anticipates reaching profitability during the first half of 2023, driven by a combination of optimizing expenses and improving gross margins [30][37] - Management highlighted the importance of learning from past operational challenges to drive future growth and efficiency [33] Other Important Information - The company is currently under a letter to secure over $20 million in committed non-dilutive borrowing capacity, which is expected to close in the near term [30][83] - The restructuring plan includes eliminating non-profitable revenues and rationalizing SKUs to optimize the product portfolio [38] Q&A Session Summary Question: Can you provide more detail on what specifically you're going to be pulling back on? - Management indicated that expense management, people management, and channel management will be the focus, with a targeted approach to eliminate non-value creating volumes [46] Question: Can you talk about the target to reach an inflection to profitability in the first half of next year? - Management confirmed that adjusted EBITDA will be the key metric, with a focus on optimizing expenses and improving gross margins [49] Question: Can you provide color around distribution progress in the quarter? - Management acknowledged that distribution gains were somewhat muted due to service disruptions but noted impressive growth on a broader basis [57] Question: How should we think about moderating beef costs flowing through the P&L? - Management explained that beef costs are influenced by input costs and yields, with ongoing efforts to optimize yield to improve margins [60] Question: Can you break out sales between the limited promotion and other sales? - Management stated that while they could not provide specific details, the promotion created significant national exposure and positive sell-through [66] Question: What is the timeline for the $20 million non-dilutive financing? - Management indicated that they are working diligently towards closing the financing in the near term, confirming that it will not have any dilutive features [83]