Barfresh(US:BRFH)2023-08-20 04:40Financial Data and Key Metrics Changes - Revenue for Q2 2023 was $1.5 million, down from $2.8 million in Q2 2022, primarily due to limited supply from the loss of the largest bottle manufacturer [33] - The net loss for Q2 2023 was $742,000 compared to a net loss of $716,000 in Q2 2022 [34] - Adjusted EBITDA for Q2 2023 was a loss of approximately $617,000, compared to a loss of approximately $431,000 in Q2 2022 [36] - The company expects to achieve approximately adjusted EBITDA breakeven for Q3 2023 and positive adjusted EBITDA for Q4 2023 [36] Business Line Data and Key Metrics Changes - The company has secured over $1.6 million in revenue for Q3 2023 and expects to end the quarter with revenue between $2.6 million and $3 million [8][11] - The gross margins for Q2 2023 were similar to the prior year at 31%, with expectations for modest margin improvement in the latter half of the year as smoothie carton sales increase [34][31] Market Data and Key Metrics Changes - The company has been added back to a significant number of school menus for the 2023-2024 school year, regaining previous customers and acquiring new ones [19][30] - The bulk and single-serve segments of the business are starting to recover, with an increase in bulk sales noted [20] Company Strategy and Development Direction - The company aims to ramp up production capacity for the smoothie carton format to 25 million to 30 million units annually by the end of fiscal year 2023 [31][62] - A new bottle co-manufacturer is expected to be operational by January 2024, which will enhance production capabilities and customer service [9][37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sequential and year-over-year improvement in revenue and margins as production capacity increases [16][31] - The company believes it is turning a corner with customers returning and new capacity coming online, setting the stage for a strong finish to the year [37][24] Other Important Information - As of June 30, 2023, the company had approximately $1 million in cash and $1 million in inventory, down from $3 million in cash at the end of 2022 [63] - The company has secured funds through a convertible debt offering to support its equity balance if needed for NASDAQ compliance [60] Q&A Session Summary Question: Updates on contracts for the upcoming school year - Management indicated that many school districts prefer not to disclose contracts publicly, but they have been awarded numerous bids and are optimistic about the new school year [43][44] Question: Expectations for Q4 growth - Management expects sales to increase from Q3 to Q4 and anticipates continued growth into Q1 of the following year due to the new bottle manufacturer coming online [55] Question: Cash flow and operational model - The company believes it will be cash flow positive in Q4 and has a short operating cycle, minimizing concerns about working capital as it grows [56]