Barfresh(US:BRFH)2022-11-13 10:16Financial Data and Key Metrics Changes - Revenue for Q3 2022 increased 25% to $2.4 million compared to $1.9 million in Q3 2021, while revenue for the first nine months of 2022 increased 82% to $7.7 million compared to $4.2 million for the same period last year [18][15] - Net loss for Q3 2022 was $2.7 million compared to a loss of $0.5 million in Q3 2021, and net loss for the first nine months of 2022 was $4.3 million compared to a loss of $1.4 million in the same period last year [24] - Adjusted EBITDA for Q3 2022 was a loss of approximately $637,000 compared to a loss of approximately $597,000 for Q3 2021 [24] Business Line Data and Key Metrics Changes - The company experienced growth in sales across all channels, particularly in the school channel for the Twist & Go product, which contributed to the overall revenue increase [18] - The gross margin for Q3 2022 was negative 30% compared to 37% for the same period last year, primarily due to costs related to a product withdrawal [19] - Selling, marketing, and distribution expenses for Q3 2022 increased to $0.8 million from $0.5 million in Q3 2021, driven by increased sales and marketing personnel and outbound freight costs [21] Market Data and Key Metrics Changes - The company is actively working to replace lost manufacturing capacity, which accounted for 58% of all inventory purchases, impacting revenue significantly until resolved [10] - The new carton format for Twist & Go is expected to align with emerging trends in schools towards environmentally friendly products, potentially expanding the customer base [13] Company Strategy and Development Direction - The company plans to launch the Twist & Go in a new carton format, which is expected to be economically and ecologically friendlier than the bottle format [11] - There is an emphasis on expanding manufacturing capacity and customer base, with plans to triple capacity and pursue high-volume accounts [16][27] - The management believes the current setback is temporary and that the company is on a path to consistent profitability once manufacturing issues are resolved [17][27] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the manufacturing issue but highlighted significant progress made throughout the year, indicating confidence in long-term growth [26][28] - The company expects revenue for the second half of the year to exceed the first half and to be greater than the full year of 2021, indicating a strong growth trajectory prior to the setback [16] Other Important Information - The company had approximately $3 million in cash and $600,000 in inventory as of September 30, 2022, and does not expect to raise cash to navigate the current setback [25] Q&A Session Summary Question: What sort of capacity do you have right now for the carton Twist & Go? - The company has just launched the new carton product and expects to move into about 20 million units a year with that capacity, aiming for a $20 million annual run rate [29] Question: Do you see that the gross margins for that product being higher than your historical gross margins? - Management confirmed that the new carton product is expected to have a significant positive impact on gross margins compared to historical performance [30]