Arcadia Biosciences(RKDA) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Arcadia's Q2 revenues were $1.4 million, down $119,000 or 8% quarter-over-quarter, primarily due to the wind-down of Body Care businesses [37] - Selling, general and administrative expenses declined by $576,000 or 13% compared to the previous quarter, now at the lowest level in three years [32] - Net income attributable to common stockholders was $823,000 or $0.61 per share [42] Business Line Data and Key Metrics Changes - GoodWheat and Zola added hundreds of stores of distribution in Q2, with GoodWheat expected to reach around 3,000 stores by the end of the year [10][50] - Zola experienced a 10% increase in distribution, still about 10% below its previous high watermark [48] - Research and development expenses were $391,000 in Q2, slightly higher than Q1, as preparations for GoodWheat pancakes continued [39] Market Data and Key Metrics Changes - The company is launching GoodWheat into the breakfast category with new pancake and waffle mixes, targeting a market valued at $850 million [19] - Quikcakes, a single-serve instant pancake product, launched on August 1st, with strong interest from retailers [20] Company Strategy and Development Direction - The company is executing Project Greenfield, a three-year strategic plan aimed at unlocking potential and providing a path to profitability [10] - A strategic review was announced to explore options including asset sales, acquisitions, or mergers, with a focus on acquiring an existing brand to scale faster [23][25] - The decision to exit Body Care brands aims to streamline operations and focus resources on GoodWheat and Zola [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio and plans to add to it, indicating a focus on core products [52] - The company is optimistic about the second half of the year, with expectations for improved distribution and sales [46] - Management acknowledged that while margins may erode slightly due to pricing strategies, they expect to maintain margins in the 20s [51] Other Important Information - The company has made significant progress in turning low-quality, non-recurring revenues into high-quality ongoing revenue streams [44] - Operating expense savings of $2 million are expected in the second half of the year, with annual savings projected at $3 million to $4 million [29][41] Q&A Session Summary Question: Can you provide details on the Zola distribution increase? - Management reported a 10% increase in Zola distribution, still about 10% below the previous high watermark [48] Question: What are the expectations for GoodWheat store count by year-end? - The target remains around 3,000 stores, with some variability based on retailer plans [50] Question: What is the expected margin structure for GoodWheat products? - Margins are expected to erode slightly, with projections in the mid to low-20s [51] Question: Will there be further changes to the organic business? - Management is confident in the current portfolio and plans to add to it [52] Question: What is the status of exploring strategic opportunities? - The company is early in the process of exploring various strategic options [58] Question: Are there new channels being explored for GoodWheat? - Management is actively exploring additional channels beyond grocery for GoodWheat [59] Question: Is the current product mix optimized? - Management is satisfied with the current SKUs and does not foresee further pairing opportunities [60]