BRFH - Barfresh Provides Fourth Quarter and Full Year 2023 Results and Business Update | Benzinga
Company Achieves Second Highest Fiscal Year Revenue in Company History Despite Restricted Supply of Smoothie Bottle Product Throughout Fiscal Year 2023 and National Carton Supply Shortage in Fourth Quarter 2023
Revenue of $8.1 Million and Gross Margins of 36% for Fiscal Year 2023
On Track to Generate Record Revenue Compared to Any Other First Quarter in Company History and Sequential Adjusted EBITDA Improvement for First Quarter 2024
Company Secured Additional Smoothie Bottle Capacity with Existing Bottle Manufacturer at End of Fiscal Year 2023 and is Focused on Replacing Lost Bottle Manufacturer in Fiscal Year 2024
LOS ANGELES, Feb. 29, 2024 (GLOBE NEWSWIRE) -- Barfresh Food Group Inc. (the "Company" or "Barfresh") (NASDAQ:BRFH), a provider of frozen, ready-to-blend and ready-to-drink beverages, is providing a business update for the full year ended December 31, 2023.
Management Comments
Riccardo Delle Coste, the Company's Chief Executive Officer, stated, "We delivered our Company's second highest fiscal year revenue and year-over-year margin improvement for 2023, despite being without our largest bottle manufacturer, as we benefitted from a full year of sales of our higher margin smoothie carton product. Fourth quarter revenue and Adjusted EBITDA results did however fall short of our expectations due to an industry-wide carton shortage that resulted in lost sales of our smoothie carton product beginning in early December. While the issue has since resolved itself and we are back to full carton production, it did impact the first six weeks of sales in fiscal year 2024."
Mr. Delle Coste continued, "Heading into fiscal year 2024, we have increased capacity with our existing bottle manufacturer and our carton manufacturer has completed all the engineering changes needed to provide them the ability to increase capacity to approximately 25 million to 30 million units annually. Additionally, we were very close to signing on a new bottle manufacturer for fiscal year 2024; however, due to internal issues on their side they were unable to execute the contract. We are currently exploring other opportunities while we wait to see if they can resolve the issues on their end and expect to have a new bottle manufacturing partner before the beginning of the new school year in August 2024, which will provide us the needed capacity to support our long-term growth plans."
Fourth Quarter of 2023 Financial Results
Revenue for the fourth quarter of 2023 was $1.9 million, compared to $1.4 million in the fourth quarter of 2022. The increase in revenue is the result of improved supply due to increased capacity in carton production, and the return of lost customers caused by the loss last year of the Company's largest bottle manufacturer of Twist & Go™, partially offset by an industry-wide shortage of 4-ounce and 8-ounce cartons that began toward the end of the fourth quarter of 2023. Gross margins for the fourth quarter of 2023 were 33%, compared to 36% for the fourth quarter of fiscal year 2022.
Net loss for the fourth quarter of 2023 was $701,000, as compared to a loss of $1.9 million in the fourth quarter of 2022. Selling, marketing and distribution for the fourth quarter of 2023 was $624,000, compared to $625,000 in the fourth quarter of 2022. G&A expenses for the fourth quarter of 2023 decreased 31% to $629,000 compared to $912,000 in the fourth quarter of 2022. The decrease in G&A was driven by a decrease in personnel cost resulting primarily from a reduction in headcount and a reduction in performance-based stock compensation.
Fiscal Year 2023 Financial Results
Revenue for the full year of 2023 was $8.1 million, compared to $9.2 million in the same period of 2022. Revenue in 2022 was negatively impacted by a $493,000 claims estimate resulting from the voluntary product withdrawal of Twist & Go™. Excluding the refund claims estimate, revenue for the full year of 2022 was $9.7 million. The decline in revenue is the result of limited supply and lost customers caused by the loss last year of the Company's largest bottle manufacturer of Twist & Go™, as well as an industry-wide shortage of cartons that began toward the end of fiscal year 2023. Gross margins for the full year of 2023 were 36%, compared to 16% for 2022. Gross margin for the full year of 2022 adjusted for the product withdrawal was 30%. The year over year improvement is the result of favorable product mix, pricing actions and a slight improvement in the cost of supply chain components.
Net loss for the full year of 2023 was $2.8 million, as compared to $6.1 million in the same period of 2022. Net loss for the full year of 2022 was impacted by $1.8 million in charges related to the product withdrawal and a $746,000 non-cash asset impairment charge related to idle equipment resulting from overcapacity for the Company's single-serve products and equipment held at the manufacturer. Selling, marketing and distribution for the full year of 2023 decreased approximately 9% to $2.6 million, compared to $2.9 million in the same period of 2022. The decrease is a result of decreased sales and marketing personnel costs and outbound freight as a result of decreased shipments. G&A expenses for the full year of 2023 decreased approximately 24% to $2.7 million, compared to $3.5 million in the same period of 2022. The decrease in G&A was driven by a decrease in personnel cost resulting primarily from a reduction in headcount and the confirmation and recognition of the Company's 2021 COVID-related tax credit, a reduction in legal, professional, and consulting fees, and a reduction in research and development expense that was elevated in 2022 as the Company incurred pre-production expense related to the launch of its carton packaging format.
Non-GAAP Financial Measures
The above information is presented in conformity with accounting principles generally accepted in the United States. In order to aid in the understanding of the Company's business performance, the Company has also presented below certain non-GAAP measures, including EBITDA and Adjusted EBITDA, which are reconciled in the table below to comparable GAAP measures. Management believes that Adjusted EBITDA provides useful information to the investor because it is directly reflective of the performance of the Company. The exclusion of certain items including stock compensation, stock issued for services, and other non-recurring costs such as those associated with the product withdrawal, asset impairment and the Company's NASDAQ uplift in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of the Company's core business performance. Adjusted EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP.
Adjusted EBITDA was a loss of approximately $427,000 for the fourth quarter of 2023, compared to a loss of approximately $833,000 for the fourth quarter of 2022. Adjusted EBITDA for the full year 2023 was a loss of $1.7 million, compared to a loss of $2.4 million for the same period of 2022. A reconciliation of net loss to Adjusted EBITDA is provided below.
| For the three months ended December 31, |
| For the year ended December 31, |