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| Statement |
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| We are encouraged to have recorded our second highest fiscal year revenue in 2023 and are on track to have a record first quarter in 2024 versus any other Q1, and expect the positive momentum we're seeing in the first quarter the increased cotton and bottle capacity, as well as our expanded sales network will continue throughout the year setting us up to achieve a record fiscal year of revenue |
| These sales results are a testament to the success of our smoothie carton product, which we rolled out in the fourth quarter of 2022 and our growing sales team's ability to sell it into new and existing customers |
| So, by signing these agreements and getting the teams on board which we have now focused on getting set up for the company, it should generate some serious lift in sales for the company across all the channels now |
| All of which we believe is setting us up for record first quarter revenue versus any other first quarter as we have already achieved over 2 million in sales and have another month remaining in the quarter |
| So, as we think about what our bottle capacity looks like, we are extremely confident that we will still get it resolved and get it resolved very quickly |
| The company generated its second-highest fiscal year revenue in 2023 with $8.1 million despite a full year without our largest Twist & Go bottle manufacturer who had previously accounted for over 50% of all our purchases |
| This is a first for the company and is expected to provide a robust lift in sales and further solidify our relationships with the military |
| However, we are expecting sequential adjusted EBITDA improvement in the first quarter driven by increased sales of Twist & Go due to the additional bottle capacity that came online and recovery of carton supply |
| We were, however, able to weather the storm better than others in the industry due to our contract manufacturing relationship with a major player in the dairy industry |
| So that should also help our negotiating power |
| We did weather that storm a lot better due to our significant manufacturing partner relationships who are some of the largest in the dairy industry |
| And most importantly, it is stored and delivered ambient, which opens up many more opportunities for us |
| As a result of that, we were also fortunate that we were able to get some increased capacity from our bottle manufacturer which closed that gap, because it probably would have been a little bit worse off, but because of the increased bottle capacity from our existing manufacturer, we're able to close that gap a little bit |
| We believe we will be on a path to sustain top-line growth once we have the necessary manufacturing capabilities for our bottle smoothie product fully online |
| We expect to replace our lost bottle manufacturer shortly and believe once we have the right manufacturing partners on board that provide us ample bottle capacity, we will be back on track to driving significant long-term profitable growth |
| We do, however, expect revenue to grow sequentially in the Q1 as we have been able to recently increase capacity with our existing bottle manufacturer for Twist & Go |
| As for the bottle capacity, we worked with our existing bottle co manufacturer to see if there was a way to increase capacity and we were successful toward the end of fiscal year 2023 and this increased capacity will now continue |
| They've actually done really well with the initial customers that we've seeded them in |
| The year-over-year increase is due to a full year of sales of our higher-margin cartons in 2023, pricing actions and a slight improvement in the cost of supply chain components |
| The increase in fourth quarter revenue is a result of improved supply due to increased capacity in our carton production this year over last year and the return of customers last year due to the loss of the company's largest bottle manufacturer at Twist & Go, partially offset by the industry-wide carton shortage Ricardo mentioned that impacted sales in the quarter |
| So, I think there's going to be more to come on that that are going to be very beneficial to the company going forward |
| We have increased capacity for both our carton and bottle smoothie products, increased our sales network and increased offerings with the reintroduction of WHIRLZ 100% Juice Concentrates |
| So fast forward now, good year out of that, there's been a lot of reshuffling and a lot of rehiring in a lot of these places and we just haven't been able to up until now get those products front and center and get the attention of the operators to be able to put it back on the menu, to have the people in place to be able to service them and we've now started to see that and we've relaunched the five-to-one 100% juice concentrates |
| In addition to working to expand capacity this past year, we also expanded our product offerings with the relaunch of our world's 100% juice concentrates |
| As we've stated previously, the carton format is aligned with the growing trend in schools to move toward more ecologically friendly products and has provided us an entry point into more of the higher volume school accounts |
| Since the launch of our new smoothie carton product offering at the end of 2022, we have been working with our carton co manufacturer to have engineering changes made to the manufacturing line to increase capacity to approximately 25 million to 30 million units per year |
| We are growing our sales team by expanding our sales brokerage coverage to an additional 13 states where we previously had no representation in the education market |
| We believe it was the right time to reintroduce the product and allows our sales force to go out with a wider range of options at various price points |
| That's why you're confident that within the next couple of months, you'll have something so that you're all set up for the beginning of the '24 school year? Riccardo Delle Coste Correct, yes |
| And now what we're in the process of doing, have already started doing and will be increasing significantly that is including a broker network to go out there and sell both of those products not only to the education channel, but we are also getting a dedicated military channel team that's both senior relationships as well as boots on the ground nationally that can go out to each of the locations which is going to be very significant for us, as well as boots on the ground in 49 out of the 50 states and having multiple sales people within each state and sometimes up to 10 people going out there and selling the product both in the education channel as well as general food service |
| Statement |
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| The year-over-year decline is a result of limited supply and lost customers caused by the loss of our largest bottle manufacturer of Twist & Go as well as the shortage of cartons during the fourth quarter of 2023 |
| As a result of the pandemic, schools experienced prolonged labor challenges, which impacted our world's 100% juice concentrates due to the need of personnel to operate the frozen dispensing equipment |
| We did experience a slight setback with production beginning in December as an unforeseen national shortage of cartons plagued the beverage industry and continued into the early part of February |
| And as a result of COVID, there was a lot of changes that happened and then post-COVID, there was a lot of prolonged labor challenges within these establishments particularly in the education channel |
| Revenue in 2022 was negatively impacted by a $493,000 claim estimate resulting from the voluntary product withdrawal of Twist & Go |
| Our plans to achieve adjusted EBITDA breakeven in the fourth quarter were temporarily delayed by the carton shortage |
| Post-COVID it's been quite challenging getting back into the market with different products in certain channels, particularly with the bulk products and the one-to-one and the easy-pour as well as the new five-to-one that we had launched in 2020, they both require the beverage dispensing equipment |
| And unfortunately, the partner was going through some management changes and they were just unable to sign the contract due to some internal things that they were working on |
| For the fourth quarter of 2023, our adjusted EBITDA was a loss of approximately $427,000 almost half of what it was in the same period of 2022 |
| Schools were without milk cartons period due to the national shortage |
| This shortage sent schools scrambling and got the attention of Congress, especially since schools are a large customer of the 4-ounce and 8-ounce cartons for milk, both of which were in short supply |
| For the full year of 2023, our adjusted EBITDA loss was $1.7 million, compared to a loss of $2.4 million in the prior year |
| However, it will have a bearing on our first quarter of 2024 results as it impacted the first six weeks of sales |
| 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 our single-serve products and equipment held at the manufacturer |
| As a result of the higher SKU between the bottles and cartons, there was a little bit more of a compression on the margin |
| Q1 is going to be a little bit lower just because of the carton issue |
| However, they were ultimately unable to execute the contract |
| However, it ended up being more of a soft launch and was subsequently put on hold due to the extended closure of schools from the pandemic |
| We had been waiting for the prolonged labor challenges to resolve at schools as well as waiting for the selling cycle to recommence the new school menus before we relaunch the product, which we did this past quarter |
| However, the carton supply issue has been fully rectified now and we're back to full production and serviceability on those lines |
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