CHERRY HILL, N.J., Aug. 11, 2023 (GLOBE NEWSWIRE) — The Real Good Food Company, Inc. (NASDAQ: RGF), a leading health and wellness frozen and refrigerated foods company, today reported financial results for its second quarter ended June 30, 2023.
Management Commentary
Bryan Freeman, Executive Chairman, said: “I am pleased to report a significant acceleration in sales growth this quarter, led by the unmeasured channel, which was up 61% on a year-over-year basis driven by strong velocity growth, as well as new customer wins. Moreover, we gained momentum on the top-line up each month in the second quarter and growth has continued to accelerate into the third quarter. We now have eight high velocity items that participate in seven categories and two temperature states in the unmeasured channel, making the Real Good Foods brand a leading brand in the frozen & refrigerated category in the unmeasured channel. I am encouraged by the continued strength of our brand and have confidence in the ability of our dedicated team to continue to deliver upon our brand promise to consumers and unlock significant value for all our stakeholders over the long-term.”
Gerard Law, Chief Executive Officer, added: “Our operational team and infrastructure are well positioned to capitalize on our accelerated top-line growth trajectory in the second half of 2023 and beyond. Our Bolingbrook, Illinois facility is continuing to ramp up production and we are on track to achieve our efficiency targets in the second half of the year. I continue to be very proud of the team and how far we’ve come since opening the new facility. Bolingbrook enables our entry into exciting new categories and gives us much needed capacity to meet the growing demand for our new and existing products.”
Second Quarter 2023 Highlights
- Net sales in the second quarter were $35.4 million, up 14.8% year-over-year and 89% on a 2-year basis
- Gross profit margin grew to 13.6% of net sales, up 598 bps year-over-year
- Household penetration totaled approximately 8.3% as of June 2023, as compared to 8.3% in March 2023*
(*) June 30, 2023 Numerator report.
Financial Results for the Quarter Ended June 30, 2023
Net sales increased 14.8% to $35.4 million in the second quarter of 2023, as compared to $30.8 million in the second quarter of 2022. This increase was primarily due to increases in sales velocities of our products in the club channel and to a lesser extent distribution growth in the measured channel. This was partially offset by the timing of certain promotional events in the measured channel that boosted sales in the second quarter of 2022 but did not repeat this year.
Gross profit increased by $2.5 million to $4.8 million, or 13.6% of net sales, in the second quarter of 2023, as compared to $2.4 million, or 7.6% of net sales, in the second quarter of 2022. The increase in gross profit was due to decreases in certain raw material costs and productivity and efficiency improvements.
Adjusted gross profit, a non-GAAP term, increased by $3.2 million to $10.0 million, reflecting an adjusted gross margin of 28.2% of net sales, in the second quarter of 2023, as compared to $6.8 million, or an adjusted gross margin of 22.0% of net sales, in the second quarter of 2022. The increase in gross profit was due to decreases in certain raw material costs and productivity and efficiency improvements.
Total operating expenses increased by $3.3 million to $15.5 million in the second quarter of 2023, as compared to $12.2 million in the second quarter of 2022. The increase was primarily driven by research and development costs to support new product development, as well as by an increase in equity compensation expense.
Adjusted EBITDA, a non-GAAP term, totaled a loss of $1.9 million in the second quarter of 2023, as compared to a loss of $3.3 million in the second quarter of 2022. The improvement in adjusted EBITDA was driven by lower commodity costs and productivity initiatives.
Loss from operations increased by $0.8 million to $10.6 million in the second quarter of 2023, as compared to a loss from operations of $9.8 million in the second quarter of 2022. The increase was primarily due to increases in operating expenses in the second quarter.
Net loss increased by $3.5 million to $14.6 million in the second quarter of 2023, as compared to $11.1 million in the second quarter of 2022. The increase in net loss was primarily due to increases in operating expenses in the second quarter.
Balance Sheet Highlights
As of June 30, 2023, the Company had cash and cash equivalents of $3.0 million (which includes $2.3 million of restricted cash) and total debt was $102.1 million.
Outlook
For the year ending December 31, 2023:
- Net sales of at least $200 million
- Adjusted gross margin of at least 24%
- Adjusted EBITDA in the mid-to-high single-digit millions range
- And transitioning to positive cash earnings in the second half of 2023
Long-term, the Company continues to expect:
- Net sales of approximately $500 million
- Adjusted gross margin of 35%
- Adjusted EBITDA margin of 15%
The Company is not providing guidance for gross margin or net loss, the most directly comparable GAAP measures, and similarly cannot provide a reconciliation between its forecasted adjusted gross margin and GAAP gross margin and adjusted EBITDA and net loss without unreasonable effort due to the unavailability of reliable estimates for certain items. These items are not within the Company’s control, may vary significantly between periods and could significantly impact future financial results.
About Real Good Food Company
Real Good Foods (NASDAQ: RGF) is a leading health and wellness frozen and refrigerated foods company, providing a better way to enjoy your favorite foods. The Company’s mission is to provide “Real Food You Feel Good About Eating”, making delicious, nutritious foods that are low in sugar, low in carbohydrates and high in protein. The Real Good Foods family of products includes breakfast, lunch, dinner, and snacks – available in over 16,000 stores nationwide with additional direct-to-consumer options.
To learn more, please visit our website at realgoodfoods.com or join us on social media @realgoodfoods – where we maintain some of the largest followings in the frozen food industry today.
