CHERRY HILL, N.J., March 27, 2023 (GLOBE NEWSWIRE) — The Real Good Food Company, Inc. (NASDAQ: RGF), a leading health and wellness frozen foods company, today reported financial results for its fourth quarter and fiscal year ended December 31, 2022.
Management Commentary
Bryan Freeman, Executive Chairman, said: “The fourth quarter was reflective of the growing strength of our brand, helping to meet increasing demand for healthier frozen food options with innovative new products such as our Breaded Poultry, Breakfast Flautas and Creamy Poblano Enchiladas. While sales came in below our original expectations, this was driven by the strategic dialing back of promotional expenses on a non-core product in the unmeasured channel that would have diluted margins. Moreover, our distribution gains are tracking ahead of plan, baseline velocities remain strong and new product velocities are exceeding base. As such, we are reiterating our revenue guidance of at least $200 million in 2023. Looking ahead to 2023 and beyond, I firmly believe that our continued focus on innovation in incremental categories – as reflected by the success of our launch into the refrigerated category as well as frozen breaded poultry – that will underpin our future sales growth.”
Gerard Law, Chief Executive Officer, added: “We are pleased to report that the Bolingbrook facility has reached its final start-up phase, which has allowed us to significantly increase production and labor efficiencies across the business. These improvements, paired with commodity cost normalization, helped to grow our gross margin profile to 13.7% of net sales in the fourth quarter, as compared to 5.0% in the same year-ago quarter. As we complete the final start-up phase and Bolingbrook begins to realize its full potential, I believe we are well positioned to achieve our expectation of reaching positive operating cash flow in 2023. I look forward to continued operational execution in the months ahead as we strive to create sustainable, long-term value for our shareholders.”
Fourth Quarter and Fiscal Year 2022 Highlights
- Net sales increased 39% in the fourth quarter to $35.7 million and 68% in the full year to $141.6 million
- Gross profit margin grew to 13.7% of net sales in the fourth quarter of 2022, as compared to 5.0% of net sales in the fourth quarter of 2021
- Household penetration increased to 8.4% as of January 2023, as compared to 7.6% in January 2022
Financial Results for the Quarter Ended December 31, 2022
Net sales grew 39.2% to $35.7 million in the fourth quarter of 2022, as compared to $25.6 million in the fourth quarter of 2021. The increase was primarily due to strong growth in sales volumes of the Company’s core products, driven by greater demand from existing retail and club customers, and to a lesser extent new customers.
Gross profit increased by $3.6 million to $4.9 million, or 13.7% of net sales, in the fourth quarter of 2022, as compared to $1.3 million, or 5.0% of net sales, in the fourth quarter of 2021. The increase in gross profit was primarily driven by a decrease in the cost of raw materials, improved price realization, productivity initiatives and to a lesser extent improved efficiencies across our plant network.
Adjusted gross profit, a non-GAAP term, increased by $5.4 million to $9.9 million, reflecting an adjusted gross margin of 27.7% of net sales, in the fourth quarter of 2022, as compared to $4.5 million, or an adjusted gross margin of 17.4% of net sales, in the fourth quarter of 2021. The increase in adjusted gross profit was primarily driven by lower commodity costs, productivity initiatives, and to a lesser extent, improved price realization.
Total operating expenses decreased by $28.2 million to $14.1 million in the fourth quarter of 2022, as compared to $42.3 million in the fourth quarter of 2021. The decrease was primarily due to $28 million in equity compensation expense recognized at the time of our IPO in the fourth quarter of 2021.
Adjusted EBITDA, a non-GAAP term, totaled a loss of $0.7 million in the fourth quarter of 2022, as compared to a loss of $3.9 million in the fourth quarter of 2021. The decreased loss in adjusted EBITDA was driven by lower commodity costs, better price realization and efficiencies related to the Bolingbrook ramp-up.
Loss from operations decreased by $31.8 million to $9.3 million in the fourth quarter of 2022, as compared to $41.1 million in the fourth quarter of 2021. The decrease was primarily due to the aforementioned reduction in equity compensation expense.
Net loss decreased by $33.0 million to $11.9 million in the fourth quarter of 2022, as compared to $44.9 million in the fourth quarter of 2021. The decrease in net loss was primarily due to the aforementioned reduction in equity compensation expense.
Balance Sheet Highlights
As of December 31, 2022, the Company had cash and cash equivalents of $7.6 million (which includes $2.3 million of restricted cash) and total debt was $73.2 million. The Company had $37.6 million in available liquidity.
Outlook
The Company is maintaining its guidance 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
- Positive cash flow from operations
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.
Conference Call and Webcast Details
Management will host an investor conference call at 8:30 a.m. Eastern time on Monday, March 27, 2023 to discuss Real Good Foods’ fourth quarter and fiscal year 2022 financial results, provide a corporate update, and conclude with a question and answer session with telephone participants. To participate, please use the following information:
About Real Good Food Company
Real Good Foods (NASDAQ: RGF) is a leading health and wellness frozen 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.
