BARFRESH FOOD GROUP INC. Q1 FY2025 earnings call

• Launched new Pop & Go 100% Juice Freeze Pops in the education channel during Q4 2024, targeting the lunch daypart market. - Sales network covers 95% of the U.S., with 5% market penetration in the education channel representing significant growth runway. - Began onboarding two new strategic partners in Q4 2024 for manufacturing, with equipment investments continuing into Q2 2025, expecting full manufacturing capacity by end of Q2 2025. - Reiterated full year revenue guidance of 35%-55% growth, with margin expansion anticipated in the second half of 2025.

In the first quarter of 2025, Barfresh Food Group reported revenue of $2.9 million, compared to $2.8 million in the first quarter of 2024. Gross margin was 31% in Q1 2025 versus 41% in Q1 2024. Adjusted gross margin was 31% in Q1 2025 versus 43% in the prior year period. Selling, marketing, and distribution expense for Q1 2025 was $824,000 (28% of revenue) compared to $694,000 (25% of revenue) in Q1 2024. G&A expenses for Q1 2025 were $747,000 compared to $855,000 in the same period last year. Net loss for Q1 2025 was $761,000 compared to a net loss of $449,000 in Q1 2024. Adjusted EBITDA was a loss of approximately $506,000 in Q1 2025 compared to a gain of approximately $53,000 in the same period last year.

• Reiterated full year revenue guidance of 35%-55% growth. - Expect gross and operating margins to dramatically improve in the second half of 2025, aiming for positive adjusted EBITDA in the second half. - Secured $3 million in growth financing in February 2025 to support scaling production capacity, particularly in the education channel.

• Uncertainties related to risks and uncertainties beyond the company's control that could impact forward-looking statements, such as delays in manufacturing onboarding, changes in assumptions, or other unforeseen events.

Q: Is there anything that could slow down the co-manufacturing partners being up and running by the end of Q2 2025?

A: We've done a lot of testing, with first production runs already started, just refining the process, and expect it to be up and running before the end of Q2.

Q: Has the bidding process started for the 2025-2026 school year?

A: Yes, it started a couple of months ago, with existing customers' repeat orders and pipeline customers being added, expecting bids to be notified by end of June.

Q: Are customers interested in both Twist & Go and Pop & Go in bids?

A: Not everyone is adding Pop & Go to bids, but we are completing quite a number of bids with Pop & Go on them.

Q: Do you have sufficient inventory for the 2025-2026 school year?

A: Correct, with a lot of testing done in the background with customers, we are ready.

Q: Are you staffed appropriately?

A: We feel we have the right amount of staff for what we need to achieve.

Q: What's the impact of manufacturing capacity on revenue?

A: Depends on product mix, but 5-10% quarterly growth in revenue is possible.

Q: What's the expectation for gross margin?

A: Expecting margins to get back to ~40%, with potential upside as manufacturing comes online