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BS

Blue Star Foods Corp. (BSFC)·Q2 2022 Earnings Summary

Executive Summary

  • Q2 2022 revenue was $3.0M, up 39% year over year but down sequentially from $5.324M in Q1; gross margin compressed to 11.4% as cost inflation and LTL fuel surcharges weighed on profitability .
  • Net loss widened to $1.4M (-$0.06 EPS) as operating expenses rose with RAS ramp, non‑cash stock comp and Lind note amortization; management emphasized investments that should drive future scale .
  • Soft‑shell crab RAS contributed initial $0.5M in Q2; management expects FY22 revenue to “nearly double” versus $10.0M FY21 (implied ~$20M) and to restore the legacy business to ~$20M annualized levels .
  • Near‑term catalysts: execution on the South Carolina soft‑shell crab facility (construction Sep 2022; operations Q2 2023; first commercial harvest Q3 2023) and margin recovery from price actions to offset cost inflation .

What Went Well and What Went Wrong

What Went Well

  • Launched soft‑shell crab RAS in March with $0.5M Q2 revenue contribution; “very pleased with the early results” and believe expansion will be a “major differentiator” and contributor to profitability .
  • H1 2022 revenue grew 79% to $8.3M; management reiterated they “remain on track to nearly double revenue for all of 2022” versus $10.0M in FY21 .
  • Project plan for a Jasper County, SC facility advancing (HTH engineering engaged), targeting 220,000 dozen soft‑shell Atlantic blue crab harvest capacity when fully built; firm timeline milestones disclosed .

What Went Wrong

  • Gross margin fell to 11.4% from 26.8% YoY on cost‑of‑goods inflation and rapid LTL freight fuel surcharges; operating loss increased to $1.1M .
  • Net loss widened to $1.4M YoY on higher salaries/wages and expenses tied to soft‑shell acquisition and Lind convertible note discount amortization; EPS declined to -$0.06 vs -$0.02 YoY .
  • Q1 2022 filings flagged going‑concern risks and COVID‑related demand/supply disruptions, reinforcing the need for margin stabilization and financing discipline .

Financial Results

Sequential and YoY Performance

MetricQ1 2022Q2 2022
Revenue ($USD Millions)$5.324 $3.0
Gross Profit ($USD Millions)$0.488 $0.3
Gross Margin %9.2% (calc. from source data) 11.4%
Operating Loss ($USD Millions)$0.849 $1.1
Net Loss ($USD Millions)$1.054 $1.4
Diluted EPS ($USD)-$0.04 -$0.06
Cash And Equivalents ($USD Millions)$2.981 $2.6
MetricQ2 2021Q2 2022
Revenue ($USD Millions)$2.1 $3.0
Gross Margin %26.8% 11.4%
Net Loss ($USD Millions)$0.4 $1.4
Diluted EPS ($USD)-$0.02 -$0.06

Segment/KPIs (RAS and Operational Metrics)

KPI (Taste of BC/Soft‑Shell RAS)Value
Soft‑shell crab RAS revenue (Q2) ($USD Millions)$0.5
Standing biomass (end Q2) (MT)40
Original facility design capacity (MT)27
Avg fish harvest weight (six months ending Jun 30) (kg)1.94
Harvest downgrade percentage (six months ending Jun 30) (%)1.3%
Feed conversion ratio (FCR) (Kg feed/kg)1.18

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2022Not disclosed“On track to nearly double revenue” vs $10.0M FY21 (implied ~$20.0M) Raised
Legacy crab business revenue (annualized)H2 2022/FYNot disclosed“On track to restore legacy business to pre‑pandemic levels of approximately $20 million of annual revenue” Raised
Soft‑shell crab RAS facility (Jasper County, SC) timeline2022–2023Not disclosedDetail engineering; construction start by end Sep 2022; RAS installation by end Dec 2022; commissioning by end Mar 2023; operations Q2 2023; first commercial harvest Q3 2023 New program timeline

Earnings Call Themes & Trends

Note: A Q2 2022 earnings call transcript was not available in the filings/document search; themes reflect management commentary and prior quarter MD&A (Item 2.02 refers to press release) .

TopicPrevious Mentions (Q4 2021, Q1 2022)Current Period (Q2 2022)Trend
Supply chain/cost inflationQ4 2021: not available; Q1 2022: COVID‑related disruptions and inflation impacting sales and inventory Margin headwinds from cost inflation and LTL fuel surcharges; plan to pass through higher wholesale prices over time Ongoing pressure; mgmt pricing response
RAS expansion strategyQ4 2021: not available; Q1 2022: TOBC capacity and fingerling supply agreement; Lind financing for growth Soft‑shell crab RAS launched; SC build‑out milestones; targeted 220,000 dozen harvest capacity Scaling execution underway
Financing/convertible noteQ1 2022: $5.75M Lind secured, 18 repayments of $333,333, first‑priority lien Non‑cash amortization impacted Q2 net loss; emphasis on investment ramp Cash discipline required
COVID/macroQ1 2022: decreased revenue and operational constraints noted Management focusing on operational execution and margin recovery Improvement contingent on normalization

Management Commentary

  • “We continued our positive momentum during the second quarter and we believe remain on track to nearly double revenue for all of 2022… We are very pleased with the early results and $0.5 million revenue contribution in the second quarter…” — John Keeler, Chairman and CEO .
  • “We ramped our investment in our RAS divisions to position us for expansion… Without such incremental investment and our non‑cash expenses, our operating profitability would have been similar to previous quarters.” — John Keeler .
  • “As we look to the second half of 2022, we believe we remain on track to restore our legacy business to pre‑pandemic levels of approximately $20 million of annual revenue.” — John Keeler .
  • “HTH… planning, design and consulting services to create a new facility that… will be able to harvest over 220,000 dozen a year of Soft‑Shell Atlantic Blue Crab.” — John Keeler .

Q&A Highlights

A Q2 2022 earnings call transcript was not available via filings/document search; no Q&A content to summarize (press release furnished under Item 2.02; transcript not listed in catalog).

Estimates Context

Wall Street consensus estimates (S&P Global/Capital IQ) for BSFC Q2 2022 were unavailable today due to data access limits; as a result, we cannot provide beat/miss comparisons this quarter using SPGI consensus [tool error: Daily Request Limit Exceeded]. Where estimates are needed for future recaps, we will anchor on S&P Global and explicitly cite them.

Key Takeaways for Investors

  • Sequential slowdown and margin pressure: revenue fell from $5.324M in Q1 to $3.0M in Q2 as gross margin was 11.4% amid input and freight cost inflation; watch pricing actions and mix to recapture margins .
  • RAS is scaling: $0.5M soft‑shell crab RAS revenue in Q2 and a detailed SC facility timeline suggest a visible path to capacity and profitability differentiation in 2023; execution is the catalyst .
  • H1 momentum: $8.3M H1 revenue (+79% YoY) and management’s “nearly double” FY22 revenue outlook vs $10.0M FY21 set expectations for H2 delivery and potential narrative re‑rating on progress .
  • Balance sheet/financing watch: cash was ~$2.6M at June 30; Lind note begins 18 monthly repayments of $333,333 and carries a first‑priority lien — equity holders should monitor liquidity, covenant compliance, and dilution risk .
  • Legacy business recovery: management targets restoring ~$20M annualized legacy crab revenue; pricing power and supply chain normalization will be key to reaching pre‑pandemic levels without margin sacrifice .
  • Operating expense mix: non‑cash stock comp and amortization elevated in Q2; if investment ramp moderates while RAS scales, operating leverage should improve sequentially .
  • Near‑term trading setup: microcap with limited coverage; catalysts include SC construction start (Sep), commissioning (Mar), and initial harvest (Q3 2023); any updates on price realization to offset cost inflation could drive sentiment .