Executive Summary

Q2 2023 revenue declined to $2.30M (down 46.5% YoY) with gross profit of $0.74M and net loss of $4.20M; management attributed the revenue decline to delays in financing that temporarily impacted production .
Adjusted EBITDA loss widened to $2.60M versus $1.90M in Q2 2022; management highlighted ongoing progress on brand launches and distribution that should support future growth .
Balance sheet actions converted over $5.80M of debt and $1.20M of deferred executive/board compensation into equity, improving stockholders’ equity from a $2.40M deficit to positive $4.60M—a key de-risking step .
Execution catalysts include: nationwide Boxout distribution for Sports Illustrated Nutrition, Canadian distribution with Two Hands, and a near-term acquisition of an eCommerce nutraceuticals asset (~$10M revenue, >$2M EBITDA TTM) .

What Went Well and What Went Wrong

What Went Well

Launch of Sports Illustrated protein bars targeting clean-label demand; management expects market rollouts “this quarter” and sees Boxout’s national network as a lever to accelerate reach .
Canadian distribution agreement with Two Hands to expand retail channels and geographic reach; supports goal of $100M revenue via domestic and international expansion .
Balance sheet transformation: conversion of ~$5.80M debt and ~$1.20M deferred comp into equity lifted stockholders’ equity to +$4.60M from a -$2.40M deficit .

What Went Wrong

Q2 revenue fell to $2.30M (from $4.30M YoY), with gross profit down to ~$0.74M (from ~$1.80M), driven by financing delays that temporarily reduced production capacity .
Adjusted EBITDA loss increased to $2.60M vs. $1.90M in Q2 2022, reflecting the weaker sales and continued investment amid fixed-cost intensity .
Management continued to cite cash constraints and fulfillment delays affecting revenue trajectory (reiterated in Q1 commentary prior to Q2) .

Financial Results

Metric	Q2 2022	Q1 2023	Q2 2023
Revenue ($USD Millions)	$4.30	$2.40	$2.30
Gross Profit ($USD Millions)	$1.80	$0.83	$0.74
Net Loss ($USD Millions)	$3.50	$4.28	$4.22
Adjusted EBITDA ($USD Millions)	$(1.90)	$(1.88)	$(2.64)

Additional six-month context:

Metric	6M 2022	6M 2023
Revenue ($USD Millions)	$8.70	$4.70
Gross Profit ($USD Millions)	$3.30	$1.60
Net Loss ($USD Millions)	$20.20	$8.50

Balance sheet transformation:

Metric	Prior	Current
Debt Converted to Equity ($USD Millions)	—	$5.80
Deferred Comp Converted ($USD Millions)	—	$1.20
Stockholders’ Equity ($USD Millions)	$(2.40)	$4.60

Notes:

Adjusted EBITDA excludes items such as related party consulting fees, stock-based compensation, stock issued for services, bad debt expense, IPO-related expenses, impairment of intangible assets, change in fair value of derivative liability, and gain on debt extinguishment; definitions and reconciliations provided in company press releases .

Segment breakdown: Not disclosed in Q2 press materials .

KPIs: No formal segment KPIs disclosed; highlighted commercial milestones include Boxout distribution and Two Hands Canada expansion .

Guidance Changes

Formal quantified guidance was not provided. Narrative objectives and updates:

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue Objective	Next 12 months	Targeting ~$100M via acquisitions and organic growth (reiterated across materials)	Continued emphasis on ~$100M objective; pipeline and distribution expansions cited	Maintained
Long-Term Revenue Objective	By Q4 2026	Aggregate to ~$300M through buy-and-build roll-up	Reaffirmed ~$300M by Q4 2026	Maintained
Acquisition Timing	Near term	LOIs in place; expected closing of eCommerce nutraceuticals asset in Q2/Q3 timeframe	“Expect to close” nutraceuticals acquisition in weeks; TTM rev >$10M, EBITDA >$2M	Narrowed timing

Earnings Call Themes & Trends

No Q2 2023 earnings call transcript was found despite targeted searches; themes inferred from Q3 2022, Q1 2023, and Q2 2023 company releases.

Topic	Previous Mentions (Q3 2022, Q1 2023)	Current Period (Q2 2023)	Trend
Buy-and-Build M&A	Proven track record; LOI to acquire largest eCommerce nutraceutical target; annualized run-rate >$23M	Expect to close eCommerce nutraceuticals acquisition in weeks; >$10M revenue, >$2M EBITDA TTM	Continuing execution; near-term closing
Distribution Expansion	Integration of Ceautamed; migrating manufacturing; building channels	Boxout nationwide distribution for Sports Illustrated Nutrition; Two Hands Canada agreement	Expanding footprint
Product Launches	Greens First children's chewables; ice cream bars announced	Sports Illustrated protein bars launched; clean-label focus	Pipeline active
Financing/Production Constraints	Anticipated working capital to materially impact Q3/Q4 revenue; fulfillment delays	Q2 revenue decline tied to financing delay-induced production delays	Constraints persisted in Q2
Balance Sheet Strategy	Equity funding raised; focus on de-leveraging over dilution	Converted ~$5.80M debt, ~$1.20M deferred comp to equity; equity improved to $4.60M	De-risking balance sheet
Profitability Path	Fixed-cost intensity; positive cash flow with incremental margins as revenue grows	Emphasis on acquisition EBITDA and contract manufacturing synergies	Profitability tied to scale

Management Commentary

“We continue to advance our operations and have made significant progress growing our brands. During the quarter, we launched a new line of Sports Illustrated protein bars... We look forward to launching them in select markets this quarter.” — Darren C. Minton, CEO .
“We entered into a distribution agreement with Boxout... for nationwide distribution of our proprietary Sports Illustrated Nutrition products...” .
“We executed a comprehensive Canadian distribution agreement with Two Hands Corporation... Expansion of our sales in both domestic and international markets is a key component of our growth strategy...” .
“Notably, during the quarter, we enhanced our balance sheet, by converting over $5.8 million of debt to equity. We also converted $1.2 million of deferred executive and board compensation to equity...” .
Q1 context: “Although our revenues decreased in Q1 2023, due to cash constraints and fulfillment delays... we believe we are well positioned for significant organic growth and improved profitability in 2023.” — Darren C. Minton .

Q&A Highlights

No Q2 2023 earnings call transcript or Q&A was available; no call-related guidance clarifications or tone assessment could be derived [SearchDocuments: none found].

Estimates Context

Wall Street consensus (S&P Global) for Q2 2023 EPS and Revenue was unavailable for SMFL due to missing CIQ mapping; therefore, we cannot provide an estimates comparison or beat/miss assessment (tool error indicates missing mapping).
As a result, any estimate-driven adjustments are not presented, and the analysis relies on company-reported actuals [GetEstimates error].

Key Takeaways for Investors

Revenue softness in Q2 stemmed from financing delays impacting production; near-term normalization depends on working capital availability and execution on distribution/PO pipeline .
Balance sheet de-risking is material: debt and deferred comp equitization flipped equity positive; lowers leverage optics and may improve vendor/customer confidence .
Distribution scale-up via Boxout and Canadian entry via Two Hands create multi-channel volume potential for Sports Illustrated Nutrition and broader portfolio .
Acquisition pipeline remains central to the thesis; near-term eCommerce nutraceuticals deal (>$10M revenue, >$2M EBITDA TTM) can add profitable scale and internalize manufacturing spend .
Operating leverage is significant due to fixed costs; as revenue scales (organic + M&A), management expects improved cash flow and margins—monitor top-line ramp and integration milestones .
With no formal quantified guidance and unavailable consensus estimates, trading setups hinge on execution signals: acquisition closing, distribution sell-through, and resolution of financing/production constraints .
Longer-term story remains a roll-up to ~$300M revenue by Q4 2026; investors should track acquisition cadence, financing terms, and non-GAAP adjustments impacting reported profitability .

SMART FOR LIFE, INC. (SMFL)·Q2 2023 Earnings Summary