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SF

STRYVE FOODS, INC. (SNAX)·Q1 2023 Earnings Summary

Executive Summary

  • Q1 2023 net sales were $4.6M, down from $7.4M YoY, but gross margin improved 560 bps to 20.7% as pricing and productivity actions took hold; adjusted EBITDA loss narrowed to $3.5M from $6.3M YoY .
  • Operating expenses fell to $5.2M vs $8.3M YoY and $5.4M in Q4, contributing to a net loss of ($4.6M) or ($0.15) per share vs ($7.3M) and ($0.25) YoY .
  • Management reaffirmed FY2023 net sales guidance of $28–$34M and expects a “step function” sequential revenue/margin improvement in Q2 driven by significant new retail distribution wins (e.g., Vacadillos expansion into ~10,000 7‑Eleven/Speedway doors) and packaging renovation .
  • Liquidity was tight (cash $0.377M at quarter-end), supported by AR/inventory-based line of credit and an April debt financing of $4.1M with warrants to fund inventory build for resets; management expects cash consumption to decline as revenues accelerate .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded to 20.7% (up 560 bps YoY) on pricing, procurement, yield, and process improvements despite lower volumes; adjusted EBITDA loss improved to ($3.5M) vs ($6.3M) YoY .
  • Distribution momentum: “approximately 10,000, 7‑Eleven and Speedway locations” carrying Vacadillos Carne Seca and beef sticks; early consumer response “encouraging” since mid‑April launch .
  • Cost discipline: “materially reduced cash operating expenses” and “leaner, more productive organization” with Opex down to $5.2M vs $8.3M YoY .
    Quote: “Our first quarter was our third consecutive quarter of improved year‑over‑year operational and financial results… improved adjusted EBITDA” (CEO) .

What Went Wrong

  • Top line pressure: net sales declined to $4.6M (vs $7.4M YoY) as SKU/customer rationalization and retailer inventory drawdowns weighed on shipments; management expects normalization and acceleration beginning late Q1/Q2 .
  • Liquidity constraints: quarter‑end cash was ~$377k; the company relied on AR/inventory line of credit and raised $4.1M subordinated notes (12% coupon) with ~7.96M warrants to fund Q2 distribution ramp .
  • Volumes depressed gross profit dollars; management reiterated need for higher plant utilization to alleviate unabsorbed labor/overhead (Q4 context) .

Financial Results

Quarterly comparison

MetricQ3 2022Q4 2022Q1 2023
Revenue ($USD Millions)$6.2 $5.4 $4.6
Gross Profit ($USD Millions)$1.4 $1.2 $0.963
Gross Margin (%)22.4% 22.3% 20.7%
Operating Expenses ($USD Millions)$6.1 $5.5 $5.2
Net Loss ($USD Millions)($4.97) ($4.5) ($4.6)
Diluted EPS ($USD)($0.16) ($0.14) ($0.15)
Adjusted EPS ($USD)($0.15) ($0.13) ($0.14)
Adjusted EBITDA ($USD Millions)($3.9) ($3.5) ($3.5)

Q1 YoY comparison

MetricQ1 2022Q1 2023
Revenue ($USD Millions)$7.4 $4.6
Gross Margin (%)15.1% 20.7%
Net Loss ($USD Millions)($7.3) ($4.6)
Diluted EPS ($USD)($0.25) ($0.15)
Adjusted EPS ($USD)($0.23) ($0.14)
Adjusted EBITDA ($USD Millions)($6.3) ($3.5)

Selected Q1 2023 KPIs and balance sheet items

KPIQ1 2023
Cash & Cash Equivalents ($USD Millions)$0.377
Accounts Receivable ($USD Millions)$3.0
Inventory ($USD Millions)$8.3
Net Working Capital (ex cash & debt) ($USD Millions)$6.3
Retail Doors (Vacadillos in 7‑Eleven/Speedway)~10,000 locations

Non-GAAP reconciliation details for adjusted EPS/EBITDA are provided in the company’s Q4 2022 press release (methodology carries forward) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Millions)FY 2023$28–$34 $28–$34; Q1 is trough, acceleration starting Q2 Maintained
Gross Margin (%)FY 2023 (year-end exit)“Mid‑30s by year‑end” “Mid‑30s by year‑end,” expected “several point improvement” in Q2 Maintained
Sequential TrendQ2 2023“Step function change” as resets come online “Step function growth” sequentially on new distribution Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2022)Previous Mentions (Q4 2022)Current Period (Q1 2023)Trend
Shift from DTC to retailPulled back DTC; retail distribution seen as best path Focused on retail doors across channels DTC “not a core driver”; retail to drive growth Accelerating retail focus
SKU rationalization>180 SKUs rationalized; near-term top-line pressure Base run-rate ~$20M after rationalization Lower volumes YoY reflect rationalization; quality core growth planned Lapping rationalization
Packaging/brand renovationPlan underway to improve shelf conversion New packaging to hit late Q2; velocity assumptions conservative “New brand positioning and packaging” part of Q2 ramp Execution phase
Pricing/marginsMargin turned positive; pricing process in place Expect several-point GM improvement; mid‑30s exit GM +560 bps YoY; aiming mid‑30s by year-end Improving
Supply chain/inventoryBought ahead; inventory high; drawdown planned Transition to new SKUs strains liquidity Building new packaged inventory for resets; expect inventory decline later in year Transition in progress
Liquidity/financingSecured non‑dilutive facilities Anticipated need for $3–$4M financing; potential going‑concern risk if not secured Raised $4.1M notes + ~7.96M warrants; cash $0.377M Addressed near‑term bridge
Product innovationRenovation plus innovation funnel Details on steaks/bites, pet treats Two Tails Vacadillos beef sticks launch; MRE ingredients; Two Tails pet treats Broadening portfolio
Distribution/ACVDistribution growth in measured channels Major resets across C‑store, grocery, natural ~10,000 c‑store doors; Q2 “step function” growth Momentum building

Management Commentary

  • CEO: “We are now executing against the sizable opportunities in front of us… advancing into the next phase of our plan, growth, which leads to profitability.”
  • CEO: “We are reaffirming our net sales guidance for 2023 in a range of $28 million to $34 million.”
  • CFO: “Q1 was our third consecutive quarter of improved year‑over‑year bottom line results and expanded margins…”
  • CFO: “We continue to believe that the second quarter will yield step function growth on a sequential basis due in large part to new distribution wins coming online.”

Q&A Highlights

  • Guidance composition and channel mix: Management emphasized retail distribution over DTC as the primary growth driver; DTC remains but is no longer core .
  • Path to $50M+: CEO outlined category size (~$5B measured; ~10B total), low base ACV (~16%) and expected share/velocity gains from renovation/innovation and distribution .
  • Packaging/velocity: New packaging expected to lift velocity; conservative planning assumptions remain until in-market data confirm .
  • Inventory normalization: Expect shipments to exceed consumption in Q2 as pipelines fill for resets; normalization thereafter .
  • Capital needs: Prior quarter indicated $3–$4M required to fund ramp; Q1 followed with $4.1M notes/warrants to bridge near-term distribution growth .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable for SNAX Q1 2023, so no beat/miss assessment versus estimates can be made at this time. Coverage appears limited for this micro-cap; management did not reference consensus on the call or in filings .

Key Takeaways for Investors

  • Sequential inflection expected in Q2: substantial new distribution (e.g., ~10,000 7‑Eleven/Speedway doors) and packaging upgrades should drive step-change in revenue and gross margin .
  • Quality-over-quantity pivot: rationalization and pricing have improved unit economics; Opex reduction and margin expansion are tracking to plan (GM +560 bps YoY; Opex down materially) .
  • Liquidity bridged, but tight: $4.1M debt/warrants plus A/R & inventory-based line support near-term ramp; cash was $0.377M at quarter-end, with expectation of declining cash burn as volumes scale .
  • FY2023 guide intact ($28–$34M): exit margin target mid‑30s remains; Q1 is trough with acceleration ahead—watch Q2 prints and retail sell-through to validate trajectory .
  • Product/brand catalysts: Vacadillos beef sticks, renovated packaging, and diversification into MRE ingredients/pet treats broaden the portfolio and potential shelf presence .
  • Risk factors: execution on resets, velocity realization, and working-capital management remain critical near-term variables; prior commentary noted auditor going‑concern risk if capital not secured (since addressed) .
  • Action: Focus on Q2 shipment ramp, gross margin progression, and distribution breadth; sustained margin improvement and cash burn reduction are key to re-rating .