Executive Summary

Q3 revenue fell 21% year over year to $1.986M (from $2.515M) and declined sequentially from $2.283M in Q2, as vegan cheese and frozen dessert sales both weakened amid increased competition and softer export cheese demand .
Gross margin compressed to 24% (from 29% in Q2 and 31% a year ago) on lower volumes and increased promotional activity; net loss was $0.207M ($0.04 per share) vs net income of $0.110M ($0.02) in Q3’23 and a $0.032M loss ($0.01) in Q2 .
Liquidity tightened: cash declined to ~$176K and working capital to ~$2.961M at quarter-end (vs $489K and $3.105M at Q2-end); management stated cash resources are sufficient and expects working capital to improve by year-end .
No formal quantitative guidance; management “working hard to replace lost sales,” aiming for improved operating results in Q4 and into 2025, which is the key near-term narrative to watch .
No earnings call transcript was available; trend analysis leans on the Q3 and Q2 press releases and Q1 10‑Q disclosures .

What Went Well and What Went Wrong

What Went Well
- Management reaffirmed confidence in liquidity, stating cash resources are sufficient and working capital should improve by year-end .
- Operating expenses were roughly flat year over year in Q3 ($692K vs $674K), reflecting some cost discipline despite revenue pressure .
- Q2 showed margin improvement (29% vs 25% in the prior-year Q2), indicating the company can expand margin when volume/mix is favorable .
What Went Wrong
- Top-line declined 21% YoY in Q3 on competitive pressure in vegan cheese and weaker export cheese demand; frozen desserts also declined on lower pint sales .
- Gross margin deteriorated to 24% (vs 31% a year ago and 29% in Q2) due to lower volumes and higher promotional spend to combat competition .
- Earnings swung to a loss: net loss of $207K ($0.04) vs net income of $110K ($0.02) in Q3’23, while sequentially worse than the $32K loss in Q2 .

Financial Results

Note: amounts in $USD thousands unless otherwise noted; periods are 13-week quarters.

Metric	Q3 2023	Q1 2024	Q2 2024	Q3 2024
Net Sales	2,515	2,212	2,283	1,986
Gross Profit	786	470	667	485
Gross Profit Margin %	31%	21%	29%	24%
Operating Income (Loss)	112	(302)	(26)	(207)
Net Income (Loss)	110	(303)	(32)	(207)
Diluted EPS ($)	0.02	(0.06)	(0.01)	(0.04)

Segment/Product Mix (Sales)

Product Category	Q1 2024	Q2 2024	Q3 2024
Vegan cheese products	1,809	1,926	1,648
Frozen desserts and foods	403	357	338

Liquidity and Working Capital

Metric	Dec 30, 2023	Mar 30, 2024	Jun 29, 2024	Sep 28, 2024
Cash and Equivalents	837	351	489	176
Working Capital	3,440	3,159	3,105	2,961
Accounts Receivable (net)	828	889	817	821
Inventories	2,475	2,453	2,171	2,130
Total Current Liabilities	793	631	410	292

Estimates vs. Actuals

Wall Street consensus (S&P Global) for Q3 2024 revenue and EPS was not available for TOFB; therefore, no estimate comparison is provided. S&P Global data was attempted but unavailable/insufficient coverage.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Operating results	Q4 2024 and into 2025	None	“Working hard to replace lost sales” and “hope to improve our operating results in the fourth quarter and into 2025”	Qualitative positive tone
Liquidity/Working capital	FY 2024 year-end	None	“Cash and available cash resources are sufficient” and “we will improve our working capital position by year-end”	Qualitative positive tone

No formal quantitative ranges (revenue/margins/OpEx/tax) were provided in Q3 materials .

Earnings Call Themes & Trends

Note: No Q3 earnings call transcript was available; themes are drawn from Q3 and Q2 press releases and Q1 10‑Q.

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2024)	Trend
Competitive landscape (vegan cheese)	Q1: Sales decline due to increased competition in vegan cheese ; Q2: not specifically highlighted in release	Q3: Ongoing competitive pressure in vegan cheese cited as key driver of lower sales	Worsening
Product mix and gross margin	Q1: Margin lower due to higher frozen dessert mix and input cost increases; GP% 21% ; Q2: GP% improved to 29%	GP% fell to 24% on lower volumes and higher promos	Deteriorated sequentially
Export cheese demand	Not highlighted in Q1/Q2 materials	Decline in export cheese business cited as a headwind	New headwind
Marketing/promotion intensity	Q1: Marketing increased; promotions up YoY	Increased promotional activity to combat competition	Elevated
Liquidity/working capital	Q1: Cash $351K; WC $3.159M ; Q2: Cash $489K; WC $3.105M	Q3: Cash $176K; WC $2.961M; management believes liquidity sufficient	Softening liquidity (mgmt confident)
Freight and logistics	Q1: Freight out 8% of sales; expected stable	Not discussed in Q3 release	Stable in Q1; not updated
Internal controls	Q1: Disclosure controls not effective; material weaknesses persist	Not updated in Q3 release	Ongoing risk from Q1 disclosure

Management Commentary

“While our revenues and operating results were disappointing in the first thirty-nine weeks of 2024, we are working hard to replace lost sales and hope to improve our operating results in the fourth quarter and into 2025. We believe that our cash and available cash resources are sufficient for our operations and believe that we will improve our working capital position by year-end.” — Steven Kass, Chief Executive and Financial Officer .
“While our revenues were disappointing in the first six months of 2024, we were pleased with our improved operating results. We believe that our cash and available cash resources remain strong and we look forward to achieving improved operating results in the second half of 2024.” — Steven Kass, Chief Executive and Financial Officer (Q2 release) .

Q&A Highlights

No Q3 earnings call transcript was available; no Q&A highlights to report based on company filings and press releases reviewed .

Estimates Context

Wall Street consensus estimates (S&P Global) for Q3 2024 revenue and EPS were not available for TOFB; as a result, we cannot provide a beat/miss analysis vs. Street. Management did not provide formal quantitative guidance in Q3 materials .

Key Takeaways for Investors

Demand headwinds in core vegan cheese and export markets drove a 21% YoY revenue decline; stabilizing cheese sales is critical to near-term recovery .
Gross margin retraced to 24% (from 29% in Q2), pressured by lower volumes and higher promotional activity; margin recovery likely hinges on volume improvements and reduced promo intensity .
Liquidity tightened (cash $176K; WC $2.961M), but management expressed confidence in sufficiency of cash resources and improving working capital by year-end; monitor cash trajectory through Q4 .
Expense control is mixed: Q3 OpEx was roughly flat YoY, but lower revenue magnifies operating losses; focus on balancing promotion spend with margin protection .
Seasonality historically favors Q2–Q3; with Q3 softer, execution in holiday/Q4 will be an important signal for 2025 trajectory .
No formal guidance and no call limits near-term transparency; trading catalysts center on evidence of sales replacement, promo normalization, and liquidity stabilization communicated via subsequent filings/updates .

Supporting documents and data: Q3 2024 press release and 8-K (including Item 2.02 and financial exhibits) , Q2 2024 press release , Q1 2024 10‑Q (financials, MD&A, disclosure controls) .

TOFUTTI BRANDS INC (TOFB)·Q3 2024 Earnings Summary