RGF: Reports Third Quarter 2023 Financial Results

Cherry Hill / NJ. (rgfc) The Real Good Food Company Inc., an innovative, high-growth, branded, health- and wellness-focused frozen food company, reported preliminary financial results for its third quarter ended September 30, 2022. Third Quarter 2023 Highlights:

• Preliminary net sales in the third quarter are expected to increase in the range of 46 percent and 52 percent, as compared to the same quarter last year, to a range of USD 55 million and USD 57 million.
• Preliminary estimated adjusted gross margin is expected to increase by 7 percent to 11 percent year over year.
• Preliminary Adjusted Ebitda in the third quarter is expected to increase in the range of USD 0 million and USD 2 million, as compared to a loss of USD 3.8 million for the same quarter last year.

Preliminary Financial Results for the Quarter

For the three months ended September 30, 2023, the Company’s preliminary estimated net sales are expected to be between USD 55 million and USD 57 million, an increase in the range of approximately USD 17.5 million to USD 19.5 million, or 46 percent to 52 percent as compared to net sales of USD 37.6 million for the three months ended September 30, 2022. This is lower than the Company’s previously announced guidance for the third quarter 2023 of expected net sales of USD 60 million to USD 65 million. The Company’s sales growth was not able to keep up with consumption growth in the quarter owing to the sharper than expected increase in consumption and it being more heavily weighted towards the back end of the quarter than expected. For the three months ended September 30, 2023, total consumption of the Company’s branded products increased by 90 percent year over year and 76 percent quarter over quarter, outpacing shipment growth of 50 percent and 58 percent over the corresponding period, respectively. This gap between consumption and shipment growth was the largest in the Company’s history, and as a result, retailer inventories are low at the end of the quarter. In addition, customer order activity was more heavily weighted toward the back-end of the quarter with open orders in September 2023 representing a three times increase over July 2023.

For the three months ended September 30, 2023, the Company’s preliminary estimated adjusted gross margin is expected to increase by 7 percent to 11 percent year over year as a result of improved plant operating efficiency, lower labor costs, and, to a lesser extent, a decline in certain commodity prices. In addition, the Company’s preliminary estimated adjusted Ebitda for the three months ended September 30, 2023 is expected to be between USD 0 million and USD 2 million, an increase compared to a loss of USD 3.8 million for the three months ended September 30, 2022.

For the three months ended September 30, 2023, the Company’s preliminary estimated cash flow before debt service is expected to be USD (2.2) million, an USD 8.6 million improvement as compared to the corresponding period in 2022. In addition, the Company also estimates that, as of September 30, 2023, it will have a cash balance of approximately USD 2 million.

Outlook for the full year 2023

The Company is updating its guidance for three months and full year ending December 31, 2023:

• Net sales for the three months ending December 31, 2023 are expected to be USD 65 million to USD 72 million (down from the previously disclosed guidance of USD 70 million and USD 77 million) or approximately 83 percent to 102 percent growth as compared to the corresponding quarter in 2022
• Adjusted Ebitda for the three months ending December 31, 2023 is expected to be USD 4 million to USD 6 million
• Net sales for the year ending December 31, 2023 are expected to be USD 185 to USD 194 million (down from the previously disclosed guidance of at least USD 200 million) or approximately 31 percent to 37 percent growth as compared to 2022
• Adjusted gross margin for the year ending December 31, 2023 is expected to be at least 24 percent, which is in line with the Company’s prior guidance
• Adjusted Ebitda for the year ending December 31, 2023 is expected to be in the low-to-mid single-digit millions range (down from previously disclosed guidance of mid-to-high single-digit millions range)