Better Choice Company Inc.

And welcome to the Better Choice 2024 Third Quarter Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one. To remove yourself from queue, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Walter Pinto with Investor Relations. Please go ahead.

Thank you, Operator, and welcome everyone to the Better Choice Company third quarter 2024 earnings call. Today's call is being recorded. Joining me today are Kent Cunningham, our Chief Executive Officer, and Nina Martinez, our Chief Financial Officer. Our earnings release has been posted to the Investor Relations section of our website and will be followed by our Form 10-Q to be filed with the SEC. Please note that remarks made today may include forward-looking statements subject to various assumptions, risks, and uncertainties. The company's actual results may differ materially from those contemplated by such statements. For a more detailed discussion, please refer to the note regarding forward-looking statements in the company's earnings release and SEC filings. Also during the call today, we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP items to the most directly comparable GAAP financial measures will be provided on the company's earnings release and made available on the investor section of the company's website. I would now like to turn the call over to Kent Cunningham, Chief Executive Officer of Better Choice Company.

Thank you, Walter, and good afternoon, everyone. So the main message I'd like you to take away today is that our business continues to improve based on the strategic pivots we've made, and that we're beginning to establish operational consistency and executional discipline that's enabled us to significantly improve margins while resetting the business for sustained, profitable growth. Our objective in 2024 was to step change profitability, generate cash, and create a new long-term strategy for disciplined growth. If we're successful in those endeavors, it's a win for our shareholders, our customers, and ultimately our halo consumers. For the third quarter of 2024, we exceeded our internal projections across all key financial metrics. I want to call out a few highlights from the quarter, and then Nina will provide more detail on the financial results. We generated 33% quarter-over-quarter sales growth to $11.4 million, improved growth margin for the third consecutive quarter to 40%, and achieved the company's first profitable quarter in years at just north of $200,000 of adjusted EBITDA. During the quarter, we also improved average fill rates to 97% and reduced inventory by 48% year over year. That's a testament to the team's operational discipline and the improved S&OP process we've implemented. The most encouraging Q3 outcome for me was the double digit year over year growth we saw across our primary digital customers. We increased new to brand consumers by 23% since last quarter on our second largest digital platform, while delivering a 20% quarter-over-quarter increase in repeat units. That's consumers coming back to the Halo brand on the largest e-commerce platform in the category. This gives us confidence that our marketing shifts are paying off by adding new consumers and that our product performance is delivering by generating more repeat consumers. In our international channel, we generated 9% year-over-year growth with particularly strong performance across our Asia-Pacific customers. We're excited about this once-in-a-generation demographic shift that's occurring in Asia, where the pet food market's experiencing rapid growth. In China, for example, the number of pet-owning households has doubled in the last five years, with younger pet owners driving much of this growth. We believe this demographic shift represents a tremendous opportunity to expand our footprint in one of the largest and fastest-growing pet food markets globally. Along with strong consumer tailwinds, Increased forecast accuracy and a corresponding fill rate improvements contributed to our growth, getting the right products to the right place at the right time. While we're pleased and encouraged by our progress, we recognize there is still work to be done and firmly believe there's significant growth upside that we can deliver in the future. We want to see continued growth in our top line here at home domestically and across our key international markets while we drive additional operational efficiencies to fuel that growth and further improve profitability. I believe we're making good progress proving that we can consistently deliver improved operating results, and we're committed to reliably delivering on future growth. Sustained, profitable growth will be the result of our strengthened operational and organizational capabilities, renewed focus on key customers and markets, and improved brand building efforts as we move forward. We're increasingly confident that we can continue to build on this type of performance and deliver shareholder returns.