Arcadia Biosciences, Inc.

Good afternoon and welcome to Arcadia Biosciences first quarter 2023 financial results and business highlights conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to T.J. Schaffer, Chief Financial Officer at Arcadia. Please go ahead.

Thank you, and good afternoon. Joining me on the call today is Stan Jaycott, Arcadia's President and Chief Executive Officer. This call is being webcast and you can refer to the company's press release at arcadiabio.com. Before we start, we would like to remind you that Arcadia Biosciences will be making forward-looking statements on this call based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, the company's actual performance and results may differ materially from those described or implied today. You can review the company's safe harbor language in our most recently filed 10Q. With that, I'll now turn the call over to Stan.

Good afternoon, everyone, and thank you for joining us for our 2023 first quarter conference call. Today, I want to focus my remarks on three primary areas. One, the progress we made in the first quarter of 2023. Two, an update on good wheat pasta and Zola coconut water. And three, insights into Project Greenfield and our path to profitability. First, let's start with our Q1 progress. As you have discussed on prior calls, Arcadia is focused on generating revenues that are profitable as opposed to revenues at any cost. We are intensely focused on finding ways to grow high-quality revenues and minimize our costs without negatively impacting consumers or our customers. We will not chase empty top line or value destroying revenue. This is a core principle behind Project Greenfield and ensures that we are maximizing our resources and improving the return on our scaling investment. The impact of this focus is clearly seen in our Q1 results as well as the results of recent quarters. And while the high quality revenues in Q1 2023 are substantially less than the low quality revenues in Q1 last year, The result is a more than $900,000 improvement in gross profit dollars. These gross profit dollars were the main contributor to a $575,000 improvement in the loss from operations. And we continue to invest in trial driving and brand building activities, which are up 43% compared to Q1 last year. This investment is primarily supporting the expansion of Good Wheat Pasta to new consumers and customers while we prepare to launch into new categories during the second half of 2023. Which leads to the next topic, an update on Good Week Pasta. The pasta category continued to expand in the first quarter of 2023. Based on Nielsen data for the 13 weeks ending April 1st, unit sales were down 1% while dollar sales rose 12%, driven by pricing action across the category. Looking at the last 52 weeks, units grew 2% while dollar sales increased 21%, leading to category sales of $3 billion. Good Wheat has consistently added distribution in hundreds of stores every quarter, and Q1 2023 was no exception. Retailer acceptance of Good Wheat continues to grow, and we are targeting many large 1,000-store-plus retail chains as they plan their annual shelf resets in Q3 and Q4. Importantly, We also have seen an increase in consumer pull during Q1 2023. Our newer retail accounts with lower everyday pricing have seen good week velocity surpass many competitive Better For You brands, and display programs have been a key lever in driving trial. Execution is underway to convert all current retailers to this model, and we expect newly added retailers will follow the same playbook as they come on board in the second half of 2023. And our Goodreads Pasta continues to collect accolades from trusted sources. In addition to being the only traditional pasta with the American Heart Association Heart Check certification, Goodreads Pasta has now received the Best New Pasta Award by the Retail Dietitians Business Alliance, which is a network of registered dietitians serving over 1,000 retailer-employed dietitians throughout the US and Canada. Our Goodreads Pasta beat out submissions from multibillion-dollar food companies such as Hershey's, General Mills, and Mars Wrigley. No other new product came close to our combination of great taste and nutrition. And according to an International Food Information Council survey from May 2022, consumers report that a conversation with a registered dietitian nutritionist is the most trusted source of information on foods to eat or avoid. So, with expanding store count, improving velocity, and award-winning product performance, we feel that we have just started scratching the surface of good wheat's potential. Moving now to Zola coconut water. The coconut water category was flat in units and a 16% increase in dollars for the 13 weeks ended March 25th, with pricing continuing to be the primary driver of category growth. For the last 52 weeks, Units declined 8%, but sales were up 10% to $443 million. In the first quarter, Zillow continued to be impacted by the distribution losses I referenced in the last call. We expect these distribution and velocity headwinds in grocery to continue for the next couple of quarters while we present the new grocery retailers for their annual shelf resets in Q3 and Q4. We also plan to launch product and packaging innovation during the second half of this year to drive expansion into new channels beyond grocery And we will share more details with you as we move closer to launch. Despite the distribution headwinds, we have seen improvement in gross profit margins for Zola due to the 2022 price increase and supply chain cost savings. In fact, despite Zola's revenues in Q1 2023 declining 6% compared to a year ago, Zola's gross profit dollars this year are three times higher than last year, further reinforcing our focus on revenue quality. I mentioned innovation on both brands, and I wanted to finish my remarks by linking the importance of innovation to Project Greenfield. As you might recall, Project Greenfield is our three-year plan to unlock the company's potential and create a path to profitability. Project Greenfield aligns the company's resources around solid, achievable goals to drive shareholder value, including, one, Goodreads retail expansion through both innovation and acquisition, two, driving growth of our core brands and partnerships, and three, maintaining an agile organization to cultivate next-generation wellness products that make every body feel good inside and out. We are just starting year two of the three-year path to profitability, and this is the year that category and channel expansion are planned. Over the next year, Project Greenfield calls for the launch of two incremental categories with our proprietary wheat technology, as well as entering an additional wheat-based category through acquisition. along with Zola's channel expansion, will generate the opportunity for exponential revenue and gross profit dollars in year three of the strategy. The innovation launches and acquisition targets will follow the investment criteria that we have outlined before. One, is there an opportunity to grow? Does the existing Better For You segment have at least a 20% market share? Can our product match the leading brand in the category and be preferred to the Better For You brand? Two, Can we scale without adding significant capital? Have we identified co-packing partners that have capacity and the highest quality standards? Three, can we be profitable? Is there space for premium pricing? Can we improve gross margins as we scale? This disciplined approach ensures the entire team is focused on creating and acquiring businesses that can win in the marketplace and profitably grow share of the $10 billion of total annual consumer spend in these categories. For competitive reasons, we will wait to share the next Goodreads launch category until our next call. With that, I will turn the call over to TJ to discuss our Q1 financial results. TJ?