Arcadia Biosciences, Inc.

Good afternoon, and welcome to Arcadia Biosciences' second 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 that session, you will need to press star 1 1 on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded, and I would now like to hand the conference over to T.J. Schaefer, 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 10-Q. With that, I'll now turn the call over to Stan.

Good afternoon, everyone, and thank you for joining us today for our 2023 second quarter conference call. I am pleased to report that Arcadia continues to make progress in executing Project Greenfield, our three-year strategic plan to unlock the company's potential and provide a path to profitability. Both GoodWeed and Zola added hundreds of stores of distribution in Q2, and excluding the managed decline of body care, top line revenues would have experienced a second consecutive quarter of sequential growth. Importantly, costs are being aggressively managed as evidenced by our lowest total operating expenses since Q4 of 2020. But we are not satisfied, and I want to spend the time today sharing our plans to scale more quickly while simultaneously reducing expenses and complexity. Together, These initiatives have the potential to accelerate project greenfield milestones. Let's start with how we plan to scale revenues more quickly. For Good Wheat Pasta, there are two key programs which are expected to drive growth in the second half of 2023. Last quarter, I discussed that Good Wheat Pasta is experiencing higher velocities than many competitive better-for-you brands in our newer accounts that have lower everyday pricing. So, we have completed actions to lower prices in all our remaining accounts. in order to be more competitive, and these new prices will be showing up at shelf in Q3. This reduction took place through a variety of mechanisms, ranging from price cuts to deeper or more frequent promotional activity. In total, we expect the impact of the price reduction to be offset by higher volumes. The second program is a shift in our marketing message to highlight the great taste of good wheat pasta. Many people do not like the taste of high-fiber foods, and GoodWeed is the only brand that can sneak health into families' favorite foods without changing their taste. In fact, we are so confident in the taste and texture that we are rolling out a taste guarantee. You'll love it or your money back. This message will be delivered across our marketing stack beginning in September, including through new social media influencers that will amplify our reach. The combination of these two programs will also unlock new distribution at larger retailers, as we have received feedback that they loved our brand and loved our product, but they want to see more impact in market. The second scale initiative was announced on July 17th, where we announced that GoodWeat is launching into the breakfast category with new, better-for-you pancake and waffle mixes, as well as single-serve quick cakes. Launching just in time for back to school, the new pancake mixes are made with simple ingredients, and Arcadia's proprietary non-GMO wheat flour, which delivers the same taste and texture of regular pancakes, but sneaks in more fiber and protein than traditional wheat flour. In product testing, consumers prefer the taste of good wheat pancake mix two to one versus the leading better-for-you pancake mix. Good wheat pancake and waffle mixes will be sold in refillable multi-serve pouches with each serving delivering eight times the fiber of traditional pancake mix and five grams of protein. They will be available in three classic varieties for the whole family, including buttermilk, chocolate chocolate chip, and apple cinnamon. In addition to the multi-serve pancake and waffle mixes, Goodweed is also launching Quick Cakes, an innovative single-serve instant pancake. Quick Cakes are a great option for busy mornings. Simply pour one packet into a bowl add water, and microwave for 75 seconds for a hot, fresh pancake. No freezer burn, easy cleanup, and the retail price is roughly half of existing single-serve pancake cups. Quick Cakes have 11 times the fiber of traditional single-serve pancake cups and contain seven grams of protein per serving. Quick Cakes will be sold with five individual two-ounce packets per carton and will also be available in three flavors, buttermilk, chocolate chocolate chip, and confetti. We believe that adding another day part with pancake and waffle mixes is a perfect complement to our existing pasta lineup. Pancakes are a beloved classic in every household, and mixes represent an $850 million category, with better-for-you nutrition and protein-forward options seeing the highest rates of growth. Our quick cakes are currently available nationwide after launching August 1st on Amazon. Both quick cakes and multi-serve pancake and waffle mixes began shipping to customers this month, and interest has been strong. Retailers recognize our innovative proposition, and we expect to gain distribution in more than 600 stores by the end of Q3. Shifting now to our third scaling initiative, which is accelerating growth of Zola coconut water. Last quarter, we discussed the distribution and velocity headwinds in the coconut water category, and I am pleased to report that Q2 marked the beginning of a turnaround. Zola grew distribution in Q2, reversing a multi-quarter decline in store count. We have also seen great success in adding racks in the produce category, driving velocity in high-traffic accounts, and innovation is ramping up on the brand for the first time in years with new launches planned for Q1 2024. Zola continues to be a focus for us, and we expect these programs to grow distribution and velocity in the category. Finally, I want to address the last scaling initiative, the strategic review announced on July 20th. which stated that Arcadia would explore a range of strategic options, which could include an asset sale, acquisition, merger, sale, or other strategic transaction. As we have mentioned previously, our strategic plan calls for an acquisition that would allow us to bring the good wheat value proposition to an existing brand in a new wheat-based category. There are many categories in the grocery aisle where our proprietary wheat can provide significant differentiation And we believe there is a tremendous opportunity to scale our business faster by purchasing an existing brand in a different category that already has broad shelf placement and established distribution. While we have narrowed the field of target acquisitions, we have also received several inquiries from parties interested in a larger merger. So we feel that this is the right time to explore the myriad of options with an objective banking partner, especially after closing the second quarter of 2023 in an excellent cash position. However, we must point out that there can be no assurance that this exploration of strategic alternatives will result in the company entering or completing any transaction, and no timetable has been set for the conclusion of the strategic review. We will keep you updated as material events occur. Let's transition now to reducing costs and complexity. We have made the decision to streamline our operations and exit our remaining body care brands, ProVault and SoulSpring. in order to focus our resources on our most promising opportunities on Good Wheat and Zola. We were unable to find an interested buyer given the severely depressed market for CBD products. As a result, we continued to sell through our existing inventory during the first half of the year and officially notified retailers in Q2 that we planned to exit the business. We are running closeout sales on our websites to drive additional purchases and we expect any future write-downs to be minimal. As part of the reduced workload by exiting body care, we made the decision to combine functions and reduce headcount by 25%. These organizational changes were necessary to keep us on the path to achieving our Project Greenfield milestones and extending our financial runway. There have been additional cost efficiencies as a result of right-sizing our organization, and the combined changes will result in operating expense savings of $2 million in the remainder of 2023, and $3 million to $4 million annually. With that, I will turn the call over to TJ to discuss our Q2 financial results, as well as provide additional detail around our cost savings initiatives. TJ?