Arcadia Biosciences, Inc.

Good afternoon, and welcome to Arcadia Biosciences' fourth quarter and full year 2024 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'll 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 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mark Kawakami, Chief Financial Officer at Arcadia. Please go ahead.

Thank you and good afternoon. Joining me on the call today is TJ Schaefer, 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-K. With that, I'll now turn the call over to TJ.

Good afternoon. And thank you for joining us today to discuss our 2024 fourth quarter and full year financial results. The year 2024 represented the culmination of a multi-year plan to put Arcadia on a path to profitability, and I am extremely pleased with the progress we have made. Over the last two years, we have exited underperforming body care brands in an effort to simplify our business and focus our resources on our most promising brands. In mid-2024, we seized on an opportunity to monetize a portion of our wheat intellectual property portfolio through the sale of a trait as well as the Good Wheat brand of wheat products, which provided non-dilutive capital while significantly reducing our operating expenses. Today, we are a leaner company that is solely focused on growing our Zola coconut water products, and we are delivering what we said we would deliver. In May 2024, on the special investor call following the sale of Good Wheat assets, we provided the following guidance for 2024. We said full year revenue would essentially be in line with the $5.3 million we reported for full year 2023 prior to the sale of Good Wheat, that our gross profit dollars would be above $2 million, with gross margins in the low 40s, and that our R&D and SG&A expenses would have a quarterly run rate of around $2 million in the second half of the year. The results we are reporting today illustrate the successful execution of our strategy with full-year revenues of just over $5 million, gross profit of $2.1 million, and gross margins of 41.3%. Our reported R&D and SG&A expenses in the second half of 2024 were $4.9 million, which resulted in a higher quarterly run rate than our previous guidance as we incurred approximately $1.2 million of transaction-related fees in the second half that we did not anticipate in May when we provided guidance. But there is an even better story deeper below the surface of the full year numbers, and that is one of momentum. If I were speaking about Arcadia in 2024 using a sports analogy, we would be described as a second half team. In the first half of 2024, Arcadia sales declined 4% year over year. But in the second half of 2024, Arcadia sales grew 32% despite the fact that our GLA business was down 60% in the second half compared to prior year as we sold through the remaining inventory. The significant change in our business was driven by the tremendous amount of momentum with Zola, which grew revenues 16% in the first half of 2024 and 80% in the second half of 2024 as a result of the significant distribution gains in the second half by this hyper-focused team. In fact, in the fourth quarter alone, Zola sales increased 124% compared to the fourth quarter of last year. But the second half story is more than just a revenue story. While our consolidated Arcadia revenues increased more than 30% during the second half, our use of operating cash decreased 30% in the second half compared to the first half of 2024, consistent with our strategy of profitable growth that we have previously discussed. In fact, there were several opportunities for Zola to secure even more distribution during the year, but we walked away from several opportunities that did not meet our profitability target. For full year 2024, Zola sales increased 46% compared to the previous year, primarily driven by the new distribution I mentioned earlier. In 2024, we added more than 1,600 new stores and grew our retail distribution by 86%, resulting in the best annual performance for Zola since Arcadia acquired the brand in May 2021. From a gross margin standpoint, Zola gross margins in 2024 were 33%, which is consistent with the guidance we provided previously of margins in the low to mid 30s. The success we experienced in 2024 has resulted in Zola growth that is outpacing the coconut water category by more than two to one across all measured time periods. And this is a very healthy category where full-year growth in 24 was double the growth experienced in 2023 as consumer preferences shift to healthier beverages such as coconut water. Based on Nielsen data for the four weeks ending December 28, 2024, the shelf-stable coconut water category in grocery grew 28.7%, while Zola increased 73.7%. During the latest 13 weeks, the category rose 29.2% compared to Zola growth of 71.8%. And for the full year, the category grew 18.5% while Zola increased 38.5%. As a reminder, when we provide Nielsen data, the numbers refer to scan data, which is products sold through to the end customer. As a result, our reported Zola sales growth of 46% differs from the Nielsen number of 38.5%, as some product could still be in distribution centers or on store shelves. So in summary, 2024 was a tale of two stories. In the first half, the focus was on right-sizing the business and positioning Zola for success. The second half was about executing on our strategy, driving growth in Zola, and delivering on the commitments we made earlier in the year. As we begin 2025, we believe that Zola has significant momentum based on the new distribution that was put in place in the back half of 2024, as well as a pipeline of new opportunities to drive additional growth in the future. Before I turn the call over to Mark, I want to provide an update on the pending transaction with Roosevelt Resources. But before I begin, I want to state up front that the comments I can make today will be limited. For further information and discussion, I would refer you to our form S4 registration statement that has been filed with the Securities and Exchange Commission. Having said that, as you are all aware, on December 5th, 2024, we announced that we had entered into a definitive securities exchange agreement with Roosevelt Resources, a privately held oil and gas exploration and production company based in Dallas, Texas. As I mentioned previously, we filed a registration statement on Form S-4 with the SEC on February 14, 2025, related to the proposed share issuance and a stockholder meeting to vote on certain proposals relating to the transaction. As is customary in these types of transactions, the SEC can provide multiple rounds of comments on the matters included in the registration statement. Once we complete the review process and the registration statement has been declared effective by the SEC, we intend to distribute proxy materials to our stockholders to vote on proposals relating to the transaction. Given the timing of the initial filing, as well as various actions required to go through the SEC review process, we currently expect the transaction to be completed towards the end of Q2. With that, I will now turn the call over to Mark to discuss our 2024 Q4 and full-year financial results. Mark?