Stryve Foods, Inc.

Good afternoon, ladies and gentlemen, and welcome to Strive Foods Inc. fourth quarter and year-end 2023 earnings call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star-zero operator assistance at any time. I would now like to turn the conference over to Will Pugh. Please go ahead.

Thank you, Operator, and welcome to the Shrive Foods Fiscal Year 2023 Earnings Conference Call. With me today are Shrive's Chief Executive Officer, Chris Beaver, and Chief Financial Officer, Alex Hawkins. Before we begin, I would like to remind everyone that part of our discussion today will include forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1980. Forward-looking statements, by their nature, are uncertain and outside of the company's control. Actual results could differ materially from these expectations. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We do not undertake to update these forward-looking statements at a later date, and they only refer to today. In addition, today's call will include a discussion of non-GAAP financial measures, including adjusted EBITDA and adjusted EPS. Non-GAAP financial measures should be considered as a supplement to and not a substitute for GAAP financial measures. We refer you to the reconciliation of non-GAAP to the nearest GAAP measure included in today's earnings press release for further detail. This call has been webcast and can be accessed through the audio link on the news and events page of the investor section at ir.strive.com. Also, the earnings press release is posted on our website, and a copy of the release has been included in the form 8K submitted to the SEC. With that, I would now like to turn the call over to Chris Beaver. Chris?

Thanks, Will. Good afternoon. I want to start by acknowledging the incredible journey Strive Foods has embarked on throughout the last 18 months and recognized the incredible efforts and progress by the team. Reflecting on our fiscal 2023 year, we have navigated through a transformation that now has our company on a solid foundation, one that has been right-sized with structural improvements across the enterprise, a foundation that is positioned and energized to deliver against the enormous potential in front of us. This year has been pivotal for our long-term strategy, designed to position and prepare us for our next phase, which is delivering profitable growth. Our team's dedication has translated into tangible achievements, which underscore our potential and the strength of our business model. I am encouraged by the progress and highly confident in our future. We simplified our organization and portfolio. We implemented pricing actions and now have our unit economics in position to accelerate profitable growth. We completed an important project focused on product quality, addressing the entire process, including packaging. We are focused on delivering the very best consumer experience, ensuring high confidence in repeat purchases and consumer loyalty. As a reminder, we are the first to market. USDA-certified manufacturer of air-dried beef, a truly innovative manufacturing process that delivers game-changing consumer benefits. Our products deliver 50% more protein than the leading brand of beef jerky and nearly triple the protein of the leading brand of meat sticks. These are important product attributes, considering the number one reason consumers purchasing the category is protein. I am very pleased with the new and improved product quality and the consistency that we deliver each and every time. In parallel path, we developed and are now executing our new brand positioning expressed by our packaging. We are utilizing food photography, simplifying our message, ensuring the shopper can quickly and clearly identify our superior and delicious steak quality, along with the product attributes of higher protein, zero preservatives, and low to no sugar. The early indicators are extremely encouraging, as evidenced by our increasing velocity improvement of nearly 40%, as reported by SPIN. In addition, we introduced several innovative products, such as new flavors of vacadillos and formats for the Strive and Vacadillos brand. These incremental products deliver margin-accretive revenue streams and further establish us as leaders in the healthy protein snacking segment. Our operational transformation has been crucial to our overall strategy. Our MVP program, maximizing value through productivity, is delivering across all fronts, yielding efficiencies in what and how we manufacture. We have improved our conversion cost, developed a strategic and collaborative approach to procurement, lowering our unit economics and improving free cash flow. Investments in technology and process improvements have led to significant cost savings and product quality. We are now a lean, agile operation with efficiencies gained up and down the enterprise, as evidenced by the reduction in operating expenses and adjusted EBITDA improvements over the last 18 months. Do not underestimate how important it was to address quality, cost, process, and capacity in our transformation. We now have the operational foundation prepared and ready to respond to the growing consumer demand. The strategic initiatives we have implemented this year are just the beginning of our journey toward becoming a profitable, innovative, consumer-centric company. Our commitment to operational excellence combined with our focus on strategic market opportunities position us well to capitalize on the growth we expect ahead. I am incredibly proud of what we've accomplished this year and grateful for the hard work and dedication of the entire STRIVE team. Our achievements in 2023 are a testament to our collective effort and we have built the foundation 2024 is the start of a multi-year growth agenda that will leverage the operational footprint created in a manner that delivers increased velocity, increased distribution, and increased market share. Each of our brands, while unified under the Strive Foods umbrella, caters to distinct consumer preferences and occasions. The packaging redesign have been instrumental in differentiating our brand in a crowded marketplace, enabling consumers to easily identify and connect with the unique value proposition each brand offers. Strive. It emphasizes leadership and providing premium, high-protein, low-fat snacking options that fuel an active lifestyle. Eat steak. Don't be a jerky. Kalahari. celebrates its roots with flavors and textures inspired by traditional South African biltong, appealing to the adventure seeker. Hello, biltong. Goodbye, jerky. And Bacadillo captures the essence of authentic carne seca, offering a bold taste of Latin-inspired flavors with its vibrant and culturally rich packaging. Adios, jerky. Hola, steak. The implementation of these packaging redesigns is supported by our commitment to operational excellence. We streamlined our processes to ensure a seamless transition, minimizing disruption and optimizing our supply chain to meet the anticipated increase in demand. We have fully transitioned and shipping 100% of current orders in the new packaging. we estimate to be transitioned at approximately 50% at shelf, where we have fully transitioned at specific customers. Those customers, we have indications and data that show increases of velocity on the Stry brand of over 80%. The new packaging clearly is working, improving our shelf appeal and significantly boosting our consumer trial rate. Initial feedback indicates a marked increase in unit velocities, affirming the effectiveness of our strategic focus on packaging as a key driver for an acceleration of distribution leading to brand growth and market share gain. As we look to the future, the packaging redesign combined with our operational improvements form the cornerstone for accelerated growth, margin expansion, and ultimately delivering a profitable business model. We are poised to build on momentum generated and more confident than ever in our future outlook. As we pivot to operational highlights, I'm excited to share the progress and milestones we've achieved, underscoring our commitment to operational excellence and innovation. This past year has been marked by significant achievements that reflect our dedication to operational excellence and our strategic vision. We're successfully optimizing our production process, resulting in increased efficiencies and reduced costs. Our focus on supply chain optimization has certainly improved all of our fundamentals, while simultaneously unlocking more capacity. We are more agile and connected cross-functionally, providing us the ability to respond more effectively to the increasing customer and consumer demand. Our market expansion efforts are starting to reflect as expressed by our accelerating consumption data. We have made significant inroads into new customers, channels, and geographies, further establishing Strive Foods as a leader in the healthy protein snacking segment. Consumer preferences and trends continue to guide our innovation pipeline, ensuring that our product offerings meet and exceed their expectations. The operational efficiencies we've achieved this year are a testament to our team's hard work and dedication. Through targeted initiatives aimed at reducing waste and improving production line speed, we've enhanced our overall operational efficiency. These improvements will contribute to increased gross margins as we scale the business and leverage our fixed assets. We remain focused on driving continuous improvement across all aspects of our operations. Our strategic investments in technology process and capabilities are key pillars of our strategy. These initiatives are designed to further enhance our operational efficiencies, reduce costs, and support our growth trajectory, further expanding gross margins and EBITDA. In summary, The progress we've made through our strategic initiatives in 2023 underscores the resilience and potential of Strive Foods. I am incredibly optimistic about our future and remain committed to delivering the best tasting, better for you set of products the category has ever seen. We have invested a tremendous amount of resources since our inception. We find the business model and have improved every element of our organization. It is our time. to bring customers a complete category solution so our shared consumers can locate our brand in more stores to expand and grow the category and deliver exceptional value for our shareholders.

With that, I'll turn it over to our CFO, Alex Hawkins. Thanks, Chris.

As we turn our attention to the financial results for the fiscal year 2023, I want to underscore the pivotal efforts and strategic decisions that have shaped our performance during this period. We closed the year with net sales of $17.7 million, reflecting the strategic recalibration of our top line to focus on our core product offerings, generating through long-term value-enhancing quality revenue streams. While this represents a decrease of 40.9% from the $29.9 million reported in 2022, As we've discussed on several occasions, a key part of our transformation strategy was the strategic rationalization of low-quality revenue. The benefits of those rationalization efforts are seen throughout the business. But simply put, we were able to reduce our adjusted EBITDA loss this year by $13.3 million. It's not often you see a company take out over 40% of its annual sales, and still improve its bottom-line results, with adjusted EBITDA loss dropping by 52.9%. That just speaks to the low-quality nature of the rationalized sales, as well as to the ingenuity and resilience of the organization to transform into a profit-focused business. Net sales in the fourth quarter of 2023 came in at $2.9 million. But the quarter isn't perfectly comparable to the prior year period, nor to the prior quarters. Not only did we see continuing effects of our rationalization efforts, we also increased our trade accruals, executed liquidation sales of our slow-moving and obsolete inventories, both of which affected net realized price in the quarter. Additionally, as we've seen great success with our new packaging on shelf, we worked closely with several of our key partners to phase out the legacy items and to transition fully to the new packaged items. This resulted in some irregular flows in the quarter as the retailers and distributors sold through legacy SKUs in their inventory ahead of January 2024 launches of the new items in many places. Now in 2024, since that transition, we are seeing significantly improved retail velocities at these retailers that have exceeded even our expectations. Back to the full year results. our gross profit turned positive at 2.4 million, a notable improvement from a gross profit loss of 0.7 million in 2022. This improvement stems from the strides we made in pricing year over year, as well as strategic enhancements to our supply chain and manufacturing processes, which reduced our per unit costs. Now, given that we are vertically integrated, our plant and labor Our plant labor and overhead carry a certain amount of fixed costs that can impact our gross margin performance. So, the rationalization efforts which brought down our manufacturing volumes led to underabsorption of those fixed manufacturing costs, weighing on our margins. But despite that effect, we still showed significant year-over-year improvements. And as our volumes scale throughout the year in 2024 and beyond, we would expect to see better absorption and even more gross margin expansion. In 2023, we made tremendous progress in streamlining our operating expenses, which were reduced to 17.9 million, down 43.2% from the 31.5 million in 2022. This is a testament to our transformational efforts across the organization. Not only do we find significant savings at the start of this transformation, but each quarter since we've been able to identify more to further streamline our operations and advance our productivity agenda. Ultimately, the net loss for 2023 was reduced to $19 million from 33.1 million in 2022, an improvement of 42.6% year over year. Throughout 2023, we executed several strategic initiatives aimed at strengthening our financial position and setting the foundation for future growth. The optimization of our product portfolio coupled with significant efforts in packaging redesigns and operational efficiencies has been central to our strategy. These initiatives not only enhanced our brand appeal, but also improved our cost structure and market competitiveness. As we look ahead, we are focused on leveraging the progress we made in 2023 to drive sustainable growth and improve profitability. Our strategic investments in innovation, brand development, and market expansion are designed to capitalize on the growing demand for healthy snacking options and deliver long-term value to our shareholders. Continuing our discussion on the financial performance overview, let's shift our focus to the balance sheet, liquidity, and significant financing arrangements that underscore our strategic approach to navigating the liquidity constraints typical in a transformation such as ours. Our cash and cash equivalents at year end stand at $0.4 million, reflecting our careful cash management practices and operational effectiveness and efficiencies achieved throughout the year. Our liquidity is further supported by our asset-based line of credit and other credit facilities. Furthermore, in 2023, our inventory management has been a key tool to optimize our liquidity. We significantly enhanced our ways of working connecting supply and demand to ensure we maintain a healthy balance of stock levels aligned with demand forecasts, contributing to our operational agility. Doing so throughout the year allowed us to generate over $3 million of cash from the drawdown of our excess inventories. I am pleased to announce a development in our financing arrangements as well. We have successfully renewed our asset-based credit facility with Alterna Capital, extending it beyond its original maturity of September 2024 for a new two-year term. The new maturity of the facility is March 2026. This renewal is a testament to the confidence our financial partners have in our business model and our strategic direction. It provides us with continued financial flexibility to support our operational needs and strategic growth initiatives. Additionally, we have successfully negotiated a 12-month extension of the bridge notes from April 2023, which were initially set to mature at the end of last year. We extended their maturity to December 2024. This extension reflects our financial partners' continued support, ensuring that we have the necessary runway to execute on our strategic plans without immediate financial pressures. In another strategic financial move, we have terminated the at-the-market equity facility we had in place with Craig Hallam as of March 2024. This decision aligns with our strategy to manage our equity more efficiently and reflects our commitment to utilizing our financial instruments in a manner that best supports our long-term value creation for shareholders. These developments not only reflect our ability to effectively manage our financial resources, but also the strength of our relationships with our financial partners. They provide us with a solid foundation to pursue our strategic objectives, ensuring we have the financial stability and flexibility to adapt to market dynamics and capitalize on growth opportunities moving forward. In 2024, our focus remains on growing the business the right way, maintaining a disciplined approach to spending, ensuring we have access to attractive sources of liquidity, and managing our debt responsibly. We are committed to the financial stewardship that supports our strategic goals and drives shareholder value. Now, let's turn our attention to our forward-looking financial guidance for the upcoming fiscal year. Our guidance reflects not only the strategic progress we've made, but also our confidence in the trajectory of Shrive Foods as we continue to execute on our growth strategy. For the fiscal year ahead, we are projecting net sales to be in the range of $24 million to 30 million. This guidance is based on our expectations of volumes accelerating each quarter. A significant advancement in our gross margins year-over-year this year is also anticipated. Consistent with the previous commentary, we expected this progress to be primarily driven by the anticipated volume increases projected each quarter, which will more effectively absorb our fixed cost of production. In addition to increased volumes, our ongoing efforts to enhance operational efficiencies and manage costs are central to achieving these improved gross margins. The operating leverage derived from increasing volumes each quarter, coupled with advancing gross margins, positions us to approach an adjusted EBITDA breakeven point in the fourth quarter of this year should we reach the higher end or exceed our net sales guidance range. absent any externalities or unforeseen fluctuations in beef prices. This outlook underscores our strategic focus on achieving profitability through disciplined growth and operational excellence. Our guidance reflects a balanced view of our growth opportunities and the operational challenges we navigate. We remain committed to executing our strategic plans, driving operational efficiencies, and leveraging market opportunities to achieve sustainable growth and improve financial performance. As we move forward, we'll continue to monitor market conditions, consumer trends, and operational metrics closely, ready to adjust our strategies as needed to meet our financial goals and deliver value to our shareholders. In conclusion, as we reflect on the past year and look ahead, our financial guidance and strategic initiatives are set against the backdrop of operational improvements, market expansion, and innovative packaging solutions to drive further growth. The journey we've embarked on is one of transformation, with clear focus on driving sustainable growth, improving profitability, and enhancing shareholder value. Our projected net sales range, the anticipated advancement in gross margins, and our path to an adjusted EBITDA breakeven are all testaments to the strength of our strategy and the dedication of our team. These are not just numbers. They represent the tangible outcomes of our collective efforts and strategic decisions. My commitment is to continue steering our financial strategy with prudence, agility, and forward-looking perspective. We are poised to navigate the challenges and seize the opportunities that lie ahead with a solid financial foundation that supports our ambitious growth objectives. I want to thank our shareholders, customers, and especially our Strive team for their continued support and belief in our mission. Your trust fuels our determination to achieve our goals and to drive Strive Foods to new heights. With that, I'll turn it back to Chris, our CEO, to share more about our strategic vision and exciting opportunities ahead. Chris? Thank you, Alex.

As we reflect on the operational milestones achieved and the solid financial foundation we've built, it's crucial to look forward and articulate the strategic vision that will guide Strive Foods into the future. Our strategy and outlook, are grounded in our commitment to innovation, operational excellence, and market leadership and healthy snacking. Our strategic priorities for the upcoming year are designed to accelerate growth, enhance profitability, and solidify our market position. Key focus areas include, one, enhanced operational efficiencies. Operational excellence remains a cornerstone of our strategy. We will continue to invest in process improvements, technology, and talent, to drive efficiencies and further reduce costs. Two, expanding market presence. Building on our existing partnerships and distribution network, we will grow the core and expand our reach both domestically and internationally, targeting new channels and segments. Three, continuing product innovation. We will persist in our effort to innovate across our product line, ensuring we meet the evolving needs of our consumers with healthy, high-quality snacking options. The healthy snacking industry is poised for growth, in particular, the protein snacking segment, driven by increasing consumer awareness and demand for nutritious and convenient snacking options. As a pioneer in this space, Fry's Foods is well-positioned to capitalize on these trends. Our commitment to quality, execution, and sustainability aligns with the expectations of today's consumers and sets us apart in a competitive market. Our goals for the coming year are ambitious yet achievable, reflecting our confidence in our strategic plan and our team's ability to execute. First, achieving sustainable revenue growth. We are committed to achieve accelerated and sustainable revenue growth through strategic market expansion, product innovation, and enhancing our brand penetration delivering approximately a range of 35% to 70% growth, accelerating as the year progresses. Two, continued improvement in bottom-line results. With a clear path to profitability outlined, our efforts will be geared towards improving gross margins and achieving adjusted EBITDA break-even by the end of the year, as highlighted in our financial guidance. Third, strengthening brand loyalty. we aim to deepen our connection with consumers, building brand loyalty through expanding distribution, delivering high quality, great tasting consumer experiences, increasing engagement and advocacy. In conclusion, the strategy and outlook for Strive Foods are both ambitious and grounded in a realistic assessment of our opportunities. With a clear strategic direction, a dedicated team, and a strong operational and financial foundation in place, I am extremely excited and confident about our future. We are committed to driving value for our shareholders, delighting our customers, and making a positive impact on the communities we serve. I want to express my gratitude to each of you for joining us today. Through the course of this call, we've shared a comprehensive overview of the progress on our transformation performance in fiscal year 2023, highlighting the operational improvements made, the strategic financial management we have in place that has solidified our foundation, and support the forward-looking growth strategies that will propel us into a profitable future. Our achievements this past year reflect the resilience, creativity, and dedication of our entire team. Every step we have taken has been with a clear focus on driving sustainable, profitable growth and enhancing shareholder value. We are poised to capture the exciting opportunities that lie ahead with a robust yet simplified strategic plan, passionate team, and a relentless focus on execution. I am confident in our ability to achieve our goals. Our journey is one of transformation, growth to profitability, and while we have made meaningful progress, In many ways, we are just getting started. As we move to the Q&A session, I want to thank our shareholders, customers, and the Strive Foods team for your support and belief in our mission. Your commitment, passion, and partnership fuel our ambition and raise my confidence levels. With that, I'll turn it over to our operator to begin the Q&A. Thank you again for your continued support and interest

and thrive foods. Operator?

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchstone phone. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the two. If you're using a speaker phone, please lift the handset before pressing any keys. Once again, that is star one should you wish to ask a question. Your first question is from Alex Furman from Craig Helm. Please ask your question.

Hey, guys. Thanks very much for taking my question. The first thing I wanted to ask about was the new packaging. Can you give us a little bit of an update of that? how long that new packaging has been out in the market at different retailers and different channels. It sounds like it was kind of phased in a little bit over time. And can you give us a little bit of a sense of what's really been the bigger driver of velocity? Because I think you mentioned the new packaging is helping to attract some new first-time trials, given the messaging and the food photography. Curious, you know, if you've also seen higher repeat ordering, from customers now that you have the foil bags and a little bit more of a consistently moist product as well, or if you've been able to learn anything about repeat ordering, maybe from your direct-to-consumer channel?

Yes. Thanks, Alex, and thanks for the question. It is incredibly exciting to see some of the initial response to the packaging. With our go-to-market route to market, if you will, utilizing many different forms of distributors, wholesalers, and then some customers that actually buy and purchase directly from us, we get a staggered implementation at retail. Many of the distributors carry a fair amount of inventory, and then the velocity and turns at certain, you know, classes of trade aren't all equal. So, therefore, we see a staggered response at the shelf level. from the implementation execution. What's extremely encouraging in the back half when we started shipping to the majority of the customers that buy direct from us, we've seen a list like I've never experienced in my 30 plus years in the industry. That gives me an incredible amount of confidence that we're getting new triers into the brand franchise. The heavy to medium users in the category really only purchase three to five times a year. So it's a little bit early on the repeat numbers, but I would think historically and based on my experience, we'll see that repeat fuel even higher lifts of velocity as we continue to bring more new consumers in, as well as get repeat numbers that will impact the velocities going forward. From an online perspective, we've historically had really good repeat numbers. It's significantly higher than what you typically see even at retail. And those numbers continue to remain, you know, very, very strong. We've actually used online to move out and move out some of the inventory and some of the packaging with certain discounts and offers to continue to move through as much as we could as fast as we could. The foil pouch is a game changer for quality. In addition to all the improvements we made from a processing standpoint and working in a collaborative manner with the USDA, the foil pouch totally seals in any type of air seepage and or UV rays. Not only are we already experiencing an increase in shelf life, we're also seeing a significant improvement of product quality. So that gives me so much confidence. that the repeat numbers are going to be better. We have a moisture, better mouthfeel, better tasting, more consistent consumer experience today than we've ever had. We've got really disciplined back adherence and process improvements that we've put in place in every step of our unique processing and procedures. And this is ultimately yielding the best product that's being placed in the bag now with a bag that expresses to the consumer what they're getting and actually delivers against that expectation in a very consistent, you know, high quality way. So really good indicators for customers we get direct data feeds from that we can see that impact. And then we can see on a macro basis with the SPNS data, the impact and the ones that are the ones that we see the direct data from. Obviously, we're seeing higher lists because it gets, you know, melded in across the entire universe. through the SPIN data across all channels. So very encouraging, very encouraging numbers.

That's great, Chris. And then can you just kind of help us unpack the SPIN data a little bit more? Obviously, those are, you know, impressive numbers, you know, 30 plus percent increases in velocity. You know, can you just help us unpack the growth algorithm a little bit more i mean i i would think over time as you're adding doors and and seeing that big increase in velocity i mean at some point in the future does that mean your your revenue growth is is going to be you know kind of approaching those numbers and exceeding it with with door growth or you know is that only a a snapshot of of the market here yeah the the early indicators through the spins data are very encouraging as well we've seen an increase in velocity which is the number one driver

to our increase in total sales through the register, somewhere around 16%, 18% in total, I think, on an aggregate basis off the top of my head across all three brands. The velocity portion of it has been the biggest contributor, followed by pricing as number two, and then lastly, pretty flat, like 1% to 2% type TDP growth. That type of data gives us far more facts to help – customers and retailers make the right assortment choices to expand the productivity of their shelves, utilizing now what are numbers that are very, very strong. So, as we continue to get refreshed data, we expect to see those velocities increase. We expect to convert more retailers, getting more doors, if you will, expanding our total TDPs and the average number of items along with our ACV levels to ultimately keep those growing and expanding velocities that will fuel more and more distribution. Fact-based selling and driving a retailer's complete category solution is the way to help retailers compete and expand their market penetration. We believe we have the products that offer the most unique points of difference with more protein and the absence of all the negatives. No preservatives, no to low sugar, Just some sugar, very low amount, and a couple of SKUs. But all in all, the healthiest, better-for-you products this category has ever seen. In many ways, everything that we're bringing to the market is considered innovation. On par, we have about two items at a little bit less than 20% ACV. That tells you and indicates the run room we have as we continue to build and grow our penetration in the marketplace. now with the better quality, the better positioning, and ultimately a far more capable team that is more experienced and talented, including our third-party partners. Recently, we announced a partnership with Acosta Marketing and Sales. They are one of the largest, if not the largest, food brokers in the industry that have a strong penetration with all classes of trade, and we're very excited about what they're bringing us from our opportunity to get in front of those key decision makers now that we have the right solution. We always had a great proposition. It's about how well it was going to be executed. We took many steps backwards, rationalized the revenue, improved our unit economics, got our pricing impact architecture correct, and now we've got the momentum and the early responses from shoppers and consumers that gives us a lot of fuel, which is strong fact-based data to help retailers compete. So lots of excitement and confidence brewing on our end, and the energy levels are very high that we can indeed execute it now that we've built the foundation on the supply chain side, the financial side, and even now our customer-facing team. So we're bullish.

Well, thanks very much, Chris. I really appreciate your answers. Thanks, Alex. Talk to you soon.

Thank you. Your next question is from Mike Grondahl from Northland Securities. Please ask your question.

Yeah, thank you. Hey, Chris, at a high level, 4Q had, call it, $3 million of revenues, and you guys are guiding the $24 to $30 for 2024 revenue. At a high level, can you kind of help us understand how you're comfortable with that? You know, is that orders from existing retailers? Is it orders from new retailers? You know, help us understand better what you're seeing, you know, that is going to drive sort of, you know, instead of 12 million run rate revenue, kind of double or two and a half times that.

Yeah, great question, and thank you for that, Mike. You know, with every transition, there's transformation. There's some muddiness, especially in, you know, month to month, quarter to quarter. There's certainly some cleanup we did in there, and obviously we went through a complete packaging overhaul. Working down those inventories at distributors and wholesalers, you know, timing of shipments, transitioning customers from one package design to the next, Lots of moving parts there. So I like to lean on the consumption numbers because I think that's a really good indicator of what the response in the marketplace is. And what we're seeing there is very compelling and very impactful and increasing and improving each and every period, whether you go 52 to 24 to 12 to four week data. And as we get retailer-fed data from customers that provide it to us directly, we continue to see that type of momentum. As we all know, that consumption data from SPIN's IRI Nielsen drag a little bit from a timing perspective to what's actually happening. But they also are really good indicators as to eventually, essentially, the order processing and timing for order to cash. With that being said, you know, we've got... lots of really good key performance indicators all working in our favor, and we remain very optimistic about our ability to greatly accelerate our growth and see that momentum grow throughout the course of the year, as we've indicated. Alex, anything else you'd like to add to that?

Yeah, no, I'll add a couple things. You know, just briefly on Q4 itself, as I mentioned in the prepared remarks, It's not a great proxy for our run rate because of some of the cleanup and transformation items that Chris mentioned. So, you know, take that, you know, how you will. When we think about growth for the year, the distribution is going to be the primary means that we see that, you know, compounding growth, right? The actual velocity, store velocities that we've been chatting about a lot today are That's effectively same store sales, you know, sales of items, units per store per week that we're seeing a lift materially from the new packaging, which is fantastic. But what that does is it gives retailers confidence to expand our footprint, whether that's more items in the same stores or additional stores or new retailers altogether. And so that's how you start to see a pretty quick compounding growth. and you overlay that against a category that is enormous compared to our current size, you start to see how that growth can ramp pretty quickly. And we're confident that we can get there, and we have the data to support it.

Got it. And then, Alex, in the press release, and I think your comments talked about if you're at the high-end level, or slightly above your $30 million revenue guidance, 4Q would be roughly break-even adjusted EBITDA. Does that translate to like 10 to 12 million of sales required to be adjusted EBITDA break-even? I mean, is that in the ballpark?

I think what we're trying to convey is that we've got a pretty clear line of sight to the rough timing. and scale we need to be at to reach that point. There's a lot of variables at play, as you know. We've got mixed considerations. We've got both in terms of product mix and customer mix. You have the variables that come in on the cost side, like beef pricing, and then timing of the revenue flows themselves. But as we've tried to distill it down and convey to the market is that On the high end of that range, it assumes a quarterly build each quarter, outpacing the last in terms of new distribution wins and continued growth in our consumption. That puts us at a point where we would be at a break-even inflection point sometime in the fourth quarter if we're at the highest end or exceeding that net sales range. So order of magnitude, it depends on a lot of things, but that's directionally accurate. It might be a little lower than that that you threw out, depending on mix. But we're within the ballpark, and we're on our way there.

Headed in that direction. Got it. And then just lastly, I know you talked about the line of credit going out two years now and the bridge note extension thing. But you have $400,000 of cash. Last year, you kind of created some liquidity from selling $3 million of inventory. How do you feel about liquidity, especially in the first half of the year? I mean, we're at the end of March, April 1st here, so you know what I mean? We'll get those results before too long. But what comfort can you give us that you guys can continue – to run on pretty low cash balances?

So, you know, as with any transformation, liquidity is tight. And we've proven year in and year out, kind of since we've been going through this transformation, that we've been able to walk that fine line and manage appropriately. Liquidity continues to be tight. However, we... hope to be able to share some positive updates on that in the near future. As you can infer based on the financial projections that we've got and the immediate sources of liquidity that we have, there will be some need for external financing in the coming months to quarters to support our objectives here. And so we look forward to providing updates on that in the near future.

Do you think that will come from your current two counterparties you've worked with?

We'll be able to provide more updates soon.

I would also add some color to that. Alex may be a little bit humble on this. At a time when we believe our stock price is grossly undervalued relative to other types of products, brands that the maturation of where we're at. We believe our stock price is undervalued significantly. So we're being very mindful to run as tight and lean as we possibly can, which creates a culture of being very scrappy and being very smart on every dollar we use to run, maintain, build the business. With that being said, Alex has been extraordinary at finding new creative streams to ensure that we mitigate any types of dilution at a period of time when we feel confident that our share price is significantly undervalued. So with that being said, we want to drive that shareholder value. We want to manage the balance sheet. We want to be absolute stewards of cash each and every day to fuel the growth, which is the next form of our transformation. And we're very excited about some of the avenues that we're continuing to pursue and that we've consistently delivered in a very mindful way with that lens.

Sure. Hey, thanks a lot, guys. Thank you. Thank you.

There are no further questions at this time. I will now hand a call back to Chris Biffer for the closing remarks.

Well, thank you, operator, and thank you all for your interest in our company. We've been working really hard. We've got lots to do, more to accomplish. We will continue to deliver exactly what we said we will continue and look for more positive results from Strive Foods. We will continue to provide you updates on our progress, our first quarter results, in the very near future.

Thank you, and have a great rest of your week.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.