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.