Cizzle Brands Corp

Good afternoon, everyone. Thank you for taking the time to join us. I have myself, obviously, John Salenza, CEO of Sizzle Brands, and with me, my colleague, Stephen Shearhart, CFO, Setti Coscarella, our head of corporate development, and Ronan Levy, our head of strategy. We're going to walk you through our Q2. I'm going to pass it over to Stephen to lead off. Stephen will be going over the financial highlights, and I'll be providing some commentary, and we're going to open up to questions at the end. So thank you again for joining us this afternoon. Stephen, I'll turn it over to you.

Thanks, John. Good afternoon, everyone, and thank you for joining us today. For those of you who don't know me, my name is Stephen Sherhart, and I'm the Chief Financial Officer of Sizzle Brands Corporation. And today, I'm pleased to walk you through our financial results for the second quarter ended January 31st, 2025. As you may be aware, this quarter marks our first full quarter as a public company following our successful listing on the SIBO Canada Stock Exchange in late December. And we're excited to share that we've already made meaningful progress against both our financial and operational dimensions. To begin, for the first three months ended January 31st, we generated revenue of 2.86 million, bringing our total revenue for the six months year to date to 5.65 million. This reflects solid traction on both our quench hydration and spoken nutrition brands. Furthermore, our gross profit came in on the quarter at $1.64 million, with gross margins at 57%, a true testament to our pricing strategy, product formulations, and disciplined cost of goods management. For the six months year to date, our gross margins now stand at 60%. Moving on to operating expenses, which for the quarter were $4.53 million, and in line with our budgets. These expenses reflect continued investment in our marketing and strategic initiatives to build brand awareness and scale up our business, as well as our commercial development and our legal fees associated with the RTO. Marketing spend was $976,000 for the quarter, which was down from Q1 and aligned with our plan following the launch of Quench and Spoken. We've reported an adjusted EBITDA loss of $1.78 million for the quarter, which is a 20% improvement over our Q1. This improvement was driven by a reduced marketing expense and our disciplined cost management. This indicates that we're moving in the right direction operationally. With respect to our balance sheet, we ended the quarter at 2.63 million in cash, which was up from the 1.52 million that we reported on July 31st year end, reflecting the successful completion of our GoPublic financing and efficient capital deployment. Our networking capital position as of January 31st is 5.97 million, and this gives us a solid base so that we can execute our second half of the year. Looking ahead, we are in a strong position to implement our strategy based on our early sales momentum, our very solid capital position, and continuing to improve our operating leverage. We remain committed to managing our cash flows and assessing the various financing options available, while focusing on driving revenue growth, expanding our distribution footprint, and enhancing our operational efficiency. With these efforts, we are confident that we can achieve remarkable success and continue to build long-lasting value. With that, I'll hand it back to John, who will give some final remarks, and then we can open the floor for some questions. Awesome. Thank you, Stephen.

So I'm just going to look over to the question panel quickly here because there's one comment about sound. Can someone just write into the chat, everyone can hear us? Because I don't want to go forward if people can't hear us. I believe that was a comment by Morley. Nicole, all good with the sound before we keep going? Yes, sound is working. Perfect. Larry, thank you. Perfect. All right. So when it comes to this quarter in our industry, and I know a bunch of other industries, it's an interesting one because there's really only one month of selling. So November being that month for the most part, early December, many retailers like to close their years with very thin inventory amounts. And in January, no one's really shopping in the category. The fact that we were able to grow this quarter over last with basically only one month of selling available to us was definitely a testament to the brand and our sales team for sure. One of the greatest signs of our brand so far has been the velocity and the retailers that we brought on. It's not that we're just going and getting pipe fill orders and reaching out to our previous relationships to carry the product. We're being very selective about the retailers that we're bringing on and the velocity has been staggering. Many of you know my background in the sports drink industry. I could tell you for a new brand in the space, if you're seeing velocity between 20 to 24 units, you're doing a pretty good job. We're seeing velocities in the 50s when it comes to quench. And the more retailers we add, it actually keeps growing as opposed to cannibalizing. So very excited about the last quarter. Still on pace for 15 million plus net sales for the whole fiscal year. So Definitely exciting times for us as we continue to add retail distribution and increase velocities at the same time. A deal I want to touch on that's been very important to our growth is that with Van Hoop Coffee Services. So just to give you a quick background, Van Hoop Coffee Services is owned by Dr. Pepper. The deal that we did is something that you'd see for a company maybe 9, 10 years in the business. So what this does is this gives us a DSD solution, direct store delivery solution, across the country. So, yes, we're in the game of marketing and selling drinks, selling nutritional products, but one of our greatest expenses is outbound shipping. I like to make the joke that we're actually in the outbound shipping business. So with this Van Hoop partnership, what it is, is it allows us to ship tons of product to their hubs across the country, and then from there, they take it to stores. So one of the biggest issues in the ready-to-drink game, I'll touch on the ready-to-drink side of our business, and why you hear that Coke dominates and Pepsi dominates because they have those trucks that go to stores, is is minimum quantity orders. So for us to send the retailer out two to three cases of clench makes no sense. We lose money on that. If we're doing it alone from our warehouse, the cost of shipping follows across the country. With VanHoo, they have these warehouses across the country. If someone orders five cases, 10 cases, small order like that, we're able to get it to them. We're able to replenish it and never be out of stock on shelf. So not only are they servicing our accounts, having a positive impact on the markets when it comes from a shipping and logistics standpoint, but they have 30,000 accounts of their own that we're slowly getting into as well. And what I love about these accounts is it's not general retail accounts. It's not your Sobeys types of accounts. They're food service types of accounts across the country where people work, where people eat, where people sleep, where people sweat. And what's that doing is not only is it revenue for us, but it's driving trial in key places across the country. And people are finding out about the product. They love the taste of the product. And then from there, they're going into our retailers to sell their products. So no different than if any of you are at your office right now, whatever the snacks that are there, you get used to those ones, you like those and you end up buying them in your home. That's what's happening with Munch and his relationship. So it was a monumental move for our company. And I just really wanted to highlight it here because again, it's something that you'd see nine to 10 years out in a business. And the fact that we have this and the ability to grow and the ability to use them as an advisor, and we're doing certain things in the US as well. is huge, right? I like to take people back to, you know, a lot of people know the Body Armor story, right? Body Armor had Dr. Pepper as a distribution partner, and then they sold the Coke for $4 billion, as an example of what this type of distribution partner can do when they're partnered with the right brand. So I wanted to touch on that. And I'll get to the, I see the questions popping up, Chris, later, we're going to get to those in a bit. So from a retailer standpoint, we're very Ontario-centric to start, where the majority of the the money in this industry comes from, but now we're starting to expand coast to coast, right? So if you've been following along, you've been seeing the announcements, Metro, London Drugs Out West, McEwen, Inns Market, and even in the US with United Supermarkets. Now, when I say we're being picky about our distribution, that's not just us talking. We have a plan when it comes to where our grassroots are located, what our online sales are saying, What our PR reports are saying, those are our insights on where we want to get retailers because we know we can get that velocity. So it's very much a shotgun approach, not just trying to set up one big bomb, so to speak, and get as many pipe fills as possible. A lot of our revenues you're seeing is from reoccurring orders. So that's the key sign for any brand in this industry and something that I'm very pleased with when it comes to our brand. A cool side of the business, and it is a revenue driver, but not a major revenue driver, I think it'll end up being $2 to $3 million on the fiscal year, is the adoption of professional teams. And it's across the board, whether it's in the NHL, the NBA, Major League Baseball, the NFL, PGA Tour, NCAA colleges. So as a quick background, sorry, I just got distracted by the vodka question on the side of the screen from Josh. These teams can get anything they want for free. They have major sponsors. Body has the NHL deal. Gatorade has a lot of the major league benches. Obviously, Gatorade has the NFL deal, so on and so forth. They're choosing to purchase sizzle grants products, whether it's quench or spoken or supplement line. They're paying a premium for these products as opposed to the stuff we're getting to because the athletes are saying to them, I perform better for these products. They taste better. This is what I want to have. So, yes, it's good revenue. You know, cool story for me to share with everyone. What happens is that top-down effect, right? So then these athletes go back to their training facilities in the summer, and everybody else at that training facility sees that the top person in that facility is using their products. And the trainer starts telling the masses about those products and all the other people. So it's really much a top-down, triple-down effect. And I can share with people on this call, whether it's the Yankees, the Dodgers, I was just going through some of the orders this morning, they're all very much supporting the brand. So it's good to see that adoption at the higher level, And the effect of that, it's not so much about the revenue, but it's a trickle-down effect. And because we're still in early stages of our business, we'll start to see those effects over the summers, over the summers for years to come, but in particular in the hockey world once the season's done and all these athletes are back in their training facilities. From an innovation standpoint, we launched Spoken, our supplement brand. So Sizzle Brands was, again, a house of brands approach. Our experience tells us, you know, you don't want to confuse the consumers. So Quench and Spoken live under the same umbrella. They're sold into by the same salespeople. by the same salespeople. Some of it are in the same retailers, but very much two different brands that have two different purposes for the product. So we're able to launch our spoken brand, our portfolio brands on that side. Early signs show that the Sleep Builder product, the Greens product, and our Amino product are the winners. The Sleep product in particular is getting unbelievable traction. And I definitely think it'll be the lead across that brand. So again, forecasting about $3 million Canadian On the year for that product, we're on pace to hit target. Excited to see it launch and see the purchase orders coming through. It's very much a US focus right now, the high quality training facilities across the US. We have a goal of about 300 by the end of the year, handpicking these retailers at these points of sweat, and we're at about 100 right now. So definitely some early traction for that brand. Some other success highlights from the innovation standpoint for the quarter, Coach Chippy. If you're familiar with Coach Chippy, then you know what I'm talking about. If you're not, Coach Chippy is a hockey influencer, a social media sensation. So we did a Chippy branded product. Actually, I don't have one in front of me right now. I can share this with you. I've launched custom Carmen David SKUs on the sports drink side. I've done custom Patrick Mahomes SKUs on the sports drink side. I have never seen velocity like I've seen with Coach Chippy. Over the last couple of weeks, the data that we received is we're selling more Coach Chippy in Canada than Gatorade is selling their Blue Gatorade, which is one of their lead SKUs. Their lead SKU, actually, from a flavor standpoint. So we're going to continue to use our assets to innovate. This LTO is in and out with different flavors, different athletes are ambassadors on the product. It's working great for us, and Chippy was the first one through the tracks with unbelievable success. We're actually going to be coming out with more flavors under his brand as well, or under our brand with his likeness. Those are the highlights for the quarter. I see a ton of questions coming in on the right side. I'm going to turn it over to Nicole to moderate that and we can go from there. Excited to keep the conversation going and answer any and all questions.