Flow Beverage Corp.

Good morning, everyone. Welcome to Flow Beverage Corps Fiscal Q1 2025 Conference Call. As a reminder, this conference call is being recorded on March 18, 2025. At this time, all participants 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 research analysts to queue up for questions. Before we begin, we would like to remind you that today's presentation and discussion contains forward-looking statements that involve known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current expectation and may cause actual results, performance or achievements to be materially different from those implied by such statements. The forward-looking statements are based upon and include the company's current internal estimates, plans, expectations, opinions, forecasts, projections, targets, guidance, or other statements that are not statements of fact. Any statements contained herein or discussed during today's session that are not statements of historical fact may be deemed to be public statements. A number of factors could cause actual events, performance, or results to differ materially from what is projected in the forward-looking statements. A more complete discussion of the risks and uncertainties facing the company appear in the company's annual information form dated January 29, 2025 and the company's management's discussion and analysis for the year ended October 31, 2024, which are available under the company's profile on CDER+. Your caution not to place undue reliance on these forward-looking statements, which only speak to the date of this presentation. The company disclaims any intention or obligation except to the extent required by law to update or revise any forward-looking statements as a result of new information or future event or for any reason. Any forward-looking statement contained herein or discussed during today's session is expressly qualified in its entirety ready above cautionary statement. I will now turn the call over to Nicholas Richenbach, founder and chief executive officer of Flow. Please go ahead, Nicholas.

Thank you, operator. Good morning, everybody. I'm joined today by Trent McDonald, Flo's Chief Financial Officer and EVP of Operations. On today's call, I'll start by providing an update on our quarter and our recent milestones, and then I'll pass the call to Trent to review the quarter in greater detail. After Trent's remarks, we'll open the call for questions from our analysts. In Q1 2025, Flo continued to improve its financial performance. Revenues increased 38% to $11.4 million. This revenue increase was driven by a 216% increase in our co-packing revenue. Flow branded revenue was down 5% in the quarter. Even with our recent production challenges, we continue to close the gap on our flow branded revenue growth and the impact of exiting unprofitable channels. on the details of our efforts to optimize our production during his remarks. Gross margins were 21%, a 36% improvement from the prior year. This is a result of our focus on profitable channels for the Flo brand and profitability for our co-packing contracts. However, we will still well below our potential. As we shared last quarter, and in our press release this morning, we are still dealing with challenges of scaling the operation, which means we've had demand for our flow brand in excess of what we could produce, and the more we produce, the higher our gross margins. We are still confident that we will achieve gross margins in line with our financial targets once we refine our production process. We have already seen gradual improvements. SG&A decreased by $3 million down to $5.5 million, a 35% improvement. Our selling and marketing expense did include some one-time marketing rebates, but general administration expenses were down 50%. and now represent a more sustainable run rate. These factors led to an adjusted EBITDA improvement of $7.1 million compared to Q1 2024.

In the six weeks since our last conference call, we have made a few operational milestones.