Real Good Food Clocks 15% Growth In Q2 Revenues, Ramps Up Production Growth At Illinois Facility

The Real Good Food Company, Inc. RGF reported second-quarter FY23 sales growth of 14.8% year-on-year to $35.36 million, beating the consensus of $34.60 million. This increase was primarily due to increases in sales velocities of products in the club channel and distribution growth in the measured channel to a lesser extent. 

Q2 gross profit increased by $2.5 million to $4.8 million, driven by decreases in certain raw material costs and productivity and efficiency improvements. Gross margin grew to 13.6% of net sales, up 598 bps year-over-year.

Household penetration totaled approximately 8.3% as of June 2023, compared to 8.3% in March 2023.

Total operating expenses increased by $3.3 million to $15.5 million on research and development costs to support new product development and by an increase in equity compensation expense.

As of June 30, 2023, the company had cash and equivalents of $3 million (including $2.3 million of restricted cash) and total debt of $102.1 million.

Gerard Law, Chief Executive Officer, said, "Our operational team and infrastructure are well positioned to capitalize on our accelerated top-line growth trajectory in the second half of 2023 and beyond. Our Bolingbrook, Illinois facility is continuing to ramp up production and we are on track to achieve our efficiency targets in the second half of the year."

Outlook: Real Good Food maintained its FY23 sales guidance of at least $200 million versus the $202.95 million estimate. It expects an FY23 adjusted gross margin of at least 24%. 

The company sees Adjusted EBITDA in the mid-to-high single-digit million range.

Long-term, the company continues to expect net sales of approximately $500 million.

Price Action: RGF shares traded higher by 5.00% at $4.4625 on the last check Friday.