A Taste For Growth? This Smoothie Stock Just Reported Record Fourth Quarter And Full Year 2021 Financials

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One Los Angeles-based drinks and smoothie producer says it is anticipating the robust growth and profitability with which it finished fiscal year 2021 to carry into next fiscal year and beyond.

Barfresh Food Group Inc. BRFH, a manufacturer of frozen, ready-to-drink and ready-to-blend beverages, finished the year strong with topline results beating both street estimates and company records. Revenue for the fourth quarter came in at $2.5 million, a quarterly high for Barfresh and also the first time the company posted sequential revenue growth from the third quarter into what is historically a seasonally light fourth quarter.  For the full year the company recorded a record $6.7 million in revenue.

“The increase in revenue was due to our ability to introduce our Twist & Go product across an increased customer base in the education channel and the gradual return throughout the year in sales of our single serve and bulk products compared to the COVID-19 affected prior year periods.” Barfresh’s Chief Executive Officer, Riccardo Delle Coste, said on the company’s recent earnings call.

The company also continued to reduce core operating expenses during the past year as well, reducing total G&A expenses in 2021 by 9% to $4.0 million, compared to $4.4 million in 2020.

Overcoming Industry Headwinds

Although it achieved record topline results, Barfresh was not immune to the inflationary headwinds affecting almost every industry. The company faced challenges with day-to-day operating costs related to higher fuel and labor costs throughout fiscal year 2021 and into fiscal year 2022. However, Barfresh reports that plans are in place to partially offset these higher costs by taking advantage of more efficient distribution arrangements, securing more raw materials in advance and passing on price increases where possible.

A Strategic Pivot Paying Off?

The company made a strategic pivot toward the education sector during the pandemic with the rollout of a new ready-to-drink product (Twist & Go). Barfresh saw an opportunity to service schools who needed to provide many students with meals, albeit on-the-go instead of in the classroom. This move may have contributed to their latest earnings results and an increase in their customer base as they entered the 2021-2022 school year in nearly double the number of locations compared to the prior year.

Stiff Barriers To Entry In The Beverage Market?

Big industry players such as Coca-Cola Co. KO and PepsiCo Inc. PEP have dominated the beverage landscape, especially in foodservice and retail, with their vast distribution networks; however, smaller players like Barfresh have found the key to success is securing distribution agreements with independently owned bottlers.

Barfresh has reportedly created strong industry relationships over the years, previously partnering with companies like Sysco Corporation SYY and Dot Foods. Recently, the company has also been exploring partnerships with independent bottlers that can place their chilled product next to big names like Tropicana, KeVita and Naked Juice.

In February 2022, Barfressh announced they had entered into a distribution arrangement with G&J Pepsi-Cola Bottlers, Inc., the largest independently owned and operated Pepsi franchise bottler. The company is hoping this can serve as a blueprint for the other 80 independent bottlers in the United States to begin similar programs with Barfresh and is reportedly making these types of partnerships a key focus of its sales strategy. 

Independent distributors have long-standing contracts with customers, like school districts, therefore entering into a distribution agreement with a school’s designated distributor is sometimes the only way to access that location. Barfresh has found once they enter into a school district it can become a sticky relationship with high repeat consumption rates and increased breakfast participation rate among students.

Looking To Continue Growth

Barfresh believes that the significant structural changes made to its business over the past few years have led to the expansion of its customer base and to its recent record financial results. The company exited fiscal year 2021 with a strong customer base, healthy cash balance and no debt positioning itself for a path to breakeven and possible profitability in fiscal year 2022.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.