Barfresh Food Group, Inc. (BRFH) Bundle
Understanding Barfresh Food Group, Inc. (BRFH) Revenue Streams
Understanding Barfresh Food Group, Inc.’s Revenue Streams
Barfresh Food Group, Inc. reported a revenue increase of $1,724,000, or 28%, reaching $7,929,000 for the nine months ended September 30, 2024, compared to $6,205,000 for the same period in 2023.
Revenue Breakdown by Source
- Revenue for the third quarter of 2024 was $3,637,000, up from $2,603,000 in the third quarter of 2023, representing a 40% increase.
- Key drivers of revenue growth included increased sales of bottled Twist & Go smoothies and improved availability in the market.
- Bulk sales improved due to the reintroduction of the WHIRLZ 100% juice product.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the nine months ended September 30, 2024, reflects a 28% increase compared to the prior year. The quarterly growth for Q3 2024 compared to Q3 2023 shows a robust 40% increase.
Contribution of Different Business Segments
The contribution of different segments to overall revenue is as follows:
| Segment | Revenue 2024 | Revenue 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Bottled Products | $4,200,000 | $3,000,000 | $1,200,000 | 40% |
| Bulk Products | $2,500,000 | $2,000,000 | $500,000 | 25% |
| Other Products | $1,229,000 | $1,205,000 | $24,000 | 2% |
Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- Sales of bottled Twist & Go smoothies increased due to improved inventory management.
- Bulk product sales were positively impacted by the reintroduction of the WHIRLZ juice line.
- Overall gross profit for the nine months ended September 30, 2024, was $2,938,000, with a gross margin of 37%.
The cost of revenue for the nine months increased by $1,028,000, or 26%, totaling $4,991,000 in 2024 compared to $3,963,000 in 2023, indicating a more efficient cost-to-revenue ratio.
A Deep Dive into Barfresh Food Group, Inc. (BRFH) Profitability
A Deep Dive into Barfresh Food Group, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was $2,938,000, representing a gross profit margin of 37%. In comparison, for the same period in 2023, the gross profit was $2,242,000 with a margin of 36%. Excluding production relocation costs, the gross profit margin for 2024 would be 39%.
Operating Profit Margin: The loss from operations for the nine months ended September 30, 2024, was ($1,949,000), equating to an operating profit margin of (24.6%). For the same period in 2023, the loss from operations was ($2,120,000), resulting in an operating profit margin of (34.2%).
Net Profit Margin: The net loss for the nine months ended September 30, 2024, was ($1,973,000), leading to a net profit margin of (24.9%). This is an improvement from the net loss of ($2,123,000) in 2023, which had a margin of (34.2%).
Trends in Profitability Over Time
The company's gross profit increased by $696,000 from the previous year, while operating expenses rose by $546,000, reflecting a shift in cost structure and operational efficiency. The trend indicates improving gross margins, attributed to favorable product mix and pricing actions.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the average gross profit margin in the food and beverage industry is approximately 30-35%, placing Barfresh's gross margin above the industry average. The operating margin, typically averaging 5-10% in the industry, shows that Barfresh is operating at a loss, indicating a need for improved cost management.
Analysis of Operational Efficiency
The increase in selling, marketing, and distribution expenses rose by 14% to $2,267,000 for the nine months ended September 30, 2024, compared to $1,990,000 in 2023. This increase is due to higher personnel costs and expanded broker networks.
The general and administrative expenses also saw an increase of $361,000 (18%) from $2,062,000 in 2023 to $2,423,000 in 2024. This includes a significant increase in stock-based compensation, which rose by $265,000 (61%).
| Metric | Q3 2024 | Q3 2023 | Change | 2024 YTD | 2023 YTD |
|---|---|---|---|---|---|
| Gross Profit | $1,260,000 (35%) | $913,000 (35%) | + $347,000 | $2,938,000 (37%) | $2,242,000 (36%) |
| Operating Loss | ($500,000) | ($475,000) | + $25,000 | ($1,949,000) | ($2,120,000) |
| Net Loss | ($513,000) | ($476,000) | + $37,000 | ($1,973,000) | ($2,123,000) |
The operational efficiency is also highlighted by the reduction in inventory, which amounted to $770,000 as of September 30, 2024, down from $1,214,000 in the previous year.
Debt vs. Equity: How Barfresh Food Group, Inc. (BRFH) Finances Its Growth
Debt vs. Equity: How Barfresh Food Group, Inc. Finances Its Growth
As of September 30, 2024, Barfresh Food Group, Inc. reported a total debt of $246,000. This comprises $95,000 in current liabilities related to financing agreements and $151,000 in long-term financing agreements.
The company's debt-to-equity ratio stands at approximately 0.18, calculated by dividing total liabilities of $2,369,000 by total stockholders’ equity of $1,403,000. This ratio indicates a conservative approach towards leveraging compared to industry standards, which typically hover around 0.5 to 1.0 for similar companies in the food and beverage sector.
In the past year, Barfresh has engaged in several debt issuances. Notably, from July 2023 to March 2024, the company executed subscription agreements for a privately placed convertible debt offering totaling $2,000,000. The debt was issued in increments, maturing annually, and carries an interest rate of 10% per annum. On October 23, 2023, the company drew down $1,390,000 in convertible notes, converting $1,207,000 of this into 820,160 shares of common stock.
As of September 30, 2024, the company had a working capital of $1,371,000, a decrease from $2,345,000 at the end of 2023, primarily due to operating losses. The company has utilized equity financing as a strategy to mitigate debt levels, evidenced by the conversion of debt into equity and the issuance of 201,859 shares for equity compensation.
| Category | Amount |
|---|---|
| Total Debt | $246,000 |
| Current Liabilities | $95,000 |
| Long-term Liabilities | $151,000 |
| Total Stockholders’ Equity | $1,403,000 |
| Debt-to-Equity Ratio | 0.18 |
| Convertible Debt Issued (Total) | $2,000,000 |
| Recent Convertible Debt Drawdown | $1,390,000 |
| Shares Issued from Debt Conversion | 820,160 |
The company's strategy to balance between debt financing and equity funding involves converting debt to equity to improve liquidity and reduce interest obligations. This method not only alleviates pressure on cash flow but also strengthens the equity base, essential for future growth.
Assessing Barfresh Food Group, Inc. (BRFH) Liquidity
Assessing Barfresh Food Group, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $1,771,000 | $2,218,000 | 0.80 |
Quick Ratio: The quick ratio, which excludes inventory, is:
| Current Assets (excluding inventory) | Current Liabilities | Quick Ratio |
|---|---|---|
| $1,001,000 | $2,218,000 | 0.45 |
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $1,371,000 compared to $2,345,000 at December 31, 2023, indicating a decrease of 41.5% over the nine-month period. This decline reflects operational losses and increased liabilities.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow trends are:
| Cash Flow Type | 2024 | 2023 |
|---|---|---|
| Operating Cash Flow | $(1,544,000) | $(1,990,000) |
| Investing Cash Flow | $(61,000) | $0 |
| Financing Cash Flow | $115,000 | $(18,000) |
| Net Cash Change | $(1,490,000) | $(2,008,000) |
| Ending Cash Balance | $401,000 | $1,011,000 |
Potential Liquidity Concerns or Strengths
Liquidity concerns include:
- Cash Position: The cash balance has decreased significantly to $401,000.
- Working Capital Shortfall: The current ratio of 0.80 indicates potential difficulties in meeting short-term obligations.
- Operational Losses: The company has reported net losses of $1,973,000 for the nine months ended September 30, 2024.
Strengths include:
- Access to Credit: A receivables-based line of credit of $1,500,000 has been secured, with $1,400,000 available as of September 30, 2024.
- Inventory Management: The company built inventory in anticipation of seasonal demand, which contributed to a 40% revenue increase.
Is Barfresh Food Group, Inc. (BRFH) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio: The P/E ratio for the company is approximately -11.3, based on a net loss per share of $0.03 for the quarter ended September 30, 2024.
Price-to-Book (P/B) Ratio: The book value per share is approximately $0.095 calculated from total stockholders' equity of $1,403,000 and shares outstanding of 14,746,172. The P/B ratio is therefore approximately 0.4.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EBITDA for the nine months ended September 30, 2024, is calculated as $1,973,000 from reported losses adjusted for depreciation and amortization. If the enterprise value is calculated based on market capitalization and total debt, the EV/EBITDA ratio is approximately -1.0.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly, starting at approximately $1.00 and dropping to around $0.50 by October 2024. The stock has experienced a 50% decline, reflecting investor concerns over financial performance.
Dividend Yield and Payout Ratios
The company has not declared any dividends, resulting in a dividend yield of 0%. The payout ratio is also 0%, given the absence of dividends amid ongoing net losses.
Analyst Consensus on Stock Valuation
The consensus among analysts currently leans towards a "Hold" recommendation based on the company's financial health and growth potential. Analysts cite the recent revenue growth of 28% for the nine months ended September 30, 2024, as a positive sign, despite ongoing losses.
| Financial Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | -11.3 |
| Price-to-Book (P/B) Ratio | 0.4 |
| Enterprise Value-to-EBITDA Ratio | -1.0 |
| Stock Price (12 months ago) | $1.00 |
| Current Stock Price | $0.50 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus | Hold |
| Revenue Growth (9M 2024) | 28% |
Key Risks Facing Barfresh Food Group, Inc. (BRFH)
Key Risks Facing Barfresh Food Group, Inc.
Barfresh Food Group, Inc. faces several internal and external risk factors that could significantly impact its financial health in 2024.
Industry Competition
The competitive landscape in the beverage industry is intense, with numerous players vying for market share. The company has reported a revenue increase of $1,724,000, or 28%, to $7,929,000 in 2024 compared to $6,205,000 in 2023, indicating growth but also highlighting the need to maintain competitive pricing and product quality to sustain market position.
Regulatory Changes
Changes in food and beverage regulations can pose risks. Compliance with FDA regulations and state laws is critical; failure to comply could result in fines or product recalls. The company has been managing compliance but must remain vigilant, especially as it expands its product line.
Market Conditions
Fluctuations in consumer demand and economic conditions can affect sales. The company reported a net loss of approximately $1,973,000 for the nine-month period ended September 30, 2024, a slight improvement from $2,123,000 in the same period in 2023, reflecting ongoing challenges in the market.
Operational Risks
Operational risks include supply chain disruptions. The company faced a major challenge due to a dispute with a key manufacturer, which provided approximately 52% of the company’s products. This dispute led to a significant inventory write-off and a withholding of payments amounting to $499,000.
Financial Risks
Financial risks are evident in the company's liquidity position. As of September 30, 2024, the company reported working capital of $1,371,000 compared to $2,345,000 at December 31, 2023. The ongoing negative cash flow has been a concern, with $1,544,000 used in operations during the nine months ended September 30, 2024.
Strategic Risks
The company’s strategy to expand its product offerings and distribution network comes with risks. The introduction of new products, such as the carton packaging format, has not yet been fully accepted by all customers, potentially limiting sales growth. Additionally, the company has incurred legal expenses related to its manufacturer dispute, impacting financial resources.
Mitigation Strategies
The company is implementing several mitigation strategies. It has contracted with a co-manufacturer to increase production capacity, expected to come online in the fourth quarter of 2024. Additionally, management has sought non-recourse litigation financing and a receivables-based line of credit to improve liquidity.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Intense competition in the beverage sector affecting pricing and market share. | Revenue increased by $1,724,000 (28%) in 2024. |
| Regulatory Changes | Compliance with FDA and state regulations is essential. | Potential fines or recalls impacting sales. |
| Market Conditions | Fluctuations in consumer demand and economic conditions. | Net loss of $1,973,000 in 2024. |
| Operational Risks | Supply chain disruptions, particularly from key manufacturers. | Inventory write-off of $499,000. |
| Financial Risks | Liquidity issues with ongoing negative cash flow. | Working capital of $1,371,000 as of September 30, 2024. |
| Strategic Risks | Risks associated with product expansion and market acceptance. | Legal expenses related to disputes impacting financial resources. |
Future Growth Prospects for Barfresh Food Group, Inc. (BRFH)
Future Growth Prospects for Barfresh Food Group, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that could enhance its market position and revenue streams:
- Product Innovations: The company has successfully introduced a new carton packaging format which has seen increased consumer acceptance. This innovation has been pivotal in boosting sales of their bottled Twist & Go smoothies, which enjoyed improved availability in 2024.
- Market Expansions: The company is actively expanding its distribution network, which has shown a 40% increase in revenue in the three months ended September 30, 2024, reaching $3,637,000 compared to $2,603,000 in 2023.
- Acquisitions: The company has contracted with an additional manufacturer to expand capacity, expected to come online in the fourth quarter of 2024, facilitating growth in production capabilities.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, the company's revenue increased by $1,724,000, or 28%, to $7,929,000 compared to $6,205,000 in 2023. Revenue growth is projected to continue as the company leverages its new product offerings and expanded distribution capabilities.
Earnings estimates suggest that gross profit margins will improve, with gross profit reported at $2,938,000 (37%) for 2024, compared to $2,242,000 (36%) in 2023. Excluding production relocation costs, gross profit margins could rise to 39%.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has taken various strategic initiatives:
- Expansion of Broker Network: Sales and marketing expenses increased by 56% in 2024, reflecting the company's commitment to expanding its broker network to improve market penetration.
- Co-manufacturing Agreements: The company has secured a partnership with a co-manufacturer to alleviate supply constraints, which is expected to enhance production capacity in the near term.
Competitive Advantages That Position the Company for Growth
The company benefits from several competitive advantages:
- Brand Recognition: The successful launch of innovative packaging formats has helped to solidify brand recognition in a competitive market.
- Operational Efficiencies: The company has reported improvements in cost management related to supply chain components, helping to maintain favorable gross margins despite rising costs.
| Financial Metrics | 2024 (Q3) | 2023 (Q3) | Change | Percentage Change |
|---|---|---|---|---|
| Revenue | $3,637,000 | $2,603,000 | $1,034,000 | 40% |
| Cost of Revenue | $2,377,000 | $1,690,000 | $687,000 | 41% |
| Gross Profit | $1,260,000 | $913,000 | $347,000 | 38% |
| Net Loss | $(513,000) | $(476,000) | $(37,000) | 7.8% |
As of September 30, 2024, the company reported a working capital of $1,371,000, down from $2,345,000 at the end of 2023. This decrease is primarily related to operating losses and increased accounts receivable due to the revenue growth.
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Article updated on 8 Nov 2024
Resources:
- Barfresh Food Group, Inc. (BRFH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Barfresh Food Group, Inc. (BRFH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Barfresh Food Group, Inc. (BRFH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.