Back to top

Image: Bigstock

The Real Good Food Company (RGF) Announces Q3 Preliminary Results

Read MoreHide Full Article

The Real Good Food Company, Inc. (RGF - Free Report) , or Real Good Foods, has been making efforts to boost its presence in the health and wellness food industry. Recently, the company announced preliminary results for third-quarter 2023.

The Zacks Rank #3 (Hold) company’s price performance shows that its shares have increased 2.5% over the past three months against the industry’s 15.6% decline.

Results in Detail

Management projects preliminary net sales for the third quarter to increase 46-52% year over year in the range of $55-$57 million. The adjusted gross margin is likely to increase by 7-11% year over year. Moreover, the company predicts preliminary adjusted EBITDA to increase in the band of $0 million and $2 million versus a loss of $3.8 million for the same quarter of the prior year.

For the three months ended Sep 30, 2023, preliminary estimated net sales are likely to be between $55 million and $57 million, which suggest growth of nearly $17.5-$19.5 million, or 46-52%, versus net sales of $37.6 million for the three months ended Sep 30, 2022. This is lower than the previously announced guidance for third-quarter 2023 net sales view of $60 million to $65 million.

We note that the company’s quarterly sales growth was not equivalent to the consumption growth due to the sharper-than-expected increase in consumption. For the aforementioned three-month period, total consumption of the company’s branded products rose 90% year over year and 76% quarter over quarter, exceeding shipment growth of 50-58% in the corresponding period, respectively. Customer order activity was largely weighted toward the back-end of the quarter with open orders in September 2023, which accounted for three-times growth over July 2023.

For the three months ended Sep 30, 2023, preliminary anticipated adjusted gross margin is projected to grow 7-11% year over year, owing to better plant operating efficiency, reduced labor costs and, to a lesser extent, lower certain commodity prices. Preliminary adjusted EBITDA for the three months is forecast between $0 million and $2 million, which is an increase, versus a loss of $3.8 million in the year-earlier quarter.

Preliminary cash flow before debt service is likely to be $(2.2) million, an $8.6 million improvement, versus the same period in 2022. Real Good Foods estimates that, as of Sep 30, 2023, it will have a cash balance of about $2 million.

Outlook

Management revised its guidance for the three months and full year ending Dec 31, 2023. Net sales for the three months ending Dec 31, 2023, are likely to be $65-$72 million compared with the earlier disclosed guidance of $70-$77 million or about 83-102% growth versus the corresponding quarter in 2022. Adjusted EBITDA for the three months is expected to be $4-$6 million. Management currently anticipates reaching positive operating cash flow starting fourth-quarter 2023, and this trend is likely to continue into 2024.

For 2023, net sales are predicted to be $185-$194 million, down from the previously announced guidance of at least $200 million, or about 31-37% growth, versus the last year. The adjusted gross margin for the year is forecast to be at least 24%, which is in line with the earlier guidance. Adjusted EBITDA for 2023 is expected to be in the low-to-mid single-digit millions range, down from the prior disclosed guidance of mid-to-high single-digit millions range.

Further, management issued preliminary results for 2024. Management expects preliminary net sales to be at least $245 million and adjusted gross margin to rise 1-2% from the prior year during 2024. It expects adjusted EBITDA to be at least $15 million for 2024.

For the long haul, Real Good Foods projects net sales of roughly $500 million, adjusted gross margin of 35% and adjusted EBITDA margin of 15%.

Some Solid Staple Bets

Inter Parfums (IPAR - Free Report) , which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9% on average.

Lamb Weston (LW - Free Report) , a global manufacturer and distributor of value-added frozen potato products, currently sports a Zacks Rank of 1. LW has a trailing four-quarter earnings surprise of 46.2%, on average.

The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales suggests an increase of 27.4% from the year-ago reported numbers.

Flowers Foods (FLO - Free Report) , offering high-quality baked items, currently has a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 8.1%, on average.

The Zacks Consensus Estimate for Flowers Foods’ current fiscal-year sales suggests a rise of 6.7% from the year-ago reported numbers.

Published in