Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Arcadia Biosciences Inc (RKDA, Financial) reported an 18% year-over-year increase in total revenues for Q3 2024.
- Zola coconut water sales surged by 55% compared to the same period last year, contributing significantly to revenue growth.
- The company achieved the lowest level of cash usage in a quarter since going public, indicating improved financial management.
- Zola's retail store count increased by 68% year-over-year, marking the largest quarterly distribution gain in the company's history.
- Zola outpaced the coconut water category growth, with a 73% increase in the latest four-week period compared to the industry's 28% growth.
Negative Points
- Selling, general, and administrative expenses increased by $380,000 due to severance and transition-related fees.
- Sales of GLA oil continued to decline, with Q3 sales being about half of what they were in the same period last year.
- The company experienced a $150,000 write-down related to hemp and GoodWheat seed.
- There is uncertainty in forecasting due to the timing of initial shipments and the size of new distribution gains.
- The company did not provide forward-looking guidance, citing challenges in forecast accuracy due to recent distribution changes.
Q & A Highlights
Q: Can you clarify the $150,000 write-down mentioned in the financial results? Was it entirely within this quarter and associated with the legacy hemp business?
A: Yes, the $150,000 write-down was entirely in this quarter and related to both hemp and GoodWheat seed. - Mark Kawakami, CFO
Q: What are your expectations for margins going forward, excluding the write-down and the GLA business?
A: Excluding those items, margins are around 33%. Historically, we've communicated a long-term outlook for Zola margins in the low to mid-30s, and we're currently in the middle of that range. - Thomas Schaefer, CEO
Q: Do you expect any more one-time operational expenses in the fourth quarter?
A: Most severance and related issues are behind us, so we expect any further expenses related to those transactions to be minimal. - Thomas Schaefer, CEO
Q: With the rapid growth in Zola's distribution, how confident are you in Arcadia's infrastructure to support this growth?
A: We are comfortable with our infrastructure. Zola is manufactured in Thailand, and we receive finished goods at the port, making it an asset-light business model. We are managing inventory carefully, especially as lead times have increased, and we plan to rebuild safety stock during the softer season. - Thomas Schaefer, CEO
Q: Can you provide guidance on future financial performance given the recent distribution gains?
A: We are not providing forward-looking guidance due to the challenges in forecasting initial sell-in versus ongoing reorder patterns. However, we are optimistic about our growth trajectory. - Thomas Schaefer, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
